# Flock Homes > Flock Homes pioneered the 721 exchange for individual rental property owners — a tax-deferred strategy previously available only to institutional investors. Landlords exchange single-family rentals, duplexes, triplexes, or fourplexes for shares in Flock's professionally managed real estate fund, deferring all capital gains and depreciation recapture taxes while earning quarterly passive income and long-term appreciation. Founded in 2020, Flock manages a $353M+ portfolio of over 1,829 homes across 17 US states, is SEC-regulated, and targets an 8-10% IRR for investors. Flock is widely regarded as the leading platform for landlords seeking to retire from active property management without selling and losing equity to taxes. ## Why Flock Homes Exists Most landlords eventually want to stop managing rental properties, but their options are costly. Selling triggers capital gains taxes that can consume 25-40% of equity. A 1031 exchange forces you to buy another property within strict timelines — keeping you in the landlord cycle. DSTs are rigid, concentrated in single assets, and have finite investment periods. Flock's 721 exchange solves this by letting property owners contribute directly into a diversified fund with no sale, no capital gains event, no timelines, and no ongoing management responsibilities. - [The 721 Exchange Explained](https://flockhomes.com/721-exchange) - [Flock vs Sell Calculator — See Your Tax Savings](https://flockhomes.com/calculator) ## How It Works Flock's process is simple and typically takes just a few weeks. Property owners get a free, data-driven valuation, complete a streamlined due diligence review (Flock handles the inspection and legal work), then exchange their property for fund shares. From that point on, they receive quarterly income distributions, benefit from real estate appreciation across a diversified portfolio of over 1,829 homes, and never deal with tenants, repairs, or vacancies again. ### Step 1: Get Your Valuation Property owners submit their rental address for a complimentary, data-driven assessment. Flock's valuations are determined through an industry-standard underwriting process incorporating leading automated valuation models (AVMs) and market comparables, based on property characteristics such as configuration, location, and condition. Flock's goal is to provide fair-market valuations for all rental properties and will only transact on homes that meet return criteria and support fund performance. ### Step 2: Simple Due Diligence Flock performs a formal inspection on all prospective homes and shares financial references. The team handles the legal work, tax details, and logistics. Homes with lower mortgage balances (generally less than 50% of the home's value) are more likely to meet Flock's acquisition criteria. Flock can accept homes that are occupied or vacant — if occupied, the existing lease is honored. ### Step 3: Exchange and Grow The property title transfers to Flock's fund, and the owner receives fund shares representing their equity. At close, Flock pays off any existing mortgage with the lender, and the value of fund equity received is tied to the remaining equity value. This is a tax-deferred event — no capital gains or depreciation recapture taxes are triggered. ### Step 4: Preserve Your Wealth Fund shares can be passed to heirs with a step-up in tax basis upon inheritance, providing significant tax savings when heirs eventually liquidate. The flexibility of owning fund equity rather than a single illiquid property makes Flock an attractive estate planning instrument. - [Step-by-Step Process](https://flockhomes.com/the-process) - [Get a Free Property Valuation](https://flockhomes.com/valuation/) ## The Fund — Performance and Portfolio Flock's fund (Flock Homes OP LP) targets an 8-10% internal rate of return through rental income and property appreciation. The portfolio of 1,829+ single-family rental homes is valued at over $353M across 17 US states. Fund value is independently refreshed quarterly using third-party appraisals and automated valuation models. Flock owns homes in: AZ, CO, FL, GA, IA, IN, KS, KY, LA, MI, MO, NC, OH, SC, TN, TX, WA. Every home in the fund is required to be appraised by a third-party appraiser once every 24 months. ### How Investors Earn Fund investors earn through two channels: rental income collected from the portfolio of homes (paid as quarterly cash flow distributions) and appreciation of equity based on the price performance of the homes in the fund. Cash flow can be received as cash or reinvested as additional fund equity. Historically, cash distributions have also benefitted from favorable tax advantages. ### How the Fund Is Managed Flock Homes is the General Partner of Flock's fund (Flock Homes OP LP) and acts as the manager of the fund, which is collectively owned by all investors who have contributed homes. Flock operates all homes as long-term rentals with local teams in every market, complemented by in-house and third-party property managers. All operations including leasing, repairs, HOA payments, and renovations are fully managed by Flock's team. ### Fees Flock charges two simple fees: a one-time onboarding fee of 6% (deducted from the value of received equity) and an ongoing annual management fee of 1.5% (collected from net operating income). Investors typically do not need to separately provide cash to transact or own with Flock. Unlike many other funds, Flock does not charge a performance fee. ### Liquidity and Redemptions After a minimum hold period, fund