Ark7 vs Roots

When comparing fractional real estate investment platforms, the choice between individual property ownership and pooled fund models significantly impacts your investment experience. While Roots Investment Community offers a simplified REIT approach focused on workforce housing with higher historical returns, Ark7 provides direct ownership of specific rental properties with greater control, flexibility, and accessibility. Understanding these fundamental differences—between hands-on property selection and hands-off fund investing—helps investors select the approach that matches their investment goals, risk tolerance, and desired level of involvement.

Key Takeaways

• Ark7 offers industry-leading accessibility with a $20 minimum investment, compared to Roots’ $100 minimum, enabling greater diversification across multiple properties
• Monthly cash distributions from Ark7 provide 3x more frequent income than Roots’ quarterly distributions, supporting consistent passive income needs
• Individual property selection with Ark7 delivers complete control over investment choices, while Roots operates as a pooled REIT with no property selection capability
• Ark7’s continuous secondary market enables trading anytime after 12 months, versus Roots’ quarterly redemption windows with quarterly liquidity with holding requirements
• Geographic diversification across 10+ U.S. markets with Ark7 reduces regional risk compared to Roots’ heavy concentration in Atlanta and Augusta, Georgia

Understanding Each Platform’s Core Positioning

Roots Investment Community positions itself as a specialized REIT focused on workforce housing with a unique social impact mission. Founded in 2021, Roots has built its reputation on the “Live In It Like You Own It®” model that provides renter rebates and equity incentives, creating aligned interests between investors and tenants. The platform operates as a pooled fund with $91.9M in net asset value and 388 properties as of Q3 2024, delivering strong historical returns of ~12% trailing 12‑month returns; average annual returns vary by reporting period.

Ark7 takes a fundamentally different approach. Founded in 2018 with a public platform launched in 2022, Ark7 specializes in fractional ownership of individual rental properties with complete investor control. Rather than pooling funds into a blind REIT, Ark7 allows investors to select specific properties across diverse markets, building personalized real estate portfolios with as little as $20 per share. The platform has funded over $23MM in property value for 220,000+ active investors, distributing more than $3.5MM in cash dividends since inception.

The fundamental difference lies in ownership structure: Roots offers fund-level exposure with simplified diversification, while Ark7 provides direct property ownership with complete selection control.

Investment Structure and Accessibility

Roots’ pooled REIT model includes:

• Single fund investment with automatic diversification across 388 properties
• $100 minimum investment requirement
• No ability to select specific properties or markets
• Focus on workforce housing in Atlanta and Augusta, Georgia (with Oklahoma expansion planned)
• Quarterly distributions based on fund performance
• 8% early withdrawal penalty if redeemed within the first year

This simplified approach works for investors seeking hands-off exposure to the workforce housing sector without the need for property-level research.

Ark7’s individual property model focuses on direct ownership:

• $20 minimum investment per share, enabling micro-investing and maximum diversification
• Complete control to select specific properties across 10+ U.S. markets
• Diverse property types including single-family homes, townhomes, and multifamily units
• Monthly cash distributions based on individual property performance
• Continuous secondary market for share trading after 12-month holding period
• Many properties purchased debt-free, reducing leverage risk

The accessibility advantage becomes significant for new investors. With Ark7, a $100 investment can be spread across five different properties in different markets, while Roots requires the same amount for a single fund position with no selection control.

Pricing Models and Fee Structures

The fee structures reveal each platform’s approach to value delivery and investor accessibility.

Roots’ pricing structure:

• $100 minimum investment per transaction
• $5 transaction fee, $3 recurring investment fee (waived with Roots+)
• No disclosed acquisition or management fees (embedded in fund structure)
• 8% early withdrawal penalty if redeemed within first year
• Quarterly redemption windows only

Ark7’s pricing structure:

• $20 minimum investment per share
• 3% one-time sourcing/acquisition fee
• 8-15% property management fee (based on rental income)
• Zero AUM or ongoing management fees on invested capital
• No early withdrawal penalties after 12-month holding period
• $0 trading fees on secondary market transactions

When calculating total cost of ownership, Ark7’s zero AUM fees create superior long-term value. While Roots offers competitive total costs, Ark7’s transparent fee structure and absence of early penalties provide greater flexibility for investors who may need to access their capital after the initial holding period.

