Education Center
FAQs
Macroeconomic knowledge, market research, deal level underwriting, building relationships with great operators – Leap Multifamily does all of the hard work you! We analyze 8-10 deals a month and with the help of a professional underwriter, determine which deals have the highest likelihood of success. There are few companies in the nation with the real estate experience, industry connections, and access to deal flow that Leap Multifamily has.
Honesty, servant leadership, and the relentless pursuit of excellence. We truly believe that success comes from serving others and helping them achieve their goals. Zig Ziglar used to say, “If you help enough people get what they want, you will get what you want.”
The minimum investment typically ranges between $75,000 and $100,000.
We aren’t currently accepting funds from outside the U.S.
Cash, trusts, self-directed IRA’s, LLC’s, etc.
Prospective investors will receive a Private Placement Memorandum (PPM), the Company Agreement, a Subscription Agreement, and a Purchaser Questionnaire to determine Accredited Investor status. These documents are housed in our investor portal and are signed electronically.
Our equity raises typically fill up in 3-7 days. We take investors on a first come, first served basis. A good piece of advice is to do as much due diligence as possible before a new investment is launched. You can review the market, asset class, and sponsor well before a deal is launched. Then once the deal goes out to investors you will only need to review the deal itself which will cut down on your time needed to make a decision.
One of the most basic economic principles is the concept of supply and demand. Simply put, when demand exceeds supply, the price of the service or good will rise. That’s what is happening right now in the residential real estate marketplace. There is extreme demand for all types of housing due to seniors aging in place and millennials (the largest generation) coming of age and forming their own households for the first time.
According to the National Association of Realtors, we have a housing shortage of about 5,500,000 units and the shortage is growing at a rate of 276,000 units per year.
Interest rates are going up and this is having an effect on prices. Prices may move and and down but over time, it’s likely that the prices of homes and apartments will continue to rise, along with rental rates.
Always invest in scarcity!
If interest rates are forced upward by the Federal Reserve, it will probably be in response to inflationary trends that generally benefit multifamily assets (increasing wages, rising rents, increasing costs of construction, rising asset prices, etc.). Higher interest rates would be a headwind for asset values but all of those other factors would likely be tailwinds. We’re bullish on asset prices even in the face of projected rate hikes in the coming years.
Real estate is probably the most tax efficient investment available. 1031 exchanges, accelerated depreciation, and tax deferrals are all amazing tax minimization strategies. Check with your CPA on how this could benefit you.
Investing $100,000 into a syndication will typically generate $50-75,000 in depreciable “loss” in the first year.
Yes. However, there are more paperwork and legal fees involved with accepting 1031 money. For this reason, most syndications require that the 1031 amount is >$500,000 and sometimes >$1,000,000. 1031 exchanges are fairly common with syndications so reach out as soon as you know you are doing a 1031 so that we can help with the property identification process.
This is sometimes a possibility. There may be different ways to structure an exit from a syndication where the money can be moved via a 1031 exchange. Reach out for additional details if you think this may be an option for you upon an exit from a future investment.
- Why Invest With Leap Multifamily?
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Macroeconomic knowledge, market research, deal level underwriting, building relationships with great operators – Leap Multifamily does all of the hard work you! We analyze 8-10 deals a month and with the help of a professional underwriter, determine which deals have the highest likelihood of success. There are few companies in the nation with the real estate experience, industry connections, and access to deal flow that Leap Multifamily has.
Honesty, servant leadership, and the relentless pursuit of excellence. We truly believe that success comes from serving others and helping them achieve their goals. Zig Ziglar used to say, “If you help enough people get what they want, you will get what you want.”
- General
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Absolutely not! Our clients also include business owners, many types of real estate investors, and W2 employees in many industries.
Real estate syndication simply means that we pool our money together to invest in larger, higher quality properties than we could purchase on our own. There is typically a lead sponsor in the transaction, also referred to as the general partner, and there are passive investors, also known as limited partners. The sponsor contributes time, experience, and capital while the limited partners contribute capital in their passive roles. The Tax Cuts and Jobs Act of 2012 made it much easier for ordinary people to buy into real estate syndications, opening up a lucrative, risk-adjusted investment opportunity for the general public. Today, 90% of all apartment purchases are done through syndications.Simply put, the supply/demand equation is greatly in our favor and will remain that way for many years.
