A syndication is a partnership. It involves multiple parties pooling their capital together to acquire an investment property. General Partners (GPs) are responsible for the execution of the business plan while Limited Partners (LPs) assume a passive role. By investing their capital, Limited Partners collect the greater part of the profits and can often times find more success by partnering with experienced operators rather than using their own time and energy to find, manage, and dispose of the investment alone.  

Our investment is not a REIT (Real Estate Investment Trust). When you invest with Formosa Equity in an asset, you are a partner in the actual, physical property. You get the advantages of the ownership of that building, the tax advantages, the cash flow, and the upside.

Disclaimer: Please check with your tax and legal professional as Formosa Equity and/or its Affiliates does not provide tax or legal advice and the above is not intended to or should be construed as such advice. Your specific circumstances may, and likely will, vary.

A preferred return (or “pref”) is a guaranteed rate of return that the limited partners in a real estate syndication receive before any other distributions are made to the general partners. The preferred return is typically expressed as a percentage of the investors’ capital contribution. For example, if an investor has a preferred return of 8% and invests $100,000, they will receive $8,000 in distributions before any other investors receive any distributions.

The promote, or split, is a way for the General Partner (GP) to share in the upside of the investment. The GP is responsible for finding and managing the property, and they take on more risk than the Limited Partners. The promote is a way to compensate the GP for their efforts and to incentivize them to make decisions that will maximize the profits of the investment. The promote is typically a percentage of the profits, and it can be as high as 30%.

There are a number of tax advantages that limited partners in real estate syndications can enjoy. Some of the most common tax benefits include:

• Depreciation: Depreciation is a non-cash expense that reflects the wear and tear of a property over time. Real estate investors can claim a tax deduction for depreciation each year, which reduces their taxable income.
• Passive losses: Limited partners can offset their passive income with passive losses, which can help to reduce their overall tax liability. Passive income is income from an investment that is not actively managed by the investor. Passive losses are losses from an investment that is not actively managed by the investor.
• 1031 Exchange: A 1031 exchange is a tax-deferred exchange of real estate. This means that if you sell an investment property, you can use the proceeds to buy another investment property without having to pay capital gains taxes on the sale.
  
  Disclaimer: Please check with your tax and legal professional as Formosa Equity and/or its Affiliates does not provide tax or legal advice and the above is not intended to or should be construed as such advice. Your specific circumstances may, and likely will, vary.

To be considered an accredited investor, an individual must meet one of the following criteria:

• Have an individual income of $200,000 or more in each of the last two years, or $300,000 or more together with a spouse, and a reasonable expectation of the same income level in the current and the next year.
• Have a net worth of $1 million or more, excluding the value of the primary residence.

Your liability is limited to the capital that you invest.

We look for markets with job and population growth that exceed the national averages. We also ensure the median household income is at least 4x the target rent for the subject property to ensure there is ample room for rent growth.

Although we do conservative due diligence on our acquisition, an investment with Formsa Equity involves a certain degree of risk just like any other investment. There are risks like capital expenditure budget that we can control and some we cannot (monetary or local government policy changes). In deciding whether to invest, you should carefully consider the risk factors that could have a material adverse effect on the value of the equity interest you purchase and could cause you to lose all or part of your initial purchase price or adversely affect future distributions you expect to receive. Refer to the lists of risks in any offering materials you provide before investing.

Our equity interests are considered risky and are suitable for purchase only by investors of adequate financial means and knowledge. If you cannot afford to lose all the money you plan to invest with Formosa Equity, you should not invest.

Disclaimer: All offers and sales of any securities by Formosa Equity or its Affiliates will be offered in reliance on certain exemptions from the registration requirements of the Securities Act of 1933 and are not required to comply with specific disclosure requirements that apply to registrations under the Act. There are risks associated with investing and securities in general. Investing involves risk of loss including loss of principal. Some high-risk investments which use leverage may accentuate gains and losses. Past investment performance is not a guarantee or predictor of future investment performance. Please check with your tax and legal professional as Formosa Equity and/or its Affiliates does not provide tax or legal advice and the above is not intended to or should be construed as such advice. Your specific circumstances may, and likely will, vary.

Real estate investment is inherently illiquid, if you need access to highly liquid investment vehicles like stocks, you should not invest in real estate.

Contact Us for more details and to set up an introductory call.