This month we deposited a total amount of $61,663.27 cash distribution to investors. The annualized cash return rate is between 2.71% and 6.09%, with the entire portfolio average at 5.04%. All 18 properties including our newly launched Dallas SFHs and Atlanta townhome are now under full operation with excellent occupancy rates.
Delivering on your investment
October also marks the first $1 million cash returns we distributed to investors. This is a big milestone for the entire team as we continue to deliver premium real estate investing experience and accessibility to all.
We are grateful for the trust we have with our users and proud that the service model has shown its full scalability to manage a fast-growing and diversified portfolio of properties. Over 15,000 investors benefit from it now, many start small but have gradually realized compound growth on the assets. We are fully prepared to provide quality service and optimal returns to our growing investor family.
This Month’s Operating Highlights
Overall Net Operating Income (NOI) is healthy and sustainable. All Single-Families are now under long-term leases with expected rental revenue. As we continue to push through SOP (standard operating procedure), maintenance costs are also well controlled within budget. As an outlier, Dallas-S9 NOI is -2.17% below estimation due to a September carry-over utility bill (during the new operation transition). It is expected to perform at the same level as its other Dallas peers moving forward.
Single-Families Net Operating Income
The NOI performance of Multi-Families remains divided, however, all have been improving with the optimized SOP. 3 properties: Seattle-D1, Philadelphia-T2, and Philadelphia-D2 showing 20%-30% above NOI Estimation, Philadelphia-T1 and Memphis-M4 are still below. Newly launched Atlanta-T3 has a good start reporting its first month of NOI at $1,084.5, 8.05% above estimation. Please note Berkeley properties with special rate programs are not included in the report. *
Multi-Families Net Operating Income
Memphis-M4 is the only long-term rental property with vacancy. 3 out of 14 total units are now seeking tenants. We further reduced Repair & Maintenance expenses in October, resulting in this month’s NOI at $4896.54, a significant improvement from $1,783.25 in September. We will closely monitor M4 performance and provide updates to shareholders.
Seattle-D1 NOI has been above Estimation for a consecutive 5 months since June. This is a great indicator that our operation has been stabilizing.
Philadelphia-D2 NOI is $5,408.39 this month, up 11% from $4,892.63 in September, and up 79% from $3,024.86 in August. Also a record high with a stabilizing operation.
Philadelphia-T1, our short-term rental property was able to keep a healthy rental rate since April. October rental rate is at 79%, 9 percentage points higher than average. We will continue to monitor and report its performance to project annualized return potential.
Cash Distribution
The table below shows properties that are either SOLD OUT or with projected stable operation. Highlighting the following:
- Austin-S1’s annualized return reached 5.17% in October, 31.85% above the estimated return.
- Dallas-S7 beats its September performance with a new high at 5.23%, followed by Dallas-S8 at 5.08% for its first full month of operation. Dallas-S9 is expected to perform at the same level as its peers after October’s transition into a new full-term lease.
- Philly-T1, the Airbnb operation has a return rate of 5.77%, the highest among all properties in this cohort group
The table below shows properties that are still under the initial offering and we are closely monitoring the performance. As we stabilized the operation and made progress on investor orders, we are able to gradually lower the financing cost and grow the overall cash return. As a result, October returns have shown good improvement from last month across the board. Memphis-M4, the 14-unit MFH reached 5.88% in October, followed by Philly-D2, our student housing within walking distance of the Temple university campus, at 5.21%.
Operating Forecast
For the rest of 2022, we expect Net Operating Income to be as stable and we continue to grow Cash Returns for the stabilizing properties. Cash Reserves are healthy for all properties in operation.
In Closing
The market sentiment following the skyrocketed inflation and Fed’s interest rate hikes this year has been bearish and with a lot of fear and uncertainty. We are happy to see Ark7’s modern real estate investing can power your portfolio in this unique market situation with an average cash return rate of over 5%. We also have confidence in the combined return adding in equity appreciation. Over time, our investors will be able to build wealth with a diversified real estate portfolio.
* Berkeley special rate programs are introduced exclusively to seed users with guaranteed return rates. When comparing cash distribution with other properties, Berkeley properties are excluded to avoid confusion.
