Real Estate Investment Funds
Disclaimer: Sharon Winsmith is not a financial advisor and is not engaged in the business of providing financial investment advice. The information contained on this page includes details regarding Sharon Winsmith’s personal investments. Nothing contained on this page or elsewhere on this website constitutes investment advice. We encourage you to do your own independent research and consult with your personal advisors before making any investment decisions.
Please note that to make any investments in real estate investment funds, you typically must meet the definition of an accredited investor. An accredited investor includes the following individuals:
- Income of at least $200,000 in the last two years ($300,000 joint income with a spouse) and has a reasonable expectation of the same income level in the current year; or
- Net worth of at least $1M, excluding the individual’s primary residence.
What Is A Real Estate Investment Fund?
You as the investor would be a limited partner in the investment. That means that all you really have to do is send your money and wait for distributions to start. You are not involved in the active management of the property and do not make any decisions as far as what the fund chooses to buy and what it doesn’t.
In some cases, you may know what properties the fund will buy before you make your investment. However, in other cases, the fund may have the discretion to go out and buy whatever they want. In these cases, you may only know the general class or classes of real estate assets the fund will be targeting when you first make your investment.
It is a highly regulated industry which has led to most funds requiring their investors to be accredited investors. There are some real estate investments open to non-accredited investors. However, my experience has been that the best funds only work with accredited investors.
This is not the same thing as a Real Estate Investment Trust (REIT). I am generally not a big fan of REITs because they aren’t as good from a tax perspective as investing through a fund.
Clairmont Capital Group is a fund that focuses on co-investments with general partners in the real estate industry. This means rather than being a limited partner investor in the underlying investment fund, you are a limited partner investor in the general partner of the fund.
As a co-investor with the general partner, the types of income distributions you receive will change. You will receive a portion of the management fees and promote or carried interest paid to the general partner.
The underlying investments typically consist of multi-family properties, senior housing, and college housing through the U.S. The fund is based in Los Angeles.
These types of investments are commonly limited to qualified purchasers. Qualified purchasers generally have assets of more than $5M. We discuss the requirements for being a qualified purchaser in more detail here.
Minimum Investment Requirements: $100,000+
MLG Capital is a well established group that primarily invests in commercial and multi-family real estate. Their properties are located all throughout the U.S.
The fund has been around for over 35 years and the management team has a significant amount of experience. Their headquarters are located in Wisconsin.
The one issue I have with this fund is their verification requirements are more stringent than industry standards. In many cases, they require third-party verification to confirm that you are an accredited investor. I usually avoid funds with these types of requirements as most allow you to self-certify and avoid this additional cost.
Minimum Investment Requirements: $100,000
Praxis Capital focuses on investments in multifamily properties. Most of their properties are located in the Southeast. In some cases, they have investments located elsewhere such as Nevada, Texas, and the West Coast.
The management team has a great deal of experience and the fund has been around for over 20 years. Their headquarters is located in Santa Rosa, California.
The CEO of Praxis Capital is Brian Burke. Burke is the author of The Hands-Off Investor, the best book available on investing in real estate funds.
Minimum Investment Requirements: $100,000
Voyager Pacific Capital is a newer investment fund that has a great reputation in the industry. They primarily focus on investments in single-family rental properties, vacant law, tax liens, and some multifamily rental properties.
Voyager offers a very personal experience for investors. Because the fund is smaller than some of the others that I invest in, I have more frequent contact and access to the management team.
This fund typically invests in smaller projects and is unique in the sense that they own single-family rental properties. Most well-established real estate funds do not bother with single-family homes and usually opt to invest in much larger properties, such as apartment buildings or commercial properties.
Voyager’s investments often include properties located in states that are not commonly preferred by large institutional real estate investors. Examples of some of these less investor-friendly states that Voyager covers include New York, California, and Massachusetts. This can be good from a geographic diversification standpoint.
They also often have funds that do not use any debt funding. While this may decrease the overall returns, it should also decrease some of the underlying risk associated with the investment. This might be a good choice for more risk-averse investors.
The fund is headquartered in Miami, Florida. The CEO is David Hardcastle.
Minimum Investment Requirements: $100,000 (though they will commonly let new investors start with a $50,000 investment)
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