Frequently Asked Questions

• You want to invest in real estate but don’t have the time or interest in being a landlord.
• You want to diversify your investments and/or retirement saving with physical/real estate assets
• You want to invest in something that’s more stable than the stock market.
• You want to hedge against inflation.
• You want the tax benefits that come with investing in real estate.
• You want to receive regular cash flow distribution checks.
• You want to invest with your retirement funds.
• You want your money to make a difference in local communities.

A real estate syndication is a great way for busy individuals to invest in large-scale, physical real estate assets, without the time commitment or excessive energy. 

• Cash Flow: receive quarterly distributions from property earnings
• Stability: multifamily assets have the strongest track record among commercial real estate
• Depreciation: tax write-offs that allow you to retain more of your profits
• Leverage: reduces cost of capital; purchase higher valued assets with less money down
• Amortization: residents pay down debt which creates equity and ultimately long-term wealth
• Appreciation: forced appreciation through value add investments increases value of property

One of the most common questions we get asked is, “If I were to invest $50,000 with you today, what kinds of returns should I expect?”

We understand you want to know how real estate syndications can make your money work for you, and how passive real estate investing stacks up to the returns you’re getting through other types of investment vehicles.

In order to help answer that question, you should understand we will be talking about projected returns. These returns are projections, and they are not guaranteed.  There is always risk associated with any investment. The examples herein are meant to provide some ballpark ideas to get you started.

Three Main Criteria

Each real estate syndication investment summary contains a barrage of useful data. Focus on these core concepts:

Projected hold time

Projected cash-on-cash returns

Projected profits at the sale

Projected Hold Time: ~5 Years

Projected hold time is the number of years we would hold the asset before selling it. What this means for you is that this is the amount of time that your capital would be invested in the deal.

A hold time of around five years is beneficial for a few reasons:

Plenty can change in just five years. You could move, get married, start and complete a degree,  etc. You need enough time to earn healthy returns but not so much that your kids graduate before the sale.

Considering market cycles, five years is a modest stint in which to invest, make improvements, allow appreciation, and exit before it’s time to remodel again.

A five-year projected hold provides a buffer between the estimated sale and the typical seven- to ten-year commercial loan term. If the market softens at the 5-year mark, we can opt to hold the asset for a longer period of time, allowing the market to rebound.

Projected Cash-on-Cash Returns: target 8-10% Per Year

Next, consider cash-on-cash returns, otherwise known as cash flow or passive income. Cash-on-cash returns are what remain after vacancy costs, mortgage, and expenses. It’s the pool of money that gets distributed to investors.

If you invested $100,000, and earned eight percent per year, the projected cash flow would be about $8,000 per year or about $667 per month. That’s $40,000 over the five-year hold.

Just for kicks, notice the same value invested in a “high” interest savings account (earning 1%) over five years would earn a measly $5,000.

That’s a difference of $35,000 over the span of 5 years!

Projected Profit Upon Sale: ~60%

Perhaps the largest puzzle piece is the projected profit upon sale. Typically, we aim for about 60% in profit at the sale in year 5.

In five years, the units have been updated, tenants are strong, and rent accurately reflects market rates. Since commercial property values are based on the amount of income generated, these improvements, along with market appreciation, typically lead to a substantial increase in the overall value of the asset, thus leading to sizable profits upon the sale.

Summing It All Up

Typically, in the deals we do, we are looking for the following:

5-year hold

8-10% annual cash-on-cash returns

60% profit upon sale

Sticking with the previous example, you’d invest $100,000, hold for 5 years, collect $8,000 per year in cash flow distributions paid out monthly (a total of $40,000 over 5 years), and earn $60,000 in profit at the sale.

This results in $200,000 at the end of 5 years – $100,000 of your initial investment, and $100,000 in total returns.

Double your money in just 5 years while diversifying your portfolio with physical assets that hedge against inflation.

We invest in emerging cities across the US and target markets that meet our investment criteria.  Before deciding to invest in an area, we review data and trends related to population growth, income growth, job diversification, landlord friendliness, cost of living, rent growth, median household income, recession recovery time, crime, and poverty levels.  

As a real estate syndication investor, you’ll gain the tax benefits of property ownership, including accelerated depreciation and cost segregation, which can help lower the taxable passive income you receive.  Each year, you’ll receive a Schedule K-1 tax form to include with your tax filings. This form reports your income and losses for the investment.

If you happen to be a real estate professional, you may be able to apply these paper losses to your ordinary income as well. Please consult with your CPA for details related to your specific financial situation.

Sign up with our investor portal so you can stay in the know on future investment opportunities.  Due to SEC regulations, we can only offer 506(b) investment opportunities to people who we have pre-existing relationships with. Therefore, once you sign up, we will schedule a brief call with you so we can get to know you and your investment goals.