Ark7 vs 1031 Crowdfunding: Which Real Estate Investment Platform Fits Your Goals?

When evaluating real estate investment options, it’s crucial to understand that not all platforms serve the same investor needs. Ark7 offers a revolutionary approach to fractional real estate investing, allowing investors to buy shares in curated rental properties for as little as $20 through our rental property shares platform. In contrast, 1031 Crowdfunding specializes in tax-deferred exchanges for existing property owners. This comprehensive guide examines both platforms to help you determine which aligns with your investment goals, with particular emphasis on why Ark7 emerges as the superior choice for most investors seeking accessible, passive real estate income.

Key Takeaways

• Ark7 serves as the premier solution for new investors with its $20 minimum investment, while 1031 Crowdfunding requires $25,000-$100,000 minimums for existing property owners
• Ark7 delivers monthly passive income distributions, whereas 1031 Crowdfunding typically offers quarterly or annual payouts
• Ark7 charges zero annual management fees compared to 1031 Crowdfunding’s embedded fees of 5-9%+ upfront
• Ark7 provides access to a secondary trading market after a 12-month hold period, offering greater liquidity than 1031 Crowdfunding’s typical 7-10 year lockups
• Both platforms serve different investor needs: Ark7 for building passive income from scratch, 1031 Crowdfunding for tax deferral when selling existing property

Understanding the Fundamental Difference Between These Platforms

The most critical distinction between Ark7 and 1031 Crowdfunding lies in their core purpose and target investor. Ark7 was created to democratize real estate investing, allowing anyone to build wealth through rental properties with minimal capital. In contrast, 1031 Crowdfunding exists specifically to facilitate tax-deferred exchanges for investors who already own real estate and are selling properties with significant capital gains.

Ark7’s Mission: “We believe everyone should have the freedom to build wealth through real estate” through fractional ownership of residential rental properties with minimum investments as low as $20.

1031 Crowdfunding’s Purpose: To help existing property owners comply with IRS Section 1031 regulations that allow deferral of capital gains taxes when selling investment property and reinvesting in “like-kind” property.

This fundamental difference means these platforms are often complementary rather than competitive. An investor might use Ark7 to build passive income while simultaneously using 1031 Crowdfunding if they later sell a physical property and need tax deferral.

Ark7’s Fractional Real Estate Investing: A Modern Approach to Wealth Building

Ark7 revolutionizes real estate investment by replacing traditional barriers with accessible fractional ownership. Instead of requiring hundreds of thousands of dollars to purchase entire properties, Ark7 allows investors to buy shares in professionally managed rental homes for as little as $20 per share.

Key Ark7 Advantages

• Industry-lowest minimum investment – Start with just $20 compared to $25,000+ elsewhere
• Monthly cash distributions – Receive passive income every month rather than quarterly or annually
• Zero annual management fees – No AUM fees eating into your returns year after year
• Non-accredited investor access – Open to all U.S. investors 18+ without income/net worth requirements
• Secondary market liquidity – Sell shares after 12-month hold period with $0 trading fees
• Simple tax reporting – Receive 1099 forms instead of complex K-1 partnership returns

How Ark7 Works

Ark7’s process eliminates the traditional complexity of real estate investing. Instead of navigating property listings, securing financing, and managing tenants, investors simply:

1. Browse curated rental properties on the Ark7 mobile app or website
2. Purchase shares starting at $20 per share
3. Receive monthly cash distributions from rental income
4. Track performance and manage investments through the intuitive platform
5. Sell shares on the secondary market after the 12-month minimum holding period if desired

As of March 2025, Ark7 reported paying over $3.5 million in cash dividends to 230,000+ investors, demonstrating its effectiveness in delivering consistent passive income.

Performance Validation

Ark7’s track record shows consistent performance across its portfolio of professionally managed rental properties. The platform maintains strong fundamentals with properties in high-growth Sunbelt markets like Atlanta, Dallas, and Tampa, which have demonstrated strong population growth, job creation, and rental demand.

1031 Crowdfunding: Tax Deferral for Existing Property Owners

1031 Crowdfunding specializes in facilitating IRS Section 1031 exchanges, which allow real estate investors to defer capital gains taxes when selling investment property and reinvesting the proceeds in “like-kind” property. This platform serves a specific niche: existing property owners with significant capital gains who need to comply with complex 1031 exchange rules.

