Where can I find project updates?
Click on the tab at the top of the homepage that says CLIENT PORTAL ACCESS or go to:
How do I use an IRA to invest in Real Estate?
CLICK HERE for a step-by-step process and resource links.
When can I reinvest?
A reinvestment would take place once there is a minimum increment of $15,000 in your account.
How do I transfer from Midland to Strata?
How do I update my contact information?
Please fill out the designated change of Information forms below and return via mail, fax or electronic upload listed at the bottom of the form. Please contact us so we can update our database:
[email protected] or (612) 424-8650.
CLICK HERE for Midland change of contact form.
CLICK HERE for Strata communication preference request form.
CLICK HERE for Strata information change request form.
TAX & K-1 INFORMATION
This is intended as general and basic information. We are not tax advisors and highly recommend you consult with a tax professional regarding your specific situation.
When will my K-1 arrive and where can I find it?
We have no control over when K-1s get completed. IRA investors don’t need to report any information from their K-1 when filing their individual tax return. If you are a cash investor and didn’t receive your K-1 in time to file taxes, you have two options:
1) File for an extension if the K-1 doesn’t arrive on time.
2) File your taxes and if the K-1 affects that in any way, you can file for an amendment.
You will find your K-1 in the Vincent Investor Portal under Tax Forms or CLICK HERE.
What's the difference between a cash investment and an IRA investment?
Cash vs. IRA:
All investors will receive a partnership tax document called a K-1.
IRA investors don’t need to report any information from their K-1 when filing their individual tax return since this investment is already tax sheltered. Thus, if an investor has utilized an IRA, the K-1 they receive has no tax implications.
Cash investors need to report information from their K-1 when filing their individual tax return. Potential tax advantages for a cash investor are the annual depreciation write-offs that are involved with direct real estate investing as well as bonus depreciation. Bonus depreciation is a way to potentially accelerate depreciation giving cash investors the opportunity to write-off the majority of their investment in the first year depending on their personal tax situation. If you are a cash investor, you may or may not have tax implications. We are not tax advisors and highly recommend you consult with a tax professional regarding your specific situation.
What is depreciation, bonus depreciation and recapture?
Bonus Depreciation & Depreciation Recapture:
There are potential tax advantages to investing in real estate due to the tax code and the depreciation write-offs. Bonus Depreciation is an added advantage that was enacted by congress to stimulate the economy. The intention of Bonus Depreciation is to allow a business to write off 100% of their investment/cost of an asset in the first year. As this pertains to real estate, Bonus Depreciation allows a cash investor to write off a larger portion of construction costs to include interior fixtures, furniture and virtually anything inside the structure. Bonus Depreciation hasn’t always been in place and likely won’t be in the future, however, at the current time it’s potentially an added benefit for cash investors. IRA investors do not qualify for bonus depreciation because their investment is already tax-sheltered.
Depreciation recapture is a tax provision that allows the IRS to collect taxes on any profitable sale of an asset that the taxpayer had previously benefited from Depreciation expense write-offs. Within the early years of an investment, a cash investor may be able to utilize depreciation write-offs. When the property sells or a major capital event occurs, depreciation is recaptured at a lower tax rate.
If you are a cash investor, we highly recommend consulting with your tax advisor in order to review K-1 activity and how it pertains to your specific situation. All investors receive a K-1 but an IRA investor does not need to report the K-1 information on their individual tax return because it is irrelevant.
Why did I get a K-1 and what does it mean?
K-1 & Carry-over:
As an investor in any Vincent Real Estate project, you have become an owner in a partnership. As a result of that, you will receive a K-1 from the partnership group. This K-1 will reflect the activity of the partnership in the previous year and specifically your share of that activity.
All activity passed through to investors in the partnership is considered passive by the IRS. Passive loss carry-over occurs when you do not have enough passive income by which to offset these losses for a given tax year. You can carry over these losses until you sell the asset or realize enough passive gains.
If you are a cash investor, we highly recommend consulting a tax advisor to review the K-1 activity and how it may pertain to your specific situation. Everyone receives a K-1 but an IRA investor does not need to report the K-1 information on their individual tax return because it is irrelevant.
I received a distribution this year, will I be taxed on it?
In general, a distribution from a partnership is a non-taxable event, it can however create a taxable event for you. This is dependent on the activity of the partnership within that particular tax year and what is captured on your K-1. If you’re an IRA investor it won’t affect you at all. If you’re a cash investor it may or may not. It depends on your specific tax situation. We highly recommend consulting a tax advisor to review the K-1 activity and how it pertains to your specific situation.
