Why no debt?
Because it provides a significant competitive advantage. Since we acquire properties using cash by pooling investor funds, we are able to pay lower prices, achieve better deal terms, and buy quality properties that do not qualify for financing. Additionally, we are able to avoid significant closing costs and delays that our competitors experience.
For the investor, no debt also provides peace of mind. Because the properties are owned out right, there is zero risk of mortgage default and foreclosure - no matter what state the financial markets may be in. Finally, because we are not making principal and interest payments, the additional cash flow is returned to investors, increasing profits.
Who manages the properties?
BENA Capital handles all of the decisions related to acquiring, managing, and selling the properties. Our role is to deploy our expertise to improve investor returns. We hire professional property management firms to handle the day-to-day activities and work closely with them to ensure that investor returns are maximized. Investors do not participate in the management activities.
What is the structure?
A Limited Partnership is formed, which holds title to the property. BENA Capital serves as the General Partner, while investors are Limited Partners. The Limited Partnership structure provides investors with both liability protection as well as pass-through tax benefits.
What is a Limited Partnership?
A Limited Partnership is a legal entity which consists of a General Partner and one or more Limited Partners. The General Partner is responsible for making all decisions, but retains the liability for the partnership. The Limited Partners are passive investors but receive liability protection.
How long is the investment timeline?
Investment windows are generally 3-5 years. This window provides enough time to improve and stabilize the property, benefit from market changes, and exit for a healthy return. In many instances we are able to achieve the investment goals in a shorter time period and will sell the property prior to fund expiration.
What is the minimum investment?
Currently, investment minimums range from $50,000 to $250,000 depending on the type of fund.
When do investors receive payments?
Investors receive profit distributions on a quarterly basis. Distribution checks are mailed to investors by the 15th of the month following the end of each quarter: April 15, July 15, Oct 15, and Jan 15.
How are taxes treated?
Investors receive pass-through tax benefits, which means that all distributions flow to each limited partner. The Limited Partnership pays no taxes. Investors also benefit from the depreciation deduction for real estate, which reduces taxable income. Investors receive a Schedule K-1 by March 15th each year which includes a report of each investor's share of profits, losses, deductions, and credits to include in their tax returns.
How does the investment process work?
Investing is simple.
- Prospective investors receive an Offering Memorandum which details the fund's target property types, markets, and projected returns.
- Investors complete the investment documents and contribute capital.
- Quarterly profit checks are delivered to investors.