Investing

CALL US: 509-224-3844 Let Me Explain This week I was supposed to write about how to invest in real estate with your retirement account. However, I realized that perhaps I did not explain the process of investing in a syndication as completely as I should have.  If you missed the steps in investing in a […]

CALL US: 509-224-3844 DO THIS and supercharge your investments… Hopefully, in the past several weeks through our Syndication Series, you have learned that investing in Main Street (Real Estate) as an alternative to Wall Street (Stocks & Bonds), can be a very powerful tool to boost your portfolio performance. (If you have missed the prior newsletters

What Is Your Why?​
OUR SECRET SAUCE…​
Which of the items above are the most important to you? Without knowing this, it is not possible to accurately and effectively evaluate any investment. You need to know your WHY. Which of the following resonates with you?

Financial Freedom: to me means having control over your time. It is not about how much money you have in the bank, but about being able to replace the time you spend working for money with time spent doing what you want. Perhaps that means working by choice or visiting family for extended periods of time. Ultimately it means CASHFLOW. People in this category look for investments that have a steady income stream, to help replace part or all of their earnings.

Wealth Preservation: is about safe keeping your nest egg and stopping inflation from eating away at your current savings. Low risk investments that hold their value or value that changes slowly are your best bet here. 

Tax Savings: Finding ways to legally lower or eliminate taxes is the goal. Assets that can be depreciated, oil and gas tax credits or energy credits achieved through building energy efficient projects are all good methods. 

Equity Growth: If simple preservation is not enough and you want that nest egg to grow then search for investments that are more aggressive and that project doubling or tripling of your initial investment over a certain period. A balance between increased risk and greater returns is the obvious choice, but it requires more due diligence. 

I find one of the best arguments for real estate investing is the fact that you can achieve ALL 4 strategies with different real estate ventures. Sometimes a single RE-Investment will check ALL the boxes. But that does not mean real estate is the only answer. There are so many ways you can invest in main street instead of wall street and achieve your goals faster and with more reliability. The Key is Real Assets, things that are real and tangible.

If you need more help determining your investment strategy or understanding what your options are within any of the above plans please schedule a call so I can help. I have spent the last several years exploring different options for our personal portfolio and can help direct you. I am not an investment advisor, but I do have experience and resources to share. 

What Makes Vertical Integration Significant?​
OUR SECRET SAUCE…​
What makes StoneCrest Equity Partners special and in turn a better investment choice? I think it comes down to one thing: Accountability.

We here in SEP, are 100% responsible for the acquisition, development, construction, lease up, property management and asset management of our projects.

“Well of course you are, you are promoting it as your project” you might say. But did you know that most New Development Real Estate Syndications (group investments) have up to 5 different parties working on the same project?

Operator finds the deal and manages it after it is built
Sponsor/Syndicator raises the capital needed to bring the deal together
Developer get the land approved by the city and puts in the infrastructure
Builder completes the construction of the asset
Property Manager manages the day-to-day activities of the tenants for the Operator

This in our opinion just leaves too much room for error. The operator is relying on each level to do their job correctly and within the budget so that the returns projected to the investors are met.

But each level is solely focused on their part, and they may have estimated their part based upon faulty information from another group in the deal hierarchy.

When things go wrong none of the parties are answerable to the investor except the operator. As a result, the rest are not thinking of the investor, but how to make it right for their own group.

This is too much risk in our minds. Think about it….if the developer miscalculates the amount of gravel needed, he will send a change order to the Operator. And if the Operator doesn’t understand construction, remember their main role is is to manage the deal, well there is no way for them to mitigate against this risk.

So instead, we are going to take charge of every level. After all we already have done all 5 levels successfully for ourselves. Now we are going to do it for you. We think this is one of the most powerful ways to protect you from risk and provide reliable returns for our investors.

Investors will be backed by StoneCrest Equity Partners operational prowess. I believe together we will create a powerful ensemble that can reap substantial financial rewards. Zig Ziglar would be proud.

What Makes NNN Properties So Special?​
Now that we have explained the reasoning and power behind our Real Estate investment strategy, lets look at an example property. This property is breaking ground this month and it is what is considered NNN Commercial.

In a NNN property all expenses such as taxes, insurance, lot maintenance, repairs etc. are all paid by the tenant leaving the landlord almost 100% of the rents to use for debt service and profits. Definitely one of the best leasing terms available to landlords.

Why Choose New Development To Invest In?​
FIRST….THE ASSET CLASS ITSELF HAS MANY ADVANTAGES:​
Lower Maintenance Costs

ADVANTAGE: Since everything in a new development is brand new, there is typically a significant reduction in maintenance costs and fewer unexpected repair expenses in the initial years.

IMPACT: Lower operational costs translate to higher net income and potentially higher returns on investment.

Customization and Branding Opportunities

ADVANTAGE: Investing in a new development allows for customization to meet current market demands and brand alignment. This can include designing spaces for specific tenant needs or creating a unique community atmosphere.

IMPACT: This flexibility can enhance the appeal of the property and differentiate it in a competitive market, attracting premium tenants or buyers.

