By: Travis Watts, Director of Investor Development

Preparation Meets Opportunity: Strategic Networking at Conferences 

Mastering networking at conferences is a critical skill set for professionals seeking to expand their personal and business networks. These events offer opportunities to forge new connections, elevate your brand, and explore avenues for growth, whether in seeking investment opportunities, staying current with economic trends, or cultivating strategic partnerships.  

However, effective networking requires a deliberate and strategic approach. Conferences, such as the Best Ever Conference are renowned for the ability to deliver these objectives, but success ultimately hinges on proactive engagement and preparation. 

Five Strategies for Networking at Conferences 

1. Define Specific Goals 
2. Preparation and Research 
3. Add Value to Others 
4. Follow Up 
5. Remain Open-Minded 

 

 

To optimize your conference experience, several key strategies can be employed. Firstly, it is imperative to enter the event with a clear understanding of your goals and objectives. Defining specific goals provide a roadmap for productive networking endeavors. Moreover, cultivating a growth mindset and a willingness to contribute value in every interaction fosters meaningful connections and enhances the overall experience. 

Preparation is key. Conducting research ahead of time on fellow attendees by utilizing networking platforms, like the Whova App, allows individuals to identify potential contacts and initiate conversations proactively. Additionally, leveraging social media platforms, such as LinkedIn or BiggerPockets, for engagement can further expand networking opportunities before, during, and after the conference. 

Central to effective networking is the ability to add value to those you connect with. Whether it involves showcasing your expertise, offering assistance, making introductions, or identifying synergies, prioritizing the needs of others fosters reciprocal relationships and lays the groundwork for future collaborations. By adopting a long-term perspective and focusing on quality interactions over quantity, you can cultivate professional relationships that yield mutual benefits. 

 

 

Following up on initial interactions is essential for sustaining momentum and solidifying connections. Thoughtful follow-up communications, characterized by authenticity and professionalism, reinforce rapport and demonstrate commitment to nurturing relationships beyond the confines of the conference environment. 

Lastly, maintaining an open-minded approach is paramount. Acknowledging the diversity of perspectives and skill sets among fellow attendees fosters humility and curiosity, which can open doors to unforeseen opportunities and collaborations. Embracing this mindset not only enriches the networking experience, but also fosters personal and professional growth. 

The True Value of Networking at Conferences 

In summary, mastering networking at conferences demands a strategic blend of preparation, engagement, and follow-through. By adhering to these principles and embodying a commitment to mutual value creation, you can transform conference networking into a catalyst for meaningful connections and professional advancement. Ultimately, success in networking goes far beyond exchanging business cards; it hinges on the cultivation of genuine relationships founded on trust, reciprocity, and shared objectives. 

travis@ashcroftcapital.com

 

By: Travis Watts, Director of Investor Development

How the History of Taxes Shapes Today’s Investment Opportunities 

Taxes have been intertwined with America’s story since its early days, evolving significantly over the centuries. Understanding the history of taxes can shed light on today’s investment landscape and the advantages awaiting investors in 2024. 

 

The History of Taxes: A Journey Through Time 

The Roots of Taxation:

Dating back to the 1700s, the U.S. taxation journey began with tariffs and excise taxes. In this article, we’ll fast forward to a more recognizable tax system that began to take shape later. 

Civil War Era Taxation:

In 1862, the IRS was established under President Lincoln and the Revenue Act was passed. Lasting a decade, this marked the advent of the first progressive tax structure, with tax rates ranging from 3% to 5%. Tax withholding was first introduced, which essentially turned employers into tax collectors on behalf of the government. This was to settle Civil War debts, and the taxation was intended to be temporary until these debts were cleared. 

Permanent Income Tax:

Fast forward to 1913, we witnessed the birth of the first permanent income tax structure in the U.S., featuring progressive rates from 1% to 7% based on income brackets. This was the first modernized taxation system in the U.S.   

World Wars and Tax Changes:

During World War I, the top marginal tax rate surged from 7% in 1913 to 67% by 1917 to alleviate World War I related expenses. The Great Depression era saw FDR’s presidency introduce Social Security and minimum wage, causing tax rates to climb to 79% in 1936. By the end of World War II in 1945, the top tax bracket peaked at a staggering 94%. The U.S. maintained high top tier tax rates for 24 years that ranged between 81% to 91%.  

Shifts in Taxation Policy:

In 1963, President Kennedy proposed major tax cuts, culminating in the Revenue Act of 1964, reducing the top tax bracket down to 70%. President Reagan’s tenure in 1981 further slashed these rates to 50%, marking significant reductions in top line and bottom-line tax brackets as well as reducing corporate taxes and capital gains rates.  

Modern Taxation and Investor Advantage:

As we fast forward to today, the top tax bracket for earned income stands at 37%, and many Americans pay rates much lower than that. For investors, today’s landscape is an even more favorable scenario. Long-term capital gains rates range from 0%, 15%, and 20% (based on income level) for investments held over a year and real estate investments also offer depreciation benefits, which can be a valuable tool offering immediate and significant tax relief for investors.  

 

2024 Investors: Key Takeaways from the History of Taxes 

1. Today’s tax rates are historically low, compared to many U.S. periods of time.   
2. There are strategies and investments that can help reduce tax burdens. 
3. Long-term investing can be tax-efficient (holding longer than 1 year) 
4. Real estate investment offers tax benefits such as depreciation that you may be able to utilize. 

If you’re looking to learn more about multifamily real estate investments in 2024, please reach out to learn more. 

Watch additional Passive Income Lifestyle episodes on the Ashcroft Capital YouTube channel. 

travis@ashcroftcapital.com

By: Travis Watts, Director of Investor Development

Choosing the right market to invest in is critical to investing success. In this article we will explore our process for identifying multifamily markets at Ashcroft Capital.  

 

Where We Invest 

Our footprint spans across U.S. Sunbelt markets, throughout Texas, Florida, North Carolina, and Georgia, with over 62 acquisitions since inception. There is a strong trend of Americans migrating from across the country to Sunbelt metros. This has been the case for many years, which has led to us acquiring properties in these markets; however, multifamily markets can change over time, and these metros may not always be in high growth with strong demand. Let’s dive into our selection process and reveal how we navigate this ever-changing landscape when identifying multifamily markets for our investors.  

 

The AAA Process for Identifying Multifamily Markets 

At a minimum of twice per year, we run our Ashcroft Advantage Analyzer, “AAA,” which is our proprietary research-based economic study used to identify the top U.S. markets best positioned for multifamily investment. We utilize a combination of data from third party services, like CoStar, RealPage, and Green Street, as well as U.S. Census information, to collect data on markets across the United States. We then analyze this data and apply a weighting system to help us identify which multifamily markets have the strongest fundamentals for us to target. 

 

Fundamentals We Look For When Identifying Multifamily Markets 

Two fundamental trends we look at very closely are migration trends (where people are moving to) and employment trends (where companies are locating to and where they are already established).  

A growing population helps to reduce vacancies and places demand on the housing sector, which can boost rent growth over time. A diversified and growing job market helps reduce risk by ensuring that our residents have many employment opportunities nearby if one or two sectors are impacted.  

Take for example Dallas, Texas where we have acquired 18 properties.  

Texas has joined California as the only other state in the nation with a population of more than 30 million, according to recent data from the U.S. Census Bureau. Texas’ population has grown by 470,708 people since July 2021, the highest in the country.  

Net domestic migration accounted for roughly half of that growth. This is the number of people moving to Texas from other states, while the other half is split almost evenly between net international migration and natural increase. Natural increase is the difference between births and deaths. 

This increased population growth has created demand for more local housing and has helped push property values and rental rates up. In addition, there is an ongoing need for safe, affordable residential rental housing as many residents are currently priced out of the single-family housing market or cannot afford the rents of newly built, luxury properties in DFW.  

Below, we can see that the employment sectors for Dallas, TX are highly diversified, and many sectors are expanding: 

 

Additional Metrics 

There are many other categories and trends to consider when it comes to identifying multifamily markets aside from migration trends and the job market. These include, but are not limited to: 

1. Economic Indicators:

• Employment rates and trends 
• GDP growth and economic stability 
• Median household income 
• Consumer confidence levels 

2. Demographics:

• Age distribution 
• Household size and composition 
• Migration patterns 

3. Housing Market Metrics:

• Supply and demand dynamics (inventory levels, new construction) 
• Homeownership rates 
• Rental vacancy rates 
• Price trends (median home prices, price-to-rent ratios) 

4. Infrastructure and Development:

• Transportation infrastructure (highways, public transit) 
• Accessibility to amenities (schools, shopping centers, parks) 
• Planned or ongoing developments and infrastructure projects 

5. Regulatory Environment:

• Zoning regulations and land use policies 
• Property tax rates 
• Regulatory environment for landlords and property investors 

6. Market Sentiment and Investment Activity:

• Investor interest and activity levels 
• Market sentiment indicators (surveys, sentiment indexes) 
• Capital flows (investment volume, sources of capital) 

7. Risk Factors:

• Natural disaster risk (flood zones, earthquake-prone areas) 
• Environmental concerns (pollution, contamination) 
• Socio-political stability 

8. Rental Market Dynamics:

• Rent growth trends 
• Occupancy rates 
• Rental yield potential 
• Affordability for renters 

Analyzing this amount of data is no easy task. That is why we created the AAA process and built an industry-leading team comprised of hundreds of employees, including Analysts, Acquisitions Associates, a Managing Director of Asset Management, a Chief Investment Officer, and a Managing Director of Capital Markets.  

 

Investing Made Simple  

At Ashcroft Capital, we want to make it simple and easy for our investors. We have you covered from start to finish. From identifying multifamily markets, locating properties, and structuring deals, to managing the properties and business plan. Our investment model is tailored for investors who want to enjoy all the benefits of owning multifamily real estate without the headaches of being a landlord. Ashcroft Capital negotiates the purchasing and financing of institutional-quality properties on behalf of investors. We are known for our best-in-class value-add strategy that creates forced appreciation in addition to organic market growth.  

 

Ashcroft Capital’s Track Record 

Since inception, we have delivered 25%+ annualized cash-on-cash returns to investors on the first 26 deals we have taken full cycle through the business plan. We have over $2.8 billion dollars in assets under management (AUM) and more than 21,000 units. Our track record is a direct result of a commitment to excellence in property management and a focus on capital preservation for our investors. 

Next Steps 

Whether you are a new investor or seasoned professional, we welcome you to meet our team.  Accredited investors can schedule a call with one of our team members to learn more about our current offerings and opportunities. No investment is without risk. Make sure to consult your investment advisor or speak to an Ashcroft Capital team member before making any financial decisions.  

 

travis@ashcroftcapital.com

*Past performance is not indicative of future results; investors may lose investment capital. Please see “Disclosures” for more information.

Sources:

1. Ura, Alexa. “Texas is Now Home to 30 Million People.” The Texas Tribune. December 22, 2022. https://www.texastribune.org/2022/12/22/texas-population-growth-30-million-census/#:~:text=Texas%20has%20joined%20California%20as,from%20the%20U.S.%20Census%20Bureau.

