Ans: EquityRoots is a private, secure and efficient way for qualified investors to discover, analyze, review and invest in hotel assets. EquityRoots brings vetted hotel properties and their typical transactions, (Acquisitions, New Development, Repositioning) to potential investors along with the ability to appraise details of the property, review legal documentation and perform other forms of due diligence. EquityRoots lets you make knowledgeable investment decisions on a virtually limitless online platform.
Ans: Depending on the transaction, investments are units of a limited liability company (LLC). Each property offered includes a single purpose entity formed solely for the ownership and operation of a crowdfunded asset which offers investors the advantages of limited liability exposure.
Ans: Our members are as diverse as the hotels you build. Coming from all walks of life, active hoteliers, nurses, engineers, retirees, and family physicians find real-estate investments desirable. Many of our members already own their own hotel properties and just want to diversify their portfolio. Some of our online members are too busy in careers of their own, so they just want the ability to comfortably invest alongside reputable names in the business. Whatever their reason, our members understand that pooling capital from all walks of life and doing it online, allows us to efficiently fund large iconic investment opportunities. Accredited investors, non-accredited investors and foreign investors have the opportunity to invest in offerings made available by EquityRoots.
Each offering is different and depending on the deal structure, investment opportunities may only be available to accredited investors domiciled in the United States, as current securities laws prevent non-accredited investors from participating in 506(c) offerings. Additionally, offerings may only be available for persons residing abroad in jurisdictions where securities registration exemptions apply.
Ans: We take the mystery and uncertainty out of commercial real estate investments. We simplify the procedure and offer single-click document execution to bring you easy access to thoroughly vetted hotel assets and development opportunities that span the entire country.
Our founders and staff bring experience and knowledge to the table, in finance, economics, and hotel transactions. Our committee spends countless hours scrutinizing every deal submitted to us to make sure only deals with sound planning and the right credentials are shared with you.
Ans: At EquityRoots, we value your business and respect your privacy. Rest assured that this site makes use of one of the Web’s most secure and successful cloud-based environments that meets industry best practices. Our secure and interactive environment allows investors and issuers to connect and exchange information about offerings. We apply encryption to your private data both in transport and in our database, offering peace of mind to both our investors and issuers.
Ans: Our offerings are posted on our platform for your review. Upon deciding to invest with a hotel development or property, your investment is posted in your user profile, as part of your investor dashboard.
From your profile, you can examine and execute draft documents. All signatures are electronically implemented, with a fully-executed electronic version emailed to you and also stored in your investor dashboard.
Ans: An online Question and Answer section and email list is provided for each investment. Your investor message board is located in your dashboard where all messages are archived. Operators that conduct offerings through EquityRoots are also required to convey financial reporting on a quarterly basis.
Ans: Our investment minimums depend on the transaction. Most deals often require a minimum $15,000 per unit investment.
Ans: EquityRoots is not a Real Estate Investment Trust (REIT). In fact, EquityRoots is starkly different.
With EquityRoots, you select the hotel asset, the brand, its location and the type of transaction. You pick and choose, the investor has full control of where his or her money gets invested. You own units of a LLC solely devoted to the ownership and operation of one asset.
REIT shares, on the other hand, do not classify as physical ownership of a piece of real estate. You are not only at the mercy of that company management decisions, you are bound to their entire portfolio, t
Ans: EquityRoots makes investments in hotel projects and their renovations. You have options on the type of investment choosing between equity or debt. You also pick the type of transaction, choosing from new construction, existing hotel acquisition, or value-add renovation deals.
Ans: Pre-screen each of our issuers to make certain that all offerings on our platform are legitimate. We insist that all offerings include a considerable amount of information to make all investment decisions informed ones. In addition, we require each issuer to present all risks, as well as opportunities, for all investments.
Ans: EquityRoots allows an unlimited number of investors to participate, with the exception of offerings that limit the number of participants.
Ans: Each investment is accompanied by a comprehensive business plan and projected budget. It is our responsibility to provide for sufficient reserves of capital funded at the beginning of the transaction or made necessary by a capital call later on. Capital call requirements can vary by operating agreements and are listed on each investment. In today’s current financing market, when dealing with value add or transitional investments, most lenders provide for future fundings of loan proceeds so that additional tenant improvement and leasing commission (TILC) costs are covered.
Ans: EquityRoots cannot offer tax and/or legal advice. We do suggest that you consult with your attorney and accountant on the legal and tax implications of EquityRoots investment. However, for general information only, investing in a Limited Liability Company provides benefits that include a pass-through taxation entity, limited investor liability, more efficient formation and continuing reporting requirements, and increased flexibility in allocations of profits and losses than other investment entities.
Ans: Each investment offered by EquityRoots is managed by a EquityRoots-controlled LLC who acts as the “Manager” or “Managing Member.” Many times, the sponsor and vetted issuer has sole and exclusive rights for the management, control and performance of the affairs of the LLC. These rights include, but are not limited to decisions regarding the sale and leasing and operational decisions. The rules regarding profit/loss distributions, minimum sale price, and financial reporting are always outlined upfront in the operating agreement of the LLC.
