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 such as environmental, economic, political issues could impact the properties value.
How do you finance the purchase of the complex?
Some acquisitions will be a combination of debt (mortgage) and cash while some deals will be all 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 from reviewing a number of data poins that include, but are not lmited to, projected job growth, renter demographics and value-add opportunities.
How long is each property held?
Depending on exit strategy and future market conditions, each property will have a different hold time which could be 5 to 10 years. The average holding time is approximately 7 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, Cambridge Equity Partners 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 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. In purchasing securities through a 506(c) Offering, Cambridge Equity Partners (CEP) is obligated to verify any participating investor’s status as an accredited investor in accordance with Rule 501 of Regulation D. There are three primary methods CEP may employ to comply with the verification standards such as a broker-dealer letter, attorney letter, CPA letter, or a third party specialty services like verifyinvestor.com to obtain proper and suitable verification.
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 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.
Where do I send my money?
Wiring instructions will be provided to you then your money is wired to an escrow account.
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 with no immediate tax implications. Please consult your financial advisor/accountant to determine how these types of investments may affect your individual tax situation.
How will I be updated about my investment?
When you join as an investor you will receive direct access to our investment portal where you can view your investment activity. The portal is accessible 24/7 from your desktop or mobile device and will include an executive summary on the properties performance.
What is the minimum investment?
The minimum amount is $50,000, but the amount will vary from property to property.
What if I need to get my money back early?
Once you invest in the deal, generally speaking you are unable to get your money out early until the property is sold or refinanced. The Fund member realizes that special situations do arise and the investor must contact the Fund manager 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 is the difference between a Debt and Equity Partner?
Debt Partner will receive a pre-defined target return such as a stated interest rate. ✓ An Equity Partner shares in upside and downside of project and receives both cash flow and equity appreciation.
What are some of the tax issues that should be considered?
Every investors tax situation is different. You must consult with your own tax professional for specific tax advice.
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Equity Partner will receive a Schedule K1 reporting the income or losses from the property. -
▪ Additional state tax returns could be required to file.
I am ready to learn more, now what?
If you have interest in learning more, please review our Fund Summary and schedule a time to speak with Mike Butler, Real Estate Fund Manager of Cambridge Equity Partners, LLC. He can be reached at 215-720-9846 or email him at: Mike@CEPInvest.com.
STEP 2: ✓ Submit the required documentation for Accredited Investor verification.
STEP 3: ✓ Once verification is confirmed, fill out the Subscription Agreement and wire funds as directed.