FREQUENTLY ASKED QUESTIONS
WHY SHOULD I INVEST WITH THREE BEACH CAPITAL? At Three Beach Capital, we share a passion for enabling others to achieve financial freedom through passive investing. One of our core values includes a strong belief that we each have the power to mold our lives into its true platonic form. As your wealth and passive investment income increases, you are free to devote more time to family, pursue long-neglected hobbies, and strive towards a greater purpose in life rather than just trading your time for money. To help you accomplish this, Three Beach Capital works tirelessly to ensure we preserve and grow your capital by leveraging our extensive professional network, business expertise, and past real estate experiences so that we can make intelligent, data-based investment decisions. Our conservative underwriting approach, focus on risk mitigation, and commitment to creative, hands-on asset management maximizes the likelihood that we achieve the returns that you expect in a syndicated investment. While our growing track record of success demonstrates the effectiveness of our approach, we also remain humble and open-minded so that we are continually fine-tuning our strategic approach to portfolio management. Lastly, our unique perpetuity based offerings are structured with the intent of quickly returning your original investment capital while continuing to enjoy the tax avoidance and cash flow benefits over long periods of time. The popularity of this approach with investors has allowed us to grow tremendously over the recent years, and we look forward to building a long lasting relationship with you and continuing to grow our wealth together!
ARE THERE ANY TAX ADVANTAGES? Apartment syndications are very tax efficient. As a partner in our limited partnership, you will benefit from your portion of the investment’s deductions for property taxes, loan interest and depreciation which are the big ones. We like to use a cost segregation strategy as well to accelerate depreciation since we typically hold onto the asset for a really long time. You will get a K-1 statement from the partnership in March of the following year for the current tax year. It’s not unusual on a $100K investment to experience a min 8% preferred return or cash in your pocket of $8K while experiencing a paper loss on your annual K-1. Additionally, any refinances or supplemental loans are reviewed as a return of equity so no tax impacts. *Disclaimer* This is not tax advice. We always recommend consulting with a tax professional.
WHAT IF THE ECONOMY TANKS WHILE WE OWN THE PROPERTY? We won’t want to sell in a down market. The goal would be to continue to pay the preferred return minimum and hold on until the market is healthier to achieve a better price at sale. Class B/C value add properties tend to hold up much better in downturns because everyone needs a place to stay and rents are more in line with the market.
HOW CAN I GET INVOLVED? The best way to get involved is to simply fill out the form in the Investing tab and we will be in touch with you to go over next steps.
WHAT IS THE MINIMUM REQUIRED INVESTMENT? The minimum investment will depend on each individual deal; however, a common range would be between $50,000-$100,000.
WILL THREE BEACH CAPITAL BE INVESTING ANY OF THEIR OWN CAPITAL? Yes we will. We have invested in every single deal that we've ever done and believe it truly helps us align our interests with our investors. Putting some of our own skin in the game helps our investors know that we fully believe in the success of this investment.
WHAT ARE THE RISKS? They will be outlined in the PPM (Private Placement Memorandum). That said, I will provide a few data points. In 2020, throughout the COVID-19 financial & economic crisis, delinquency rates on single family homes were 8.2% vs 1.4% on Multi Family apartments. Additionally, a 2020 survey of over 500,000 units across the U.S. showed that there was only a 1-2% collection drop from tenants unable to pay rent. Class B & C multifamily properties were actually seeing growth in tenant base during 2020 and NOI was higher than ever before in certain cities throughout the U.S. Class B & C multifamily properties have a proven track record of steady returns regardless of the market cycle.
WHY WOULD WE PURCHASE A PROPERTY THAT HAS SUCH HORRIBLE REVIEWS? We believe that’s a good thing. As value add syndicators, if all news was good, there would be nothing to capitalize on. The property is typically re-branded with a new property management team, a new website, and an entirely different feel. Focus is on operational improvement and renovating the property. There’s a focus on intangibles such as hosting monthly community gatherings to foster a sense of community that may have been lost which can improve retention & reduce turnover. This can be turned around faster than you think. Re-positioning the asset is the focus.