COMMONLY ASKED QUESTIONS
WHY SHOULD I INVEST IN REAL ESTATE INSTEAD OF STOCKS OR MY 401(K)?
There are a number of reasons why a person may want to invest in real estate instead of a 401(k). First of all, real estate can provide regular income streams while 401(k)s don’t pay distributions at all. Real estate also provides tax benefits including depreciation and mortgage interest deductions. This means the property puts money in the investor’s pocket and they pay minimal tax on that income. Real estate ownership also provides equity through the loan paydown (which the tenants are paying down – not the investor). Appreciation is another benefit that will improve the overall investment return. Lastly, real estate is one of the few assets that you can buy with leverage. If the bank loans 80% of the money, that means the investment is leveraged at a 4-to-1 ratio, and for every dollar the property appreciates, the investor sees 5 times the return as if he or she bought with all cash.
Remember, real estate is an I-D-E-A-L investment
WHAT TYPE OF PROPERTY WILL I BE ABLE TO INVEST IN IF I PARTNER WITH REGENCY?
Regency invests exclusively in multifamily apartment communities. The multifamily market has been the strongest performing sector for the last 5 years and is expected to remain at the top. We look for properties built in the 1960s to the 1990s with between 40 and 150 units. The property location is also important, and the properties that Regency invests in always have to be in a growing labor market with population growth and a strong economic outlook. Our target markets are the Denver metropolitan area and Colorado Springs.
WHAT SORT OF RETURNS CAN I EXPECT, AND HOW LONG IS THE INVESTMENT DURATION?
While we can’t guarantee future performance, the properties we purchase are expected to provide 10% or higher average cash-on-cash returns. Our target investment duration is 3-5 years which gives us time to reposition the property and bring it to its full potential before selling. Regency strives to double our investors’ money in 5 years or less (100% return) which is equivalent to a 17.3% annual IRR (Internal Rate of Return).
ARE THERE ANY QUALIFICATIONS THAT I NEED TO MEET IN ORDER TO INVEST?
We comply with all Securities and Exchange Commission (SEC) regulations which does require us to set certain guidelines for our investor group. Our typical offering is only available to investors who have a prior “substantive relationship” with one of our team members in order to comply with exemption 506(b). Investors do not have to meet any net worth threshold – they simply must be sophisticated investors who have an understanding of the nature of the investment. We also may offer properties under exemption 506(c) which does not require that the investor have a substantive relationship with the sponsorship team. Under 506(c), investors must be accredited investors, making $200k per year in income individually or $300k per year in income if part of a married couple; or they must have a net worth exceeding $1,000,000 excluding their personal residence.
WHAT ARE THE LEGAL ASPECTS OF THIS TYPE OF REAL ESTATE DEAL?
The Securities and Exchange commission regulates all sales of Securities. We operate under one of several exemptions which details how the sale of securities must take place. By operating under one of these SEC exemptions, we do not formally register the security sale with the SEC.
HOW DO I INVEST IN ONE OF THESE PROPERTIES? HOW INVOLVED WILL I NEED TO BE AFTER I INVEST?
If you’d like to invest with us, please call Sarah at 303-915-1233 to set up a consultation. If you choose to invest with Regency, you will receive a packet of documents including the private placement memorandum (PPM) which describes the investment and potential risks, an investor questionnaire to ensure the investment is a good fit, and a property prospectus which provides the detailed business plan, investor return projections, and property and market information.
In order to invest, you would review the documents, ask us any questions you might have, sign the agreement, and mail or wire the funds. Once those steps are complete, you will receive our investor welcome package and will receive periodic newsletters from us with all the latest information on the property, including the monthly financial statements, rehab updates and pictures, and any news affecting the investment. There is no other action for you to take once you place the initial investment.
HOW LONG WILL IT BE BEFORE I START GETTING RETURNS FROM MY INVESTMENT?
Because our business model is to acquire already-performing properties that cash flow from day 1, we will start providing quarterly distributions 3 to 6 months after the closing date that we acquire the property. Once Regency and our investors own the property, we begin renovations and implementing our business plan so that we can start providing returns to our investors as soon as possible.
CAN I COME AND SEE THE PROPERTY THAT I INVEST IN?
You are always welcome to come and visit the properties that you are invested in. If you give us advance notice, we will arrange a tour for you as well. We also hold annual investor meetings at which time you can visit the property. While you do not have to attend these annual investor meetings, we will always have a property tour scheduled so you can see the apartment community in person.