Fund Questions?

While our vision is to make real estate investing simple, we understand that making a decision to invest your capital is never easy. Browse our FAQ's below and if you cannot find the answers to your questions, please reach out to us at invest@avestorinc.com.

For answers to the hard questions that investors sometimes hesitate to ask us, the No Spin section answers them.

General

What is Avestor?


Avestor is a real estate investment platform that enables investor to build their own custom portfolios. Avestor has its own fund (Avestor Ariel, LP) and we partner with other real estate sponsors to help them build their own customizable fund offerings. Investors are able to diversify across different cities/states, property types and time horizons. Investors have opportunity for passive income and/or capital appreciation on real estate investments.




What is the benefit of investing in real estate?


The real estate market has historically performed independent of the stock market. Investing in real estate helps diversify your overall portfolio, provide passive income and opportunities for long-term appreciation.




How does Avestor work?


1) Accredited investors join a private fund offered by Avestor or through one of our partners. 2) Investors build their portfolio by selecting slices of available investments . 3) For each investment, Avestor tracks your pro-rata share of both percentage and time in each deal and distributes earnings to you based on that pro-rata share. Earnings and principal returned can be re-invested in new deals.




How are the funds on Avestor different than a REIT?


Our platform allocates your capital into investments based on the direction you give the fund manager. This results in every investor having a customized portfolio. REITs cannot be customized by an investor to meet their personal investment goals. Additionally, REITs distribute all earnings through dividends while limited partnerships allows pass through profits/losses and appreciation. Consult your tax or investment advisor to understand the tax advantages of our model.




How is Avestor different than other real estate platforms?


Avestor is unique in numerous ways from other real estate platforms. 1) Most platforms focus on individual deals. We focus on helping investors build a custom portfolio of deals. 2) Avestor does not originate deals. For our Avestor funds, we evaluate deals across many platforms and sponsors, select the best ones and pre-invest in them. For other funds on Avestor's platform, the sponsor of the fund may be originating the deals.




How much transparency does Avestor provide on investments?


Avestor's platform provides a new level of transparency for investors. Unlike a REIT, investors are able to view the performance of every individual investment in their portfolio. For equity/syndication deals, we have all the due dilgence documents (PPMs, Operating Agreements, financial spreadsheets) from sponsors. For debt deals, we have the information available to us that was provided by the sponsor.





Regulatory

Is Avestor's offering approved by the SEC?


Any funds on Avestor's platform are disclosed to the SEC and any states where we have investors through a Regulation D, Form D electronic filings. Funds use a 506(c) or 506(b) exemption so SEC registration for the offering is not required.




Is Avestor a Registered Investment Adviser?


Avestor is not a registered investment adviser. We recommend you work with your financial or investment adviser to determine if real estate investments and private funds should be part of your portfolio. Avestor Inc. is an Exempt Reporting Adviser in Oregon. More information can be found at the SEC website at https://adviserinfo.sec.gov/firm/summary/305443




Is Avestor a robo-adviser?


While Avestor uses technology to automate our processes, we are not a robo-adviser.




Is Avestor a broker?


Avestor in not a broker and does not receive any broker compensation.





Tax

What tax statements do I receive?


Avestor provides a single, consolidated K-1 each tax year to each investor. The K-1 will consolidate all interest income, dividends, business income/losses and real estate income/losses.




When will I receive my tax statements?


Limited Partnerships are complex and require time to ensure accounting is properly done. Investors will be participating in deals where Avestor is dependent on the delivery of partnership K-1s from its sponsors to Avestor prior to being able to generate our consolidated K-1 for investors. Avestor's goal is to deliver individual K-1 to each investor in early April ahead of the tax deadline but cannot guarantee it. Like most real estate investments, investors should plan for the possiblity of delays and filing extensions for their tax return.





Investments

What are Residential Debt Notes?


Residential debt notes are short term loans (~12 months) to borrowers to purchase a single family home. Borrowers put 10% to 30% cash down and the note covers the remainder. The borrowers pay either monthly interest on the loan or the interest is accrued and paid in full at the end of the loan term. Investors participating in the notes receive their pro-rata share of interest income that the borrower pays for the loan and receive principal back at the end of the term. The sponsor of the note generally holds the first lien on the loan. If the borrower fails to pay, the sponsor can take possession of the property and sell it to return the principal back to the investors holding the notes.




What are Commercial Debt Notes?