Liquidity and Secondary Market Options

Liquidity represents a critical differentiator between these platforms, especially for investors who may need to access their capital.

Roots’ liquidity limitations:

• Quarterly redemption windows only
• 8% early withdrawal penalty if redeemed within first year
• No continuous trading capability
• Fund-level redemptions only (no property-specific liquidity)

Ark7’s liquidity advantages:

• Continuous secondary market operating since 2022
• Trade shares anytime after 12-month holding period
• $0 trading fees on the PPEX ATS platform
• Property-specific liquidity (can sell shares in individual properties)
• SEC-registered alternative trading system through North Capital

The liquidity difference proves crucial for investors seeking flexibility. While Roots locks capital into quarterly windows with significant early penalties, Ark7 provides an established marketplace where investors can respond to changing financial needs or market opportunities. This continuous trading capability, combined with the absence of early withdrawal penalties, makes Ark7 significantly more flexible for investors who value capital mobility.

Geographic Diversification and Market Exposure

Geographic concentration creates different risk profiles for each platform.

Roots’ geographic focus:

• Heavy concentration in Atlanta and Augusta, Georgia
• Limited market diversification (388 properties in primarily two cities)
• Workforce housing specialization in specific Southeast markets
• Recent expansion plans into Oklahoma

Ark7’s geographic diversification:

• 10+ U.S. markets across multiple states
• Properties in Sunbelt regions including Atlanta, Dallas, and Tampa
• Diverse market exposure reducing regional economic risk
• Strategic property selection based on local market fundamentals

The diversification advantage matters significantly for risk management. While Roots’ concentration in Atlanta and Augusta creates efficiency in property management and potentially higher returns through market specialization, it also exposes investors to regional economic downturns or regulatory changes. Ark7’s multi-market approach provides natural hedging against local market volatility, allowing investors to build truly diversified real estate portfolios across different economic regions and property types.

Performance Metrics and Returns

Both platforms deliver attractive returns, but through different mechanisms and risk profiles.

Roots’ performance metrics:

• 12.04% trailing 12-month return (October 2023-October 2024)
• 17.18% average annual return since inception (July 2021)
• 97% portfolio occupancy rate (Q3 2024)
• $1.36M+ in renter savings through “Live In It Like You Own It®” program
• Fund-level performance with automatic diversification

Ark7’s performance metrics:

• 3.96% annualized dividend return 
• Property-specific returns ranging from 4.31% to 4.67%
• 94.81% portfolio occupancy rate 
• $75,538.20 in monthly dividends paid
• Individual property performance with transparent metrics

The performance difference reflects structural choices. Roots’ higher returns benefit from fund-level diversification, workforce housing specialization, and the aligned incentives of their social impact model. Ark7’s property-specific returns allow investors to target high-yield assets (like the 7.65% Urbana-S11 property) while managing risk through careful selection and diversification across multiple properties and markets.

Technology Platform and User Experience

The technology experience significantly impacts investor satisfaction and engagement.

Roots’ platform features:

• Simplified fund investment with minimal decision complexity
• Fund-level performance tracking and reporting
• Quarterly distribution processing
• Limited property-level detail (fund model)

Ark7’s technology advantages:

• Full-featured mobile app for iOS and Android with complete trading capability
• Real-time property performance data including occupancy, rental income, and market pricing
• Individual property dashboards with detailed financial metrics
• IRA integration through Inspira Financial custodian
• Secondary market trading directly integrated into the platform

Ark7’s mobile-first approach and property-level transparency provide superior investor engagement. The platform’s real-time data and detailed analytics empower informed decision-making without overwhelming complexity, striking the right balance between control and usability.

Retirement Account Integration

For investors seeking to allocate retirement funds to real estate, integration capabilities matter significantly.

Ark7’s retirement options:

• IRA investment support through Inspira Financial Company custodian
• Both Traditional and Roth IRA accounts supported
• $0 Ark7 fee to open IRA
• Annual custodian fee of $100 per property (capped at $400 annually, waived for accounts >$100,000)
• Full property selection control within IRA accounts

Roots’ retirement integration:

• Not clearly disclosed in available documentation
• Limited information on IRA or retirement account support

Ark7’s clear retirement account pathway provides significant advantages for investors seeking to diversify their retirement portfolios with tangible real estate assets. The ability to maintain property selection control within IRA accounts, combined with transparent fee structures, makes Ark7 the clear choice for retirement-focused real estate investors.

