What is an accredited investor?
An accredited investor is a term used by the U.S. Securities and Exchange Commission (SEC) under Rule 501 of Regulation D. In order to qualify as accredited, an investor must accomplish at least one of the following:
- Earn an individual income of more than $200,000 per year, or a joint spousal income of more than $300,000 per year, in each of the last two years and expect to reasonably maintain the same level of income
- Have a net worth exceeding $ 1 million, either individually or jointly with his or her spouse. Be a bank, insurance company, registered investment company, business development company, or small business investment company. Be a general partner, executive officer, director or a related combination thereof for the issuer of a security being offered
- Be a business in which all the equity owners are accredited investors
- Be an employee benefit plan, a trust, charitable organization, partnership, or company with total assets in excess of $5 million
How do I show I am an accredited investor?
Prior to getting approval to invest in a private offering with Passive Storage Investing, you will be required to show that you qualify as an accredited investor.
When you click on the “Invest Now” button on an offering in the InvestNext investor portal, one of the first questions you are asked is whether or not you are accredited. You then have the option to upload a verification letter from your CPA or attorney, or you can choose the other option, which takes you to a third-party verification service through Parallel Markets.
Do you allow international investors?
Can I invest even if I am not accredited?
YES! We offer investment opportunities for accredited and sophisticated non-accredited investors. Due to SEC guidelines, we only publish Accredited investor projects on our website.
If you are non-accredited and would like to learn more about our investment projects, please fill out our Investor Application and we will contact you when we have non-accredited opportunities.
Can I use an SDIRA or other type of IRA for my investment?
Yes. Investing in self-storage in a structure like ours is perfect for retirement plan investing because your involvement is passive. All you need to do, if you haven’t already, is set up a SELF-DIRECTED IRA with an independent custodian, like Directed IRA, Specialized IRA Services or Vantage IRA. Once that is done you can invest using your IRA/401K/ROTH-IRA or other similar self-directed retirement account forms.
When will I get my investment back?
Each project is different, and the projected timelines are presented in the offering documents.
What kind of properties do you invest in?
We currently solely invest in self-storage facilities, one of the most recession-proof segments of the Real Estate Market, particularly with the United States population continuing to grow and the need for storage increasing. Within this segment, we focus on C- to C+ class self-storage facilities so we can buy at a reasonable price, add value, and generate returns.
What is a K-1?
Similar to a 1099, a Form K-1 is an accounting of the tax income for the year. Each investor receives one per investment. Form K-1s are most commonly used in partnerships and in real estate ownership.
What happens if there is more interest in investment in a project than funding needed?
Investments are usually closed on a first-come, first-served basis; although Passive Storage Investing reserves the right to reject any particular investment. Once the total listing amount is reached, the listing is closed.
What documents will I receive as an investor?
As long as you are an investor, we will send you a Form 1099 or a Form K-1, as appropriate. We strive to have these documents to you by approximately mid-March of the following tax year.
What are the tax implications of investing with Passive Storage Investing?
Tax implications may vary according to investment. Generally, investors can expect to receive a 1099 for a majority of investments on the platform. However, investors should consult their independent tax advisor for specific questions regarding tax treatment.
Can I invest if I am new to real estate investing?
Yes! We’re here to guide you and can provide educational resources that will help you confidently make smarter investing choices.
What is the difference between Passive Storage Investing and a REIT?
When you invest in a REIT, you are buying shares in a company, just like when you buy shares in a stock. You do not own the underlying real estate; you own shares in the company that owns those assets.
When you invest in a real estate syndication, you are investing directly in a specific property. Together with the other limited partner investors and general partners, you will own the entity (usually an LLC) that holds the asset. Thus, you have direct ownership.
When you invest in an apartment REIT, that REIT will likely own and manage a lot of apartment buildings in multiple markets across the country. With a real estate syndication, you are investing in a single property in a single market.
With a REIT, you can invest a very small amount of money, just like a stock. Syndications typically have higher minimum investments, often $50,000 or higher.
When you invest directly in a property through a real estate syndication, you get the benefit of a variety of tax deductions, including depreciation. In some cases those tax benefits can be quite substantial. The depreciation benefits often surpass the cash flow, so you’re showing a loss on paper while you’re actually getting positive cash flow. Furthermore, you can use those paper losses to offset your other income.
When you invest in a REIT, because you’re investing in the company and not directly in the real estate, you do get the benefits of depreciation, but those are factored in before you get your dividends so you don’t get any tax breaks on top of that and you can’t use that depreciation to offset any of your other income. Also, any dividends are taxed as ordinary income, which can contribute to a bigger, rather than smaller, tax bill.
Is there an investment minimum?
It varies on the project but generally the minimum is between $ 25,000 – $50,000.
Is my investment liquid?
Generally, no. While we understand circumstance arise that require our investors to exit offerings before they conclude, we cannot guarantee investments will be available prior to the closing of the offering. We can commit to trying to replace investors within a current offering, but any expenses occurred in the replacement are the responsibility of the exiting investor.
How are your deals structured?
In most investment opportunities you will be a limited liability owner of the property, which comes with all the ownership benefits like depreciation and cash flow. The property is owned by a “Kingdom Storage Partners” entity for which that property is the only asset, thereby reducing liability. You will be a direct shareholder in this business entity, so in essence, you are part owner of the company that owns the property. This allows for a direct flow-through of cash, depreciation, and upon sale of the asset allows you to realize long term capital gains. Additionally, you literally get to tell your friends you “own” a storage facility, because you do.
What will my return on investment be?
All our investment and Private Placement Memorandums are based on individual properties, and every property is different so will therefore offer different returns.
Our returns typically consist of two parts:
Preferred Return from cash flow: Each investment is selected so that it pays a minimum average annual preferred return of at least 6% (depending on the individual property deal this could be higher) which is paid out quarterly. Investors get paid first before the sponsors get paid anything, which protects you as an investor and makes sure we only pick projects that have strong cash flow projections.
Profit Share/Back End Profit: Upon the sale or refinancing of a property, it is our goal to return 100% of the initial invested amount to each investor, and then do a profit split between sponsors and investors.
When should I expect my first distribution?
It varies from property to property, but in general as a Limited Partner (LP) you should expect to receive a cash distribution on a quarterly basis, and then also upon an exit event. The first quarterly cash distribution is typically a short time after the end of the quarter in which the property closes.
How will I be updated on the progress of my investment?
You can view your investments on our investor portal, InvestNext, through your dashboard. We also send out monthly project update emails and are always available at info@PassiveStorageInvesting.com to answer specific investor questions.
How does the investment process work?
Once you’ve decided to partner with Passive Storage Investing, we like to set up an initial one on one call to get to know each other better. We like to get to know our investors on a personal level so that we can offer investment opportunities that meet their criteria.
How do I get started as an investor with Passive Storage Investing?
You can get started as an investor with Kingdom Storage Partners, LLC by completing our online Investor Application.
How are legal documents handled by Passive Storage Investing?
We work with tax and securities attorneys that review all our documents prior to being released.
Are there fees for investors?
No. Our sponsorship/management fees come from the expenses of the project, not your investments. Also, we only pay ourselves after all investments and projected returns are paid out.
Are the investments secure?
No investments are completely secure. While we have a very thorough due diligence process designed to mitigate as many risks as possible, there are many factors that are simply outside our control. We recommend consulting your investing team when assessing the risk of investing in speculative real estate investments.