What RREAF Holdings?
The company is a completely-integrated corporation with subsidiaries managing real estate, engaged in building, managing assets and doing just nearly everything that's needed to acquire, grow, manage and ultimately liquidate assets.
Is it reasonable to invest with the company?
RREAF Holdings has brought good things for its users on the basis of their 'CV'. However, like any other site, you need to know how it acquires money, what are the advantages, and if its approach is suited to your investment strategy.
A positive thing to note about the structure of RREAF Holdings is its completely-integrated business, it has heightened oversight over every venture. This sets it apart from most of the platforms that usually have third-party partners that manage all the information.
Nonetheless, there is a possible disadvantage to this approach. Investors can not choose from deals made by other developers. Seeing how RREAF (directly or via a subsidiary or related party) deals with nearly all aspects of development and runnings, there is heightened uncertainty for clients if RREAF starts struggling or defaults. Although your investments in deals are in another legal entity (which means that it is not directly liked to the worst-case collapse of RREAF), having one business deal with each part of each deal can cause heaps of issues when trying to retain your investment in its entirety.
What are the advantages and disadvantages of the company?
- Clear track record: The main players have spent dozens of years in property development, finance and building real estate. That experience and expertise is fantastic for you as a client.
- Full integration pros: RREAF directly handles each part of its ventures, and has executives with heaps of experience.
- Skin in the game: RREAF usually invests five to ten percent of the funds needed in transactions.
- Consistent transaction flow: They usually got 3-4 transactions simultaneously open, spanning different kinds of property.
- Self-directed IRA investment: RREAF will be willing to network with the majority of SDIRA custodians.
- Cons of complete integration: Along with transactions organized as bankrupt-remote branches, investors rely on the company for all things. Failure on the company's side would have consequences for every transaction that may incur losses thanks to faulty handling.
- Available just to approved clients: Just those clients with net wealth of $1+ million (not counting in the main property where the investor lives) or annual earnings of more than $200,000 can participate in RREAF transactions.
- Above-average minimums: Some offers are provided at a minimum investment of USD 25,000, but bigger min. are often to be found.
- Deals with bigger leverage: A lot of the company assets are funded with up to eighty percent debt-to-value. In CRE, that's a quite big leverage amount which can bring more uncertainty in terms of money defaults for clients.
Is RREAF Holding legit and a strong company?
The Management of the Company
The CEO Kip is Sowden who has 30+ years of CRE experience. He has personally been a part of the purchase, operation and growth of $400+ M in CRE and brokered $2.5+ B in CRE deals.
Other key executives are COO Doug McKnight and CFO Mitch Provosty, with a stealthy track record in property finance, operations and construction that adds up to RREAF Holding's offerings.
RREAF Holdings Operations
While other websites have deals offered by third-party partners, this company lists just those transactions in the marketplace for which it is a sponsor. In addition, the subsidiaries of RREAF Holdings must handle the assets, construction and remaining parts of development.
RREAF claims that it virtually never buys publicly listed assets, but purchases off-market real estate and uses the rich backdrop and contacts belonging to the key players in the company. The CEO, for instance, has a hefty backdrop as a broker for properties and has had a Texas license for over two decades as a broker.
The Performance of the Company
RREAF's online crowdfunding platform is pretty fresh, and just one transaction has thus far completely returned money, but that asset has returned thirty percent IRR (Internal Rate of Return) in only 22 months. RREAF turned down a notch when it comes to expected exits as a result of the coronavirus situation worldwide in the 2nd Q of 2020, acknowledging that it is not desirable to be a seller on a buyer's market. The management seems to be eager to find prospects in downturns, optimistic for long-term returns through economic landscapes.
Can I invest in the company? What's the min. amount for investing?
This business is available just to accredited clients, which means that you got to claim a net value of $1 M, not counting your main property where you live (alone or with a spouse) or earn the equivalent or more than $200k (single) or $300k (with a spouse) annually, with the prospect of acquiring at least the equivalent amount in the coming years.
Various ventures have varying min. investment amounts, with the lowest reported minimum of $25k. Nonetheless, most transactions need a heftier minimum, usually somewhere around $25k and $50k, although some ask for much bigger investment sums.
