RESOURCES
August 11, 2023
A big tax benefit from 2017’s Tax Cuts and Jobs Act (TCJA) begins phasing out at the end of 2022. The 100% bonus depreciation will phase out after 2022, with qualifying property getting only an 80% bonus deduction in 2023 and less in later years.
September 9, 2022
A big tax benefit from 2017’s Tax Cuts and Jobs Act (TCJA) begins phasing out at the end of 2022. The 100% bonus depreciation will phase out after 2022, with qualifying property getting only an 80% bonus deduction in 2023 and less in later years.
August 25, 2022
Whether you are an investor needing faster access to cash, refinance a property, or purchase a new one, loans are a necessity. We will look at two loans, one being a bridge loan, and the other an agency loan. Although these loans are used to reach different objectives, both are very popular among multi-family investors and should be reviewed when passively investing.
July 15, 2022
Have you ever noticed that smart ultra-wealthy investors never panic during a crisis? While everyone else gets caught off guard by recession-inducing events like COVID, inflation, and wars, the ultra-wealthy sit back and ride out every storm. Why is that?
It’s because they have different investment objectives than the average investor. While the average investor is wholly dependent on appreciation for growing their portfolios, the ultra-wealthy have a multi-prong attack that grows their portfolios faster than the average investor’s strategy and shields them from the downside.
June 30, 2022
Doesn’t everyone say that they have a conservative model when looking at real estate?
While we approach every deal with an eye on the downside, maintaining consistency in our analysis model has proven to be a recipe for success.
June 22, 2022
When “Investing” is brought up, what is the first thing that flashes in your mind?
Stocks? Great Recession? How Warren Buffett continues to grow while your portfolio is single digits, flat, or negative growth?
June 2, 2022
This is part 2 of a 2 part article. Please refer back to Tax Benefits of Real Estate Syndication Part 1.
As a recap, why do people always refer to the tax benefits of real estate investing?
Because with every real estate investment, we have a secret, silent partner — a partner who wields immense power, and who puts that power to use to pad our bottom line.
June 1, 2022
Why do people always refer to the tax benefits of real estate investing?
Because with every real estate investment, we have a secret, silent partner — a partner who wields immense power, and who puts that power to use to pad our bottom line.
Have any questions?
Frequently Asked Questions
1How do I know if I am a shopisticated investor or an accredited investor?
To qualify as an accredited investor, at a minimum you must have 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). Reference the SEC guidelines at https://www.sec.gov/answers/rule506.htm for a more detailed description. Contact us to discuss whether you
are qualified.
2Does the deal sponsor invest funds in the property with the investors?
Yes. We believe in all of our offerings and invest in each syndication.
3What is a typical minimum investement amount?
The minimum investment is typically $50,000.
4Can I invest through my entity (LLC, Corporation, Partnership, etc.)?
Yes. You can invest through an entity as long as the members meet the SEC investor requirements.
5What are the risks?
Purchase of real estate involve significant risk including loss of value. When deciding whether to invest
in an HTF Capital opportunity, prospective investors should read the entire operating agreement and
associated risk disclosures. Potential investors should always consult an investment advisor, accountant,
and attorney prior to making any investment decision.
6Do we accept foreign investments?
Yes, on a case-by-case basis as long as compliance with U.S. Securities Law is satisfied.
7How often do you make distribution?
Quarterly distributions are the standard; however, each syndication is a business with varying
distribution amounts based on the performance of the property. Each syndication has a specific
strategy based on the specific value-add components of the asset.
8Who manages the property?
HTF Capital works with local operators that have extensive experience operating real estate in the local
market that are usually part of the investment team. In addition, we have built up extensive
relationships with the top property management firms for the specific markets we invest in.
9What will be the ramifications to my personal taxes?
Consult with your CPA for specifics on how this type of investment can impact you. There are typically
significant tax advantages from investing in the real estate sector through depreciation. You will receive
a K-1 from the partnership.
10Are properties insured?
All of our properties are insured with insurance benefits designed specifically for real estate investors
that cover most natural disasters, vandalism, and even some maintenance issues. The asset-specific LLC
will also be named as the “loss payee” on the insurance policy so that the insurance company can
reimburse investors indirectly if something happens to the property. Please remember that each
investment property requires different insurance needs. Please see your potential investment’s Risk
Disclosures section of the Operating Agreement or PPM for more details.
11What are the typical returns or investors?
There are three main areas of returns from real estate; cash flow, principal pay-down, and appreciation.
Returns will vary from property to property. Please review each private placement memorandum and
contact us for more specific information regarding total returns.
12Can I use my IRA or 401(k) to invest?
Yes, you can use your self-directed IRA (SDIRA) or you can convert an existing IRA or old 401(k) to a
SDIRA to invest in our syndications. Contact your CPA to learn the details. We can recommend a couple
IRA custodians. Be sure to shop around to find the best service and fees for their custodial services.
13Do I need to be an accredited investor to invest with HTF Capital?
No. HTF Capital works with accredited and non-accredited investors.
14How does the average annual return compare to IRR?
The IRR typically is slightly lower than the Average Annual Return because the profits at the end upon
sale have a lower net present value than monies that are spent at the beginning of an investment.
15How are syndications more turnkey than owning your own rental?
Syndications are one of the most hands-off real estate investments available to investors. They allow
investors to take a fully passive, limited partnership status alongside other limited partners in a clearly
defined profit-sharing structure. These syndications have managers, or sponsors, who take the active
management responsibility, manage property managers, make liquidation decisions, and ultimately all
day-to-day decisions of the property. The alternative is directly owning your own investment and
dealing with the three Ts (Tenants, toilets, & trash).
16Definition of financial terms
CAP (Capitalization Rate): Percent of cash return in the first year if the property were purchased for cash. The ratio of NOI to purchase price.
NOI (Net Operating Income): Income after vacancy and expenses and before debt service.
Gross Rent Multiplier: Purchase price or asking price / gross rents received from an investment. Mostly used for multifamily (apartment) properties.
Depreciation: Commercial is 39 years linear depreciation, residential (to include multifamily) is 27.5 years. This assumes all physical assets will predictably depreciate to a value of zero after this time, and the losses from this offset income on a tax basis. Depreciation is one of the main benefits of investment real estate ownership.
Cash on Cash Return: Percent of cash out of an investment in a year relative to the amount of cash invested. It does not consider time value of money but provides a simple and commonly used metric.
Internal Rate of Return (IRR): The annual rate of return that one receives on an investment for all of the capital and cash flows based on the net present value for each when deployed. It is the discount rate such that the sum of today’s investment and future cash flows have a net value of zero. It expresses in the form of an interest rate the value of a given investment in today’s terms. It is the most accurate and one of the most widely used ways of calculating and comparing multiple investments by professionals.
Average Annual Return (AAR):The annual rate of return that one receives on an investment for all of the capital and cash flows invested. It does not factor in the net present value of all monies that go into and out of the investment.
Debt Service: Amount of the principal plus interest loan payment per month or annual. The cash flow that services the debt.