Supply: According to the National Association of Realtors, there is a housing shortage in the United States of $5.5MM units and that shortage is expected to grow by 276,000 units annually. The cost of new construction has risen dramatically, making the lower cost of pre-existing inventory even more attractive.
Demand: We’re becoming a nation of renters. Millennials, our largest generation, are waiting longer than previous generations to form households and are choosing to stay renters for longer than previous generations.
We target properties that project to a 5-8% cash-on-cash return (CoC) and a 14-17% internal rate of return (IRR). Most importantly, we underwrite conservatively by discounting the renovation premiums we will receive. We also underwrite less organic rent growth than expected and we project an exit cap rate that is above current market cap rates. If an investment hits these ROI metrics even with conservative underwriting assumptions, then we will bring it to our investors.
Under-promise and over-deliver is the name of the game here!
A small portfolio of single-family houses will always be subject to wild swings in income as repairs, evictions, or other issues strike one of the assets. Apartments often have 100-400 units so the sample size is larger and more likely to even out the swings in income and expenses.
Additionally, apartments are valued based on the income they bring in. By purchasing assets where we can drive income up, we automatically increase the value of the property. Single-family houses can only be as valuable as the properties surrounding them.
Due to the rising costs of construction, it’s nearly impossible to build new housing cheaply. Meanwhile, demand for housing is expected to rise dramatically over the next 10 years, making A/B apartments a great investment opportunity.
Our investment strategy is to locate A/B class properties where we have the ability to build in additional equity. By increasing the equity in the property, we produce higher returns and protect against downside in the market. “Forced appreciation” can come via capturing loss-to-lease, adding amenities, decreasing expenses, or renovating classic units.
Additionally, the higher income tenants in A/B properties are more likely to withstand economic downturns compared to the tenants in lower class properties.
Commercial real estate is typically classified based on several factors including age, condition, and overall neighborhood appeal. A-class properties are typically built from 2005 onward and are located in recently built neighborhoods. C-class properties are older and may have more deferred maintenance. B-class properties fall somewhere in the middle of those.
SFR values are based on the values of the homes around them. No matter how much rent is generated the home will never be worth more than the surrounding houses. Apartment complexes are valued differently, and the valuation is based on a simple formula.
Apartments: Value = Net Operating Income / Cap Rate. If the property produces $100,000 in NOI and the cap rate for that area is 5% then the value of the property is $2,000,000.
If we choose our properties correctly then we can renovate dated units and/or operate the property more efficiently. Both strategies increase the NOI and build up equity. It’s called forced appreciation and it’s a big reason why we LOVE this investment strategy.
Using the prior example, we can figure out the cap rate for this area by dividing the NOI by the value. $100,000 / $2,000,000 = .05 or 5%.
Cap rate is the expected rate of return that investors demand in a certain area if buying a property with cash. Like everything in the world of finance, expected rates of return (cap rates) vary based on investors’ perception of risk. A “Class A” property in a booming city will have a lower cap rate than a “Class C” property in a city whose economy is struggling.
Using the prior example, we can figure out the cap rate for this area by dividing the NOI by the value. $100,000 / $2,000,000 = .05 or 5%.
There are two type of securities that we offer. One is called a 506(b) and the other is a 506(c). Most of our offerings are issued under the 506(b) exemption and as such, investors don’t have to be accredited. They do, however, have to be sophisticated. You can read more about these two types of securities at the SEC.gov links above.
There are several ways to meet the definition of an accredited investor. If an individual’s income is >$200,000 (>$300,000 if married), or if your net worth is >$1,000,000 excluding your personal residence, you would qualify. There are other ways to qualify, and you can read more at SEC.gov.
Answer: There are many different types of investor splits (also known as waterfalls). The most common waterfall involves a preferred return of 6-8% and then a split of profits above that where 60-80% of the profits goes to the LP’s and the rest to the GP’s.
