Frequently Ask Questions...
While each investment will vary slightly depending on the individual investor, there are many commonalities in how investment partnerships with the IMPACT Group function. The following are some of the most common questions potential partners have.
Q: What do I need in order to be a potential partner?
There are many ways you can develop a partnership with our company. The following three statements represent the baseline requirements of our investment partners.
a) You are someone with $75,000+ in retirement assets or liquid assets seeking to earn a higher return on this money.
b) You have at least two years at your current job. (If you just graduated with a degree and have secured a position, the two year requirement may not apply.) Credit score should be (680+). If you meet these requirements you may qualify for a leveraged capital partnership.
c) You currently own your house or have a small amount of mortgage left.
If you met any of those requirements, there is a good chance an investment partnership with the IMPACT group is possible.
Hmm, I just read those requirements, and I don't think I can do this...
That's okay! In the current economic climate there will be many people that would like to partner with us but may not be able to do so. Despite this, we recognize that you can still be an invaluable asset to the growth of our company. As an affiliate partner with the IMPACT Group, you have the potential to make money by connecting us with an investment partner. If you know individuals in your field of work or have a social network made up of people that do meet the above requirements, you can be paid for simply providing the IMPACT Group with that person's contact information. If the introduction you provide leads to an investment partnership, IMPACT Equities Group will pay you a percentage of the total invested by that partner. If a name you provide to our group leads to an investment partnership with a total capital investment of $500,000 you would earn $5,000! See our FORMS page for additional details on becoming an affiliate partner.
Q: I meet one of the baseline requirements and I'm interested...What's next?
Great! We'd love to hear from you! Head over to the CONTACT US page and call us to discuss partnership opportunities in detail.
Q: What is a "leveraged capital partnership?"
A leveraged capital partnership is a transaction in which a partner is able to obtain a bank loan for a majority of the capital required to purchase an investment. This works to the investors advantage as it requires a significantly reduced cash investment. This is what sets IMPACT Equities Group apart from a standard investment brokerage. There are no banks willing to lend you money to buy stocks and bonds but there are plenty willing to lend against a property! A good example of a potential leveraged capital partner is someone that may only have $15,000 in retirement or liquid capital, but has a steady job and decent credit. The IMPACT team can perform a preliminary review of your finances to determine if you qualify as a leveraged capital partner. If you meet the requirements, we can put you in touch with several reputable mortgage lenders who will determine how much you can qualify for.
Q: I don't have much liquid capital or retirement funds to invest... Am I out of luck?
Not necessarily. There may be some circumstances that would allow you to invest without putting much of your own money down. In this situation, you would need to qualify for a mortgage for a majority of the capital needed.
Q: What is the minimum rate of return that I'm guaranteed as a partner?
A rate of return is not something that we can guarantee Just like any investment in the stock market, there is no guarantee that you will make a certain return or profit. We can guarantee that we will always strive to achieve the highest return possible for our investment partners and continually focus on managing a profitable real estate portfolio. Please see our PROPERTIES page for more details.
Q: Is this legal? Do I need to hire a lawyer to do this?
As a business we are required to comply with Illinois law. There are several forms and agreements that will be signed with our investment partners throughout this process. These agreements will ensure legal protections to our investors, and provide legal binding documentation in regard to any investments purchased. Our company is partnered with a legal firm to ensure all our business transactions comply with applicable Illinois laws. You can have your own attorney review any of our documentation that you will be signing. Alternatively, the IMPACT group can provide you with legal representation at a reduced cost for your transaction. The fee for legal representation for a single transaction on 1-4 unit property is only $300.00 and does not need to be paid until after the property is purchased.
Q: How is the money handled?
Once an investor determines how much capital they are willing to invest, IMPACT Equities Group will identify specific properties that meet our strict buying requirements. Once a property is thoroughly evaluated, the process of forming a legal partnership begins. Terms will be specified with the proper legal documents and both the Investor and IMPACT Equities Group LLC will enter into a legally binding partnership. That partnership becomes the legal entity that owns the investment property. As part of our agreement, a bank account is opened in the name of our newly formed partnership. It is through this account that ALL funds are handled so that there is perfectly clear accounting. If a mortgage is secured by the property, that will be paid from the partnership account. Also, all rental income will be deposited into this account. After income is collected and debts are paid, the investor receives a monthly transfer to their personal account where they can manage their investment earnings.
Q: If I put up all the money to buy a property but then sign a 50/50 partnership agreement, do I instantly lose 1/2 of the money I invested?
If that was the case we certainly would not be getting any business! The answer is No, and here is the reason why. If you invest $200,000 with the IMPACT Group and we purchase two properties with that capital:
Property A is purchased for 50,000 and needs 50,000 in rehab.
Property B is purchased for 60,000 and needs 40,000 in rehab.
Between purchase price and rehab costs those properties add up to the investor's contribution of $200,000. It is correct that the investor will purchase these properties within a 50/50 partnership. However, the investor will also hold a mortgage note against those properties for the amount that he/she invested in them.
Property A) would have a recorded mortgage of $100,000.
Property B) would also have a recorded mortgage of $100,000
As a part of the partnership agreement, these mortgages are recorded debts against the properties and would have to be paid back to the investor upon any transfer or sale.
Q: If I have mortgages against these properties am I entitled to mortgage payments?
Absolutely! As apart of our partnership agreement, IMPACT Equities Group will be obligated to pay you a principle and interest payment on any capital invested. The best way to explain this is through an example.
In this example, the investor is willing to invest $100,000 with the IMPACT group. As a part of our partnership agreement, a mortgage will be recorded against the property at a 5% rate and a 15 year amortization (or any mutually agreed upon term). The property we purchase has annual taxes of $3,800.
The payment on this mortgage would be $790.80 for principle and interest, an additional $316.67 for taxes, and about $85.00 a month for Insurance.
The income that this property generates is $2,200 a month. Upon collecting the rent, IMPACT Equities Group will deposit the funds into the partnership account and from there will pay out the appropriate expenses.
As a result, each month $2,200 dollars is collected and $316.67 of that goes to pay real estate taxes, $85.00 goes to pay Insurance, and $790.80 is the principle and interest payment PAID TO THE INVESTOR. In addition to the mortgage payment, the investor is entitled to 50% of the net income from the property. In order to determine that we simply subtract the fixed expenses from the income and multiply by 50%
Gross Rent = $2,200 - Fixed expenses of ($1,192.47) = $1,007.53 (50%) = $503.77
Each month the property is occupied the investor will be entitled to the mortgage payment ($790.80) + 1/2 of the net income ($503.77)
The investors total monthly return is $1,294.57.
Q: What if I have a question that wasn't answered on this page?
We realize there are many questions that may not be answered here. If you have further questions or would like to discuss matters in greater detail please do not hesitate to CONTACT US.