What is the process of making an investment?
When you make your investment, the money is held securely in an independent escrow account. Your investment is not final until the company raises enough money to meet its minimum investment target. Once the target has been met, the money is transferred to the company and you will receive your security. If the minimum is not met, 100% of your investment will be returned directly to you. Neither REITless, nor North Capital Private Securities, will ever receive or hold any investor funds during the process.
When I invest in an offering on REITless, what do I own?
Investing in a REITless offering means you are investing in a Trust Deed Note Participation Agreement (Participation Agreement). This is a promissory note with a stated interest rate for a stated term. A Participation Agreement is a contract between an investor and REITless and is dependent on payment of the underlying loan between REITless and the property developer. REITless secures a first lien position (mortgage) on the underlying property. This means the investor does not own the underlying property, nor is the property title in his/her name.
What are REITless' interest rates?
Most loans range from 9% to 13% in annual interest. Interest rates are determined by many factors such as borrower experience, credit score, loan-to-value ratio (LTV), and after repair value (ARV), and can fluctuate, as each loan is unique.
Am I charged any fees to invest on REITless?
REITless does not charge any direct fees to invest on the platform. REITless does however charge the borrower a loan due diligence fee and charges up to a 2% servicing fee from gross interest payments. All interest rates displayed on REITless are net of fees unless marked otherwise.
What is the duration of my investment?
Many loan terms range from 3 to 12 months. The full loan term is clearly stated on each note. If REITless has not negotiated a prepayment penalty, Borrowers can pay off the loan early without consequence.
Are my investments liquid?
Principal investments are highly illiquid. The initial investment is repaid at the end of the loan term, or sooner if the borrower repays the loan before the end of the term.
What are the risks associated with hard money loans?
Though this type of loan often offers higher rates of return, there are inherent risks with these investments. Those risks may include, but are not limited to, a catastrophe or disaster destroying the investment property, a downward trending local real estate market (only concerning if significant enough to eliminate a profit motive for the developer), or non-completion of the project. These risks are typically associated with real estate, and can be alleviated by REITless’ due diligence, insurance, and other mechanisms.
Why choose REITless?
REITless is investor focused and strives to bring the most favorable terms to our investors. Our firm’s principals have decades in the securities business and have worked for the likes of Goldman Sachs, Bear Stearns, UBS and Bankers Trust. We believe we are the most experienced team in the industry.
Are these investments risky?
Yes, investing in real estate is risky. Though REITless conducts a stringent due diligence process, prior to finalizing investments, we encourage investors to review the due diligence materials, as well as the Investor Agreement, Trust Deed Note Participation Agreement, and the Offering Memorandum.
Who can invest?
REITless is currently allowing only accredited investors to invest in the offerings on the REITless platform. We are planning to launch a Regulation Crowdfunding offering in the near future so please stayed tuned. To register as an accredited investor, simply sign up for a REITless account and complete the online self-accreditation questionnaire.
What is an accredited investor?
Under the Securities Act of 1933, a company that offers or sells its securities must register the securities with the SEC or find an exemption from the registration requirements. The Act provides companies with a number of exemptions. For some of the exemptions, such as rules 505 and 506 of Regulation D, a company may sell its securities to what are known as “accredited investors.” The term accredited investor is defined in Rule 501 of Regulation D.
For more information about the SEC’s registration requirements and common exemptions, read their brochure, Small Business & the SEC. For more information about how individuals can be accredited investors, see their Investor Bulletin on accredited investors.
In Rule 501 of Regulation D, federal securities laws define an accredited investor as*:
- A bank, insurance company, registered investment company, business development company, or small business investment company;
- an employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million;
- a charitable organization, corporation, or partnership with assets exceeding $5 million;
- a director, executive officer, or general partner of the company selling the securities;
- a business in which all the equity owners are accredited investors;
- 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;
- 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; or
- a trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.
* from the SEC’s website
How can I verify my accredited status?
To verify your accredited status quickly and securely, visit our affiliate Accredited.AM. The accreditation service is free for investors and can be completed entirely online. We also ask that you self-accredit on REITless as part of the marketplace registration process.
Am I required to make an investment if I register as an investor?
No, you are not required to make an investment on REITless. Registration gives you access to the REITless Marketplace and allows you to browse all of the current investment opportunities.
What is the process of making an investment?
The investment process may differ slightly for each investor, depending on his or her personal investing preferences, but it can generally be described as follows:
- Create an account: Investors must first create an account and register on REITless.
- Self-verify accredited status: Investors must verify their accreditation to gain access to the marketplace. You will also receive a phone call from a registered representative of North Capital Private Securities to verify your identity and assess your suitability, as required by FINRA regulations.
- Browse our offerings: Once you have identified a potential investment opportunity, you should review the terms of the offering located in the Documents section of the offering page.
- Invest: Once you are comfortable with the investment terms, you can select “Invest” to initiate the purchase process.
- Fund investment: After selecting to invest in an offering, there are only a few steps left to complete the process:
- Enter your investment amount
- Select your payment method (ACH transfer, wire, or check)
- Verify your identity and accreditation status
- E-sign and execute the required legal agreements sent to your email
Once these steps are completed, your funds will be held in an escrow account until the fundraising is closed. At that point, you will receive confirmation of success and counter-signed legal agreements. In the event of an unsuccessful round, your funds will be returned to you by the escrow agent. You can track the status of your investment(s) from your dashboard anytime.
Is my investment guaranteed once I have made my commitment?
REITless operates on a first-come, first-serve basis. As long as you are an accredited investor with available funds and have placed your commitment before the maximum fundraising amount is met, you may make the purchase. Once the offering has closed, the status of that investment on your portfolio dashboard will change to “complete.”
How are legal documents handled on REITless?
All required documentation is emailed to you using Adobe Echosign. Once you have carefully reviewed the documents, you can sign them electronically. You will receive an emailed copy of all signed documents for your records.
Can I invest in a property if I am located outside the United States (non-U.S. citizen)
Yes, REITless allows investments from those domiciled outside of the United States, although this requires a few additional steps. If you find a deal you would like to participate in, contact us at help@REITless.com and we will set up a time to discuss the required information.
When will my interest begin to accrue?
The interest will begin to accrue from the date REITless receives your funds until the date the borrower has repaid the loan. We often do not penalize borrowers for early repayment.