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RREAF Holdings

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By: Scam Risk - Expert Reviewer

RReaf Holdings Review 2021: Best For Commercial Real Estate?

In this review, we’re going to cover everything you need to know about RREAF Holdings.

As a matter of fact…

What I’m about to share with you is exactly the same information that has helped more than 73.9% of our readers with their questions about how to make money with real estate.

Now, I do want to say this first…

Even, though you might have some pre-conceived notions about RREAF Holdings… when you’re finished with this review, you’ll feel confident that whatever decision you make will be the best one for you.

So, let’s get started…

Table of Contents

RREAF Holdings Overview:

RREAF Holdings is a commercial real estate developer that also offers a crowdfunding platform for accredited investors.

Unlike other crowdfunding sites, RREAF has been investing in and developing real estate for over a decade and has only recently begun offering crowdfunding on its internet platform.

Investing directly with a deal sponsor rather than an intermediary is a crucial differentiator.

This review will go over RREAF Holdings to see if it really is the best real estate crowdfunding platform out there.

You’ll learn whether commercial real estate is the right online business for you.

And at the end, you’ll find answers to some of the most frequently asked questions regarding RREAF Holdings and commercial real estate in general.

But most importantly, you’ll see the exact system many others have used to build their own internet marketing business to over $40,000 a month in mostly passive income.

This system made them swear off commercial real estate for good, because it uses some of the same skills but in a much more powerful and profitable way!

What is RREAF Holdings?

RREAF Holdings is a fully integrated firm, based in Dallas TX, with subsidiaries that manage properties, participate in construction, manage assets, and do just about everything else required to purchase, develop, operate, and ultimately dispose of a property.

RREAF Holdings is a privately held commercial real estate corporation based in Dallas, Texas, with a track record of success in purchasing, developing, asset management, ownership, repositioning, and financing complex real estate projects around the U.S.

About RREAF Holdings LLC

RREAF Holdings LLC (“RREAF”) is a privately held, vertically integrated commercial real estate corporation with approximately 35 years of industry experience.

RREAF focuses its portfolio of commercial real estate projects and development under three platforms aimed primarily at catering to the Middle America workforce community: programmatic value-add multifamily acquisition, opportunistic hospitality, resort redevelopment, and core ground-up development.

RREAF employs over 300 people, primarily in the South and the Southeastern United States.

They handle a wide range of commercial real estate investment matters, including in-house underwriting/due diligence, capital markets, acquisition, asset management, property management, construction management, project development, accounting, and legal support.

Over the last five years, RREAF has created a varied portfolio in its key competencies totaling more than $2 billion and more than 12,000 units with the help of debt and equity alliances.

It aims to continue developing these platforms.

RREAF seeks to improve the lives of its investors, partners, property residents, and guests by offering exceptional service, excellence, and expertise while maintaining integrity, vision, values, and purpose. Please visit RREAF.com for additional details.

Is RREAF Holdings A Good Investment?

RREAF Holdings has done well for investors based on completed acquisitions. It’s essential to understand how a platform makes money, how its incentives align, and whether its strategy is good for you.

As a fully integrated corporation, RREAF Holdings has better control over each investment. Unlike other sites, which contain arrangements with third-party advertisers who manage all the details.

However, there are several drawbacks to this partnership.

Because RREAF (directly or through a subsidiary or connected party) manages practically every aspect of development and operation, investors are at greater risk if the company struggles or fails.

While your investment is in a distinct legal entity (and thus not directly vulnerable to RREAF’s bankruptcy), having one business handle every facet of every contract could cause issues keeping your investment intact.

What Are RREAF Holdings' Pros and Cons?

Pros

  • Experience: Key leaders have worked in development, finance, and construction for many years. That kind of track record and expertise is invaluable to have on your side.
  • There are some advantages to full integration, including complete control over every area of each project and experienced executives with a track record for success.
  • RREAF puts skin in the game by investing 5-10% of the required money in each contract.
  • The deal flow is consistent, with a few deals shown and spanning several real estate categories. Master-planned communities in Texas have given it a head start in developing new properties in the area.
  • Investors can choose from a variety of projects in the company’s development pipeline, including multifamily, single-family, and retail properties.
  • Investing in a self-directed IRA: RREAF is compatible with the vast majority of SDIRA custodians.

Cons

  • Integration: Even when transactions are constituted as bankruptcy-remote businesses, investors rely on RREAF for everything. Failure of the RREAF would have ramifications for every contract, potentially resulting in losses owing to mismanagement.
  • Only Accredited investors can participate: Only investors with a net worth of more than $1 million (excepting your primary residence) or $200,000 in annual earnings are eligible to invest in RREAF projects.
  • Minimums that are above-average: Some deals need a minimum investment of $25,000, although bigger minimums are more prevalent.
  • High-leverage transactions: Many of its properties are funded at an average debt-to-value ratio of 70%. This is an extremely high level of leverage in commercial real estate, which increases the risk of loss for investors.