Key 1031 Crowdfunding Characteristics

• High minimum investments – $25,000-$100,000 for Delaware Statutory Trusts (DSTs)
• Accredited investor requirement – DSTs only available to investors meeting income/net worth thresholds
• Commercial real estate focus – Multifamily, medical office, industrial, and senior housing properties
• Complex tax reporting – K-1 partnership forms instead of simple 1099s
• Long-term hold periods – Typical 7-10 year investment horizons
• High upfront fees – 5-9%+ acquisition fees built into deal structure

How 1031 Crowdfunding Works

1031 Crowdfunding’s process is designed specifically for tax-deferred exchanges:

1. Investor sells existing property and works with a Qualified Intermediary
2. Within 45 days, identifies replacement properties from 1031 Crowdfunding’s offerings
3. Within 180 days, completes the exchange by investing in Delaware Statutory Trusts (DSTs)
4. Receives quarterly or annual distributions from commercial properties
5. Holds investment for 7-10 years before potential exit

The platform’s team has raised over $2.1 billion in equity for real estate investments and completed 1,800+ exchange transactions since its 2014 founding, demonstrating its effectiveness for its specific use case.

Accessibility and Entry Barriers: Democratizing Real Estate Investment

The most striking difference between these platforms is accessibility. Ark7 was specifically designed to remove traditional barriers to real estate investing, while 1031 Crowdfunding serves a specialized, high-net-worth investor segment.

Minimum Investment Requirements

• Ark7: $20 per share – accessible to virtually any investor
• 1031 Crowdfunding: $25,000-$100,000+ for DSTs, $5,000 for REITs

This 1,250x difference in minimum investment means Ark7 opens real estate investing to millions of Americans who would otherwise be excluded. The $20 minimum allows investors to start building a diversified portfolio with minimal capital, spreading risk across multiple properties.

Investor Accreditation Requirements

• Ark7: No accreditation required – open to all U.S. investors 18+
• 1031 Crowdfunding: Accredited investor status required for DSTs (core product)

This distinction is crucial because accredited investor requirements exclude over 80% of U.S. households. Ark7’s SEC Regulation A+ qualification allows non-accredited investors to participate in fractional real estate ownership, truly democratizing access to this asset class.

Property Management Burden

• Ark7: Full-service property management included – no landlord responsibilities
• 1031 Crowdfunding: Management included via DST structure, but investors have no control

Both platforms offer passive investment experiences, but Ark7 provides greater transparency and operational control. Ark7 holds a minority ownership stake (1%-20%) in each property, aligning interests with investors by sharing both profits and losses.

Passive Income Generation: Monthly Cash Flow vs. Tax Deferral

The income generation approach differs significantly between these platforms, reflecting their different investor targets.

Ark7’s Monthly Distribution Model

Ark7 pioneered monthly cash distributions in the fractional real estate space, providing investors with consistent, predictable passive income. This approach offers several advantages:

• Regular cash flow – Monthly distributions support budgeting and financial planning
• Faster compounding – Monthly reinvestment opportunities accelerate wealth building
• Transparent reporting – Clear monthly statements show income and expenses
• Residential rental focus – Single-family homes and townhomes in growing markets

The platform’s residential rental properties deliver competitive yields, with monthly income distributed consistently to investors.

1031 Crowdfunding’s Tax-Deferral Focus

1031 Crowdfunding prioritizes tax deferral over immediate cash flow:

• Deferred taxation – Primary benefit is avoiding capital gains taxes on property sales
• Quarterly/annual distributions – Less frequent income payments
• Commercial property income – Multifamily, medical office, and industrial properties
• Complex tax reporting – K-1 forms require professional tax preparation

For investors selling property with significant capital gains, 1031 Crowdfunding’s tax deferral can save tens of thousands in taxes. However, this benefit is only relevant to existing property owners, not new investors seeking to build passive income from scratch.

Diversification and Risk Management

Diversification strategies differ significantly between these platforms due to their minimum investment requirements and property types.