By: Travis Watts, Director of Investor Development

Inside Ashcroft Capital’s Procurement Process – Streamlining Operations for Unmatched Efficiency 

Typically, a real estate syndicator identifies, structures and acquires assets on behalf of investors.  However, a firm seeking greater self-reliance may opt to internalize additional aspects of the process, such as directly overseeing asset management and ensuring the full implementation of the business plan from inception to completion. This strategy is commonly referred to as vertical integration. At Ashcroft Capital, we aim to set a Gold Standard.   

Our property management company, Birchstone Residential, and its in-house construction team, Birchstone Construction,  have one of the best streamlined in-house procurement processes around. Ashcroft Capital handles all steps of the investment life cycle, yielding the strongest possible returns for investors by streamlining operations in true vertical integration fashion.  

Beyond our property management and construction arms, Ashcroft Capital’s procurement process is a one-of-a-kind cornerstone that truly sets us apart from the competition. This process has decreased our unit renovations timeline to sub-30 days, which is among the fastest turnaround in the industry. 

 

Four Step Procurement Process 

1. We source materials directly from manufacturers. 
2. We ship the materials to our Birchstone warehouse in Dallas, TX. 
3. We organize the materials into individual unit renovation kits. 
4. We disseminate the renovation kits to our communities. 

 

20-30% Savings 

We source most renovation materials directly from the manufacturer. This allows for the best possible pricing with the additional benefit of our hardware always being in stock.   

The savings we tend to see are 20 to 30% less than what we see when buying the same amount in bulk from U.S. retailers. We re-run these comparisons on a bi-annual basis to make sure our costs are well below market. This approach creates tremendous efficiencies and locks in pricing to help offset future inflation. In addition, we mitigate supply chain delays by having bulk inventory on-hand for our properties, which is stored in our own warehouse in Dallas, TX. Typically, we place material orders of $5 million or more and forecast the need for about 9 months’ worth of inventory in our orders.  

 

30% Custom Designed 

About 30% of our renovation materials are custom designed at no additional cost because of our large volume orders. Custom designed items include pendant lights, faucets, vanity lights, and cabinet hardware. Most groups cut items to save money, while we operate more efficiently with higher quality products. Our focus is on providing high quality renovation finishes while saving money through bulk orders comprised of the best materials.  

 

Small Details Lead to Big Savings

Some Examples: 

Light Fixtures – In a standard apartment community, you might see brushed nickel dome lights in the hallways or entrances. We renovate our properties so that they not only have an updated modern look, but also for efficiency. For example, standard dome lights require two light bulbs, resulting in more maintenance. Instead, we use flush mount lights that have a modern sleek look and only require one light bulb. In addition, these custom-made lights are $4 less than the standard dome lights. On a final note, as it pertains to light fixtures, we replace the glass, not the product. Pendent lights are beautiful, they make the space pop for the resident, but sometimes the maintenance team makes a mistake and breaks the glass when installing them. We have a process that accounts for that by having extra glass on hand so that we don’t have to replace the entire unit.  

While these small savings may not seem significant, as we apply this process to thousands of units, a real cost savings benefit adds up for our investors.  

 

Bar Pulls – The pulls we have on our cabinets are zinc die cast. Working directly with the manufacturers, we can dictate the finishes. Not only does this mean we don’t have to pay a premium for the current trend, but we can also manufacture in a more durable way. For items like cabinet and door pulls, we dictate a zinc die cast finish, which is more durable to wear and tear and from surface rust. Our bar pulls cost about 20 cents less than what most of our competitors pay, and about 30 pulls are needed for each apartment unit we renovate. That’s a $6 savings per unit, but more importantly, a six-figure savings across the portfolio.  

 

Ashcroft Capital’s Procurement Process is Customized to Benefit Investors.    

We mitigate risk by:  

• Decreasing turnaround time for renovations 
• Avoiding supply chain delays via bulk ordering  
• Offsetting inflation costs via bulk ordering  
• Utilizing In-house construction teams vs third-parties 
• Using less packaging to reduce our environmental impact 

We increase potential profits by:  

• 30% cost savings in materials by buying in bulk  
• Custom-made high-quality materials for our residents leading to higher tenant retention and decreases turnover  

 

Adding Value  

The collaboration of Ashcroft’s fully integrated platform enables us to execute each property’s business plan immediately upon acquisition. Through renovating and revitalizing our apartment communities with our industry-leading value-add business plan, we enhance the quality of our properties, making them more attractive, safer, and appealing for our residents. Simultaneously, we improve value for our investors by boosting net operating income, addressing inefficiencies, and ultimately enhancing property valuation upon sale. 

Ashcroft Capital has you covered from start to finish. From locating properties, to structuring deals, to overseeing property management. Our investment model is tailored to investors who want to enjoy all the benefits of owning multifamily real estate without the headaches of being a landlord. We negotiate the purchasing and financing of institutional-quality properties on behalf of investors and are best known for our best-in-class value-add strategy that creates forced appreciation.  

 

Ashcroft Capital’s Track Record 

Since inception, we have delivered 25%+ annualized cash-on-cash returns to investors on the first 26 deals we have taken full cycle through the business plan. We have over $2.8 billion dollars in assets under management (AUM) and more than 21,000 units. Our track record is a direct result of a commitment to excellence in property management and a focus on capital preservation for our investors.  

 

Next Steps 

Whether you are a new investor or seasoned professional, we welcome you to meet our team.  Accredited investors can schedule a call with one of our team members to learn more about our current offerings and opportunities. No investment is without risk. Make sure to consult your investment advisor or speak to an Ashcroft Capital team member before making any financial decisions.  

travis@ashcroftcapital.com

By: Travis Watts, Director of Investor Development

Exploring the Financial Implications of Leaving Your W2 Job 

In the realm of personal finance, few decisions rival the magnitude of leaving behind the security of a W2 job to pursue entrepreneurial ventures or become a full-time investor. It’s a decision with complexities, uncertainties, and profound implications for one’s financial future, but it may be a risk worth taking. In this article, we’ll explore some considerations if you are looking to take the leap yourself.  

 

Key Considerations Before Leaving Your W2 Job 

1. Building a Financial Safety Net

At the heart of the transition lies the importance of financial preparedness. Establishing a cash safety net, typically six months of living expenses, serves as a buffer against unforeseen events in the near term. New businesses can take time to become profitable, and new investments can take time to yield results.

Depending on your circumstances and desired path, you may warrant a more conservative approach, necessitating a year’s worth of reserves or alternative liquidity sources. Planning and budgeting accordingly can improve the odds of long-term success.  

2. Navigating Health Insurance:

Transitioning from an employer-sponsored healthcare plan to private insurance entails a reevaluation of healthcare costs. Understanding the financial implications of health insurance premiums is paramount, as the cost may come as a surprise if you have never shopped for private health insurance.

A recent ValuePenguin.com analysis found that in 2024, Americans will spend a record $584 per month, or $7,008 per year on health insurance, if they purchase a private health insurance plan.  

The cost of private health insurance varies based on several factors, including how you buy your plan. When you buy private health insurance through your state or federal exchange, you could be eligible for subsidies to help with monthly payments and other insurance costs.  

3. Prioritizing Passive Income

Whether embarking on entrepreneurial endeavors or embracing full-time investing, prioritizing passive income is imperative. Passive income offers a world of possibilities from offsetting monthly expenses, adding flexibility to your lifestyle, and providing long-term financial security. According to the legendary investor Warren Buffett, free cash flow—the cash remaining after a company has covered expenses, interest, taxes, and long-term investments—is the most crucial metric.

With this in mind, if you are starting a business, how long will it take before it cash flows? If the business will not cash flow, how will you generate income in the meantime? For investors, cash flow is often overlooked and is not widely taught. Many financial products are intended to be held for long-term equity growth and appreciation. If you intend to venture out today, these may not be useful. Suppose you invested 100% into growth investments and the market declines for the next two years. How will you generate income?   

4. Evaluating Credit Dynamics

The role of credit in post-transition endeavors cannot be overstated. While W2 income is often most favorable with lenders, self-employed individuals may encounter challenges in accessing credit once they branch out on their own. Proactively addressing any upcoming credit needs, like obtaining a mortgage, financing a vehicle, personal loans, or opening new credit cards while you still have W2 income, can put you in a better position for making the transition.  

5. Embracing New Income Opportunities

If you are departing from a W2 job to pursue investing, it does not have to mean active income is a thing of the past. Many investors choose to pursue part-time employment, side hobbies, passion projects, or charity work and often derive fulfillment and financial rewards beyond the traditional 9-5. Many widely known investors. such as Carl Icahn, Jack Bogle, George Soros, and Peter Lynch, have active income sources aside from their investments and Investors are actively engaging in their careers well into their 80s and 90s. 

6. Worst-Case Scenario – Reentry into the Workforce

The thought of branching out into the unknown can seem intimidating, but what is the worst-case scenario if your business or investments don’t end up supporting your lifestyle? There is always the option to return to the workforce, and guess what? That’s what everyone else is doing anyway. Here’s a quick example for perspective.

Boxing legend Mike Tyson earned nearly $400 million dollars during his career, then filed for bankruptcy in 2003. Since then, he “returned to work” and has been featured in films, commercials, and TV shows. He’s launched multiple businesses and even returned to the boxing ring in 2020. He has now reclaimed multi-millionaire status, albeit not at a $400-million-dollar level…yet. 

 

Conclusion: Forging Your Path to Financial Freedom 

The decision to leave your W2 job represents a profound juncture in one’s financial journey. It’s a decision that entails both risk and opportunity and demands planning and balance. While the path is not without its uncertainties, it can often unlock unparalleled growth and self-actualization. Ultimately, the decision to depart from the familiar shores of traditional employment is a testament to one’s courage, preparation, and unwavering commitment to charting a course towards new adventures and experiences. To your success. 

 

Want to explore more content like this? 

Tune into new episodes of The Passive Income Lifestyle on YouTube

Talk to Travis

 

Sources:

1. Shepard, Daniel. “Average Cost of Health Insurance (2024).” ValuePenguin. December 15, 2023. https://www.valuepenguin.com/average-cost-of-health-insurance.
2. Mishra, Neena. “Why Investors Should Focus on High Cash Flow Stocks & ETFs.” yahoo!finance. August 29, 2023. https://finance.yahoo.com/news/why-investors-focus-high-cash-162900708.html.
3. Rodgers, Josh. “How Mike Tyson Earned $400M, Filed For Bankruptcy, And Recovered.” AFROTECH. April 19, 2023. https://afrotech.com/mike-tyson-bankruptcy.
4. Nelson, Allie. “Pigeons, Tigers, and Bears—Oh Mike! All About Mike Tyson’s Net Worth in 2024.” Parade. January 11, 2024. https://parade.com/celebrities/mike-tyson-net-worth.

