Finding Real Estate Investment Opportunities

In the past, only the wealthiest and the most connected individuals could participate in large scale real estate investment opportunities, also known as real estate syndications. The JOBS Act passed in 2012 has accelerated an individual’s access to real estate syndication - which is essentially a partnership between an exclusive group of passive investors - like you and a sponsor like Scoot Capital.

We at Scoot Capital identify the ideal investment opportunity, raise funds to acquire it and manage the investment property’s day-to-day operations. Our ability to acquire the investment property is validated by the bank financing the deal, which is predicated on our track record.

We started out by acquiring a personal portfolio of single and multi-family properties and diversified and expanded into larger property syndication. Our investment track record highlights a balance between capturing opportunity and exercising caution to achieve a high success rate while being fiscally responsible; this makes us an ideal investment partner.

Deal Structure

We structure investments as a Limited Liability Company. Our role as the Sponsor is to participate as the General Partner or Manager. Your role as the Investor is to participate as limited partner or passive member. The LLC Operating Agreement enumerates the rights of the Sponsor and Investors, including rights to distributions and voting rights.

The Limited Liability Company structure is very similar to the set ups of other private funds in the Venture Capital, Private Equity, and Venture Debt space. Such legal entities protect both the Sponsor and the Investor.

Profits

Rental income when the property is held, Property appreciation when the property is sold and Tax benefits from the investment are the three main ways the Sponsor and the Investor make money from real estate investment.

Rental income is distributed to Investors from the Sponsor according to preset terms, typically on a quarterly basis. A property’s value usually appreciates over time and investors can net higher rents and earn larger profits when the property is sold. All investors receive a "Preferred Return".

Projected cash-on-cash returns when the property is held: A passive investor could take home cash returns every quarter for each year we hold the property.

Projected profit upon sale: During our investment period, we would have updated the units, established a strong tenant base, and stabilized rents to market rates. Each of these improvements contributes to the overall revenue that the asset is able to generate, thereby increasing the property value.

So a passive investor would receive profits upon the sale of the property after the hold period. This is on top of the cash-on-cash returns you’re receiving throughout the hold time.

When we choose markets to invest in, we’re always looking for areas where job growth is strong, and as a by-product of that, population is increasing as well. This leads to increased demand for housing, which, in turn, leads to increased rents. However, when putting together these projected returns, we always underwrite conservatively, and we never count on that market appreciation. We factor in baseline inflation, but anything on top of that is a bonus. This is so that, even if the market tanks during the course of the hold, we can make sure that the investment can still stay afloat, and that investor capital is protected.

The Bottom Line

If you were to invest with Scoot Capital in a real estate syndication deal, projected returns for our typical investment looks like this:

• Quarterly cash-on-cash returns as long as we hold the property

• Profits upon the sale of the property.