Is RREAF Holdings legit?

RREAF Holdings is a legitimate real estate corporation.

RREAF Residential oversees a 9,700-unit multifamily portfolio worth over $750 million. IIRR Management Services manages one of the world’s largest crowdfunded real estate investment portfolios with over $200 million in assets.

In addition, it has two capital partnerships that raise finance and equity from various investors to acquire and develop real estate.

The company’s size allows it to fund massive projects like its most extensive offering in early 2021. The Sun Belt 12 portfolio attracted $120 million in equity and had a $386 million market valuation.

With subsidiaries in property management, construction, and asset management, the corporation is involved in every area of commercial real estate, including those that create continuous cash flow regardless of economic conditions.

But, when it comes to building a business, you have plenty of options.

And even if you’re dead set on becoming a Real Estate Investor, you’ve got way better options than RREAF Holdings.

Keep in mind, we don’t get paid to promote any of the programs we review. We personally think Commercial Real Estate is a great business model, but you could end up leaving way too much money on the table.

RREAF Holdings' Performance

RREAF’s online crowdfunding platform is pretty young. But so far, it’s working well. When we reviewed it in early 2021, it had closed or committed to selling eight multifamily developments.

IRRs ranged from 7.02 to 29.8% for holding periods ranging from one to five years.

RREAF Holdings Management

RREAF’s Chief Executive Officer Kip Sowden leads RREAF. After 30 years in commercial real estate, he has personally acquired, operated, and developed over $400 million in commercial real estate and brokered over $2.5 billion in deals.

Last year, Jeff Holzmann was promoted from President of Asset Management to COO. Real Estate Shares is his domain. We spoke with Holtzmann in 2020.

Former COO Doug McKnight and CFO Mitch Provosty are prominent professionals with extensive experience in real estate finance, operations, and construction.

How does RREAF Holdings work?

Unlike other platforms, RREAF Holdings only lists deals that it sponsors. The company’s subsidiaries will also manage the properties, construction, and other areas.

To improve the development and construction process, RREAF developed RREAF Construction Services (RCS) in 2020. The affiliate will help the corporation construct master-planned communities, multifamily complexes, and retail developments.

RREAF says it rarely buys publicly listed assets instead of relying on its executives’ broad experience and relationships. Sowden, for example, has been a licensed Texas real estate broker for over 20 years.

It also has a large internal development pipeline. It contains a 3,000-acre master-planned community near Midlothian, Texas, with multiple development opportunities over the next five to 10 years.

It also offers a master-planned community in Salado, TX, with multifamily, single-family, and mixed-use options.

Who can invest with RREAF Holdings? What is the minimum investment?

To invest in RREAF Holdings, you must have a net worth of $1 million, excluding your primary residence (single or joint), or earn at least $200,000 (single) or $300,000 each year with the expectation of making at least that amount in future years.

Investing minimums vary, with the lowest indicated at $25,000 and the highest at $100,000. Most transactions demand a minimum investment of $25,000 to $50,000. However, some require significantly more.

What Are RREAF Holdings' Fees?

As a fully integrated real estate corporation, RREAF Holdings’ potential fees are broader than other platforms, which solely make money from sponsor listing fees or investor asset management costs.

Asset Management Fees

RREAF earns 2% purchase, 1% financing, and 2% annualized asset management fees.

Depending on the transaction arrangement, the sponsor can earn a variety of fees. We’ve seen structures give investors cash distributions of between 7% and 8% (sometimes more or less), with the remaining distributable operating flow, split 80/20 between investors and sponsors. Investors are paid last.

Investors Fees

When you sell or refinance a property, a similar split is usually in place, paying investors first up to a certain amount. Usually, 10% or more, with the incremental net proceeds split between investors and the sponsor.

It’s critical to read the placement memorandum for each trade, as the split can vary substantially. For example, one of the analyzed acquisitions paid out 70% of the net transaction proceeds to investors. In comparison, the other paid out only 50%.

You must read the fine print to learn how you and RREAF generate money.

Property Management Fees

It also receives variable property management fees paid out of operating cash flows as the project operator (more precisely, a subsidiary or related party). The benefit of having RREAF as a property manager is greater control; the disadvantage is that the rates it receives may be above market rates.

RREAF Holdings Returns: What should you expect?

