Each investment will be held in its own LLC of which you the investor own a proportionate percentage shares.

Cap rate is the financial metric used by investors to calculate what the rate of return from an investment is based on the Net Operating Income(NOI) currently or should produce and the property value or price.

It measures the cash income earned on the cash invested in a property. Our goal is 10-15%

It is the estimate of the value it generates during the time frame in which you own it. Effectively, the IRR is the percentage of interest you earn on each dollar you have invested in a property over the entire holding period. Our goal is 8-10%.

Risks are outlined in the Private Placement Memorandum. In 2009 at the bottom of the financial crisis, delinquency rates on single family homes was 5% vs 1% in multifamily apartments. We further mitigate risk by targeting proven assets where the current owner is generating good cash flow (our due diligence includes auditing the trailing 12-month financials, bank records and tax returns). Additionally, lenders will not partner with us unless we have a good business plan, conservative underwriting (bank’s will underwrite the deal as well), have adequate insurance, and have an inspection completed by outside experts.

The returns forecasted to you are post fees. The most common fee is an acquisition fee based on purchase price and is paid upon closing. This covers the general partner’s costs to find the deal and get it under contract. The second most common fee is the asset management fee which is compensation for holding the property manager accountable, to ensure execution of the business plan, bookkeeping, and distribution of checks and K-1s. The asset management fee is aligned with the investor’s interest as it is based on the property’s revenues. Industry averages are 1-3 % for both fees.

A real estate Limited Partnership is a form of syndication in which a group of investors pools their money to invest in property. Investments can include purchasing property, property development projects, or leasing. Generally, the structure of the partnership includes a General Partner that acts as an experienced property and investment manager, and Limited Partners who provide financing in exchange for an investment return.

Preferred return is a contract provision that describes the investor’s entitlement to the distribution of profit. This provision will specify the order in which profits from our real estate projects are distributed to investors. Typically, our contract with our investment partners will specify the preferred return (expressed as a percentage of your initial investment). Any returns on our real estate projects above these preferred returns will then be distributed proportionally to all partners.

Accredited Investors are legally authorized to purchase securities that are not registered with regulatory authorities like the SEC. To be considered an accredited investor, an individual must meet at least one requirement related to income, net worth, or professional experience. Currently, a person must have an annual income exceeding $200,000 ($300,0000 for joint income) for the last two years and expect to earn the same or more in the current year. Alternatively, a person must have a net worth exceeding $1 million. You can refer to the SEC Rule 501 or Regulation D for more information.

The Private Placement Memorandum (PPM) is a document in which we disclose everything potential investment partners need to know to make an informed investment decision. It includes information that you would typically find in a Business Plan but goes further to detail the investment opportunity, disclaimers of legal liability, and the risk of losses. At Klogby Investments we take great care to compile this document with complete and transparent information.