Auction Markets: An auction market is a market in which buyers indicate the highest price they are willing to pay and sellers indicate the lowest price they are willing to accept. A trade occurs when the buyer and seller agree on a price.
Bonds: In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. The most common types of bonds include municipal bonds and corporate bonds.
Common Stocks: Common stock is a form of corporate equity ownership, a type of security.
Correlated/Correlation: When two sets of data are strongly linked together we say they have a High Correlation. The word Correlation is made of Co- (meaning “together”), and Relation. Correlation is Positive when the values increase together, and. Correlation is Negative when one value decreases as the other increases.
Demographics: Demography is the statistical study of populations, especially human beings. Demography encompasses the study of the size, structure, and distribution of these populations, and spatial or temporal changes in them in response to birth, migration, aging, and death.
Depreciation: In accountancy, depreciation refers to two aspects of the same concept: first, the actual decrease in value of fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wears, and second, the allocation in accounting statements of the original cost of the assets to periods in which the assets are used.
Direct Ownership: Direct Ownership means ownership by an owner but excluding any such ownership with or through Associates and Affiliates of such owner. The terms “directly own” and “directly owned” have correlative meanings.
Diversification/Diversified: Portfolio diversification means investing in multiple different asset classes and risk levels in an effort to mitigate overall investment risk.
Exchange-Traded Funds (ETFs): An exchange-traded fund is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds and generally operates with an arbitrage mechanism designed to keep it trading close to its net asset value, although deviations can occasionally occur.
Interest Expense: Interest expense relates to the cost of borrowing money. It is the price that a lender charges a borrower for the use of the lender’s money. On the income statement, interest expense can represent the cost of borrowing money from banks, bond investors, and other sources.
Investment Portfolio: An investment portfolio is a basket of assets that can hold stocks, bonds, cash and more. Investors aim for a return by mixing these securities in a way that reflects their risk tolerance and financial goals.
Investment Vehicles: An investment vehicle is a product used by investors to gain positive returns. Investment vehicles can be low risk, such as certificates of deposit (CDs) or bonds, or they can carry a greater degree of risk, such as stocks, options, and futures.
Mortgage-Backed Security (MBS): A mortgage-backed security is a type of asset-backed security which is secured by a mortgage or collection of mortgages. The mortgages are aggregated and sold to a group of individuals that securitizes, or packages, the loans together into a security that investors can buy.
Mutual Funds: A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. These investors may be retail or institutional in nature. Mutual funds have advantages and disadvantages compared to direct investing in individual securities.
Paper Investments: A number of different kinds of popular investments in the United States qualify as paper investments. These include stocks, bonds, mutual funds, certificates of deposits, and money market accounts. Shares of stock are pieces of paper that relate a certain percentage of ownership in a publicly-traded company.
Private Placements: Private placement is a funding round of securities which are sold not through a public offering, but rather through a private offering, mostly to a small number of chosen investors. Generally, these investors include friends and family, accredited investors, and institutional investors.
Shares: In financial markets, a share is a unit used as mutual funds, limited partnerships, and real estate investment trusts. The owner of shares in the company is a shareholder of the corporation. A share is an indivisible unit of capital, expressing the ownership relationship between the company and the shareholder.
Socially Responsible Investing (SRI): Socially responsible investing, or social investment, also known as sustainable, socially conscious, “green” or ethical investing, is any investment strategy which seeks to consider both financial return and social/environmental good to bring about social change regarded as positive by proponents.
Stocks: Stock of a corporation, is all of the shares into which ownership of the corporation is divided. Shares are collectively known as “stock”. A single share of the stock represents fractional ownership of the corporation in proportion to the total number of shares.
Stock Trading: Stock trading, also known as refers to the buying and selling of shares in a particular company; if you own the stock, you own a piece of the company.
Volatility: In finance, volatility is the degree of variation of a trading price series over time, usually measured by the standard deviation of logarithmic returns. Historic volatility measures a time series of past market prices.
ACCREDITED INVESTORS KNOW THE BENEFITS OF DIRECT REAL ESTATE INVESTING
According to Forbes, the vast majority of millionaire investors either made or retain their wealth in real estate. In our experience, the sophisticated and most successful investors elect to invest directly in real estate, not real estate investment trusts (REITs) . REITs give indirect and diluted real estate exposure. Shares represent ownership in the companies invested in real estate, not direct ownership in real estate. REIT investors have little or no knowledge regarding what they actually own and shares trade on the same exchanges as common stocks . They are paper assets, not actual real estate, thus their prices tend to be volatile and closely correlated with common stocks, and in our opinion they afford no meaningful diversification . Additionally, some REITs don’t invest in real estate at all, but rather mortgage backed securities (MBS) or even other real estate companies.
