WHAT IS CREATIVE EQUITY GROUP?
Creative Equity Group combines the capital of many investors to acquire or provide financing for the acquisition of real estate. Our goal is to provide a professionally, diversified portfolio of quality residential and commercial real estate to investors who generally have had very limited access to such investments in the past.
WHAT TYPES OF PROJECTS ARE AVAILABLE TO INVEST IN WITH CREATIVE EQUITY GROUP?
For our investors, we select retail projects after careful scrutiny and analysis. Using the search tool, users can select the exact type of investment property they’re looking for.
HOW DOES A COMPANY GET LISTED ON CREATIVE EQUITY GROUP?
We have some stringent measures set in place for those wishing to get financial support at Creative Equity Group. Property owners and developers can contact the team at Creative Equity Group with information about their project. Our team, consisting of experienced real estate finance, development and engineering professionals, then evaluates each proposal thoroughly. We have developed a rigorous check-list of all the points that we’d like to have in an investment project. Each prospective project is measured in regard to that check-list to help us decide if the project is suitable for investment by our clients. We also compile a detailed overview and economic analysis for each project to determine its profit potential.
WHY SHOULD I CONSIDER AN INVESTMENT IN REAL ESTATE?
Allocating some portion of your portfolio to a direct investment in institutional quality commercial real estate may provide you with a reasonably predictable and stable level of current income from the investment; the opportunity for capital appreciation; and diversification of your portfolio, by investing in an asset class that historically has not been correlated with the stock market in general.
ARE THERE ANY FEES FOR INVESTORS?
Investors are charged a 2% Placement/Engagement fee for each successful capital raise for each project they invested in. The fee is calculated off the total dollar amount of ownership interest/shares purchased. The annual Performance fee is 10% on the profits made from an investment with Creative Equity Group. We also charge our investors a Management fee for tracking the project, providing timely updates and ensuring that their money is returned according to the terms and maturity of the offering. This fee is 1% a year for each year their capital is invested with us.
ARE THERE ANY FEES FOR DEVELOPERS?
Developers are charged a 3% Note Origination/Development fee upon a successful capital raise. This fee is calculated off the total amount funded. All other costs are disclosed on a deal-by-deal basis and may vary, such as legal fees, travel and expenses, document preparation, and appraisal fees.
WHAT WILL I ACTUALLY OWN?
The investor will own shares or membership interest in a limited liability company, solely set up for each individual project. When you purchase shares of a company setup for a specific project, the company receives your cash investment and you receive a percentage ownership. For example, 36 W 20th St Linden NJ, LLC will use the money it raises by selling Membership Units (“shares of ownership”) to purchase, renovate, and sell the property. This would entitle you to your percentage share of ownership and profits.
HOW DOES THE JOBS ACT IMPACT CREATIVE EQUITY GROUP INC?
The Jumpstart Our Business Startups Act (JOBS Act) was signed into law by President Obama in April of 2012 and is intended to provide more effective access to capital for businesses and startups. While most of the attention has been paid to Title III of the JOBS Act (providing for a legal framework to enable equity based crowd funding), Title II will lift the ban on general solicitation of certain securities, allowing companies such as Creative Equity Group to offer our investment opportunities to accredited investors where no prior meaningful relationship exists. Once Title III regulations are fully enabled by the SEC, Creative Equity Group will be able to offer investment opportunities to non-accredited investors as well, opening up close to $3 trillion of capital to invest in real estate opportunities.
HOW MUCH WILL A NON-ACCREDITED INVESTOR BE ABLE TO INVEST?
If an investor makes less than $100,000/year or have less than $100,000 in assets, they can invest 5% of that each year. For example, if you make $80,000/year, you will be able to invest $4,000/year in startups. If an investor makes less than $200,000/year or has less than $200,000 in assets, they can invest 10% of that each year. For example, if you make $150,000/year, you can invest $15,000/year. If an investor makes more than $200,000/year they are considered and accredited investor, and can basically invest as much as they want.
