Exclusive real estate crowdfunding platform Origin Investments offers lucrative opportunities that are tailored for accredited investors. Could it be right for you, too?

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With the stock market looking a little bit shaky over the past year, diversification has become more important than ever. If you’re a large investor, you can do this by diversifying into commercial real estate. Historically, it’s been one of the most successful asset classes. You can do it through Origin Investments, which can enable you to invest in funds that have been providing returns much higher than stocks and bonds and even real estate investment trusts.

About Origin Investments

Origin Investments is a real estate crowdfunding platform that was launched in 2007 by David Scherer and Michael Episcope. What’s most interesting about the start of this platform is that it wasn’t started as a business. Instead, the two founders created it to both build and protect their own wealth. That kind of personal stake should inspire confidence by other investors.

When you invest with Origin Investments you’re doing so as a partner. And with the success of the platform, the number of participating partners has increased by 500% since the company began.

Origin Investments invests in properties in eight cities–Chicago, Atlanta, Austin, Charlotte, Dallas, Denver, Houston, and Raleigh, North Carolina. It’s no accident these markets were chosen. They represent some of the fastest-growing commercial real estate markets in the country. Each meets the company’s standards for population and job growth, rent growth, access to multiple transportation modes, and proximity to universities and the trained workforce they provide.

The company is based in Chicago, and since its founding they’ve executed over $900 million in transactions, using $44 million of personal capital invested by the firm’s principals. The firm currently has more than $700 million in assets under management.

Related: Beginner’s Guide to Real Estate Investing

How Do You Qualify to Invest with Origin Investments?

To participate in Origins Investments you’re required to be an accredited investor. These are the requirements to be an accredited investor:

• You must have an income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expect the same for the current year, OR
• You must have a net worth in excess of $1 million, either alone or together with a spouse, and that amount cannot include the value of your primary residence.

NOTE: Origin Investments will contact you to verify your status as an accredited investor.

How Origin Investments Works

One of the major ways Origin Investments differs from other real estate crowdfunding platforms is that they act as a direct investor. That is, they take direct positions in property investments, rather than acting as either a broker or a middleman.

While the company takes advantage of technology in conducting its business, it is used primarily to enhance the customer’s experience. The firm never veers from its strategy of emphasizing real estate as its main objective.

Their strategy is to generate the highest risk-adjusted returns for their investors. Acquisition and managing of high quality properties are offered through a series of investment funds. This enables investors to take an equity position in commercial real estate, without committing to individual properties.

They also make it a policy to work with real estate experts who live and work in the areas where the company invests.

Investment funds are a series of private real estate investment trusts (REITs) that operate as LLCs. That enables all tax benefits to pass through to investors, including depreciation. However, since Origin Investments is a direct investor, they don’t need to pay fees to third parties. That means a larger percentage of their private REITs’ income is passed on to investors.

And as written above, Origin Investments principals have substantial investments in each fund. That means they are also investors, and have a direct interest in maximizing the overall return for all investors in each fund. As well, the management team is compensated based on asset performance rather than on acquisition value, which is more typical of publicly traded REITs.

Related: 8 Best U.S. Housing Markets for Real Estate Investing

Origin Investments Features and Benefits

Minimum investment: $100,000

Available accounts: You can open a regular taxable account. In addition to being able to invest as an individual, you can also do so through either an LLC or a trust.

IRA accounts: Origin Investments doesn’t offer an IRA account option directly. Instead, you’ll hold your IRA through a third party trustee that offers self-directed plans, through which you can invest in Origin Investments funds.

Fees: 1.5% per year.

Investment terms: Typically six to eight years.

Investment return indication: The firm doesn’t provide much detail on the performance of individual funds. But they have indicated their first two funds are averaging 24% net returns to investors.

Property types: Origin Investments concentrates on underperforming office and multifamily properties in the eight high-growth markets listed earlier. Their investment philosophy is to purchase the right properties, then expand revenues through active and effective property management.

Distributions: Origin Investments’ primary investment goal is capital appreciation, not income. As a result, cash flow is generally reinvested into the underlying properties. Distributions are not normally paid until several years into the investment cycle.

Investment results reporting: Origin Investments provides quarterly updates on the financial results of each REIT. This is fairly unique, since private REITs aren’t required to provide regular updates, and often don’t. And apart from quarterly updates, you can get information on your investments at any time by logging into the website.

Customer service: Includes access to an investor relations associate. That person will be available to answer your questions and address any concerns you have. You will have a direct email link to that person. In addition, you can contact the company either by phone or email, during regular business hours.

Satisfaction guarantee: The firm promises that if you are not happy with the service, they will work with you to improve the situation. But if you’re not fully satisfied, they’ll refund your investment at your request. Refunds are limited to a maximum of $250,000 per investor, and will not include fees, charges, or market losses. The guarantee is available to new investors for the first 12 months following their original investment.

Origin Investments security: All aspects of the platform are held to industry-standard compliance for both cyber security and data redundancy. The company also employs continuous monitoring and review to maintain the integrity of the system. They also work with third-party services to enhance security, as well as provide ongoing security training to staff.

Related: 10 Things I Learned from Flipping Real Estate (and Why I’ll Never Do It Again)

Specific Investments with Origin Investments

Origin Investments has five different investment funds. At the present time however, three of those funds are closed to new investors. They include Fund I, Fund II and Fund III, all of which are growth equity funds requiring minimum investments of between $100,000 and $500,000.

