Investors rely on different investment strategies when it comes to real estate. Some people prefer to go from one investment to the next and build wealth in the process. Others look for opportunities to generate passive income with a buy and hold model.
But what if you were looking for a way to combine the best of both worlds? The CalTier Multi-Family Portfolio Fund might be right up your alley.
The CalTier Multi-Family Portfolio Fund offering invests in Class B and C multi-family properties across the American sunbelt. The assets in the multi-family fund are in the value-add category. This term means that the fund has identified them as being undervalued but having tremendous upside in relation to the market they are in.
CalTier’s latest real estate fund has a minimum investment of only $500. Learn more...
CalTier believes it can make effective renovations and manage these assets more efficiently to increase revenue. In addition to the added revenue potential, CalTier is betting on continued population growth in these areas to create ongoing demand for high-quality housing options. The logic is that as the population growth drives demand, the price for acquiring new parcels and building on them will be prohibitively high.
This plan should have the kick-on effect of making the existing multi-family options not only more sought after but also more valuable. The investor profit comes in with the fact that CalTier will have gotten involved in these markets early in the growth cycle at a time when the acquisition cost and per-door renovations would still be affordable in relation to the asset’s replacement value.
Investors in the fund will receive equity shares in the assets and be able to enjoy the benefits of property ownership. Advantages include annual write-offs for depreciation, property taxes, management fees and other property-related expenses.
Image source: CalTier website
Perhaps the best aspect of the CalTier fund is that it’s a U.S. Securities and Exchange Commission (SEC)-qualified offering that accepts contributions from non-accredited investors. Interested investors can purchase shares or units in the mult-family fund for only $5, with a minimum purchase of 100 shares. That means investors can become equity owners in real estate with upside for only $500.
CalTier’s Multi-Family Fund has a target distribution of 8%. Learn more...
Once the investment is made, unit owners will be able to earn in two ways. They receive quarterly distributions based on the number of units they own. And, if the properties in the fund increase in value, quarterly distributions will go up with the rents, and the value of individual units will rise.
Unlike many other funds, CalTier doesn’t have a minimum lock-in period so you may be able to redeem your shares if you need to exit the fund early. The longer you hold on to your units, however, the more likely it is that you’ll enjoy the higher returns. CalTier’s strategy of targeting B- and C-rated assets is solid, but it takes some time for it to pay off.
Why does it buy B- and C-rated assets? The most obvious reason is that they cost less. The second reason is that Class B and C multi-family assets are usually a bit older, meaning they were built at a time when land was cheaper and have larger unit sizes. Once they are renovated and brought up to modern standards, the additional size and comfort offered by these types of assets has a strong appeal to renters, who will usually take a larger unit than a smaller one if the amenities and price are comparable in both.
The other benefits to investors are obvious. Being able to own income-generating real estate is a bonus, but having the peace of mind that comes with knowing the assets are being professionally managed is priceless. That means investors can participate in the CalTier fund like any other property owner but not have to worry about clogged toilets and tenant complaints the way independent property managers do.
The assets in the CalTier fund have been hand selected by experienced real estate professionals for their upside and income potential. When the assets are sold at the end of the hold period, investors should see another payoff. So, regardless of whether your individual investment strategy is building wealth through appreciation or gaining passive income, the CalTier Multi-Family Portfolio Fund aims to fill both of those goals.
On top of that, it allows investors to buy equity in multi-family real estate assets for only $500, making it possible for virtually anyone to start building a cash-flowing real estate portfolio. That’s why the CalTier Multi-Family Portfolio Fund is worth a look from any non-accredited investor, whether they want to build wealth, generate passive income, or, better still, do both at the same time.
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© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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