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Frequently Asked Questions

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  • Individual accounts
  • Joint accounts
  • Tenancy in common
  • Entity accounts:
    • Trusts
    • Limited Liability Companies
    • Limited Partnerships
    • C Corporations
    • S Corporations
  • Individual retirement accounts – IRA’s / 401K’s, (more info on IRA’s / 401k’s below)

Yes, you can invest through your IRA and 401K! You can invest using any of your retirement accounts if they are self directed

  • If you currently have a self-directed (IRA, SEP-IRA, 401K, or any other type of retirement account), check with your current custodian to ensure that they will allow you to place your investment with High Country Capital Partners
  • If you don’t have a self directed (IRA, SEP-IRA, 401K, or any other type of retirement account) OR haven’t converted these traditional accounts to a self-directed model, you’ll need to contact a custodian to help you with that
  • If you need a referral please reach out and we can connect you with the group we use personally
  • Please reach out if you have any questions or need help with this, we’re always here to help!

A K-1 is a tax form for multifamily investors in partnerships or LLCs. It reports their share of profits, losses, and other tax details from the investment, used for filing personal tax returns

You are an accredited investor if:

  • You earned an 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 have a net worth over $1 million, either individually or together with a spouse (excluding the value of the person’s primary residence)

Additionally, entities such as banks, partnerships, corporations, nonprofits and trusts can be accredited investors if they meet any of the following criteria:

  • Entities owning investments in excess of $5 million
  • The following entities with assets in excess of $5 million: corporations, partnerships, LLCs, trusts, 501(c)(3) organizations, employee benefit plans, “family office” and any “family client” of that office
  • Entities where all equity owners are accredited investors
  • Investment advisers (SEC- or state-registered or exempt reporting advisers) and SEC-registered broker-dealers
  • A bank, savings and loan association, insurance company, registered investment company, business development company, or small business investment company or rural business investment company

Still not sure if you are accredited? Find out here

According to the U.S. Securities and Exchange Commission (SEC), a sophisticated investor in multifamily refers to an individual or entity that has sufficient financial knowledge, experience, and resources to understand and evaluate complex investment opportunities, such as multifamily real estate deals. These investors are deemed capable of assessing the risks and merits of such investments without the need for the regulatory protections provided to less experienced or less financially capable investors

No. We currently have investment opportunities that are open to accredited and sophisticated investors. You’ll need to register to view our current offerings

Distributions are currently being made on a quarterly basis

Funds are used for the acquisition cost of a property. This includes, but is not limited to: 

  • Down payment
  • Acquisition fees
  • Legal and transaction costs
  • Capital improvements
  • Reserves
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Yes, absolutely! Investors are welcome to visit the property at any point. With proper planning we can make sure someone is there to show you around and answer any questions

Hold times vary on each offering, ranging from 1-10+ years, with the most common being 3, 5, and 7 year holds

Multifamily investments provide many attractive tax benefits. Here is a list of some of the tax benefits associated with multifamily investments:

  • Depreciation deductions
  • Mortgage interest deduction
  • Operating expenses deduction
  • Passive activity losses
  • 1031 exchange for deferring capital gains taxes
  • Tax credits (e.g., LIHTC)
  • Opportunity Zone tax incentives

Our deals are structured as a syndication model, with everyday investors, high net worth individuals, LLC’s, and corporations funding the acquisitions

Yes! You can invest with High Country Capital Partners if you live in another state, country, or planet! It doesn’t matter where you live. International investors have to have a United States tax ID and a United States bank account

  • An Individual Taxpayer Identification Number (ITIN) is not sufficient enough
  • Every investor will need a tax ID that will allow for the completion of tax returns in the United States
  •  If Alec were to suddenly die, or retire, any real estate under management will continue to operate as normal
  • High Country Capital Partners would continue to manage and operate the business until the appropriate time to sell and/or refinance the properties came to fruition
  • High Country Capital Partners would be in close contact with its investors in this type of situation
  • Yes! All HCCP team members invest our own capital alongside our investors
  • We often get asked “Do you have any skin in the game?”
    • The answer: Yes! We want to take advantage of these investment opportunities too, so we invest our capital alongside yours, which means our goals are aligned. The greatest returns possible!