Ark7’s Diversification Advantages

With $20 minimum investments, Ark7 enables unprecedented diversification for small investors:

• Geographic diversification – Properties in 10+ markets across the U.S.
• Property type diversification – Single-family homes and townhomes across different price points
• Low-cost diversification – $1,000 can be spread across 50 different properties
• Residential market stability – Single-family rentals typically show lower volatility than commercial properties

Ark7’s portfolio includes properties in Sunbelt markets like Atlanta, Dallas, and Tampa, which have demonstrated strong population growth, job creation, and rental demand.

1031 Crowdfunding’s Concentration Risk

Higher minimum investments create natural concentration risk:

• Limited diversification – $25,000 minimum restricts portfolio breadth
• Commercial property exposure – Multifamily and other commercial assets face different risk factors
• Market-specific risk – Individual commercial properties may be more volatile
• Sector concentration – Medical office, industrial, and senior housing each face unique challenges

While 1031 Crowdfunding offers access to institutional-grade assets worth $50M-$100M+, these investments require significant capital and carry different risk profiles than residential rentals.

Exit Strategies and Liquidity Options

Liquidity considerations represent another major difference between these platforms.

Ark7’s Secondary Market Advantage

Ark7 provides greater liquidity through its PPEX ATS secondary trading platform:

• 12-month minimum hold – Sell shares after one year of ownership
• $0 trading fees – No costs to buy or sell shares on the secondary market
• SEC-registered platform – Regulated alternative trading system
• Transparent pricing – Real-time market data for informed decisions

While there’s no guarantee of an active market, the secondary trading option provides flexibility not available with most real estate investments.

1031 Crowdfunding’s Long-Term Lockup

1031 Crowdfunding investments typically involve longer commitment periods:

• 7-10 year hold periods – Standard for DST investments
• Limited liquidity options – No disclosed secondary market
• Exit tied to property sale – Returns realized when underlying asset is sold
• Tax implications – Exiting before completing exchange requirements triggers capital gains taxes

This long-term approach makes sense for tax-deferred exchanges but limits flexibility for investors who may need access to their capital.

IRA Investing in Real Estate: Tax-Advantaged Growth

Both platforms support IRA investing, but with different approaches and benefits.

Ark7’s IRA Solution

Ark7 enables investors to purchase property shares through Traditional and Roth IRAs:

• Custodian integration – Partnership with Inspira Financial Company
• Annual fee structure – $100 per property (capped at $400 annually, waived for balances >$100,000)
• No platform fees – Ark7 charges $0 to open an IRA account
• Same investment minimums – $20 per share applies to IRA investments
• Simple tax reporting – 1099 forms for easier IRA accounting

This approach allows investors to build real estate wealth within tax-advantaged retirement accounts while maintaining the same accessibility and low minimums as regular accounts.

1031 Crowdfunding’s IRA Compatibility

1031 Crowdfunding works with self-directed IRAs but with limitations:

• Higher minimums apply – $25,000+ minimums still required for IRA accounts
• Accredited investor requirement – Maintains accreditation requirements for IRA investments
• Complex tax reporting – K-1 forms complicate IRA accounting
• Custodian coordination – Requires coordination with self-directed IRA custodian

While functional, this approach maintains the high barriers to entry that limit accessibility for most investors.

Total Cost of Ownership Comparison

When evaluating real estate investments, total costs significantly impact long-term returns.

Ark7’s Transparent Fee Structure

• Acquisition fee: 3% one-time sourcing fee
• Annual management fee: $0 AUM fees
• Property management: 8-15% of rental income (standard industry rate)
• Secondary market fees: $0 trading fees
• IRA custodian fees: $100/property annually (capped at $400, waived >$100K balance)

For a $50,000 investment over 5 years, total disclosed fees would be approximately $2,500 (1% average annual fee rate).

1031 Crowdfunding’s Embedded Costs

• Acquisition fee: 5-9%+ upfront fees (built into deal structure)
• Annual management fee: Embedded in DST structure (not clearly disclosed)
• Property management: Included in DST fees (embedded)
• Qualified Intermediary: ~$1,000 for 1031 exchange services
• IRA custodian fees: Not clearly disclosed

For the same $50,000 investment, disclosed fees would be at least $4,500+, with additional embedded costs not clearly quantified. This represents a 44% higher disclosed cost compared to Ark7.

