How Commercial Real Estate Works In A Customizable Investment Fund

When you create an account with Vert Investments, you'll be able to preview and capitalize on opportunities in the deal flow that fit your unique investment strategy.  VERT uses existing relationships and experience in the commercial real estate industry along with direct marketing efforts to source and control deals that fit the needs of the investors of the fund.  Individual properties are presented to the limited partners, who are then able to opt in or out based on their investment objectives.  According to SEC regulations, only accredited investors are allowed to participate in investment fund offerings.

Yes.  Investment syndication is a way for a group of investors to pool their resources and invest in a real estate project or other asset that may be too large or expensive for any one investor to undertake on their own.  In a real estate syndication, there are typically two main parties involved: the syndicator or sponsor, who is responsible for identifying and managing the investment opportunity, and the investors, who provide all or a portion of the capital.

Here is a general overview of how real estate syndication works:

1. The syndicator identifies a real estate investment opportunity that they believe will generate a good return.
2. The syndicator creates a legal entity, such as a limited liability company (LLC), that will serve as the investment vehicle for the project.
3. The syndicator then solicits investors to participate in the project. This may be done through personal contacts, referrals, or through a crowdfunding platform.
4. Investors who are interested in participating in the project sign a subscription agreement and provide their investment capital to the legal entity created by the syndicator.
5. The legal entity then acquires the real estate asset and manages it according to the business plan laid out by the syndicator.
6. The syndicator is typically responsible for managing the day-to-day operations of the project, such as hiring contractors, marketing the property, and handling tenant relations.
7. The investors receive a return on their investment based on the performance of the project. This may come in the form of regular distributions of cash flow or a lump sum payout upon the sale of the property.
8. At the end of the project, the legal entity can be dissolved and any remaining assets or profits are distributed to the investors.

Traditionally, syndicated commercial property investments have been associated with single large assets or REIT-like blind funds.  Due to expensive and lengthy formation requirements, sponsors have been limited to the types of assets (new developments, fix & flips, owned & underperforming, value add, etc.) that they can bring to the investor pool as well as the minimum contribution levels for each investor.  The holding period between the investor deposit and a cash flowing asset led to the development of preferred returns, waterfall equity models and other financing practices that confuse investors and favor sponsors for the most part.

At VERT, we've adopted a fund structure that allows us to act quickly on new opportunities that we procure based on the direction and interests of our investor community.  Our streamlined management platform allows us to accept lower minimum contributions.  We focus on cash flowing assets in strong markets with strong tenants.  Our investors are able to diversify based on their preferences while still leveraging the benefits of the fund umbrella.

 The typical return on a syndicated real estate investment can vary widely depending on the specific project, market conditions, and the investment strategy of the syndicator.  However, most syndicated real estate investments aim to provide investors with returns that are higher than what they would earn from more traditional investments such as stocks or bonds.  In general, syndicated real estate investments offer the potential for both current income and capital appreciation.  The current income is generated by rental income from the property, while capital appreciation occurs when the property increases in value over time.  Syndicators are required to provide investors with financial projections that estimate the expected returns for the project, including both cash flow and the potential for capital appreciation upon sale.

While there is no standard for a "typical" return in a syndicated real estate investment, it is not uncommon for investors to target annual returns of between 8% and 15% or more, depending on the specifics of the project. However, it's important to note that real estate investments, including syndicated investments, can be risky, and there is no guarantee of return.  Investors should carefully evaluate the risks and potential rewards of each investment opportunity and consult with their financial advisors before investing.

At VERT, we prioritize acquiring existing cash flow from strong  tenants.  Our proforma return on capital is often at the lower end of the syndication spectrum, but we feel that minimizing risk for our investors is more important that the thin promise of a higher result upon exit.  Year end tax benefits, passive cash flow and asset appreciation are innate in our fund model. 

 The sponsor, also known as the syndicator or the general partner, plays a critical role in a syndicated real estate investment.  The sponsor is responsible for identifying the investment opportunity, structuring the deal, raising capital from investors, managing the day-to-day operations of the project, and ultimately delivering returns to the investors.