 

By: Travis Watts, Director of Investor Development

The FIRE Movement, an acronym for Financial Independence Retire Early, has gained significant traction since its inception, particularly after the 2008 financial crisis. Primarily centered around stocks, this movement advocates for aggressive savings coupled with low-cost index fund investing to amass a nest egg substantial enough to sustain a person’s lifestyle indefinitely.[1]  

However, beyond the realm of stocks, there lies a compelling avenue within the real estate sector that aligns seamlessly with the principles of the FIRE Movement. 

 

Understanding the FIRE Movement with Stocks 

A core staple of the FIRE Movement revolves around building a robust portfolio through diligent saving and disciplined investment. Participants typically channel a significant portion of their income – often 50% or more – into low-cost index funds (stocks) over a span of 10 to 20 years. Upon reaching a predetermined financial milestone, typically a one to two-million-dollar portfolio, individuals then sell off 4% a year from their investments to sustain their lifestyle.  

The Simple Math  

4% of $1,000,000 = $40,000 per year 

4% of $2,000,000 = $80,000 per year  

The idea behind the “4% Rule” is that historically the stock market has averaged around 8-9% a year in equity growth, thereby, withdrawing 4% a year creates a buffer to account for inflation while also facilitating continued portfolio growth.[2]

 

Extending the FIRE Strategy to Real Estate

In parallel with the principles of the FIRE Movement, real estate offers a compelling alternative investment avenue. Considering the innate cash flow potential that real estate can provide, investors can adopt a strategy where they use passive income as the “withdrawal rate”, rather than selling off the portfolio. Private real estate investments are inherently illiquid, so selling off a percentage of a portfolio is usually not applicable. Instead, collected rent and revenue can provide monthly income and any equity gains (when a property sells at a profit) allows the portfolio to grow over time, and could provide a buffer for inflation similar to that of the 4% Rule’s methodology.

 

Realizing the Benefits of Real Estate Investment

The allure of real estate investment lies not only in the potential for diversified income streams, but it also offers a myriad of tax advantages, it is not highly correlated to stocks, it offers relatively low volatility and since the year 2000, private real estate has outperformed US Equities on an annualized basis.

 

Crafting a Personalized Path to Financial Independence

While the FIRE Movement underscores the pursuit of financial independence and early retirement, its implementation remains inherently flexible. Investors can tailor their approach based on individual preferences and risk appetite. For many investors, the addition of real estate can simply be a way to diversify a portfolio while unlocking new avenues for income generation.

Bob’s Case Study

Let’s examine a quick case study for example purposes:

• Bob has $100,000 to invest.
• Bob earns $125,000 a year at this job ($100,000 after taxes).
• Bob maintains a 50% savings rate (after taxes)
• Bob lives on $50,000 every year.
• Bob allocates $50,000 toward his investments every year.

Simply saving this amount of income could amass a portfolio worth around $600,000 in a 10-year timeframe without factoring in any investment returns. But if we factor in an 8% annualized rate of return for these 10 years, Bob’s portfolio would be close to $1,000,000. This calculation does not include equity gains, this is purely generated from cash flow, so the portfolio could amount to much more.

At this point, FIRE begins to unfold. Bob can choose to live on his cashflow; roughly $80,000 a year assuming an 8% yield, or he may choose to take some time off, retire a spouse, switch careers, or embrace charity. The point is, Bob has options.

 

Summary: The FIRE Movement

In recap, that is what the FIRE movement is all about. It’s about having more options. Many choose to continue working after reaching “FI” and opt-out of the “RE” retirement component because they enjoy their career or see a need for contribution. That is the beauty of it, it’s completely in your hands to modify your lifestyle the way you see fit. Something to think about for the week.  

 

Want to take a deeper dive?  

Tune into weekly episodes on YouTube

Talk to Travis

 

Sources:

1. Kerr, Alexandra. “Financial Independence, Retire Early (FIRE) Explained: How It Works.” Investopedia. January 31, 2024. https://www.investopedia.com/terms/f/financial-independence-retire-early-fire.asp
2. Suknanan, Jasmin. “What is the 4% rule and how can it help you save for retirement?” CNBC. November 30, 2022. https://www.cnbc.com/select/what-is-the-4-percent-retirement-savings-rule.

 

By: Travis Watts, Director of Investor Development

Building Wealth and Financial Freedom 

Financial freedom typically refers to building wealth that allows for sufficient savings, investments, and liquid assets to support the lifestyle we choose. It involves accumulating savings that allow for retirement or the pursuit of a desired career without the constraint of a fixed annual income. Essentially, financial freedom is achieved when our finances are actively working in our favor, instead of us working for our finances.  

The two most common routes to building wealth:  

1. Trade your time for money 
2. Invest your money to make more money 

Which holds the best return? Well, for me, it began with trading my time for money.  

 

Working Hard for the Money 

At 15, my first job was a paper route, earning $40 weekly for 4 hours of work—a decent $10 per hour at the time. Then, the entrepreneurial bug bit, and I hustled cleaning cars for $100 a day, making about $25 an hour.   

In my early 20s, the oil and gas industries were my next highest and best opportunity, hustling 100-hour workweeks for $20 an hour. To my surprise, the bonuses and overtime pushed me into a six-figure income, and this is where I began to question my time value.   

 

Investing in Financial Freedom 

A pivotal moment arrived when I began to study investing. It was time for my money to do some heavy lifting on its own.   

Initially, my real estate investments yielded roughly $30,000 a year, then $50,000, gradually scaling to $100,000+ annually. Eventually, my passive income surpassed my active income, granting me new choices…  

The fact was, I wasn’t rich, I was just twenty-something with a six-figure income—but the passive income made the situation unique.  

1. It was tax-friendly 
2. It didn’t enslave me to an exhausting schedule 
3. Diversification kept it more secure and predictable  

 

Why Passive Income 

This simple realization steered me towards teaching others about passive income. Why? Because it unlocked the opportunity to switch to a more fulfilling career in the world of finance, which was my true interest and passion.   

Shifting from a grueling 100-hour workweek to a balanced 40-hour week reunited me with family, friends, and led me to my wife, and our shared love for travel. I finally had a personal life again as the golden handcuffs of high-paying and unfulfilling work had held me captive in my own life for years.   

Then came the urge to give back. Earned income was the only means I had to give before becoming an investor, but teaching others was how I wanted to give back, and this required time. Passive income unlocked this opportunity, and it became a reality.   

 

What Financial Freedom Could Mean for You 

Did you know 60% of Americans live paycheck to paycheck?  

I was part of that statistic for many years. It’s been a pain point of mine that passive income investing is not widely taught and, consequently, millions of people are opted-out from the opportunity. Not because they can’t participate, but because they simply do not have the tools and knowledge.   

A large part of my mission is to help spread this knowledge for others aspiring to take the path less traveled.  

“Two roads diverged in a wood, and I took the one less traveled by, and that has made all the difference.” – Robert Frost 

Money becomes a game once you can cover your basic living needs. Any additional income becomes an opportunity to:   

• Try new careers 
• Retire early or retire a spouse 
• Launch a business that betters lives 
• Attain financial peace and lessen stress around finances  
• Elevate your lifestyle  

Financial freedom can unlock a new world of opportunities. I encourage you to ponder on this for the week ahead; it might unveil new avenues. 

If you would like to learn more about building wealth or investing in our current offerings, you can schedule a call with our Investor Relations Team or check out the “Passive Income Lifestyle” YouTube series. 

travis@ashcroftcapital.com

By: Travis Watts, Director of Investor Development

Navigating the World of Real Estate Investment 

In a recent enlightening episode of “Masters of Multifamily,” Travis Watts, the Director of Investor Development at Ashcroft Capital, hosts Ruzanna Queenan, president of Queenvest, a planning and investment firm specializing in real estate investments.  

The interview highlights the importance of comprehensive financial planning, particularly in the realm of real estate, where Queenan’s 20-year background in stock market investments and financial planning provides a holistic perspective. Unlike traditional planning models, Queenan’s approach integrates various facets of financial strategy, offering a one-stop solution that aligns with an investor’s overarching goals, addressing challenges unique to real estate portfolios. 

Topics of Discussion Include:

• Why Real Estate Investments
• Unique Challenges Real Estate Investors Face
• Maneuvering a Volatile Market
• Traditional and Unconventional Planning Models

 

The Intersection of Financial Planning and Real Estate Investment 

Queenan’s focus on real estate investors stems from recognizing the asset class’s potential for diversification and multiple income streams. She emphasizes the need to understand the nuances of each investor’s portfolio, from entity setup and tax strategies to succession planning. 

Her refreshing perspective challenges the conventional landscape of financial advice, emphasizing the evolving nature of the industry, with a focus on planning and support over mere investment management.   

 

Final Words of Encouragement in Volatile Times 

In volatile times, Queenan encourages investors to maintain a long-term perspective, exercise patience, and adhere to their investment strategies. 

Watch the full interview detailing Queenan’s financial planning roadmap for investors seeking to navigate the complex world of real estate investment. 

While the interview provides valuable insights, it is essential to note that Ashcroft Capital is not affiliated with Queenvest, and the inclusion of Queenvest does not constitute an endorsement. Investors are encouraged to seek planners who understand and support their unique needs. 

travis@ashcroftcapital.com

By: Travis Watts, Director of Investor Development

Redefining Wealth Through the Power of Core Values 

What does the term “wealth” mean to you? For me, wealth spans far beyond money – I’ve always viewed lifestyle as the main goal of obtaining wealth. Imagine walking through a neighborhood and coming across a beautiful home. It’s stunning, perhaps it’s worth millions. If you had an opportunity to buy it for half the cost, would you buy it? This question can tap into what truly matters to you. 

The other day, my wife made a great point. We were looking at houses and found an amazing house as described above. I presented the hypothetical thought of buying at such a discount. While the thought was tempting to my wife, it turned out, she valued freedom more.

In other words, the house, even if we could buy it at a steep discount, would still require ongoing maintenance, higher property taxes, higher insurance costs, and a multitude of cleaning, which my wife does not value. So, for her, the house would take away something more meaningful, her freedom.

If she valued “status” over freedom, things may be different. Lucky me! This got me thinking—our core values are what guide us, pushing us toward things or pulling us away. Knowing these values is like having a compass in life. 

In money matters, knowing yourself is key. Before diving into investments, I’ve always started with understanding myself—who I am, what I want in life, and what drives me. 

 

Understanding the Core Values that Drive You 

So, how do you figure out your guiding values? It starts with a simple five-minute self-reflection, which I’ll share with you in a couple of minutes. This exercise is a fun way to uncover what matters most to you. It can help sort out what drives you, what your goals are, and equally important, it reveals what’s not important to you.  

I’ve done this exercise many times over the years, and my top core values have long been freedom, growth, independence, wealth, and knowledge. They’re like my personal DNA, shaping who I am. 

 

Let’s Dive a Step Deeper into These Core Values: 

Freedom is huge for me – having a love for travel and creating financial independence have guided my career choices and shaped how I live. 