Specific Use Cases Where Each Platform Excels

Choose Ark7 When:

• You’re new to real estate investing and want to start with minimal capital
• You seek monthly passive income rather than tax deferral
• You don’t meet accredited investor requirements
• You want simple 1099 tax reporting instead of complex K-1 forms
• You value the flexibility of a secondary market after 12 months
• You prefer residential rental properties over commercial real estate
• You want to build a diversified portfolio with limited capital

Consider 1031 Crowdfunding When:

• You’re selling existing real estate with significant capital gains
• You need to comply with IRS Section 1031 exchange requirements
• You meet accredited investor requirements and have $25,000+ to invest
• You want exposure to commercial real estate (multifamily, medical office, industrial)
• You’re comfortable with 7-10 year investment horizons
• You have professional tax guidance for complex K-1 reporting
• You’re working with a Qualified Intermediary on a 1031 exchange

Making the Right Choice for Your Investment Goals

Selecting between Ark7 and 1031 Crowdfunding depends entirely on your current situation and investment objectives. Ark7 emerges as the clear winner for most investors seeking to build passive real estate income from scratch, while 1031 Crowdfunding serves a specific niche of existing property owners needing tax deferral.

For new investors, Ark7’s $20 minimum, monthly distributions, zero annual fees, and secondary market liquidity make it the superior choice. As of March 2025, Ark7 reported paying over $3.5 million in dividends to 230,000+ investors, proving that accessible real estate investing is not just possible but profitable.

The future of real estate investing is democratized fractional ownership, and Ark7 leads the charge in making this asset class accessible to everyone. Start building your real estate portfolio today with Ark7’s fractional investment platform and experience the difference that modern, accessible real estate investing can make in your financial future.

Frequently Asked Questions

What is the primary difference between investing with Ark7 and performing a 1031 Exchange?

The fundamental difference is that Ark7 allows new investors to build passive income from rental properties with as little as $20, while 1031 Exchanges are specifically for existing property owners who need to defer capital gains taxes when selling real estate. Ark7 is designed for wealth building from scratch, whereas 1031 Crowdfunding facilitates tax-deferred reinvestment of existing property sale proceeds. Both platforms serve different investor needs and can even be used complementarily. Ark7 focuses on accessibility and passive income, while 1031 Crowdfunding emphasizes tax efficiency for current property owners.

Can beginners utilize Ark7’s platform or participate in a 1031 Exchange effectively?

Beginners can easily start with Ark7’s platform, which requires no prior real estate experience and has a $20 minimum investment. However, 1031 Exchanges are generally not suitable for beginners due to complex IRS regulations, $25,000+ minimum investments, accredited investor requirements, and the need for existing property ownership. Ark7’s mobile app makes it particularly accessible for new investors to manage their investments on-the-go. The platform’s simplified approach removes traditional barriers that typically exclude most beginners from real estate investing.

What are the typical risks associated with each investment method?

Ark7 investments carry risks including illiquidity (despite the secondary market), lack of diversification if investing in few properties, and potential complete loss of capital. 1031 Exchange investments through DSTs face similar risks plus concentration risk due to higher minimums, longer lockup periods (7-10 years), and complexity of commercial real estate markets. Both investment types are subject to property market fluctuations, vacancy risks, and property-specific challenges. Investors should carefully review offering materials and consult with financial advisors before committing capital to either platform.

How does the liquidity of Ark7 shares compare to that of directly owned 1031 Exchange properties?

Ark7 offers greater liquidity through its PPEX ATS secondary trading platform, where shares can be sold after a 12-month minimum holding period with $0 trading fees. In contrast, 1031 Exchange investments through DSTs typically have 7-10 year hold periods with no disclosed secondary market, making them significantly less liquid. However, Ark7 investors should still be prepared to hold shares indefinitely as there’s no guarantee of an active secondary market. The secondary market provides optionality but not guaranteed liquidity for Ark7 investors.

Are there specific tax benefits unique to Ark7’s fractional ownership model compared to a 1031 Exchange?

Ark7 doesn’t offer the capital gains tax deferral that 1031 Exchanges provide, as that benefit is only available when selling existing property. However, Ark7 offers simpler tax reporting through 1099 forms instead of complex K-1 partnership returns, and supports IRA investing for tax-advantaged growth within retirement accounts. The platform’s residential rental focus may also provide standard real estate tax benefits like depreciation, though investors should consult tax professionals for specific advice. The choice between platforms depends on whether you need immediate tax deferral or simplified ongoing tax reporting.