Is it Safe to Invest with Ark7?

Ark7 Safety Blog Graphic

At Ark7, safety is our number one priority when it comes to making real estate investments. Our goal is to create a secure environment for buying, holding, and selling property shares so our users can focus on earning passive income from their investments.

But just how safe is it to invest with Ark7? 

We will be answering this question in four different parts:

  • How does the Ark7 investment process work?

  • Does Ark7 hedge the risk of house price fluctuations?

  • How does Ark7 improve the returns of rental income?

  • What are Ark7’s methods for share liquidity? 

 

How does the Ark7 investment process work?

Ark7 was created to enable our users to invest in real estate and become shareholders of the property on the Ark7 platform.

To put it simply, Ark7’s trading platform is a tool for trading shares, much like other trading platforms. Ark7 users are free to invest in the properties of their choice and the Ark7 platform does not directly manage our users’ investments. 

So, how does this work? Ark7 uses its own money to buy a property and then splits the property rights of the house into affordable shares for interested users to purchase.

Using Ark7’s method, users can participate in real estate investment at as low as $5 by buying property shares and enjoy potential long-term stable rental income generated by the invested property.

Our operation process includes registering an independent Limited Liability Company (LLC) for a property, enabling shareholders to own property rights as equity, and avoiding oversold equity to ensure our users’ shares maintain value. Our step-by-step operation process is detailed below:

 

1. Ark7 registers an independent Limited Liability Company (LLC) for each property

Before purchasing real estate, Ark7 will set up an independent LLC for the property in order to hold the property rights. The total asset(s) of the LLC is the market value of that property.

All legal documents containing the ownership of each property and the corresponding LLC property ownership are available for our registered users to view on the Ark7 website.

 

Grant Deed or the Certificate of the Real Property Ownership
Grant Deed or the Certificate of the Real Property Ownership

 

2. Users become shareholders of the LLC company and own the property rights in the form of equity

We split the property rights of a property into shares and submit all information about the property on the Ark7 website. This information includes: the total issuance, the number of shares, the price per share, the rental return, and the value-added return. The shares are then made available on the Ark7 website for the public to purchase.

 

Property Offering Webpage
    One of Ark7’s property offering webpages

 

Then, users can invest in their preferred properties and build their own real estate investment portfolio on the Ark7 platform.

But what does it mean to hold property shares with Ark7? To put it clearly, Ark7 users who subscribe shares for the equity of their chosen property on the Ark7 platform become shareholders of the LLC Company that owns the property. This means that Ark7 users who invest in a property have partial ownership of it based on the number of shares they possess.

 

An example of a user's stock certificate
An example of a user’s stock certificate

 

As an Ark7 user, you have total control over your investment by choosing and configuring your own real estate investment portfolio. You can buy or sell any number of shares you want–it’s as easy as buying stocks.

 

3. Ark7 avoids oversold equity so users can earn passive income

The overall Ark7 investment process is similar to buying or selling a house.

The difference is that our users do not need to pay a high-cost down payment or take out a 30-year loan to buy a property. By investing with us on the Ark7 platform, you can spend an amount as low as $5 to buy shares of the property’s equity and enjoy monthly rental income and appreciation from your investment.

Because Ark7 makes real estate investment accessible for everyone, protecting our users’ rights and interests comes first. Since 2018, we have hired and consulted with lawyers to study the relevant provisions of federal securities laws and ensure that each and every step of Ark7’s operation is in compliance with the requirements of the US Securities and Exchange Commission (SEC) and those of all relevant government agencies.

 

Certificate of SEC Registration
Certificate of SEC Registration

 

In addition, the Operating Agreement of the LLC registered company also stipulates the amount of LLC property equity. Ark7 values our users and their equity and will never perform oversold operations.

 

Provisions of the Operation Agreement
 Provisions of the Operation Agreement

 

As our shareholders, Ark7 users enjoy all rights and interests strictly protected by the Operating Agreement and government agencies.

 

Does Ark7 hedge the risk of house price fluctuations?

We must first think of this from another angle: can the volatility risk of a company’s stock on the market be hedged by a stock trading platform?

As a real estate equity investment platform, Ark7, just like any other stock trading platform, is an online trading tool. And because market fluctuation is not determined by a trading tool, the risks will not be hedged by a trading tool.