Growth – Always striving to learn and improve through mentors, podcasts, and books has allowed me to help others and has guided me toward the role of Director of Investor Development. 

Independence – Has allowed me to make choices based on personal preferences and values without as much external pressure or influence. 

Wealth – Has always been about lifestyle for me. An improved quality of life by affording access to more options, flexibility, and resources, while having a greater means to serve others.  

Knowledge is like fuel for me. I’m always thirsty for learning new things and sharing openly with others through podcasts, events, and articles like this.  

Living in accordance with your core values fosters authenticity. It allows you to stay true to yourself, leading to a more genuine and fulfilling life. When values align, relationships thrive. But when they clash, it can create tension. 

 

Discover Your Treasure Map to True Wealth 

Imagine a top value for you is adventure. You love to get away and travel, but your spouse values security and stability and prefers to be a homebody. You bet there will be some tension in the relationship. That’s not to suggest that the relationship cannot work, but it will require an understanding of your partner’s values, which can aid in finding common ground.  

So, my advice? I encourage you to take a few minutes and uncover your core values. It’s your personal treasure map to true wealth. Below are examples of personal values. Rank your top 5 in order of importance and feel free to do this exercise with your partner or a family member. These are what guide your choices, shape your behavior, and define the path you take, contributing significantly to your overall well-being and happiness.

Want to learn more? Check out The Passive Income Lifestyle Series on Ashcroft Capital’s YouTube page.  

travis@ashcroftcapital.com

 

By: Travis Watts, Director of Investor Development

In the world of investing, risk and reward are two sides of the same coin. A crucial concept in this space is the risk premium.  

In this episode of Multifamily Investing 101, Director of Investor Development Travis Watts explains the importance of understanding risk premium in investments. By grasping this principle, investors are better equipped to align their investment choices with their financial objectives and risk appetite. 

 

Unraveling the Concept of Risk Premium 

Simply put, risk premium is the extra return an investor expects to earn by choosing riskier investments over safer ones. The risk premium acts as compensation for the extra risk undertaken. But to understand this concept fully, we need to first consider what constitutes safe investments. Typically, these are low-risk, low-volatility options. However, it’s important to note that safe doesn’t necessarily equate to risk-free or a guaranteed yield. 

 

The Risk-Free Rate 

At the core of the risk premium concept is the risk-free rate. This is the return offered by the safest possible investment, often represented by government bonds. The risk-free rate forms the baseline against which riskier investments are measured. The rationale is simple: why take on more risk unless the potential reward is higher than the yield of a risk-free investment? 

 

Calculating Risk Premium 

The formula for calculating risk premium is quite straightforward: it’s the difference between the expected return of an investment and the risk-free rate.  

 

Why Risk Premium Matters 

Understanding the risk premium is vital for both new and seasoned investors. 

For Novice Investors: 

• Diversify your portfolio: Spread your investments across different asset classes, such as multifamily real estate, to reduce the impact of individual asset risk.  
• Understand risk tolerance: Assess your risk tolerance honestly. This involves evaluating your ability and willingness to take on risk. Use risk assessment tools provided by financial institutions to determine an appropriate asset allocation that matches your risk tolerance. 
• Educate yourself: Take the time to learn about different investment options, financial markets, and economic factors that can affect your investments. Understanding the basics of investing can help you make informed decisions. 

For Experienced Investors: 

• Assess the risk and return relationship: Continuously evaluate the risk-return trade-off of your investments. Ensure your portfolio continues to align with your risk appetite and financial goals. 
• Investment strategy: Assess whether your investment strategies are suitable for your goals. Different investment strategies might involve higher costs and require more time and expertise to manage but can potentially generate higher returns. In contrast, multifamily syndications, for example, aim to match market returns at lower costs. 
• Rebalance regularly: Rebalance your portfolio periodically to maintain your desired asset allocation. This ensures that you don’t become overexposed to higher-risk assets during bull markets or too conservative during bear markets. 
• Stay informed: Keep up with financial news, market developments, macroeconomic trends, and geopolitical events that can impact your investments.  

The Influence of Economic Conditions 

Economic conditions significantly impact risk premiums. In stable times, the risk premium is generally lower. Conversely, during economic downturns or uncertainty, the risk premium tends to rise. 

 

The Role of Diversification 

Diversification plays a critical role in managing risk premiums. By spreading investments across various asset classes, investors can balance the risk and returns in their portfolio. This strategy can smooth out the bumps caused by fluctuations in risk premiums. 

 

To Bring it All Together

Risk premium is an essential concept in investing that provides a framework for understanding and managing the trade-off between risk and return. Although the pursuit of higher returns through riskier investments can be enticing, it’s crucial to understand the risk premium involved. By mastering this concept, investors can make more informed decisions, tailor their investment strategy to their risk tolerance, and potentially enhance their investment returns. 

The “Multifamily Investing 101” YouTube series is dedicated to unraveling the intricacies of multifamily investing and the real estate industry. In this series of concise, informative videos, we aim to provide you with a comprehensive understanding of key terms and concepts necessary for navigating multifamily investing. Whether you’re a seasoned professional seeking to deepen your knowledge or a newcomer looking to build a strong foundation, these videos are designed to equip you with the expertise you need to navigate the multifamily real estate market with confidence. 

travis@ashcroftcapital.com

Welcome to a world of investor wisdom. Are you ready to seize investment opportunities in 2024? Our investor tips and quotes this year are from your trusted peers on this exciting investing journey.

In a rapidly evolving financial landscape, staying informed and inspired is key. We have collected pearls of wisdom, strategies, and insights from current investors featured in The Monthly Distribution this past year. Together, let’s make 2024 your year of financial success.

 

Stacee Evans, California

“Do your research and learn everything you can. Surround yourself with people who are doing what you want to do, and learn from them. But once you’ve got that knowledge, you have to just go for it!”

 

Russell Brower, Florida 

“If I had a mortgage and I was dependent upon the rental income to pay it, I’d be in dire straits. With Ashcroft, they might own a 400-unit apartment building. If any one person moves out, it’s all factored in. That demonstrates the protection you get.”

 

Chad Philpott, Tennessee 

“I don’t want my kids to have to start from zero like I did. Real estate is a family affair for us. We are looking to build generational wealth for our kids and grandkids. We involved them in the business. They’ve worked on rentals…They know the lingo and the math. Real estate investing has afforded us opportunities to take our kids on amazing family trips to Hawaii and the Caribbean, and we plan to visit England next year. We got to see Pearl Harbor and the USS Arizona firsthand, and that was big for us.”

 

Kevin Heffernan, California 

“Ashcroft is not in the business to lose money, so they’re going to do what’s best for the investors and for the project as a whole, themselves included.”

  

Dean Gronostaj, Texas 

“The big realization was the passive income that came from my investment with Ashcroft’s monthly distributions. My investments are paying for my son’s education and my daughter’s college tuition as well.”

 

Jim Donnelly, Ohio 

“One thing I learned in my career was that you invest in people. It’s people who drive businesses, and it’s people who get the results. We invested with Joe because we trusted him after doing our due diligence and learning more about him. Get comfortable with the company, their leadership and ethics, and whether they’re good people with good hearts––not just trying to make a buck. You’ll find that those guys will let you down. If you find people who are truly sincere in their efforts to build relationships and build equity, you’re better off.”

  

Josh Beesinger, Texas 

“The hardest part about finding a good syndication is needing transparency. You want to look at all of their past deals, not just the good ones. You want to see the average. And there’s not a lot of syndicators who are fully transparent about that.”

 

Mark Hentemann, California 

“I had become an annoying evangelist to all of my writer friends, saying ‘Do yourself a favor and invest in real estate!’ For me, the big highlight of the (investment) proceeds is being able to step into a volatile industry. Discovering real estate investments gave me the confidence to stay in this field and not be anxious all the time. We’ve been on strike going on four months—and your income stops. I’m so lucky that I invested in real estate and continue to invest both passively with other operators and on my own.”

 

Chandra Venkat, Kansas 

“We always said we should have cash flow funding our vacations instead of spending the money we’ve earned. Ashcroft has helped us quite a bit with the cash flow coming in so we can replace our income and be financially free. That also helps us have the time freedom we want. I would say the biggest lesson is that we regret we didn’t start sooner.”

  

Stan Sudarso, California 

“Multifamily investing was in a different ballpark––a game changer. I said, ‘Let’s go all in on this and build our passive income streams.’”

 

Tim Wagner, Washington 

“After the markets crashed, around 2009, I began looking into ways to diversify my 401k. I started listening to the Bigger Pockets podcasts; that’s where I first heard Joe Fairless talking about multifamily syndications. There’s no guarantee, but I think these are solid investments. You look at the housing crisis––the number of people that don’t have a place to go––and these multifamily dwellings provide a place for people to live as opposed to home ownership.” 

  

Richard Hart, California 

“I think people just get a little nervous. You have to be an accredited investor and go through that process, but I would encourage people in general to go ahead and take a little bit of risk and look at the upside rather than be so conservative. I always look at the worst-case scenario. I ask myself if I could survive if this went belly up. Yes, I could. Would it hurt a little? Maybe, but the upside is just too good to not explore.”

 

Daniel Galvan, Illinois 

“We wanted to have more flexibility. So, we started researching how to get involved in multifamily syndications. We’ve always seen the power of investing in real estate. We had our own rental properties, and we invested through the stock market, but we were looking for something more substantial. Syndication was really appealing––it almost sounded too good to be true!” 

  

Jennifer Skeen, California 

“It was a hassle for an out-of-state investor, and the market was popping, so I decided I would just cash in. Instead of flipping them into a 1031 exchange so I would reduce my taxes, I decided to put the money toward a passive investment with Ashcroft, where I could take advantage of accelerated depreciation to help with taxes. Ashcroft is a reputable company and well-known in the investment community, so I felt really comfortable.”

 

Joe Sauers, Pennsylvania

“Being financially free, not having to punch a time clock anywher –that’s the biggest benefit of syndications. The stock market can’t generate that monthly passive income or the tax benefits. To me, it was a no-brainer”

 

Mark O’Brien, California 

“I was sold on real estate as my asset class of choice, but I was in analysis paralysis running the numbers on real estate deal flow from 2013 to 2015. I analyzed every type of deal––NNNs, single-family homes, fourplex developments, turnkey providers, and many more. His (Joe Fairless) team creates some of the best pitch decks, which include the most extensive research and due diligence all in one place. Ashcroft is conservative on their projections and has only outperformed for me since day one.”

 

These are just 16 of our 3,000+ investors. Hear what passive income has meant to over 100 of our investors.

By: Travis Watts, Director of Investor Development

The Overlooked Phenomenon: 

The potential of a reverse market crash is an important concept that few industry professionals are discussing. It’s important to understand the implications for individuals across different socioeconomic classes, and most importantly, what it means for you as investors. 

 

Understanding Market Cycles:  

To begin, it’s crucial to acknowledge the historical patterns of market cycles. We can categorize these in five stages as shown below:  

1. Accumulation 
2. Uptrend 
3. Distribution 
4. Downtrend/Recession 
5. Bottoming 

After bottoming, we revert to stage 1… accumulation.  