This team has built real estate over numerous cycles and a fully integrated approach. So there’s something to like about its crowdfunded services. While it hasn’t completed many acquisitions, the early returns have been great.

By early 2021, the company’s multifamily platform had closed five deals. These deals generated IRRs between 7.02 and 29.8% and equity multiples between 1.25 and 2.09 times. It had many more contracts with buyers or listings with brokers. These deals would give investors IRRs of 18.3% to 23.93% and equity multiples of 1.76 to 2.02.

Nonetheless, investors should examine the businesses’ greater risk profile, as they are generally development projects that require more debt than is prudent.

Leverage increases risk, especially if a property is under construction, not entirely occupied, or cyclically susceptible.

Put it all together, then read the placement memorandum for each offer you’re contemplating to learn about the cost structure, potential gains, and hazards.

How can you sell RREAF investments?

Investments in commercial real estate are not like stock market investments.

In addition, none of the placement memorandums we analyzed included an early redemption scheme.

That is, once you invest, your funds are locked up for the duration of the investment.

Depending on the deal’s structure and market conditions, this might be a few months or several years. From the data it gave, the shortest holding duration was less than a year, while most others were over five years.

More extended holding periods often benefit investors. But that means their cash is locked up for years.

Put only money you can afford to lose on the line, and never store cash you might need in an emergency.

Going mobile: Is there an RREAF Holdings app?

RREAF doesn’t have a mobile app. However, using the web browser on an iPhone was quite similar to using the platform on a PC.

RREAF Residential

RREAF Residential is a full-service property management company focused on worker housing. RREAF Residential now manages 9,000 multifamily units, mainly in the South, Southeast, and Southern Atlantic regions of the United States.

RREAF Residential takes pride in its ability to manage assets effectively and professionally. Thanks to a skilled corporate and on-site workforce, RREAF Residential focuses on increasing sales and profits while providing secure and affordable homes to middle America. The manager advises on finances. Several others work for investment banks.

RREAF risks: Is RREAF Holdings safe to invest with?

RREAF has a strong management team with extensive experience in private real estate investment and a proven track record of success.

Management’s broad connections can help find the greatest bargains.

The corporation has a lot of control over other platforms because it manages the development, property management, construction, and other areas.

This can aid with execution and potential returns.

On the other hand, because RREAF also caters to institutional and other private investors, not every trade it participates in appears on the web platform.

Because RREAF handles so many aspects of each project, it runs the danger of losing money if it fails (RealtyShares is a cautionary tale).

Given its size and scope, this risk seems remote. Investors should also examine the benefits and costs of complete integration since the sponsor leverages internal assets, subsidiaries, or affiliated companies rather than external bidders.

Finally, increasing debt leverage used to fund real estate acquisitions increases risk.

When all is said and done, investors must evaluate if the benefits of the management team and integrated model offset the increased risks associated with integration and higher debt leverage.

Overall, the platform’s seasoned management team and early results are appealing. Those features make it appealing to accredited investors.

What Is Our #1 Recommendation For Making Money Online In 2021?

Our review team has come across a program in the real estate industry that is next level!

Although it’s not real estate in the traditional sense, it’s all digital.

Yup, Digital Real Estate!

Where these RREAF Holdings LLC fall short is in scalability. Because in order to make a good amount of money with real estate, you have to invest in many properties across the country.

And who has that kind of capital to start?

But what if you went local?

With Digital Real Estate, you will be getting service requests from multiple sites at every minute of the day from people who are willing to pay a lot of money for what you can provide them.

I was watching a YouTube video once where the host made a comment that it isn’t about making a lot of money from one website… it’s about making a little bit of money from lots of different websites.

So, think of it this way….

What if you could have streams of investment income where you operated 10 rental units that you could charge anywhere from $750-1,000 per month?

That’s $7,500-10,000 per month in passive income!

What If You Invested Into 100 Rental Units?

But instead of spending $Millions to build houses or apartment complexes… you spend a couple hundred dollars to build websites.

You then get those websites ranked in the search engines for specific home-based services that customers are searching for.

Next, you offer your lead generation system to local business owners who are looking for customers and are willing to pay you for their information.

And Then…

BAM!

You’ve just created a Digital Real Estate Investment Empire that is potentially earning you 4-5 figures in PASSIVE INCOME on a monthly basis without spending a single dime on ads.

With conventional digital real estate, you have to compete with thousands, if not millions of others who are selling the SAME product to the SAME customers.

With Local Lead Generation, the competition is virtually nothing and your profit margins are 85-90%.

Now, I could go on and on, but I’m sure you have tons of questions…

So, learn how you can create Digital Real Estate assets and start building YOUR digital empire!

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