FAQ

DR Capital does NOT hold your investment funds. In fact, if you invest in a syndication during a capital raise event, those funds are never sent to us. Your funds are directly deposited by YOU via WIRE into the Syndicator's account and any financial communications are conducted directly with the Syndicator.

Real estate syndications are group investments. As a limited partner and passive investor in a real estate syndication, you invest your money alongside dozens, and sometimes hundreds of other investors, and together, invest in a commercial real estate asset like an apartment building. ​ As a passive investor, you have no active responsibilities in the deal. The DR Capital team manages the asset and its performance on behalf of you and other limited partners invested in the deal.

The projected returns will vary from deal to deal and like all investments, never carry guaranteed outcomes. That being said, we typically pursue deals that provide a 7-8% annual return, along with a 16-18% IRR (internal rate of return).

The minimum investment is $50,000. We are in a unique position to lower the investment threshold on our offerings from the typical $75,000 - $100,000 minimum. Bring that opportunity to our investor group.

You do not need to be an accredited investor to invest alongside DR Capital. However, certain deals will be open to accredited investors only. ​ To be considered an accredited investor, you must meet one of two criteria. Either you have $1 million in net worth, (not counting your primary home) or you make $200,000 per year (or $300,000 if you’re married), have done so for the last two years, and expect to maintain that level of income through the current year.

The average projected hold time for our investments is 3 – 5 years.

At DR Capital, we focus on Value Add Class B and C multifamily apartment communities with 100 units or more, and present compelling value-add opportunities, in growing markets throughout the Southeast and Midwest.

DR Capital focuses primarily on growing markets. However, we do not turn down great opportunities in other markets. When evaluating any market, we look for strong job growth, population growth, and job diversity, among other factors.

At DR Capital, capital preservation is our No. 1 priority. Above all else, we do everything in our power to protect your hard-earned money. ​ While there are no guarantees with any investment, we ensure that every deal has plenty of reserves, ample buffer, and multiple exit strategies in order to best protect and grow your capital. ​ Although multi-family properties are often considered stable and safe among various investment asset classes, there is always risk to any investment. In order to manage risk, we leverage established relationships with local brokers to obtain “off-market” and “below-market” deals. We partner with local, experienced property management companies that know the neighborhood markets we invest in, so the property is operated as efficiently as possible by optimizing income and reducing expenses. There are no guarantees in investing. We the sponsors invest our own personal capital into the deals so we have aligned interests and goals with the investors in the group.

In order to get the most accurate tax information for your unique situation, we highly recommend you consult your own CPA. That being said, as an investor in a real estate syndication, you get the pass-through tax benefits of owning the real estate itself. This includes accelerated depreciation and cost segregation, which can help to lower the taxable passive income you receive. ​ Each year, you’ll receive a Schedule K-1 reporting your income and losses for the investment. ​ Further, if you’re a real estate professional, you may be able to apply these paper losses to your ordinary income as well. Again, consult your CPA for specifics.

To get started, join the DR Capital. We’ll take some time to get to know you and your investing goals, and then we’ll share upcoming investment opportunities with you. The DR Capital is free to join, and there are no commitments to invest.

Can I invest through my IRA, LLC, LP, or Trust? Yes. Investors are able to invest through their traditional self-directed IRAs. Investors are also able to invest through their LLC, LP, or Trust. Please contact DR Capital if you have questions about how this works or need help selecting a custodian.

An investor can expect to receive monthly distributions depending on the specific business plan for each investment property. We may also distribute additional capital to investors from time to time. This depends on the performance of the properties and when properties are sold or refinanced.

No. Commercial real estate investments are longer-term in nature than traditional liquid stocks and bonds. Investors would receive a projected hold period timeline from the beginning of the investment and consistently throughout the life of the project. Cash distributions are done through cash flow from the property during the holding period of the asset. Many times investors may not receive their full principal investment back until the property sells and investors cash out from the profits upon disposition. Rise48 Equity makes no guarantees of investor returns.

As a partner in the LLC that purchases the properties, you will receive a K-1 tax form used by partnerships to provide investors with detailed information on their share of a partnership’s taxable income. Partnerships are generally not subject to federal or state income tax, but instead issue a K-1 to each investor to report his or her share of the partnership’s income, gains, losses, deductions and credits. The K-1s are provided to investors on an annual basis so that each investor can include K-1 amounts on his or her tax return. Many of our investments feature strong depreciation benefits which will be clearly stated in the K-1.