However, this doesn’t mean the risks of real estate investment are higher than those in the stock market. First, the overall volatility risk of real estate investment is lower than that of the stock market.

 

5-year volatility comparison between the S&P 500 Index and the National House Price Index
5-year volatility comparison between the S&P 500 Index and the National House Price Index

 

Second, Ark7 users can invest in multiple properties in different locations using small amounts of money. As an Ark7 investor, you don’t have to worry about risking your money by investing in a single property with a high amount of concentrated funds. Instead, you can focus on diversifying your portfolio and earning passive income from your investments.

 

   Berkeley Property Promotion

As a special promotion for our three Berkeley properties, M1, M2, and M3, we will bear the market downside risks for the investors in the first two years.

In other words, if the housing market declines within one to two years, Ark7 can repurchase the equity of the house at 100% of the user’s original purchase price, and bear the principal risk for the user.

During this promotion period, Ark7 users who wish to exit after having held a Berkeley property’s shares for a one-year holding period and prior to their two-year holding period can sell the shares back to Ark7 for 100% of their initial value. Or instead, if they choose, these Ark7 users could sell shares to others for a higher price.

   

 Ark7’s Berkeley M2 Property

 

How does Ark7 improve the returns of rental income?

 At Ark7, we operate both the real estate investment platform and the management of our properties. When users invest in a property on the Ark7 platform, they are also choosing us as their property manager, avoiding the usual headaches of relying on remote property management.

We firmly believe that the qualities of property values and management are the key factors determining users’ rental income.

Ark7 always holds 1 to 10 percent of each property’s equity to act as a shareholder of the property and maximize our users’ profits. In the case that rental income decreases, then Ark7’s income as a management company will also decrease; if the rent increases, our income will also increase.

This relationship between Ark7 and the rental income status ensures that we can truly make the most cost-effective housing selections from our users’ perspectives, tenant management, and property management decisions. 

Should the vast majority of users determine that Ark7 is not performing the property management responsibilities well, they can also execute legal procedures in accordance with the Operating Agreement. For example, users could change the asset manager, take back house management rights, or hire another asset management company to manage the properties they have invested in.

 

   Berkeley Property Promotion

As part of the Berkeley Property Promotion, if the annualized rental income does not reach 6% within two years, Ark7 will compensate our users for the remaining percentage.

   

 

What are Ark7’s methods for share liquidity?

We have designed the following three methods for share liquidity:

 

  • Real estate equity trading platform

We expect to launch a trading platform that allows users to freely purchase and sell property equity within the next 1 to 2 years. On the Ark7 trading platform, users will be able to freely sell their equity at a chosen price to enjoy house appreciation benefits.

We will also invite early users to be part of the first group to test our trading platform, provide us with valuable feedback, and participate in the processes of product optimization and improvement.

 

  • Property shareholders’ meeting

If necessary, the general meeting of shareholders will serve as an alternative process for the functions of the secondary trading platform.

At regular intervals, we will evaluate the market value of each property, hold meetings with the investors of the property, consider the vote and feedback of each shareholder, decide whether to sell the house, and distribute the proceeds according to the market price and shares possessed by shareholders.

 

  • Ark7 company redemption policy

Currently, while we are still at the early user recruitment stage and have not yet launched the secondary trading platform’s function, the company’s redemption policy will give users opportunities to withdraw from an equity transaction.

 

Making real estate investment accessible to everyone

Ark7’s vision is to make real estate investment accessible to everyone through our platform so people interested in real estate investment don’t have to worry about the high entry barriers of investment thresholds and cumbersome processes. Investors can purchase our property shares at a low cost, while we manage the properties.  

We have made diligent efforts to ensure that Ark7 users, as valued co-investors in our properties, will be able to retain the value and ownership of their property shares while minimizing risk, maximizing returns, and making the most of their property shares.

All of our operating procedures are strictly subject to the supervision of legal institutions and users, which protect the rights and interests of all Ark7 users. We design all of our processes with Ark7 users in mind so you can benefit from your investments. 

We are open to user suggestions and if you have any questions, you can reach us on our website or by joining our Ark7 Community Slack channel.

Join us as co-investor today by creating an account and purchasing low-cost property shares on the Ark7 platform.

Join the Ark7 Slack Channel

Ark7 has a Slack channel, which we use to connect with current and prospective investors. Join today to get in touch with the Ark7 team!

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