Yes! Like the back of your hand! …Just kidding, you don’t

We have plenty of information on our website, and while we don’t expect our investors to know everything right away, we offer it for those who want to dive deeper. We recommend familiarizing yourself with the terms and strategies to better understand investments, but it’s not mandatory

Yes! This can be done through various means, such as:

  1. Home Equity Loan or Line of Credit (HELOC): You can borrow against the equity in your home to invest in HCCP offerings

  2. Cash-Out Refinance: You can refinance your existing mortgage for an amount greater than what you owe, allowing you to cash out the difference in equity to invest

  3. Home Equity Investment Platforms: Some platforms allow homeowners to access the equity in their homes as a form of investment capital

Before proceeding, it’s essential to carefully consider the risks and consult with financial advisors or real estate professionals to ensure that investing the equity in your home aligns with your financial goals and risk tolerance

KEY TERMS

You are an accredited investor if:

  • You earned an 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 have a net worth over $1 million, either individually or together with a spouse (excluding the value of the person’s primary residence)

Additionally, entities such as banks, partnerships, corporations, nonprofits and trusts can be accredited investors if they meet any of the following criteria:

  • Entities owning investments in excess of $5 million
  • The following entities with assets in excess of $5 million: corporations, partnerships, LLCs, trusts, 501(c)(3) organizations, employee benefit plans, “family office” and any “family client” of that office
  • Entities where all equity owners are accredited investors
  • Investment advisers (SEC- or state-registered or exempt reporting advisers) and SEC-registered broker-dealers
  • A bank, savings and loan association, insurance company, registered investment company, business development company, or small business investment company or rural business investment company

Still not sure if you are accredited? Find out here

An acquisition fee in multifamily real estate is a one-time payment to a real estate firm or syndicator for facilitating the purchase of a property. It covers their efforts in identifying, negotiating, and closing the deal, typically ranging from 3% to 5% of the property’s purchase price

An active investor does all the leg work of finding, structuring, managing, and exiting investments

The Annual Rate of Return (ARR) is a measure of the yearly profit generated by an investment, typically expressed as a percentage of an investors initial investment. It considers income from rent, minus expenses like operating costs, mortgage payments, and property management fees

An apartment syndication is a collaborative financial arrangement where multiple entities join forces to handle a large apartment transaction. Typically, it involves a partnership between general partners (the syndicator) and limited partners (the investors) to acquire, manage, and sell an apartment community while sharing profits

Appreciation refers to the rise in value of assets like apartment buildings over time. It comes in two forms: natural and forced. Natural appreciation happens as market cap rates decrease, while forced appreciation occurs when the property’s net operating income rises. This can be achieved by boosting revenue, cutting expenses, or both

An asset management fee is an annual charge for supervising a property’s operations. It’s paid to the general partners and typically amounts to 2% of the collected income

Bad debt is the amount of uncollected money a former tenant owes after they move-out

Breakeven occupancy is the percentage of occupied units needed to cover all expenses of an apartment building. To find it, add up operating expenses and debt service, then divide by the potential income

A bridge loan is a short-term mortgage, typically lasting 6 months to 3 years (with an option for extension), used until permanent financing is secured. It often has higher interest rates and is interest-only. Also known as interim or swing loans, it’s ideal for repositioning apartment communities

Capital expenditures, or CapEx, are funds used to acquire, upgrade, and maintain an apartment community. An expense becomes a capital expenditure when it improves and enhances the property’s lifespan

The capitalization rate, or cap rate, is the return rate based on the property’s expected income. It’s calculated by dividing the property’s net operating income (NOI) by its current market value or purchase price

The capital reserves account is set up by raising reserve funds from limited partners. It’s used for unexpected expenses such as occupancy drops, insurance premiums, taxes, or higher-than-anticipated capital costs

Cash flow is the profit left after covering all property expenses. It’s distributed to investors and operators in the deal. Cash flow is calculated by subtracting operating expenses and debt service from collected income

The cash-on-cash (COC) return is the return rate based on cash flow and the equity investment. It’s expressed as a percentage and calculated dividing cash flow from the initial investment

Closing costs are additional expenses outside the property price that buyers and sellers handle to finalize a real estate deal. Examples include legal fees, insurance, surveys, recording fees, third-party reports, title endorsements, utility deposits, and due diligence fees

Concessions are offers given to tenants when they move in. They’re used to rent units faster, reducing vacancy time. Concessions can be monetary compensation, discounts, or goods/services

Cost segregation is a tax strategy that helps property owners accelerate depreciation deductions by classifying certain assets within a property for shorter depreciable lives. This can result in lower tax liabilities and increased cash flow in the short term.

