How Safe is Ark7?

At Ark7, safety is our #1 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 that users can focus on earning passive income from their investments.

But how safe is it to invest with Ark7? What are the policies and procedures in place to make sure that these investments are secure? 

We’ll 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 liquidity? 

 

How does the Ark7 investment process work?

To put it simply, Ark7 is a platform for trading shares, much like stock trading platforms. Ark7 investors can purchase shares in any property of their choice and the Ark7 platform does not directly manage users’ investments. 

How does this work? Ark7 buys a property and then splits the property rights of the house into affordable shares for interested users to purchase.

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 process is as follows:

 

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

Before purchasing the property in question, Ark7 creates 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 on our website.

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

 

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

We split the property rights into shares (a process known as securitization) and include all relevant information in the property listing, which includes the total issuance, price per share, rental return, and value-added return. The shares can then be purchased on Ark7.

 

Property Offering Webpage
    One of Ark7’s property offering webpages

What does it mean to hold property shares with Ark7? Investors who buy shares of their chosen property become shareholders of the LLC Company that owns the property. Investors have partial ownership based on the number of shares they hold.

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

You have total control over your investment by choosing exactly which properties to purchase shares in, thereby creating a custom real estate portfolio. You can purchase any number of shares you want, similar to buying stocks.

 

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

The big difference between investing on Ark7 and the traditional method of investing is that users don’t need to pay a lofty down payment or apply for a 30-year mortgage. Instead, users buy shares of the property’s equity and enjoy monthly rental income and appreciation from their investment, with no minimums and no fees.

Because Ark7 makes real estate investment accessible for everyone, the company prioritizes protecting users’ rights and interests. Since 2018, Ark7 has worked with lawyers to ensure that every step of Ark7’s operation is in compliance with the requirements of the U.S. Securities and Exchange Commission (SEC) and other relevant governmental agencies. In addition, the Operating Agreement of the LLC registered company also stipulates the amount of LLC property equity.

Certificate of SEC Registration
Certificate of SEC Registration
Provisions of the Operation Agreement
 Provisions of the Operation Agreement

 

Does Ark7 hedge the risk of house price fluctuations?

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 of all, the overall volatility risk of real estate investment is lower than that of the stock market. Secondly, you can invest in multiple properties in different locations and mitigate risk. You don’t have to worry about risking your money by concentrating your funds into a single property. Instead, you can focus on diversifying your portfolio and earning passive income from your investments.

 

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

 

   Berkeley Promo

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, users who want to exit within their one- to two-year holding period can sell the shares back to Ark7 for 100% of their initial value.

 Ark7’s Berkeley M2 Property

 

How does Ark7 improve the returns of rental income?

We firmly believe that superior management is key to increasing rental income. We operate both the real estate investment platform and the management of our properties. When users invest in a property, they’re also choosing Ark7 as their property manager, thus avoiding the typical risks associated with remote property management.

We hold 1-10% of each property’s equity to act as a shareholder of the property and maximize users’ profits. If rental income decreases, then Ark7’s income as a management company will also decrease (and vice versa).

This relationship between Ark7 and the rental income incentivizes our team to make the most cost-effective housing selections from our users’ perspectives, tenant management, and property management decisions.

If the majority of shareholders determine that Ark7 is not properly managing the property in question, they can execute certain legal procedures in accordance with the Operating Agreement. For instance, users can elect to change the asset manager, take back management rights, or hire another asset management company to manage the properties they’ve invested in.

 

What are Ark7’s methods for liquidity?

We have designed the following three methods for liquidity of shares:

 

1. Real estate equity trading platform

We expect to launch a trading platform within the next 1-2 years that allows users to freely buy and sell property shares. We invite early users to be part of the first group to test our trading platform and to provide their feedback!

2. Property shareholders’ meeting

If needed, a general meeting of shareholders will serve as an alternative process for the function of the secondary trading platform. We’ll evaluate the market value of each property regularly, hold meetings with the investors of the property and consider feedback from each shareholder. If we decide to liquidate, we’ll sell the property at market rate and distribute the proceeds to shareholders.

3. Ark7 company redemption policy

While we’re still at an early stage and haven’t yet launched the secondary trading platform, our redemption policy will give users the opportunity to withdraw from an equity transaction.

Making real estate investment accessible to everyone

Our vision is to make real estate investment accessible to everyone, and to eliminate the high entry barriers and cumbersome processes to investment. We’ve made diligent efforts to ensure that users are treated as co-investors. Plus, all operating procedures are subject to the supervision of legal institutions and users, which protect the rights and interests of all investors.

We love hearing suggestions or feedback. Reach us at support@ark7.com.

Join us today by creating an account and purchasing shares on Ark7 with no minimums, no down payment, no mortgage—nothing but real estate.

Scroll to Top