Frequently Asked Questions
Create your own freedom and build generational wealth through the power of real estate.
To start a relationship, please schedule a call at https://calendly.com/dbacapitalgroup.
We promise the call is quick and painless. It allows us an opportunity to connect and determine if and how to serve you best. It also helps us stay compliant with SEC regulations.
After that call you can expect to be added to our newsletter and invited to our events and educational content.
The full SEC definition of accredited investor is more comprehensive. However, as it applies to individuals investing in syndications it captures either individuals making at least $200,000 in gross annual income in each of the two most recent years (or joint income, with a spouse or partner, exceeding $300,000) or individuals with net worth (individual or joint) exceeding $1,000,000, excluding the person’s (couple’s) primary residence.
A sophisticated investor does not meet the income or net worth hurdles of accredit investor noted above; however, possesses business/finance/investment knowledge and experience to properly evaluate the risks and benefits of the investment.
Yes. Please remember to contact your provider to ensure you follow their investment process and to obtain/complete the forms they require. Returns and distributions will be sent to the subject retirement account. Lastly, please ensure you consult with your CPA/tax advisor and retirement plan custodian about the tax treatment and reporting of such.
Minimums typically vary between $50,000 and $100,000.
Distributions typically begin after the initial stabilization period. We aim for at least quarterly basis (but may process those monthly for certain deals). Depending on the deal structure, distributions are typically comprised of the preferred return and pro rata share of profits. We usually aim for cumulative distributions. Cumulative means that missed preferred interest and/or distribution payments carry over to the next year and accrue over time.
Real estate syndicated investments should be considered illiquid, i.e. cannot be exited at a moment’s notice. However, we understand life happens. If you are facing emergencies or extenuating circumstances, please reach out to us and we will determine if there are options we can work through by either selling your share to another investor or to us.
Passive investors are typically compensated first. Depending on the amount of refinance proceeds, your principal investment will be returned in part or in full. If returned in full, the preferred return will no longer apply after refinance. If returned in part, the preferred return thereafter will apply on the lower remaining principal balance only. Your pro rata equity share of the investment (and profits) does NOT change.
It depends. Usually the hold period is 3-7 years. Holding the property forever may be an option at completion of the business plan, should the management team and passive investors agree to hold the property past the initially agreed upon hold period.
We focus on buying in the right markets and neighborhoods. We further identify properties with stable value add opportunities (see our prior discussion on the benefits of value add investing and how that can partially mitigate exogenous market movements). We underwrite conservatively with adequate cushion. We look to buy at the right price and with proper financing terms that match our business plan. We further vet the property management and deal team to ensure strong execution relative to the business plan.
Very often, particularly if the hold period is 3 years or more, the operators may elect to perform a cost segregation study to take advantage of the accelerated depreciation offered by the IRS. Starting in year 2023 that bonus depreciation benefit is reduced to 80% and will gradually phase out back to standard depreciation rates after 2026. Such depreciation can help create paper losses, which can be either used to offset other passive income you generate OR will accumulate over time and can be used to offset capital gains at the time of sale. As always, we would encourage you to consult with your own tax advisor on your personal situation and tax deferral strategies.
We will provide the annual K1 report that your CPA will need in order to prepare your annual tax return. Annual K1 filings are typically due and distributed by each March 15th.
We like to have ongoing communication with our investors and encourage our investors to reach out to us when they have questions. This is why we openly share our contact information and have a few contacts you can reach out to should your primary contact be unavailable for any reason. Beyond that, we distribute monthly updates and quarterly financials and host periodic investor webinars. Reports might also be available via the investor portal (this varies by deal). Having multiple touchpoints and communication modes keeps the communication channel open and ensures investors have various means to stay up to date on the performance of their investment(s).