As an investor you are a limited partner in the deal, thus are fully passive, with all management decisions being made by the syndicator (sponsor). Therefore, trust in a syndicator, and a successful track record, is very important when evaluating a deal.

Development deals tend to run the gamut of risk/reward. Low risk investments are typically stabilized assets that have are considered ‘yield’ plays and tend to have a lower return and lower perceived risks. Other deals are “value add”, which take on more risk to make substantial improvements to a property, typically increasing both occupancy and rents. Development deals offer attractive returns at higher risk, and can encompass land entitlement, construction, and operation of a new facility. The important thing to decide here is not only about the outlook of the particular deal, but your own particular risk threshold.

As a limited partner investors take a passive role in the ownership of real estate commercial investments. Sponsors set up full construction management, handle taxes, finances, accounting, and an investor simply receives predetermined profit splits. It also has the advantage of limiting liability to amount invested due to passive nature.

Lower risk deals tend to have more stabilized values but produce cash flow over long terms that help meet investor cash flow goals. Value add development deals have a large profit potential but take on more risk to attempt those objectives.

• LLC owns property

• Investors own share in the LLC

• Investors have no liability beyond their investment

• Managers have all responsibility in managing the asset

Syndications allow one to invest only in products that match their investment objectives Funds generally invest in a portfolio of investments that may or may not meet investors objectives.

REITs are public securities with broad investment objectives that have the volatility of typical market securities. “Investors” can get in and out at will but have no long term commitments.

Leverage, more cash to invest elsewhere, not all eggs in one basket, more passive Benefit from the expertise, experience, and ability of the syndicator to qualify for loans, select from many opportunities, vet the deal, and execute the management of the investment for maximum return on investment.

The syndication establishes a corporation that purchases the asset and the investors own shares of the corporation. An LLC corporation manages the asset for the investors.

Only on the net income after all expenses and depreciation. The annual net income reported on a typical K1 already takes advantage of the depreciation shelter of the investment.

The future is hard to predict, but with an affordable housing development such as this, we have multiple exit strategies each lot that will be developed, based on our sponsors experience in the industry. In addition to selling the homes on land, we can also utilize other exit strategies to move lots including: selling lots directly to dealers, owner financing the homes on land and maintaining the note, owner financing the homes on land and selling the notes to note buyers, lease the homes, lease the homes and sell them to investors looking for cash-flow, and also lease options of the homes on land to owners and investors.