Commercial debt notes are short term loans (24 months or less) to borrowers to purchase a commercial properties. These can include multi-family homes, townhomes, mixed use properties, land development projects and other new construction projects. Borrowers put 15% to 35% cash down and the note covers the remainder. The borrowers pay either monthly interest on the loan or the interest is accrued and paid in full at the end of the loan term. Investors participating in the notes receive their pro-rata share of interest income that the borrower pays for the loan and receive principal back at the end of the term. The sponsor of the note generally holds the first lien on the loan. If the borrower fails to pay, the sponsor can take possession of the property and sell it to return the principal back to the investors holding the notes.




What is Commercial Equity?


Commercial equity deals provide an opportunity for investors to jointly participate with an active sponsor in the purchase of a larger property. These can include apartment buildings, student housing, self storage, retail centers or other commercial properties. The investments are a minimum of 3 years and can be as long as 7 years. Sponsors may be constructing a new property or renovating an existing property with a goal to increase the income and value of the asset over a time horizon. At the end of the time horizon, the sponsor sells the property and splits the profits with the passive investors. Investors also get the tax benefits of real estate including depreciation. Commercial equity deals are traditionally higher risk deals since banks generally hold the first lien on the property. Returns on successful deals are also higher.





No Spin

Why should I trust Avestor? You are a start-up.


Every company starts out as a small company. Some investors are comfortable working with small companies and others are not. If you are not, that’s okay. Join our mailing list and track our progress. When you are comfortable, reach out and we would love to work with you.




What happens to my money if Avestor goes bankrupt?


Our legal structure is setup to protect investors. Investors join private funds that are a separate legal entity from Avestor Inc.

Avestor's initial fund, Avestor Ariel LP Fund, is a limited partnership where Avestor is the general partner. In the event that Avestor Inc. cannot continue to function as the general partner, the partnership agreement states that Avestor Inc. will assign a trustee to manage the partnership until all investments exit, investor capital is returned and the partnership can be properly dissolved. In an absolute worst case scenario where Avestor Inc. did not assign a trustee, the investors, who are limited partners of the partnership, have the right to assign their own trustee.

Bottom line. Our structure is set up to protect investors regardless of what happens to Avestor Inc. as an entity.




I can invest in deals directly. Why should I pay Avestor fees to be in your fund?


We believe we are providing significant value for the 1.00%-1.25% annual platform fee that we charge investors. We spend a large amount of time researching deals around the country, talking to deal sponsors and then selecting deals that we believe provide the best return opportunity at the lowest investor risk level. We enable investors to participate in equity deals at a significantly lower investment level than if they went directly to the deal sponsor. Finally, unlike any other platform in the market, we have built a leading edge technology platform that allows investors to build a fully customized portfolio that meets their investment goals.




Are you compensated by sponsors on deals that you invest in?


WIthin Avestor's Ariel LP fund, we do not receive any direct compensation, soft dollars or benefits of any other kind from the syndicators or crowdfunding platforms to invest in their deals. A decision to invest in a deal is based purely on our analyses of the deal.

Avestor is a software and services company. We do partner with real estate entreprenuers to host their funds on our platform. Avestor receives software and services compensation for providng sponsors platform capabilities and services.




Are you affiliated with any of the sponsors on deals that you invest in?


We do not hold financial interests or affiliation in any of the sponsors that Avestor's Ariel Fund invests in.




Does the leadership team invest in Avestor's Fund deals?


Yes. As the saying goes, "put your money where your mouth is". We have personal accounts with Avestor Ariel LP Fund and invest our own capital into deals.




Why does your PPM have so many risks listed?


We believe every investor should invest with eyes wide open. Commecial real estate investing has a multitude of different risks and you can lose your capital on a deal due to a variety of reasons. This can be anything from the deal sponsor failing on their business plan to real estate market conditions. We do our best to help investors build a diversified portfolio so their risk is minimized on any given deal. Bottom line, when an investor seeks high returns, it comes with risks. Please read our PPM carefully before you invest.




Am I paying for Avestor's engineering and marketing expenses as part of fund expenses?


Absolutely not. All fund expenses are expenses tied directly to the fund, such as Regulation D filing fees, state fees, bank fees, funding accounting/tax, etc.). Avestor Inc., which is developing the platform and marketing Avestor, is a separate legal entity. The only compensation that Avestor Inc. receives from the fund is the annual platform fees.





Ariel LP Fund

What is the Avestor Ariel LP Fund?