Presently, we find ourselves in stage 4 – a downtrend on the precipice of a potential recession. 

 

Will We Have a Recession?  

Deutsche Bank conducted a recent analysis of the past 34 recessions in the U.S. and identified four warning signs that historically predict recessions:  

1. A rapid rise in interest rates (The Fed funds rate has increased roughly 5.2 percentage points over the past 20 months)
2. An inflation spike (Inflation soared to a four-decade high above 9% in June of 2022)
3. An inverted yield curve (U.S. Treasuries have been stuck in inversion since July 2022)
4. An oil price shock (Oil prices have soared roughly 33% since June to over $95 per barrel)

Alarmingly, all four of these red flags are currently present in the country, something to consider. 

 

Lessons from Past Recessions:  

Reflecting on past recessions, such as the Dot Com Crash in 2000, the Great Recession in 2008, and the 2020 COVID-19 Recession, we observe a similar pattern of markets soaring rapidly leading up to a sudden drop in the market.  

As we approach the end of the Fed’s tightening cycle, the question is…will we witness a reverse market crash?  

 

The Concept of a Reverse Market Crash:  

Simply put, a reverse market crash is characterized by a sudden rise in asset prices that leads to the rich getting richer and the poor getting poorer. How?  

Rising interest rates negatively impact the valuations of real estate, stocks, and private companies as higher rates slow growth and increase borrowing costs. Over the past 20 months, we have seen these declines begin to unfold. In a reverse market crash, the Federal Reserve cuts rates, which reinflates asset prices.  

But is this really a good thing? 

 

Implications for Different Socioeconomic Classes:  

The potential benefits of a reverse market crash are not evenly distributed across the classes: 

The Poor

They statistically own very few assets. In this case, there would likely be little to no improvement in their financial situation. Making matters worse, soaring asset prices often lead to higher rents and consumer goods increasing in price, making daily life more difficult and widening the gap between the rich and the poor.  

The Middle Class

Many Americans are currently struggling with rising housing costs. If a middle-class renter can’t afford a house today with an 8% mortgage, it might seem as though lower rates would be beneficial, but what happens if housing prices take off again?  

Is it better to buy a $500,000 home today with an 8% mortgage or a $650,000 house with a 5% mortgage? Spoiler alert – it’s roughly the same payment. For middle-class Americans who are already homeowners and also hold investments, there would be some benefit, but much of this benefit would be offset by rising consumer inflation.  

The Wealthy & Investors

Did you know 89% of all U.S. stocks are owned by the wealthiest 10% of American households?  

The bottom line is investors and the wealthy own assets, real estate, stocks and businesses. In the event of a reverse market crash, this would boost their existing portfolios and lower rates make it easier to acquire even more assets.  

Once again, the wealth gap would further increase between the rich and the poor, leaving the middle-class in a squeeze.   

 

Are your investments ready?  

In a reverse market crash, asset prices rise due to interest rates being cut, but the benefits are only felt by a select few. The question is, do you want to be part of the select few? Are you an investor prepared to take action and capitalize on the potential price appreciation?  

At Ashcroft Capital, we are taking action by purchasing institutional-quality multifamily apartments at a discount and improving the properties for residents and investors. Our current investment opportunity is prepared to weather the storm.   

We are ready if interest rates remain high, or if interest rates drop in the coming years, and a reverse market crash unfolds. This strategy will boost the valuation of our properties as debt becomes more affordable for buyers. Are you ready to join us?  

 

travis@ashcroftcapital.com

By: Travis Watts, Director of Investor Development

Who likes doing taxes?

Tax forms can often appear as intricate puzzles, especially for individuals engaged in investment ventures like real estate private placements. Among these forms lies the K-1 tax form—a document that investors need to know.

 

Understanding the K-1 Tax Form

The K-1 tax form, officially recognized as Schedule K-1 (Form 1065), serves as a comprehensive record of income, deductions, credits, and other tax-related data allocated to partners. It plays the role of reporting each investor’s stake in income and losses from the associated entity or entities. Investors then utilize the K-1 when filing their individual tax returns.

Our CPA prepares K-1 tax forms for all our investors at Ashcroft Capital. Understanding a K-1 tax form is essential for investors in real estate private placements and other private investment enterprises.

 

Sections of the K-1 Tax Form

Part I – Information About the Partnership

A: Within this section, the partnership’s unique employer identification number (EIN) for tax purposes is provided.

B, C: It also entails the legal name and physical address of the partnership, along with details about where the partnership files its tax return.

D: Additionally, a checkbox is included to determine if the partnership is publicly traded.

 

Part II – Information About the Partner

E,F: Partners’ individual identification particulars are captured here. This section records partner names, addresses, cities, states, and ZIP codes.

G: Partners identify themselves as general partners, limited partners, or LLC member-managers.

H: It also designates domestic or foreign partner status, with foreign partners potentially subject to additional withholdings for U.S.-based businesses.

I: Partners specify their entity type, such as an individual, corporation, or retirement plan.

J: Partner shares in partnership profit, loss, and capital are outlined, including beginning and ending percentages for profit, loss, and capital contributions.

K: The section details partners’ share of liabilities, encompassing nonrecourse financing, qualified nonrecourse financing, recourse financing, and any liabilities from lower-tier partnerships.

L: Partner capital accounts at the start and end of the reporting period are displayed, including contributions, net income or loss, other changes, withdrawals, and distributions.

M: This section requires relevant information if a partner contributed property with a built-in gain or loss, with the option to attach a statement for additional details.

N: It also addresses partners’ share of unrecognized gains or losses related to section 704(c) of the Internal Revenue Code.

 

Part III – Partner’s Share of Current Year Income, Deductions, Credits, and Other Items

This section is a comprehensive collection of components, including ordinary business income or loss, rental real estate income or loss, interest income, dividends, royalties, capital gains, deductions, credits, distributions, and supplementary data.

 

Bonus Depreciation Explained

Bonus depreciation offers businesses a means to accelerate tax deductions for qualifying property acquisitions. This incentive allows companies to deduct a substantial percentage of eligible asset costs in the year they are placed in service, rather than spreading deductions over several years. As an Ashcroft Capital investor, you can benefit from bonus depreciation.

 

Cost Segregation Studies

A cost segregation study involves categorizing and reclassifying components of an investment property into shorter depreciation schedules, such as 5, 7, 10, and 15-year components. The study generates substantial paper losses on tax returns, particularly in the first year of ownership. This approach helps real estate investors mitigate tax impacts on cash flow by accelerating deductions.

At Ashcroft Capital, we conduct cost segregation studies on our properties. To learn more, please visit www.investashcroft.com.

 

A 1031 Exchange

A 1031 tax-deferred exchange allows investors to defer capital gains into “like-kind” real estate. Ordinarily, when selling property, taxes are due on any profits. As an Ashcroft Capital investor, you can benefit from 1031 exchanges when we sell properties. To learn more, please visit www.investashcroft.com.

Several requirements must be met to execute a 1031 exchange, so consulting with a licensed tax advisor for details is essential.

*None of the content in this article should be regarded as tax advice. Always seek counsel from a qualified tax professional for personalized guidance regarding your specific tax situation.”

 

If you would like to learn more about investing in multifamily properties, please visit https://info.ashcroftcapital.com/fund or schedule a call with one of our investor relations team members today. 

travis@ashcroftcapital.com

The October edition of The Monthly Distribution is now available.

Articles:

Q3 Review and Q4 Outlook: An Interview with Asset Management

Evan Polaski sits down with Managing Director of Asset Management Traci Wilhelm to discuss updates with her team and overall trends in the multifamily market.

Read More

Understanding the K-1 Tax Form in Real Estate Syndications

Delve into the world of the K-1, exploring its purpose, sections, and importance. Travis Watts also joins CPA Karlton Dennis for a further discussion.

Read More

Is Middle Income Enough? How to Elevate Your Game 

Americans are shifting to the lower-income tier or entering an upper-income tier, meaning the middle class continues to shrink. How can you avoid becoming this statistic?

Read More

Investor Features:

Chandra Venkat

Syndication Inspired This Couple to Educate the Next Generation of Investors

Read More

Chad Philpott

Navy Veteran Plans a Return to the Sea with Caribbean Retirement

Read More

Sean Mahoney

A Chiropractor That Cures Other Doctors of Poor Financial Habits

Read More

Additional Insights:

Investor FYI

Our investor relations team answers your multifamily real estate market questions.

Read More

Testimonials

Meet some of our happy investors.

Read More

 

We invite you to discuss your educational and investment goals with us to ensure you are on the path to success. Let’s work together to develop a plan to help you achieve those goals. You can schedule a call with our Investor Relations Team or email at investorrelations@ashcroftcapital.com.

A Webinar Series for Investors Like You

Ashcroft Capital kicked off our Building Passive Income Webinar Series in June. Every two weeks, you can join one of our thought leaders for an informative and interactive conversation surrounding real estate investing topics.  

If you are looking to create more passive income, you might want to consider the many benefits that real estate has to offer. Passive income investing is a way to put more money in your pocket while freeing up your time.

This strategy allows you to expand your lifestyle without the hassle of becoming a landlord. Investing in multifamily real estate is ideal for those who prefer a more conservative approach to growing and preserving wealth.

The great news is you can begin today even if you do not have past experience.  

Multifamily Real Estate Can Offer: 

• A hedge against inflation: with higher inflation, property values and rents go up, yielding higher returns 
• Portfolio diversification: historically, real estate has a low correlation to the stock market 
• Consistent cash flow: returns you can rely on in the form of rental income 
• Ability to appreciate: tends to appreciate even in times of market volatility 

 

The next webinar in this series will be announced soon.

 

Catch Up on Previous Webinars: 

Hosted by Director of Investor Development Travis Watts

Negative Leverage – Can You Still Make Money in Commercial Real Estate: Can you make money in real estate if interest rates are higher than cap rates? Learn how profits can be made amid negative leverage.

Everything You Need to Know About Investing in Real Estate Today: Learn the ins and outs of real estate investing and how you can make your investing journey hassle- free. 

The Velocity of Capital—How Travis Compounds His Returns: Travis started by investing $40,000. After 15 years, he achieved a net profit of $1.8 million. Learn the secret to his real estate investment success with sustainable real estate wealth-building strategies.

Playing Monopoly in Real Life – The Game of Commercial Real Estate: In this fun and engaging presentation, you will learn the parallels between the game of Monopoly and real-life real estate investing, how to convert active income into passive income and how to create financial independence.

How to Eliminate Pain Points with Passive Income: Learn how passive income is more than just a trending phrase. It’s your key to achieving the life balance you’ve dreamed of.

 

Hosted by Investor Relations Senior Manager Danielle Jackson

Start Earning Passive Income – Unleash the Power of Multifamily Apartment Investing: Learn how to be an investor, rather than a landlord. Danielle shares her expertise on passive income investing using multifamily private placements.