Sometimes there may be a secondary hurdle where the split changes above a certain IRR. For instance, an investment waterfall may have a 7% preferred return, a 70/30 split up to a 16% IRR, and then a 50/50 split over 16% IRR.
There is no right or wrong way to set up the investor waterfall as long as all parties feel that interests are aligned, and the split is fair.Many syndications offer a preferred return of 6-8%. This means that the first x% of profits is paid out 100% to the LP’s before the GP’s start to participate in profit sharing. Most preferred returns accrue, meaning that if the investment offers an 8% preferred return and only produces a 7% return in Year 1, the 1% difference will accrue into Year 2 where the GP’s won’t share in the profits until the preferred return is caught up to the stated 8%. - Real Estate Agents
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Part 1: All investors enjoy many of the same benefits of multifamily syndications including great risk-adjusted returns and passive income. But real estate agents can fully realize the most powerful component – the tax benefits that come with being involved in commercial real estate investing. Most real estate agents are classified as, “Real Estate Professionals” on their tax returns. This entitles them to fully utilize the depreciation that comes along with an investment into a syndication.
Part 2: Division of labor. Real estate can be a very high paying profession but only if you focus on the right things. Splitting your time between building your client list and finding a few rentals to own and manage is not time-efficient, nor tax efficient. Focus on growing your business and let us find the best investment opportunities!
- Investment Process - Details
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The minimum investment typically ranges between $75,000 and $100,000.
We aren’t currently accepting funds from outside the U.S.
Cash, trusts, self-directed IRA’s, LLC’s, etc.
Prospective investors will receive a Private Placement Memorandum (PPM), the Company Agreement, a Subscription Agreement, and a Purchaser Questionnaire to determine Accredited Investor status. These documents are housed in our investor portal and are signed electronically.
Our equity raises typically fill up in 3-7 days. We take investors on a first come, first served basis. A good piece of advice is to do as much due diligence as possible before a new investment is launched. You can review the market, asset class, and sponsor well before a deal is launched. Then once the deal goes out to investors you will only need to review the deal itself which will cut down on your time needed to make a decision.
- Market Outlook
-
One of the most basic economic principles is the concept of supply and demand. Simply put, when demand exceeds supply, the price of the service or good will rise. That’s what is happening right now in the residential real estate marketplace. There is extreme demand for all types of housing due to seniors aging in place and millennials (the largest generation) coming of age and forming their own households for the first time.
According to the National Association of Realtors, we have a housing shortage of about 5,500,000 units and the shortage is growing at a rate of 276,000 units per year.
Interest rates are going up and this is having an effect on prices. Prices may move and and down but over time, it’s likely that the prices of homes and apartments will continue to rise, along with rental rates.
Always invest in scarcity!
Asset prices are derived from many different components. Projected rent increases, supply & demand imbalances, demographic trends, monetary and fiscal policy, inflation trends, economic growth, employment rates, etc., are all very important components of asset pricing. Interest rates are certainly one component in the pricing of assets, but they are definitely not the only factor.
If interest rates are forced upward by the Federal Reserve, it will probably be in response to inflationary trends that generally benefit multifamily assets (increasing wages, rising rents, increasing costs of construction, rising asset prices, etc.). Higher interest rates would be a headwind for asset values but all of those other factors would likely be tailwinds. We’re bullish on asset prices even in the face of projected rate hikes in the coming years. - Tax Advantages
-
Real estate is probably the most tax efficient investment available. 1031 exchanges, accelerated depreciation, and tax deferrals are all amazing tax minimization strategies. Check with your CPA on how this could benefit you.
Investing $100,000 into a syndication will typically generate $50-75,000 in depreciable “loss” in the first year.
- 1031 Exchanges? Yes!
-
Yes. However, there are more paperwork and legal fees involved with accepting 1031 money. For this reason, most syndications require that the 1031 amount is >$500,000 and sometimes >$1,000,000. 1031 exchanges are fairly common with syndications so reach out as soon as you know you are doing a 1031 so that we can help with the property identification process.
