As an experienced commercial multifamily developer, I’m often asked how passive investors can participate in our ground-up mixed-use projects. If you’re a high-net-worth individual looking to diversify your portfolio with real estate, here’s a comprehensive overview of the process and what you can expect.
Understanding the Opportunity
Our projects typically involve developing high-quality, mixed-use properties from the ground up. These properties combine residential apartment units with commercial or retail spaces on the lower floors, creating vibrant, integrated communities in prime locations.
The Investment Process
- Apply to Join our Investor Club: The process begins when you reach out to express interest in our projects. We’ll have an initial conversation to understand your investment goals and to ensure this is a good fit for your investing goals. If so, we will add you to our investor club so you can view our next opportunity.
- Project Introduction: Once qualified, we’ll keep you on our investor list and present you with current or upcoming project opportunities. This includes detailed information about the location, project scope, projected timeline, and potential returns.
- Here’s The Deal: Boom! We have an exciting opportunity for you to invest in. We will typically send out an email or text message blast to alert you of the opportunity.
- Due Diligence: We encourage investors to conduct their own due diligence. We provide comprehensive documentation, including market analysis, financial projections, and risk assessments. You’re welcome to ask questions and request additional information during this phase.
- Investment Commitment: If you decide to proceed, you’ll be asked to sign a subscription agreement and other necessary legal documents. This formalizes your commitment to invest a specific amount in the project.
- Capital Contribution: Following the paperwork, you’ll transfer your investment funds to a designated escrow account. The timing of this may vary depending on the project’s stage and capital needs.
- Congratulations! After you wire your funds, you’re officially in the deal! Now you can sit back and relax while our team executes the business plan.
The Development Phase
Once the project is funded, we handle all aspects of development:
- Land acquisition
- Design and architecture
- Permitting and approvals
- Construction management
- Marketing and pre-leasing
During this phase, which typically lasts 14-24 months, we provide you with monthly updates on the project’s progress.
Operational Phase and Returns
As the property nears completion and begins leasing, it enters the operational phase. This is when you can start expecting returns:
- Preferred Return: Investors often receive a preferred return (e.g., 7-8% annually) on their invested capital before we, as the developers, participate in profits.
- Cash Flow Distributions: Once the property is stabilized, typically 6-12 months after completion, you’ll receive regular cash flow distributions, often quarterly.
- Profit Sharing: Additional profits above the preferred return are split between investors and developers according to the predetermined waterfall structure.
Exit Strategy
Our projects usually have a hold period of 3-7 years. At the end of this period, we’ll either:
- Sell the property, distributing profits to investors
- Refinance, potentially returning a portion of initial capital while continuing to hold the asset
Throughout the hold period, we manage all aspects of property operations, allowing you to enjoy truly passive income.
Risks and Considerations
While we strive to minimize risks, real estate development does involve uncertainties:
- Market fluctuations affecting rental rates or property values
- Construction delays or cost overruns
- Changes in local regulations or economic conditions
We mitigate these through careful planning, market research, and our extensive experience in the field.
Conclusion
Investing in ground-up multifamily developments offers an exciting opportunity to participate in creating valuable real estate assets while generating potential returns.
As a passive investor, you benefit from our expertise and hands-on management, allowing you to diversify your portfolio without the day-to-day responsibilities of property development and management.
If you’re interested in exploring these opportunities further, we’d be happy to discuss our current projects and how they align with your investment goals. Consider joining out Investor Club so you can get notified when we have our investment passive investment opportunity.
