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Everything you need to know about commercial real estate investing, real estate crowdfunding and more.
How do I invest?
There are 3 simple steps to investing:
1. Browse and Conduct Due Diligence - Review the offering materials, including the real estate investment presentation and investment documents.
2. Invest – If you see a deal you like and want to make an investment, you can move to a secure investment area by clicking on the “Invest Now” button then simply fill in the amount and other investment information.
3. Benefit - Fund the investment by wire transfer or send in a check.
How do I fund my investment?
After you have filled in your investment amount and gone through the electronic documents, you will be provided funding information. To fund an investment you will be provided with wire transfer instructions or you can send us a check for the amount of your subscription. The investment amount will go into the deal bank account. Once the closing is complete, CityVest will send you a notification via email that we have closed and you will receive the fully executed documents.
How / when do I receive my distributions?
After an investment is made to acquire a property or in a real estate investment fund but prior to the sale or realization of the investment, your investment may earn a quarterly, semi-annual or annual distribution at the rate of 6% to 10% per annum of the investment amount. Some development and value add real estate investments may initially provide a lower annual distribution. Some real estate private equity funds may delay providing any distribution until after the first or second year of making the investment. An investor’s share of any distributions is generally transferred directly into the same bank account that was initially used by the investor for the contribution of the original investment amount, and typically occurs soon after CityVest's receipt of such distributions. Please review the expected distribution schedule for each investment before making an investment. No distributions are guaranteed.
Where does my money go once I commit to making an investment?
A distinct bank account will be utilized for each investment. You can send your money via a wire transfer or mailing a check. Your money will remain in the bank account until the time of closing. Bank wire transfer instructions are provided on the CityVest platform and in the Subscription Agreement.
When and how does my money get transferred from the bank account?
After signing and submitting all required documents digitally via Docusign, you can then fund your investment via wire transfer or check to a bank account. When we have received the minimum amount necessary, you will receive a confirmation from CityVest that the closing process is complete at which point your funds will be released for the investment from the bank account.
How do I make money?
You can make money from a CityVest opportunity in two ways: 1) distributed cash flow from each of your properties or funds and 2) profit when the property is liquidated. You may also receive certain tax benefits associated with property depreciation.
What is the target return of my investment?
The typical investment will seek to achieve a 10% to 25% rate of return over the life of the investment. This return may include an annual interest or other distribution from the investment, and sometimes this payment may include a preferred return structure. In addition you may get a payment of profits after the property is sold.
What criteria does CityVest look for in a real estate private equity fund?
CityVest is focused on real estate investment funds that have a track record of audited investment returns, strong property and asset management capabilities, reputable service providers (such as auditors, administrators, banking and financing relationships), and good relationships with prior limited and joint venture equity partners. We will generally only take on investment managers that are on their second, third or fourth fund and can provide detailed evidence of prior experience and capability in the geography and niche focus of the fund for which they are seeking to raise capital. The lead members of the investment manager must clear a criminal and credit check with no felonies, OFAC or SEC violations. The investment manager must also invest in no less than 1% of the targeted value of the fund.
What is the structure of my investment?
You are typically investing in shares or membership interests in a limited liability company established by CityVest. In turn, that LLC owns (directly or indirectly), along with the sponsor and other investors, a share of a joint venture entity that owns a specific investment property, like a specific apartment building. An LLC gives you liability protection, shielding your personal assets from the investment. Please find more detailed investment information and risk disclosure in the investment memorandum, presentation or operating agreement for your investment. Potential investors are strongly urged to read the complete set of closing documents in its entirety prior to investing.
What criteria does CityVest look for in an investment opportunity?
CityVest is focused on investing in real estate investments originated by strong sponsors. Strong sponsors may possess many of the following attributes: (1) verifiable track record of prior sponsored deals amounting to at least $10 million of transactions and 3 deal in last 3 years. (2) the sponsor’s current transaction must be in a similar geography and property type as their past deals, (3) the sponsor must possess strong property and asset management capabilities, (4) have reputable service providers (such as auditors, administrators, banking and financing relationships), (5) good relationships with prior limited and joint venture equity partners, (6) invest 10% of the equity of the deal, net of sponsor transaction fees, (7) clear a criminal and credit check with no felonies, OFAC or SEC violations. Regarding the sponsor’s property, it must have (1) financial reports indicating a history of positive cash flow performance, (2) strong indications that the property's positive performance will continue for at least the next five years related to geography, demographics or a value add component, and (3) the properties should produce a targeted preferred return of 6% to 10% with a targeted IRR of 10% to 20%.