Ans: Each asset is put into the hands of an experienced operator with the background needed to operate the asset at its peak potential. We vet operators by this specific asset class. Hotels are different than apartment building and industrial facilities, and that’s why we only work with management companies and sponsors that have long standing track records specifically with hotels. In addition, the opportunity to review the operator’s past investment experience and background prior to the investment is made available to you.
Ans: We do not charge any fees to investors investing through our platform. Issuers are charged an upfront fee, which is always disclosed in each offerings private placement memorandum. Our fees cover the administrative, technology, and legal costs of conducting a specific investment offering. EquityRoots goes to great lengths to avoid brokers, dealers, and middlemen and therefore does not charge a percentage based capital raise fee.
Ans: Real estate investments typically operate on a longer time-frame than more stocks or bonds. Each investment opportunity is accompanied by a thorough business plan that outlines the time-frame necessary to realize the investment return. This may vary anywhere from one to ten years. The nature of the units in the LLC investment is considered “restricted shares” according to SEC guidelines and may not be sold on a public market. It is our intention at EquityRoots to either partner with an established secondary market provider or often designs a first right of refusal option to your peers in the event that you want to exit before the recommended hold period.
Ideally, your real-estate investment will see two types of gains; operating gains and disposition gains. Operating gains are the revenues and profits collected from running the hotel. Disposition gains are the profits recognized when selling a hotel property for a higher amount than your acquisition/development cost. EquityRoots carefully looks at these metrics before approving a funding request. Keep in mind, this only applies to equity transactions.
On the other hand, if you decide to invest into debt, the return on investment discussion is much simpler to have. All debt instruments, such as promissory notes label its design and format upfront. The security note discloses what APR% your money will earn, and over what time period it will be cashed out. Essentially, you’re giving a loan to the developer. Not to insist that debt instruments are safer than equity instruments, but generally debt is more predictable than equity, with investments earning between 8-12% APR and 3 to 5 year maturity dates.
Ans: Like all forms of investing, commercial real estate entails risk. As an investor, you must be prepared for the potential loss of all of your investment. If this will render you unable to survive financially, or you are unwilling to accept the potential loss of capital you have invested, we do not recommend you invest with us, or anyone else. With that fact established, we understand the value of total due diligence, deep underwriting of potential investments and other basics that control our risk. We are committed to offering only investments that meet our stringent criteria.
Ans: All of our investors must pass our initial screening process to qualify for accredited, non-accredited, or foreign status. They are able to examine potential investment opportunities when logged into their account. Our platform presents all due diligence items, project financials, proposed deal structures and business plans, investment documents (including operating agreement, an investor questionnaire, PPM, and subscription agreement) as well as detailed information on the operating partner. Once the investor considers the investment attractive enough to add to their portfolio, they simply click the “invest” button. They will then be asked to execute the required documents online with a secure e-signature process to lock their position in the investment. The investor is then presented with several options to transfer investment funds into escrow. All funds are held in this account until the investment is complete. Monies are then transferred securely to the investment fund and the transaction is closed with a newly formed entity taking ownership of the asset. If the opportunity fails to reach its full funding amount, funds will be returned to the investors, no fees, no penalties.
Ans: Our investors can use their desktop, tablet or smartphone to receive and review updates to their investments in their online portfolio dashboard. Our operating partners are required to report on the status of the assets at least quarterly. These reports must include monthly revenues, operating costs, financial performance/variances and any capital improvements or requirements. Important documents are often sent online and in postal mail.
Ans: President Obama signed the Jumpstart Our Business Startups Act (JOBS Act) into law in April of 2012. The intent of the JOBS Act is to provide more effective access to capital for small businesses and startups. Although a majority of the attention paid to Title III of the JOBS Act (which provides a legal framework to enable equity based crowdfunding), Title II potentially will have the greatest impact on EquityRoots. While EquityRoots will not rely initially on the implementation of the JOBS Act, Title II of the Act will lift the ban on general solicitation of certain securities and allow companies such as EquityRoots to offer investment opportunities to accredited investors where no prior meaningful relationship exists. After Title III regulations are fully enabled by the SEC, EquityRoots will be able to offer investment crowdfunding opportunities in their fullest sense, opening up the investment marketplace. Crowdfunding brings Wall Street back to Main Street as we continue to democratize the investment world. Below are some general offering types to consider:
506(b): These investment opportunities cannot be found online until the project is fully funded. The reason behind this, is because the SEC wants to maintain a pre-existing relationship between issuers and investors prior to their investment. This is a great way to attract friends and family to invest alongside the issuer, and without the use of general solicitation or advertisements. It’s also worthy to note that up to 35 non-accredited investors can participate in these offerings.
506(c): These investment opportunities leverage technology to the max. This offering type allow the issuer and platform to advertise the investment opportunity within our membership circle and the whole world. This offering type reaches the largest audience, however participating investors must be accredited investors. An accredited investor is defined as someone with annual income of at least $200,000 or $300,000 with a joint spouse. Another way to qualify as an accredited investor is to have a net worth of at least $1,000,000 without counting the equity of your primary residence. If one of these scenarios apply to you, you invest into these types of offerings.
RegA: These offerings require that the asset and all investors be domiciled in the same State. These offerings often come with general solicitation privileges, and the ability to invite accredited and non-accredited investors. This is the closest offering type to a public IPO. In addition, many States also sponsor their own intrastate crowdfunding laws so please contact a staff member of EquityRoots to learn more.