Appreciation Potential

ADVANTAGE: New developments often see significant appreciation as they transition from construction to stabilization. The value of the property can increase substantially as the surrounding area develops and infrastructure improves.

IMPACT: Early investors can capitalize on this appreciation, leading to substantial capital gains.

Attraction of High-Quality Tenants

ADVANTAGE: New developments with state-of-the-art facilities and modern amenities are attractive to high-quality tenants, including businesses looking for premium office space or individuals seeking luxury residences.

IMPACT: High-quality tenants are more likely to pay premium rents and have lower turnover rates, contributing to consistent income streams.

Financing and Tax Incentives

ADVANTAGE: Projects can be built to specifically take advantage of government incentives like energy tax credits and also accelerated depreciation

IMPACT: These incentives can improve the financial viability of the project and enhance overall returns. Tax incentives are often significantly higher.

While investing in existing real estate has its own merits, such as immediate cash flow and established market presence, new development real estate offers a dynamic and potentially more profitable avenue for investors looking to capitalize on modern design, lower maintenance costs, and market trends. The ability to leverage new technologies, benefit from tax incentives, and increase revenues through building practices, cemented our decision to go all in on new development real estate investing.

What is the REAL difference between ACTIVE and PASSIVE Investing?​
Active Investor: Actively manages the investment. 

Passive Investor: Takes a hand-off approach, allowing others to manage the investment. 

Active Investing Example:

You invest $50,000 as a down payment on a rental property, secure a $150,000 loan, and purchase a $200,000 property.
You hire a property manager to find tenants and collect rent.
You handle repairs and tenant turnover.
You control the investment, decide on improvements, and determine when to sell.
You keep all the profits. Returns are usually in the 5%-8.6% range.*
Even though you are ACTIVELY doing everything, IRS considers rentals a PASSIVE activity so there is no increased tax benefit for all the extra work.

Passive Investing Example:

You invest your $50,000 into a group investment rather than a single property.
Your funds are pooled with other investors to buy larger assets, like an apartment building.
Your active involvement ends after the initial investment.
You receive regular cash flow distributions during the hold period and a share of the profits upon sale.
You avoid the day-to-day responsibilities of property management.

The Key Differences:

Control vs. Convenience: Active investors maintain full control but bear all responsibilities. Passive investors relinquish control but avoid the work involved.
Potential Returns: Passive investments (syndications) can potentially double or triple your investment, compared to the typically lower returns of individual rental properties.

Ultimately, the right choice depends on your life situation. If you need more information or are undecided, give us a call. We’re here to help you achieve greater wealth with less effort, if that’s the path you choose.

We hope to help you develop your own personal investment philosophy so you too can increase your passive income stream. We are very passionate about helping you develop a strategy that will grow your wealth, while providing more time to pursue what matters to you.

Welcome to installment #3 of StoneCrest Equity Partners introduction series on investing in Real Estate for maximum wealth growth. So far you have learned about the tax benefits of real estate investing and why Steve and I believe in Real Estate syndications are the best investment strategy for increasing passive cashflow. (If you missed these newsletters click HERE).

In the next several installments we are going to explain our strategy in more detail. It is not enough just to decide to invest in real estate. There are a myriad of options and details to consider. We are going to dive deeper into what we feel are the most important elements to evaluate when deciding on an investment strategy.

What is a SIMPLE way to INCREASE your WEALTH?

That is a question we have been trying to answer for years. Since, I have been involved in the world of new construction and housing rentals for 36 years now, you would think that I would have a pretty broad knowledge base on all things’ real estate and know the answer.

Yet, until five years ago, the concept of real estate syndication was not even on my radar.

If you find yourself in a similar position, fear not – today, I unveil the secret behind syndications and their profound impact on wealth building.

So, what exactly is a real estate syndication? (See Pros and Cons below)
At its core, it’s the pooling of capital from multiple investors to collectively invest in a property or portfolio of properties

Once I grasped this concept, I embarked on a five-year journey of education, internships, and hands-on projects, delving deep into the world of real estate syndications.

RE syndications (also called private investments) are now my favorite tool for wealth building. Gone are the days of saving every penny for down payments on rental projects. With syndications, my husband Steve and I have expanded our portfolio, engaging in more significant deals with greater ease and efficiency.

We found the answer in rental real estate
By buying properties and putting tenants in place, we created rental returns without much effort. We soon discovered that one of the major benefits of such an arrangement is the tax savings. By properly structuring each project, we were able to implement strategies that include accelerated depreciation and energy credits to eliminate the tax on any income earned. Some of these benefits also offset income from other sources.

This was initially a side gig for us, but it soon became apparent that this was a much better model than purchasing blocks of developed building lots and hoping to sell custom homes. And after the industry turmoil of Covid-19, we decided we wanted help people grow their wealth rather that sell them overpriced homes with high interest rates.

So began StoneCrest Equity Partners. We are now building investment properties for like-minded people who want to be financially free with less work. We do what we do best, build things, and split the cash flow and profits with our partners.

Our goal is to preserve the value of your current capital, generate cashflow and increase generational wealth.