Episode 3 of The RealCrowd Podcast is now available on your favorite podcast listening platform. In this episode, RealCrowd Co-Founder & CEO, Adam Hooper, discusses fees that investors will come across when investing in commercial real estate with Michael Episcope at Origin Investments.
In this episode listeners will learn about:
– Real estate fee terminology
– The quickest way to analyze the impact of fees
– Fee structures that provide incentive for sponsors to work for investors
– The market rate for various fees
Michael Episcope co-chairs the Investment Committee and oversees capital raising efforts and company operations at Origin Investments. He has been an active real estate investor for more than 15 years and has overseen the acquisition and disposition of more than $1 billion of commercial real estate. He cofounded Origin Investments in 2007 as a vehicle to invest his personal capital in private real estate. He has helped Origin become an industry leader through his 25 years of risk management and investment experience.
Before forming Origin, Michael spent 15 years trading interest rate derivatives. He had a prolific career and was twice named one of the top 100 traders in the world by Trader Monthly Magazine. In 2005, he retired from trading with the intention of focusing full-time on real estate investing.
Origin Investments is currently offering Origin Fund III to accredited investors on RealCrowd.
To listen to the podcast, please click the button below of your favorite podcast provider.
Episode 2 of The RealCrowd Podcast is now available on your favorite podcast listening platform. In this episode, RealCrowd Co-Founder & CEO, Adam Hooper, discusses the ins and outs of self directed IRA investing with leading expert, Mat Sorensen.
Mat Sorensen is a partner at KKOS Lawyers in its Phoenix, AZ office. KKOS Lawyers assists clients nationwide from its offices in Arizona, Utah, and California. Mat’s practice has a particular emphasis on self directed retirement plan law. Mat has assisted over 1,000 clients with self directed retirement plan investments and has established IRA/LLCs, partnerships, private offerings, corporations, and other investment structures with self directed IRAs and 401(k)s. In addition to his legal practice, Mat also serves as an instructor for the Retirement Industry Trust Association’s (“RITA”) Self Directed IRA Professional certification program. RITA is the premier national association representing the self directed retirement plan industry.
To listen to the podcast, please click the button of your favorite podcast provider below and be sure to subscribe to stay up to date.
Listen as Pat Poling, Founder & CEO of Mara Poling, discusses the impact of the election on commercial real estate, the current multifamily climate and where multifamily is headed in 2017.
Mara Poling is currently offering the Mara Poling Total Return Fund to investors on RealCrowd.
Mara Poling is a total return real estate investment firm dedicated to helping their Investor Clients Build Lasting Wealth. Headquartered in Dallas, Texas with offices in Northern California, Mara Poling’s principals bring over 60 years of commercial real estate experience to the multi family investment market. Experienced asset managers with a proven track record including acquisition and management of over $1B in assets, $1.5B in annual cash flow, and more than 10,000 acquisitions. Mara Poling has acquired 700+ units $40M in Multi Family assets in the last 15 months.
The next post in our Guest Blog series is provided by Pat Poling, Principal of Mara Poling, and provides an overview of his thoughts on multifamily investment strategies and its benefits to investors. You can view their latest offering by clicking here.
The following are solely the opinions of Pat Poling and do not constitute financial advice or counsel from RealCrowd. RealCrowd is not an investment advisor, attorney, tax consultant or endorsing the following comments. As always, please consult your investment advisor prior to making any investment decisions.
“I need better returns!” cried every investor I’ve ever met. When queried as to what better returns means the responses are many. I need more stability. I want less risk. I want higher returns. I want it all. Ah, Optimized Returns, the holy grail of the investing world. Well, here are 4 easy steps you can take today in your quest for Optimized Returns.
Revise your asset allocation
Equities? Check. Bonds? Check. Fixed Income? Check. Cash? Check. Real Estate? … Did you know that 40% of investment portfolios do not contain any commercial real estate, and those that do are underweighted (according to Goldman Sachs).
