When considering an investment in real estate, McGregor Interests, Inc. is honored to be in consideration. We analyze the fundamentals of each property, its position in the market, and our ability to enhance that position. We do not consider the income tax ramifications of ownership nor the cost and effect of borrowed money in determining the initial acquisition price. We do not believe the tax tail should wag the economic dog. Both the treatment of income taxes and mortgage interest rates are short-term at best. While an investment structured around debt may preserve capital, it will not necessarily build wealth. The real estate’s inherent value is its ability to preserve capital while providing a hedge against inflation and its ability to increase in value over time, thus building wealth. If one adds to that, the changing income tax ramifications and the changing interest rates, the apparent value of the property can be misleading.
Real estate is, and should always be considered, a long-term investment. People have been investing successfully in real estate for thousands of years, long before there was an income tax nor the ability to borrow against the real estate. Once we have established a purchase price, we then endeavor to maximize the returns through proper use of leverage and by taking advantage of whatever tax treatments there may be available at that time. If those factors change, and they always do, the inherent value of the real estate still remains. This is what we mean by traditional real estate investing.
We feel this philosophy and performance has contributed to the large number of our investors who have continued to invest with us over the years.
Syndication is the pooling of investor money where the investor is typically a passive limited partner. The other partner to the deal is the managing member, or active partner that puts the deal together and implements the business plan to provide a return for the benefit of all investors. General Partner (GP), managing member, and Sponsor are often used interchangeably.
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It depends on the fund. Some of our offerings are released under rule 506(b) which allows for both accredited and non-accredited investors and some are released under rule 506(c) which allows for accredited investors only.
Now when an investment opportunity arises, , you will receive correspondence about the offering, which will detail property type, investment objectives, and estimated return. If the investment is of interest, please reach out and we will provide you access to the necessary investment documents for your review and completion.
You can see a list of all our prior investments on the website. Prior performance tables are available for review with each offering.
Each offering is slightly different however typically minimum investment amounts are $25,000-$100,000
Plan on a 10 year hold period. The shortest time we have owned a property was 84 days, and the longest was completed in 1989 and still operating.
Distribution payments are sent, in June and December.
The short answer is no. On occasion, Investors may need to sell before the end of the holding period. Should this occur we will provide our opinion of valuation, the investor then determines their asking price, and we will then send out correspondence to the other investors in that offering advising them of the availability for additional investment. Should those investors all pass, we will send it to the members of our other offerings.
Typical cash on cash returns are projected in the 8-10% range and an internal rate of return (IRR) of 16 – 20% range. In a value add or new construction syndication, the annual return may be deceivingly lower than the overall IRR (Internal Rate of Return) as a large part of the investor returns come from sale proceeds.
Investing in commercial real estate allows you to take advantage of current tax benefits which provide sheltered or partially sheltered cash flow, by utilizing the following accounting practices:
Monthly financials will be uploaded to the investor portal. Furthermore year end financials, tax returns, K-1’s, and annual video updates will be uploaded annually.
Typically our offerings utilize debt to increase cash on cash returns. Debt ranges from 40%-70% loan to value. Investors are limited liability partners, so your risk is limited to your initial investment. On occasion lenders require a personal guarantee to secure financing. When this is required one of the sponsors will personally guarantee the debt.
Yes, consult your custodian.
You cannot 1031 into our deals or out of our deals since you are technically purchasing units of our LLC and not actually the real estate itself. Occasionally we may have an offering in an Opportunity Zone, which will allow you to invest the gains portion from your prior sale.
We will always invest our money with our limited liability partners. The amount of our minimum investment will be disclosed upfront.
This varies with each offering; however the general structure remains the same. The sponsor receives an acquisition fee, implied equity, and a portion of cashflows from operations and sale. These fees are disclosed in each offering memorandum.
It ranges from approximately 5-40 depending on the size of the offering.
Financial advisors will generally recommend not les than 10% and not more than 40% of net worth should be invested in value be tied to commercial real estate. Lower net worth individuals will have less exposure to commercial real estate as a percentage of their total net worth, and higher net worth individuals will typically have high percentage of their total net worth tied to commercial real estate.
This favors the limited partner. It essentially means that the limited partners need to receive their annual preferred return on an investment before any distributions to the managing members.