Investor FAQs

In a 506(b) offering, investors need to have a pre-existing relationship with either Jay or Jason.
In a 506(c) offering, only accredited investors can invest. According to the Securities and Exchange Commission (SEC) regulations, you must satisfy at least one of the following to be an accredited investor:

• Individuals must have had an annual income of $200,000 or more each year for the past two years and expect to earn the same this year.

• Couples must have had an annual income of $300,000 or more each year for the past two years and expect to earn the same this year.

• Individuals must have a net worth of $1 million or more excluding the value of a primary residence.

• An entity must have $5 million or more in assets or must be a business in which all equity owners are accredited, investors.

• Additional exceptions can be found under Rule 501 of Reg. D not listed here.

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Typically $50,000 but can be higher for specific deals. The minimum investment will always be noted in communications.

Offerings typically pay in two ways: a smaller cash drip (cash-on-cash return) and a larger payout after a refinance or a sale. Exact percentages will vary across investments but we typically provide at least 7% cash return every year and at least a 15% internal rate of return (the rate at which your money grows every year).

Investors receive preferred equity interests which means they are paid before any other profit distributions to other investor classes. Investors can expect cash flow distributions on a quarterly, semi-annual, or annual basis, depending on the terms of the offering and a lump sum payout at a sale or refinance of the asset.

Beyond planned communication, we are always happy to address any questions on an individual basis so please feel free to reach out.

As with any investment, an investment in real estate involves a certain degree of risk. Please consider the risk factors that could have a materially adverse effect on your equity interest and do your own due diligence on the property and us. You could lose all or part of your initial investment.
Our deals are only suitable for investors of adequate financial means. If this is your last dollar, you should not invest.

No, as with most investments there are no guarantees. The Private Placement Memorandum that you sign as part of the onboarding process outlines the general risks and it is possible for the entire investment to be lost.

As conservative investors, we mitigate risk in a variety of ways:

• We partner with local professional property management companies which are fully equipped to support the asset on a day-to-day basis with a team of professional contractors, maintenance technicians, and leasing agents.

• We are active asset managers with equity interests. We oversee the property manager and meet with them weekly to ensure any construction is on track and leasing is occurring in real time. We directly control the oversight of the property and are responsible for the asset’s success.

• We pay tens of thousands of dollars a year to stay integrated with the real estate investing committee. We have friends and colleagues who are fellow multifamily investors, brokers, lenders, property managers, contractors, etc. and our network can support us on any obstacles.

• We hire experienced securities legal counsel to help us draft the appropriate documents. We hire experienced commercial real estate counsel to review our loan documents, purchase and sale agreements, property transaction documents, and to handle our closings.

• The property is covered by insurance to mitigate physical damage and liability risks. We also insure the property for stocks, bonds, gold, commodities, etc. We focus on non-luxury rental real estate as it is historically one of the most recession-resistant asset classes.

Equity interests are generally not transferable. Rare exceptions will require the approval of Compounding Capital Group and will be subject to strict SEC regulations regarding resale. Even with permission from CCG, there is no guarantee that you will be able to sell your equity interests legally. Investors should be prepared to hold their equity interests for the life of the communicated hold period.

Compounding Capital Group will provide periodic updates to all investors. Updates will be delivered via email or via your Compounding Capital Group Investor Portal. In addition, you will receive 1099 tax documents every year for the interest earned from your equity interests.

To date we have invested our own capital in all of our own deals. We place our own money beside yours.
We have backend equity interests; our personal returns are highly dependent on the final performance of the property after 5 years. We have class B shares so all passive investors are prioritized in compensation and we are only rewarded if the asset exceeds expectations.
While you do not pay us directly, we charge a small percentage of the total equity at acquisition and disposition in addition to a small percentage of ongoing cash flow as an “asset management fee”. This helps cover the thousands we pay out of our own pockets to run our business, finding these deals, setting up systems, and devoting the daily time to ensure the success of the asset.

As a passive investor (Limited Partner), you own a percentage of the property, which allows for several tax advantages. The IRS allows real estate investors to expense a portion of the purchase price and capital improvements made to the property through depreciation. Please note that we are not tax professionals so you need to consult your tax advisor or CPA.

Yes. You can invest through a Self-Directed IRA by locating an SDIRA custodian if you do not have one currently. Many banks and brokerage firms will not allow investment assets like ours in their IRAs.

Yes. You can anticipate a minimum investment of $50,000, which may change at management’s discretion.