These frequently asked questions cover the most common concerns that we often hear from our first-time investors. We are a “crystal clear” operation. Our Investor friends can reach us any time and for any clarification. We want every prospective investor to be fully confident that they understand the pros and cons of any specific type of investment. In that way, you can be confident that your investment decisions are sound.
NO, as in most investments, there are no guarantees. As will be explained in the Private Placement Memorandum, the entire investment can be lost under unusual circumstances.
This is determined by the specific property and improvement plan and will be specified in each property offering. Typically we intend to hold properties between 3-7 years.
Each property has an anticipated rate of return and a proposed exit strategy. For example, our strategy may be to hold a property for 4 years OR until we hit a specific appreciation hurdle, perhaps +40%. The first of these two factors to hit will cause us to sell the property and payoff our investors with available proceeds.
Yes, we welcome introductions to your family and friends, but remember, we make it a point to get to know each investor and make sure they know us before we invite them to invest. At any given time, we are underwriting/evaluating 3-5 properties that we have received from our strong relationships with brokers. We learn about several pocket listings before they are shared with other investors.
The benefit of our type of investment is for you to become very knowledgeable about the risks before you invest. We provide a Private Placement Memorandum, Operating Agreement, and Subscription Booklet along with the latest and 12-month Trailing Profit & Loss, Rent Rolls, Property Brochure, Due Diligence Reports, Lease Audit reports, Executed Sales Contract, and more. We will let you see documentation on the profit history of the specific asset you would be investing in, the current issues, how we intend to resolve them, and the specific plan and anticipated returns.
We hire experienced securities legal counsel to help us draft the appropriate documents. We hire experienced commercial real estate counsel to review our loan documents, purchase and sale agreements, and property transaction documents and handle our closings.
Of course, the property is covered by insurance to mitigate physical damage and liability risks. We also ensure the property for loss of rent during rebuilding and carry a full replacement cost with an Umbrella Policy on each property.
To lose all of your investment, something drastic would have to occur that would lead to foreclosure. For example, all of the tenants would have to move out due to an undiscovered hazard, or an environmental hazard could destroy the property, and the insurer fails to pay for the extent of the loss. Another example would be, the US financial markets would have to crash with no refinancing available when a loan on a property is coming due, et al.. We perceive this risk to be small because we buy at a reasonable rate, without overleveraging, and further increase value by enhancing the property and increasing income.
Our Affiliated property management company manages all of the assets we acquire; this way, we deal with the property daily and see it perform with full care. We take immediate actions and strategize to reverse any negative trends we see promptly.
The only way to get a completely risk-free investment is to choose a treasury bond…with its nascent level of return.
Each acquisition is unique, depending on existing financing in place, whether the current owner will be carrying back financing, etc. Depending on the scale and value of the asset, most deals will include between 3 and 20 investors.
If you would like to solely invest in an asset and have funds to make a full acquisition and prefer to be the only investor in a deal, we would be glad to locate a property that fits your criteria. We do the underwriting/evaluation along with due diligence and assign the purchase contract to you for a fee and/or become a managing partner and manage it for you.
Yes. Self-directed IRAs and pension funds can invest in real estate.
IRA and 401K funds can typically be rolled over into a self-directed IRA account. The custodian is an intermediary that you direct. There are several self-directed IRA custodians; we have had positive experiences with a couple to whom we can refer you. They will be happy to advise you on transitioning your funds into one of their custodian accounts.
If this list of frequently asked questions has not fully addressed your questions, please contact us.
Avatar Equity, LLC members and its Affiliates oversee the management of the properties and assets and execute the improvement plan. Our affiliated property management company is Avatar Equity, LLC, and is fully equipped to manage the asset on a day-to-day basis with their team of professionals. We have an Asset Manager and a Director of Construction and Maintenance to facilitate that. Each property has its Community Manager, Assistant Community Manager, Lead Maintenance Technician, and Assistant to the lead. Typically, 4-5 full-time staff manage each asset we acquire.
We will hold regular conference/webinar calls to update investors on the property status. We hold a monthly Investor call for the first 4 months after we close on a property and quarterly web/Teleconference calls each quarter after that. We send out executive summaries and financial reports every two months. We are very approachable to our investors. Our track record and knowledge keep our investors returning to invest more money in our new acquisitions.
We are always willing to discuss any issues or concerns individually with specific investors.
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