Why Big Money Chases Multifamily Apartments: Learn key factors that continue to draw institutional and investors like you to multifamily real estate. 

Unleash Wealth Creation Potential with Multifamily Apartment Investing: Learn how you can leverage this powerful investment tool and start earning cash flow. 

Why 9 Out of 10 Millionaires Invest in Real Estate: Nearly 90 percent of ultra-high net worth individuals build, and maintain, their wealth for generations by investing in real estate. Learn 7 key reasons to invest in real estate for both cash flow and wealth creation.

 

If you would like to learn more about investing in multifamily properties, please visit https://info.ashcroftcapital.com/fund or schedule a call with one of our investor relations team members today at investorrelations@ashcroftcapital.com. 

By: Ryan Wynkoop, Investor Relations Manager

What is the correlation between Cap Rate and ROI?  

Cap Rate and ROI are common terms in real estate deal projections. It is important investors understand how they are determined and how they impact a real estate deal.   

Cap Rate simply stands for Capitalization Rate. This is a valuation calculation used to compare different real estate investments.

It is calculated as the ratio between the annual net operating income (NOI) of the property against its current market value.

That market value will typically fluctuate based on the current cost of debt, other elements specific to the property type, and the submarket that the property is located in.   

There are multiple ways to calculate the Cap Rate depending on your inputs and what you are trying to determine. You only need two of the three figures to get the third (Cap Rate, NOI, Value).  

 

Below are the various ways you can calculate the cap rate:    

Cap Rate = NOI / Value  

or  

Value x Cap Rate = NOI 

or 

NOI / Cap Rate = Value 

 

Now, what is ROI?  

This simply means the return on investment. Cap Rates, NOI, and value all indicate your return on investment.

It’s quite obvious that the higher the income and the value, the better the investment. But inversely, a lower Cap Rate actually means a higher value and higher NOI.   

 

What drives Cap Rates up and down?  

The cost of debt is a major factor because investors often use various amounts of leverage to acquire properties. When interest rates are high, Cap Rates often rise as a result.

Also, the strength of a property location can drive Cap Rates lower and values higher because more investors are competing to acquire properties in that space. Their stability as an investment type commands a higher value.

In addition, sometimes Cap Rates in specific asset classes—multifamily or industrial, for example—are lower than other asset classes. This is determined by the market and typically indicates both the scarcity of product available and competition for this asset class as an investment.   

 

How should you consider Cap Rates and ROI when researching an investment? 

The short answer is that it is most advantageous to invest when indications are that Cap Rates will fall and compress, which would lead to higher value.

This typically happens in markets that are growing or improving, where there is a lack of supply for the asset class in that market. Cap Rates will also compress when interest rates fall and the cost of debt becomes cheaper.

If income remains the same, but interest rates fall and Cap Rates fall as a result, that would command a higher value in the Cap Rate. An investor would have acquired the property at the higher Cap Rate.

The value would then improve because of the cheaper cost of capital and better leverage that a takeout buyer could use when they sell it. 

 

At Ashcroft Capital, we are continually tracking Cap Rates and projecting ROI for our investors based on current market conditions.

Interest rates and Cap Rates have risen and are projected to drop significantly in the coming year. This indicates potential value creation for our investors.

We are also investing in value-add properties and driving additional NOI growth through improvements. These improvements to the property and submarket also increase the ROI to the investor. 

If you are interested in reviewing our current offering, please visit https://info.ashcroftcapital.com/fund, or schedule a call with our Investor Relations Team at investorrelations@ashcroftcapital.com. We look forward to the opportunity to work with you and align our investment interests.   

ryan@ashcroftcapital.com

The September edition of The Monthly Distribution is now available.

Articles:

Understanding What Investors Crave – 10 Focal Points To Maximize Your Success 

After speaking with thousands of investors throughout the years,  find our “Top 10” list of what investors really want and how they choose the best operators.

Read More

Risk Adjusted Returns: The True Measure for Any Investment

As human beings, we are hardwired to want instant gratification but it is important to weigh the associated risks before jumping in. Continue reading to learn about ways to compare
the risk of private real estate objectively and subjectively.

Read More

State of the Multifamily Market Q3 2023

The United States multifamily real estate market remains strong, with high rent growth and occupancies. However, there are also increasing expenses being seen for property operating costs. Explore the trends that are currently at play.

Read More

Investor Features:

Mark Hentemann

Comedy writer of Family Guy fame builds a strike-proof investment strategy.

Read More

Tim Wagner

Ashcroft investor funds his bucket list with investment returns.

Read More

Additional Insights:

Investor FYI

Our investor relations team answers your multifamily real estate market questions.

Read More

AVAF3 Update

The final two properties in the AVAF3 have closed. Learn more about these properties, catch up on due diligence, and join us for a property tour.

Read More

 

We invite you to discuss your educational and investment goals with us to ensure you are on the path to success. Let’s work together to develop a plan to help you achieve those goals. You can schedule a call with our Investor Relations Team or email at investorrelations@ashcroftcapital.com.

By: Ryan Wynkoop, Investor Relations Manager

A big focal point for real estate investors looking at deals to invest in is whether that deal has a preferred return. We often get this question from savvy investors, but it is often overlooked and not fully understood. So what are preferred returns in a real estate deal, and why are they important? Let’s take a moment to dive deep into this subject.  

A preferred return, often called a “pref,” in a real estate deal is the priority or preference of a return to the investor before profits are shared and split with the sponsor. This means that, based on what that preferred return is set at, the investor will see that part of the profits before any profits flow down to the rest of the equity capital stack. Typically, preferred returns are in the 8%–10% range, based on the type of investment opportunity and the risk associated with that investment.  

Not all sponsors provide preferred returns, but they are important for many reasons. The preferred return gives an investor the confidence that they are likely to see a certain size return in a deal as an expected baseline. Also, and potentially even more important, the preferred return incentivizes the sponsor to ensure they perform in the deal beyond the preferred return rate to ensure they see a profit in the deal. If a sponsor is offering a preferred return to investors, it is likely they are confident the deal will perform either at or even beyond that measure in some cases. Preferred returns are most often offered to Limited Partner investors in a real estate syndication. These investors are forming the pool of capital needed to make acquisitions of properties or fund the operations and budgets needed to execute the investment strategy. The sponsor is usually also the General Partner in the deal—they are generating a return in the deal after the limited partners see their preferred return rate met—which is often done in a waterfall split of profit sharing between the General Partner and Limited Partners.   

Ashcroft Capital offers preferred returns to our investors for both class A and B of shares in our offerings. For our current offering, the Ashcroft Value-Add Fund III (AVAF3), Class A shares generate a 9% preferred return, while Class B shares generate a 7% preferred return. This is incredibly attractive to our investors, who know Ashcroft is confident in the performance of our acquisitions and at performing at or above our target preferred return rates. We believe it is important to demonstrate to our investors this commitment to execute our value-add strategy and overall property performance, and this is one of the major reasons they look to invest with Ashcroft Capital.  

If you are interested in reviewing our current offering, please visit https://info.ashcroftcapital.com/fund, or schedule a call with our Investor Relations Team at investorrelations@ashcroftcapital.com. We look forward to the opportunity to work with you and align our investment interests.   

ryan@ashcroftcapital.com

 

Ashcroft Capital’s Q3 Real Estate Market Report is now available. 

Ashcroft Capital is committed to keeping you informed and updated on the many facets of commercial multifamily real estate investments.

According to our data, multifamily market fundamentals remain steady, despite ongoing economic uncertainty. 

 

Explore the Real Estate Market Report for insight into the four key Q3 trends: 

1. New development: Ramp up could be short-lived 

2. Apartment Rents: Continue to grow at a modest pace 

3. Interest Rates: The ceiling is in sight 

4. Multifamily Markets: The Sunbelt is still shining 

 

The August edition of The Monthly Distribution is now available.

Articles:

A Comprehensive Guide to Deal Research in Multifamily Real Estate Investing

Real estate investing can offer lucrative opportunities, but careful research is necessary for repeated success. So how do real estate investment firms conduct their due diligence?

Read More

Transforming the Multifamily Sector: The Impact of Artificial Intelligence

In recent years, artificial intelligence (AI) has emerged as a powerful force, revolutionizing many industries. Explore a few ways in which AI is changing the multifamily sector.

Read More

Property Management Best Practices

As you consider investing, it’s essential to understand the options available. How hands-on do you want to be with your investment? Gain insight into the necessary responsibilities property managers must maintain to be successful.

Read More

Investor Features:

Stacee Evans

Insurance Agent and Mom of Two crosses the finish line of her investment goals by stumbling on multifamily investing.

Read More

Joe Sauers

He started a landscaping business in the ninth grade, saved his pennies, researched real estate options, and built a blossoming portfolio.

Read More

Additional Insights:

Investor FYI

Our investor relations team answers your AVAF3 questions.

Read More

Building Passive Income Webinar Series

Catch up on previous webinars and register for upcoming.

Read More

 

We invite you to discuss your educational and investment goals with us to ensure you are on the path to success. Let’s work together to develop a plan to help you achieve those goals. You can schedule a call with our Investor Relations Team or email at investorrelations@ashcroftcapital.com.

By: Ryan Wynkoop, Investor Relations Manager

Any investor looking to acquire real estate assets typically not only targets a specific type of property asset but also applies specific criteria to areas where those properties are located. We refer to these areas as submarkets. At Ashcroft Capital, we target suburban submarkets in the southeast region of the U.S. We classify these submarkets as Core+ locations because of their strength as stand-alone areas and their proximity to major employment centers and economically diverse cities.  

Our acquisitions and research teams are led by Ashcroft Capital CEO Frank Roessler and Chief Investment Officer Scott Lebenhart. In any given year, we can analyze 200+ acquisition opportunities in our target submarkets. We apply several criteria when analyzing these acquisition opportunities that are critical to understanding the strength and growth trajectory of a particular location. More specifically, we examine how an asset is positioned against its competition and how it will perform through our value-add process. This is not an all-inclusive list, but we want to share some elements we think are critical to understanding a submarket and its potential for a property.  

 

• Population Growth 
• Job Growth 
• Economic Growth 
• Economic Diversification 
• Median Household Income 
• Average Rents 
• Amount of For Sale Housing Stock 
• Pricing of For Sale Housing Stock 
• Amount of For Rent Housing Stock 
• Pricing of For Rent Housing Stock 
• Trajectory of Rent Growth 
• Submarket Attractions & Amenities 

 

Real estate rental growth and value appreciation are more likely when most of the conditions listed above appear in a specific submarket. The southeastern area of the U.S. (where Ashcroft Capital has been investing and continues to pursue) has been performing very well for these reasons; this is why we now have a presence in submarkets surrounding Dallas, Atlanta, Orlando, Jacksonville, Tampa, and Chapel Hill. We continue to track all these trends and use those data points to focus our acquisition efforts and analyze deals in real time. 

