1. How do I contact US GROUP HOLDINGS?
If you have any questions, please email us at [email protected] or call/text us at 347-422-4026
2. How do I get started as an investor with US GROUP HOLDINGS?
The entire account creation and investment process is completed online.
3. Am I an accredited investor?
An accredited investor, in the context of a natural person, includes anyone who:
- Has earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current calendar year, OR
- Has a net worth over $1 million, either alone or together with a spouse or spousal equivalent (excluding the value of the person’s primary residence), OR
- Holds good standing a Series 7, 65 or 82 license
On the income test, the person must satisfy the thresholds for the prior two years consistently either alone or with a spouse, and cannot, for example, satisfy one year based on individual income and the next two years based on joint income with a spouse. The only exception is if a person is married within this period. The person may satisfy the threshold based on joint income for the years during which the person was married and based on individual income for the other years.
In addition, entities such as banks, 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 more than $5 million, not formed to specifically purchase the subject securities, and whose purchase is directed by a sophisticated person, OR
- Certain entity with total investments more than $5 million, not formed to specifically purchase the subject securities, OR
- Any entity in which all the equity owners are accredited investors.
In this context, a sophisticated person means the person must have, or the company or private fund offering the securities reasonably believes that this person has, sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment.
eCFR :: 17 CFR 230.501 — Definitions and terms used in Regulation D.
4. What is a non-accredited investor?
If you do not meet the requirements of question 3, then you fall in the category of beign a non-accredited investor. However, you can still invest given that we comply with the following:
For our current Regulation A offering(s), no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth (excluding your primary residence, as described in Rule 501(a)(5)(i) of Regulation D) for natural persons.
eCFR :: 17 CFR 230.251 — Scope of exemption.
Different rules apply to non-natural persons.
5. What types of account can invest through?
There are several options for types of entities/accounts you can use when investing in our funds. You can invest as an Individual, Jointly, through an LLC (Limited Liability Company), Corporation, Partnership, Retirement Plan/401K, or a Trust.
6. Can I invest through IRA?
Relevant answer coming soon
7. What type of tax documents will I receive?
You will receive a Form/Schedule K-1. A Schedule K-1 is a tax form used by partnerships to provide investors with detailed information on their share of a partnership’s taxable income. Our goal is to finalize all Schedule K-1s annually by March 31st, however, we do rely on outside reporting and may require additional time to furnish the forms in a way that is to the investor’s best advantage. Accordingly, you may be required to obtain one or more extensions for filing federal, state and local tax returns, but that is not our intention.
8. Can I invest if I live outside of the United States?
Relevant answer coming soon
9. How long is the term of the vehicles?
The term of our vehicles are generally 10 years, but we have sole discretion to extend the life or even decrease the life after you have invested. The reason for this is we want to maximize the value of the real estate investments. We do not want to be forced to sell investments when the market is bad, nor do we want to pass up the opportunity to sell investments when the market is great. We are long-term investors and the more time we stay invested in a property, the better chance we have of capturing property appreciation from inflation and rising rents.
10. How much of US GROUP HOLDINGS LLC’s own money does it invest?
US GROUP HOLDINGS LLC (the “Manager”) intends to invest the lesser of two percent (2%) the total of Class A Member’s Capital Contribution or $100,000. The Manager evaluates each property as if it is going to invest all the money itself. Per the above, the Manager’s intention is always to have skin in the game to show its conviction in the investment.
11. What is a Class A Member and Class B Member?
The real estate property will be acquired under a newly created LLC (the “Company”) whose members will be Class A Members and Class B Member. The Class A Members are “you” (entities/accounts) mentioned in question 4 above and the Class B Member is US GROUP HOLDINGS LLC.
12. How is my investment protected?
Although, all investment have risks, investing in real estate has more security in a sense that it is secured by a hard asset. You will own a percentage interest in the Company that owns the property/properties, therefore, your investment is backed by a real estate asset.
13. What happens is Jonathan Carrera retires or passes away?
That is a great question! We should discuss the reality of that situation. If Jonathan retires or passes away, the vehicles themselves and their property investments will continue to operate. Cash flow will continue to be generated and distributed to investors. The real estate properties are managed by third-party property managers with experience on maximizing cash flow. They will continue with business as usual – maximizing the value of each investment. If US GROUP HOLDINGS LLC does not have enough personnel to continue operations, a new manager(s) can be appointed to replace Jonathan’s role.