Yes! Some of our offerings are structured to allow for 1031 exchange funds. Please contact us if you’re in need of a 1031 exchange investment.

Yes! If you have an IRA it is possible to roll it over into a self-directed IRA or solo 401k custodian, which allows you to invest your tax-advantaged retirement dollars into alternative investments that a standard IRA will not.

You can learn more about our future investment opportunities by signing up for the newsletter. You will then be able to schedule a call with Rob or Deepak at your convenience to discuss how to move forward as an investor.

Typically a recurring fee paid from property revenues to the general partner for asset management. Related: Real Estate Syndication Definitions & Metrics

Typically short-term loans enabling investors to leverage equity in one property to finance another or access cash for a down payment on a new acquisition.

These expenses are funds used by the managing company or partners to acquire, improve, or maintain a property. Also referred to as CapEx. It specifically applies to when these funds improve the useful life of a property.

The cap rate. Calculated by dividing net operating income by current market value of a property to determine an expected rate of return. Related: Real Estate Syndication Definitions & Metrics

Remaining liquid profit after deducting operating expenses and any debt service payments.

A rate of return calculated by dividing the cash flow being produced by a property by the initial cash investment.

This is the process of identifying assets and costs, and their classification for tax purposes. Applies for reducing current tax liability and deferring taxes.

Costs required to close on a real estate or financing transaction. May include origination, application, processing, underwriting, appraisal, and recording fees.

A debt investment is the investment in debt. For example, a mortgage loan. Debt investors typically earn interest until the debt is fully repaid. There may be an option to convert to equity.

The amount of loan payments required to be paid back to a lender. Also used to calculate the DSCR for qualifying for commercial real estate financing.

The DSCR is the the ratio commercial mortgage lenders use to evaluate and qualify a deal for financing. The DSCR measures how much cash flow will be available to cover debt service. A DSCR ratio of 1 means the cash flow should cover the debt payments. Lenders typically expect a minimum DSCR of 1.2 in order to get a loan. A better ratio may qualify the borrow for better terms.

The term disposition refers to the sale of an asset (property).

These are the funds paid out to investors. These profits may be paid monthly or quarterly or upon a successful exit.

Due diligence describes a group of tasks to screen and evaluate a property and to satisfy lender underwriting requirements. May include appraisals, surveys, inspections, and title work.

An earnest-money deposit is placed into escrow by the buyer of an apartment building to demonstrate their commitment to execute on the purchase contract. Will be credited toward the acquisition cost at closing.

The EGI is the effective income derived by subtracting losses due to vacancy, concessions, employees, model units, and any bad debt.

The cash put into an investment. In an apartment building syndication this capital may be used toward the down payment, closing costs, borrowing costs, funding an operating account funding, along with any compensation earned by the general partners.

The EM is a way to calculate a rate of return on commercial investment property. This is calculated by dividing the total cash distributions (cash flow and cash on exit) by the equity investment made. This is a popular and easy metric to understand. If I invest $100,000 and it grows to $200,000 (including distributions and sale profits) then it’s a 2x (double my investment). If it grows to $193,000, then it’s a 1.93x. The higher the better the return. Most of the deals we review are for a typical 5 year hold period. Related: Syndication: Common Financial Metrics And Key Terms To Understand

This is how the syndicator plans to cash investors out of their investment in the future. This may be by selling the property, purchasing their shares, or refinancing them out.

This is the same as a variable or adjustable interest rate loan. The interest rate—and typically the payments—will float and change with the market.

This is the increase in market value through an increase in NOI, which is forced by an increase in income or a decrease in expenses.

The hypothetical amount of revenue if the apartment community was leased at 100 percent occupancy year-round at market rental rates. Also known as “GPR.”

The potential income a multifamily property could produce if it had no vacancies and all leases were signed at market rates—plus any other revenue.

This calculation shows the number of years it would take for the property to pay for itself based upon the gross potential rent. This is calculated by dividing the property purchase price by the annual gross potential rent.

The holding period is the amount of time the sponsor plans to hold the property.

The cost charged by a lender for using their funds to finance a deal.

A monthly mortgage payment that only requires interest, not the principal balance, to be paid. The balance may be due on sale, refinancing, or at the maturity of the loan.

The IRR is calculated based on all future anticipated cash flow, principal pay down of debt, and proceeds on the exit of a property. Related: Syndication: Common Financial Metrics And Key Terms To Understand

A “JV” is a partnership between two or more investment partners who collaborate on a deal.

