What is syndication?
Syndication is the pooling of investor money where the investor is typically a limited partner and the general partner, or active partner, puts the deal together and manages the business plan to provide a return for the benefit of all investors.
What are your return projections and how are they calculated?
All projects will have their own unique return profile based on a number of factors. Ask your Epimoni contact to discuss in detail for the investment you are considering. Make sure this endeavor brings you proper value for your opportunity cost. Real Estate investments should yield a stronger and more secure return than mostly all asset classes available in the marketplace.
When will I get my original investment back and what is the expected hold period?
We model most investments with a 5 year hold period (60 months) that includes a refinance in between month 24 – 36. This provides ample time to execute our development or repositioning plan and then cash flow for a few years while looking for an opportunistic sale. Some investor principal could be returned as early as month 24 from a refinance. The full return would come upon sale. If the market is not ripe for selling when the original business plan called for, we may want to continue to cash flow until the best time for disposition. This will always be market/asset/partnership dependent.
What is the minimum investment?
Minimums vary from deal to deal but generally are set at $50K with preference given to investors with more to invest.
When and how will I get paid?
Investor distributions vary from deal to deal but most syndications make monthly or quarterly distributions.
How will you communicate with me?
We’ll provide monthly or quarterly email updates on the investment’s progress including renovation status/pictures, rents we are getting, and the distribution amount for the period. You will also receive a K-1 statement from us in March of each year for your tax filing.
What are the tax implications?
Apartment syndications are very tax efficient. As a limited partner, you will benefit from your portion of the investment’s deductions for property taxes, loan interest, depreciation, etc. We will also use a cost segregation strategy to accelerate depreciation. The tax loss can then be used to offset other income depending upon your individual tax situation. At the time of sale, the partnership gains are treated as long-term capital gains.
Do you invest in your own deals?
Yes – We operate on a core value of treating investors’ money as if it were our own. We invest alongside our clients in every deal.
Do you perform sensitivity analysis?
Yes – We model different scenarios to show our breakeven point for profitability given a decline in occupancy or if rents drop below projections.
Can I invest using a retirement account (IRA or solo IRA)?
Yes – You can invest in real estate with certain retirement accounts. We are happy to discuss how to boost your IRA investing returns with real estate investing.
What are the general partner fees?
The returns forecasted are described in the private placement memorandum (PPM) and vary from deal to deal. The most common fee is an acquisition fee based on purchase price and is paid at closing. This covers the general partner’s costs to find the deal and get it under contract. The second most common fee is the asset management fee which is compensation for holding the property manager accountable, to ensure execution of the business plan, bookkeeping, and distribution of checks and K1s. The asset management fee is aligned with the investor’s interest as it is based on the property’s revenues. Industry averages are 1-3 % for both fees.