What Is An Accredited and Sophisticated/Non-Accredited Investor?
Here’s how the SEC defines an accredited or sophisticated investor:
“An accredited investor, in the context of a natural person, includes anyone who:
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, either alone or together with a spouse (excluding the value of the person’s primary residence).
There are other categories of accredited investors, including the following, which may be relevant to you:
any trust, with total assets in excess of $5 million, not formed specifically to purchase the subject securities, whose purchase is directed by a sophisticated person, or
any entity in which all of the equity owners are accredited investors.
In this context, a sophisticated person means the person must have, or the company or private fund offering the securities reasonably believes that this person has, sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment.”
As of 08.26.2020, The SEC added some amendments to the accredited investor definition in Rule 501(a). One of the highlights is a new category to the definition that permits natural persons to qualify as accredited investors based on certain professional certifications, designations or credentials or other credentials issued by an accredited educational institution, which the Commission may designate from time to time by order. In conjunction with the adoption of the amendments, the Commission designated by order holders in good standing of the Series 7, Series 65, and Series 82 licenses as qualifying natural persons. Click here for press release.
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.
How Do I Get Started?
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.
How Are Our 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 which reduces liability. You in turn 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 flow, depreciation, and upon sale of the asset allows you to realize long term capital gains… PLUS, you literally get to tell your friends you “own” a storage facility, because you do.
Can I Invest With My Retirement Account?
Yes. Investing in self-storage in a structure like ours is perfect for retirement plan investing because your involvement is by definition 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.
What Will My Return On Investment Be?
All our investment and Private Placement Memorandums are based on individual properties, and every property is different and will therefore offer different returns.
Our returns typically consist of two parts:
Preferred Return from Cash Flow: Each investment is selected such that it pays an minimum average annual preferred return of at least 6% (depending on the individual property deal this could be higher than that) which is paid out quarterly via direct deposit into your bank account or by check. In other words, the investors get paid first before the sponsors get paid anything. This protects you as an investor and makes sure we only pick projects that have strong cash flow outlooks.
Profit Share/Back End Profit: Upon a Sale or Refinancing of the 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.
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 This 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 case 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. Further, you can use those paper losses to offset your other income, like income from your job.
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. Further, any dividends are taxed as ordinary income, which can contribute to a bigger, rather than smaller, tax bill.
When Should I Expect My First Distribution?
It varies from property to property, but in general as a LP (Limited Partner) 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.