Our primary investment philosophy is capital preservation. We typically use long term fixed rate debt to mitigate interest rate risk and cap our LTV to 80%. We target annual cash-on-cash returns of 8-10% and focus on stabilized established properties in strong locations with a history of high occupancy.
The simple answer is depreciation. Tax laws allow Multifamily investment to depreciate residential real estate over 27.5 years while other real estate is depreciated over 39 years. This non-cash expense reduces the net income from the property without affecting cash flow. The net effect is partners receive quarterly cash distributions and the annual taxable income is generally lower than the income distributed to partners and in some cases reduced whereby partners have a tax loss on their K-1. The basis is reduced by the depreciation so when the property is sold the gain on sale is taxed as long term capital gain. Consult a tax advisor to learn more specifically how this affects your investment.
Absolutely! Principals of LRE will typically invest 5-10% of total equity. Eric Londa has personally been the largest single individual investor in most deals.
Yes, click on the attached link for definition of accredited investor
https://www.sec.gov/education/capitalraising/building-blocks/accredited-investor
Personal, JTWROS, Trusts, LLC and IRA s.
LRE can refer you to a few IRA custodians that will facilitate a self-directed IRA investment in a real estate partnership. There are nominal fees to set it up.
We typically target 3-7 years to maximize our return on the investment.
Generally, there is not liquidity for a LP interest, but we do have a process to sell an LP interest to other partners or the GP, with no guaranty of liquidity.
A majority of our deals offer quarterly distributions and updates which are sent directly to your bank via ACH. Quarterly property updates and financials can be found directly in our secure investor portal.
K-1s are distributed in late March, early April and are placed directly in the investor portal for you to securely access.