Faq’s

Syndication refers to the process of pooling investor funds to acquire large assets. Under this arrangement, the investor becomes a limited partner while the general partner assumes the role of the active operator. The general partner is responsible for putting the deal together and managing the project to generate a return that benefits all parties involved.

The Private Placement Memorandum is a comprehensive disclosure document that outlines the details of an investment offering, including potential risks involved. The document comprises of the partnership agreement, investment summary, and subscription agreement, and is usually prepared by a syndication attorney.

A subscription agreement is a legally binding document an investment company uses to record an investor’s decision to purchase a certain number of shares or units in the investment fund. This document outlines key details such as the amount being purchased, the investors vesting entity to hold shares in and the percentage of ownership of the fund, all of which are essential for tax reporting purposes.

We model each investment with a 5 year hold period. This provides ample time to execute our value-add plan and then cash flow for a few years while looking for an opportunistic sale. Some investor principal could be returned as early as year 2 from a refinancing event or we may want to continue to cash flow till year 7, if the market is down in year 5.

The IRS has a specific definition for an accredited investor. 

• Net worth over $1 million, excluding primary residence (individually or with spouse or partner)
• Income over $200,000 (individually) or $300,000 (with spouse or partner) in the prior two years and reasonably expects the same for the current year.

If you are investing from a larger entity, additional definitions pertain to those. 

The SEC requires a General Partner to track whether or not the investors they receive money from are accredited. Some filings require all investors to be accredited, whereas others allow a limited number of non-accredited investors.

Return projections are estimates of future financial performance of an asset or investment. These projections provide a glimpse into the expected earnings from an investment over a specific period. Return projections are calculated using historical data, market analysis, and various financial models.

Each investment deal is run through a proforma and is designed with a projected hold period that aligns with the project goals. Please review the investment summary carefully to understand the anticipated length of the investment.

Minimums vary from deal to deal but generally are set at $50K with preference given to investors with a larger commitment amount.

Investor distributions can differ from deal to deal. Some investments may offer monthly or quarterly payments, whereas others may delay disbursements until the project is finished. It is important to carefully review the investment summary to understand the timing and frequency of payment distributions.

You will receive email updates on the progress of your investment. These updates will be saved in the portal, where you can log in and check them at any time. Additionally, you will receive a K-1 statement, which will also be saved in your login portal.

As a limited partner, you can enjoy the benefits of the investment’s deductions for property taxes, loan interest, and depreciation, among others. Our strategy often involves cost segregation to accelerate depreciation an create a paper tax loss, which can then be used to offset other income based on your individual tax situation. When the property is sold, gains are generally treated as long-term capital gains.

Retirement accounts can be used to invest in real estate syndications. To do this, you establish a self-directed account through a qualified custodian. This custodian will ensure that the investment account complies with IRS regulations. We work alongside your custodian to ensure a seamless process.

It is possible that certain projects may include fees that are paid to the general partner. Each project summary should indicate the fees that are paid to the general partner, such as acquisition fees or project management fees. Typically, we structure the general partner fee to be in line with the asset’s performance, and it is paid along with the returns received by the investors.