Direct ownership of specific investment properties offers a potential solution for many investors. Direct investing in real estate creates ownership of specific properties the investor can visit before and after taking ownership.
Well-informed real estate investors know the differences between stock trading and direct real estate investing. They may invest in stocks, but according to Financial Planning Magazine, 64% of accredited investors now utilize direct investing or private placements primarily in real estate. Many also use Direct Participation Real Estate (DPRE) – an asset class non-correlated with stocks and bonds – to potentially grow wealth, create income, preserve wealth, and reduce taxes.
DIVERSIFICATION & DPRE
Why do so many accredited investors use Direct Participation Real Estate (DPRE)? Unlike paper investments , DPRE investments are hard assets and non-correlated with paper assets like stocks and bonds. Therefore, the results of what that can provide is likely the driving force behind the popularity of DPRE. To reiterate, DPRE investments offer the potential to build wealth, produce income, preserve wealth, and deliver tax advantages.
The key to creating true diversification comes from using fundamentally different kinds of investments, not just different kinds of securities . Limiting a portfolio to different kinds of stocks, for example, may not work because stocks are paper assets that trade in auction markets . Paper assets tend to change in the same direction at the same time – their returns are usually highly correlated – and the auction markets in which they trade amplify price volatility , which often distorts value.
We believe direct real estate investing can help create true diversification in which asset returns change independently. DPRE investments represent ownership of specific investment properties. They are no longer considered “alternative” investments when directly invested in because of the long list of potential benefits they provide. DPRE investments don’t trade in auction markets like the shares of many real estate investment trusts (REITs) and other securities. Rather, investors purchase DPRE in private placements. This is perhaps why 64% of accredited investors now utilize direct investing or private placements to access the real estate asset class.
THE REAL ESTATE SWEET SPOT
If we accept the diversification value of real estate, then the next question is: What kind of real estate? We can start to answer this question by ruling out some kinds of so-called real estate investing:
Real estate investment trust (REIT) shares are once removed from real estate ownership because REITs don’t involve real estate ownership; rather, they represent ownership of a business that may or may not own real estate.
Shares of real estate mutual funds and exchange-traded funds (ETFs) are even further removed from real estate. Fund shares represent ownership in investment companies that buy shares of real estate companies that may or may not own real estate.
Flipping real estate and ownership of residential properties like homes and duplexes might offer a suitable investment for some people. However, owners assume all the risks the properties and renters impose. They can also be time-consuming, or the cost of hiring a property manager can diminish or even eliminate positive cashflows.
We believe passive DPRE investments offer more net benefits than the aforementioned. There are many different kinds of DPRE investment properties. In our opinion, demographic and economic trends favor the growth and income potential of thoughtfully located and designed senior living communities and multi-family apartments. Based on our research and experience, this represents the real estate “sweet spot”. These private placement investment properties can capitalize on the growth of the senior population, cross-generational preference for renting, and a residential supply shortage.
There is another unique aspect and to our knowledge we’re the first to identify it. The senior living space offers opportunities for Socially Responsible Investing (SRI) or Impact Investing . Invest well while doing good. Our aging population needs our help. We believe nothing could be more socially responsible and have more of a positive impact than being part of the solution to our senior living crisis.
All investing imposes risks. This is especially true for investors who try to speculate about future trends.
We reject speculation. Rather, we prefer to capitalize on trends with momentum.
We’ve witnessed and documented certain economic and demographic trends. These trends have history and persistence. We call the three dominant trends a “Trifecta”: The Trifecta of factors positively affecting apartments and senior living.
Senior population growth: Growth in the proportion of seniors started years ago. Demographers project a higher senior population than we’ve ever seen.
Rising cross-generational demand for renting: More baby boomers, Millennials, and post-Millenials (Generation Z) now favor renting over homeownership. The trend has persisted for a while, and we believe a reversal would be like trying to stop a speeding train.
Short supply of rental units: Construction has failed to keep pace with rising demand among the three generations.
To us, using the trifecta to help guide investment decisions is like choosing the escalator to let the trends do the work (instead of choosing the stairs). In our opinion, the trifecta points to direct real estate investments in senior living communities and multi-family apartments. Ownership in these investment properties comes about through direct investing via private placements. We encourage accredited investors to use the experience and knowledge of our real estate investment team to gather all the pertinent information necessary for you to make a full informed and educated decision.
THE TRIFECTA & DIRECT PARTICIPATION REAL ESTATE (DPRE)