14. What happens if the Manager is underperforming and needs to be removed?
The Company’s priority is to protect its property/properties against entities that may devalue them, even if such entity is the Manager. The Resignation or Removal of Manager provisions in our Operating Agreement provides details of how to remove a Manager.
15. What is the role of third-party property management companies?
They are the experts on managing real estate properties. They handle all daily operations needed for the properties to run smoothly; operations such as: Setting rent, collecting rent, finding/ screening/ evicting tenants, resolving tenant’s work order, overseeing property maintenance and repairs, etc. The third-party property manager companies and US GROUP HOLDING LLC will work together to increase the value of real estate properties owned by the Company.
16. What type of investment returns should I expect?
Let’s understand that acquisition cap rate = ( NOI / Purchase Price ) * 100%, where NOI is Net Operating Income of the Property. See Presentation-001 in the Education section to learn about cap rate Presentation-001 – US GROUP HOLDINGS.
The returns are dependent on the acquisition cap rate and how fast we can increase the cap rate over time. Presentation-003 in the Education section has two examples:
- Example 1: Property with acquisition cap rate of 8% and assumption of cap rate increased by 5% yearly. Per this example, on the first year, the annual return on investment (ROI) = 19.6 % via cash flow of the property. On year 5, ROI = 26.6 %.
- Example 2: Property with acquisition cap rate of 5% and assumption of cap rate increased by 5% yearly. Per this example, on the first year, the annual return on investment (ROI) = 9.8 % via cash flow of the property. On year 5, ROI = 14.2 %.
Note that the more stable Class A properties which attract the high-income earning tenants are usually in the lows 5% acquisition cap rates. There is a tradeoff of acquiring a very financially stable Class A property and the annual return on investment (ROI). See Presentation-003 to learn more about Class A, B, C, D properties
Additionally, when we refinance the mortgage and depending on how well the cap rate has been increased over time, investors are expected to get additional return on investment from refinance proceeds.
It is strongly encouraged to read Presentation-003 which has detailed information of the assumptions used to estimate ROI percentages provided above. It is important that investors are aware and understand the assumptions (i.e., Debt Service / Mortgage Interest Rates, $0 Capital Expenditure expenses assumptions) made to come up with the ROI percentages. See Presentation-003 – US GROUP HOLDINGS
Our targeted returns are just that, targets. Investment involves risk and our actual returns may be higher or lower and may include a partial or total loss of your investment.
17. How often will I receive a distribution?
We intend to pay distributions monthly for investments of $5,000 or more and is likely that the Manager may decide to pay distributions quarterly for investments of $4,999 or less due to cost effectiveness but may change the frequency at our sole discretion during the term of the fund.
The change in distribution frequency can depend on many factors such as the property’s cash flow level or needed capital expenditures. Sometimes the cash flow of the property may not support a distribution.
Jonathan is an investor in the properties, and he loves to receive his distributions while we all wait for the property’s value to appreciate.
18. What types of fees do you charge?
The Manager charges the following fees:
First fee: 0.5% asset management based on the total equity raised; this is to say, 0.5% of the total of Class A Member’s Capital Contribution
Second fee: Initially 20% of the distributable cash flow of the property until Class A Members receive a return of one hundred percent (100%) of their Capital Contributions. Afterwards, this fee may be amended per Operating Agreement signed between Class A and Class B members. Keep in mind that if the property’s cash flow goes up or down, so does our Second fee. This aligns our economic interests.
We do not charge miscellaneous fees, such as fees for processing and storing your investment information. We also do not ask you to pay fees or commissions to middlemen or stockbrokers to invest in our funds.
19. Is there risk involved?
All investments involve risk, including those investments made in our funds. We do not guarantee that you will earn our targeted returns. There are many factors that can impact the performance of your investment, many of which are not under our control. Please keep in mind, investing involves risk and may result in partial or total loss of your investment. Prospective investors should carefully consider investment objectives, risks, charges, and expenses, and should consult with a tax or legal adviser before making any investment decision.
We do believe that investing in private real estate poses less risk than many other types of investments. Private real estate has historically been less volatile than the stock market, and properties generally appreciate over time as inflation tends to push rents up. Additionally, we conduct extensive research and due diligence on every property investment and have a high degree of conviction that our risk is balanced with our targeted returns. Jonathan himself is an investor on the properties, so he personally believes in the potential return of each of our investments.