A 501K is a type of investment fund that focuses on real estate. It’s similar to a 401K, but it’s considered more reliable in tough economic times because it invests in recession-proof opportunities. This makes it a good option for people who want to invest their money or move their savings from a 401K to a more secure account.

If you have any questions, please email us at support@501K.com or call us at 1-385-424-9113

The entire account creation and investment process is completed online. You will be prompted to provide or verify any required information, as well as make the necessary acknowledgments electronically.

An accredited investor, in the context of a natural person, includes anyone who:

• Has earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current calendar year, OR
• Has a net worth over $1 million, either alone or together with a spouse or spousal equivalent (excluding the value of the person’s primary residence), OR
• Holds good standing a Series 7, 65 or 82 license

On the income test, the person must satisfy the thresholds for the prior two years consistently either alone or with a spouse, and cannot, for example, satisfy one year based on individual income and the next two years based on joint income with a spouse. The only exception is if a person is married within this period. The person may satisfy the threshold based on joint income for the years during which the person was married and based on individual income for the other years.

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 more than $5 million, not formed to specifically purchase the subject securities, and whose purchase is directed by a sophisticated person, OR
• Certain entity with total investments more than $5 million, not formed to specifically purchase the subject securities, OR
• Any entity in which all the equity owners are accredited investors.

In this context, a sophisticated person means the person must have, or the company or private fund offering the securities reasonably believes that this person has, sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment.

There are several options for types of entities/accounts you can use when investing in our funds. You can invest as an Individual, Jointly, through an LLC (Limited Liability Company), Corporation, Partnership, Retirement Plan/401K, or a Trust.

If you have an existing IRA, or a 401K from a previous employer, it is likely that you will be able to self-direct all or a portion of it into our investment vehicles. Check with your current custodian to see if they will allow you to self-direct your retirement account. If the answer is yes, please contact a member of our investor relations team by email at support@501K.com, call us at 1-385-424-9113, and we will introduce you to one of the custodians that we work with that will allow you to invest in alternative assets using your retirement funds.

That depends on which vehicle you decide to invest in. If you invest in our new accredited fund, you will receive a Form K-1. A Form K-1 is a tax form used by partnerships to provide investors with detailed information on their share of a partnership’s taxable income. Our goal is to finalize all Form K-1s annually by March 31st, however, we do rely on outside reporting and may require additional time to furnish the forms in a way that is to the investor’s best advantage. Accordingly, you may be required to obtain one or more extensions for filing federal, state and local tax returns, but that is not our intention.

If you invest in our new non-accredited vehicle, you will receive a Form 1099-DIV. A Form 1099-DIV is a tax form that records income earned from entities or persons other than your employer. For our non-accredited vehicle, it will record the amount of distributions you receive and whether those distributions are income or a return of capital. We will provide you with a Form 1099-DIV by January 31st each year.

You can invest in our accredited fund if you live in another country. Depending on how you structure your investment, different documents may be required. We have many international investors in our 501K funds. For our non-accredited vehicle, only U.S. Persons can invest, meaning a U.S. citizen or resident, U.S. partnership, corporation or entity, or U.S. estate or trust.

The term of our investment vehicles are generally 10 years, but could be shorter or longer depending on the nature of the project. As an investor you will know the expected timeline for the project before investing. This information would be spelled out in the legal documents that will be provided to you. The reason for the different timelines for each project is because we believe in maximizing the value of our real estate investments, which is why we don’t want to be forced to sell during a down market or miss out on selling during a strong market. As long-term investors, we aim to capture property appreciation through inflation and rising rents. The more time we stay invested in a property, the greater the potential for returns.

We aim to earn low- to mid-teens equity returns on an annual basis for stabilized, income-producing property investments throughout the entire investment period. Depending on the investment type and the amount of leverage utilized, we may aim for higher or lower equity returns. If we invest in a property that requires significant improvements through capital and marketing investments, we may focus on achieving a higher gain on the sale of the property in the longer term and delay near-term distributions. For these riskier investments, we aim for higher equity returns.

However, these returns are just our targets. Investing is risky, and the actual returns may be higher or lower than expected. 

That depends on the vehicle you decide to invest in. We intend to pay distributions at least annually and our target is quarterly.

Regardless of the vehicle, the change in distribution frequency can depend on many factors such as the property’s cash flow level or needed capital expenditures. Sometimes the cash flow of the property may not support a distribution. Additionally, our funds may not pay any near-term distributions while we undertake a capital and repositioning program.

All investments involve risk, including those investments made in any 501K fund. We do not guarantee that you will earn our targeted returns. There are many factors that can impact the performance of your investment, many of which are not under our control. Please keep in mind, investing involves risk and may result in partial or total loss of your investment. Prospective investors should carefully consider investment objectives, risks, charges, and expenses, and should consult with a tax or legal adviser before making any investment decision.

We do believe that investing in private real estate poses less risk than many other types of investments. Private real estate has historically been less volatile than the stock market, and properties generally appreciate over time as inflation tends to push rents up. Additionally, we conduct extensive research and due diligence on every property investment and have a high degree of conviction that our risk is balanced with our targeted returns. Grant himself is our single-largest investor across our entire portfolio, so he personally believes in the potential return of each of our investments.