Will I know who else I am investing with?

Generally, no.  You’ll know about the sponsors/GPs who are running the deal but we won’t publish who else has invested.

When I invest, what exactly am I getting?

Once you’re reviewed the investment materials and want to invest, you’ll need to make an account on our online investor portal.  Once you do this, you can sign the applicable legal documents, connect your bank account, and ACH funds into our account.  Once we close on the property you’re officially invested!

How Do I invest?

Once you’re reviewed the investment materials and want to invest, you’ll need to make an account on our online investor portal.  Once you do this, you can sign the applicable legal documents, connect your bank account, and ACH funds into our account.  Once we close on the property you’re officially invested!

IRR? AAR? Cash-on Cash

 IRR is Internal Rate of Return.  This calculation takes into account all the cash flow you’ve received during the investment along with the profit you get when the property is sold.  AAR is Average Annual Return.  This factors in three profit centers of real estate. Cash flow, Appreciation, and Amortization of the loan (I.E. the principal of the loan you get to keep at sale).  Cash-on Cash is the ratio of cash flow you receive versus the amount of capital you invested.

GPs? LPs? Sponsors? Managers? Members? Investors?

Some of these terms are used interchangeably.  Our LLC members will be divided up into those who run/manage the LLC called General Partners (GPs), Sponsors, or Managers.  Those who invest and are passively involved in the LLC will be called Limited Partners (LPs), Members, or Investors.

What are your fees? 

The managers of this syndication all have day jobs and don’t need to nickel and dime our investors or tenants.  We charge a fee (usually 1%) when we close on the property and a fee (usually 1%) when we sell the property.  Additionally, there’s a profit split between the GPs and LPs that varies according to the specific property.  Investors must get their money before the GPs can get any profit from the deal.

What is a Private Placement Memorandum (PPM)? Subscription Agreement? Operating Agreement? 

Before you can submit your money to us, you’ll have to read, agree to, and sign the above documents.  The PPM describes the company selling the securities, the terms of the offering, and the risks of the investment, amongst other things. A Subscription Agreement is a legal document in a securities offering package that contains an investor’s representation and warrantees that they meet the financial qualifications to invest, understand the risks, have read all of the documents, have asked all of their questions and sought appropriate financial advice from their own advisers, and can afford to lose the money. It also contains their contact information and signatures. The Operating Agreement is a key document used by limited liability companies to outline the business' financial and functional decisions including rules, regulations and provisions.

How do I get my capital back? 

The primary means of investors getting their invested capital back in any real estate transaction is a refinance or sale of the property.  The timeline of this happening depends on the terms of the deal.  Most deals we do will also include quarterly cash flow distributions.  Remember, you’re legally obligated to get your initial capital returned to you BEFORE the managers can realize any profit. See the legal documents you sign before sending your money in.

What if I want my money back before you sell the property? 

Talk to us.  Generally, you can’t sell or trade your shares for a year or two after the property closes. The managers will have the first right of refusal to buy your shares from you.  Otherwise, they can help find someone who is interested in taking over your shares.  Expect to incur a cost to do so.  The

Will the Managers/GPs be investing their money too?   

Yes!  We invest money alongside our investors all the time.  And money we invest credits us on the LP side as well. However, we don’t get any preferential treatment when it comes time for distributions.

Who controls the operations of the property?   

The GPs have control over the property.  Of the GPs, there may be certain people who have primary control of the asset management side of the operation.  Members/Investors will not have any asset management duties.  Just sit back and collect the cash flow checks!  Consult your investment documents for specifics on this.

Does depreciation flow through to the investors?

Yes!  You’ll get a percentage of the depreciation that’s the same as your ownership percentage of the LLC.  Expect to pay little or no tax on your cash flow earnings.

How long will my money be tied up? 

The Investment documents will make a clear prediction on investment timeline.  However, industry standard is 5-7 years and we will try to abide by that.  If we can get your money back sooner along with a great return then we will!

What if you don’t close on the property but you already have my money? 

If something should go wrong with the property or bank financing and we can’t close on the property, you’ll be fully refunded of your investment.  The GPs will absorb all costs incurred so the investors get all their capital back.

Can I 1031 out of this investment when it sells? 

No, unfortunately you cannot.  In order to 1031 the entity on the deed of the property that’s sold must be the same as the one who buys the replacement property.  Since investors want their money back and the legal entity that holds the property will dissolve shortly after sale, a 1031 exchange isn’t practical.

Can I invest with retirement funds? 

Yes, you can!  Self-Directed IRAs and solo401ks are very commonly used to invest retirement funds into syndications.  Ask us if you need help with selecting a retirement plan to invest with.  All the managers have one setup for themselves and can offer advice on this.

Will I pay any UBIT or UDFI taxes with my IRA? 

Since properties will be acquired using financing from a bank, yes.  Consult your tax advisor or do a quick google search on how much you would expect to pay every year.

What type of tax documentation will I get?

All investors will get a K1 at the end of the year for each entity they are invested in.  Just forward this to your tax preparer.

What’s the worst-case scenario for losing my money? 

If something goes horribly wrong with the property and we have to issue a capital call; A request for more money from the members.  Then, we run out of money again, default on the loan, and get foreclosed on.  However, members have a right in the Operating Agreement to vote out the managers should we not perform up to the liking of the membership of the LLC.  We don’t see this happening, but you should be familiar with the risks of the investment.  This will be outlined in the investment documents you’ll have to sign before you’re able to send your money in.