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If you're unfamiliar with Education Real Estate, you may have a lot of questions. From the technical aspects of underwriting and education value to the fun stuff like updating amenities and equity distributions, you'll find the answers here.

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Student Housing FAQ

WHAT HAPPENS WHEN STUDENTS LEAVE DURING SUMMER HOLIDAY?

Due to the greater demand than supply for available off-campus housing, 12-month rental leases have become the norm for properties that are close to 4-year public university campuses and are in high demand. Although there is typically higher tenant turnover in student housing than other residential properties every year, student housing managers know how to handle the churn of residents. Pre-leasing starts well before the new school year begins, often in November, and most student housing properties don’t have difficult time filling up.

WHAT ABOUT THE WEAR AND TEAR ON THE PROPERTY?

The operating expenses are already built into the cap rate of the property before it is purchased. Nelson brothers will have an idea of what the operating expenses that are lower than 40% of net operating income. On average, Redwoods Capital’s properties have comparatively low expense ratios of 35% and will continue to add efficiencies to improve that ration. Based on all the properties in the Redwoods Capital’s portfolio, the behavior of students shown little tendency to wear down the property enough where it would dramatically impact the bottom line. As a preventative measure, Redwoods Capital on most of the properties require a larger deposit up front, full year of rent and parental guarantee.
This is such a sound investment, what am I missing? Why aren’t more people doing it? Redwoods Capital acquires assets we believe to be in well positioned locations within 0.5 miles from major universities that offer valuable degrees at a reasonable cost. In fact, we are not the only investor that has an interest in student housing. More and more institutional investors and international investment fund have caught on to the recession proof and strong cash-flow benefits that student housing provide. In 2016, 2017 overseas capital accounted for 25% of investing activities or 8 billion dollars in transaction volume.

HOW LIQUID IS THE INVESTMENT?

By definition private real estate investments are illiquid. However, in rare occasion due to uncontrollable situations, our investors looking to have their principal returned before the full cycle of our holding period, which can run from 3-7 years.
One option is that; we would help them in the process of offering their share units to other investors whom also invested
in the property. Another option is to offer the share units to new investor that are interested in the property. Nonetheless,
this potential liquidity still depends upon the availability of a buyer for the investor’s interest. For planning purposes, you
should always consider real estate investments as illiquid and a long term investment

HOW WILL INFLATION IMPACT THE INVESTMENT?

Inflation can be a good thing for our private student housing real estate investments due to the following:

  • Our biggest expense (loan interest payment) is locked in at a low 10-year term. Inflation and rising interest rates will impact this component 

  • Inflation benefits the top line revenue which is rent

  • Inflation will increase some of our operating expenses but that impact will be mute for two reasons: (1) The typical operating expenses on our properties are comparatively low. (2) The growth rate in rent often outpaces the growth rate in operating expenses tied to inflation

Investment FAQ

6% is not a high return, it’s less than other investments that I had, is there any other benefits from this investment?

  • First, if your children plan to study in the U.S, our team will coach your children and help them learn more about business operation in the U.S. These experiences are the best preparation for them on their entrepreneurship journey.

  • Second, with our asset protection attorney, your property are protected by the most restricted law in the world.

  • Third, you will have B2 Visa to travel to the U.S and see the property

  • Fourth, after 3-7 years, depend on the market, our team will provide you with the best exit strategy base on the appreciation (12-18%/year)

How should we pay tax for this source of income?

When you invest, we will open an LLC company for you in U.S. (Company A), you own 100% of the company and this company will invest in the project. When company A receives profit from the project, there will be 30% tax if you take the money from the company to your personal bank account, for non-U.S legal resident. However, if you keep that money in company A, you can use it as company A’s expenses. Depend on each investor purposes, our experienced CPA will consult with you to maximize your tax benefits for Company A

Can this investment qualify for EB-5?

Redwoods Capital is a pure investment firm and our priorities are protecting your assets and maximizing ROI for investors. For EB-5 applicants, projects must be approved by USCIS or through Regional Center. For more EB-5 questions, please go to our partner website at: IBID.vn

CAN I FINANCE MY PURCHASE?

Yes. We have integrated financing up to 70% of the property values.

DOES MY SHARE INCREASE IN VALUE IF THE PROPERTY APPRECIATES IN VALUE?

Yes, as a true owner, any equity gains realized are yours.

If I’m a non-US citizen, Can I come see the property before investing?

Yes, we will process B1 Visa for you to come see the property before investing.

What is the capital structure of the Projects that Redwoods will invest in?

Each project will be set up a separate investment fund by Redwoods Capital. Investors will invest in investment funds with shares corresponding to the invested capital. The investment fund will represent investors to invest and manage the project.