Frequently Asked Questions

What are some advantages of investing in apartments versus single family rental homes?

  • Apartments offer certain advantages over single family homes such as economies of scale and greater cash flow potential. Additionally, the more rental units you have in one location or under one roof, the less risk you have. Cash flow on an apartment building usually is greater than a single family home since you have more rent coming in.

What could go wrong?

  • All investments have an element of risk. Some risks to consider: tenants move out, tenants don’t pay rent, interest rates increase, poor management, and external factors (environmental, economic, political) could impact the properties operating performance.

How do you finance the purchase of the complex?

  • Most acquisitions will be a combination of debt (mortgage) and cash.

Can I be guaranteed that I will get my initial investment back?

  • NO, any type of investing has an element of risk and there is a possibility that you may not receive your investment back. To mitigate risk with this type of investing, properties are selected in a real estate market that has the highest probability of generating strong cash flow, appreciation and returns to the investor.

How long is each property held?

  • Depending on exit strategy, each property will have a different hold period. The average hold period is approximately 3-5 years.

How many other investors are in the deal with me?

  • Each investment opportunity will have a different amount of investors in the deal. The fewer the better as most investors desire to have a higher proportion of cash flow and equity.

Will I be involved in the day-to-day management of the property?

  • NO, Adams Investor Group will handle all day-to-day activity and you will not have any management responsibilities.

How will I get money back?

  • Your initial investment may be returned to you when either the property is sold or if the property is refinanced at a higher value.
  • Investors will receive distributions of cash flow and generally these payments are sent out quarterly. Some lenders like HUD only allow semi-annual or annual distributions.

What is the structure of the deal?

  • Each property is placed into a single purpose partnership structure. A Limited Liability Company (LLC) is a common entity selection. The LLC will own the apartment complex.

What am I buying when I invest in your deals?

  • You are buying investment units in the LLC and the LLC owns the building.

Why do you have to follow the Securities and Exchange Commission (SEC) rules?

  • Any time money is pooled together from two or more investors with the expectation of making a profit and where the investors are not involved with management decisions, a security is created. Securities are regulated by the SEC.

What types of investors do you work with?

  • We help a group of accredited investors generate passive cash flow through real estate investing.

What is an accredited investor?

  • SEC defines an accredited investor as someone who has net worth that exceeds $1 million, excluding the value of primary residence or anyone who has received income in excess of $200,000 ($300,000 if married filing jointly) for the last two years, with the expectation of that level of income in the current year. The SEC assumes that an accredited investor has the financial acumen to make smart investing decisions without its oversight.

What is the purpose of the investor qualification form?

  • Completing the investor qualification form validates that you are either an accredited or sophisticated investor.

Why do you ask to see my bank or brokerage statement?

  • Your bank or brokerage statement must be provided to show you have the necessary resources to participate in these types of investment offerings.

What is a PPM?

  • PPM stands for a private placement memorandum. It is a document that the investor will review in great detail and outlines the specific investment opportunity. The PPM presents the potential risks to the investor.

How do I fund my investment?

  • You can fund your investment by using money in a checking, money market, CD or stock account, etc. or money in a self directed IRA.

When do I send my money?

  • Money is only wired after your review and approval of the investor documents.

Should I consider using a self directed IRA account?

  • There are benefits of using a self directed IRA to invest since the money grows tax deferred and you can make huge returns with no immediate tax implications.

How will I be updated about my investment?

  • You will receive monthly updates on the property. Each month you will receive an executive summary and monthly financials on the properties performance.

What is the minimum investment?

  • The minimum investment amount is $100,000 and the amount will vary from property to property.

What if I need to get my money back early?

  • Once you invest in a deal, generally speaking you are unable to get your money out early until the property is sold or refinanced. The managing member realizes that special situations do arise and the investor must contact the managing member to discuss. An investor will forfeit any equity in the deal if their investment is returned early.

What type of investment return will I receive on my money?

  • Every deal will have a different investment return that depends on the age, location and exit strategy of the property. The investment return is discussed in the PPM.

What are some of the tax issues that should be considered?

  • You must consult with your own tax professional for specific tax advice.
  • Some items to consider:
    • Equity Partner will receive a Schedule K1 reporting the income or losses from the property.
    • Equity Partner is allocated depreciation expense that is beneficial for tax purposes.
    • Additional state tax returns could be required to file.

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