Frequently Asked Questions
Get answers to the most common questions.
About Garages of America and Fund I
Garages of America was formed to offer real estate investments to investors that know real estate. The Fund has a simple, transparent structure that allows investors the ability to effortlessly evaluate our business model and understand its projected returns and strategy to reduce risk.
Garages of America strives to break the mold of smoke and mirrors of many investment offerings. Most developers are highly incentivized to sell as quickly as possible, minimizing the cash flow and tax benefits that investors may receive from owning real estate. Many real estate sponsors also rely on low interest rates and cash-out refinances at interest rates much lower than today’s rates to execute their business plans. These types of offerings are not founded on fundamentals of finance, but rather are a product of luck and we believe may struggle in a different economic environment. Garages of America takes a very different approach and does not rely on low interest rates to deliver our distributions once we stabilize our rental portfolio. Our offering is aimed at developing high quality, low leverage real estate to provide consistent above market returns to our investors.
Garages of America Fund I seeks to provide investors the opportunity to partner with a real estate developer and profit from a business model not commonly available to the general public. The Fund offers a class of real estate that is difficult to access in other funds and a business model designed to increase returns and mitigate risk.
It certainly can be. When a development fund liquidates some of its properties early in the fund’s life, it often generates significant short-term revenue and reduces costly debt and carrying charges. The fund is more of an equity play that does not require refinancing in later years to strip equity from properties to return “profit” to investors.
We anticipate 5-7 separate projects developing approximately 450 garage units and 3,000 self-storage units.
Cash flow will begin once the development project(s) are completed and stabilized. Development takes approximately 14-20 months and stabilization about 24-36 months. Of course, during the development period, your investment receives tax-deferred appreciation on the land and improvements. Land that is developed will often see a 2%+ increase in appreciation over a property purchased over the same time period.
Our first priority is to make sure our investors have exit strategy options that provide attractive returns; and our investors always be made aware of those options. We may sell all of the projects in a fund to a public REIT, merge with another one of our funds, or employ an UpREIT strategy. We will be in communication with our investors to keep them informed of the market conditions that would determine a course of action.
Yes. Investors are required to meet the definition of an accredited investor and provide third-party verification of their accreditation status. We provide a free accreditation service. Alternatively, you may have your accountant, attorney or financial advisor write a letter testifying that you meet the definition of an accredited investor.
Accreditation is as defined by the SEC here.
No. This Fund is not available to qualified retirement accounts.
Fund Structure and Returns
While each project is different and separate with its own private entrance and security, both are complimentary and often drive traffic to each other. Although each type of garage appeals to a different demographic, demand for both types of garages is strong. The Luxury Garages historically sell-out with back-up offers prior to completion.
Approximately 30% post construction debt. Many real estate funds require 50%-80% debt for their business models exposing their investors to greater interest rate and market risk.
- Class A $500,000 and $1,000 increments above the minimum
- Class B $100,000 and $1,000 increments above the minimum
We are projecting a 8%-10% per annum stabilized cash flow, and a 3.0x total return utilizing a 10-year residual value. Our projected cash flow and total returns are not dependent on a softening interest rate environment and do not require aggressive cash-out refinance and low interest rate assumptions to be achieved.
Investors in Garages of America Fund I can expect the following:
Class A investors receive a 75/25 profit split. Class B investors receive a 70/30 profit split.
We believe portion of your income will be sheltered from income taxes, which could increase your effective yield.
Anticipated to last through December, 2023
Anticipated quarterly distributions are based on our asset management team’s assessment of free cash flows generated over the performance period and capital needs determined at the end of the performance period.
It is intended that each investor’s liability is limited to its investment amount.
Tax Information
The Fund will file tax returns as a Limited Liability Company and be taxed as a partnership. Tax returns will be filed on a calendar year basis.
Investors need to be prepared to file a federal tax return, as well as a state tax return in any state the Fund does business, if necessary. Please consult with your tax advisor.
Investors will receive a Schedule K-1. Investor K-1’s are distributed no later than March 15th.
No.
How to Invest
A subscription agreement, proof of accredited investor status, and a complete profile on our investor portal. Click here to access.
Accreditation is as defined by the SEC here.
Simply click here “Start Investing”. Link. Alternatively, you can contact us at investors@garagesofamerica.com and we will get you setup to invest.