getFREED stands for Freedom through Real Estate Education for Doctors. My mission is to help empower and educate the medical field to leverage real estate investing so that they can getFREED.

An accredited investor has an earned income over $200,000 per year (or joint annual income of $300,000 with a spouse) OR has a net worth over $1M, (excluding the value of the person’s primary residence). You may also qualify as an accredited investor with by holding an active Series 7, 65 or 82 license.

The LP Investors are the passive investors that provide the majority of capital to each investment opportunity.

The GP Investor is the main operator that has the experience and responsibility required to invest directly in the real estate asset, execute on the business plan and manage the day-to-day operations of the property.

Foreign investors should always consult their CPA on how to navigate the intricacies of investing in US-based real estate syndication based on their unique situation. Some important things you may want to consult them on are how to withhold taxes from distributions, entity structures, tax implications and potentially having an in-country securities counsel review the investment documents.

Cash flow comes from the payments that investors receive from the real estate syndications that they are invested in. Investors can generally expect quarterly distributions from most syndications.

Cashflow comes from the rental revenue that a property generates. Some of the rental income covers operating expenses like mortgage payments, taxes, insurance, property management, etc. Any of the money left over after all operating expenses generally goes towards the passive investors.

Big cash returns (outside of the cash flow) generally happens when a property is refinanced or sold. When improvements and renovations are made at a property, you can generally expect the rental revenue and property value to increase, which creates profits for investors.

Depreciation is the reduction of value of an asset over time. The IRS recognizes that physical assets will deteriorate over time and that there is a cost to maintain those assets. In order to compensate the owners of these physical assets, the IRS allows tax deductions, known as depreciation.

For owners of real estate, you are able to deduct a percentage of the property against the income that a property generates, which will typically reduce your taxes

Always consult with a good CPA, accountant or tax adviser to understand your unique financial situation.

The holding period is the projected time that a property is planning on holding the property. This holding period is an estimate, so depending on market conditions, property performance and potential opportunities can impact whether an operator decides to sell early or hold longer than projected.

A Preferred Return is directly related to the returns that a property is able to achieve.

For example, if an investment is offering an 9% Pref, that means that the passive investors in the deal will receive the first 9% annual cash flow on their investment before the operating team (GP) receives any cash flow. This ensures that investors who invest under the pref return receive priority in the returns before other classes in a deal.

For example, if you invest $100,000 in an opportunity that offers a 9% pref cash-on-cash return, you can expect to receive $9,000 for the year.

Generally, if preferred returns are not met, they will accumulate and roll over into future years.

For example, with an 9% pref, if you only receive $3,000 in year one, your deficit for year one would be $6,000. That $6,000 would then accumulate over future years so that instead of  roll over to year two, and in year two, you are now owed $15,000 – your $6,000 for year one and your $9,000 for year two.

A split ratio refers to the percentage ownership that investors and operators own. 

For example, if an opportunity offers an 80/20 split, investors would own 80% of the equity of the property and the operators would own 20% of the equity.

The average annual return tells is what the average return over the entire life of the investments.

For example, if a $100,000 investment had a 110% return over a five year hold, you would have received a a $110,000 profit plus your original investment of $100,000. The average annual return for this investment would be 22% (110% / 5 years).

IRR is a common returns metric for passive investments. The IRR of an investment compares the return on your investment with the length of time included in the calculation. The typical ROI (return on investment) calculations don’t take into account how long it will take to collect your return.

The equity multiplier indicates how much you could expect your investment to grow should the project go as planned. If an investment opportunity projects a 2.0x equity multiplier (also commonly know as MOIC) you can expect a $100,000 investment to grow to $200,000 by the end of the holding period.