Intro to Real Estate Investment Groups

A Real Estate Investment Group (or "Club") is a community of likeminded investors who pool their resources to co-invest in properties based on a common investment strategy. Pooling resources allows investors to diversify their portfolio across multiple properties, access the knowledge and expertise of other investors in the group.

A real estate investment group often, but not always, has less legal structure and administrative structure and decisions are often driven more by group consensus than by any one particular General Partner or Syndicate Lead. Many real estate investment group's individual investments are structured as partnerships between the participating investors. The term "fund" is often used inappropriately as a blanket statement for a pool of capital from various investors. Technically a fund is a dedicated pool of capital with its own legal structure which is managed by a General Partner ("GP") which receives fees for their asset management services. Limited Partners ("LPs") allocate capital to the fund and receive a payout if the fund is successful. A "syndicate" is similar to the partnership deal structure often seen with real estate investment groups, but more of the equity ownership of the deal, and the management responsibilities, are often concentrated in one individual or organization's hands (the "Lead" or "Sponsor").

Each deal is structured individually, and the exact form they can take can vary based on the co-investors involved and based on the opportunity. Most often deals are structured as partnerships, with participants being owners in a Limited Liability Partnership (LLP) entity which ultimately purchases and owns the property.

PRI Realty Group targets quarterly cash-on-cash returns (i.e., dividend payments) of 7-10%, and 12 - 15% IRR over the life of the investment.

Yes, each participating investor contributes a portion of their up-front investment capital as "set-up costs". Much of this goes to pay the legal, accounting and broker fees associated with structuring a deal. Occasionally if there is a co-investor who does a large portion of the work, the group will also provide them an additional share of any returns as compensation for "sweat equity".

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It depends. Each deal is structured differently based on what is agreed on by the co-investors involved in the partnership. In general we strive for a minimum lock-up period of 5 years, followed-by graduated exit opportunities at a pro-rata amount. We typically underwrite assuming a 10 year hold period, however many co-investors have a longer-term buy-and-hold strategy (i.e. 20+ years) with the goal of generating long term recurring passive income. There are several ways to structure a deal to accommodate this.

A correctly purchased and managed property is capable of mitigating risk to a large degree. Similar to other investments, market conditions are largely out of investors' control. PRI Realty Group's investment thesis and approach help significantly minimize risk. (1) We only invest where we have local boots on the ground. We've found its essential to be able to walk the property, get a sense of what can't be modeled, and to understand the local market dynamics. It's also essential for profitably managing the property over the long-term. (2) Value-add model of purchasing distressed / undercapitalized assets gives us significant margin for error and the ability to quickly increase the equity value of the property after purchase. (3) Investing in multifamily properties allows us to diversify tenant risk associated with each property. For most of the assets we purchase, we could break even at ~50% capacity - a worst case scenario we don't anticipate seeing even in the midst of a recession. (4) By pooling money, we're able to invest smaller amounts across a larger portfolio, thereby diversifying risk exposure across multiple properties. (5) The assumptions we use in our asset valuation models are incredibly conservative, leaving significant margin for unforeseeable circumstances and events. PRI Realty Group only purchases properties where value is able to be added immediately; resulting in forced, near-term appreciation and increased rental income. Every investment our Group Members have the opportunity to participate has undergone a rigorous due diligence process, and includes detailed financial projections backed by local market data. All investment risks are outlined, in detail, in the Operating Agreement of the investment partnership ultimately used to purcahse the property for the group of investors.

We underwrite all our investment opportunities very conservatively and look at many of the standard metrics one would look at to evaluate an investment opportunity: potential for near term capital appreciation through value-add asset repositioning, estimated montly rental income potential based on local market comps and asset income history, anticipated ongoing operating costs and cost of capital, and estimated long-term market appreciation.

At the moment you do NOT need to be an Accredited or Sophisticated Investor to participate in PRI Realty Group's co-investment opportunities. However they common terms that are worth understanding. Accredited Investor Under the federal securities laws, only persons who are Accredited Investors may participate in certain securities offerings. To qualify as an Accredited Investor, 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). Sophisticated Investor Another SEC designation for investors, who are non-accredited but whom have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment. Its typically used in reference to Regulation 506 (D) Crowdfunding investment opportunities permitting non-accredited, but "Sophisticated" investors in investing in private securities offerings. Source: U.S. Securities & Exchange Commission (SEC)

Yes. Many self-directed IRA plans allow investing in alternative asset classes such as real estate.

PRI Realty Group provides all participating investors with quarterly updates on their properties. This is the same time that dividend payments are made.

Connect with us online on our investor page.