Does an investment in a managed Single Family Rental Pool belong in your portfolio?
We are pleased to announce residential real estate rental income dividend paying 5–7% yield quarterly, Three Arch Investment Fund 1 is open for investment. This fund is an alternative real estate investment with very unique components for investors who seek current income over a 3-6 year holding period. This fund is designed to take advantage of the recent (2012) recovery in home sale prices as well as rental housing. After buying 25 homes this calendar year, we already are already increasing values.
In early 2011, the Sponsor of the fund initially began acquiring executive homes in Las Vegas, and expanded to Portland in 2012. The fund will purchase homes throughout the West Coast to diversify the safety of the rental pool once we have completed our funding.
Our primary goal is to achieve current income. We have all seen our passive income shrink to unacceptable levels, and our objective was to find a safe alternative investment. This fund seeks accredited investors who desire an alternative to the Bond, Stock, or CD market. While we recognize that future values of any real estate investment may increase or decrease, we believe investors likely will benefit from the timely purchases made at what appears to be the bottom of the residential market. Of course, risk is mitigated when you are buying an asset at 50% below its replacement cost, and at a time most experts believe is now seeing the first signs of price appreciation.
All of our existing homes, which will be contributed to the new fund, have been rented for periods of 1-3 years. Our list of homes, the renters’ occupations, and the rental rates are available for review on our web site. Our management team ensures tenants have long term ties to the community. We review a 2+ year current job history as well as conduct background and credit checks for indications of stability and commitment to remain in the community. Please read the articles on our website which go into more detail regarding the rental program and our success in maintaining 100% occupancy. In the few cases of normal turnover (two houses), the homes were re-rented in less than 15 days after our former tenants vacated the properties.
The Fund is for accredited investors who are seeking income of 5-7% depending on the length of your investment period. We have a three-year minimum period, with a 5% annual return, where quarterly checks will be paid beginning on the 90th day from the date of your initial investment. Investors that choose to extend their investment for two additional years will earn 6% in years four and five. An additional sixth year can be added at a rate of 7% for that year.
Investors whom are accredited and can invest $100,000 or more for a minimum three-year period are invited to review our offering memorandum. Please determine the suitability of this investment with your investment advisor. Our goal is to make this investment a good alternative for the yield portion of your portfolio
You will find our 25 rented single family homes have a current value in excess of $2,500,000 and have been fully rented and producing distributable cash flow in excess of 5% since inception. The sponsor intends to acquire an additional 50 homes over the next 12 months bringing the total acquisitions to approximately $10,000,000. Although approximately 25% of the inventory will be owned by the sponsor and his family trusts, members of this fund will have a first right of distributions on all distributable funds prior to the sponsor, Mr. Michelson. This will provide consistency of distributions and some protection in the event of any future vacancies. The sponsor will also skip any fees in the event that any quarterly distribution is not made. Fees skipped will be carried over until the investors are made current on the indicated yields. While this investment and the cash flow are not guaranteed, the sponsor has taken steps to mitigate any likely interruption of quarterly distributions by using his current rental income as additional protection.
The fund will not exceed $10,000,000 of new membership shares, and will terminate upon full commitments, or the conclusion of the offering period, whichever is earliest.
The fund will have a one-time withdrawal after 24 months for its members without penalty, subject to cash on hand should you wish to liquidate a portion of your investment at that point. However, the investors who need to withdrawal will have the balance remaining extended to a three-year period from the withdrawal date, and shall be restricted to a 5% rate on the remaining funds. This provision is intended to address an emergency need and should not be assumed as a commitment for withdrawal – the ability to make a withdrawal is contingent on cash being on hand rather than a planned liquidation, and as such could be delayed. Therefore, members are permitted only one withdrawal under this provision. All withdrawals require a minimum of 90 days written notice.
In the second half of 2012, we saw clear signs of a housing recovery in both home sales and residential rentals. We posted a CNBC video on our website in which market masters forecast that owning homes for rental purposes was the best alternative investment in 2012. A report by the Harvard University Joint Center for Housing Studies indicates that the employment recovery , while still weak, ultimately will result in new household formation. The report states, “We have reason to believe 2012 will mark the beginning of a true sustainable recovery.” The study also added that housing demand will remain robust during the next 10 years.
Jed Kolko, chief economist of Truilia.com, noted leading indicators in 2012 saw asking prices rise by more than 3% in a handful of turnaround metros. Additionally, the three major indexes traded on the major stock exchanges increased in 2012: the Vanguard REIT index increased by 10.92%, the S&P Homebuilders Select Industry Index is up year to date 19.8%, and shares of the Dow Jones US Home Construction Index was up 28.11%. On our web site, we have more than 30 articles by industry experts supporting the compelling case for this investment. Please note this information still requires each investor to consult with their advisors to determine the suitability of this type of investing for their personal situation.
We believe investors today need to seek out alternative investments given that traditional sources such as bonds, stocks, dividends, Notes, Trust Deeds, CD’s, and stock dividends have fallen to record low returns. Single Family Homes, rented to quality families in newer, safe communities may be a great addition to your portfolio.
For more than 30 years, the Sponsor, David Michelson, has participated in more than 45 partnerships that developed, built and managed more than $1 billion of past projects, either in a co-development role as a senior member of a team, or on his own. The housing rental successes that Three Arch Investors has achieved since 2010 are posted on our web site. Again, we have maintained 100% occupancy and distributed 5% on a quarterly basis without interruption during the past 18 months.
This letter is not an offer or a specific solicitation. It is intended solely for the party to whom it was addressed, and should only be reviewed by qualified principals that meet the requirement for a non-retail investor. Any discussion regarding projections and past history, are not a guarantee of future events. The Sponsor has made every attempt to provide accurate information, but investors need to seek out their own council. Any future projections cannot be relied upon, because they are based on unforeseen future events that likely will affect results. Representations made herein are believed to be accurate but are not guaranteed
If you are looking for a safe source of consistent, or quarterly distributions that have a low correlation to the stock markets or international events, David would be pleased to discuss your participation.