But the platform currently offers the following two funds to new investors:

QOZ Fund

Short for “Qualified Opportunity Zone”, this is a long-term growth fund that includes maximum tax efficiency. This fund was created in response to the 2017 Tax Cuts and Jobs Act to encourage long-term investment and economic development in more than 8,700 designated low income and economically distressed communities throughout the country. The fund is required to invest 90% or more of its assets in one or more approved zones.

Under the program, fund investors are allowed to either defer or completely eliminate certain capital gains taxes. Under deferral, any capital gains can be deferred until 2026, as long as those gains are reinvested in a qualified opportunity zone fund. And if held for at least seven years, only 85% of the deferred gain will be taxable. Meanwhile, the capital gain from the QOZ investment itself is tax-free, as long as it has been held for at least 10 years.

Investment assets that can be sold and reinvested in QOZ includes stocks, real estate, private businesses, precious metals, cryptocurrencies, and even art.

Money invested in this fund is invested in the qualifying property, and will require substantial upgrading of the property, consistent with federal law. Under the law, the property improvement needs to be at least equal to the initial purchase price. For example, if a property is acquired for $1 million, it must then invest at least $1 million more in upgrades.

The fund therefore offers investors a combination of capital appreciation and strong tax benefits. It is however a long-term investment.

As an indication of how much confidence investors have in Origin Investments, the firm was able to raise $105 million in commitments from 425 investors in just 17 hours when the fund was launched in November.

Income Plus Fund

Origin Investments describes this as “a fund designed to deliver stable, passive income and appreciation.” Unfortunately, no other information is provided on this fund, or on the three closed funds.

Signing Up With Origin Investments

Unlike many other investment services, including real estate crowdfunding platforms, Origin Investments does accept non-U.S. investors, as well as U.S. residents and citizens.

You’ll be asked to provide your name, email address, and then to create a password. You’ll then be required to provide the following:

• Indicate the type of investor you are – family office, individual investor, institutional investor, RIA, or other
• Investor objective – income, income and growth, growth, or not sure
• Approximate net worth
• How you heard about Origin Investments
• Your zip code

Once you sign up for the service, you’ll be able to browse the investment funds that are available. When you are ready to invest, you simply click the “Invest Now” button after which you’ll be contacted by a team member who will provide instructions, as well as have you sign the legal documents specific to the fund you’ll be investing in.

You can fund your account using ACH transfers from a linked bank account.

Origin Investments Alternatives

The two major limitations with Origin Investments are the high minimum investment and the accredited investor requirement. If you don’t meet one or the other requirement there are other platforms where you can participate in real estate crowdfunding.

Fundrise has a minimum initial investment requirement of just $500 and no accredited investor requirement. This is because you invest in private real estate investment trust and funds, instead of directly in individual properties.

Realty Mogul is another real estate crowdfunding platform that also requires accredited investor status. However, they offer two private REITs that non-accredited investors can participate in. Also, you can begin investing in REITs with as little as $1,000, though private placements will require an investment of several thousand dollars. Either investment requirement is lower than Origin Investments $100,000 minimum.

Like Origin Investments, PeerStreet also requires you to be an accredited investor. But the minimum initial investment is a much more reasonable $1,000. However, one downside to be aware of with PeerStreet is that they offer only debt investments, not equity participation.

Origin Investments Pros and Cons

FAQs

Question: What’s the difference between Origin Investments and a real estate investment trust?

Answer: Origin Investments funds are private REITs. A typical REIT is publicly traded, and can be bought or sold on national exchanges. Origin Investment funds are private, and therefore not available on public exchanges. Origin’s funds have lower expenses than publicly traded REITs, which can have expenses up to 10% of the trust income. Origin Investments minimizes these fees by acting as a direct investor.

Question: The Satisfaction Guarantee will refund your investment up to $250,000. What happens if I have funds invested in excess of this amount?

Answer: The guarantee will refund only up to $250,000. If your investment exceeds this amount, the excess will not be refunded. However, the firm also has a commitment to work out whatever issues you might have with a particular investment.

Question: What is the typical size of an Origin property investment?

Answer: The firm generally looks to invest in projects in the $10 million-$40 million range. Origin also limits exposure by keeping the loan-to-value on their investments to not more than 70% of the property value.

Question: Since Origin Investments funds are private, are they subject to third party verification, the way public investments are?

Answer: Yes, the investments are audited by a Chicago-based accounting firm.

Should You Invest With Origin Investments?

Naturally, you’ll only be able consider investing on the platform only if you are an accredited investor. But if you are, Origin Investments offers you an opportunity to not only earn higher returns than you can get on most other investments, but it also provides a chance to diversify into an alternative investment, commercial real estate.

The emphasis on select high growth markets gives these investments an added measure of integrity, since such markets typically produce accelerated price appreciation. Participation in qualified opportunity zone investments (the QOZ Fund) is untested, but it has the potential to earn significant returns, with special tax treatment, in the years ahead.

Origin Investments certainly represents an alternative investment, so you’ll want to limit your exposure to a relatively small percentage of your total portfolio. But it can offer an opportunity to seriously increase your portfolio return even with a limited allocation.

If you’d like more information, or if you’d like to sign up to begin investing, visit the Origin Investments website.

Topics: Investing • Real Estate Investing • Reviews

The post Origin Investments Review – Exclusive Real Estate Crowdfunding Platform appeared first on The Dough Roller.

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