FAQ

The General Partner (GP) Team at KR Pace Group is comprised of experienced real estate investors who have joined forces to acquire and manage multifamily properties. These properties typically involve multimillion-dollar investments requiring substantial down payments.

While the GP Team will invest their own capital in the deal (also known as having "skin in the game"), they may not have the financial resources to fund the entire acquisition. Additionally, to diversify their investment portfolios, they prefer not to concentrate all their resources in a single investment—a strategy we also recommend to our investors.

This approach allows us to offer investment opportunities to Limited Partners (LPs). The funds raised from LPs are primarily allocated for three key purposes:

1. Deposit: Securing the necessary down payment to purchase the property.

2. CAPEX: Funding capital expenditures to improve the property's condition in line with the business plan.

3. Reserves: Maintaining a contingency fund to address unexpected expenses and ensure financial stability.

By partnering with us, investors can take advantage of these well-structured opportunities while benefiting from the expertise and commitment of the GP Team.

YES, YES and YES! If this was not clear enough, YES. Every investment carries inherent risks. We strongly encourage you to conduct your own due diligence, starting with evaluating the GP Team and then assessing the specific deal presented.

Historically, real estate has been considered a relatively low-risk asset class. Our goal is to manage the property to the best of our abilities, aiming to deliver the forecasted returns outlined in our business plan. While market conditions can change, and unforeseen events such as another pandemic may occur, each of our deals undergoes rigorous stress testing analysis to ensure profitability even in the most adverse scenarios.

At KR Pace Group, we are committed to transparency and diligence, striving to provide a secure and profitable investment experience for our partners.

The average Return on Investment (ROI) varies based on the type of property acquired. Here are some general guidelines to consider:

- Investment Doubling: Expect to double your investment in approximately 3-6 years, with the average being around 5 years.

- Internal Rate of Return (IRR): Typically ranges between 15-25%. For clarity, the IRR is a metric used in financial analysis to estimate the profitability of potential investments. IRR is a discount rate that makes the net present value (NPV) of all cash flows equal to zero in a discounted cash flow analysis. IRR calculations rely on the same formula as NPV does. Keep in mind that IRR is not the actual dollar value of the project. It is the annual return that makes the NPV equal to zero.

- Annual Cash Flow: Generally falls between 5-10%. This can vary significantly depending on the strategy and type of property. For instance, a new build might offer lower initial cash flow but higher long-term upside potential, while a stabilized property could provide higher cash flow from the beginning but with more modest upside potential.

For clarification:

-Cash Flow: In simple terms, cash flow refers to the amount of money that is generated from a real estate investment after deducting all expenses. As an investor, cash flow is crucial because it not only provides a consistent income stream but also acts as a measure of the investment’s profitability. Quarterly distributions are calculated predominantly using this metric and taking into account “free cash”.

-Upside Potential: Some properties have a “delayed gratification” factor which means that patient investors are going to receive the majority of their returns at the time when the GP team decides to re-finance or sell a property.

At KR Pace Group, we tailor our investment strategies to balance these factors, aiming to optimize returns and meet the diverse goals of our investors.

Typically, there is a six-month stabilization period from the acquisition date to the first distribution. This period allows the GP Team to effectively manage the property, implement the business plan, and assess the available free cash for distribution.

Distributions are generally released to Limited Partners (LPs) on a quarterly basis, every three months.

At KR Pace Investor Group, we prioritize careful planning and execution to ensure consistent and reliable distributions to our investors.

A K-1 is a tax form used to report a partner's (investor) share of income, deductions, credits, and other allocable items of a partnership. Every partnership, including real estate investment funds, is required to file a K-1 with the Internal Revenue Service (IRS) the CPA firm of the GP Team will fill out a K-1 tax form and provide it to each partner (investor) annually. The K-1 details the investor's annual share of the partnership’s taxable income, which is used to prepare the investor’s individual tax return.

One of the significant advantages of investing as a Limited Partner (LP) in multifamily properties is the depreciation benefits. While this is a complex topic, in simple terms, it allows investors to offset other income from various sources with the depreciation received from their multifamily investments.

The Cost Segregation method is the main way how the GP team achieves the depreciation benefits. A cost segregation study identifies and reclassifies personal property assets to shorten the depreciation time for taxation purposes, which reduces current income tax obligations. Personal property assets include a building's non-structural elements, exterior land improvements and indirect construction costs. The primary goal of a cost segregation study is to identify all construction-related costs that can be depreciated over a shorter tax life.  

We recommend consulting with your CPA to fully understand these tax benefits.

Transparency: At KR Pace Group, we are committed to maintaining an open line of communication throughout the duration of your investment. We promise to respond promptly and answer any questions you may have before, during, and after your decision to invest with us. Your trust and confidence are paramount, and we are dedicated to providing ongoing support and clear, honest communication every step of the way.