- Commercial Real Estate in general, and Multi Family Real Estate in particular, deserves a place in your portfolio. A 2013 study by Thomson Reuters Datastream tells the whole story.
- Commercial real estate generates total returns exceeding small cap and large cap stocks; with stability on par with corporate and government bonds – all with tax advantages neither can offer (depreciation, 1031 exchange, pass through tax treatment/K-1).
- And remember, returns in the Multi Family segment of Commercial are driven by a supply/demand imbalance that will continue for years to come (more on that another time). How much Commercial Multi Family is up to you. Don’t miss out on a key component of an optimized return – add some Commercial Multi Family to your portfolio.
Invest in a Fund
- Funds provide diversity, tax efficiency, actual real estate ownership (not a stock), and the ability to add to your position.
- A fund has the ability to provide greater tax efficiency than an investment in a single property. Laddering asset acquisitions can result in net losses at the fund level even after some assets begin to generate positive income. Timing 1031 exchanges to minimize tax exposure can defer gains while providing fresh assets to depreciate.
- A Fund is not a publicly traded REIT – a publicly traded REIT is a stock in a company that owns real estate, subject to the whims of the stock market. You want a Fund not a REIT.
- An extra benefit of some funds is the ability to add to your position over time, enabling you to grow your position while maintaining your diversity (an investment in a single asset is a one time transaction).
Re-Invest your cash distributions
- Compounding is one of the most powerful forces in investing.
- Cash yield is a valuable component of the total return associated with Commercial Multi Family real estate. Re-Investing some or all of your cash distributions can be a powerful force to grow your returns.
- Ask your sponsor to reinvest your quarterly distribution checks back into your capital account. Note – not all investment sponsors offer a reinvestment option.
- The compounded growth from reinvestment will boost your return substantially. Selecting the reinvestment option, in our experience, can increase your total return by 250 to 300 basis points or more.
Use your IRA
- A small fraction of the more than $6 Trillion in IRA accounts is invested in real estate. Put your retirement fund dollars to work doing more than investing in index funds or whatever else your current IRA provider offers.
- Take control and invest in what you want to invest in – Commercial Multi Family real estate.
- The average return on investment for IRA funds in the US is less than 10%, significantly lower than your potential return from a Commercial Multi Family investment.
- Select your Commercial Multi Family investment carefully as not every sponsor can or will accept IRA investments.
So there you have it. A simple four-step plan to optimize your returns. 1. Add some CMF to your portfolio, 2. Through a well managed Fund, 3. One that provides a reinvestment option, and 4. Accepts investments from IRA accounts.
Pat Poling is the Founder and CEO of Mara Poling, a Total Return real estate investment firm dedicated to enabling their clients to Build Lasting Wealth. Check out the Mara Poling Total Return Fund now available on RealCrowd.
This week we sat down with Chief Executive Officer of Avistone, LLC, Richard Kent, to find out why industrial assets are the focus of their investment strategy. Check out their latest offering for Avistone Presidents, LLC.
The following are solely the opinions of Mr. Kent and do not constitute financial advice or counsel from RealCrowd. All investments involve risk. As always, please consult your investment advisor prior to making any investment decisions and carefully read the risk disclosures and forward looking statements in the Private Placement Memorandum for the applicable transaction prior to investing. This does not constitute an offer for the sale of any securities.
Avistone, LLC focuses exclusively on the multi-tenant industrial real estate sector. Compared to other types of real estate – or even to other types of equity investments – Avistone, LLC believes industrial real estate offers investors a number of potential competitive advantages.
- Attractive Risk/Return: Avistone is the first to admit: industrial real estate is not the sexiest type of investment – no soaring glass towers, jazzy store fronts, hip mixed-use or classy apartments. That is exactly the point: Avistone, LLC believes that, historically, industrial real estate has exhibited less wide swings in market value as opposed to other property types during times of economic weakness.
