The entire account creation and investment process is completed online via the Wellings Capital website. You will be prompted to provide or verify any required information, as well as make the necessary acknowledgments electronically. We will reach out to you after you register.
Here is the step-by-step process:
- Register as an investor.
- Choose the Income Fund or the Growth Fund.
- Start your investment process for the Income Fund here or the Growth Fund here.
- Sign the subscription agreement online through DocuSign or print and sign.
- Verify your accreditation. Steps for this are laid out in the portal.
- Receive funding instructions and fund your investment through wire, ACH, or check.
- Wellings Capital receives your funds and deploys the funds directly to a commercial real estate project.
- Your preferred return of 9% begins accruing 30 days after your funds are deployed.
- If you invested in the Income Fund, you will receive a distribution check or ACH within 45 days after the close of each quarter. If you invest in Q2, your first distribution will come after Q3 closes.
- You will receive a detailed investment update for your Fund each quarter.
- You will receive closing announcements via email as new properties are added to your Fund.
For each investment our Funds make, we enter into a joint venture with our carefully selected operating partners. These operating partners invest alongside us in the transaction and they are responsible for day-to-day management of the property. We serve as the large capital provider assuming responsibility for oversight, reporting, and major decisions on behalf of our investors.
Each Wellings Capital Fund is structured as an LLC. As an investor, you will own a membership interest in a Wellings Capital Fund. Through this structure investors have direct ownership in the individual properties in the Fund. Each Fund has a 9% preferred return and an 80/20 split (in favor of investors) after the preferred return. This means investors get the first 9% of all returns. After 9%, the returns are split 80% to investors, 20% to Wellings Capital. Our other fees: one-time 1% capital placement fee and a 1% AUM fee. No other fees. The return projections include all fees and the split. For full details on this structure, please register and read through the PPMs.
This is a question every prospective investor should be asking. Much of the success of our investments depends on our operators. For this reason, we take the operator vetting process extremely seriously and we only approve those with stellar track records through at least one recession.
These are not companies we just heard about online and decided to partner with. We have met the key principals multiple times in person, met their team, visited their offices, seen their properties with them in person, and much more. Click HERE to view our stringent operator due diligence process. We are more than happy to share detailed track records of the four operators we have approved with our prospective investors.
There is nothing stopping you from investing directly with our partner operators. Most of them accept retail investors at the $50k+ level. However, since Wellings Capital brings large portions of equity, we are able to negotiate better terms for our investors. This typically means better preferred returns and splits. The terms we negotiate usually more than cover our fees and still give our investors a better deal. In addition, our investors are getting instant diversification across assets, geographies, and managers with phenomenal track records.
If you would like to hear more details on the terms we negotiate with our operators, feel free to contact us.
There are many ways you can participate in this type of investment. You can invest with cash and through trusts, LLCs, and LPs. In addition, you can invest through self-directed IRA’s and self-directed 401(k)’s.
Please contact us if you need help selecting a self-directed IRA or 401k firm. We have worked with quite a few in the past.
As a partner in the LLC that purchases the properties, you will receive a K-1. A K-1 is a tax form used by partnerships to provide investors with detailed information on their share of a partnership’s taxable income and depreciation. Each Wellings Capital investor receives one per Fund each year, regardless of how many individual properties are in each Fund.
A REIT (Real Estate Investment Trust) is basically real estate flavored stock and is often highly correlated to the performance of the stock market. As direct fractional investors, Wellings Capital clients are protected from that volatility.
Additionally, direct fractional ownership provides investors access to all of the tax advantages that are often unavailable to REIT Investors.
An investor in the Wellings Income Fund can expect to receive quarterly distributions via ACH or check. An investor in the Wellings Growth Fund may experience a significant delay in the commencement of distributions, then expect distributions on a quarterly basis from that time on.
Our investments are open to approved, accredited investors. Since these offerings fall under Rule 506(c) of Regulation D, investors will be required to verify their accredited status through a third party such as a CPA, financial advisor, attorney, or a service like www.verifyinvestor.com.
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 the same 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 addition, entities such as banks, partnerships, corporations, nonprofits and trusts may be accredited investors. Of the entities that would be considered accredited investors and depending on your circumstances, the following may be relevant to you:
- 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 contact us.
Investors in our Funds become direct fractional owners in the individual properties. Commercial real estate can provide several tax advantages to an investor:
- Quarterly cash flow distributions will often flow to you on a tax-deferred basis
- Proceeds from refinance events typically come to you with no immediate tax obligation
- 1031 or 721 Exchanges allow you to defer capital-gains taxes under certain circumstances
- The Step Up in Basis benefit reduces your heir’s tax obligation when they sell the inherited asset
This is not professional tax advice. Consult with your tax professional to better understand your individual tax situation.