Multifamily real estate has an IRS depreciation period of 27.5 years. However, cost segregation allows investors to take their deductions over 5, 7, or 15-year periods

Debt service is the yearly payment made to the lender, covering both the loan’s principal and interest. The principal is the original loan amount, while interest is the fee for borrowing that amount

The debt service coverage ratio (DSCR) is a ratio that measures if the cash flow is sufficient enough to pay the debt obligation of the property. This is calculated by dividing the net operating income (NOI) by the total debt service

A DSCR of 1.0 means the property’s income exactly covers its debt. It’s best if the ratio is 1.25 or higher. If it’s too close to 1.0, the property is at risk. Even a small decrease in income could make it hard to pay the debt

Distributions represent the share of profits allocated to investors, disbursed regularly on a monthly, quarterly, or annual schedule, as well as upon refinance or sale

Due diligence is the process of checking and assessing various tasks related to a property to meet lender requirements. It involves tasks like appraisals, surveys, inspections, and title work

Earnest-money is a deposit placed into escrow by the buyer of an apartment building to demonstrate their commitment to execute on the purchase contract. The earnest money is credited toward the acquisition cost at closing

Economic vacancy is the percentage of tenants living in an apartment but not paying rent. It’s calculated by dividing actual revenue by gross scheduled rents

Effective gross income (EGI) is the net income from an apartment community. EGI is found by adding up potential rent and other income, then subtracting losses from vacancies, loss-to-lease, concessions, employee units, model units, and bad debt

An employee unit is a unit rented to an employee at a discount

The equity investment covers the initial expenses for buying an apartment building. It includes the down payment, closing costs, financing fees, capital reserves, and fees paid to general partners

The Equity Multiplier (EM) is a measure of return on investment for real estate. It’s calculated by adding the total net profit and gross cash flow, then dividing by the equity investment

An exit strategy is a plan for selling an apartment community when the business plan has been executed

Financing fees are upfront charges from the lender for providing the loan, also known as loan points or loan point costs. They’re usually around 1% to 2% of the loan amount

Floating interest rates, also known as variable or adjustable rate loans, adjust with market trends, meaning both the interest rate and payments can fluctuate over time

The general partner (GP) is a partner in a business with unlimited liability. They typically manage daily operations and are active in the business. In apartment syndications, they’re also called the sponsor, syndicator, or operator, and oversee the entire project

The gross potential income is the amount of revenue the property would expect to generate if it was 100% leased year-round at market rates plus all other income

The gross potential rent (GPR) is the amount of revenue the property would expect to make if the apartment community was 100% leased year-round at market rates

The gross rent multiplier (GRM) is the number of years the apartment would take to pay for itself based on the gross potential rent (GPR). You calculate this by dividing the purchase price by the annual GPR

A guarantor fee is paid to the loan guarantor at closing, typically 0.25% to 1% of the mortgage loan balance

The holding period is how long a property is planned to be held, ranging from 1 to 10+ years, with common periods being 3, 5, 7, and 10 years

An interest-only payment is when the borrower only pays the interest on the loan amount each month, unlike typical payments where both principal and interest are paid

The interest rate, shown as a percentage, is what a lender charges for borrowing their money

The Internal Rate of Return (IRR) shows how much money you earn on each dollar invested over time. It’s expressed as a percentage and is a key factor for passive investors to consider. How quickly you get your cash back impacts the IRR: the sooner you get it, the higher your IRR

A joint venture or JV, is a partnership between two or more investment partners, entities, or companies who collaborate on a deal

In apartment syndication, a key principal is someone the lender sees as crucial for the investment’s success. They’re insured to cover any disruptions if something happens to the property or general partners

An LOI is a non-binding agreement created by the buyer proposing their purchase terms

The limited partner (LP) is a passive investor in apartment syndications. Their liability is limited to their share of ownership and they fund part of the equity investment

The loan-to-cost ratio (LTC) in multifamily financing compares the debt amount to the property acquisition cost

The Loan-To-Value (LTV) ratio is used to calculate the ratio of a loan amount compared to an apartment building’s appraised value

The London Interbank Offered Rate (LIBOR) is a key interest rate that major banks use for short-term loans. It helps determine interest rates for loans worldwide, including those for commercial real estate like apartment buildings

Loss to lease (LTL) is the income lost because the actual rent is lower than the market rent. It’s calculated by subtracting the scheduled rent from the market rent

