Our Limitations on Funding

2 min read

To ensure quality, EquityRoots has a few limits on our funding policies.

What are our limitations on funding?

Many times we get inquiries about what types of deals EquityRoots.com funds. We fund a variety of deals: opportunistic turnarounds, acquisitions, new developments. However, we do have some qualifying criteria to ensure that our hotel investors have the highest quality crowdfunding projects available to them. All projects must be franchised with one of the big three brands. This includes Marriott, Hilton, and IHG. Why is it that we are only picking these three? It’s not to say that other properties and other franchises do not make money or are that they are poor investments. These properties do have the potential to perform well and earn returns, but the three big brands that EquityRoots has identified have proven track records of customer service, brand standards, and a sense of predictability that corporate travelers have come to expect. It’s the hotel brands that we feel comfortable investing behind and sharing to our hotel investors on our hotel crowdfunding platform. They have strong brand support that includes a robust central reservation system working to fill your guest rooms each night.

EquityRoots.com also likes to look at the type of transaction. New development hotel projects from the ground up tend to have longer planning times and disposition periods, but they also tend to draw in higher revenue than a comparable pre-existing hotel upon stabilization.  It’s no secret that new hotels often become market leaders, but hotel investors must endure 18-24 months of deferred returns during planning and construction.

Alternatively, existing asset acquisitions are also an attractive proposition because you’re ready to recognize a return on your hotel investment the day after closing.  Existing stabilized assets also allow hotel investors to see exactly the income that they’re buying, whereas new development deals are based on projections.

 

EquityRoots - Hotel Real Estate Investments Platform

Are there any dollar amount limits on funding?

In short – no. Traditionally, potential real estate investor bases are often limited by their location. EquityRoots’ platform allows sponsors to reach a larger investor base, using technology to enhance how they source capital. A Hampton Inn in New York City will have no problems raising capital online. It’s strong brand and larger sized market will allow this project to draw not only local investors in New York, but also investors from outside New York State. Our technology department focuses on effective quality search algorithms to make sure that investment opportunities are available to local investors. Interested hotel investors that may be researching how and where to invest in hotels online may find themselves directed to EquityRoots.com’s platform. You don’t have to live near an asset to perform due diligence and invest. With that said, we would expect the New York City Hampton Inn would raise quite a bit more capital than a La Quinta Inn in Albuquerque, New Mexico.

Looking beyond the deal itself

Oftentimes, the sponsor behind a hotel crowdfunding deal matters just as much as the merits and location of the deal itself. Although we don’t set funding limits, we often push project sponsors to contribute at least 50% equity, requiring them to share a significant stake in the success of the project.  This way, both passive hotel investors and project sponsors both share a mutual, financially backed interest in the success of the deal. Other factors matter too, and we look at each submitted project holistically before presenting the hotel crowdfunding opportunity to our hotel investors. In general, the better the flag, brand, sponsor, and market size – typically improve the outcome on the capital raise.

Share this Blog:

Financing Justice

Helping Plaintiffs Gain Access to Justice through Crowdfunding

Financing Justice

 

Imagine you we were badly injured in an accident that left you paralyzed against a Fortune 500 company. Your medical bills are continuing to grow and you haven’t been able to work since the accident. You have no one else to depend on for income. You had your case evaluated by an attorney and you are fairly certain that your damages are well over $700,000, potentially a few million. Yet there’s one small problem; your attorney has told you that your case could cost you at least $200,000 in legal fees, not including additional legal expenses, cost of living and inability to work due to your current disability that was created. Your attorney won’t work on a contingency basis, meaning they aren’t going to front the costs, and you can’t take out a loan because you don’t have enough leverage. What do you do?

Naturally, you would think you’re out of luck. In despair over the thought that you’re likely going to be stuck in a case where the defendants have funds to out “lawyer” you; seeking loans and searching for a law firm to take your case on a contingency fee or as a pro bono case ( which is unlikely). Now you have the opportunity to finance the litigation and your lawsuit through crowdfunding.

Access to justice is a major barrier in both civil and criminal trials. According to the Department of Justice, we have a legal system that is “inadequate”. The Office for Access to Justice states as its mission that it was established specifically to address the access-to-justice crisis and to help the justice system efficiently deliver outcomes that are fair and accessible to all, irrespective of wealth and status”. With the inability for Plaintiff’s with true meritorious claims to recover for past and future damage, means that many people are left hopeless.