Allows a company to utilize pass-through taxation, which shifts the income tax liability from the entity earning the income to those who have a beneficial interest in it.

A key principal in an apartment syndication is a vital person to the ongoing success of the investment. It is someone who should be insured to compensate for any interruptions if something happens to them.

An LOI is a non-binding agreement drafted by the buyer proposing their purchase terms. Typically used as a faster method to make an offer, without being tied into the deal.

In contrast to the general partner, a limited partner’s liability is limited to the extent of their share of ownership. In a typical real estate syndication, a limited partner is a passive investor who puts in capital.

The LIBOR is a benchmark interest rate that is often used to calculate loan rates and interest rate adjustments on a variable rate loan.

The LTC ratio shows the value of the anticipated loan amount against the total costs (acquisition and renovations).

The LTV calculates the ratio of the loan amount divided by the apartment building’s appraised value.

Manufactured housing (commonly known as mobile homes or modular homes in the United States) is a type of prefabricated housing that is largely assembled in factories and then transported to sites of use. Related: Growth with Downside Protection - Three "All-Weather" Real Estate Niches to Invest in Now Manufactured Homes - Interest Increases In This Niche 6 Reasons Mobile Home Parks Rock As An Investment

The market rent refers to the market value of a rental unit for lease based upon comparable rental rates for similar units in close proximity to the subject. Used to calculate value, cash flow, and potential loan amounts.

A MSA is a geographic region with a substantial population. These are cities pooled together with neighboring communities that have high degrees of integration. An example is the Miami Metropolitan Area. This MSA actually encompasses Miami, Fort Lauderdale, and West Palm Beach, three counties, dozens of cities, and even more neighborhoods.

Multifamily properties are a classification of housing where multiple separate housing units for residential inhabitants are contained within one building or several buildings within one complex. (AKA an apartment building) Related: Growth with Downside Protection - Three "All-Weather" Real Estate Niches to Invest in Now Why I Like Investing In Large Apartments Top 10 Reasons To Invest In Real Estate Syndications

The NOI of a property is calculated by adding up all of the incoming revenue from a property and subtracting the operating expenses. Learn how to Increase NOI for Your Apartment Investment here.

A non-recourse loan is a loan on which the borrower is not personally signing a guarantee. The lender generally has no recourse to pursue the borrower in a default, beyond the pledged real estate collateral the loan was made on.

Operating expenses are what it costs to run and maintain an investment property. In apartment syndications, these operating expenses usually include payroll, maintenance, repairs, contractors, marketing, admin, utilities, management fees, property taxes, insurance, and capital reserves.

Also known as the private placement memorandum, this document lays out the risks, terms, and objectives of an investment, as well as documents the syndicators’ business operations and condition.

The strategy of placing your capital into a real estate syndication that is managed for you. Related: Active vs. Passive Real Estate Investing? 5 Important Factors To Consider

This is a long-term mortgage loan guaranteed by government-sponsored agencies Fannie Mae or Freddie Mac. Loans may be amortized for as many as 30 years.

Investors with preferred shares or preferred returns receive their distributions and returns up to an agreed upon percentage before the sponsor. This holds them accountable and ensures interests are aligned. ​ Related: Syndication: Common Financial Metrics And Key Terms To Understand

A penalty for paying off a loan balance early. These clauses can be especially complicated calculations in commercial mortgage lending.

The price per unit of in an apartment building. For example, a 100-unit building for sale at $100,000 would have a price per unit of just $1,000. It is a method of comparing competing properties, assessing value, and weighing returns between investments.

Sometimes referred to the offering memorandum, the PPM is a legal document that is provided to prospective investors that details the offering; the description of the company and how it will be managed, the use of proceeds, the risks of the investment, and the subscription terms, among other things.

A projected financial statement for estimated revenues and expenses. Often detailed for one and five years.

A recurring cost for having a professional property management company manage day-to-day operations of a property.

A RUBS system is a way to bill tenants back for utility costs. Can be based on occupancy or square footage leased.

In contrast to a non-recourse loan, this is the right of a lender/creditor to pursue the debt owed to them. A full recourse loan can expose liability to personal assets beyond the collateral in the case of a default on the loan.

Replacing a debt obligation on a property with a new loan, often with different terms.

A rent premium can be earned upon completing upgrades and renovations.

The spreadsheet or document detailing each of the units in an apartment community. A good rent roll will include unit numbers, unit types, square feet, tenant names, market rents versus actual rent, deposit amounts held, move-in dates, lease-start and lease-end dates, and current status.