Market rent is what a landlord expects to receive and a tenant expects to pay for a rental. It’s determined by comparing rents at similar apartments in the area, usually through a rent comparison analysis

A metropolitan statistical area (MSA) is a big region with a large population center. The United States Office of Management and Budget (OMB) decides which nearby communities are part of it, as they have a big influence on the area’s economy and social life

A model unit is an apartment unit used as a sales tool to show prospective tenants how the actual unit will appear once occupied

Net operating income (NOI) is total income from a property after subtracting operating expenses such as maintenance, utilities, property taxes, and insurance

A non-recourse loan for a multifamily property doesn’t need the borrower(s) to personally guarantee it. If there’s a loan default, the lender can’t go after the borrower’s other assets besides the property used as collateral for the loan

An Offering Memorandum (OM) is a document that provides detailed information about a commercial real estate investment opportunity. It typically includes property details, financial projections, market analysis, and terms of the investment

Operating expenses are the costs of running and maintaining the property. Common expenses include the following:

  • Taxes
  • Insurance
  • Repairs & Maintenance
  • General / Admin
  • Management
  • Utilities
  • Marketing
  • Contract Services
  • Payroll
  • Reserves
  • Asset Management

Passive investing means putting your money into a real estate syndication that’s managed for you. It takes away the hassles of real estate ownership, letting you benefit from real estate without the headaches

A permanent agency loan is a long-term mortgage from Fannie Mae or Freddie Mac with lower rates than bridge loans. They usually last 5, 7, or 10 years and ammortized over 20 to 30 years

The physical occupancy is the number of occupied units shown as a percentage

A Preferred Return is a guaranteed return for limited partners before general partners get paid

A prepayment penalty is a fee charged to a borrower if they pay off a mortgage early

Price per unit is how much it costs to buy an apartment community per unit. You find it by dividing the purchase price by the number of units

A private placement memorandum (PPM) is a document explaining an investment’s terms and risks. It usually has four parts: introduction, basic disclosures, legal agreement, and subscription agreement

The profit and loss statement, also called a trailing 12-month profit and loss statement or T12, shows the revenue and expenses of an apartment building over the past year

A pro-forma is a projected budget for an apartment community, outlining income and expenses for the next 12 months and 5 years

Property and neighborhood classes use rankings like A, B, C, or D based on different factors. Here are some general guidelines:

Property Classes:

  • Class A: New buildings with top amenities, demanding high rents
  • Class B: Well-maintained, about 10-15 years old, with a mix of tenants
  • Class C: Around 25 years old, showing wear, with blue-collar tenants
  • Class D: over 30 years old, no amenity package, low occupancy, needs a lot of work

Neighborhood Class:

  • Class A: Wealthy areas with expensive homes, possibly with amenities like a golf course
  • Class B: Middle-class neighborhoods, generally safe
  • Class C: Low-to-moderate income areas
  • Class D: High crime, very unsafe neighborhoods

A property management fee is a monthly payment to the management company for running the property. It’s usually 2% to 8% of the total monthly revenue, depending on the property’s size

A refinance is when you swap one loan for another with different terms. In apartment syndication, the general partner might refinance after boosting the property’s value, using the money to repay part or all of the limited partner’s investment

A refinancing fee is paid to the general partner when closing a new loan, for their work in refinancing the property. It’s usually 0.5% to 2% of the total loan amount

A rent comparable analysis involves studying similar nearby apartment communities to determine out market rents

A rent premium is the higher rent charged after renovating an apartment community. General partners estimate this increase based on rates of similar or recently renovated units nearby

The rent roll is a detailed list of all units and tenants at an apartment, including income summaries

Residential Utility Billing System (RUBS) calculates a tenant’s utility bill based on factors like occupancy or apartment size. Once calculated, the bill is sent to the resident, increasing the apartment’s revenue

The sales proceeds are the profits received from selling the apartment community after paying the broker and any remaining debt

A sophisticated investor is someone with enough experience and knowledge to understand investment risks and benefits, but they might not meet the criteria to be considered accredited

The submarket is a geographic subdivision of a larger MSA or market

A subscription agreement is a deal between a company and an investor(s) outlining the price and terms of buying shares. It explains the rights and duties related to the share purchase

Underwriting involves financially evaluating an apartment to figure out potential returns, an offer price, and whether it’s worth pursuing further

Vacancy loss is the amount of revenue lost due to unoccupied units

The vacancy rate shows the percentage of empty units at a given time. It’s found by dividing the number of empty units by the total number of units