Why Ark7 Delivers Superior Value for Most Real Estate Investors

While Roots excels in specialized workforce housing with strong historical returns, Ark7 provides superior flexibility, control, and accessibility for most real estate investors.

Key advantages of Ark7’s approach:

• Maximum accessibility: $20 minimum investment enables entry with minimal capital and maximum diversification across multiple properties, compared to Roots’ $100 minimum
• Superior liquidity: Continuous secondary market with no early penalties after 12 months versus quarterly windows and 8% penalties with Roots
• Complete control: Individual property selection across 10+ markets versus blind fund investment with no selection capability
• Monthly income: 3x more frequent cash distributions supporting consistent passive income needs
• Geographic diversification: Multi-market exposure reducing regional risk versus heavy concentration in Atlanta/Augusta
• Transparent fees: Zero AUM fees and clear property-level costs versus embedded fund fees

For investors seeking to build personalized real estate portfolios with maximum flexibility and control, Ark7 represents the superior choice. The platform’s combination of accessibility, liquidity, transparency, and property-level control creates compelling value that pooled fund models cannot match.

Frequently Asked Questions

What is fractional real estate investing?

Fractional real estate investing allows multiple investors to purchase shares of individual rental properties, making real estate investment accessible with lower capital requirements. With Ark7, investors can buy shares starting at just $20 per share in specific, cash-flowing rental properties. Unlike REITs that pool funds across many properties, Ark7 provides direct ownership in individual assets with complete transparency and control over investment selection.

How does Ark7 generate passive income for investors?

Ark7 generates passive income through monthly rental distributions from professionally managed rental properties. When tenants pay rent, Ark7 collects the income, deducts property management fees (8-15% of rental income), and distributes the remaining cash to shareholders monthly. This provides consistent passive income without the landlord responsibilities of property maintenance, tenant management, or operational oversight. Investors receive distributions automatically to their Ark7 account each month.

Is investing through Ark7 or Roots risky?

Both platforms involve substantial risks as with any real estate investment. Key risks include illiquidity (difficulty selling shares quickly), lack of diversification (especially with individual property investments), and potential complete loss of capital. Roots’ pooled fund model provides automatic diversification but concentrates in specific geographic markets, while Ark7 allows investors to build diversified portfolios across multiple properties and markets to manage risk. Investors should carefully review offering materials and consult financial advisors before investing.

Can I invest my IRA funds in real estate with Ark7?

Yes, Ark7 supports IRA investments through a partnership with Inspira Financial Company as the custodian. Investors can open both Traditional and Roth IRA accounts to invest in real estate shares. The Ark7 platform charges $0 to open an IRA account, with Inspira charging an annual fee of $100 per property (capped at $400 annually, waived for accounts with average balances over $100,000). This allows investors to use retirement funds to build real estate portfolios with potential tax advantages while maintaining full property selection control.

How do I sell my shares on the Ark7 platform?

After a 12-month holding period, Ark7 investors can sell shares through the PPEX ATS (Public Private Execution Network Alternative Trading System), which is an SEC-registered secondary trading platform operated by North Capital. The process involves listing shares for sale through the Ark7 mobile app or website, with transactions executed when buyers are found at agreed-upon prices. Ark7 charges $0 trading fees for secondary market transactions. However, liquidity may vary by property and market conditions, so there is no guarantee that an active market will develop for any specific shares.

What kind of properties does Ark7 offer?

Ark7 offers fractional shares in diverse property types across 10+ U.S. markets, primarily focusing on Sunbelt regions. Available properties include single-family homes (like the 4-bedroom Tampa-S10 property), townhomes (such as the Atlanta-T3 unit), and multifamily buildings. Properties are typically newer constructions (many built 2018-2020) in markets with strong rental demand, population growth, and favorable economic conditions. Each property listing includes detailed information about location, specifications, market data, and expected returns to support informed investment decisions.