Do I qualify to invest with Hanson Equity Partners?
If you are an individual or private investor, you must be an Accredited Investor to invest in our properties. For an individual or married couple, in order to qualify as an accredited investor, you must meet one of the following criteria:
- Earn an annual income exceeding $200,000 or joint income exceeding $300,000 together with a spouse.
- Have a net worth exceeding $1 million – excluding one’s primary residence.
If your investment entity is a partnership, trust, REIT or Qualified Plan, please call us for Accredited Investor standards.
The SEC considers accredited investors to have sufficient amount of wealth, as to not need the protection of federal and state securities laws as those who are not accredited investors do.
How do I get started as an investor with Hanson Equity Partners?
What type of accounts can I invest through?
We currently support personal investment accounts, joint accounts, and certain entity accounts (Trusts, Limited Liability Companies, Limited Partnerships, C Corporations, and S Corporations). For more information on IRA accounts, see below.
Can I invest through my IRA?
Absolutely! Your IRA needs to be a self directed IRA account.
What is a K-1?
As a partner in the LLC that purchases the properties, you will receive a K-1. A K-1 is a tax form used by partnerships to provide investors with detailed information on their share of a partnership’s taxable income. Partnerships are generally not subject to federal or state income tax, but instead issue a K-1 to each investor to report his or her share of the partnership’s income, gains, losses, deductions and credits. The K-1s are provided to investors on an annual basis so that each investor can include K-1 amounts on his or her tax return.
When will the K-1 be available to investors?
Our goal is to finalize all K-1s by March 31st, however, we do rely on outside reporting and may require additional time to furnish the forms in a way that is to the investor’s best advantage. Accordingly, you may be required to obtain one or more extensions for filing federal, state and local tax returns.
Can I add funds after my initial investment?
Yes. We will be continually finding new opportunities to help you grow your wealth we will generally always have the ability for you to place more funds into our investments.
Can I invest if I live in another state?
You can invest with us from anywhere in the world! You will just need a US tax ID and a US bank account.
Can you explain the promote?
The amount of money paid to us as the sponsor of the deal above the amount earned on our contributed capital to the deal is the promote. This is compensation for the following:
- Source and identify assets
- Underwrite and discover hidden value
- Pursue, negotiate and win deals
- Develop asset business plans
- Negotiate purchase and sale agreements
- Conduct thorough due diligence
- Secure financing
- Close deals
- Manage assets
- Lease to new tenants
- Renew leases with existing tenants
- Perform and manage capital expenditure projects
- Execute asset business plans
- Dispose of assets; and
- Deliver investment returns
Considering that we as the sponsor do all of the heavy lifting in a deal while investors are paid a passive income, it is logical for the sponsor to expect to earn a greater share of profits than their pro-rata equity participation would otherwise suggest.
Cash flow helps reduce volatility of real estate investments as they rely more on income return and tend to be less volatile than those that rely more on capital value return.
In real estate terms, cash flow is the byproduct of owning a property and leasing it to tenants for a monthly rental income. Cash flow beyond all expenses is profit returned to investors.
When real estate is financed with a loan, over time the income generated by the tenant is used to pay down the principal balance of the loan. Essentially this is a form of forced savings.
- Depreciation (non-cash expense) deduction from income. This real estate tax deduction is based on the perceived decrease in the value of the real estate over time.
- Mortgage interest tax deductions.
- Deferral of capital gains via 1031 exchange.
- Cost of repairs, maintenance, and upkeep.
- Cost of services.
- Travel costs associated with the property.
- Property tax deductions.
Real estate allows us to use borrowed capital or debt to increase the potential return of an investment. For example, you can purchase a $100M asset with approximately $25M, finance the rest of the purchase, and still receive appreciation based on the entire value of the $100M asset.
Appreciation, in general terms, is an increase in the value of an asset over time. The increase can occur for a number of reasons, including increased demand or weakening supply, or as a result of changes in inflation or interest rates. You can also force appreciation through property improvements and increasing a property’s Net Operating Income through increased revenue, or decreased expenses.
What are the risks involved?
As with any investment, there are risks involved when investing with real estate. Although, we appreciate the fact that our investments are backed by real tangible brick and mortar assets.