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1031 Exchange into an Apartment Syndication
History of the 1031 Exchange Tax Code A 1031 exchange is a powerful tax deferral strategy that was originally started in 1921 a short 3 years after the first income tax code was enacted by Congress. Since then, it has had a complicated history and has gone through several iterations. When it was first enacted,…
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The Vital Role of a Loan Guarantor
Understanding the role of the loan guarantor will help you better understand how strong our group is financially when it comes to acquiring large, institutional level assets. Between our three managing partners we sign the loans on all our acquisitions and do not use any outside person or group to help us meet the stringent…
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Are You an Accredited Investor? SEC Expanded Definition
In August 2020, the SEC proposed a new, expanded amendment to the definition to be qualified as an accredited investor. The proposed amendment updated and improved the definition to better identify institutional and individual investors that have the prior knowledge and expertise to invest in private placements such as our real estate syndication investments. The…
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Understanding Multifamily Revenue Terms
The accounting world and specifically multifamily accounting tend to use words or phrases that can be tricky to remember. One way to make sense of the terms is to think about them as if you are a resident renting an apartment and how a specific term can apply to one resident or one lease. This…
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Equity Waterfall Structures and Hurdles
What are equity waterfalls? An equity waterfall is the breakdown in a private equity real estate transaction that outlines how the distributions will be handled between the operator and, you, as the passive investor. In private equity real estate transactions there are typically 3 different waterfalls to consider: What are equity hurdles? Inside the waterfalls…
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What is an accredited investor?
An accredited investor has either a net worth of $1mil, not including their primary residence, OR an annual income of $200,000 (or $300,000 if married) for the last two years and you have a reasonable expectation that it will continue. Feel free to contact us if you have further questions regarding whether or not you…
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Understanding Preferred Returns
What is a Preferred Return? A preferred return is a minimum return that you would receive before the operator would receive any of their share of the cash flow or sale proceeds. It is typically expressed as a percentage of return on an annual basis. For example, if you invested $100,000 and the preferred return…
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The Importance of Understanding Capital Stack Structures for Apartment Syndication
What is a Capital Stack? A capital stack consists of the total capital invested in the project. For multifamily real estate, the capital stacks will be comprised of a combination of senior debt, mezzanine debt (optional), common equity, and preferred equity (optional). Having a clear understanding of the capital stack in each investment offering is…
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Due Diligence
In the multifamily industry, the term “due diligence” is common. The term is perfectly descriptive when you stop and think about it. The word “DUE” infers that something is owed. And that whatever is due must be given or paid. In other words, it is a debt! A debt of what? Well, of DILIGENCE. The…
