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Apartment FAQ

New to Apartment Real Estate Investing? Get with the lingo and some frequently asked questions here.

  • History has repeatedly demonstrated multifamily properties to be less volatile during economic downturns. Real estate value increases with inflation while the buying power of the dollar decreases. Your investments are managed by a team of professionals so the process is essentially hands-off. Unlike single family properties, which tend to require more time and money from the investor, multifamily properties easily generate enough income to cover overhead and have a steady cash flow returned to investors.

  • Class A

    Newly built or remodeled, high-income tenants, little to no maintenance issues

    Class B

    Older properties, middle-income tenants, some maintenance required

    Class C

    Oldest properties, less desirable areas, lower-income tenants

    Movement between properties is dictated by the economy. During recessions, residents of Class A properties may seek lower rent in Class B properties. On the other hand, when the economy is strong, residents in Class C will seek housing in Class B properties with better amenities and neighborhoods that are more desirable. We invest in a variety of classes to ensure a diverse portfolio that creates passive income regardless of the economy.

  • A pool of investor capital with a business plan managed by investing experts.

  • Because multifamily real estate is syndicated, the process is more hands-off than other avenues of investing. Essentially, you must trust the investing managers to have your best interests in mind. However, you can rest assured that’s exactly the attitude our team has when it comes to our clients’ financial futures. Also, invested money is no longer a liquid asset. However, cash will only decrease in value as inflation rises. Real estate actually benefits from inflation. So, while you have less cash in your pocket in the short term, you’ll end up with a stable financial future in the long term once your investments return a profit.

  • Generally profits are distributed quarterly. They will also be distributed during a refinance or reposition.

  • These vary based on property type and location. Tax benefits may include: accelerated depreciation, possible 1031 exchanges, property tax, and repairs and upkeep.

  • Yes! Our team will be happy to discuss how to make the most of your IRA or 401k during your initial consultation with us.

  • We currently support personal investment accounts, joint accounts, and certain entity accounts (Trusts, Limited Liability Companies, Limited Partnerships, C Corporations, and S Corporations). For more information on IRA accounts, see 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 Smart Capital.

  • 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.

  • Investor funds are used for the total acquisition cost of the property. This includes but is not limited to the actual purchase price of the property, acquisition fees, legal and transaction costs, capital projects, and reserves.

  • n 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).

    On the income test, the person must satisfy the thresholds for the three years consistently either alone or with a spouse, and cannot, for example, satisfy one year based on individual income and the next two years based on joint income with a spouse. The only exception is if a person is married within this period, in which case the person may satisfy the threshold on the basis of joint income for the years during which the person was married and on the basis of individual income for the other years.

    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.

  • Distributions are planned quarterly.

  • Yes. Investors are allowed to visit the property before investing and during the life of the project.

  • No. We currently have investment opportunities that are open to accredited and non-accredited investors.

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