Who makes the decisions of the LLC?
Decisions in an LLC are governed by a document called an “operating agreement”. While every operating agreement is slightly different, they usually include a manager (who may also be a member) and limited members. The manager, such as CV Manager LLC, typically makes all of the day-to-day decisions and the limited members act as passive investors on the transaction. The manager can determine how much cash to distribute to the limited members versus how much to hold in reserve and assess possible sales for the property. There are certain activities that might mandate a vote by the limited members and the limited members can typically take action if the managing member defaults on the terms of the agreement or is grossly negligent.
How liquid is my investment? What happens if I need to sell early due to an unforeseen cause?
No secondary market currently exists for your investment. You should assume that you will not be able to retrieve your investment prior to the scheduled liquidation date. Further, the investment is considered a “restricted securities” and are not being registered under federal or state securities laws. As such, they may not be resold or transferred unless they are so registered or qualify for an exemption therefrom. CityVest will endeavor to assist each investor in locating a buyer of their investment interest should the need for liquidity arise prior to the realization on an investment.
How much money will the sponsor invest in the acquisition of a property or an investment manager in a real estate private equity fund?
The exact amount should be specified in the investment presentation. Generally, sponsor's and investment manager's contributions account for five to twenty percent of the total amount of equity invested in the investment.
What are the risks of this investment?
Your investment involves substantial risk including risks to the value of the property at the time of its liquidation. See Risks.
Do I qualify to invest in CityVest investments?
CityVest is seeking investors who are “accredited investors,” as defined in Rule 501(a) of Regulation D under the Securities Act.
What is an “accredited investor”?
The SEC defines accredited investors as a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person; or a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.
Why do I have to be an “accredited investor” in order to invest?
Under Securities and Exchange Commission rules, we may only accept investments from accredited investors.
What is the maximum and minimum investment amount?
There is no set maximum amount. Generally the minimum amount will be $10,000 and on a case by case basis the minimum may be higher. To the extent that demand exceeds capacity; allocation preference will be given on a combination of first come first served and to those who invest greater amounts.
Can I invest via a self-directed IRA?
Self-directed IRAs can invest in a Cityvest investment but they require custodian involvement and approval before an investment can be consummated. This process creates delay and involves manual processes that reduce the efficiency of the CityVest platform. We continue to evaluate our processes here, however, so if you are interested in investing through an IRA then please contact us and we’ll see what we can do.
Once you link your self-directed IRA to CityVest with a bank account, you can transfer funds immediately.
If I commit to investing, am I guaranteed a place in the investment?
No. We will attempt to accommodate as many investors as possible. However, if demand exceeds supply, we will need to allocate shares to investors ourselves. CityVest may accept or reject subscriptions at their discretion.
How do you keep my personal information secure?
We go to great lengths to ensure the security of all our members and our data and use Secure Sockets Layer. SSL is the standard security technology for establishing an encrypted link between a web server and a browser. We use 128-bit encryption, which is the same level of encryption used by top national banks. We are also regularly audited by third party security firms to ensure compliance with the most rigorous security standards. For added protection, we never store your banking information on our servers and we automatically log you out of your account after a period of inactivity.
What are the tax implications of investing in a CityVest opportunity?
Investments listed on CityVest will be structured as LLCs, which act as “pass-through” entities for tax purposes. This is done to avoid double taxation. Since the LLC pays no corporate income tax; profits, losses and depreciation can be passed through to the investors, as applicable. The significant advantage of an investment in real estate in a sponsored deal on CityVest is that the investor will receive a tax deduction for their share of the depreciation which may reduce the tax liability on income received. So, the attractive return from investing in an income producing property may be even more attractive if taxes are reduced on some of that income. You should speak to your own accountant, attorney, or tax advisor to understand how a CityVest investment will impact your specific tax situation.
What is your real estate investment evaluation process?
CityVest maintains an extensive network of real estate investment sponsors who seek to finance their real estate acquisitions. Our team leverages this network to source and select only the highest quality opportunities for our investors, as shown below our screening process is highly selective.
1. Submission – Sponsors submit initial offering materials to the CityVest team.
2. Initial Screening – CityVest performs basic analysis to ensure potential investments provide generous returns and attractive risk profiles. The initial screening process may eliminate 50% to 80% of the potential investment opportunities based upon sponsor or deal related due diligence.
3. Analysis – CityVest carries out a comprehensive examination of the project, its market, management, financials and deal structure. This “vetting” process ensures our investors receive a level of informed investment analysis otherwise unavailable to retail investors. This analysis phase may eliminate the remaining deals, except for the top 1% to 5% of investments opportunities.
