Recently, we discussed what it means to invest passively in real estate and the benefits of passively investing. If you missed those newsletters, you could view them on our blog page. The ones to review are How to Invest in Private Placements for Busy Professionals and What is Real Estate Syndication and Passive Investing?
A more in-depth discussion on this topic is one we recorded with our lawyer, CPA, and a trustee who showed us how to use self-directed IRAs to invest passively. We would love for you to watch that 1-hour webinar here.
Since we started talking more about passive investments, people have asked us questions that we thought others might be interested in, like …
What are some examples of passively investing?
Passive Investing is investing in real assets, not mutual funds or stocks and bonds.
Caribbean Capital Group is a sponsor, where our team finds or develops deals, and we do all of the due diligence and legal work to get them ready for the investment market.
Then high-net-worth investors can choose to invest in these passively.
A typical investment can pay every quarter to the investor with an update on the asset. The sponsor manages the asset and communicates with the investors.
Not all passive investments are suitable for everyone.
It depends on your investment philosophy, your investment timeline, your tax situation, and more.
There are better passive investments than others when it comes to tax savings. We encourage a discussion with your tax advisor and fund manager before investing.
Of course, we are happy to have deeper conversations with those interested, and we’ll figure out the best options available and any active projects that fit.
All investment projects have minimums and maximums, and part of the process is making sure investors are not putting too much of their net worth into a single deal.
This is important for several reasons:
1) It gives you diversity.
2) We feel you should be invested in other things like gold and silver.
3) The tax savings are different for various investments.
There are two types of exemptions we apply for with the SEC. Caribbean Capital Group manages two types of investments: a 506B exemption and a 506C exemption.
Due to specific U.S. Security Exchange Commission rules and laws, there are active projects we are currently raising capital for that we can’t openly discuss per the 506B exemption. We can privately discuss these active projects on a one-on-one basis or on a private webinar.
What is a 506B?
It is an exemption where we can invest with up to 35 non-accredited investors and accredited investors for our project. The rule is we must have a substantive relationship with the investor before they can invest in our project.
What is a 506C?
It is an exemption that states we can only invest with accredited investors, and we are allowed to advertise the project. We must follow a verification process by working with the investor’s lawyer or CPA before completing the investment.
We discuss the difference between non-accredited and accredited investors in our investing webinar.
The ROI varies from deal to deal, but we have seen a range of 6% up to 15% and more.
The financing terms have the most significant impact on the ROI. So it’s crucial to understand the length of the term, refinancing options, and paybacks to the investors as all deals are different.
Here are examples of types of investments high-net-worth individuals can take advantage of:
- ATM machines
- A 108-unit apartment building in Dallas, Texas
- A 246-unit class B apartment building in North Carolina
- A CO2 coal scrubber in Texas, these have great returns and some of the highest tax savings.
- Twelve single-family houses in Florida
- A 446 acres in Hopkins, Belize, to subdivide and develop a subdivision to sell the lots. There’s an opportunity to provide financing to buyers for an extra return on your investment.
- A 72-unit condo building to develop luxury condos in Placencia, Belize
- A 515 acres of farmland producing cacao in the Toledo District of Belize
Anything is possible with group investing! We’ve seen a project done to help publish a book and one for a Broadway play production.
It doesn’t have to be an asset, but we prefer a real estate component, as property always has value.
To learn more about the projects above, schedule a call!
We plan to discuss topics such as gold and silver, cryptocurrency, the economy, pension plans, and the stock market in upcoming newsletters. If you are interested in learning more about other topics, reply to this email and let us know.