Crowdfunding litigation (or litigation financing/funding) has become increasingly popular. Litigation financing allows investors the ability to invest in a legal cause of action. Just like institutional grade assets, investors are able to invest in lawsuits with potential for a high rate of return on the investment. How so? Well, just like any other investment an investor partakes in a portion of the amount that the Plaintiff needs to pursue the case. In return, based on the total judgment award, the investor receives a portion of the judgment for the initial investments into the lawsuit. Without the investor helping to fund the lawsuit, the lawsuit would not have gotten to the judgment stage

From the investor’s view, you’d have the ability to invest in justice — giving the plaintiff their “day in court”, that they otherwise would not have had. Sharing in the risk of the possibility of judgment means that as an investor you share in a portion of the total judgment award. Investors should feel good— you have the ability to further public policy and promote access to justice. With capital to work with, Plaintiff’s can now bring forth their lawsuits in the pursuit of justice. This allows them the ability to engage with the legal system when they otherwise wouldn’t have had such an opportunity.

Investing in litigation is risky, just as any other investment would be. As an investor it’s important to know that each case is properly vetted to ensure that only meritorious claims are pursued. Investors should also be aware of the process of review of every lawsuit. This way you know whether or not the frivolous or fraudulent cases are set aside and only those that have passed all the tests have the ability to receive funding from investors. Thereby ensuring that not only are your funds that you have invested are getting put towards a good cause, but also increasing the likelihood of a return on your investment. At EquityRoots we go above and beyond for our clients to ensure our vetting process yields meritorious claims. For our clients, we provide lawsuit and litigation financing to those in need of assistance with their legal expenses. For our investors, we ensure that we have properly vetted each case, just as we do with any other investment opportunities we offer.

Litigation Financing and crowdfunding litigation allows the plaintiffs an opportunity they otherwise wouldn’t have had, with the investor reaping a benefit alongside the plaintiff. After all, there can be no justice without adequate access to justice.

 

EquityRoots - Hotel Real Estate Investments PlatformFor more information about financing your lawsuit or investing in a lawsuit visit us at http://signup.equityroots.com.

Share this Blog:

1031 Exchange | Defer Your Tax Obligations

3 min read

1031 Exchange- Defer Your Tax Obligations

Investing in hotels and real estate continues to be one of the best ways to build your wealth, grow your portfolio, and minimize your taxes. Thanks to Section 1031 of the Internal Revenue Code, investors are able to enjoy these advantages.

What Is Section 1031?

Section 1031 of the Internal Revenue Code allows an owner of any business or investment property to defer paying federal capital gains taxes and depreciation recapture if they exchange business or investment properties of like-kind. The 1031 Exchange allows you to swap properties or businesses while ignoring the taxable gains and reinvesting it into more valuable property. Essentially investors are using money that would otherwise be due in taxes to continue funding a bigger portfolio.

What are the Benefits?

There are numerous benefits that can be the result of a 1031 Exchange, but there are a number of requirements that must be met in order to complete an exchange. The most obvious benefit of a 1031 Exchange is tax deferral. The true power, though, lies in what comes as a result. Depending on your investment objective, a 1031 Exchange offers a wealth of opportunity.

Preserve Equity

If you are looking to preserve your equity, a 1031 Exchange can do that. Tax deferral will allow your initial investment to continue to grow. And since there’s no limit on how many times you can do a 1031 Exchange, you can defer indefinitely and continue to reap the benefits.

Purchasing Power

Or if you’re simply looking to increase your purchasing power, a 1031 Exchange can do that too. By allowing you to use all the sale proceeds- money that would otherwise be tied up in taxes- you can leverage it into more valuable real estate, which can subsequently increase the return on your investment by producing more cash flow and greater depreciation values.

Diversify Investments

And if you’re looking to diversify your portfolio and improve your investment position, a 1031 Exchange can do that too! Although this tax provision is limited in scope to only property located within the US, diversifying into different geographic regions or into different types of business or investment properties may be desirable for you or your business.

But if you’re looking to split up property or consolidate properties, a 1031 Exchange can do that too! Allowing you to roll over the gain from property to property, gives you the option to exchange a large property and split up the gain among several smaller properties or to exchange multiple properties and consolidate the gain into one larger property.

EquityRoots - Hotel Real Estate Investments Platform

Is it Right For Me?

A 1031 Exchange may be just the thing if you are intending to sell business or investment property, and you plan to buy a business or investment property of like-kind, within 180 days following the closing of your relinquished property.

It is ideal for taxpayers looking to sell their appreciated property–a low tax basis, business or investment property that has been held for more than one year. However, it should not be utilized if you have recently refinanced the property you want to sell, nor is it recommended if the transaction will result in a capital loss.

It’s important to know, though, that 1031 Exchanges are subject to strict rules. And depending on the type of transaction involved, these can sometimes be very complex. However, the use of a qualified intermediary to coordinate the essentials is imperative to the success of any exchange. Despite its complexity, though, 1031 Exchanges remain a very powerful investment strategy- that allows ‘real estate to help defer your tax obligations!

Subscribe To Our Blog

Share this Blog: