Investments & Strategy

Open Investment Offerings

Freedom Venture Real Estate Fund I

A Hybrid Fund designed to deliver stable, passive income and appreciation. The Fund owns and operates multifamily properties, supplemented by strategic debt investments.

INVESTMENT TYPE

Growth & Income

RISK PROFILE

Core Plus

MINIMUM INVESTMENT

$100,000

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Freedom Venture Real Estate Fund II

Fund II will be designed to follow a similar strategy as Fund I to deliver an attractive risk-adjusted return profile. The Fund will continue to grow our multifamily portfolio with an emphasis on larger JV equity positions & debt.

INVESTMENT TYPE

Growth & Income

RISK PROFILE

Core Plus

MINIMUM INVESTMENT

$100,000

Coming Soon

Deal Pipeline

Tampa, FL

IRR: 31.19%

Equity Multiple: 2.2X

Cash on Cash Return: 20.40%

Orlando, FL

IRR: 40.91%

Equity Multiple: 4.7X

Cash on Cash Return: 18.14%

Clearwater, FL

IRR: 21.8%

Equity Multiple: 2.7X

Cash on Cash Return: 12%

Orlando, FL

IRR: 23.9%

Multiplier: 2.9X

Cash on Cash Return: 13.8%

High Absolute ROI

Multifamily real estate offers an investment vehicle with a risk profile similar to government bonds, but with the return profile superior to the stock market.

There is no other investment class on the planet with a better risk-adjusted-return profile.

Tax Advantages

Real estate offers tax advantage over nearly every other investment including stocks, bonds, businesses, and precious metals.

Our investors are able to benefit from legal tax avoidance and deferment methods encouraged by the U.S. tax code, including depreciation, 1031 Exchanges and tax-free cash-out refinances.

FAQ

Why invest in multifamily assets?

Multifamily properties have some of the best risk-adjusted returns out of any asset class. Our private real estate funds provide the opportunity for above market returns, tax efficiency, low volatility and diversification at a level that can only be found in multifamily properties.

Multifamily apartments have an incredible track record and will continue to be in high demand in the years to come. They are valued based on their income, most of which comes from tenant rents. Because of the nature of the leasing life cycle, we are not as vulnerable to market volatility as other asset classes. Combine that with the incredible tax advantages and you have one of the best investment vehicles available in the market.

It is also what we have specialized in over the past few decades so we know how to manage these properties at optimal efficiency.

Where does Freedom Venture Invest?

We target a range of markets across the Sunbelt Region. We especially like the Gulf Coast of Florida region amidst the recent pandemic. We've been able to target significantly undervalued assets in an already growing economy trending towards a younger demographic.

FACTS ABOUT FLORIDA:

  1. Fifth fastest growth rate in the United States (World Population Review)
  2. Population is getting younger with an average age of 41.6 years
  3. Nearly 60% of adults over 25 have college education
  4. Ranked 7th in job growth rate 2017 to 2018
  5. Unemployment rate 3.3% (as of October 2019)
  6. Top ranking U.S. vacation destination
  7. Second longest shore line of any state and first in developed shoreline
  8. No state income tax
  9. South Florida enjoys a tropical climate. North and central Florida are subtropical. Average Florida temperature ranges from 61 degrees in the Winter to 84 degrees in the Summer
  10. Rated as one of the best states for Investment and Business:
  • Ranked 6th "Best State To Start A Business  2019" (Inc Magazine)
  • ​Ranked 6th "Best State To Start A New Business 2019" (SquareUp.Com)
  • Ranked 7th "Best States For Business 2018" (Forbes Magazine)
  • Ranked 6th "Best State to Start A Business 2018" (Fortune Magazine)
  • Ranked 10th "America's Top States For Business 2018" (CNBC.Com)
  • Ranked 17th "Best Economic Climate For Businesses 2018" (USA Today)
  • Ranked 6th "Best Place To Start A Business 2018" (Entrepreneur Magazine)
  • Ranked 5th "Best State For Retiring 2019" (CNBC.Com)
  • Ranked 1st "Number 1 state to move to in 2020" (Miami Herald)
I invest in stocks , how does this supplement my strategy?

Stocks can be a great investment and we never suggest getting out of stocks completely. Real Estate should be considered as part of your overall portfolio. Consider it a hedge against the year to year volatility of the stock market. If the market is having a down year, how would it feel knowing that you have some of your portfolio in a hard asset that generated a check for you each quarter? This way you don’t HAVE to pull from your account in a down year in the stock market and can wait until those values are at a comfortable level again.

What if your only option was to pull from your account during one of those down years? How much would that cost you in the long run?

Example of Extreme Market Volatility from 2017 - 2018:

For the Dow Jones Industrial Average:
  • Total return 2017: 29.11%
  • Total return 2018: -3.48%
For the S&P 500 index:
  • Total return 2017: 21.83%
  • Total return 2018: -4.38%
Why not buy these properties myself?

You can, and we even have a book that details how you could be successful. However, you need to consider if that is the right approach and best use of your time.

Active investors should consider taking a “boots on the ground” approach and be ambitious and disciplined in their pursuit of information about the market or markets where they invest. Successful investing starts with having high-quality deal flow and deals don’t just fall into one’slap. Most active investors stay close to home because it offers them easy access and that’s where they’re comfortable. But what’s the likelihood that the best deals in the country are within a mile or two of where you live?

Active investors become landlords, which is grueling and time-consuming work — especially if renovations or construction is part of the business plan over and above maintenance or rent collection. You may like to do work around the house, but do you want to be responsible for a property 24/7?Owning properties involves work that managers and handymen can do more easily, but the payout to these “helpers” will shave profit margins.

Active investors are often looking to maximize returns by saving on fees. They should think twice; there are countless do-it-yourself investors who find themselves not only under-performing the market in terms of returns but also working full time in a “new” profession they thought would be relatively passive. In most cases, investors should double it or triple the amount of time they think an active real estate investment will take because doing it right takes a real commitment.

This is what we do all day every day.

Why would I pay the fees involved with a private equity fund?

Unlike the public markets, real estate is not a business where you want to base a decision on fees alone. There is a big difference between price and value and low fee real estate deals can end up being very expensive. The quality of a business plan and the asset manager who runs it make the most impact on the success of a real estate investment. Fees are a function of the complexity of a business plan and should be correlated to the value the manager is able to create.

Someone must find the property, negotiate the price, create marketing materials and legal documents, raise equity, manage the day-to-day operations of the property, formulate and execute the business plan, report to investors, provide K-1’s, sell the asset and distribute the proceeds. A great team does not come cheap, but the overall return far outweighs the cost.

Why not invest in individual deals like in a syndication?

Investors who select individual deals have the freedom to pick and choose what deals they invest in, but this also requires a large amount of time and may not result in the most diversified portfolio. Investing in a real estate fund means giving up control of selecting individual deals to a disciplined manager, but also means saving substantial time and, ideally,receiving a well-diversified group of real estate investments.

Considerations:

1.      Time Commitment

With a deal-by-deal approach, an investor would have to source a large number of deals and evaluate every opportunity.Finding a good, trustworthy manager is not easy and the investor only has to find one if investing in a fund.

2.      Reporting

In a fund, investors receive consolidated quarterly performance reports on their entire portfolio, rather than dozens of individual reports. Each update will follow the same format and illustrate how the individual deals within the portfolio are performing and the overall investment performance at the fund level.

Additionally, year-end tax reporting is much easier in a fund structure because K-1’s, a tax document sent to partners that lists out their share of income and loss for the year, are consolidated into a single document for tax reporting purposes. But an investor in 20 individual deals will likely have to manage 20 K-1’s and the costs associated with filing them.

3.      Diversification

Diversification is one of the easiest ways to reduce risk. In real estate, investors need to make sure they are not overexposed to any one deal or geographic region. Our funds have minimums of$100,000, but that capital could be spread across 15 to 20 deals. Investing$100,000 on a deal-by-deal basis could easily lead to a portfolio of four to six deals and a single property could easily make up 30% or more of the portfolio. Real estate downturns can often be isolated to a single city or region and having too much concentration in one area can lead to unnecessary risk. Our funds target multiple markets for diversification.

4.      Incentives

In a fund, the performance fee is paid based on the overall performance at the fund level. In contrast, managers of individual deals get paid based on the performance of each and every deal. This is important because if one deal generates a 20% annualized return and another deal generates a 20% annualized loss, the manager is entitled to an incentive fee on the deal that did well and knows they won’t make money on the under-performing deal. The manager operating in a deal-by-deal structure may be more incentivized to focus on the deals doing well and ignore those doing poorly where they are least likely to earn a fee. The fund manager, in contrast, is highly incentivized to revive under-performing deals.

Why would I invest in a fund vs a REIT where I can have liquidity?

The value of a private real estate fund is based on the actual value of property held by the fund. Conversely, in a public REIT, the share price value is determined by daily market forces, which means the share price of a public REIT may not reflect the actual value of the underlying real estate. In some cases, the share price can value the REIT 30% higher or lower than the actual value of the underlying real estate.

Private real estate values don’t move much on a daily basis but rather appreciate slowly over time, which is why private investments are less volatile than their public counterparts. Both vehicles have pros and cons and the optimal portfolio has a combination of both. Public markets offer liquidity, but that comes at the expense of volatility while private investments offer investors low volatility, but with that comes illiquidity.