Frequently Asked Questions
Understanding Multifamily
Real Estate Syndications
1Are Real Estate Syndications a Good Investment?
Commercial real estate is typically not available to individual investors because of the cost and complexity of ownership. Not only do you need to finance a multi-million-dollar property, but you must have the expertise to vet the opportunity, manage the asset, add value to enhance appreciation, and sell it to realize gains.
Real estate syndications partner with a sponsor like Sunage Equity Capital, providing the expertise required for commercial real estate investments. You become a silent partner in the business, which is usually an LLC, resulting in a low-risk passive investment. You can often receive above-average returns without the work required in most real estate transactions.
2Are Multifamily Syndications a Good Investment?
Apartment buildings tend to be low-risk investments because housing is a basic need. The current housing crisis creates ample opportunities for companies like Sunage Equity Capital to help communities. We do not tear down older complexes and replace them with luxury apartments or condominiums. Nor do we convert units into short-term rentals. Instead, we renovate existing units and add popular amenities, improving the housing conditions for current and future residents.
Syndications can be a win-win for all parties. We locate older properties for sale in high-growth areas and strong housing demand. After purchasing the asset, we modernize the units allowing us to raise rents, thus increasing revenue. Partnering with professional management teams often uncovers operational efficiencies, which reduce costs, making the property more attractive to tenants when rectified.
How Investors Make
Money
1What Kind of Returns Can You Expect?
Real estate typically produces returns through cash flow (tenant rents and other revenue minus operating expenses), paying down the principal loan balance, and appreciation.
Each property has a different potential based on the purchase price, regional market, job outlook, and economic conditions. Considering these factors (and many others), we project a potential return for the property during the period of ownership. In many cases, you can achieve above-average returns with less risk than stock market investments provide.
2How Do You, as a Passive Investor, Earn Profits?
Investors participate in gains through revenues and appreciation. Sunage Equity Capital specializes in Class B and C real estate, concentrating on older apartment communities needing renovation. As we upgrade the common areas and individual units, we can raise rents to increase profitability. We generate additional profits by improving management processes and reducing operating costs.
The capital improvements allow us to increase rents and elevate property values faster. This dual strategy tends to produce double-digit annual returns for investors.
3How Often Are Distributions Made?
Each syndication includes value-add components that impact distributions. Before investing, you will understand the proposed schedule and the target date to initiate distributions. The actual start date is dependent on meeting targets and objectives but generally commences within the first year of ownership. Once distributions begin, quarterly payouts are the most common payout schedule. The sponsor will base distributions on the performance of the property.
4What are the Tax Implications of Real Estate Syndications?
Taxation depends on many factors. The IRS grants tax benefits associated with real estate investments and additional benefits based on where funds come from, how the syndication handles depreciation, and your tax filing strategies. For example, investments made with IRA dollars typically allow you to take advantage of tax-deferred or tax-free growth.
Other factors include the level of capital investment, depreciation schedules, and how the syndication depreciates capital investments. A 1031 exchange may allow you to roll over your capital gains into another property, delaying taxation on the investment. You will receive a K-1 for tax reporting purposes in each year of ownership. Working with a CPA or tax accountant can address specific taxation questions.
Who Qualifies to Invest in Multifamily Real Estate Syndications with Sunage Equity Capital?
1What is the minimum investment required?
Most syndication deals require a minimum investment between $50,000 and $100,000. The amount you invest will determine your percentage of ownership.
2What is an Accredited Investor?
The SEC (Securities Exchange Commission) regulates investment firms, including non-registered security investments like real estate syndications. These regulations require most syndications to restrict participation to accredited investors.
Non-registered investments require a higher level of investment understanding and expertise to evaluate the opportunity appropriately. As a high-net-worth investor, you gain access to syndications and private placements not available to the average individual or entity.
To qualify as a sophisticated or accredited investor, you must meet the SEC's income or net worth guidelines verified by the investment manager. You must meet one of the two measures listed below to qualify as an accredited investor:
Non-registered investments require a higher level of investment understanding and expertise to evaluate the opportunity appropriately. As a high-net-worth investor, you gain access to syndications and private placements not available to the average individual or entity.
To qualify as a sophisticated or accredited investor, you must meet the SEC's income or net worth guidelines verified by the investment manager. You must meet one of the two measures listed below to qualify as an accredited investor:
- Income requirements: The SEC requires you to earn $200,000 or more in the last two years and expect to maintain or exceed this income threshold in the coming year. Couples can qualify with a joint income of $300,000 or more.
- Net Worth guidelines require a net worth of more than $1 million in assets, not including the value of your primary residence. Property can be owned individually, jointly, or as an entity. General partners, executive officers, and company directors issuing unregistered securities may also qualify.
3What Investment Structures Are Allowed?
You may invest in real estate syndications as an individual or an entity. Deals allow LLCs, Partnerships, and Corporations, provided the individual or entity meets the accredited investor guidelines.
4Can Investors Use Retirement Account Funds to Invest?
Yes. The IRS allows alternative investments such as real estate through a self-directed IRA (SDIRA) or self-directed Solo 401k. Doing so can expand your portfolio and improve your diversification without forfeiting the tax-preferred treatment.
Contact your accountant, CPA, SDIRA custodian, or Solo 401k administrator for more details.
5How Does the Partnership with Think Multifamily Work?
Think Multifamily is a syndication group with about 100 members, spearheaded by Mark Kenney. This partnership gives Francis Aniekwensi access to quality deals around the country, as members of the group find and present potential buys through the Think Multifamily network.
Francis Aniekwensi hand picks the deals and the partnerships based on our investment criteria and the acquisitions that will most benefit our team of investors. We vet potential properties for upside potential, internal return, and long-term viability. We use our partnerships to identify the best deals, obtain financing, and allow other investors like you to participate in lucrative projects.
Investing With Sunage Equity
Capital
1Do Sponsors Invest in Sunage Equity Capital Deals?
Our team invests in every deal secured by Sunage Equity Capital. As a fellow investor, all decisions are made with the investor's best interest in mind because we are part of the investment team.
2What Types of Properties Does Sunage Equity Capital Invest?
Commercial real estate falls into three primary categories: Class A, B, and C.
Sunage Equity Capital focuses on Class B and C apartment buildings in high-growth cities. We accelerate appreciation through value-add renovations and upgrades, allowing us to increase revenues and raise property values. We also scrutinize operational processes looking for ways to improve inefficiencies and cut costs.
- Class A properties include newer and high-end properties in prime locations that attract the highest quality tenants.
- Class B are older buildings that remain structurally sound with good quality tenants. Buildings tend to be well maintained, despite their age.
- Class C units are older buildings (sometimes 50 years or older) that may face neglect or have locations in less desirable areas.
Sunage Equity Capital focuses on Class B and C apartment buildings in high-growth cities. We accelerate appreciation through value-add renovations and upgrades, allowing us to increase revenues and raise property values. We also scrutinize operational processes looking for ways to improve inefficiencies and cut costs.
3How Does Sunage Equity Capital Chooses Properties?
Francis Aniekwensi hand picks three deals per year, and all projects we sponsor or co-sponsor include a personal investment.
Being particular about each investment gives us the time required to develop deep relationships with investors. We are available 24/7 throughout the process in every sense of the word. Not only does Francis Aniekwensi educate himself on the investment potential through a rigorous vetting process, but he has one-on-one calls with every investor before they commit to the project.
His principal goal is to help you find financial independence through commercial real estate investments.