Multifamily Investing FAQs
Questions about how to invest? Check out our FAQs here or contact us to learn more.
WHO CAN INVEST?
Most of our offerings are for accredited investors only. To qualify as an accredited investor, you must meet one of the following criteria:
1) Earn an individual income of more than $200,000 per year, or a joint income of $300,000, in each of the last two years and expect to reasonably maintain the same level of income.
2) Have a net worth exceeding $1 million, either individually or jointly with his or her spouse.
3) Be a general partner, executive officer, director or a related combination thereof for the issuer of a security being offered.
These investors are considered to be fully functional without all the restrictions of the SEC.
An employee benefit plan or a trust can qualify as an accredited investor if total assets are in excess of $5 million.
WHAT IS MY CAPITAL BEING USED FOR?
Investor funds are used as equity to acquire new properties. This includes but is not limited to the actual purchase price of the property, acquisition fees, legal and transaction costs, capital projects, and reserves.
WHAT IS AN ACQUISITION FEE?
The acquisition fee is the upfront fee paid by the new buying partnership entity to the general partner for finding, analyzing, evaluating, financing, and closing the investment. Fees can range depending on the purchase price but are typically around two percent.
CAN I INVEST WITH A SELF-DIRECTED IRA?
Yes! Ask us about investing with a self-directed Roth IRA so that you can receive the benefits of your investment absolutely tax free!
HOW DO I GET PAID?
Investors receive distributions on a monthly or quarterly basis from the property via check or ACH.
WHAT IS A GENERAL PARTNER AND A LIMITED PARTNER?
The General Partners are the individuals who form the syndication opportunity and execute the business plan by managing the purchase process, conducting asset management, and overseeing capital expenditures. The general partners also hold all the risks associated with the loan. They are interchangeably referred to as the syndicator, the sponsor, or the operator.
The Limited Partners or passive investors have no active investor duties in multifamily syndication. The distributions that an LP receives, typically monthly or quarterly, are truly passive in nature.
WHAT IS A CAPITALIZATION RATE (CAP RATE)
A cap rate is a return on a real estate investment property based on the expected income that the property will generate. Cap rates are used to estimate the investor’s potential return on their investment. This is calculated by dividing the income the property will generate (after fixed costs and variable costs) by the total value of the property. In other words, a higher cap rate implies a lower asset value, while a lower cap rate implies a higher asset value.
WHAT IS LTC
LTC stands for Loan-to-Cost. This refers to the ratio between the size of the loan and the cost of building a new property.
WHAT IF I NEED MY CAPITAL BACK DURING THE HOLD PERIOD?
Real Estate investments are highly illiquid in nature. Investors should only invest capital they do not anticipate needing for the entire holding period of the investment. However, if circumstances change, we will work to sell your note internally to the other partners in the transaction for a small fee. Please note, we will try out best to return your capital early but there are no guarantees the internal transfer will be successful.