Real Estate Investment & Management
FAQ's For Investors
Have a question regarding our company,process, or how to invest? Check out some of our frequently asked question below. If you still need more information, feel free to contact us.
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Am I An Accredited Investor?
An accredited investor, in the context of a natural person, includes anyone who: Earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence)On the income test, the person must satisfy the thresholds for the three years consistently either alone or with a spouse, and cannot, for example, satisfy one year based on individual income and the next two years based on joint income with a spouse. The only exception is if a person is married within this period, in which case the person may satisfy the threshold on the basis of joint income for the years during which the person was married and on the basis of individual income for the other years. In addition, entities such as banks, partnerships, corporations, nonprofits and trusts may be accredited investors. Of the entities that would be considered accredited investors and depending on your circumstances, the following may be relevant to you: any trust, with total assets in excess of $5 million, not formed to specifically purchase the subject securities, whose purchase is directed by a sophisticated person, or any entity in which all of the equity owners are accredited investors. In this context, a sophisticated person means the person must have, or the company or private fund offering the securities reasonably believes that this person has, sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment.
What is a Limited Partner (LP)?
A Limited Partner (LP) is an investor who provides capital to a business or partnership but has limited liability and is not involved in the day-to-day operations of the business. Limited Partnerships are a common structure used in real estate investment where the general partner (GP) manages the investment and assumes full liability, while the limited partners (LPs) provide capital and share in the profits of the investment but have limited liability. Limited Partnerships are governed by a partnership agreement, which outlines the roles and responsibilities of the general partner and limited partners. In a typical real estate investment partnership, the GP is responsible for sourcing and managing the investment, while the LPs provide capital and have limited say in the decision-making process. The partnership agreement also outlines the distribution of profits and losses between the general partner and limited partners. Limited Partnerships are often used in real estate investments as they provide a way for investors to gain exposure to real estate without taking on the full risks and responsibilities of ownership. LPs also benefit from the potential for higher returns on their investment than they would achieve in more traditional investments, such as stocks or bonds.
What is a Prefferred Return?
Preferred Return, also known as Preferred Equity, is a financial term used in real estate investment to describe a priority return on investment that is paid to certain investors before other equity investors receive any profits. In a real estate investment partnership, preferred return is a contractual arrangement between the general partner and limited partners, where the general partner agrees to pay a specific rate of return to certain investors before sharing any profits with other equity investors. This preferred return is typically paid out on a regular basis, such as quarterly or annually, and is often calculated as a percentage of the total investment.
The Offering Document is a legal document used in a private placement offering to provide prospective investors with detailed information about the investment opportunity. The Offering Document outlines the terms of the investment and the primary risk factors involved with making the investment. The Offering Document typically includes an introduction, basic disclosures, limited partnership agreement, and subscription agreement. The Basic Disclosures section is one of the most important parts, providing investors with information about the investment opportunity, including the investment strategy, asset description, and risk factors. This section should provide detailed information on the market conditions, the asset class, and the specific risks involved with the investment. The Offering Document is an important document for both investors and the general partner. It helps ensure that investors are fully informed about the investment opportunity and can make an informed decision about whether to invest. Additionally, the Offering Document can protect the general partner from potential liability by disclosing all relevant information to investors.
What is the Offering Document?
What is my Capital Being Used For?
Investor funds are used for the total acquisition cost of the property. This includes but is not limited to the actual purchase price of the property, acquisition fees, legal and transaction costs, capital projects, and reserves. Investors invest directly into the real property.