Ariel is Avestor's first private, customizable fund. It invests in residential debt deals, commercial debt deals and commercial syndication deals. Investors build a custom portfolio inside the fund by allocating slides of active deals to their portfolio. Individual slices are between $500 and $5000 per slice.




What is the minimum investment in the Ariel Fund?


The minimum investment in the fund is $50,000. Subsequent capital investments are $1000.




What are the fees for the Ariel Fund?


The Avestor Ariel LP fund charges an annual platform fee of 1.25% on accounts valued up to $100,000 and 1.00% for accounts valued over $100,000. The fee is calculated based on the daily account value and multiplied by either .0125/365 or .010/365 to calculate the fee for that day. Investors in the fund also share in any limited partnership expenses such as regulatory fees, tax/accounting costs. Pro-rata expenses are calculated as an investor's account value as a percentange of the total fund assets. Expenses are projected to be approximately 0.25%-0.50% of an investor's account value. More details on the fees will be available in the Private Placement Memorandum (PPM) and Limited Partnership Agreement (LPA). The Avestor Ariel LP fund does not take any additional Performance fees from Limited Partners.




What is the structure of the Fund?


The Avestor Ariel LP fund is a Delaware Limited Partnership. Investors join the fund as limited partners.




What kind of investments does Avestor Ariel LP fund invest in?


The Ariel LP Fund focuses on three types of deals - residential debt notes, commercial debt notes and commercial equity. Debt notes have a shorter time horizon (<24 months) and pay interest income. Commercial equity have a longer time horizon (3+ years) and pay cash distributions and a share of profits on the sale of the property. Equity Deals (you are an "owner") - Longer term investments - 3 to 7 years - Equity stake in the property - Pro-rata share of income distributions - Pro-rata share of profits from sale Debt Deals (you are a "banker") - Short term investments (2 to 24 months) - Participate in financing of a note to borrower - Fixed interest rate based on borrower quality - Pro-rata shre of monthly income or deferred interest - 1st lien on property




Do you invest in distressed loans?


Avestor Ariel LP Fund does not invest in distressed loans.




Who is able to invest in the fund?


Avestor Ariel LP Fund is only accepting accredited investors at this time. To qualify as an accredited investor, you must meet certain thresholds as defined by the Securities and Exchange Commission under rule 501 of Regulation D. Specifically, you must meet one of the following criteria: (1) Income Test: Earn an annual income per individual of over $200,000 per year ($300,000 per married couple or spousal equiivalent) with the expectation of maintaining such level of income in the future or (2) Asset Test: Have a net worth of more than $1 million (individually, jointly or with spousal equiivalent), excluding the value of a primary residence or (3) Qualification Test: Passed the Series 7, Series 65 or Series 82 exams administered by FINRA.




How are investments made in the fund?


Avestor selects deals that best suit the financial and suitability requirements of the fund as a whole. We do not select investments directly for individual investors. Avestor then pre-invests in the deal. Once a deal is closed, investors may select the deals they want to participate in or request Avestor to auto allocate slices of deals based on their portfolio direction.




How many deals can I be in?


For an initial $25,000 investment, most investors should expect to be allocated at least 25 deals unless you have directed us differently. The number and types of deals that each invidividual Limited Partner varies based on the capital investment they have made in the partnership and what deals were available when they made their capital investment. For each deal, Avestor allocates the deal across multiple investors to reduce risk.




How are investments made in the fund?


Avestor selects deals that best suit the financial and suitability requirements of the fund as a whole. We do not select investments directly for individual investors. Avestor then pre-invests in the deal. Once a deal is closed, investors may select the deals they want to participate in or request Avestor to auto allocate slices of deals based on their portfolio direction.




How are earnings, profits & losses allocated?


Earnings, profits and losses are tracked at a deal level and are allocated to the Limited Partners that are participating in each specific deal. The actual allocation is calculated by algorithms based on a combination when capital was allocated and how much capital was allocated. More details can be found in the Private Placement Memorandum (PPM) and the Limited Partnership Agreement (LPA).




How do I exit the fund?


Unlike investments in publicly traded equities, real estate deals are not liquid. An investor must wait for each deal in their portfolio to complete before the principal and earnings for that deal can be returned. Once an investor seeks to exit the fund, Avestor will determine an estimated timeline based on the their investments. In most cases, fully exiting the fund and the underlying limited partnership will take multiple years.