To reposition a property is a strategy in which the owner, or general partner, of a property aims to change the position of the asset in a market through adding value and/or rebranding the property.

A return hurdle is the rate of return that, when achieved, triggers a disproportionate profit split. Common return hurdles are pref, IRR, and equity multiple.

The ROE is the amount of net income returned as a percentage of shareholders equity.

The ROI is the cumulative cash flow plus net resale proceeds divided by the Members’ equity contribution.

The reversion cap is the expected CAP rate at the end of an investment (or disposition of a property). It is the benefit that an investor expects to receive at the time of sale.

The typical method for estimating a property’s value based on recent similar sales in the area.

A Self-Directed IRA is technically not any different than other IRAs (or 401ks). The government created the IRA to allow investments to grow tax-free or tax-deferred compounded over time to maximize growth. The IRA can also qualify for yearly tax-deductions (depending on the account type), provide asset protection, and assets may be passed to future generations for qualifying accounts. A self-directed IRA is unique due to the available investment options and because it puts the IRA owner in control. Most IRA custodians only allow approved stocks, bonds, mutual funds and CDs. A truly self-directed IRA custodian allows this type of investing in addition to real estate, notes, private placements, tax lien certificates and much more. ​ Related: How To Invest In Real Estate With A Self-Directed IRA Self-Directed IRAs & Their Benefits Diversify Into Real Estate With Your IRA or Solo 401(k)

Self-Storage is an industry in which storage space (such as rooms, lockers, containers, and/or outdoor space), also known as "storage units" is rented to tenants, usually on a short-term basis (often month-to-month). Self-storage tenants include businesses and individuals. ​ Related: Growth with Downside Protection - Three "All-Weather" Real Estate Niches to Invest in Now Top 5 Reasons I Invest In Self Storage

A sensitivity analysis, also referred to as what-if or simulation analysis, is a way to predict a certain outcome given a number of variables. This is often used to show returns in the event of a market downturn (often proving that large, value-add multifamily apartments expose investors to less risk that other traditional investments).

A individual “determined” to have enough experience and knowledge to assess the risks and merits of an investment opportunity for themselves.

A split is the percentage of distributions from operations and profits from capital events that are split between the limited partner (investor) and the general partner in the syndicate deal. Splits are common in the syndication business. Typical split would be 70% payout to limited partners (investors) and 30% to the general partners after the 8% preferred return is paid to investors.

Apartment syndications are essentially real estate partnerships pairing passive investors, capital, and a syndicator (sponsor or active partner and promoter) who organizes the deal, puts it together, and manages it. Related: Top 10 Reasons To Invest In Real Estate Syndications

A document that is a promise by the LLC that owns the property to sell a specific number of shares to a limited partner at a specified price—and a promise by the limited partner to pay that price.

A document that is a promise by the LLC that owns the property to sell a specific number of shares to a limited partner at a specified price—and a promise by the limited partner to pay that price.

A T12 is a profit and loss statement showing the actual reported numbers for the last 12 months.

The promote refers to a ‘bonus’ of sorts used to motivate the sponsor to exceed return expectations and reward them for their work in finding, managing and adding value to the property. It is an extra, disproportionate share of returns rewarded to the sponsor.

A process of evaluating an apartment building community to determine the status, value, risks, and potential.

How much potential revenue and cash flow is lost due to vacant units.

The percentage of vacant units in a multifamily community.

The term value-add is used to describe a property that offers the opportunity to increase cash flow or FMV through renovations, rebranding, or increased operational efficiencies. Related: Growth with Downside Protection - Three "All-Weather" Real Estate Niches to Invest in Now

The waterfall structure is a method for splitting profits among partners in a business deal that allows for said profits to follow an uneven distribution. In a waterfall model, payouts change when previously agreed upon return hurdles are met. ​ Related: Syndication: Common Financial Metrics And Key Terms To Understand

Workforce housing is a term that is being increasingly used to describe housing that is affordable for households with an earned income that is insufficient to secure quality housing within a reasonable proximity to a workplace. ​ Related: The Workforce Housing Investment Opportunity How Workforce Housing Is Attracting Real Estate Investors

A properly structured 1031 exchange allows an investor to sell a property, to reinvest the proceeds in a new property and to defer all capital gain taxes. ​ Related: Experts Offer Tips On Tax Considerations for 1031 Exchanges