Whether you are an existing investor or potential new investor, we appreciate your interest in Ashcroft Capital, and we welcome a conversation with you. Feel free to reach out at your convenience to our Investor Relations team at investorrelations@ashcroftcapital.com to learn more about our current offerings, the Ashcroft Value-Add Fund III (AVAF3), and how the AVAF3 might fit your investment goals.  

ryan@ashcroftcapital.com

 

The July edition of The Monthly Distribution is now available.

Articles:

Discover the Investing Opportunities of Florida: Gateway Lakes and Cocoplum

Delve into the location details of our two newest properties, Gateway Lakes and Cocoplum and explore the reasons we chose to invest here.

Read More

Multifamily Trends: Looking to Q3 and Beyond

What can you expect from multifamily trends and investment opportunities through the rest of 2023? Gain insight into ways to maximize opportunities in the existing market.

Read More

Negative Leverage – Can You Still Make Money In Commercial Real Estate

Examine multiple case studies that test why negative leverage makes sense for investors like yourself.

Read More

Investor Features:

Daniel and Lindsay Galvan

How were these junior high sweethearts from the Chicago suburbs able to quit their W-2 jobs and live off their passive income?

Read More

Susan Hunter

This mom and Air Force veteran utilized her military training and adaptive mindset to meet new challenges and opportunities.

Read More

Additional Insights:

Investor FYI

Our investor relations team answers your questions

Read More

Healthy Tips

If we don’t have our health, what use is our wealth?

Read More

 

We invite you to discuss your educational and investment goals with us to ensure you are on the path to success. Let’s work together to develop a plan to help you achieve those goals. You can schedule a call with our Investor Relations Team at investorrelations@ashcroftcapital.com.

By: Evan Polaski, Investor Relations Managing Director

Many investors look to multifamily real estate for passive income and capital preservation. Real estate can offer benefits such as lower volatility, a hedge against inflation, and the opportunity for depreciation.

Assessing which operator to invest your hard-earned capital with can be challenging.

There are eight critical factors you should consider when choosing a syndicator for your real estate investment:

• How well are they known and respected in the marketplace? (1:39)
• Are they buying in high-growth markets? (1:50)
• How are they evaluating properties for success? (2:00)
• What is the plan to generate returns? (2:07)
• Do they have full asset control with property management? (2:21)
• Are they transparent and clear with fees and structures? (2:32)
• How often are you communicated with? (2:44)
• Can they prove consistent execution on their business plan? (2:59)

Join Evan Polaski, Managing Director of Investor Relations, as he outlines the questions you should be asking in his new YouTube series “8 Essentials to Evaluating a Real Estate Investment.”

Subscribe to this YouTube series and receive notifications when new episodes are shared.

evan@ashcroftcapital.com 

By: Travis Watts, Director of Investor Education

It is natural to look to avoid pain points. We all have them, and they can be anything that prevents us from living an optimal lifestyle. From mundane tasks we would rather not do, to ongoing problems that persist every month. Having passive income not only helps monetarily alleviate pain points, but also emotionally. This article will discuss ways to address eliminating your pain points by investing in passive income.  

Not financial advice. I’m not a CPA, an attorney, or a financial advisor. This article is intended for educational and informational purposes only. 

Let’s begin with a quote from Aristotle (over two thousand years ago). 

Here’s a more modern-day quote from Tony Robbins… 

Without a doubt, for thousands of years, humans have been looking to avoid complications. Many investors, myself included, think of long-term goals. I’ve asked hundreds of investors about their goals over the years and nearly every time, investors share long-term goals with me.  

Examples include: 

“I want to retire from my corporate job by the age of ____.”  

“I want to have ____ amount of net worth when I retire.” 

“I want to create _____ amount of passive income per month in the next 10 years.”  

Today I want to explore how you could start benefiting much sooner. What if you could start expanding your lifestyle this year?  

I’ll begin with a quick story. There was a time in my life, where I accrued bad debt from a hasty auto loan. I had purchased a luxury vehicle that frankly, I could barely afford. This also came at a point where my gross income was less than $30,000 per year.  

As you can imagine, any re-occurring expense that I had in my life at that time was a big deal. This loan payment was a major pain point that made me cringe every time it came due. I would fill up with anxiety, because I worried that some unknown expense was going to pop up that would prevent me from making the payment causing me to lose my car. 

(Not my house by the way ^) 

In hindsight, my car payment was only $500 per month. But again, putting this in perspective of someone who earns less than $30,000 gross income per year, it was a big deal at that time. Like most people, I would go to work, save up money, and make my payment at the first of the month, and then my anxiety would drop down for two or three weeks until I started thinking about having to make the payment again. Living this way was uncomfortable but did you know….? 

According to Lending Club, 60% of Americans Now Living Paycheck to Paycheck (As of January 2023) 

This was my life just before I started investing in real estate, which was a huge game changer for me. Specifically, it was passive income that was the turning point. My first introduction to passive income was when I rented out a room in my first house. Today, this is called “house hacking”, back then it was called “having a roommate”. In any case, my roommate began paying me $600 per month in exchange for a furnished bedroom.   

What did I do with this $600 check? I made my car payment! I effectively learned how to have someone else pay for my car. From an emotional standpoint, I eliminated one of my biggest pain points, which was much more satisfying than the money.  

Throughout the years, I’ve used a similar strategy, and it’s really quite simple: 

#1 Make an investment that produces passive income 

#2 Use the passive income to eliminate a pain point  

 

Here are a few practical examples of how you can apply this same strategy: 

#1 Let’s say you have kids and they constantly make a mess of the house. This would be an example of a pain point. Let’s assume a house cleaning service cost $150 for a group or individual to come clean your house. Cleaning twice per month would cost $300.  

What if you first invested $50,000 into an asset that produced passive income? Say that the investment offered an 8% annualized yield. Therefore, the monthly distribution would provide $333, which could be used to hire a house cleaning service, thus eliminating this pain point. 

#2 Let’s say you have a high-stress job and it’s difficult to unwind at the end of the week. Using the same example as before, what if you invested $50,000 into an asset that produced passive income at an 8% annualized yield? You could consider setting up a massage on a Friday or a Saturday, two or three times per month and use your monthly distribution to pay for it. Thus eliminating the pain point and making your weekends a little more enjoyable. 

#3 Here’s an example for those who want to take this strategy to the next level. MarketWatch released an article in 2022 stating that Ford Motor Company’s customers had an average auto loan payment of $832 per month for those who purchased a vehicle and financed it. This is compared to the average Ford lease payment of only $516 per month.  

Consider this… 

Instead of buying vehicles throughout a lifetime, financing them, and watching the “investment” disappear with depreciation, what if you invested $100,000 into a passive income producing asset that yielded 8% a year on average? That could generate a $666 monthly distribution.  

Keep in mind with this example, I’m not even discussing potential equity upside on the investment, meaning the investment could increase in value over time (depending on what it’s invested in). I’m only talking about the possible passive income component.  

  

Something else to consider… 

#1 This strategy does not involve spending $100,000, as with buying vehicles that depreciate over time. This is simply moving cash into an investment, preserving the principle, and only using the passive income component to lease the vehicles. 

#2 Compare this to what most people do. For example: 

• If a person buys five cars in their lifetime 
• They pay an average of $50,000 each time (including the taxes, fees, and registration)  
• Each car depreciates to $10,000 because of high mileage and the ageing of the vehicle  
• The vehicles get traded in for a new vehicle each time 

  This amounts to $200,000 in capital losses throughout a lifetime, and this doesn’t include any financing and interest cost if the vehicles were financed.  

  

The Takeaway 

Focusing on passive income can be a unique way to view investing. Most people are equity focused and use a “buy-low and sell-high” strategy. Most also defer the benefits of investing until retirement. You don’t have to suffer until your golden years and have pain points build up over time. You can start eliminating pain points today, using passive income as your tool.  

I want to leave you with this quote from Benjamin Franklin:  

I recently launched a series on Ashcroft Capital’s YouTube Channel called “Passive Income Lifestyle” which is designed to help you enhance your lifestyle and learning the game of passive income. 

If you ever have questions, you can reach me at travis@ashcroftcapital.com. I’m always happy to help and have a conversation. I appreciate you taking the time to read. I hope you found some value in this short article!  

To Your Success, 

Travis Watts  

travis@ashcroftcapital.com

 

Ashcroft Capital works hard to continually protect its investors’ finances and data from cyber threats and criminals. We recognize that the best line of defense against cybercrimes is awareness. Therefore, we recommended several tips to help keep yourself safe from internet fraud. 

 

• Scammers often use fake emails, text messages, voice calls, and/or letters to pose as a legitimate company (like Ashcroft Capital) and request personal information or a payment transfer. When receiving requests for confidential information 
• Remain suspicious of calls, texts or emails requiring immediate action;   
• Investigate before responding to any unfamiliar requests; and 
• Remember that Ashcroft’s policy is to never request personal information over the phone, by text, or by unsecured email.  
• Do not click on any links included in unsolicited emails or text messages that ask you to update or verify account information. 
• Never send funds to a third party until you confirm that the payment request is legitimate. 
• For example, use the verified payment information in Ashcroft Subscription documents and if you have questions, reach out to an investor relations team member. 
• We will keep you updated as we learn about how new scams evolve. It’s all part of how Ashcroft Capital is looking out for our investors. 

 

Here are some additional resources to learn more about avoiding potential scams and fraud:  

• FTC: Online Privacy and Security 
• FTC: Report Fraud 
• FBI: Internet Crime Complaint Center (IC3) 
• BBB Scam Tracker 

 

To learn more about investing with Ashcroft Capital, visit https://info.ashcroftcapital.com/fund or schedule a call with our Investor Relations Team at investorrelations@ashcroftcapital.com. 

By: Ryan Wynkoop, Investor Relations Manager

Many real estate subtypes in the market require their own approach to ownership and investment. Differences also exist in the returns they respectively generate. Here, we want to take a minute to outline a number of these for our readers and the reasons our strategy to market revolves around Value-Add and Core+ multifamily real estate. 

This list is not exhaustive, but it encompasses several real estate subtypes. They differ in terms of asset location, risk tolerance, and overall return generation.   

 

• Core 
• Core+ 
• Value-Add 
• Opportunistic 
• New Construction Development 

 

Strength of Location 

Generally, working from the top down in the list above, real estate asset types often decrease in regard to their strength of location. For instance, Core properties are located in the center of urban city cores. Core+ properties are on the outskirts of those city cores—they are, perhaps, in emerging market locations, but they are very strong in their own regard. On the opposite end of the spectrum are Opportunistic properties, which are often aged or blighted and located in areas ripe for reinvestment and major overhauls. New Construction Development properties are often part of an expansion of the city core into newly emerging and developing areas. Value-Add properties tend to be located between Core and Opportunistic areas in locations that have opportunities for improvement, but the market supports a selective improvement, repositioning the asset. 

