From Decision to Distributions: A Real Estate Syndication Roadmap

At CalTex Capital Group, we provide an accessible pathway to real estate investing through syndications. By pooling resources, multiple investors can take part in acquiring high-performing multifamily properties without the burden of direct management.

We structure our offerings using Regulation D, specifically Rules 506(b) and 506(c), which provide flexibility and compliance for diverse investor needs. But what does the investment process look like from start to finish? Here's what you need to know, expect, and prepare for when investing with us.

Understanding Regulation D: Rules 506(b) and 506(c)

Regulation D enables companies like ours to raise capital without registering securities with the SEC. Here’s a breakdown of the two primary rules we utilize:

• Rule 506(b)

  • Who can invest? Unlimited accredited investors and up to 35 sophisticated (non-accredited) investors.

  • Key restriction: No general solicitation or advertising—investors must have a pre-existing substantive relationship with us.

  • Investor verification: Investors can self-certify their accredited status.

• Rule 506(c)

  • Who can invest? Only accredited investors.

  • Key advantage: Allows for general solicitation and advertising to reach a broader audience.

  • Investor verification: Requires documentation or third-party verification to confirm accredited status.

Depending on the business plan, we employ either a 506(b) or 506(c).

Are You an Accredited or Sophisticated Investor?

Before diving into syndications, it's essential to understand the classifications of investors:

Accredited Investors:

• To qualify, you must meet one of these SEC criteria:

  • Income Threshold: Earn $200,000 annually ($300,000 with a spouse) for the past two years, with expectations for the same in the current year.

  • Net Worth: Exceed $1 million, excluding your primary residence.

  • Certifications: Hold specific professional licenses, such as Series 7, Series 65, or Series 82.

Sophisticated Investors:

• While not meeting the financial thresholds, these investors possess sufficient knowledge and experience to evaluate the risks and merits of investments. Sophisticated investors are only eligible for 506(b) offerings and require a pre-existing relationship with us.

The Investment Process: What to Expect

From the initial offering to receiving distributions, here’s a walkthrough of how our investment process works:

1. Receiving the Investment Offering

Once an opportunity arises, you’ll receive an offering deck outlining key details, including:

• Property overview and location

• Business plan and strategy (e.g., value-add renovations, income growth, expense reduction)

• Projected returns (cash-on-cash, IRR, equity multiplier)

• Risk factors and market analysis

This document serves as your first glimpse into the investment’s potential.

2. Investor Webinar

We host an investment webinar to dive deeper into the offering. This session includes:

• A detailed walkthrough of the property and business plan

• Financial projections and timelines

• Market conditions and assumptions

• Q&A with our team to address any questions you may have

The webinar ensures transparency and gives you the confidence to make an informed decision.

3. Investor Due Diligence

We encourage all investors to conduct their own due diligence, which might include:

• Reviewing the offering deck and market data

• Asking questions about the business plan

• Understanding the risks and potential rewards

• Consulting with financial advisors or tax professionals

This step is crucial to ensure alignment with your financial goals and risk tolerance.

4. Investor Documents

Once you decide to invest, you’ll complete and review the following key documents:

• Private Placement Memorandum (PPM): A legal document outlining the terms, risks, and structure of the investment.

• Subscription Agreement: Confirms your commitment and verifies your accredited or sophisticated investor status.

• Operating Agreement: Defines the rules and responsibilities of the syndication and its partners, ensuring transparency.

• W-9 Form: This form is required to ensure proper tax reporting for any distributions you receive.

• Investor Questionnaire: Helps us ensure compliance with SEC regulations.

These documents are essential for finalizing your investment and ensuring everything is in place for both compliance and communication.

5. Wiring Funds

After completing the necessary documents, you’ll receive wiring instructions to transfer your investment funds. Once the funds are received, your spot in the syndication is secured.

6. Staying Updated

As an investor, you’ll stay informed through regular updates:

• Monthly and Quarterly Reports: Includes property performance, progress on the business plan, occupancy rates, and financial updates.

• Distributions: Depending on the offering, you’ll receive passive income distributions monthly or quarterly. These payments are directly tied to the cash flow generated by the property.

Our commitment to transparency ensures you’re always in the loop.

Why Choose Syndications?

Syndications offer a unique opportunity to invest in commercial real estate without the complexities of property management. Here’s why so many investors choose this model:

• Passive Income: Enjoy steady cash flow without managing tenants or repairs.

• Diverse Opportunities: Access high-value properties often unavailable to individual investors.

• Tax Advantages: Benefit from depreciation, cost segregation, and other real estate tax incentives.

• Scalability: Syndications allow you to diversify across multiple properties, markets, and strategies.

Start Your Journey Today

Whether you’re an accredited investor looking for scalable opportunities or a sophisticated investor ready to take the next step, our team at CalTex Capital Group is here to guide you.

Let’s create wealth together, one property at a time.