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Why should I passively invest as opposed to just buy a property myself?
When someone is investing in highly complicated asset classes such as commercial real estate, a top-tier operator can bring great value to the opportunity – enough that they should make up for the fact that they’re receiving some of the proceeds of the offering. The more complicated the investment vehicle, the more value an operating partner can bring to the table. In a relatively simple asset class like single-family residences, there isn’t a substantial difference between best-in-class owners and mon-and-pop owners. However, in a 200+ unit multi-family apartment, which functions more like an operating business, an operator could provide invaluable systems, processes, relationships, and know-how, justifying their participation in the offering. Because of this, the return profile might actually be similar to what an active investor may achieve on their own, but the passive approach doesn’t require the investors time once the investment has been made.
Due to the distinction between the class of shares between the General Partner and Limited Partner (passive investor), the sponsor is the only party to incur credit and liability risk.
Investing in passive syndications allows investors to rely on highly sophisticated operators who stand to gain millions of dollars if they’re able to deliver to their investors.
What type of account can I invest through?
We currently support personal investment accounts, joint accounts, and certain entity accounts (Trusts, Limited Liability Companies, Limited Partnerships, C Corporations, and S Corporations). For more information on IRA accounts, see below.
Can I invest through my IRA?
Yes, you can invest through your IRA. If you currently have a self-directed IRA, please check with your current custodian to ensure that they will allow you to place your investment with Thomas Investment Properties.
What is a K-1?
As a partner in the LLC that purchases the properties, you will receive a K-1. A K-1 is a tax form used by partnerships to provide investors with detailed information on their share of a partnership’s taxable income. Partnerships are generally not subject to federal or state income tax, but instead issue a K-1 to each investor to report his or her share of the partnership’s income, gains, losses, deductions and credits. The K-1s are provided to investors on an annual basis so that each investor can include K-1 amounts on his or her tax return.
Am I an accredited investor?
An accredited investor has earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year or has a net worth over $1 million (excluding the value of the person’s primary residence).
How frequently are distributions made?
Distributions are planned quarterly.
What exactly are the funds used for?
Investor funds are used for the total acquisition cost of the property. This includes but is not limited to the actual purchase price of the property, acquisition fees, legal and transaction costs, capital projects, and reserves.
Can I visit the property?
Yes. Investors are allowed to visit the property before investing and during the life of the project.