- Ease of Management: Industrial real estate is primarily leased on a triple net basis where the tenant pays its share of the property operating expenses and most of its interior maintenance costs. Additionally, industrial tenants generally do not require interior janitorial service and industrial properties rarely include interior common areas that need to be maintained by the landlord.
- Lower Cost of Ownership: Industrial real estate is primarily leased on a triple net basis where the tenant pays its share of the property operating expenses and most of its interior maintenance costs. Additionally, industrial tenants generally do not require interior janitorial service and industrial properties rarely include interior common areas that need to be maintained by the landlord.
- Industrial RE Is Flexible: Industrial properties come in a variety of shapes and sizes. There can be warehouse with little office, or space that’s heavy on office with some warehouse for distribution, warehouse area can be converted into biotech space or a baking facility… and so on. Given proper zoning, industrial real estate allows for far greater flexibility in accommodating tenants’ needs than other commercial property types.
- Industrial RE Supply Is Shrinking: Avistone, LLC believes that we are seeing an urbanization renaissance in the United States. Dilapidated industrial buildings are being turned into hip night clubs, chic lofts, apartments and “collaborative space” offices. At the same time, very little new industrial construction is occurring in the urban and suburban areas. As former industrial areas are being rezoned, there is less room for suppliers and distributors to access and store their inventories. From an investor’s supply/demand perspective, this means that industrial has the potential to become more valuable in these areas as businesses prefer to be closer to the cities they supply.
- High Replacement Cost / Barriers-To-Entry: Which brings us to the primary expense driver of new industrial projects: the high cost of acquiring and entitling land. While industrial properties are typically single-story and not necessarily expensive to build, they do require far larger sites of land as opposed to vertical projects such as office, multifamily and hospitality. Generally speaking, developing new industrial sites does not offer municipalities the same tax revenue opportunities as retail, hospitality, housing or high-rise office. Thus, Avistone, LLC believes that the increasing demand for industrial space and the high cost of building new projects potentially places upward pressure on rental rates on existing projects, which may increase opportunities for appreciation in existing properties, especially those acquired below replacement cost.
- Changing Nature of US Employment Market: Today, according to Small Business Association, 40% to 50% of all job growth in the country is driven by businesses with fewer than 50 employees, and this trend is expected to increase over the foreseeable future. Avistone LLC believes many of these businesses will seek to expand space they already occupy in multi-tenant industrial projects and business parks.
- Growth of Internet Retail: According to the National Association of Industrial and Office Park Owners (NAIOP), e-commerce (product warehousing for shipping) now drives 30% to 40% of the industrial real estate business. As one of the fastest growing segments of the economy, ecommerce is expected to account for one-third of all retail sales in just 15 years; and shift more and more space from expensive brick and mortar retail stores to industrial properties – primarily warehouses and e-commerce fulfillment centers.
- The Coming Revolution in 3D Printing: Forbes Magazine, The Economist and other leading business publications are calling 3D Printing “The Next Industrial Revolution.” Because most practical applications will extend beyond “home-use,” the explosive growth in this industry over the next 10-years will house itself primarily in industrial properties. Along with that, Avistone LLC believes the widely reported coming growth in industrial robotic manufacturing and assembly will directly impact industrial properties.
- Home Building and Infrastructure Construction: Industrial properties are often home to businesses engaged in the construction industry. As a result, Avistone LLC believes expanded activities in new residential/commercial construction, the oil and gas industry, and renovation of the nation’s aging infrastructure of roads, bridges and utilities will have a positive impact on industrial properties. Specifically, Avistone LLC targets industrial projects in regional markets exhibiting these strong economic drivers.
Avistone, LLC, is a real estate investment firm specializing in the purchase of multi-tenant industrial / business park properties and creating alternative investments for individual investors seeking high current yield, strong returns and the mitigation of risk. We target individual properties that have the potential of providing our clients with current cash-on-cash distributions and the potential for appreciation over 5-year holding periods.