FAQ

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.

The Private Placement Memorandum is required by the SEC and describes the offering, risks, includes the partnership agreement, investment summary and subscription agreement. It is a lengthy legal document prepared by a syndication attorney. The subscription agreement section includes basic information as to amounts being purchased and percent ownership. The risk section highlights just about every possible risk that could happen.

Annual cash on cash returns are targeted to be an average 10% or better over the hold period. Likewise, IRR (Internal Rate of Return) is targeted to be in excess of  20% range over the hold period. In a value-add project, a large part of the investor returns come in the year of sale. Actual returns vary on a property by property basis. See the private placement memorandum (PPM) for specific property investment risks.

We model each investment with a 5 year hold period. This provides ample time to execute our plan.  Whether the plan is to buy and hold for cash flow or a fix and flip value add, we have constructed our model and plan for delivering outsized returns to the investor.  In any scenario, the investor should expect the return of their capital investment in year 3 for a value add play and year 5 for a cash flow opportunity. Some investor principal could be returned as early as year 2 from a refinancing event or we may want to continue to cash flow till year 7, if the market is down in year 5.

Minimums vary from deal to deal but generally are set at $50,000. The Sponsor can decide on a case by cash basis to allow a fractional unit or to raise the minimum based on demand for the deal.

Investor distributions vary from deal to deal but Harvard Grace typically makes quarterly distributions by direct bank deposit.

We’ll provide monthly email updates, at a minimum, 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​ Schedule K-1 from the investment’s tax return no later than March 15th of each year for your tax filing.

Real estate 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 recovery charges. 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.

YES! We operate on a core value of treating investors’ money as if it were our own. Harvard Grace Capital and the individual board members invest alongside our clients in every deal.

Yes – Our standard underwriting model consists of five scenarios to show our breakeven point for profitability utilizing twelve variables which include a decline in occupancy or if rents drop below projections.

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.

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 amount of invested capital. Industry averages are 1-3 % for both fees.