What are the fees for RREAF Holdings?
As a totally integrated property business, the possible fees that the company can receive are wider than most of the platforms that earn money just by stating charges cashed out by sponsors or property handling charges cashed out by investors.
RREAF receives a 2% purchase fee, a one percent investment fee (where it can be applied) as well as a two percent annual asset handling charge.
As a sponsor, the organization can receive different fees relative on the structure of every agreement. From what was observed, the usual structure charges investors money distributions at the current rate of return at a min. seven to eight percent, and the rest of the payable operating money is managed as 80% for investors and twenty percent for sponsors. So first the investor gets paid.
When a real estate is getting rid of or refinanced, another division alike that one is usually in effect, first paying investors up to a min. amount, usually ten percent or more, and then dividing the additional net proceeds between the investors and the sponsor.
It's of huge importance to go over the fine print for every contract, as the difference will shift a lot from various deals. For example, two open-ended investment deals had quite varying payout ways: one compensated investors with seventy percent of net transaction proceeds, while another paid out 50 percent to investors.
Read everything to see ways you rake in cash and the way the company earns profits.
As the developer of every venture, RREAF (more specifically, usually their subsidiary or a related party) often receives property management charges, which may change, cashed out of running money flows. The advantage of RREAF working as real estate handler is a higher amount of control; the disadvantage is that agreements on the prices it receives can be above market levels.
RREAF Holdings Profits
The management team has a good track record, has developed properties over several complete cycles and a completely integrated model, so there is something to like about RREAF's prospects. It's also a breeze to evaluate the details of every listed transacrion, to know what you're investing in, the structure of the costs of the deal you have to pay, and the expected returns.
That being said, investors should keep in mind the possible higher uncertainty of the deals provided, which may use more leverage than is seen as cautious. Higher leverage may create more uncertainty, especially if the real estate is still being built, not occupied to its full potential or exposed to cyclical uncertainties. To illustrate - it wouldn't be a good time at the moment to build hospitality infrastructure from the scratch with heaps of debt.
Take it all at once and be sure to dive into every offer you're mulling over and go over the fine print so that you are familiar the fees, the upside potential, and the uncertainties that could lead to losses.
In which way and when can I sell a RREAF investment?
The essence of private CRE investment varies from that of a publicly traded investment. There is no secondary market for RREAF investments, and none of the investment fine print details we checked provided an early redemption scheme. So if you invest, the money is not available for the lifetime of the venture.
This could only be a few years or more - considering how the contract looks like as well as what are the unforeseen market terms. The business highlighted multiple deals that it wanted to sell or refinance in the 2nd Q of 2020 but, as a result of the coronavirus situation that sent down CRE prices, it chose to keep going. This is in the greatest long-term interest of investors that also ties up money longer than one would want.
So don't gamble resources that you can't afford to lose, and don't tie up cash that you may require to have access in some CRE transaction.
Is there an app for this?
There is no smartphone application, but using an iPhone web browser was close in the look and feel to using a desktop platform.
RREAF Uncertainties: Is the company secure?
With a key executive team with years in the game of CRE and success, RREAF has plenty of pros. Management is interlinked well, which can help find the best transactions. Since it deals with growth, asset management, construction and so on, the company has heaps of advantages compared to other platforms. This can assist with improving performance and result in greater possible profits.
But given that the platform is only part of RREAF's offerings, investors may be losing out on great deals, as the company still priorities institutional and various private investors, and not every transaction it has entered pops up on the platform. There is also a higher uncertainty of money loss if the company defaults because it manages a lot of pieces of each venture. Investors should bear in mind if the costs of complete integration outweigh the advantages, seeing how the sponsor does not put out projects for tender, but rather uses in-house properties, subsidiaries or related parties.
Finally, there is also more ambiguity due to the bigger chances of debt leverage that can be used to finance property deals.
Count all of this in and investors will determine, depending on each deal, if the advantages of their management team and integrated model are sufficient to offset higher risk integration, plus possibly higher risk associated with bigger debt leverage.
RREAF Holdings main features and highlights
- Real Estate Developer