FAQ

Syndication business matches a good deal with investors; it’s that simple. Syndication = Group investing. It is when a group of people form a new company to undertake a business transaction. Real estate syndication allows passive investors to invest in a larger project than they would be able to purchase as individuals. Passive investors do not do any of the work to manage the project. General partners are the ones handling the day-to-day operations. Our G.P.’s have decades of collective experience.

As a passive investor, you invest your money, sit back and relax while receiving your returns. There is no need to concern yourself with the daily operations, maintenance, and tenants. Fratelly’s team handles the hard work and provides you with updates and progress.

The majority of projects plan for a 5-7-year-old. Therefore, you should ideally have your money in the investment for a minimum of 5 years. During this time, you will receive regular monthly or quarterly cash flow returns, but your original investment cannot be withdrawn. However, we understand that five years may be a long time, and life happens. In the instance of a significant life event happening and you need out, we will do everything we can to help you get out of the investment, including buying out your shares.

Every investment is different, so there is not an exact percentage, it will vary from one project to the next. However, all returns are cash on cash and paid throughout the life of the investment. If the investment sells, you will receive a portion of the profit from the sale.

We structure the deal by making you a limited liability owner, making you a direct shareholder. We structure it this way because it allows for a direct flow-through of cash flow and depreciation.

An accredited investor is someone who meets certain requirements regarding income and net worth, based on Securities and Exchange Commission (SEC) regulations overall so that the Securities and Exchange Commission (SEC) can guarantee proper protection for all investors.

To be an accredited investor, you must satisfy at least one of the following:

1. Have an annual income of $200,000, or $300,000 for joint income, for each of the last two years, with expectations of earning the same or higher income this year.

2. Have a net worth exceeding $1 million, not counting your primary home

Multifamily investments are among one of the safest real estate investments out there. However, with any investment, there are always risks. To reduce risk, we purchase “below market” and place our strategic property management systems and processes to reduce expenses and increase revenue. By doing so, we can ensure execution is performed correctly.

Additionally, commercial real estate assets such as apartment buildings and self-storage operate independently of the stock market. Likewise, they are better in recessions, because more people are inclined to downsize. They also tend to be safer investments than single-family homes. Mainly because if one tenant moves out, you still have the others to pay down the mortgage.

We take essential measures to reduce risks for every venture we take significantly. If something unexpected occurs, we notify you immediately and work quickly with our team to get it resolved. We prioritize protecting your investment with a strategic investment process that focuses on maximizing returns.

Typically, these investments have an exit strategy of five years. Then again, it may vary depending on the scope of the project and the completed business plan. As the project progresses on time and throughout the holding period, investors receive monthly or quarterly payouts.

The holding time may be affected by fluctuating economic conditions. With that in mind, investors must have trust in the management team’s decision making to increase returns for investors.

When the market is down, we do not sell. Our strategy is to hold onto the property while continuing to pay the preferred return minimum until the market stabilizes again for an improved sale price. On the bright side, during economic downturns, B and C class properties tend to sustain because they are more affordable.

It is the claim on profits given to preferred investors first before general partners can collect their shares and usually communicated as a yearly percentage.

We prefer to keep things simple. We look for returns and aim to hit double digits by the third year and double your investment by the fifth or sixth year. We have found that 14-18% IRR is right on the money.
There are three ways we are compensated:

1.) We apply a one to three percent acquisition fee at closing, depending on the size of the deal.

2.) We charge an asset management fee of one percent.

3.) 20% of cash flow, 20% of sale proceeds, or refinance in sponsorship equity.

No. Real estate investments are long-term.

The funds are typically wired directly or sent by check and held in an escrow account in the name of the LLC until the property has been closed. Need not to worry, Fratelly does not take any ownership of your funds.

A K-1 is a yearly tax document similar to a 1099 and frequently used in real estate ownership and partnerships.