Impact Housing REIT: Review
Category: Non-accredited investor funds
2018-11-26: Impact REIT says that it is shutting down. They claimed they were only able to raise $2 million of the $3 million required for their first acquisition. This is a little bit puzzling, considering the claimed experience. They say that all investors received back their money.
More discussion in the private club here: Impact REIT.
Impact Housing REIT is a commercial real estate fund that seeks to acquire and renovate distressed and/or neglected apartment community in “B/C” locations nationwide.
In addition, it has partnered with the Healthy Apartment Property Initiative (HAPI) Foundation, a 501C-3 non-profit, to provide free food and health and wellness programming, as well as fitness education and activities to kids and families living in its communities. (This earns it our "most socially conscious" award).
The sponsor's team says they have acquired and transformed over $3 billion in multifamily properties since 2001 (either as principal or advisor) and raised approximately $260M from private investors. Their 7 year track record is claimed to be a 8.55% annual cash on cash, and IRR of 24.74% on 28 projects containing 40 properties.
The leverage target is a maximum of 80% of purchase price which is aggressive.
They are one of the few non-accredited funds that have bankruptcy protection. If they go bankrupt, shareholders can vote to select a new manager, which is a great feature.
On the downside, they do not have any quarterly liquidation like competitors in the industry have. This means your money will be locked up for 5 to 7 years until the fund sells all its assets and winds down. So this needs to be long-term money that you don't need for a while.
In addition to performance fees they are one of the few non-accredited funds to charge a 1% disposition fee on the total sales price of the property (the average is no fee). They also charge 1% financing/refinancing fee which is unusual (the average is no fee), as well as construction management and miscellaneous fees which are also unusual.
We are still waiting to hear back on further information regarding target yield and all fees, and will update this review then.
The minimum investment is $1000 (which matches the industry average).
Advantages: Considerable track record claim by the sponsor, provides free food health and wellness programming and fitness education to kids and families in its communities through partnership with the nonprofit
Disadvantages: disposition fees, financing/refinancing fees, construction management and miscellaneous fees are charged (which the average fund doesn't do).
Accolades: Most experienced sponsors, Most socially conscious.
Where can I discuss Impact Housing REIT?
You can do this with thousands of other investors in the private investor club. While the club is free, membership is restricted to investors who have no business connections to sponsors or platforms. Also, all members must agree to keep all club info confidential by signing a nondisclosure agreement. Click here to join or get more info.
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About Ian Ippolito
Ian Ippolito is an investor and serial entrepreneur. He has been interviewed by the Wall Street Journal, Business Week, Forbes, TIME, Fast Company, TechCrunch, CBS News, FOX News, USA Today, Bloomberg News, Realtor.com, CoStar News, Curbed and more.
Ian was impressed by the potential of real estate crowdfunding, but frustrated by the lack of quality site reviews and investment analysis. He created The Real Estate Crowdfunding Review to fill that gap.
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