Frequently Asked Questions

Wellings Capital helps high-net-worth individuals, family offices, Registered Investment Advisors, and wealth managers access diversified private commercial real estate investments through professionally managed funds and co-investment vehicles.

Wellings Capital invests preferred equity and JV equity alongside experienced commercial real estate operators rather than operating properties directly, with a focus on asset types such as manufactured home communities, multifamily apartments, small bay and flex industrial, open-air retail, and select self-storage properties.

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The minimum investment for Wellings Capital’s funds and sidecar opportunities is $50,000.

We expect that the Wellings Evergreen Income Fund will remain open perpetually. The Wellings Growth Fund II will be open until approximately 2027 before closing to investors. To get on our email list and be notified about fund announcements and sidecar opportunities, you can register here.

Here is the step-by-step process:

1. Register as an investor and review investment documents and details.

2. Schedule a call with us to get your questions answered and ensure investing with us is the right fit for you and your goals.

3. Submit your commitment to invest online in our portal.

4. Verify your accreditation status through either an accreditation letter or the free Accredd option. Steps for this are laid out in the portal.

5. Sign the subscription agreement online.

6. Receive funding instructions and fund your investment through wire or ACH either immediately or wait until capital calls depending on the investment.

7. Wellings Capital receives your funds and deploys the funds to carefully vetted investments.

8. If distributions are available and if you have not opted into the Distribution Reinvestment Plan (DRIP) for Wellings Evergreen Income Fund, you can expect to receive your first distribution within 3-6 months following your commitment.

9. You will receive a detailed investment update for your fund each quarter and intermittent updates between quarters when there is relevant data to report.

The current Wellings Capital funds are structured as Limited Partnerships, and Wellings Capital sidecars are structured as Limited Liability Companies (LLCs). As an investor, you own a limited partnership interest in the fund or sidecar. The funds and sidecars typically invest preferred equity and JV equity alongside experienced operators; investors hold an interest in the fund or sidecar rather than direct ownership of the individual underlying properties. For full details, please register and review the legal documents, or schedule a call with us.

For full details on this structure, please register and read through the legal documents and/or schedule a call with us.

Wellings Capital has an extensive 26-step due diligence process that we perform before investing with an operator. We’re doing background checks, verifying track record and current portfolio performance, checking skin in the game, checking references, meeting the principals in person, touring the property in person, vetting how the operator runs their business and their culture, and much more.

We are happy to share more about our due diligence process on a call with you.

This is one of the most important questions every prospective investor should be asking. The biggest determinant of success of each investment we make is the quality of the operator. For this reason, we take the operator vetting process extremely seriously and we only work with those that have lengthy and proven track records of success in the specific asset type of the investment.

We are happy to share detailed track records and bios of our operators after completing a call with us and signing a basic NDA.

The Wellings Growth Fund II is a closed-end fund that generally does not offer liquidity to investors. However, we do allow for investors to seek out a third-party sale of their investment. There is no guarantee that investors will be able to find a suitable third-party. 

The Wellings Evergreen Income Fund does allow for investor withdrawals after as early as one year. However, certain penalties will apply until the end of the fourth year. See Section 13 of the Limited Partnership Agreement for the full details and terms. 

An investment in the funds should be considered long-term in nature. Investors should be in a financial position that will enable them to hold their investment for the duration of the offering.

The Wellings Growth Fund II is projected to last from eight to ten years, or even longer. Wellings Evergreen Income Fund is an open-ended fund with liquidity options.

Wellings expects to invest in manufactured home communities, multifamily apartments, small bay and flex industrial, open-air retail, select self-storage properties and potentially other commercial real estate asset classes. Click here to access free eBooks about self-storage, and mobile home parks.

A preferred return is a real estate investment structure that gives investors priority in receiving profits before the sponsor or general partner participates in certain profit distributions. Often expressed as an annual percentage, such as 8%, a preferred return establishes distribution priority but does not guarantee that investors will actually receive that return. We discuss this in more detail in a blog post here.

You can invest with cash and through trusts, LLCs, and LPs. In addition, you can invest through eQRPs, self-directed IRAs, and self-directed 401(k)s.

You can go here to view our self-directed IRA firm recommendations. We have worked with quite a few in the past.

Similar to a 1099, a K-1 form is an accounting of the tax income for the year. Each Wellings Capital investor receives one K-1 per fund/sidecar each year, regardless of how many properties are in each fund. K-1 forms are most commonly used in partnerships and in real estate ownership. 

