• Diversification: Investing in multifamily properties can diversify your investment portfolio.
• Steady Cash Flow: Multifamily properties often provide consistent rental income.
• Appreciation: The value of multifamily properties can appreciate over time.
• Tax Benefits: Investors can benefit from various tax deductions and incentives.

• Market Risk: Property values and rental income can fluctuate with the market.
• Management Risk: Poor property management can lead to lower returns.
• Economic Downturns: Economic conditions can impact occupancy rates and rental income.
• Liquidity Risk: Real estate investments are generally less liquid than stocks or bonds.

Returns are usually distributed through:

• Cash Flow Distributions: Regular payments from rental income.
• Appreciation: Profits from the sale of the property.
• Tax Benefits: Depreciation and other tax deductions that can enhance returns.

• Experience: Track record in managing multifamily properties.
• Reputation: Positive reviews and testimonials from other investors.
• Transparency: Clear communication and detailed financial reporting.
• Alignment of Interests: The sponsor should invest their own money in the deal.

• Class A: High-end properties with premium amenities.
• Class B: Older properties, typically well-maintained and located in good areas.
• Class C: Older properties in less desirable locations, often requiring renovation.
• Class D: Low-income properties, typically in need of significant repairs.

EQUITYFARM generally invests in Class B & C Properties in Class B areas of growing, (landlord friendly) markets such as Houston Texas.

EQUITYFARM has direct and exclusive access to some of the top operators in the USA.  Often with very experienced operators the point of entry is $1MM – $10MM at the fund level.  Our minimum investment requirement is $100,000 CDN and open to accredited investors only unless otherwise indicated.

EQUITYFARM is working on a legal framework that could allow the use of registered funds (RRSP / TFSA etc.) for investment in our projects.  In these cases investor returns would be tax deferred or tax free respectively.  This would be above and beyond the general tax benefits already utilized at the asset level such as depreciation, cost segregation, interest deductions, 1031 exchange (capital gains deferment), tax deferred refinance.  It’s important to consult with a tax professional to understand the specific tax implications based on your situation.

The hold period can vary but is typically between 5 to 10 years. The hold period is the length of time the property is expected to be owned before it is sold.  EQUITYFARM generally works with operators projecting exits at 3-5 years; however, there is a cash-out refinance that often takes place once the asset is stabilized (generally within 24 months) where the investors can get most or all of their investment capital returned while they remain a Limited Partner for the lifespan of the deal.  

• Location: Consider the property’s location, neighbourhood trends, and economic factors.
• Financials: Review the property’s income, expenses, and projected returns.
• Management: Assess the experience and track record of the management team.
• Exit Strategy: Understand the plan for selling or refinancing the property.

A preferred return is a minimum return on investment that passive investors are promised before the sponsor receives any share of the profits.

• Due Diligence: Thoroughly vet the property, market, and sponsor.
• Legal Protections: Ensure proper legal documents are in place to protect your investment.
• Diversification: Spread your investments across multiple properties to mitigate risk.

In commercial multifamily investing, a “waterfall” is a term used to describe the distribution structure of returns between the different parties involved in a deal, typically between the investors (limited partners or LPs) and the sponsors, operators or managers (general partners or GPs). The waterfall outlines how profits are allocated once the property generates income or is sold.

Here’s a breakdown of a typical waterfall structure:

1. Return of Capital

Before any profits are distributed, the initial capital invested by the LPs is returned. This ensures that investors get their original investment back before any profits are shared.

2. Preferred Return (Pref)

After the return of capital, the LPs often receive a preferred return. This is a specified percentage return on their investment that is paid out before any profits are shared with the GPs. Preferred returns typically range from 6% to 10%.

3. Catch-Up / Promote

Once the preferred return is paid, there might be a “catch-up” provision. In this stage, the GPs receive a portion of the profits until they “catch up” to a certain level of return, often bringing their returns in line with the LPs’ preferred returns. For example, if the preferred return is 8%, the catch-up might allow GPs to receive 8% of the profits until they match the LPs’ preferred return.  EQUITYFARM generally does not use a Catch up / Promote provision.

4. Profit Splits

After the preferred return and any catch-up provisions, the remaining profits are split between the LPs and the GPs according to an agreed-upon ratio. Common profit splits include:

• 70/30 Split: 70% to the LPs and 30% to the GPs.
• 60/40 Split: 60% to the LPs and 40% to the GPs.
• 50/50 Split: Equal split between LPs and GPs.

EQUITYFARM does not charge any fees at the fund level.  We only share in profits after our investors receive ALL of their investment capital back for each deal.   Fund set up and accounting expenses will be reimbursed from the fund.  The General Partnership (at the asset level) may include fees such as Acquisition Fee, Asset Management Fee, Project Management Fee etc..  Any and all fees will be clearly outlined in the Offering Memorandum.