Here are some of the key roles and responsibilities of a sponsor in a syndicated real estate investment

1. Identifying investment opportunities: The sponsor is responsible for identifying real estate investment opportunities that meet their investment criteria and align with the investment strategy they have laid out.
2. Structuring the deal: The sponsor determines the structure of the investment, including the legal entity that will hold the property, the ownership interests, and the terms of the deal.
3. Raising capital: The sponsor raises capital from investors by marketing the investment opportunity to potential investors, soliciting commitments, and managing the subscription process.
4. Managing the project: The sponsor is responsible for managing the day-to-day operations of the project, including property management, leasing, maintenance, and capital expenditures.
5. Reporting to investors: The sponsor provides regular updates to investors on the progress of the project, including financial reports, updates on occupancy and leasing, and other relevant information.
6. Distributing returns: The sponsor is responsible for distributing returns to investors, which may come in the form of regular cash distributions or a lump sum payout upon the sale of the property.

Overall, the sponsor plays a critical role in the success of a syndicated real estate investment.  Investors should carefully evaluate the sponsor's track record, experience, and expertise before investing, as the sponsor's abilities can greatly impact the performance of the investment.

 Yes.  Converting a 401(k) into a self-directed investment vehicle can be a complex process and you should definitely consult your CPA and/or attorney, but here are some general steps you can take:

1. Research self-directed retirement plans: Self-directed retirement plans, such as a Self-Directed IRA or Solo 401(k), allow you to invest in a broader range of assets, including real estate, private equity, and other alternative investments. Research different self-directed retirement plans to determine which one is right for you.
2. Check if your 401(k) plan allows in-service distributions: Some 401(k) plans allow for in-service distributions, which means you can take money out of your plan while you are still employed with your employer. Check with your plan administrator to see if this is an option.
3. Roll over your 401(k) into a self-directed IRA or Solo 401(k): If in-service distributions are not an option, or you want to move your funds to a different retirement plan, you can roll over your 401(k) into a self-directed IRA or Solo 401(k). You will need to set up the new account with a custodian that allows for self-directed investments.
4. Choose your investments: Once you have set up your self-directed retirement plan, you can choose your investments. Keep in mind that not all investments are allowed in a self-directed plan, and you will need to follow IRS rules and regulations regarding prohibited transactions and disqualified persons.
5. Manage your investments: As with any investment, it's important to monitor and manage your investments regularly. Keep accurate records and consult with a tax professional or financial advisor if you have any questions or concerns.

There may be fees and restrictions associated with a 401(k) conversion.  It's important to carefully evaluate the costs and benefits of a self-directed retirement plan before making any decisions.  It's also recommended to consult with a tax professional or financial advisor who is familiar with self-directed retirement plans to help guide you through the process.

 Syndicated commercial real estate investments can be an attractive option for investors seeking to diversify their portfolio, enact more control over their long and retirement holdings and potentially earn higher returns than more traditional investments like stocks and bonds.  However, like any investment, syndicated investments carry risks and may not be suitable for every investor.  Here are some factors to consider when determining if syndicated investments are right for you:

1. Investment goals: Consider your investment goals and objectives, and how a syndicated real estate investment fits into your overall investment strategy. Syndicated investments may be a good fit if you are looking for potential high returns and diversification, but may not be appropriate if you are seeking a low-risk investment.
2. Risk tolerance: Evaluate your risk tolerance and how comfortable you are with the risks associated with real estate investments. Real estate investments can be illiquid, meaning that it may be difficult to sell the investment quickly, and may be subject to market fluctuations and other risks.
3. Experience: Consider your level of experience with real estate investments and whether you have the knowledge and expertise to evaluate investment opportunities and manage the risks associated with these investments.
4. Investment size: Determine the amount of capital you have available to invest and whether you are comfortable committing a significant portion of your investment portfolio to a syndicated real estate investment.
5. Due diligence: Conduct thorough due diligence on the investment opportunity and the syndicator, including reviewing their track record, financial projections, and business plan.
6. Legal and tax considerations: Consider the legal and tax implications of a syndicated real estate investment, including any potential tax benefits or liabilities.

Ultimately, the decision of whether syndicated commercial real estate investments are right for you will depend on your individual circumstances and investment goals.  If you prefer bricks and mortar over stocks, bonds and mutual funds, then syndicated commercial real estate is likely a good option for you!