Frequently Asked Questions (FAQ’s)
We are here to help.
What are the risks associated with investing in a real estate investment and how are the risks mitigated?
There are many risks associated with ANY investment. If you want to invest, you must understand that there is a chance you will lose some or all of your initial investment. If you cannot risk the money you are investing, you should consider a CD or high yield savings account. Assuming you understand there are risks, there are also many benefits and ways you can mitigate any investment risk.
- Really know your sponsor. What is the character of the people and company you are investing with. Do they have a good track record and substantial experience.
- Ensuring that the project has reasonable leverage and liquidity.
- Understand the goal of the project, how the value is going to be created, and what is the likelihood the plan can be executed.
- Be prepared to sit on your investment longer. Factors like interest rate fluctuations and Covid pandemics leading to supply chain issues cannot be controlled. But if the asset is positioned properly, you can still ride out the storm and have a positive financial outcome.
What's the difference between investing in a private RE investment vs. Stocks, bonds, or REITS?
Unfunded RE sponsor investments are offered to accredited and non-accredited investors and are usually one-off properties or projects that have very specific financial goals or targets in a dedicated timeline. Usually, you have an opportunity to vet the individuals you will be directly investing with and get to know the people and the property you will be investing with. REITs, Stocks, and bonds are publicly traded entities that go up and down with the overall markets. You have much less direct control of who will determine the success and outcome of your investment, but your investment is significantly more liquid.
How does my involvement as a limited partner impact my liability?
Every asset is safeguarded within its individual LLC (Limited Liability Company). The sponsors are the Managing partners and day-to-day controlling operators. The limited partners (investors) are only limited to their initial principal investment. If someone slips and falls at the property, no limited partners are liable. So, there is no additional liability that the investor is exposed to other than the loss of your principal investment.
What types of regular communication should I expect?
Investors can access and monitor their accounts anytime via IAI’s investor portal. Through the Investor portal you will receive quarterly investor statements.
In addition to the quarter investor statement, you will also receive monthly owner statements for the property. The owner’s statement is equivalent to a P&L for the month. It will show rent coming in and expenses going out. This report is generated by the Property Management Portal.
In addition to the automated reports, we work to keep all investors as up to date on the projects as possible. Most projects will receive a quarterly report with both a qualitative and quantitative update on the project. These reports are all project specific.
When do distributions begin and how frequent are they?
Every property is different depending on the asset type and goal of the project. Distributions happen when there is a capital event that takes place during the project. This could be from cash flows, a refinance, or the sale of the property. The sponsors can return a portion or all your initial capital and profit at that time. This is usually defined and explained in the investment deck of the project you are considering.
What are the minimum investment requirements for participating in this opportunity?
The minimum investment threshold is $50,000 to $100,000 depending on the project.
Do you accept 1031 exchange investments?
Yes! Some of our offerings are structured to allow for 1031 exchange funds. Please contact us. if you need a 1031 exchange investment.
Can I invest through a self-directed IRA or other retirement accounts?
Yes. If you have an IRA it is possible to roll it over into a self-directed IRA or solo 401k custodian, which allows you to invest your tax-advantaged retirement dollars into alternative investments that a standard IRA will not. For any questions, please schedule a call and we’ll be happy to walk you through what we do.
Are there Tax Advantages to investing in Real Estate?
There are many ways to defer and mitigate taxes for real estate investors. Many of the advantages depend on your situation, and we work closely with your accountants to help build a tax-advantaged portfolio for you. Schedule a call and we can discuss your situation and ways we can help.
If you have more questions, please feel free to contact us.