Real Estate is a great investment vehicle to generate passive income. The income the assets generate after all expenses and mortgage debt is paid is passed to our investors as distributions. Passive income is the primary reason we invest in Real Estate.
As Economies expand, the demand for Real Estate drives rent higher and this, in turn, translates into higher capital values. Therefore, real estate tends to maintain the purchasing power of capital by passing some of the inflationary pressure on to tenants and by incorporating some of the inflationary pressure in the form of capital appreciation.
Unlike stocks and traditional wall street investments, real estate does not experience high transaction frequency. Additionally, commercial real estate valuation is mostly driven by it's NOI (Net Operating Income). These factors make commercial real estate less vulnerable to sudden unexpected market shocks. In an environment where market volatility is an issue and the dynamics of algorithmic trading are murky, the more stable pricing of real estate is attractive.
Investors can shield themselves from taxes y claiming allowable deductions, such as depreciation of real estate. Please consult with your CPA about the benefits of real estate shielding taxes.
Sometimes, but not always. Without getting too technical, it depends on whether the offering is a 506(b) or a 506(c) as defined by the SEC. A 506(b) allows up to 35 unaccredited investors whereas a 506(c) must accept only accredited investors. If you’re not sure whether you are accredited, there is a good explanation in this article on Investopedia. https://www.investopedia.com/terms/a/accreditedinvestor.asp
We send out emails roughly once per quarter or when we announce a distribution.
For most of our investments, we send distribution checks on a quarterly basis. This usually means January, April, July, and October. However, in some value-add opportunities, there may not be distributions in the first year because the capital is used to fund new construction and re-positioning. We communicate this information before you invest, however, so you will know well in advance whether and when to expect a distribution.
Typically about 80% of the money is used to purchase the property. The remaining 20% is held in reserve for capital expenditures (e.g. replacement of a broken refrigerator) and/or as a hedge in an emergency situation. For example, in the case of a major storm that causes damage, we may need to dip into reserves to cover the insurance deductible.
The minimum is $25,000, however, this may vary depending on the project.
Yes, but it needs to be a self-directed IRA. If you don’t have a self-directed IRA, no worries. It’s easy to set one up, but it can take a few weeks to get an investment approved by the custodian, so plan for that extra time when considering whether to invest.
Not directly, but when we underwrite and close a deal we generally take an acquisition fee of 2-4% of the purchase price. This compensates us for all the due diligence we perform. Once the deal is closed we take a minority stake in the property that entitles us to 25-40% of the equity, depending on the deal structure