What is syndication?
Syndication is the pooling of capital from investors to participate in an investment. The Sponsor sources, manages and implements the business plan. Passive investors benefit for a projects success without being involved in day to day operations.
How do I get started investing with you?
We like to get on a call with every potential passive investor. You can schedule a call with us here. We also recommend signing up for our regular email updates here. From here, you will begin receiving our monthly newsletter as well as project announcements.
What type of accounts can I use to invest with?
Investment can be made via personal investment accounts, joint accounts, and certain entity accounts (Trusts, Limited Liability Companies, Limited Partnerships, C Corporations, and S Corporations). Certain retirement accounts can also be used.
How are payments to investors determined and how often do they occur?
We generally target distributing the offered preferred return each quarter. If a property performance is strong, distribution levels can be above projections, and if property performance is weaker than expected, distributions may be below targets.
How will you communicate with the investor?
Each project will have a monthly email update and a quarterly webinar meeting. We are also available any time to jump on a call to answer any questions. K-1’s are distributed by March for tax purposes.
Is there an option to exit the investment early?
Investments into syndications should be considered illiquid. To accommodate emergencies/unusual circumstances we can either find another investor to purchase your existing position or buy it out ourselves.
What is an accredited investor?
The SEC defines an accredited investor as an individual with a net worth of at least $1 million, or an annual income of $200,000 for someone filing single, or $300,000 for those filing as joint income with a spouse, for at least three years. An individual and one filing jointly needs their net worth to exceed $1 million at the time of the purchase, excluding the value of the person’s primary residence.
What is a sophisticated investor?
The SEC defines a sophisticated investor as an individual who has enough knowledge and experience in business matters to evaluate the risks and merits of an investment. In syndications, which are offered through the 506(b) exemption, sophisticated, non-accredited investors are permitted to invest as long as they have a preexisting relationship with the sponsor.
How long are the investments?
We typically underwrite for a five to seven year hold period. We constantly evaluate market conditions for favorable exit opportunities.
What are your return projections?
As of today’s market conditions, we are underwriting for an 8-10% cash on cash return, with an IRR in the range of 13-20%. We look to achieve a 1.5 to 2.0 equity multiple, meaning an initial investment of $100,000 would return $50,000 to $100,000 profit through cash flow and proceeds from sale in addition to your initial investment.
What fees are involved in an investment?
We charge an acquisition fee of 2-4% based on the purchase price for sourcing, putting the deal together, and running the deal. We also charge an asset management fee of 1%-1.5% of net collected rent.
Are you investing in the deal with your own capital?
We typically invest a minimum of 10% of the capital needed for each project.
What is the minimum investment?
Our minimum investment is $50,000.
Can I invest through an LLC?
What is Rule 506(b)?
Rule 506(b) eliminates the need for people issuing securities to register if they meet certain qualifications. Investors can raise an unlimited amount of money from accredited investors and up to thirty-five non-accredited investors. No general solicitation or advertising is allowed for the investment.
What is Rule 506(c)?
Rule 506(c) allows for general solicitation of the investment if all of the investors in the offering are accredited and the company takes reasonable steps to verify that they are accredited.
What is a Sponsor/General Partner?
A Sponsor/General Partner is an investor or group who takes active involvement and assumes a day-to-day role in managing the investment. They responsible for any debts incurred with investment.
What is a Limited Partner?
A Limited Partner (LP) is a passive investor in the deal. They have limited liability in the deal, and their risk is limited to the amount of capital they invest. They are not signers on the loan, and bear no responsibility for the performance of the deal.
What does the timeline/process look like?
Once under contract it takes 60-90 days to close a property, sometimes longer. As soon as possible we present an Offering Memorandum as well as a live webinar to our investors. You then have the chance to aske questions, reserve a spot, review the Private Placement Memorandum, and sign. Funds are required to be wired within three weeks of the closing.
What is a Private Placement Memorandum?
A private placement memorandum, or PPM, is a form of documentation that discloses everything an investor should know when making a decision on whether to provide funding. A PPM will detail the various aspects of the investment option, disclaiming legal liabilities, and providing the underlying risk factors that may be associated with the venture.
What is a subscription agreement?
According to investopedia.com, a subscription agreement is an investor's application to join a limited partnership. It is also a two-way guarantee between a company and a subscriber. The company agrees to sell a certain number of shares at a specific price, and in return the subscriber promises to buy the shares at the predetermined price.
If you would like to know more about what we do and how you can participate in future projects, we'd love to hear from you.
Schedule a call with Greg today.