When you think of owning a piece of real estate, what comes to mind?
Perhaps it’s the many tasks associated with being a landlord. These include collecting rent, vetting new tenants, answering middle-of-the-night calls about the pilot light going out in the hot water tank.
Or maybe it brings to mind the ongoing worry that your rent checks will stop coming in.
You might even think about the significant amount of “sweat equity” you'd need to put into a property. This could include painting walls, repairing sagging porches, or repaving the driveway. Let's face it, there are many other challenges that go into keeping your property up to par.
Fortunately, there are now numerous platforms for passive real estate investing to simplify and streamline the investing process.
One of the popular crowdfunded real estate platforms for accredited investors is called Origin Investments. In this review, we will be covering the ins and outs of this real estate investment company.
Origin Investments is aiming to help accredited investors access select real estate markets in a passive manner. With a minimum investment of $100,000 it is clear they are going after higher net worth clients. Origin puts their own money into projects alongside the investors, aligning their interests with yours. Fees are reasonable and lower than the industry average for private real estate investment.
Origin is a real estate investment firm that invests in commercial properties across the country. Since its inception in 2007, Origin Investments has raised and currently manages more than $700 million in office and multi-family properties in eight U.S. markets.
These markets show high potential for explosive property value growth. They include Atlanta, Austin, Charlotte, Chicago, Dallas, Denver, Houston, and Raleigh.
Origin selected these markets by taking a look at key factors including:
These real estate investment opportunities include office buildings and multi-family housing units. To date, they have bought and managed more than 60 properties.
Origin buys real estate directly without the use of a broker. This allows them to save on costly commissions to brokers.
At the same time, as a company, Origin also adds some of its money to the pot. To date, principles David Scherer and Michael Episcope have co-invested over $56 million dollars into their deals. As a result, the incentives between investors and Origins are aligned.
It’s important to note that Origin investors buy into a fund, rather than buying into individual properties. The minimum investment can be steep, ranging from $100,000 to $500,000.
However, when you sign on with Origin, you won’t find any hidden fees, confusing structures, or complex deals. The capital needs are clearly laid out from the start, so once you allocate your initial investment amount, there won't be any surprises.
Origin’s team members have significant real estate investment experience. The company relies on this expertise to find projects and act as asset managers for all its funds. And they are particular about what projects they take on. In any given year, they may consider more than 1,000 deals but take less than 5%.
Origin values full transparency with investors and provides detailed information about every project held in their funds. From the financial information to the overall investment strategy, Origin isn't holding anything back from investors.
Additionally, investors will be able to attend monthly webinars on the funds they are invested in to receive updates and information. A behind-the-scenes look like this is rare to see from crowdfunding platforms but it extremely valuable to investors.
As an investor, you'll also be able to dive into the financial information on every deal the firm has ever purchased. This will allow you to fully examine the company's track record since 2007 and assess whether you believe they are a good option for you to invest with.
So far, their two first funds have proven to be fairly successful. Touting a 30% IRR so far, many investors would be happy to see returns like these.
Origin charges its investors an annual management fee of 1.25% of their net asset value, as well as other fees. These could include an acquisition fee, administration fee, or a number of other fees depending on the particular fund.
For example, if your initial investment is less than $250,000 you will pay a one-time 2% administration fee.
In addition to this fee, Origin also charges a performance fee on both of their funds. These fees apply only if the funds return over a certain preferred threshold. Then a portion of the returns above the threshold is paid to Origin.
For the Origin IncomePlus Fund, there is a 10% performance fee after a 6% preferred return with a 50/50 catch-up.
QOZ Fund investors will encounter a 15% performance fee after a 7% preferred return with a 50/50 catch-up.
Keep in mind that you must be an accredited investor to invest with Origin.
In order to qualify as accredited, you need to meet at least one of the following criteria:
|Diversified Funds, Individual Deals, Managed Portfolios, Opportunity Zones||View Investments|
|Professionally Managed Commercial Real Estate Portfolios||View Investments|
|Income REIT, Growth REIT, Individual Properties, 1031 Exchanges||View Investments|
|Multiple Private Managed Real Estate Funds||View Investments|
While they may seem similar on the surface, the funds listed on Origin are not REITs. In fact, Origin’s real estate investments differ from traditional REITs in several ways:
Currently, Origins offers investors the choice of two separate funds to invest in. The funds vary in their investing strategy and appeal to different subsets of investors.
The Origin IncomePlus Fund is an open-end private real estate fund that gives investors consistent distributions, offers downside protection, and minimizes the impact of taxes.
The fund targets a 9-11% total net annual return, with a target distribution of 0.5% paid monthly (6% total annually).
Previous closed-end funds do not offer this amount of steady passive income. In these cases, investors usually did not receive a distribution until the real estate had gone through its complete business plan and was sold. Once the plan was completed, investors got their first distribution. In some cases, this can take 5-10 years to play out!
The IncomePlus Fund lets you enter the fund at various points in time. You can immediately diversify your capital across a high-quality portfolio of real estate assets. Plus, the IncomePlus Fund’s “buy, fix and hold” option means that you can stay in for as long as you’d like instead of being forced to exit when the assets are sold.
The minimum investment for this fund is $100,000.
Origin will pay dividends monthly to IncomePlus Fund members. However, keep in mind that these distributions are not guaranteed.
You have two options for how to receive your distribution. You can take it in cash, and Origin will send it straight to your bank account.
Or, you can take advantage of compounding returns through its DRIP. This strategy lets you use the distribution to automatically buy new units each month. In other words, reinvest back into the fund.
The Qualified Opportunity Zone program, established by the JOBS Act, encourages investment in targeted communities that need a boost in economic development. It provides significant tax advantages to investors who roll over their capital gains from other investments into a fund that invests in QOZ's.
Origin created this fund’s portfolio as a mix of new development projects to give healthy returns even before factoring in the QOZ tax benefits.
Origin will diversify the portfolio into properties that produce consistent cash flow for its investors after the properties are built.
The minimum investment for this strategy is $100,000.
Additional benefits of the Origin QOZ fund include:
Once you sign up for an account on its website, you can reach an investor relations associate, who is available to answer any questions you may have as they come up. A link to their email will be given out when you are logged into the portal.
As an investor, you can access updated account information 24/7 by logging in to the Origin website. Investors also receive detailed asset management updates via email at least once per quarter.
With its sky-high investment minimums, Origin isn’t designed for the casual investor.
But it does cater to more seasoned investors who understand the value of passive income through real estate.
Their track record shows over a decade of delivering strong returns which is not something many other crowdfunding platforms have. Origins has proven through both strong and weak real estate markets that their strategies deliver consistent returns to investors.
When you invest in Quality Opportunity Zone projects, you are part of a movement towards economic development for areas that need a boost. In return, you'll reap the significant tax advantages that this investment opportunity offers, and potentially pay $0 in capital gains tax.
Since you will have access to your account info 24/7, you will see the fund’s progress continuously. You may want to reinvest your dividends to watch your investment grow.