Frequently Asked Questions

Real estate syndications are group investment opportunities. As a limited partner/passive investor in a real estate syndication, your capital is invested alongside other investors in a single commercial asset (i.e. a 240 unit apartment complex in Atlanta, Georgia). The best part about passively investing is you don’t have any other responsibilities – you get to leave the hard work to us! We vet opportunities and operators who will actively manage the asset and execute the business plan.

These types of deals are unique and highly sought after. We spend a lot of time underwriting deals and submitting offers – but very few of them end up going to contract. We typically offer up to 4 investment opportunities per year to our investors. We strive to create a resilient commercial real estate portfolio for ourselves and our investors- one that is designed to thrive in any economic environment. Thus, we invest in non-correlated, recession-resistant asset classes, such as Apartments, Self-Storage, Industrial, Mobile Home Parks & Short Term Rentals.

Every deal is different in how quickly it “subscribes” and closes to investors – much of that depends on the market, returns, and the size of the capital raise. On the aggressive side, we’ve seen deals fill up in a couple of weeks while others are available for 30-60 days. Keep in mind these investment opportunities are being sent out to thousands of investors to evaluate, and there’s only space for 60-80 total investors on the average deal. The quicker you can act in your evaluation and reach out to us with questions, the more likely you’ll be able to participate before it fills up.

As soon as we have a deal under contract, we’ll send you an email with high-level details of why we love the deal, business plan objectives, and the potential returns. You’ll be invited to participate in an investor webinar that’s typically a couple of weeks after we initially notify you of the deal. So be sure to block off time on your calendar and attend this live to ask questions. Once the webinar is completed, we’ll email out a recording with the slide deck that includes all the business plan details and a link to review the documents in the investor portal. If you love the deal and want to invest, you’ll complete the documents in the investor portal and wire your funds with the instructions provided. (And don’t worry, we’ll walk you through each step when it’s time and make it super simple!)

You can invest through cash (wired funds from your account), Self-Directed 401K or IRA, personally or through an entity like an LLC or Trust, and individual or joint-registration with your spouse.

Due to SEC regulations and our unique partnership structure, we must have a pre-existing, substantive relationship with our investors before we’re able to send live investment opportunities. Getting started is simple - simply fill out the investor form, and schedule a call with our team HERE.

We accept both accredited and sophisticated investors (see definitions below). You can also invest through your self-directed 401K, IRA, and QRP funds. DEFINITIONS Accredited Investor: Your individual income has been $200,000 or more in the past two years, and you have a reasonable expectation of reaching the same income level this year. OR Your joint income with your spouse has been $300,000 or more in the past two years, and you have a reasonable expectation of reaching the same income level this year. OR Your individual net worth (or joint net worth with your spouse) exceeds $1,000,000, excluding your primary residence. ​ Sophisticated Investor: You have sufficient knowledge and experience in financial and business matters to make you capable of evaluating the merits and risks of the prospective investment.

Yes. As a syndication investor, you can get the tax benefits of property ownership, including *accelerated depreciation through cost segregation, which can help lower the taxable passive income you receive. *Cost segregation identifies costs that would typically be depreciated over 27.5 years and reclassifies them to permit a shorter, accelerated depreciation method. This segregation model leads to substantial tax savings for the investor versus the standard depreciation model. Every year, you’ll receive a Schedule K-1 tax form for your tax filings. This form will report your income and losses for the investment. There is an opportunity to apply the losses against your ordinary income if you are a real estate professional. DISCLAIMER: Luxe Capital, its partners, and its representatives do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your tax, legal, and accounting advisors before engaging in any transaction.

Typically, our goal is to invest in properties that return 7-9% annually and an average annual return in the 16-20% range for the hold period. In a value-add project, a large part of the investor returns come in the year of sale. This is often modeled as year 5.

We target a 2-5 year hold on our deals. This provides time to execute our value-add plan and then cash flow for a few years while looking for an opportunistic sale. Some investor principal could be returned as early as year 2 or 3 from a refinancing event or we may want to continue to cash flow until year 5+ if market conditions are not favorable.

We typically pay distributions on a monthly or quarterly basis. Often there is a ramp phase - during this phase distributions will be lower. Next, will be the stabilization phase - distributions are expected to grow during this time. Every deal is different, so it is important to take a close look at this aspect of every deal.

Our minimum investment is typically $35,000 or $50,000, depending on the deal.

We communicate regularly: Monthly Updates: Current operations and capital improvements. Monthly or Quarterly​ Cash Flow Distributions. Tax​ Documents: A K1 is sent as soon as it is available – typically between April 7th and April 30th. Investors should prepare to file an extension, although we try to avoid this scenario.

Risks are outlined in the Private Placement Memorandum. That said, here are a few data points. In 2009, at the bottom of the financial crisis, delinquency rates on single-family homes was 5%. At this same time delinquency rates on multifamily apartments was 1%. Additionally, vacancies in Class C and B (older properties where value-add syndicators play) remained steady at 8%. We further mitigate risk by targeting proven assets where the current owner is generating good cash flow (our due diligence includes auditing the trailing 12-month financials, bank records and tax returns). Additionally, lenders will not loan millions of dollars unless we are experienced, have a good business plan, conservative underwriting (banks will underwrite the deal as well), have adequate insurance, and have an inspection completed by outside experts.

During a typical economic downturn, the goal would be to continue to collect rents, provide cash flow and hold until the market is healthier to achieve a better price at sale. Class B/C value-add apartment properties tend to hold up much better in downturns because folks need a place to stay and rents are more in line with the market/service economy demographic that is typically still employed in downturns versus the higher paid class A renters whose jobs are more at risk. One reason we invest in different asset classes, such as Self-Storage, Multifamily, Short Term Rentals, and Industrial, is that each sector will face different challenges at different times. For example, an economic downturn is often really positive for Self-Storage occupancies.

We model different scenarios to show our break-even point for profitability given a decline in occupancy or if rents drop below projections. Most of our scenarios allow occupancy to drop between 65-80% to break even (apartments). However, certain asset classes will vary from this benchmark. Third party data shows that in our target markets the worst apartment vacancy levels were around 85% during the 2009 financial crisis.

There is nothing in our prospectus for a workout or formula for such a scenario. The investment should be considered an illiquid investment. That said, the general partner will review your situation and see if there is something that can be done to help.

The returns forecasted to you are after fees. The most common fee is an acquisition fee based on purchase price and is paid closing. This covers the general partner’s costs to find the deal and get it under contract. The second most common fee is the asset management fee which is compensation for holding the property manager accountable, to ensure execution of the business plan, bookkeeping, and distribution of checks and K1s. The asset management fee is aligned with the investor’s interest as it is based on the property’s revenues. Industry averages are 1-3 % for both fees.

The Private Placement Memorandum is required by the SEC and describes the offering, risks, includes the partnership agreement, investment summary and subscription agreement. It is a lengthy legal document (approx. 100 pages) prepared by a syndication attorney. The subscription agreement section includes basic information as to amounts being purchased and percent ownership. The risk section highlights just about every possible risk that could happen.