 

Risk Tolerance 

Risk tolerance increases as well in the property type investment profile as you move down the asset classes. Core properties tend to hold their value the most through volatility in the overall real estate market. This tendency is driven by the properties’ premium location and more high–end tenant mix. Core+ properties are in strong submarkets surrounding Core areas. By comparison, Opportunistic and New Construction Development properties require major investment and transitions until they are stabilized and generating the projected returns. They can also be located in newly emerging areas that have not fully met their potential full value. These properties have more risk exposure to the value of the real estate because of repositioning and the transitional nature of the surrounding submarket. Value-Add properties tend to be in the middle of Core and Opportunistic/New Construction Development locations—often in Core+ submarkets—making them suitable to a medium risk approach.  

 

Return Generation 

Returns can also vary widely, depending on the asset class. Core properties tend to have a very stable value but modest returns. The opportunity to push higher values and returns in Core areas tends to have a limited upside, but the locations bring tremendous stability. Rents in Core areas are fairly consistent and do not move quickly—up or down. Core+ properties can generate slightly greater returns than Core locations, with comparable strength of submarket attributes. By comparison, Opportunistic properties may be distressed or aged, requiring major capital infusions to turn them around and help them make a transition. New Construction Development properties also require a tremendous capital infusion to help them get through development and stabilize. However, both Opportunistic and New Construction Development can generate significantly larger returns in the end due to substantial value creation. Through major construction overhauls and the development of new properties, significant value is created in rents and can be achieved after the improvement process. Value-Add properties also tend to have a strong return generation because they are transitioned to a higher valuation. This return generation is created because the improvements drive higher income in rents and a higher valuation after improvement. 

 

Ashcroft Capital’s Strategy 

Ashcroft Capital focuses on what we consider the “sweet spot” of property types when they are measured against investment risk tolerance. We target Core+ property locations, which we consider strong and established submarkets where values are on an upward swing. These are often infill property locations that are typically around 20 years old. We also target properties ripe for a Value-Add approach: properties that could use some selective infusion of capital to generate additional return. These properties are not aged and blighted real estate needing major overhauls like Opportunistic properties are, nor do they require the up–front capital needed to develop New Construction Development properties before an income stream is generated. The combination of these Core+ and Value-Add strategies to market makes up our business plan, which generates a fantastic return for our investors while offering a much more calculated and reduced risk compared with other asset types. 

To learn more about investing in multifamily apartments or for IRR and cash-on-cash projections, visit https://info.ashcroftcapital.com/fund or schedule a call with our Investor Relations Team at investorrelations@ashcroftcapital.com. 

ryan@ashcroftcapital.com

The June edition of The Monthly Distribution is now available.

Articles:

How to Eliminate Pain Points Using Passive Income

3 Practical examples that demonstrate how passive income can alleviate cost of living pain points.

Read More

By the Numbers: The Advantages of Real Estate Investing

How strong is the multifamily investment sector according to recent data?

Read More

The Catch-22 of Investing in a Recession

An analysis on the different risks associated with starting a new investment during times of economic uncertainty.

Read More

Investor Features:

Jim Shaw

How does Washington State University basketball coach, Jim Shaw, embody the Ashcroft team spirit?

Read More

Lynetta Johnson

Multifamily property management executive and broker of 20 years, Lynetta Johnson, shares her personal experience with Ashcroft.

Read More

Stan Sudarso and Kelly Lee

As COVID-19 swept the globe, Stan Sudarso and Kelly Lee were inspired to reassess their priorities and go all-in on their passive income strategy.

Read More

Additional Insights:

AVAF3

Updates on AVAF3 Properties.

Read More

Cybersecurity Insights

Tips to help keep yourself safe from internet fraud.

Read More

 

We invite you to discuss your educational and investment goals with us to ensure you are on the path to success. Let’s work together to develop a plan to help you achieve those goals. You can schedule a call with our Investor Relations Team at investorrelations@ashcroftcapital.com.

 

By: Danielle Jackson, Investor Relations, Senior Manager

Join Ashcroft Capital’s Investor Relations Senior Manager, Danielle Jackson, for her series, “3 Minutes of Real Estate.” Tune in to our YouTube channel weekly for an easy 3 minutes of learning about investing in real estate.

On this edition of 3 Minutes of Real Estate, Danielle continues to focus on the US multifamily fundamentals making recent headlines given the capital market environment we are all experiencing. Referencing the most recent CBRE report, she looks at what is driving the demand for US multifamily and keeping the occupancy level around 95%.

 

• What is the disparity between owning your own home and renting?
• Will this disparity close enough to significantly affect occupancy level?

 

Take a couple minutes to watch the video. If you would like to learn more about investing in multifamily assets schedule a call with our Investor Relations Team at investorrelations@ashcroftcapital.com.

Start your investment here.

danielle@ashcroftcapital.com

By: Travis Watts, Director of Investor Education

Join Ashcroft’s Director of Investor Education, Travis Watts, for his new YouTube series Passive Income Lifestyle. This series is all about you, the passive income investor, and will discuss mindset, strategies, philosophies, stories, and more.

On this episode of Passive Income Lifestyle, join Travis as he considers how to use money as a tool to expand your lifestyle. It is interesting to consider how income affects our daily life. Follow along to learn four ways to improve your lifestyle.

 

• Reframe the way you think
• Create win-win situations
• Take 1% of your earnings and reinvest in yourself
• Passive income cash flow investing

 

Please take a couple of minutes to watch the video below.

To learn more or schedule a time to talk to Travis, visit https://www.ashcroftcapital.com/travis/.

Watch more episodes here.

travis@ashcroftcapital.com

By: Ben Nelson, Investor Relations Regional Manager

Investing can be exciting, and sometimes frustrating, but it is one of the greatest ways to build long-term wealth. For most investors, a singular and all-important question remains paramount: “How should I diversify my assets?” Those who have accumulated enough wealth to consider investing can find no shortage of strategies to minimize risk while maximizing returns. While many of these strategies work (until they don’t), some have withstood the test of time. One of those strategies is known as Modern Portfolio Theory (MPT).  

Put simply, MPT is the process of constructing a diverse portfolio of assets to drive strong returns, while reducing overall risk. Modern Portfolio Theory is founded on the idea that different investments and investment classes inherently carry different levels of risk and return. By diversifying your portfolio across multiple types of investments and asset classes with different risk/reward profiles, you can reduce the overall risk of your portfolio and still participate in positive performance. This theory is less about beating market indices year over year, but about a steady advance of your portfolio over a longer time horizon. 

In this article, we will discuss how investors use the Modern Portfolio Theory to create a diversification strategy to maximize portfolio performance while accounting for an acceptable level of risk. We will also discuss alternative investments, such as real estate, and how they fit into a diversified portfolio. 

 

Lessons from the Past: Looking Backward to Move Forward 

Modern Portfolio Theory is based on a concept called the Markowitz Efficient Frontier or Efficient Frontier. American economist and Nobel Laureate, Harry Markowitz, first proposed this theory in a 1952 issue of The Journal of Finance. Markowitz argued that portfolios should optimize expected return relative to volatility. He also asserted that a portfolio’s assets should be selected based on how an asset will impact others as the overall value of the portfolio changes.[1]  

The graph below illustrates this concept and the level of risk an investor should be willing to assume in order to achieve higher returns. The line represents all possible combinations of risk versus reward that can be obtained through diversification. Riskier investments will have a higher potential return, but also greater volatility and potential for losses. 

The illustration shows that a portfolio that falls outside the Efficient Frontier is suboptimal because it either carries too much risk relative to the anticipated return or too little return relative to its risk. If a portfolio falls below the Efficient Frontier, it does not allow for enough return compared to the risk level being taken. In contrast, the illustration shows that a portfolio whose anticipated return falls on the upper portion of the curve is considered optimal, maximizing the investor’s expected return based not only on overall market risk, but risk relative to the other investments in the portfolio. 

Markowitz believed that most investors are risk-averse and would select assets in a portfolio with the least risk, even with the possibility of lower returns.[2] Using MPT, an investor will consider how much risk they’re willing to take against the return they expect from their investment. 

Correlation measures how different assets move together or against each other over time. If two different assets have a high correlation (i.e., 0.85 to 1.00), they tend to react similarly. If they have a low correlation (i.e., 0.10 to 0.00), they tend to move in different directions at different times. According to the MPT, diversifying a portfolio across asset classes with lower correlations to each other could reduce investors total risk. Markowitz stresses that investors who can diversify and reach zero or near zero correlation between assets can minimize the volatility of their portfolio and maximize their expected returns on a risk-adjusted basis.[3] 

Risk is measured in terms of volatility and can be categorized into systematic and unsystematic risk.[4] 

Systematic risks affect all assets in an economy simultaneously. Interest rates, inflation, recessions, and geopolitical conflicts are all examples of systematic risks. Unsystematic risk refers to risks that affect only a particular asset or group of assets (e.g., a product recall or natural disaster). Once an investor has determined their level of risk tolerance and expected return, they can create a diversified portfolio that effectively manages both types of risk. 

 

Achieving Optimal Diversification 

Based on the MPT an important first step is to decide on an asset allocation strategy that suits the investor’s tolerance for risk. Asset allocation refers to the percentage of your portfolio invested in different asset classes (e.g., stocks, bonds, alternatives, real assets, cash). Asset allocation is an ever-evolving process, as market environments (and your personal situation) can shift quickly. 

Depending on the different asset classes an investor selects, they may reduce their overall exposure to any one type of risk. The crux of the MPT is to create a balanced portfolio that includes assets that tend to do well when the economy is growing and when the economy is contracting. 

Alternative assets, like private multifamily real estate funds, typically exhibit a low correlation with traditional assets. In addition, real assets, such as real estate, traditionally hold their value, even during recessions, as value is retained in the land. 

 

Introducing Ashcroft’s Value-Add Fund III 

Real estate funds like the Ashcroft Value-Add Fund III (AVAF3) differ from syndications by investing in multiple deals rather than a single property. The fund is structured so that investments are allocated across multiple properties in multiple states, creating diversified sources of return and mitigating concentration risk. Along with income generation, Value-Add Fund III will allow investors to participate in the upside potential of a portfolio of real-estate assets in different areas of the United States.  

The Ashcroft Value-Add Fund III (AVAF3) is an open private placement fund for accredited investors interested in diversifying their retirement and wealth portfolios into multifamily real estate. 

If you would like to learn more about investing in multifamily assets, visit https://info.ashcroftcapital.com/fund, or schedule a call with our Investor Relations Team at investorrelations@ashcroftcapital.com.

ben@ashcroftcapital.com

Sources:

1. Portfolio Selection. Retrieved September 23, 2022, from The Journal of Finance, Vol. 7, No. 1. (Mar., 1952), pp. 77-91. https://www.math.hkust.edu.hk/~maykwok/courses/ma362/07F/markowitz_JF.pdf
2. What Is Modern Portfolio Theory (MPT) and Why Is It Important? thestreet.com™. (n.d.). Retrieved September 30, 2022, from https://
   www.thestreet.com/investing/modern-portfolio-theory-14903955
3. Ibid.
4. Ibid.