Origin Investments began as a real estate investment firm that later embraced technology, not the other way around. The company prides itself on its personal service as well as the consistent quality of the features it offers. However, you must be an accredited investor to participate and Origin requires a minimum of $100,000 for your IncomePlus fund and $50,000 for your Qualified Opportunity Zone (QOZ) fund.
What Is Origin Investments?
Origin Investments is a real estate investment company that owns and operates commercial real estate. Origin invests in 11 of the fastest growing US markets, including Atlanta, Austin, Charlotte, Chicago, Dallas, Denver, Houston, Nashville, Orlando, Phoenix and Raleigh.
Origin Investments was founded in 2007 and is headquartered in Chicago with regional offices in Charlotte, Denver and Nashville. It has handled more than $1 billion in transactions. Origin was around long before the JOBS Act 2011 came into force. Until then, its commercial real estate funds were limited to private placements with no more than 100 investors.
But the JOBS Act opened another door for Origin. Through the use of technology and crowdfunding strategies, the platform has managed to attract more investors. Origin has expanded its investor base from extremely high net worth personal relationships to accredited investors nationwide, enabling the company to raise $151 million for its latest growth fund, Origin Fund III. The company is currently accepting new investors for its new offerings: Origin IncomePlus Fund and Origin QOZ Fund.
Origin is not really a real estate crowdfunding company. Rather, it is a private real estate investment firm that is now using crowdfunding and platform technology to enable more investors to participate.
Origin's strategy is to acquire income-producing properties for the IncomePlus Fund with the ability to force property appreciation through renovations and capital improvements. Primary focus is on multifamily between $25 million and $75 million. This is a segment of the asset class that is trafficked by large institutions and pension funds. In addition, the fund invests in preferred equity opportunities that enjoy the same protection as a primary lender but provide returns commensurate with an equity position.
Origin's strategy for the QOZ Fund is to build a diversified portfolio of multifamily development projects from the ground up located in Qualified Opportunity Zones. The QOZ program was created under the Tax Cuts and Jobs Act of 2017 to encourage investment in targeted communities in need of economic development, QOZs. There are significant tax advantages for investors who reinvest their capital gains from other investments into a fund investing in QOZ.
Origin allows you to invest in two funds that are diversified across multiple assets. The origin shows the individual property that makes up the funds, but you are not buying specific property. You buy a fund that owns a combination of properties.
Origin's two co-founders, David Scherer and Michael Bishop, use Origin as their primary investment vehicle. This is unique to Origin's crowdfunding business model. They are Origin's largest investors to date, with more than $56 million pledged alongside investors, ensuring an alignment of interests. And team compensation is based primarily on fund performance, not acquisition volume.
And team compensation is based primarily on fund performance, not acquisition volume. According to Director of Investor Relations Ben Harris, “We don't believe in paying people to sell our products, which is why our funds are not offered by commission-based advisors.”
Origin Investments Features
|Time Commitment||60 Months|
|Offering Types||Debt, Equity, Preferred Equity, Direct Ownership|
|Property Types||Commerical, Residential, Single Family, Foreign Investors|
|Regions Served||Atlanta, Austin, Charlotte, Chicago, Dallas, Denver, Houston, Nashville, Orlando, Phoenix, Raleigh|
- Distributions — Although Origin's IncomePlus Fund offers a distribution reinvestment program, Origin is targeting quarterly distributions equal to a 6% net annualized distribution yield to fund investors.
- Due Diligence — Thorough due diligence is critical to real estate investment success. It is a highly illiquid asset with high transaction costs for both buying and selling. Origin team members have extensive real estate investment experience, which the company uses to find, screen and act as asset manager for all your real estate transactions. And their selection criteria are strict. According to Origin, they review around 1,100 deals a year and have historically bought only six to eight of them.
- Customer Service — While online technology is invaluable in providing transaction transparency and efficiency, each registered investor is assigned a personal contact that serves as their point of contact during the due diligence process. Once your accreditation is approved and you decide to invest, your personal contact will help you navigate the entire process of filling out the paperwork and transferring your investment funds to a third-party manager. You will also receive regular updates from the Investor Relations team on the performance of your investment. Investors can access their investment details and track performance through their personal portfolio page through a secure portal. You can view detailed property descriptions, property videos, restoration plans and photos. You can also read the financial projections, details about the property improvement strategy and all the documents related to the property.
- Investing Fees — Origination fees are lower than the private equity industry standard of a 2% annual management fee. Origin's annual fee is 1.25% of net asset value. So if you made $100,000, you would be charged $1,250 in the first year of your contribution. When first invested, amounts below $250,000 incur a one-time 2% administration fee. That is, you will pay $2,000 for a $100,000 investment. If you commit more than $250,000, the fee ranges from 0.0% to 1.0%, depending on the size of your investment. These fees are used to cover the costs of setting up the fund, such as legal and accounting fees. In addition, there is a 0.5% acquisition charge and for the IncomePlus fund there is a 10% withdrawal charge after a 6% principal return with a 50/50 repayment. A 15% performance fee applies to the QOZ Fund after a preferred return of 7% with a 50/50 redemption.
How Does Origin Investments Work?
Technology can be a wonderful thing. The process of investing in such real estate transactions used to require a lot of time and paperwork. There are three investment steps on Origin's crowdfunding platform:
- Register — You must be an accredited investor to invest, but anyone can sign up and review funds.
- Research —Everything you need to know about each fund's strategy and details is available to view and download. And it's easy to compare investment options with each other thanks to smart technology.
- Invest —. Origin has deliberately emphasized personal assistance because the company wants to get to know you and help you understand exactly what you're investing in. You are assigned a personal contact to guide you through the investment process. You are not working with a “customer service representative” but with a knowledgeable team member familiar with all aspects of properties and processes.
How Do Origin’s Funds Differ From REITs?
You're probably familiar with real estate investment trusts (REITs). You can buy REIT shares from any financial advisor or broker. Although some real estate crowdfunding sites offer REITs, Origin funds are not REITs and differ from private REITs in the following ways:
- Private REITs often pay substantial fees to advisors to “sell” their products. With the Origin platform, you can invest directly. There is no intermediary to “sell” the investment. This means lower fees for the investor and more dollars invested in real estate.
- You cannot research the individual properties that make up a private REIT. But Origin is about transparency. You can view all property details of each fund online 24 hours a day, 7 days a week. And Origin sends quarterly updates to keep investors informed of progress.
Origin Investments Pros & Cons
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Final Thoughts on Origin
Good commercial investment properties require experience to acquire and manage profitably. And to get it, you need to invest a significant amount of money. By incorporating crowdfunding into its already successful model, Origin allows individual investors to participate in the same types of high-profile deals previously only available to the super-wealthy, pension funds and large institutions. Most crowdfunding sites require investors to be accredited, and the same applies to Origin Investments.
Origin appears to cater to wealthier accredited investors with a minimum investment of $100,000 for the IncomePlus Fund and $50,000 for the QOZ Fund. His experience and due diligence see his average net IRR of 24% on his first two funds.