Wellings Growth Fund II and Wellings Evergreen Income Fund will file composite returns in states where allowed (approximately 40 states) to reduce and/or potentially eliminate the need for individual state filings. As always, please consult your tax professional for more specific instruction on tax filings.

A REIT (Real Estate Investment Trust) trades like a stock and is often closely correlated with the stock market. Private real estate investments like ours are not marked to market daily, so they don't experience the same day-to-day price swings — but this does not mean they are protected from loss. Private real estate carries its own risks, including illiquidity. Because our funds are pass-through entities, investors may also access certain tax benefits that are often unavailable to REIT investors. REITs typically earn much of their income through transaction fees, while the bulk of our revenue comes only after our investors make money.

The frequency of distributions will vary based upon the fund or sidecar, but typically investors receive distributions on a monthly or quarterly basis.

After closing, our operating partners are responsible for running the property. We continually test whether the business plan we underwrote is actually happening, we retain control over certain major decisions, and on renovation deals we release capital only as work is documented and verified.

Who does what

Property management covers the ground game: leasing, collections, maintenance, and daily operations. Asset management sits above that: budgets, net operating income, capital projects, financing, and exit decisions. Our operating partners are accountable for both, whether they perform those functions in-house or through third parties. That is what we hire them to do, and it is why operator selection matters so much.

Our role as the capital partner is different. Routine oversight is continuous. Direct intervention is selective. We get more involved when a plan is off track, when we see signs it may get off track, or when the evidence suggests the plan itself should change.

That happens in three primary ways.

1. Control over major decisions

In our typical joint venture agreements today, we retain approval rights over decisions that can materially affect the outcome, including a sale or transfer, refinancing or taking on new debt, material changes to the budget or business plan, and removal or replacement of the manager.

We are not approving invoices at the property level. We want control at the point where an ordinary variance becomes a meaningful change in plan.

Control rights vary by investment, and even strong rights have limits. A right to approve a sale, for example, does not necessarily require an operator to disclose an offer they reject. Contracts matter, and so do trust, transparency, and judgment.

2. Capital released as work is completed

On investments with a renovation or capital-improvement plan, we typically do not fund the full commitment at closing. We hold back capital for the improvements and release it in draws as the work progresses.

Each draw request must clear review before we fund it. That generally includes invoices that reconcile with the requested amount, proof of payment, and photographs of the work, including photos taken during the work rather than only before and after, since anything mechanical or behind a wall is difficult to verify once it is covered.

Draw requests generally also include the expected scope and cost of the next phase, so each release gives us visibility into what is coming rather than only confirmation of what has already happened. Depending on the draw, we may also require lien waivers or in-person inspection by our team or an experienced construction manager.

The principle is that additional capital should follow evidence of execution.

3. Monthly reporting review and targeted site visits

Our asset management team reviews reporting on every investment each month, comparing actual results against the budget, the underwriting, and the business plan. We look at occupancy, collections, net operating income, cash balances, debt coverage, capital spending, and business-plan milestones, with particular attention to where actual performance is separating from the original assumptions. That is usually where drift first becomes visible.

We also visit properties in person. We do not follow a fixed site-visit schedule. We visit when being onsite can inform a decision: verifying important work, assessing the quality of a renovation, investigating something in the reporting, or having a substantive conversation with an operator.

Oversight is not only about identifying problems. On one multifamily investment, converted units began leasing well above pro forma projections. After engaging an outside construction professional to inspect renovated, unrenovated, and in-progress units, we approved an expanded value-add scope, accepting more near-term vacancy in exchange for higher projected net operating income. Sometimes the evidence indicates the plan should change.

Oversight reduces risk. It does not eliminate it, and investors can lose capital.

Yes, you can always add new money to any existing fund which is open. Please check with our team about this if you have additional questions.

On a quarterly basis, Wellings Capital publishes a comprehensive update for each fund, highlighting various activities and operations of the fund.

Additionally, Wellings often emails fund updates intra quarter when there is relevant information to share. Investors are also encouraged to schedule a call with a team member to discuss any questions.

Our investments are only open to accredited investors, family offices, RIAs, wealth managers, and qualified investors. Since our offerings fall under Rule 506(c) of Regulation D, investors will be required to verify their accredited status through a third party, including a CPA, financial advisor, attorney, or a third party accreditation service provider called Accredd. We cover the cost of the accreditation verification for investors through our portal.