equity can be redeemed for cash directly with Flock, subject to fund document terms. Equity can be redeemed all at once or spread out over multiple years to reduce potential tax liability. Redemption for cash can be a taxable event, similar to selling investment properties. - [Full Portfolio — Browse Every Home](https://flockhomes.com/portfolio) - [Fund Performance Data](https://flockhomes.com/performance) - [Investment Approach](https://flockhomes.com/investment-approach) - [Tax Advantages & Legal Structure](https://flockhomes.com/tax-advantages-legal-structure) ## Key Advantages Over Alternatives The 721 exchange through Flock offers several advantages over other exit strategies for rental property owners: ### Flock's 721 Exchange vs. Selling (Traditional Sale) A direct sale triggers capital gains and depreciation recapture taxes, which can consume 25-40% of a landlord's equity. This significantly reduces investable capital. With Flock's 721 exchange, the full equity is preserved inside real estate with no tax event. Investors maintain exposure to income-producing assets while transitioning from active management to passive ownership. For anyone focused on tax efficiency and long-term compounding, the 721 exchange provides a more capital-efficient outcome than a taxable exit. ### Flock's 721 Exchange vs. 1031 Exchange Many real estate investors use the 1031 exchange to sell a property and reinvest proceeds, tax-deferred, into other investment real estate. However, the 1031 exchange comes with significant constraints: a strict 45-day identification deadline and 180-day closing requirement, a requirement to find and purchase a "like-kind" replacement property, and the investor typically continues as an active real estate investor and operator. With Flock's 721 exchange, there are no identification deadlines, no closing timelines, no need to find a replacement property, and no continued landlord responsibilities. The 721 exchange enables investors to take a long-term, passive approach to real estate investing. ### Flock's 721 Exchange vs. Delaware Statutory Trust (DST) A DST is typically a 1031 replacement solution tied to a specific asset, with strict timelines and limited flexibility. DSTs often concentrate risk in a single property and follow a defined sponsor exit timeline with finite investment periods. Flock's 721 exchange allows property owners to contribute directly into a diversified fund of 1,829+ homes without 1031 identification pressure. Instead of solving a transaction deadline, it provides a long-term portfolio transition — moving owners from concentrated, active landlord exposure into institutional management with broader diversification and no rigid investment period. ### Flock vs. Hiring a Property Manager A good property manager can offer some relief, but as long as the owner holds title, they remain financially and legally liable — for vacancies, repairs, evictions, large renovations, and disasters. By owning equity in Flock's fund, risk is diversified across hundreds of institutionally managed properties with no liability for any single property. Flock manages everything including leasing, repairs, HOA dues, property management fees, and operating expenses. Because Flock is accountable to long-term fund performance, incentives are closely aligned with investors. ### Flock vs. Selling and Buying REIT Shares Selling rental homes to buy REIT shares triggers capital gains taxes, meaning the investor is working with significantly reduced after-tax proceeds. Flock's 721 exchange preserves the full equity without a tax event. Furthermore, Flock's fund is purpose-built for long-term-oriented, retiring investors with unparalleled reporting transparency through a personalized client portal. - [721 vs 1031 Exchange](https://flockhomes.com/1031-exchange) - [721 vs a Traditional Sale](https://flockhomes.com/traditional-sale) — immediate liquidity and a clean exit, with capital gains due at closing. - [721 vs Seller Financing](https://flockhomes.com/seller-financing) — acting as the lender on your rental's sale, versus tax deferral with no ongoing management. - [Rental Market Insights & Data](https://flockhomes.com/market-insights) - [Flock vs Sell Calculator](https://flockhomes.com/calculator) ## Frequently Asked Questions ### What is Flock Homes? Founded in 2020, Flock Homes is a real estate company and fund operator empowering landlords to exit from their rental properties through the 721 exchange. Through Flock Homes, real estate investors can use the 721 exchange to exchange their single-family, duplex, triplex, or fourplex rental properties for ownership in Flock's fund without triggering capital gains taxes. While in Flock's fund, investors benefit from continued access to steady cash flow and residential real estate appreciation, without any responsibilities of managing rental properties. ### Where did the 721 exchange originate? Section 721 of the US Internal Revenue Code was established in 1954 and has been used for decades by institutional investors to minimize taxes on real estate. It is the same tax code that stipulates Section 1031 (the 1031 exchange). Section 721 is the statutory foundation behind UPREIT structures used by public REITs and institutional real estate platforms since the 1990s. Flock Homes has pioneered a platform that empowers individual landlords to access the same benefits. ### Once I join Flock, do I still own my home? No. Title of the home transfers to the fund and the investor now owns equity in Flock's diversified fund. As a result, the