EDUCATE. PARTNER. INVEST.

FAQ

Typical investment accounts are as individuals, joint accounts, tenancy in common, entity accounts (Trusts, Limited Liability Companies, Limited Partnerships, C Corporations, S Corporations) and individual retirement accounts (more info on IRA’s / 401k’s below).
Yes, you can invest through your IRA. If you currently have a self-directed IRA, please check with your current custodian to ensure that they will allow you to place your investment with MF Capital Partners. If you haven’t converted from a traditional IRA to a a self-directed IRA you’ll need to contact a custodian to help you with that. If you need a referral we can connect you with the group we use personally.
As a partner in the LLC that purchases the properties, you will receive a K-1. A K-1 is a 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.

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).

In addition, entities such as banks, partnerships, corporations, nonprofits and trusts may be accredited investors. Of the entities that would be considered accredited investors and depending on your circumstances, the following may be relevant to you:

  • any trust, with total assets in excess of $5 million, not formed to specifically 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.

A Sophisticated Investor doesn’t meet the requirements of an Accredited Investor but they have investor experience. This could mean the person believes they have sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment.
No. We currently have investment opportunities that are open to accredited and sophisticated investors. You’ll need to register to view our current offerings.
Distributions are planned quarterly.
Investor funds are used for the total acquisition cost of the property. This includes but is not limited to the down payment for the actual purchase of the property, acquisition fees, legal and transaction costs, capital improvements, and reserves.

Absolutely! Investors are allowed to visit the property before investing and during the life of the project. If you give us a heads up we can make sure someone is there to show you around and answer any questions.

KEY TERMS

An apartment syndication is a temporary professional financial services alliance formed for the purpose of handling a large apartment transaction that would be hard or impossible for the entities involved to handle individually, which allows companies to pool their resources and share risks and returns. In regards to apartments, a syndication is typically a partnership between general partners (i.e. the syndicator) and the limited partners (i.e. the investors) to acquire, manage and sell an apartment community while sharing in the profits.
An accredited investor is a person that can invest in securities (i.e. invest in an apartment syndication as a limited partner) by satisfying one of the requirements regarding income or net worth. The current requirements to qualify are an annual income of $200,000 or $300,000 for joint income for the last two years with expectation of earning the same or higher or a net worth exceeding $1 million either individually or jointly with a spouse.
A sophisticated investor is a person who is deemed to have sufficient investing experience and knowledge to weigh the risks and merits of an investment opportunity.
The general partner (GP) is an owner of a partnership who has unlimited liability. A general partner is also usually a managing partner and active in the day-to-day operations of the business. In apartment syndications, the GP is also referred to as the sponsor, syndicator, or operator. The GP is responsible for managing the entire apartment project.
The limited partner (LP) is a partner whose liability is limited to the extent of the partner’s share of ownership. In apartment syndications, the LP is the passive investor and funds a portion of the equity investment.
The gross potential income is the hypothetical amount of revenue if the apartment community was 100% leased year-round at market rates plus all other income. For example, an apartment community with a GPR of $202,692 and monthly other income of $15,258 from late fees, pet fees and a RUBS program has a gross potential income of $217,950 per month.

Loss to lease (LtL) is the revenue lost based on the market rent and the actual rent. LtL is calculated by taking the gross potential market rent and subtracting the gross scheduled rents.

For example, a 415 unit apartment community with a gross potential market rent of $3,958,680 and gross scheduled rents of $3,166,944 has a LtL of $791,736.

Bad debt is the amount of uncollected money a former tenant owes after move-out.
Concessions are the credits (dollars) given to offset rent, application fees, move-in fees and any other revenue line time, which are generally given to tenants at move-in.
A model unit is a representative apartment unit used as a sales tool to show prospective tenants how the actual unit will appear once occupied.
Appreciation is an increase in the value of an asset over time. There are two main types of appreciation: natural and forced. Natural appreciation occurs when the market cap rate “naturally” decreases. Forced appreciation occurs when the net operating income is increased (either by increasing the revenue or decreasing the expenses).
Preferred Return: the threshold return that limited partners are offered prior to the general partners receiving payment.
Distributions are the limited partner’s portion of the profits, which are sent on a monthly, quarterly or annual basis, at refinance and/or at sale.
The subject property is the apartment the general partner intends on purchasing.
Underwriting is the process of financially evaluating an apartment community to determine the projected returns and an offer price.
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