The Future of
Real Estate Investing

Frequently Asked Questions

We are first and foremost real estate owners and operators that leverage technology to better serve our communities and investors.  We launched HLC Direct in order to grant access to our institutional quality real estate investments, and to do so directly with HLC Equity as the sponsor, without any third parties. Conversely, most real estate equity crowdfunding websites are third party capital raisers who do not directly own and operate real estate, nor do they typically invest their own capital into the transactions that they promote. Here are our key differentiators from typical real estate crowdfunding websites:

 

 HLC EquityTypical Crowdfunding Real Estate Platforms
Date Established1950’s2012 and beyond
ExperienceTime tested investment management portfolio through dozens of economic cyclesLimited time in the market
Core CompetenciesReal estate investment and management, investor relationsMarketing and technology
Proximity to AssetsWe live and breathe real estate. We love being onsite at our communities with our team members, meeting our residents and commercial tenants, breathing the air, and feeling the brick and mortarGenerally, raise capital for real estate owners and operators 
% of Equity InvestedMinimum 5-10% of deal equity. Frequently HLC Equity will be the largest investor in its dealsUsually 0-5%
Fee StructureManagement and performance fees well aligned throughout the entire investment as detailed in the offering memorandum Generally, investors are charged an upfront fee and an asset management fee throughout the lifecycle of the investment
Communication Direct with real estate operators and investorsThrough third-party company less involved with the intricacies of owning and managing real estate

HLC Equity targets core markets with attractive demographic trends and a healthy demand/supply ratio.

HLC Equity invests in a wide range of real estate assets, with various risk/reward features. We most often invest in value-add, core, and core plus transactions. Our primary focus is cash flowing multifamily properties, necessity-based retail assets with long term leases and credit tenants, and other opportunistic ventures are considered on a deal by deal basis.

Layers (www.layerslife.com) is an HLC Equity-backed operating company that serves as an innovative property management company, offering residents flexible living options with serviced and conventional apartments, community events, and additional services. Beyond providing an exceptional customer experience for our residents, Layers also aims to significantly improve property performance through its proprietary operating systems. When HLC Equity invests in a deal that will be managed by Layers, it means that HLC Equity investors will benefit from this innovative property management model. 

Sign up for our updates so that you can be the first to know about industry updates, market insights, new deals being offered, and innovations occurring in the world of real estate and technology.

Register for an account in order to be the first to receive updates on new transactions and important investment information. Once you have invested, your account on our portal also becomes your key resource for your account information, financial statements, and investment updates.

As of now, HLC Equity transactions are limited to accredited investors. Investors are asked to verify this prior to investing in transactions. 

An accredited investor is a term used by the U.S. Securities and Exchange Commission (SEC) under Rule 501 of Regulation D. In order to qualify as accredited, an investor must accomplish at least one of the following:

  • Earn an individual income of more than $200,000 per year, or a joint spousal income of more than $300,000 per year, in each of the last two years and expect to reasonably maintain the same level of income;
    Have a net worth exceeding $1 million, either individually or jointly with his or her spouse (excluding the primary residence);
  • Be a bank, insurance company, registered investment company, business development company, or small business investment company;
  • Be a general partner, executive officer, director or a related combination thereof for the issuer of a security being offered;
  • Be a business in which all the equity owners are accredited investors;
  • Be an employee benefit plan, a trust, charitable organization, partnership, or company with total assets in excess of $5 million.

For further information please visit the SEC website

Please contact us through our website or by clicking here

Yes, you can. Each entity varies, but our investor relations team is happy to work with you on ensuring a smooth onboarding.

When you invest with HLC Equity you generally become a partial limited owner in the entity that is purchasing the property. The rights and ownership are detailed in the transaction offering material and we encourage you to read through all documentation diligently.

Our investor portal allows 24/7 access to view your investment info, historical distributions and cash movements, and other property and financial statements. Additionally, investors are provided with updated financial and property reports at least once per quarter.

