Investment opportunities are available to individuals and companies that qualify under SEC rules and regulations as both accredited and sophisticated per the SEC definitions. Accredited investors under a 506 (c) offering is defined as having a net worth of at least $1,000,000 OR an annual income of $200,000 (or $300,000 combined income if married). Sophisticated investors under a 506 (b) offering are eligible who don’t meet the accredited definition but have a pre-existing relationship and has enough experience or knowledge to evaluate the risk and benefits of the investment. Entities involved in a 1031 exchange may also participate and benefit as a co-owner with the General Partner.
Brokerage accounts, savings and retirement accounts like 401K or IRA can be used for real estate investments, ask me for more info
The typical investment in a property usually involves a hold period of 5-7 years and varies with the business plan for that particular property. If the building needs to be rehabilitated or turned around due to poor management and low occupancy, distributions may not come until the property is stabilized. In these cases the preferred returns would be prorated and would have a chance to “catch up” once stabilization occurs and the property is sold or refinanced.
Passive investing allows you to have equity ownership in real estate assets without having to do the heavy lifting involved with sourcing, acquiring, and managing the property. It’s all done for you. A real estate investment company like ours will find, acquire and manage the property. We also help raise capital for the down payment through a process called syndication. This allows investors like yourself to pool their money together for the down payment the lender will finance the rest of the purchase price, typically between 70-80 percent of the price. Through the syndication process we can raise enough capital for the down payment and if necessary rehab or construction costs for property stabilization. Once closed our firm will also manage the investment and do all the work necessary to make it successful.
We recommend investors use only funds that are not needed for short term use and will not have a financial impact for living necessities. The minimum investment is generally between $50,000 to $100,000. Distributions would be scheduled either monthly or quarterly, and since you are a partner in the LLC you will receive a K-1 that reports your share of the income. These are provided on an annual basis for tax season.
All investments carry some form of risk. Real Estate, acquired and run properly, can outperform typical investments while mitigating risks. Multifamily investments historically carry less risk compared to other single lease investments and have shown to be more recession resistant. Value-add B and C class type properties in target markets have been known to have more stable performance compared to other asset classes. Regardless of good times or bad, people still need housing and an affordable safe place to live. In order to mitigate risk we stress test the debt service coverage ratio in the underwriting to ensure all expenses are covered in case of a short term decrease in rental income. This helps us avoid a forced sale prior to the opportune time to sell.