This is sometimes a possibility. There may be different ways to structure an exit from a syndication where the money can be moved via a 1031 exchange. Reach out for additional details if you think this may be an option for you upon an exit from a future investment.
Macroeconomic knowledge, market research, deal level underwriting, building relationships with great operators – Leap Multifamily does all of the hard work you! We analyze 8-10 deals a month and with the help of a professional underwriter, determine which deals have the highest likelihood of success. There are few companies in the nation with the real estate experience, industry connections, and access to deal flow that Leap Multifamily has.
Honesty, servant leadership, and the relentless pursuit of excellence. We truly believe that success comes from serving others and helping them achieve their goals. Zig Ziglar used to say, “If you help enough people get what they want, you will get what you want.”
Absolutely not! Our clients also include business owners, many types of real estate investors, and W2 employees in many industries.
Simply put, the supply/demand equation is greatly in our favor and will remain that way for many years.
Supply: According to the National Association of Realtors, there is a housing shortage in the United States of $5.5MM units and that shortage is expected to grow by 276,000 units annually. The cost of new construction has risen dramatically, making the lower cost of pre-existing inventory even more attractive.
Demand: We’re becoming a nation of renters. Millennials, our largest generation, are waiting longer than previous generations to form households and are choosing to stay renters for longer than previous generations.
We target properties that project to a 5-8% cash-on-cash return (CoC) and a 14-17% internal rate of return (IRR). Most importantly, we underwrite conservatively by discounting the renovation premiums we will receive. We also underwrite less organic rent growth than expected and we project an exit cap rate that is above current market cap rates. If an investment hits these ROI metrics even with conservative underwriting assumptions, then we will bring it to our investors.
Under-promise and over-deliver is the name of the game here!
A small portfolio of single-family houses will always be subject to wild swings in income as repairs, evictions, or other issues strike one of the assets. Apartments often have 100-400 units so the sample size is larger and more likely to even out the swings in income and expenses.
Additionally, apartments are valued based on the income they bring in. By purchasing assets where we can drive income up, we automatically increase the value of the property. Single-family houses can only be as valuable as the properties surrounding them.
Due to the rising costs of construction, it’s nearly impossible to build new housing cheaply. Meanwhile, demand for housing is expected to rise dramatically over the next 10 years, making A/B apartments a great investment opportunity.
Our investment strategy is to locate A/B class properties where we have the ability to build in additional equity. By increasing the equity in the property, we produce higher returns and protect against downside in the market. “Forced appreciation” can come via capturing loss-to-lease, adding amenities, decreasing expenses, or renovating classic units.
Additionally, the higher income tenants in A/B properties are more likely to withstand economic downturns compared to the tenants in lower class properties.
Commercial real estate is typically classified based on several factors including age, condition, and overall neighborhood appeal. A-class properties are typically built from 2005 onward and are located in recently built neighborhoods. C-class properties are older and may have more deferred maintenance. B-class properties fall somewhere in the middle of those.
SFR values are based on the values of the homes around them. No matter how much rent is generated the home will never be worth more than the surrounding houses. Apartment complexes are valued differently, and the valuation is based on a simple formula.
Apartments: Value = Net Operating Income / Cap Rate. If the property produces $100,000 in NOI and the cap rate for that area is 5% then the value of the property is $2,000,000.
If we choose our properties correctly then we can renovate dated units and/or operate the property more efficiently. Both strategies increase the NOI and build up equity. It’s called forced appreciation and it’s a big reason why we LOVE this investment strategy.
Using the prior example, we can figure out the cap rate for this area by dividing the NOI by the value. $100,000 / $2,000,000 = .05 or 5%.
Cap rate is the expected rate of return that investors demand in a certain area if buying a property with cash. Like everything in the world of finance, expected rates of return (cap rates) vary based on investors’ perception of risk. A “Class A” property in a booming city will have a lower cap rate than a “Class C” property in a city whose economy is struggling.
Using the prior example, we can figure out the cap rate for this area by dividing the NOI by the value. $100,000 / $2,000,000 = .05 or 5%.