Yes, that is the goal. You invest, we do the work, you receive distributions and your capital grows.

Yes. HLC Equity works with several wealth management firms and family offices in order to assist in investing capital on behalf of their clients.

HLC Equity has a diverse mix of investors, which range from private equity groups, to family offices, investment advisors, and wealth managers. Aside from institutional investment partners, HLC Equity’s investors include sophisticated individuals ranging from high tech executives, former CEO’s of large corporations, fund managers, and other professionals.

Yes. The goal of HLC Direct is to create a direct relationship with private investors who otherwise may not have direct access to our platform. Although our investments are currently restricted to Accredited Investors, we hope to eventually open up our investments to an even broader group of investors.

Real Estate Investment Learning Center

One of the key benefits of investing in real estate is diversification, which can improve the risk/reward profile of your total portfolio. Additionally, investments in commercial real estate can provide regular income streams at levels significantly higher than typical stock dividends.  Lastly, investments in real estate often serve as a hedge against inflation and can offer significant tax efficiencies.

Cap rate = Net Operating Income / Current Market Value

Cash on cash return is a rate of return that shows the amount of cash earned from the income of a property relative to the cash invested in the property. In other words, cash-on-cash returns are annual pretax cash flows divided by the total cash invested.

IRR stands for Internal Rate of Return. IRR is a metric used in finance to determine the average annual return an investor can expect to realize from an investment. This metric is also expressed as a percentage.

Equity multiples are used to determine how much of your original investment will be returned over the course of the investment. Equity multiples are calculated by dividing the total cash distributed by total equity invested. An equity multiple less than 1.0x means that you are getting back less than you invested.

Real estate investments can be categorized based on the level of risk/reward.

Core investments are those with a lowest risk and therefore, a lower potential return. Higher quality cash-flowing assets that require little to no improvement would be put into this category.

Core-plus investments are similar to core properties, with a slightly higher risk profile and consequently higher potential return.

Value-add is a term use to refer to a real estate investment that needs corrective action, such as property improvements or unit renovations. These actions carry a certain amount of risk and therefore often demand higher returns in the marketplace.

Opportunistic investments carry the greatest risk and largest potential returns among the 4 major categories of real estate investment. They often require significant financial investment to execute physical and/or operational improvement.

Preferred equity is an equity investment with a higher priority than common equity. Preferred equity holders have first claim to the company’s cash flows after debt has been serviced. Preferred equity has a fixed rate of return associated with it, after which the remaining cashflows are distributed to common equity.  

Sponsors are usually General Partners (GPs) that contribute their own capital as part of the equity required to acquire a property and raise capital from investors to fund the rest. Until a certain threshold of total returns, all parties earn proportionally, relative to their investment. Once the preferred return threshold is met and capital is returned, the sponsor’s share of the excess profits becomes disproportionately larger. The amount of extra profits paid to the sponsor is the promote.

Also known as the distribution waterfall, the investor waterfall is the set of rules that determines when and how cash flows from a property get distributed between general and limited partners.

Mezzanine debt is a type of higher-risk debt financing, in which the lender or debtholder has second-priority claims to cashflows after senior debt. Mezzanine debt allows companies to borrow money without offering any collateral (also known as unsecured debt). Should the borrower default, the lender can gain ownership of the property through warrants or options.

K-1 is an annual IRS tax form issued to partnership investments, S- corporations, trusts and estates that distribute income to beneficiaries. It is used to report each partner’s share of the earnings, deductions, losses, and credits.

There is a limited amount of equity available for investment in each deal. When a deal becomes oversubscribed, it means that the amount of capital committed by investors has met or exceeded the amount of capital required. Interested investors can be put on a waiting list for an oversubscribed deal.  

An institutional investor is generally a company or organization that invests large sums of money on behalf of other people. Examples of institutional investors may be private equity funds, pension funds, endowments, and insurance companies. Because these institutional investors have large sums of money, they are able to purchase large, high quality real estate transactions. Some refer to these larger sized investments as institutional real estate investments.

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