Accredited Investors are individual investors who either have a net worth of at least $1,000,000, excluding the value of one’s primary residence, or have earned income over each of the last two years of at least $200,000 and have the expectation to make an equal or greater amount in the current calendar year. If you don’t qualify under that standard, you can choose to combine your income with your spouse and the new threshold for qualification would be $300,000 in combined income.

In addition, accredited investors can invest through entities such as LLCs, partnerships, corporations, nonprofits and trusts. These entities are considered suitable for investing depending on your personal circumstances, including the following:

• any trust, with total assets in excess of $5 million, not formed to specifically purchase the subject securities, whose purchase is directed by a sophisticated person, or

• any entity in which all of the equity owners are accredited investors.

It is also important we ensure we are a fit for one another. This type of investing is not appropriate for every investor. To determine if commercial real estate investing is right for you, please schedule a call with us.

Source: Investor.gov

Commercial real estate has the potential to provide investors with several tax advantages:

• Income distributed to investors may be reduced by depreciation and other tax losses passed through on your Schedule K-1

• Proceeds from refinance events typically come to you with no immediate tax obligation

• A step-up in basis may reduce your heirs' tax obligation on inherited assets

This is not professional tax advice and should not be relied upon for making investment decisions. Investors should consult with their financial advisor, accountant and/or tax attorney for tax advice specific to their situation.

Wellings does not use leverage at the fund level, however our operators typically use debt when acquiring new properties. We anticipate that bank or seller financing will generally account for between approximately fifty percent (50%) and seventy percent (70%) of the gross fair market value of each property.

Not every investment performs as underwritten. In a diversified portfolio, some outperform, some meet expectations, and some fall short. When one falls short, our response depends on why.

Underperformance usually shows up in reporting before it shows up in any single event: occupancy below plan, collections weakening, net operating income separating from the budget, or business-plan milestones slipping. Distributions may be reduced or suspended.

Our first question is whether the shortfall is timing, execution, or the market, because those call for different responses. A renovation running two months late is a different problem than a submarket absorbing significant new supply.

An example

We invested in a portfolio of three multifamily properties in a Texas market. Occupancy came in below pro forma, driven by general market softness and a decline in local rental demand. The operator was struggling to generate qualified leads.

We increased our involvement. We moved to calls every other week with both the operator and the onsite property management team, and we worked with them on tactics to improve lead quality and occupancy rather than only tracking the results.

We also visited the properties and walked units at various stages of renovation, because we wanted to confirm that what we were being told matched what was actually there.

Based on what we found, we changed the plan. We paused unit renovations and upgrades until existing available units were leased. Continuing to add renovated inventory into a market that was not absorbing it would have consumed capital without improving income.

That is generally how this works. We get closer to the investment, verify the situation ourselves, and then adjust the plan rather than continue executing one that the evidence no longer supports. Changes of that kind fall under the major decision rights we retain in our joint venture agreements.

What investors hear

We report on every investment in our quarterly updates, including the ones that are not going well, and we communicate material developments as we become aware of them, subject to confidentiality obligations to our operating partners. Investors do not have to guess which investments in a fund are struggling.

The honest limits

Getting more involved improves our position. It does not guarantee outcomes. We cannot control interest rates or local market conditions, we cannot force a sale at a favorable price, and replacing an operator is disruptive and carries its own costs and risks.

Diversification across operators, asset types, and geographies is how we manage that risk at the portfolio level.

As a passive investor, your liability is generally limited to the amount you invest, and you are not personally liable for the fund's debts beyond your investment. However, real risks remain: you could lose some or all of your invested capital, the investment is illiquid, returns are not guaranteed, and market conditions, interest rates, operator performance, and property-level issues can all affect outcomes.

No. Wellings Capital does not make any guarantees regarding the investment performance of our funds. We use documented historical data as well as commonly used industry methods to conservatively calculate the potential returns of these investments. Wellings cannot predict future events (which can influence any investment).

Guaranteed investments generally have very low returns as compared to the potential returns projected for Wellings funds/sidecars.

The Wellings Capital team leverages years of real estate experience with the goal of meeting or exceeding return projections to investors. Wellings Capital earns asset management fees, acquisition fees, and a share of profits after investors receive their preferred return.