1 – How Do I Get Started As An Investor With FTW?
The investment process starts by filling out a simple intake form at the link above. Once you submit the form, we will reach out to you to schedule a phone or online meeting. After the meeting, if we both determine that investing with FTW would be mutually beneficial, you will be provided access to our investment portal where the rest of the investment process will be handled.
2 – I Want To Invest. What Are The Steps?
- Once you’ve been given access to our portal, you will be required to verify qualification status by filling out the Investor Questionnaire.
- Once your qualification status has been confirmed, you will be given access to the Offering Package that will include the Private Placement Memorandum (PPM) and supporting documents which may include, but not be limited to an Operating Agreement (OA) and an Executive Summary.
- Sign the Subscription Agreement online through DocuSign or print and sign.
- Receive funding instructions and fund your investment through a wire transfer, ACH, or check.
- Once FTW receives your funds, you will be given an Ownership Certificate evidencing your ownership of the securities subscribed thereto.
- FTW will allocate the funds to the applicable commercial real estate project.
- If a Preferred Return is offered in connection with the offering, your Preferred Return will begin accruing and payment will be distributed according to the terms of the PPM and the OA.
- You will receive periodic investment updates for your investment (depending on the fund).
- You will receive any major announcements via email or text as they arise.
3 – How Are FTW Investments Structured?
Each FTW fund (Fund) is typically structured as syndications through an LLC, but we may consider other structures including debt structures in the future. As an investor, you will own a membership interest in the Fund. Through this structure investors have direct ownership in the individual properties in the Fund, giving you access to tax benefits. Full details of the structures are offered in the PPM and OA.
Syndications are characterized by the waterfall compensation structure – outlining profit splits between the investors and managers. After accounting for all expenses including management fees net cash flow is distributed as follows:
- Net Cash Flow from Operations – Annual net cash flow from operations is first distributed to the investors in the form of a Preferred Return, with all remaining net cash flow split between investors and management based on predetermined ratios.
- Net Cash Flow from Refinance/Sale – Upon refinance or sale of the subject property, net cash flow is first distributed to investors until they’ve received a return of their capital and the remaining net cash flow is distributed based on predetermined ratios.
4 – Can I Sell Or Transfer My Interest In This Investment?
Generally, no. There are statutory restrictions on the transfer of securities interests except in the case of gift or inheritance, usually to family members or by will or another official document. You should consider your investment an illiquid asset. See the OA for more details.
5 – What Is The Duration Of The Funds?
An investment in the funds should be considered long-term. Investors should expect to commit their investment for a minimum of five (5) years and up to ten (10+) years depending on the Fund.
6 – What Types Of Properties Would I Be Investing In?
FTW currently manages assets in the multifamily, retail, and hospitality segments. We follow trends with an established history and long-term viability. Currently, we’re focused on the undersupplied multifamily segment in the Kansas City market. We may consider other segments and markets we consider viable based on our analysis and due diligence.
7 – What Type Of Funds Can I Use To Invest?
You can invest with cash or funds held through trusts, LLCs, LPs, or corporations. Also, you can invest through self-directed IRAs, self-directed eQRPs (Enhanced Qualified Retirement Plan aka Self-Directed Solo 401k Plan).
8 – How Is This Investment Different From A REIT?
REITs (Real Estate Investment Trusts) are publicly traded investments focused on commercial real estate, an investment in FTW is a private investment open to only qualified investors. As publicly traded equities, REIT stocks are highly correlated to the stock market. Investments in fractional ownership interests of FTW funds are private investments shielded from stock market volatility.
Additionally, direct fractional ownership in the form of LLC or LP interests provides investors access to all of the tax advantages that are unavailable to REIT Investors. REIT management typically makes the majority of their fees through transactions before any profit distributions to investors; while the bulk of FTW management compensation comes after our investors make money.
9 – How Often Can I Expect Distributions?
Although varying with the Fund, distributions are typically made every quarter commencing after a property has been developed or stabilized as the case may be.
10 – Can I Add Funds After My Initial Investment?
Yes, as long as the Fund is still open and accepting investments, you can add to your funds.
11 – What Kind Of Reporting Will Be Provided?
FTW intends to provide investors with Fund reports every quarter, which could include updates on the activities and operations of the Fund. Any other relevant non-periodic announcements will be made via email.
12 – Who Can Invest?
The Fund is open to Accredited Investors and a limited number of Sophisticated Non-Accredited Investors possessing sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment.
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.
Also, entities such as LLCs, partnerships, corporations, nonprofits, and trusts may be Accredited Investors.
Entities qualifying as Accredited Investors include but are not limited to:
- Any trust, with total assets over $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 owners of the equity are Accredited Investors.
13 – What Are The Tax Benefits?
Passive investments in private real estate offerings offer a variety of tax benefits.
Some of the most common real estate-related deductions include:
- Depreciation (Accelerated).
- Mortgage Interest.
- Property Tax.
- Operating Expenses.
Gains from investments held more than a year are also taxed at the capital gains rate. In a private real estate investment fund, these deductions are distributed to their partners on a pro-rata basis and reported on each partner’s annual K-1. Additionally, deductions considered passive losses can be used to offset passive income while any other deductions can be used to offset ordinary income to reduce tax liability.
This is not professional tax advice and should not be relied upon for making investment decisions. Investors should consult with their financial advisor, accountant, and/or tax attorney for tax advice specific to their particular needs and objectives.
14 – Does FTW Use Leverage?
FTW will use leverage depending on the circumstances and when financially prudent.
15 – What Legal Risks Do I Assume In This Investment?
Like an investment in public equities, your investment in an LLC or a limited partnership limits your liability to the amount of your investment. Additionally, the passive investors (i.e., LLC members or limited partners) carry no lending risk with no personal guarantees attached to any secured lending obtained.
16 – Is My Investment Guaranteed?
As an equity owner, your investment will not be guaranteed. Although FTW will subject every property to its rigorous vetting and analytical process to mitigate risk and ensure the highest likelihood of success; we can not eliminate all risk and guarantee a 100% likelihood of success.
Because it’s impossible to anticipate all future events and predict the effect of all potential factors associated with the associated Fund assets, we can not guarantee your investment. Guaranteed investments – typically fixed-income assets – typically offer low returns as opposed to the potential returns from an equity investment like one made in FTW.
17 – How Is FTW Management Compensated?
While FTW management may collect reasonable management fees (depending on the Fund) including but not limited to acquisition, asset management, property management fees, etc., the bulk of management compensation comes from a share of the profits only after the investors have made money.