Frequently Asked Questions

How much investor capital is the Fund going to raise?

Our goal is to raise $30-40 million, up to a maximum of $100 million. With conservative leverage, $30-40 million translates into $90-120 million in assets or 1,500-2,500 multifamily units.

What is the manager’s compensation?

AWF will pay the Manager one to two percent (1-2%) of the Fund’s Net Asset Value (value of the Fund’s assets less debt). After a seven percent (7%) preferred return to investors and manager catch-up, the remaining profit split between investors and Manager will depend on when the Investor joined the Fund during the two-year Offering Period:

Months 1-6: 90% Investors / 10% Manager
Months 7-12: 85% Investors / 15% Manager
Months 13-18: 80% Investors / 20% Manager
Months 19-24: 75% Investors / 25% Manager

Are there any additional fees?

The Manager will earn an Acquisition Fee of one percent (1%) of the purchase price of acquired assets at the closing as a due diligence fee.

What is the projected term of the Fund? Will there be a forced sale of assets at the end?

After the two-year offering period, AWF will have a term of two (2) years. The Manager may extend the term by three (3) additional one-year periods at its discretion. Any further extension will require a vote of the Members of the Fund. There will be no forced sale to meet any particular term; the overriding consideration is to protect the investors from incurring reduced returns or losses due to fire sales of assets.

Why is the Fund structured as a limited liability company (LLC) instead of a limited partnership (LP), real estate investment trust (REIT), or UPREIT?

Both LPs and LLCs protect investors from liability (beyond their investment) and are well-established, flexible, and straightforward to administer. LLCs are more common for real estate investments, which is an advantage when working with agency and non-agency lenders and other third parties.

A REIT structure puts limits on the disposal of assets, among other restrictions, and is therefore not suitable for executing the Fund’s business plan. Exiting into a public or private traded or non-traded REIT may be an option for the Fund.

AWFs individual assets will be held in wholly owned sub-LLCs for liability and financing reasons. Those special purpose vehicles will be treated as pass-through entities for tax purposes.

What is the Manager’s experience with multifamily and other residential real estate assets?

The principals of the manager have purchased, rehabbed, managed, and sold over 9,000 single-family rentals in the past decade for institutional capital partners (mainly large private and publicly traded hedge funds and REITs). They also directly own or have owned over 1,000 multifamily units and are passive investors in another 4,000+.

Merrill Kaliser is the founder and principal of a boutique SEC law firm that specializes in multifamily syndications. He has facilitated thousands of multifamily transactions for hundreds of clients over the past decade (totaling over $2B in value) and is a frequent speaker at regional and national multifamily syndication conferences.

How will the Fund’s assets be managed?

At least initially, the Fund will work with experienced third parties for property management. The Manager has extensive experience with closely supervising property managers. We will require them to use specific processes and procedures and integrate with our systems for real-time analytics.

Once AWF has achieved critical mass in a market, the Manager may put local market managers in place to directly oversee the assets.

What is the Fund’s strategy on rehabs?

To generate the highest returns with the least risk for AWF, the Manager will tailor the strategy for each asset. Typical assets will have 100+ units, 1970s or newer, with at least 70% current occupancy and opportunities for value-add (growing rents and providing new amenities and/or services to generate additional top-line income).

Asset updates usually include cosmetic remodels of $4-5,000/unit and +/- 10% of purchase price on the exterior and systems (streets, parking, building painting, roof, HVAC, etc.). Newly renovated opportunities with attractive cap rates will be options as well. Those are rarer at this point in the cycle but may become available again during the life of the Fund, and through off-market deals.

Turning a multifamily unit will take a week or less (subject to materials). The units will receive C Class-typical finish outs, including wood-style vinyl plank throughout, new water-efficient toilets, black appliances, brushed nickel fixtures, and light gray to off-white paint.

What yield on cost is the Fund targeting?

6-9% stabilized net cap rate (unlevered).

Will the Fund’s rehab strategy include complete de-tenanting of assets?

Most of the time, rehabs will be performed on turns to maintain cash flow, but complete asset overhauls are an option as well depending on the situation. For single family rental homes, rehabs will be performed after acquisition and prior to the first tenant moving in.

Will the renter demographic be able to afford the upgraded rents?

If the submarket demographics do not support the projected rent growth, the Fund will not purchase the asset.

What type of financing does the Fund intend to employ?

Both agency and non-agency debt, depending on the most advantageous terms at time of purchase. Leverage is capped at 3:1 at the asset level. Agency debt usually comes with a loan-to-value (LTV) of 65-75%; non-agency may allow for higher LTVs.

What data does the Fund use to underwrite asset purchases?

1. CoStar for asset and market/submarket data
2. Yardi Matrix for submarket actual financial and rent data
3. Proprietary underwriting software for demographics, crime, flood, school ratings, and dozens of other data points
4. Local market research with brokers and property managers in the area
5. Site visits
6. Unit-by-unit walks and rehab budgets
7. Seller-provided actual financials (T-12), rent rolls, and improvement schedules (to be verified during due diligence through inspections, bank record reconciliation etc.)

How does the Fund source assets to acquire?

The Manager monitors commercial real estate listing sites such as CoStar and has many broker contacts who will submit listings and pocket listings to the Fund. More importantly, the Manager has access to off-market deals through its extensive network of clients and real estate professionals built over many years.

Are there any conflicts of interest with the prior fund, USREOF Feeder Fund I LLC, or other single family rental origination activities?

No. USREOF has completed its purchases and will begin returning capital to its investors soon. The buy box of this Fund is outside of any other current mandates of the manager. Also, single family rentals will only make up a small portion (if any) of the Fund’s assets.

How are investment/disposition decisions made? Is it a committee process?

The decisions are made by the Fund’s investment committee which consists of Merrill Kaliser, Jeff Satz, Cindy Mirliss, and Bhuvan and Pratima Sharma.

Does the Fund have experienced multifamily underwriters?

All members of the investment committee have multifamily underwriting experience.

Who is overseeing day-to-day operations?

Jeff Satz and Bhuvan and Pratima Sharma.

Who will manage the Fund’s financials, including debt?

Tandy Robinson, CPA (Controller).

How often will the Fund provide reports and financials to the Fund?

The Manager will provide regular updates and performance reports (monthly during the offering period, quarterly thereafter). The Investors will receive quarterly statements prepared by the Fund’s third-party administrator, Opus Fund Services, as well as annual financials and tax documents (K-1).

Opus will also handle the onboarding of investors and provide an online portal for them to view and retrieve all Fund-related documents at their convenience.

Are the Fund’s financials audited?

Yes. The Fund will be audited by Saville & Associates.

How do investors make their contributions?

Investors will complete a subscription package. The investment amount is due at time of subscription (no capital calls).

Are there enough suitable assets available for purchase with the investor capital?

Yes. The Fund is limited by the availability of investor capital. Leverage is accessible on very favorable terms and there are far more attractive deals available for purchase than the Fund has capital to close on.