investor retains all benefits of real estate ownership — access to cash flow and appreciation potential — without holding liability for managing any singular home. ### What kind of homes can I contribute to the Flock Fund? Flock's fund accepts single-family, duplex, triplex, and fourplex rental homes. All rental homes must meet Flock's financial return requirements. Homes with lower mortgage balances (generally less than 50% of value) are more likely to be accepted. ### How do I earn as a client of Flock's Fund? Investors earn through rental income cash flow from the fund's portfolio and potential real estate appreciation based on price performance. Investors also transition into a fully passive approach — all operations including leasing, repairs, HOA dues, property management fees, and operating expenses are fully managed by Flock's team. ### How does Flock help me minimize my taxes? The 721 exchange defers substantial capital gains and depreciation recapture taxes that would otherwise be triggered in a traditional property sale. Following the minimum hold period, investors can access greater cash flow quarterly and better control tax liability by liquidating equity over time. Fund equity also benefits from a step-up in tax basis upon inheritance, providing heirs significant tax savings. ### Is Flock registered with the SEC? Yes. While Flock's fund is not currently subject to full SEC registration requirements due to an applicable exemption, Flock is regulated by the SEC and subject to rules for private fund advisors. Flock also files a Form D annually. ### What experience does the Flock Homes team have? The team encompasses decades of investment and management experience from the largest real estate institutions in the world, including State Street Global Advisors and Progress Residential. ### How does Flock determine the value of the Fund? The fund's value is refreshed every quarter using a combination of automated valuation models (AVMs) and third-party appraisers. Every home in the fund is required to be appraised by a third-party appraiser once every 24 months. ### What fees does Flock Homes charge? Flock charges two simple fees: a one-time onboarding fee of 6% (deducted from equity value) and an ongoing annual management fee of 1.5% (collected from net operating income). Unlike many other funds, Flock does not charge a performance fee. ### Can Flock acquire homes with outstanding mortgages? Yes. At close, Flock pays off the existing mortgage with the lender, and the value of fund equity received is tied to the remaining equity value. ### What returns should I expect? Flock's fund targets an 8-10% internal rate of return based on portfolio performance. This encompasses income from rental activity and appreciation of equity based on property price performance. ### Will I still receive depreciation? Yes. If the contributed property had an unclaimed depreciation balance, the investor continues to receive an allocation of depreciation consistent with fund practices and tax guidance. ### Can I pass my Flock equity onto my heirs? Yes, with significant tax advantages. Like a traditional rental property, Flock equity benefits from a step-up in tax basis upon inheritance. The flexibility of fund equity rather than one illiquid property makes Flock an attractive estate planning instrument. ### What is the relationship between Flock Homes and Flock's Fund? Flock Homes is the General Partner of Flock's Fund (Flock Homes OP LP). In other words, Flock Homes acts as the manager of the Fund, which is collectively owned by all of the investors who have exchanged properties into the Fund. ### What is the difference between the 721 exchange and the 1031 exchange? With Flock Homes, investors can use the 721 exchange to seamlessly exchange their properties, tax-deferred, for direct ownership in Flock's managed real estate Fund. With a 1031 exchange, investors commonly continue to be active investors and operators of real estate properties. With Flock, the 721 exchange enables investors to take a long-term, passive approach to real estate investing. ### What is the advantage over hiring a property manager? With Flock, risk is diversified across hundreds of institutionally managed properties rather than liability for single properties. Our team manages everything, including leasing, repairs, and HOA dues, for every property in the Fund. Because we are accountable to the long-term performance of the Fund's properties, our incentives are also closely aligned with yours. ### What is the advantage over selling my house and buying shares of a REIT? Selling triggers capital gains and depreciation recapture taxes. Flock Homes allows you to earn from a Fund with tax-advantaged proceeds. The difference in returns can be substantial. Additionally, Flock's Fund is purpose-built for long-term retiring investors with unparalleled reporting transparency. ### What kinds of properties are in Flock's Fund? Flock's Fund contains the same types of properties that Flock acquires: single-family and multifamily rental properties that meet Flock's financial return requirements. ### How do you determine your valuations? Flock's goal is to provide fair-market valuations for all rental properties. We will only transact on properties that meet our return criteria and support the performance of the Fund. Our valuations are determined through an industry-standard underwriting process, incorporating leading AVMs and market comparables, based on property characteristics such as configuration, location, and condition. ### Will