Real estate has long been a powerful investment strategy that enables buyers to mitigate traditional peaks and valleys in the traditional stock market. Strategies differ, but with benefits such as numerous tax advantages, long-term appreciation in value, and steady cash flow, real estate is an excellent addition to many portfolios.
Fractional investing eliminates the significant hurdle—the need to invest a substantial amount of money in purchasing, repairing, and modernizing real estate and handling day-to-day tenant issues. Let’s break down why this matters during an economically uncertain time.
What Is Fractional Real Estate Investing?
With as little as $20 per share, you could own a fraction of real estate. With this form of ownership, you own a fraction of the property, much like you would own a fraction of a business if you purchased stocks.
Fractional home investing enables you to pool your money with other interested buyers in high-demand areas. You then receive monthly distributions straight to your account. You can sell or hold your investment for appreciation. Most often, this means long-term investing, but you have the full flexibility to sell your shares after a minimum holding period.
What makes Ark7 different is that it has no hidden fees. Ark7 maintains a small percentage of your investment to handle administrative costs and property sourcing, but you know exactly what those costs are at the time of your investment. This fully legal and lucrative opportunity provides access to 10 properties (currently, although we’re always expanding!)
Why Today’s Economic Conditions Warrant Diversification in Real Estate
To determine what type of investment strategy is right for you, think about the following factors.
From political tensions to overseas war risks, the stock market remains volatile. With double-digit volatility, as noted by Charles Schwab[1], there is always some level of uncertainty about what could happen next in real estate investing. For many, this means traditional stock market investing isn’t ideal.
What about the economy? Data indicate concerns about an economic slowdown despite economic growth remaining above trend, as noted by Edward Jones[2]. Edward Jones states that wage gains are positive (at around 3.9%), and economic growth is likely to exceed 3% in the second quarter. From their perspective, consumers feel comfortable spending now as long as wages increase at a rate that exceeds inflation. With uncertainty looming in the coming months due to tariffs, you may want to consider investing in stability and long-term growth. That makes real estate attractive.
But is real estate in its traditional form the right move? Zillow[3] shares that the typical home in the market is now valued at $367,969, about a 0.8% increase over the previous year. Freddie Mac[4] reports that a 30-year fixed-rate mortgage will now cost, on average, 6.84%, slightly over the 52-week average of 6.69%.
What Does It All Mean for Fractional Ownership, Then?
As an investor, you must consider your current position in relation to your investment goals. Fractional homeownership can offer benefits in several key ways:
- You don’t want to invest in high interest rates. This is incredibly important for many investors. Taking out a 30-year loan on a $370,000 property means that the total interest will cost you over $501,000, along with a monthly payment of $2,422. If you plan to purchase and then rent, that will take a long time to recover from.
- Flipping is challenging and expensive. If you want to buy real estate to fix and flip, you’ll need to find properties with a much lower value and ensure you can offset the labor and material costs with inflation factored in.
- You don’t want the unpredictable stock market determining your financial future. With fractional ownership, you’ll still benefit from the long-term stability of owning and holding real estate without the hassle of managing that property.
Ark7 does well creating an opportunity where you can be as hands-off as you would like to be. We source the properties in key target markets where demand continues to be high. We handle the entire property management process. You can invest as little or as much as you like, providing you with the flexibility to accumulate value over time. Choose a strategy that works for you—monthly cash payments or long-term investment.
If you’re looking for reliability, now is the time to consider the value that Ark7 brings to the complex market. Download the app today. Find out how it works, why it works, and how it fits into your specific financial objectives.
Source:
[1]Schwab
[2]Edward Jones
[3]Zillow
[4]Freddie Mac