4. Offering – Only the best investments are presented to CityVest members. While CityVest will source and select investmetn opportunities, CityVest and its affiliates do not make any investment recommendations or provide any investment advice.
What legal documents am I required to sign in order to invest?
First, review the operating agreement and other offering documents. Please sign the signature page for the Operating Agreement digitally via Docusign, email or mail a hard copy.
How is CityVest different from a Real Estate Investment Trust (REIT)?
REITs can be liquid investments and are often traded on public exchanges making them subject to the ups and downs of the equity markets. REITs cannot pass through any of the tax benefits that are so attractive in real estate investments. CityVest shares none of this type of market risk as primary real estate asset prices are less correlated with the Dow Jones or other comparable equity markets. REITs are similar to mutual funds in that they are directed by asset managers with broad authority to buy, sell, or restructure properties within the fund and without your consent. REITs generally have a range of different properties that they are investing in. In the case of a CityVest investment in a specific property, you will know details about that specific property. In the case of a CityVest investment in a real estate private equity fund, you will know the track record, strategy and focus of the investment manager, but you will not know the specific details of their investments prior to your investment. However, unlike a REIT investment, a real estate private equity fund will provide a pass through of certain tax benefits to investors.
What happens if an investment’s funding target is not met?
If an investment target is not met, you will receive 100% of your investment deposit back.
Will the properties have mortgages on them?
Real estate investments are generally funded mostly by mortgage debt due to the low cost of financing. Debt or “leverage” increases returns to equity holders, while also making the project more risky. We expect that CityVest investments will be partially funded with debt, this information will be clearly detailed in each projects presentation. Principal and interest payments due under the mortgage will be paid through rental income generated from the property and will not be your liability or owed by you.
What if more money is needed for the property?
CityVest investments general do not have capital calls, meaning investors are not required to commit more money to the property beyond their initial investments. Rather than requiring an additional investment, it is possible that investors may be diluted if more money needs to be raised. It is also possible that the property may be sold.
What is backing my investment?
When you invest in a CityVest investment, you own a membership interest in a limited liability company (LLC). That LLC will invest in either the entity that is acquiring the property or the real estate private equity fund. CityVest does not usually provide direct real estate investment opportunities that have a mortgage lien or collateral securing the investment.
How long does it take to invest?
After registration, users can immediately view investment opportunities and subscribe to invest.
Does CityVest provide investment advice?
No. We and our affiliates do not make any recommendations or provide any investment advice.
What types of partners does CityVest work with?
CityVest seeks to find its investment opportunities through experienced real estate sponsors or investment manager of real estate private equity funds. The sponsors or investment managers will conduct due diligence and analysis on the property, structure the investment and arrange for mortgage financing.
What do I own when I invest through the CityVest Platform?
You will own a membership interest or a share in a limited liability company. You're purchasing rights to a portion of the entity which will invest in the property acquisition company or in a real estate private equity fund.
If I invest with CityVest and something happens to CityVest, what will happen to my investment?
Each CityVest investment has a separate LLC that could be managed by separate managers. CityVest would appoint an agent, such as a national bank or a trust company, to manage the LLCs in the event CityVest is unable to manage them. Of course, the LLC members could also vote to appoint their own agent.
If something happens to the property, is it possible for me to owe more than I invested?
No. The purpose of holding each investment offered on CityVest through a single-asset LLC is to limit your liability with respect to any particular investment to only the amount you invested. Therefore, if there is a lawsuit involving the property or property’s owner (the LLC), any legal and financial liability accruing to the LLC cannot pass through to you or your personal assets. You can only lose the amount you invested.
What are the investor fees?
There is no cost to join CityVest, browse opportunities, perform due diligence, and choose an investment property. There is a small annual fee – typically 0.75% (less than 1%) of the investment amount plus a small fixed annual fee – to cover the CityVest technology, listing and reporting. In addition, there is a reimbursement of accounting and other administrative costs. Please review the applicable investor package and the operating agreement for the investment vehicle for details on such fees. These fees help us maintain the platform and the regular reporting that is available on the investor dashboard.
Can I invest through my LLC, LP or Trust?
Yes, you can invest through an entity or trust. We will likely need some additional information concerning an investing entity, such as the articles of organization or the governing trust documents. Generally speaking, each owner of an entity, or each beneficiary of a trust, must themselves be an accredited investor, or else the entity must have total assets in excess of $5,000,000. Please contact us if you’d like us to get started on qualifying your investment entity or trust.
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