Cape Sierra Capital Continues Strong Growth in 2021 and Provides Advice for Investing in Real Estate Syndications


Detroit, Oct 01, 2021 (GLOBE NEWSWIRE) – “Cape Sierra Capital is off to a good start in 2021 and has closed 200 units between Michigan (124 units) and Mississippi (76 units) so far this year. We remain disciplined and attentive to the fundamentals. It’s easy to overpay in today’s real estate market, but we have to realize certain returns for our investors, ”said David Kamara, Founder of Cap Sierra Capital, a real estate investment company. Kamara and her team continue to visit apartment communities and make offers. The latest acquisition closed at the end of June and things are going as planned. “It’s a numbers game. You have to see a lot of properties, do a lot of analysis and submit a lot of bids to get the right deal under contract, ”says Kamara.

As the world slowly emerges from the global pandemic, investors looking for high risk-adjusted returns are finally realizing the undeniable strength of real estate investing in apartments or multi-family buildings. Many real estate sectors such as offices, hotels and retail have been decimated in the past 18 months. The apartments, however, have seen increased demand. Multi-family construction has not kept pace with population growth and the accelerated pace of household formation. Some people hard hit during the pandemic have sold their homes and moved into apartments. Many more are finally leaving their parents’ basements to fend for themselves as vaccination rates across the country rise.

Many commercial real estate investments are made through syndication. Syndication is simply the pooling of resources to achieve a common goal. If you’ve been on a commercial aircraft, you’ve been part of a syndication. Chances are you don’t want to pay all of the operating costs of this flight, so you and all the passengers have raised your money or “syndicated” a flight, with the help of the airline. .

Real estate syndications typically involve a team of active real estate professionals called syndicators, operators, or transaction sponsors. This team usually brings together passive investors who do not want to know the details of real estate investing. Many investors enjoy their current careers or enjoy spending their time doing other things. They understand that real estate offers diversification, strong returns and a different risk profile than traditional equity investments. It is the trader’s job to study the market, find the deal, close the deal, implement the business plan and operate the asset until it is sold.

Recently, David Kamara, founder of Cape Sierra Capital, was asked about questions investors should ask a syndicator before joining their real estate investment offering.

  1. Do you trust the operator?

    • This is the most important question you need to ask yourself. Do you think the operator will do the right thing for you when faced with a really difficult decision? Experienced professionals such as secret service agents and court judges are always mistaken about moral character. Ask the operator to tell you about those offers that did not go as planned. It’s easy to do the right thing when things are going well. The experience of bear markets matters too. “Ask them if they were invested in the 2008 downturn and how they survived that period. Ask what lessons have been learned as they apply today, ”says David Kamara.

  2. How aligned is the trader with the investor?

    • The most obvious way a trader is aligned with the investor is the fact that if he does not deliver results or acts immorally, he is unlikely to stay in business. Look for operators who have been in business for a while. It takes a long time to build a reputation and only a few bad decisions to destroy it. David says, “Realize that just because a syndicator invests their own money in a deal doesn’t mean they’re 100% aligned with you. It is certainly good that they invest their own money, but that does not guarantee a positive result. “

  3. Who provides the loan guarantees?

    • Most syndicated home loans use non-recourse debt. This means that even if things don’t work out, passive investors are not responsible and their personal assets cannot be used to meet the loan obligation. What you might not know is that banks always require someone to guarantee that the investment will be managed conscientiously, without fraud, embezzlement, or environmental degradation. The operator must make these collateral generally backed by a total equity greater than the loan amount. In the event of illegal acts, the principals who provide the above guarantee are in fact personally liable. It is important to understand who provides these guarantees

  4. Who pays the initial costs?

    • Before a deal is presented to investors, a lot of money has to change hands. Deposit deposits, often in the hundreds of thousands of dollars, must be placed in receivership. Lenders often require their application processing fees and third party due diligence fees to be paid up front. All of these fees and significant legal fees are usually prepaid and are not recoverable if the transaction is not completed. It helps to understand who pays these costs and if you risk losing your capital if the deal doesn’t go through.

  5. How is the investment structured from a legal point of view?

    • The majority of syndications are organized in the form of a limited liability company (SARL) or a limited partnership. This structure allows for easy distribution of profits to investors, as the income is not taxed at the entity level but is passed on to individual investor returns. The biggest downside to real estate investments is that they are illiquid. Your capital will be tied up for a long time and you will not be able to easily get out of the investment. Your rights as a sponsor and other specificities of the structure will be specified in the legal agreements of the offer. Make sure you understand what you are allowed and prohibited to do before investing to avoid surprises and uncomfortable conversations at a later date. Do not go through legal documents.

  6. What are the expected returns for you After Are all fees paid?

    • Beyond the legal structure, you need to understand how the equity is divided in the transaction. You need to be clear about what percentage of profit you are entitled to on an annual basis as well as when the property is refinanced or sold. What are the different fees charged by the operator? Typical syndications often involve some or all of the following costs: asset management costs, acquisition costs, disposal costs, construction management costs, etc. Are projected property returns calculated before fees or after fees? Make sure you understand how the cascade of silver flows and when it fills your buckets. It should work for you.

  7. What are the assumptions used to arrive at the projected returns?

    • Every real estate investment will have two key components of return: i). the cash on cash return which is paid annually and ii). profit sharing when refinancing or selling the property. It is important to understand the assumptions associated with each of these components. The origin of the majority of the return is a range that defines the personality of the transaction.

  8. Why is this offer making money? What makes this particular offer unique?

    • Every investment opportunity has a story. Try to understand why the operator is particularly excited about this opportunity. What is the case thesis and business plan? This must be true for the operator to be able to execute the plan. What dominoes must fall for this opportunity to deliver the returns you expect?

  9. What is the market doing and supporting this deal?

    • In real estate, the market is very local. As a result, there are many real estate markets. It’s often a mistake to equate the national headlines with what’s going on in the city where your carrier is about to tie up millions of dollars. Kamara further explains, “The key is to investigate further, carefully consider the facts about the big picture and your specific location, and then draw your own conclusions. Also understand that markets are cyclical. They don’t always go up. They don’t descend forever either. The difficulty is figuring out where you stand in the market cycle. No one can predict the high or the low. Good traders expect a lot of results in the market.

In summary, there are many questions you need to answer before you electronically sign these legal documents, wire your money, and join the ranks of passive real estate investors. You must understand and have confidence in the trader, the transaction and the market. David strongly recommends that you check them in that order. Find a trusted trader and they’ll offer you great deals in markets that will work. The operator or syndicator is the key to the puzzle.

Cape Sierra Capital is focused on providing investors with passive cash flow by investing in multi-family real estate. To learn more about how cash flow works and how you can take back control of your time, download a free copy of their eBook. The personal treasury formula. To find out about their future investment opportunities, join the Exclusive investor network.

Contact details:

Company name: Cape Sierra Capital
Contact Person: David Kamara
Email: [email protected]
Telephone: (313) 288-8289
Country: United States

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