5Rivers CRE

Frequently Asked Questions

What do you want to know?

What is RDF?

A "Rainy Day Fund" (RDF) has been established with the primary purpose of self-insurance against contingencies such as the COVID-19 pandemic and other potential catastrophic events. The RDF fund accrues interest through tax-free municipal bonds and is overseen by a third-party entity, BNY Mellon. The funds have already been deposited into this account at the me of property acquisition. Byendorsing the RDF agreement, individuals aﬃrm their ownership of the funds contributed to the RDF and maintain the right to access these funds in the future.

What is RDF used for?

The RDF is earmarked to cover expenses related to roof repairs, including those mandated by lenders, within specific me frames that vary according to the designated roof sec on. Given the imperative nature of these repairs and the unpredictability of future storms, tornadoes (one of which touched down in proximity last year), unforeseen circumstances, and other unforeseen events, we have implemented an RDF policy obliging property owners to allocate 2% of the asset's value to this fund.

What is the syndication fee?

The syndication fee, which is approximately 17% of the initial down payment, covers the costs associated with our team's work on the investment, including due diligence, acquisition, and ongoing management. It also ensures that we have the financial strength required to protect our investors' interests and maintain project stability. This fee is a one-time charge, essential for the successful
execution and management of our projects.

What happens after the term period is over?

After the term period is over, we will determine what is the best approach at that me.

Can this loan be refinanced when the interest rates drop?

Yes, our loans are structured with flexibility.

Can two separate investors buy 0.25% in an investment? Will they get separate tax documents?

No, two separate investors cannot jointly purchase a 0.25% interest in an investment. The IRS requires each investor to have their own EIN number, as Limited Partnerships (LP) are tax-wise pass-through entities. Each investor should have their individual ownership stake for separate tax documentation.

When the property is sold, how are the profits shared?

The profits are shared equally.

How to identify this property (or others) for 1031 Exchange.

We take 1031’s all the me and on all projects. The partners would become TIC’s which stands for tenant in common, and their 1031 intermediary exchange person would transfer the money to title at closing.

What are the options if we want to exit from any investment?

If you wish to exit an investment, you can let us know the amount you'd like to sell your shares for. If you're unsure, we can obtain a broker opinion le er to determine a fair price. We ini ally oﬀer it to current investors for 15 days, dividing the shares among interested parties. If it doesn't sell within this period, we'll make it available to all investors, ensuring a timely sale.

Where does the 3% referral fee come from? Does it come from the same project?

No, the 3% referral fee is paid directly to you post-closing. It does not come from the project's funds.

When are monthly distributions expected to begin?

An cipated commencement for monthly distribu ons is con ngent upon various factors, including the precise down payment timeline (which may lead to potential fluctuations in price and loan amount following thorough due diligence), associated Closing Costs, and the ini a on of major tenants staring their rental payments. The duration for distribution initiation on typically spans from one to several months, subject to ongoing due diligence procedures conducted by both our team and the involved lender.

Is Commercial Real Estate a safe investment given the acceleration of Amazon?

The safety of investing in commercial real estate depends on various factors, and while the rise of e-commerce, including the dominance of Amazon, has had an impact on traditional retail spaces, it doesn't necessarily mean that commercial real estate is universally unsafe.