There are two type of securities that we offer. One is called a 506(b) and the other is a 506(c). Most of our offerings are issued under the 506(b) exemption and as such, investors don’t have to be accredited. They do, however, have to be sophisticated. You can read more about these two types of securities at the SEC.gov links above.
There are several ways to meet the definition of an accredited investor. If an individual’s income is >$200,000 (>$300,000 if married), or if your net worth is >$1,000,000 excluding your personal residence, you would qualify. There are other ways to qualify, and you can read more at SEC.gov.
Answer: There are many different types of investor splits (also known as waterfalls). The most common waterfall involves a preferred return of 6-8% and then a split of profits above that where 60-80% of the profits goes to the LP’s and the rest to the GP’s.
Sometimes there may be a secondary hurdle where the split changes above a certain IRR. For instance, an investment waterfall may have a 7% preferred return, a 70/30 split up to a 16% IRR, and then a 50/50 split over 16% IRR.
There is no right or wrong way to set up the investor waterfall as long as all parties feel that interests are aligned, and the split is fair.
Part 1: All investors enjoy many of the same benefits of multifamily syndications including great risk-adjusted returns and passive income. But real estate agents can fully realize the most powerful component – the tax benefits that come with being involved in commercial real estate investing. Most real estate agents are classified as, “Real Estate Professionals” on their tax returns. This entitles them to fully utilize the depreciation that comes along with an investment into a syndication.
Part 2: Division of labor. Real estate can be a very high paying profession but only if you focus on the right things. Splitting your time between building your client list and finding a few rentals to own and manage is not time-efficient, nor tax efficient. Focus on growing your business and let us find the best investment opportunities!
The minimum investment typically ranges between $75,000 and $100,000.
We aren’t currently accepting funds from outside the U.S.
Cash, trusts, self-directed IRA’s, LLC’s, etc.
Prospective investors will receive a Private Placement Memorandum (PPM), the Company Agreement, a Subscription Agreement, and a Purchaser Questionnaire to determine Accredited Investor status. These documents are housed in our investor portal and are signed electronically.
Our equity raises typically fill up in 3-7 days. We take investors on a first come, first served basis. A good piece of advice is to do as much due diligence as possible before a new investment is launched. You can review the market, asset class, and sponsor well before a deal is launched. Then once the deal goes out to investors you will only need to review the deal itself which will cut down on your time needed to make a decision.
One of the most basic economic principles is the concept of supply and demand. Simply put, when demand exceeds supply, the price of the service or good will rise. That’s what is happening right now in the residential real estate marketplace. There is extreme demand for all types of housing due to seniors aging in place and millennials (the largest generation) coming of age and forming their own households for the first time.
According to the National Association of Realtors, we have a housing shortage of about 5,500,000 units and the shortage is growing at a rate of 276,000 units per year.
Interest rates are going up and this is having an effect on prices. Prices may move and and down but over time, it’s likely that the prices of homes and apartments will continue to rise, along with rental rates.
Always invest in scarcity!
If interest rates are forced upward by the Federal Reserve, it will probably be in response to inflationary trends that generally benefit multifamily assets (increasing wages, rising rents, increasing costs of construction, rising asset prices, etc.). Higher interest rates would be a headwind for asset values but all of those other factors would likely be tailwinds. We’re bullish on asset prices even in the face of projected rate hikes in the coming years.
Real estate is probably the most tax efficient investment available. 1031 exchanges, accelerated depreciation, and tax deferrals are all amazing tax minimization strategies. Check with your CPA on how this could benefit you.
Investing $100,000 into a syndication will typically generate $50-75,000 in depreciable “loss” in the first year.
Yes. However, there are more paperwork and legal fees involved with accepting 1031 money. For this reason, most syndications require that the 1031 amount is >$500,000 and sometimes >$1,000,000. 1031 exchanges are fairly common with syndications so reach out as soon as you know you are doing a 1031 so that we can help with the property identification process.
This is sometimes a possibility. There may be different ways to structure an exit from a syndication where the money can be moved via a 1031 exchange. Reach out for additional details if you think this may be an option for you upon an exit from a future investment.