Syndication is the pooling of investor money where the investor is typically a limited partner and the general partner, or active partner, puts the deal together and manages the business plan to provide a return for the benefit of all investors.
The SEC mandates the Private Placement Memorandum, which comprehensively outlines the offering, risks, and the partnership agreement, alongside investment summary and subscription details. This legally substantial document, crafted by a syndication attorney, includes a subscription agreement section with purchase amounts and ownership percentages, as well as an all-encompassing risk section covering potential eventualities.
We aim for annual returns within the 8-10% range and anticipate an average Internal Rate of Return (IRR) around 15% throughout the investment period. For value-add projects, significant investor returns are often realized upon property sale. The actual returns, however, can vary depending on each property’s unique characteristics. For detailed information on specific investment risks, kindly refer to the Private Placement Memorandum (PPM).
Our investment strategy involves a 5-year hold period, allowing sufficient time to implement our value-add plan and generate cash flow for several years while seeking advantageous selling opportunities. Depending on market conditions, investor principal could potentially be returned as early as year 2 through a refinancing event, or we may choose to continue cash flow until year 7 if market conditions are unfavorable in year 5.
Minimums vary from deal to deal but generally are set at $50K with preference given to investors with more to invest.
Investor distributions vary from deal to deal but most syndications make monthly or quarterly distributions.
We’ll provide monthly or quarterly email updates on the investment’s progress including renovation status/pictures, rents we are getting, and the distribution amount for the period. You will also receive a K-1 statement from us in March of each year for your tax filing.
Apartment syndications are very tax efficient. As a limited partner, you will benefit from your portion of the investment’s deductions for property taxes, loan interest, depreciation, etc. We will also use a cost segregation strategy to accelerate depreciation. The tax loss can then be used to offset other income depending upon your individual tax situation. At the time of sale, the partnership gains are treated as long-term capital gains.
Yes – We operate on a core value of treating investors’ money as if it were our own. We invest alongside our clients in every deal.
Yes – We model different scenarios to show our breakeven point for profitability given a decline in occupancy or if rents drop below projections.
Yes – You can invest in real estate with certain retirement accounts. We are happy to discuss how to boost your IRA investing returns with real estate investing.
The private placement memorandum (PPM) outlines the projected returns that may vary between different investment deals. Among the most common fees charged, an acquisition fee is prevalent and calculated based on the purchase price, paid during closing. This fee covers the general partner’s expenses in securing and contracting the deal. The asset management fee is the second most common, serving as compensation for overseeing the property manager, ensuring effective execution of the business plan, bookkeeping, and distribution of payments and K1s. The asset management fee is linked to the property’s revenues, aligning it with the investor’s interests, with industry averages ranging between 1-3% for both fees.