In short, yes. It would simply entail a slight difference in how you sign the subscription agreement and fund the deal, with no added degree of difficulty.
However, there are some things to consider such as the UBIT (unrelated business income tax), which is why recommend consulting with your CPA or financial advisor in order for you to make the best decision for you.
You cannot 1031 in to our deals since you are purchasing units of our Limited Partnership and not actually the property itself. However, although not guaranteed, there is potential to 1031 from one of our deals in to the next, given the right timing, thus providing the extremely powerful benefit of tax deferred growth.
We distribute on a quarterly basis to all of our investors.
Like any investment, there are some factors that are outside our control (i.e. market conditions) that pose a risk of losing your entire investment. The same is true for other investment vehicles.
However, for our approach in multi-family real estate, we can mitigate risks to a large degree, as outlined below:
- Conservative Underwriting. Due to our ample room for market variations (i.e. occupancy decline), we can still get through a market downturn.
- Value-Add Purchases. We buy properties that we can add immediate value to, gaining a significant equity foothold to weather market declines or unexpected events.
Something to consider is that delinquency rates at the bottom of the financial crisis in 2009 were 1% on multi-family properties as compared to 5% on single family houses. We buy properties where our sensitivity analysis supports returns at or even below historically low market occupancy and rent rates.
All risks associated with an investment will be laid out in great detail in the Private Placement Memorandum (PPM).
The beauty of real estate is partially due to its many tax advantages. Some to consider are below:
a. Depreciation. Due to this factor, a Limited Partner may see a paper loss on his or her K-1 statement. This loss can also be used to offset other gains in your investment portfolio.
b. 1031 Exchange. Instead of paying capital gains tax upon disposition, you can invest in a like-for-like property to help grow your investment earnings tax-deferred.
c. Supplemental Loan or Refinance. These events can return a significant amoun tof your initial invested equity, which the IRS considered a non-taxable event.
d. SDIRA. Investing through your self-directed IRA will allow you to return your profits to your IRA account tax-free.
Should I invest all of the capital I am seeking to invest into one deal or spread it across multiple deals?
The key to a strong investment portfolio is diversification, and thus would recommend spreading your capital across a number of deals.
The amount of capital you should put to work in each deal will depend heavily on the amount of capital you are looking to deploy in total. If you are looking to deploy $1MM, for example, you can diversify by $100K in ten deals. Alternatively, if you have $100K to invest, you may consider investing $50K in two deals.
Each investor’s financial situation is unique, so there is no general rule to follow. We advise you consult with your financial advisor for the best decision to make.
We want to make clear that all fees are separate from the return projections. These fees will have no impact on the return projects you will see in any of our deal decks; the LPs are not paying any fees “out of pocket.”
We make our money in our deals in three ways:
- Acquisition Fee (1-3% of purchase price). Paid at close and covers all costs associated with finding and putting the property under contract
- Asset Management Fee (1-3% of monthly revenues). Paid monthly and covers costs associated with executing the business plan, overseeing the property management company and construction management companies, identifying and implementing value-add strategies, improving operational efficiencies, etc.
- Equity Split (70/30 for LP/GP).
The terms will be specific to the investment opportunity, but our typical split is 70/30 between the Limited Partners and General Partners. Other options include an investor preferred return with waterfall afterwards. We aim to provide a structure that we believe is fair and understandable to everyone invested in the opportunity.
This information will be laid out in detail and readily available in the investment summary for the opportunity.
As most of our syndicated deals are structured as 506(b) under SEC Regulation D, in order to remain compliant we cannot accept non-accredited investors at this time.
In short, yes. We will invest alongside LPs in own deals to show alignment and also receive the strong returns we are projecting. As to small investment amounts, we are acquiring properties year-round. Investing in each of these deals would make our total investment very large. Additionally, occasionally we will serve asthe guarantor on the secured loan for the property, thus facilitating the need for a liquid personal balance sheet.
Ken Breeze has over two decades of experience in investment management, capital raising, and real estate investing. He currently owns controls over $80 million in performing multifamily assets all over the United States. Ken is supported by his professional A-class team, which you can read more about here.
Each property will be owned by a newly created, single-purpose LLC. Shares of the entity will then be sold to each investor in accordance with his or her investment amount. Per SEC guidelines, we will send each prospective, qualified investor a PPM (Private Placement Memorandum) and Subscription Agreement prior to his or her investment. These documents will be prepared by our licensed attorney.
Most of our syndicated deals are structured as 506(b) under SEC Regulation D. You can read the fact sheet on the SEC rule here.
Prior to closing on the property, you can wire your investment directly into the subscription account of the fund. You can also send it by check.
The management team will send all investors a monthly update and and a quarterly report on the investment. However, we are available at all times to our investors as a resource for specific questions or general discussion throughout the life of the project.
The minimum investment is dependent upon the exact deal, but the typical range is $50,000 – $100,000, with $5,000 increments.
We only look in metropolitan growth areas with diversified economies and population growth. In these areas we only look for value-add properties in order to immediately capture equity and buffer against any market downturns.
You can view our comprehensive buying criteria by clicking here.
Our investment criteria include the following:
Cash-on-Cash (COC): At least 9% (Cash income in proportion to your cash invested. Distributed at periodic intervals. Measured annually.) a rate of return that determines the cash income on, or in proportion to, the cash invested, measured annually)
Internal Rate of Return (IRR): 6-15% (Time-sensitive rate at which your money grows annually. Measured over the life of the project.)
We only acquire and invest in deals that have potential for great cash flow and forced appreciation derived from adding value to the property. When we offer you an investment opportunity, we will provide data-backed projections for cash flow returns and equity build up over the length of the entire project.
Our exit strategy is generally in five to seven years, although this may vary depending on the specific business plan being executed and/or specific investment property. Occasionally, changes to this may be voted upon, such as whether to dispose (sell) or refinance the property should the market change significantly. The original business plan will be adhered to as closely as possible to ensure that targets are met.
With this being said, we operate in good faith and will work with LPs to try to find a solution if they need to get out of the investment due to a particular life event. However, there are no guarantees.
The SEC (Securities and Exchange Commission) defines an Accredited Investor as a natural person who satisfies one or both of the following conditions:
a. 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
b. Has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence)
You must be an accredited investor to invest with Breezopoly. This is done to mitigate risk and for both our and your protection.