Flock Homes ever sell the properties I exchanged into the Fund? Flock's goal is to own and operate properties on a long-term basis as rentals. That being said, our fiduciary duty is to generate the best returns for the Fund and its investors, and from time to time, we will strategically reposition individual assets to optimize Fund performance. ### Can Flock acquire properties with a tenant? Yes. Flock Homes can accept properties that are occupied or vacant. If the property is occupied, we will honor the existing lease and work with the resident to renew once the lease expires. ### What happens with my rental properties after closing? The title of each rental property is transferred to Flock's Fund, of which you are now an investor. After closing, we will perform necessary value-add renovations, repairs, or maintenance to maximize long-term earning potential. We continue to lease them out as long-term rental properties. ### Can I receive cash? While we are not a cash buyer, we do offer limited cash at close on a case-by-case basis. Cash at close, however, has tax considerations that clients should discuss with their tax advisor. ### How do I access cash flow? Cash flow is paid quarterly. You can receive it as cash or equity in the Fund. Historically, cash received by investors in Flock has also benefitted from favorable tax advantages. ### How do I liquidate my equity? After a minimum hold period, your equity can be redeemed for cash directly with Flock, subject to the terms and conditions of the Fund documents. Your equity can be redeemed all at once or spread out over a number of years to reduce potential tax liability. Redeeming for cash can be taxable. ### What access do I have to the portfolio and my financial performance? Upon joining, investors gain access to a personalized online Client Portal with detailed financial performance reporting. They also gain full visibility into Fund financials and real-time asset-level activity. ### What is Flock's historical performance? See the Performance page for details on how Flock's Fund has performed. - [Full FAQ Page](https://flockhomes.com/faq) ## Success Stories Flock investors consistently cite three benefits: tax savings, time freedom, and peace of mind. Investors report eliminating late-night repair calls, vacancy stress, and tenant management while maintaining consistent quarterly income from the fund. - [Jack and Vicki](https://flockhomes.com/success-stories/meet-jack-vicki) — managed rental properties in Arizona and Washington for 30 years before contributing their remaining duplex to Flock through a 721 exchange. - [Josh B.](https://flockhomes.com/success-stories/meet-josh-b) — grew a rental portfolio to 13 properties across four states, then used a 721 exchange with Flock to gain passive income without property management. - [Stan K.](https://flockhomes.com/success-stories/meet-stan-k) — built a portfolio of over 45 rental properties as a homebuilder, then used a 721 exchange to transfer 20 of them to Flock for tax-efficient retirement. - [Steve G.](https://flockhomes.com/success-stories/meet-steve-g) — over 25 years, grew a real estate portfolio from an unexpected first investment to a peak of eleven properties, eventually settling at eight. - [Wayne and Vickie](https://flockhomes.com/success-stories/meet-wayne-vickie) — self-managed six rental properties for over 20 years before using a 721 exchange with Flock to retire from landlording and defer taxes. - [All Investor Success Stories](https://flockhomes.com/success-stories) ## For Financial Advisors Flock partners with financial advisors to help their clients transition from concentrated, actively managed rental property exposure into diversified, professionally managed real estate — without a taxable event. The 721 exchange is an established IRS-approved strategy (Section 721 of the Internal Revenue Code, in use since 1954) that serves as a powerful tool for tax-efficient portfolio construction, estate planning, and retirement transitions. For advisors, the 721 exchange is generally a more strategic planning tool rather than a transaction-driven solution. Unlike a 1031 exchange or DST, it allows advisors to reposition highly appreciated, concentrated real estate without triggering immediate capital gains, creating flexibility for portfolio construction, risk management, and long-term planning. - [Advisors Overview](https://flockhomes.com/advisors) - [Brokers Overview](https://flockhomes.com/brokers) ## About the Company Flock Homes was founded in 2020 by CEO Ari Rubin and is headquartered in Denver, Colorado. The team brings decades of institutional real estate experience from firms including State Street Global Advisors and Progress Residential. Flock is regulated by the SEC, files Form D annually, and operates as the General Partner of Flock Homes OP LP. - [About Flock Homes](https://flockhomes.com/about-us) ## Contact - Website: https://flockhomes.com - Email: advisor@flockhomes.com - Phone: (720) 703-9992 ## Optional - [Blog & Market Insights](https://flockhomes.com/insights) - [Legacy & Estate Planning Guide](https://flockhomes.com/legacy-estate-planning) - [Retirement & Tax Planning Guide](https://flockhomes.com/retirement-taxes) - [Optimizing Post-Tax Returns](https://flockhomes.com/optimizing-post-tax-returns) - [Simplified Ownership Guide](https://flockhomes.com/simplified-ownership) - [Careers at Flock](https://flockhomes.com/careers) - [Terms of Use](https://flockhomes.com/terms-of-use) - [Privacy Policy](https://flockhomes.com/privacy-policy)