WHEN CAN WE INVEST?
Title II of the Jobs Act is final and went live Sep 30th. Title III is expected to be proposed by the SEC this fall to be voted and passed in early 2014. Investments can be made immediately.
WHAT KIND OF RETURN CAN I EXPECT ON MY INVESTMENT?
Depending on the property type that you invest in and how many shares you purchase, the dividends or profits you receive may be paid out quarterly or in one lump sum when the project is complete. On cash flowing assets the investors will begin to receive checks in the form of dividends 3-6 months after their original investment.
WHAT ARE THE RISKS AND IS THERE ANY TYPE OF GUARANTEE?
We can never guarantee a return as there is always the risk of losing your capital investing in securities and hard assets, however our management team has over 70 years of combined experience in real estate investing and asset management. We have the appropriate due diligence framework in place to provide our investors the best option for a profitable venture. By meticulously analyzing each investment and implementing our efficient monitoring system, we can ensure a project is on schedule and the funds are being used per the offering memorandum. Furthermore, all loans issued are secured by a first lien position on title.
WHY HAVEN’T I HEARD ABOUT THIS BEFORE?
Crowd funding is a very familiar concept in Europe. But in the United States it has yet to catch on. Since the economic crisis, the Government and SEC govern the process of selling equity and debt securities to accredited investors, and it takes a long time to get licensed as an investment bank and broker dealer. With the recent proposed changes in the JOBS act, a lot more companies similar to ours yet focused on other industries will be popping up.
HOW ARE THE RETURNS ESTIMATED FOR EACH PROJECT?
Determining returns on investment are a very important part of our investment reviews. Our underwriters, combined, have more than 70 years of experience analyzing real estate investment prospects throughout the United States. Armed with extensive industry-wide experience, they meet the developers and property owners and conduct extensive scrutiny of the facts before coming up with the prospective return estimates.
HOW DOES THE INVESTMENT PROCESS WORK?
Your investment is not final until the project has met its Investment Target. Until then, the money is held securely in an independent escrow account. If the minimum is not met, 100% of your investment is returned directly to you. If the Investment is met, the money is transferred to an account controlled by our asset management team, which only releases it if the property owner or developer has met the guidelines set forth in the development plan.
IS THERE AN INVESTMENT MINIMUM AND MAXIMUM?
Yes. The minimum investment is different for each project and is set by Creative Equity Group based in part on how much capital is being raised.
IS THERE A LIMIT TO THE NUMBER OF INVESTORS ON EACH PROJECT?
Yes, a limited number of investors are accepted into each project on Creative Equity Group. Historically, the Securities and Exchange Commission limited the number of investors for any non-registered security to 500 investors. With the JOBS Act, signed into law by President Obama on April 5th, 2012, the number of permitted shareholders will increase to 2,000. Of these, up to 500 can be unaccredited investors. However, private companies will not be able to allow unaccredited investors until after the SEC rule making period which ends in 2013.
WHAT HAPPENS IF A ROUND IS OVERSUBSCRIBED?
The round is first come first serve. One of the goals of Creative Equity Group is to build transparency and help to democratize early stage investing. If you liked the investment first, you should have a right to invest first!
HOW DO YOU DETERMINE WHETHER TENANTS ARE CREDITWORTHY?
We have a well-established and proven underwriting process to determine the creditworthiness of our potential tenants. The underwriting process includes analyzing the financial data and other information about the tenant that we may deem relevant.
WILL I BE NOTIFIED OF HOW MY INVESTMENT IS DOING?
Yes, included in the annual Management fee, we provide periodic updates on your investments, their payouts and expected cash flows, and their time to maturity.
WHAT MARKETS ARE TARGETED FOR REAL ESTATE INVESTMENTS?
Right now the tri-state area because of the asset management team is here and we want to keep costs down and the fees we charge to investors as low as possible. Also, the Northeast is usually protected for the huge downturns in the housing market and has proven to be more stable than other markets like Arizona Nevada and Florida.