05 Apr Why Invest With SMARTCAP, INC.?
The SMARTCAP Group’s slogan is “Smart, Transparent, Professional Real Estate Investments.” We believe that through making smart investments, providing ground breaking transparency to our investors and taking advantage of our professional network to find the best deals and inform the best decisions that we will provide outstanding returns for our investors. Before becoming an investor, learn more about what you should expect and how we make money for you.
What should I expect from my investment?
During the course of a year, The SMARTCAP group will provide you with the following:
- Dividends/ Distributions- these are regular payments made to investors by the LLC that they invest in. The LLC will only make these payments when the properties are stable enough to support a distribution. We, the Managers, save enough money to act as a buffer to pay for Tenant Improvements to attract high quality tenants, as well as operating buffer to pay for the unforeseen issues (Roof leaks, cracks in road, etc). Payments are usually distributed quarterly after a property is stabilized.
- Updates- The SMARTCAP Group is dedicated to transparency of investment progress. We have an investor dashboard that shows your distribution, your prorate share of the yearly mortgage principal paid, links to your investor documents as well as quarterly operating statements for each property. We also send out quarterly updates about the property investments including unbiased lease activity, any major repairs, and any major changes to the business.
- Tax filings- every year you will receive a document from the investment company showing how much your prorate share of company profits flows through to you. Depending on what type of project you invest in, you will file a 1099 or K-1 tax report. Note that your prorate share of profits may not equal your distribution during that year.
How does the SMARTCAP Group return money to investors?
Along with our investors, the founders and partners of The SMARTCAP Group put significant amounts of their own money into each property purchased. We invest alongside our syndicated investors into the same LLC that owns the property. Thus we are equally incented to manage the properties diligently and return cash as quickly (and smart) as possible. There are three events that lead to distribution of money back to investors.
- Distribution of cash flow generated by the property. Every year the properties receive rent from tenants. After paying all expenses the remaining funds are profit. Some of that profit is retained for a buffer and the majority is returned to investors. That profit is cash flow into our investors pockets.
- Sale of property- the most common method of exiting real estate is when the company sells a property that they purchased with the help of their investors. First they will pay off their mortgage along with other liabilities, and then move forward with paying off their investors.
- Refinancing- When a value-add property is stabilized it is oftentimes much more valuable than when we purchased. That created value is ‘trapped’ as equity in the value of the property. In most situations we will sell a property once it is stabilized. In some situations it makes sense to continue to hold the property to enjoy the cash flow but we still want to return the trapped equity to investors. In this case we will entertain a refinance of the mortgage on the property to increase the debt, and return the equity to the investors.
Investing in commercial real estate is a wealth creation tool, but can also be hard to understand. We are here to help educate you and show you the potential of investing with The SMARTCAP Group.