Frequently Asked Questions
Are you an accredited investor?
You may be an accredited investor if you have any of the following:
If you have earned income that surpasses $200,000 (or $300,000 combined with a spouse) in each of the previous two years, and generally expect the equivalent for the present year OR have a net worth over $1 million, including if combined with a spouse but excluding the value of the person’s primary residence.
If you are taking the income test, then you must keep and maintain the thresholds for three consecutive years (which can be accompanied by a spouse) but for example, it cannot satisfy one year based as an individual and base the other two years with a spouse. There is only one circumstance that will exempt this and that is only if the person was married during this three year period and in that case, the person must keep and maintain the threshold for the years they have been married and provide the individual income for the previous years while single.
Entities such as Banks, corporations, trusts, partnerships, and non-profits all may be considered accredited investors. With these being considered accredited investors, the following may be relevant to you depending on if: Any of the trusts have assets that surpass $5 million that were not made to purchase individual securities, which was purchased directly from a sophisticated person or when all equity owners are all accredited investors to any entity.
A sophisticated person in this context applies to an individual who has the experience and knowledge in business and finance to give input on the pros and cons of the investment.
Do you only offer investments to accredited investors?
No, we allow accredited and non-accredited investors to invest with us.
What type of accounts am I able to invest in?
The types of accounts we currently support include personal investment accounts, joint accounts, and certain entity accounts (Trusts, Limited Liability Companies, Limited Partnerships, C Corporations, and S Corporations). More information on the IRA accounts can be seen below.
Can I invest using my IRA?
Yes, you are able to invest using your IRA. If a person currently has a self-directed IRA, then they need to contact their current custodian to make sure that they are allowed to place an investment with CalRov Investment Group.
Will there be other investors involved in the deal with me?
It all depends on the situation, each deal is unique to the person. There are multiple factors that will determine how many investors will be involved. These factors can include: the existing finance in place and if the current owner will be carrying back financing. Each deal will most likely have a range of 3-20 investors depending on the circumstances.
If there was a circumstance where a person had the funds to invest in an asset as the only investor, we would work with them to locate a property to fit their personal criteria. We would do all the underlying work and also the evaluation. For a fee, we would also assign that person a purchase contract and/or become a partner in the management and manage the property for that person.
When am I able to visit the property?
If you are an investor, you are allowed to visit the property before investing and during the life of the project.
What is a K-1?
A K-1 is a tax form that partnerships use to give investors informative details on their share of a partner’s taxable income. Any partner in the LLC that has purchased property will receive a K-1 form. A K-1 is issued to each investor so that they can keep track of their partners gains, losses, deductions and credits, and are provided annually so that investors can provide K-1 amounts on their tax returns.
Where exactly do these investor funds go?
Investor funds are used for the all-around costs of the property(actual purchase price of the property, acquisition fees, legal and transaction costs, capital projects, reserves, etc.
How long will my money be needed?
This will vary depending on the specific property and improvement plan but it will typically be held for 3-7 years.
An anticipated rate of return and proposed exit strategy will be given to each property. We can either hold the money for a specific time period or until we reach a specific appreciation hurdle, whichever one comes first. Whichever factor happens first, it will cause us to then sell the property to pay off the investors.
When are distributions made?
Distributions are made quarterly.
Can these investment opportunities be shared with friends and family?
Yes. Family and friends are more than welcome to be introduced to invest. Remember to always make it a point to reach out and get to know each and every investor you are working with and make sure that they reach and get to know us as well. We want each investor to have a relationship with us before they invest.
Will I be managing the property day-to-day?
The members of CalRov investment Group, LLC, and its affiliates will be overseeing the management of the properties including all the assets. They will also be executing the improvement plan. CalRov Investment Group, LLC, will manage the asset day-by-day with our team of professionals. Your property will have both an asset manager and a director of construction and maintenance. Each property will also include a community manager, an assistant community manager, and a lead maintenance technician with an assistant. There will typically be 4-5 full-time staff to manage each asset.
Conference and webinar calls will be held regularly to update investors. After closing on a property, we will hold a monthly investor call for the first 4 months and will also hold a web or teleconference call quarterly. Every two months we will also be sending out the financial reports and executive summaries every two months. We want to make it so that we are very approachable to our investors and are more than welcome to help answer any questions.
Am I guaranteed to get my money back?
No, because it is an investment and there is no solid guarantee, it is possible under an unusual circumstance to lose the entire investment but that will be explained in the private placement memorandum.
How do you migrate the risk of loss to investors?
The benefit of choosing us for your investment is that we will brief you to educate you about the risks before you invest. We will provide you with a Private Placement Memorandum, operating agreement, and a subscription booklet that comes with a 12-month training profit and loss, Rent Rolls, Property Brochure, Due Diligence Reports, Lease Audit reports, Executed Sales Contract and more. You will be able to view the documentation on all profit history of the specific asset that you will be investing in, you will be informed of any issues and how we plan to resolve them and also anticipated returns.
To assist us to draft the appropriate documents, we hire experienced securities, legal counsel. We will also hire experienced level commercial real estate counsel to review all of our loan documents, the purchase and sale agreements, and the property transaction documents and to lastly handle our closing.
The property will be covered by insurance to mitigate physical damage and liability risks. It will also be insured for loss of rent during rebuilding and will carry a full replacement cost with an Umbrella Policy on each of the properties.
Only something drastic would have to happen for you to lose all of your investments. Some examples include; having all tenants move out due to a hazard or a natural disaster that could destroy the property and the insurer fails to pay for the loss. There are other ways that could lead to foreclosure but we perceive this risk to be very small.
All the assets we acquire are managed by our affiliated property management company. This is so that we can deal with the property on a daily basis and see it perform with full care. We will take action immediately and plan strategies for any negative trend that comes up.
There is only one way for a very low-risk free investment, and that is to choose a treasury bond with its nascent level of return.