Frequently Asked Questions (FAQ)
How do I get started as an investor with The ProActive Realty Income Fund?
Investing with The ProActive Realty Income Fund is easy as we have partnered with the nation's leading fund management services, including Cashflow Portal and Appfolio. For those interested in debt investment, click here to be taken to The ProActive Income Fund III opportunities. For those interested in equity investment, please call 1-800-626-2089 to speak with our fund manager.
What is the minimum investment?
The minimum investment is $50,000.
How are investments structured within The ProActive Realty Income Fund?
For each investment our Funds make, we enter into a joint venture with our carefully selected operating partners. These operating partners invest alongside us in the transaction and they are responsible for day-to-day management of the property. We serve as the large capital provider assuming responsibility for oversight, reporting, and major decisions on behalf of our investors.
Each ProActive Fund is structured as an LLC. As an investor, you will own a membership interest in a ProActive Fund. Through this structure, investors have direct ownership in the individual properties in the Fund. The return projections include all fees and the split. For full details on this structure, please register and read through the PPMs.
Funds are deployed into income-producing properties through a Fund Administrator. Investors have real-time access to Fund activities through the investor portal.
Who are your operators and what is their track record?
This is one of the most important questions every prospective investor should ask. Much of the success of our investments depends on our operators. For this reason, we take the operator vetting process extremely seriously, and we only approve those with stellar track records and distribution history through at least one recession.
We have met the key principals multiple times in person, met their team, visited their offices, observed their properties with them in person, and much more. Please contact us to view detailed track records and bios of our approved operators.
Can I just invest directly with your operators?
Most of our operators accept individual investors; however, since The ProActive Realty Group brings large portions of equity to operators and deals, we are able to negotiate better terms for our investors. This typically means better preferred returns and splits, which means a better return for you. In addition, our investors are getting instant diversification across assets, geographies, and managers with phenomenal track records.
If you would like to hear more details on the terms we negotiate with our operators, feel free to contact us.
Can I sell or transfer my interest in this investment?
Generally, no; however, it can be transferred by gift or inheritance, usually to family members, by will or other official document. Because there is not an open market for this investment, it is an illiquid asset. Please see Operating Agreement for more details.
What is the duration of the funds?
An investment in the funds should be considered long-term in nature. Investors should be in a financial position that will enable an investor to hold their investment for the duration of the fund, which can be between three and six years.
What types of properties would I be investing in?
The ProActive Realty Income Fund invests in multifamily properties, Single-Room Occupancy (SRO), and manufactured home communities, value-add or ground-up self-storage facilities and potentially multifamily apartments.
What type of funds can I use to invest?
You can invest with cash and through trusts, LLCs, and LPs. In addition, you can invest through self-directed IRAs and self-directed 401(k)s.
What is a K-1?
Similar to a 1099, a K-1 form is an accounting of the tax income for the year. Each investor receives one per investment each year. K-1 forms are most commonly used in partnerships and in real estate ownership.
How is this different from a REIT?
A Real Estate Investment Trust (REIT) is basically real estate-centric stock and is often highly correlated to the performance of the stock market. As direct fractional investors, The ProActive Realty Group clients are largely protected from that volatility.
Additionally, direct fractional ownership provides investors access to all of the tax advantages that are often unavailable to REIT Investors. REITs typically make the majority of their fees through transactions, while ours come after our investors make money.
How often should distributions be expected?
Distributions for The ProActive Realty Income Fund generally occur on a quarterly basis. Historically, such distributions have been uninterrupted; however, past performance is no guarantee of future results. Consider carefully before investing.
May I add funds after my initial investment?
Yes you may. Please check with our team about this if you have additional questions.
What kind of reporting will I receive?
On a quarterly basis the ProActive Realty Group intends to furnish investors with a fund update, which reports various activities and operations of the fund. It is not uncommon for ProActive to send shorter updates via email between quarters when there is relevant information and/or data to share.
Who can invest?
Our investments are open to approved, accredited investors; however, accreditation is not a requirement for debt capital investors. Since these offerings fall under Rule 506(c) of Regulation D, investors will be required to verify their accredited status through a third party such as a CPA, financial advisor, attorney, or a service like www.verifyinvestor.com.
Accredited Investors are individual investors who either have a net worth of at least $1,000,000, excluding the value of one’s primary residence, or have earned income over each of the last two years of at least $200,000 and have the expectation to make the same amount in the current calendar year. If you don’t qualify under that standard, you can choose to combine your income with your spouse and the new threshold for qualification would be $300,000.
In addition, entities such as LLCs, partnerships, corporations, nonprofits and trusts may be accredited investors. Of the entities that would be considered accredited investors, and depending on your circumstances, the following may be relevant to you:
any trust, with total assets in excess of $5 million, not formed to specifically purchase the subject securities, whose purchase is directed by a sophisticated person, or
any entity in which all of the equity owners are accredited investors.
It is also important we ensure we are a fit for one another. This type of investing is not appropriate for every investor. To determine if commercial real estate investing is right for you, please contact us.
What are the tax advantages?
Commercial real estate can provide several tax advantages to an investor:
Quarterly cash flow distributions will often flow to you on a tax-deferred basis
Proceeds from refinance events typically come to you with no immediate tax obligation
The step up in basis benefit reduces your heir’s tax obligation when they sell the inherited asset
Note: This is not professional tax advice and should not be relied upon. Investors should consult with their financial advisor, accountant and/or tax attorney for tax advice specific to their particular needs and objectives.
Does ProActive Realty Group intend to use leverage?
There will be no leverage at the fund level; however, our operators typically use debt when acquiring new properties. It is anticipated that bank or seller financing will generally account for between approximately fifty percent (50%) and seventy percent (70%) of the gross fair market value of each property. We typically say "no" to properties with more than 30% leverage.
What legal risks do I assume in this investment?
Because you will invest in a Limited Liability Company, your liability cannot exceed the amount of your investment plus amounts distributed to you. One value of real estate as an investment as compared to stocks, etc., is that it is highly unlikely for property to lose all value, as is possible when investing in stocks. Companies can go completely out of business or have their value reduced to virtually nothing. The passive investors carry no lending risk.