Welcome to BAM Capital
Series A Units
and why you should take a second look.
Multifamily real estate syndication can be a consistent and lucrative option for passive income. However, it can be hard to find the right syndicator, the right offer, and the right type of investment. At BAM Capital, we want our accredited investors to feel confident and knowledgeable about the process. That’s why we offer an educational series, FAQs, and live webinars that are free and open to the public.
One of the questions that we get the most at BAM Capital is what is the difference between Series A and Series B units? So, today, let’s take a deep dive into Series A Shares.
Projected Investor Returns
Series A
EQUITY MULTIPLE
IRR
PREF
YEARS
*Above targets are the hypothetical capital contribution of and hypothetical sales proceeds. Hypothetical returns from (i) the operation, or (ii) a sale, of underlying assets, including, but not limited to, the timing and amount of available proceeds, have been arbitrarily included for illustrative purposes only. Returns are not guaranteed. Possibilities and examples do not represent or guarantee what the actual results.
First, the basics.
Series A units offer a targeted 10% annual return, paid out monthly, for the life of your investment. They offer stability and truly passive income.
Series A units offer monthly distribution for the life of the investment (typically 5-7 years). So, if you invest $100,000 then the targeted distribution will be $10,000 each year.
As a Series A Limited Partner, in Year 1, you’ll receive a passive loss of -$55,000 for tax purposes
via a K-1.
| Original Investment: $100,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Year 1 |
Passive Loss |
-$55,000 |
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|
10% Distribution |
$10,000 |
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|
Year 2 |
10% Distribution |
$10,000 |
|||||||||||||||||||||||||||||||||||||||||||||||
|
Year 3 |
10% Distribution |
$10,000 |
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|
Year 4 |
10% Distribution |
$10,000 |
|||||||||||||||||||||||||||||||||||||||||||||||
|
Year 5 |
10% Distribution |
$10,000 |
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|
Capital Returned |
$100,000 |
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|
Capital Gain from Sale Sum of $50,000 distributions ($10,000 per year for five years) plus the $55,000 K-1 loss benefit (returned Capital not included) |
$105,000 |
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Passive Income: money which flows in regular intervals without the need for putting in a considerable amount of effort to create it
Distribution: The disbursement of cash is labeled as a distribution instead of rental income or investment income. Distributions are not taxed during the hold years of the investment.
Passive Loss of -$55,000: A cost segregation analysis allows for accelerated deprecation. This large passive loss gets passed onto investors through a K1. The passive loss amount is 55% of initial amount invested.
K-1: a federal tax document used to report the income, losses, and dividends of a financial entity’s partners
The Fund has closed. Now what?
OPTION 1:REINVEST
Reinvest your funds into the next BAM Capital offering. Not only will you have the potential to earn a higher IRR, but there are significant advantages to reinvesting your funds. Reinvesting will give you another passive loss of -$55,000 (or 55% of initial amount invested), which will offset your Net Taxable Income of $50,000 from your prior investment.
Reinvest: the action of putting the profit made on a previous investment back into the same place.
|
Capital Gain from Sale (pulled from chart above) |
$105,000 |
|
Net Taxable Income (Capital Gain minus original Passive Loss) |
$50,000 |
|
Passive Loss (from reinvestment) |
-$55,000 |
|
K1 Carry Over |
-$5,000 |
|
Taxed Owed |
$0 |
OPTION 2:
DO NOT REINVEST
Keep your $150,000 (targeted returned capital plus distributions received) and pay the appropriate long-term capital gains tax.
Long-term Capital Gains: (LTCG) the gain or loss stemming from the sale of a qualifying investment that has been owned for longer than 12 months at the time of sale
**Tax assumption, personal situation may vary.
|
Capital Gain from Sale (pulled from chart above) |
$105,000 |
|
Net Taxable Income (Capital Gain minus original Passive Loss) |
$50,000 |
|
Long Term Capital Gains (15% from LTCG + 3.8% NIIT**) |
-18.8% |
|
Taxes Owed |
-$9,400 |
|
Net Proceeds |
$40,600 |
How does this compare to other options?
All stock examples below are based on an initial investment of $100,000.
| BAM Capital | Stocks | Stocks | |
|---|---|---|---|
|
|
Series A Units |
Qualified dividend / LTCG
|
Interest Income / STCG |
|
Year 1 |
$10,000 |
$13,123 |
$14,451 |
|
Year 2 |
$10,000 |
$13,123 |
$14,451 |
|
Year 3 |
$10,000 |
$13,123 |
$14,451 |
|
Year 4 |
$10,000 |
$13,123 |
$14,451 |
|
Year 5 |
$10,000 |
$13,123 |
$14,451 |
|
Total Proceeds |
$50,000 |
$65,615 |
$72,255 |
|
IRR |
10% |
13.12% |
14.45% |
|
Tax Assumptions
|
Reinvestment (Option 1 above) |
20% LTCG + 3.8% NIIT |
27% blended income tax + 3.8% NIIT |
|
Net Proceeds |
$50,000 |
$49,999 |
$50,000 |
| Wage Increase |
|---|
|
Based on initial salary of $100,000 |
|
$13,699 |
|
$13,699 |
|
$13,699 |
|
$13,699 |
|
$13,699 |
|
$68,495 |
|
13.70% |
|
27% blended income tax |
|
$50,001 |
Summary
Series A units provide targeted, consistent cash flow and a higher yield during operations whether they are your main investment choice, or if you split your investment between Series A and Series B.
About BAM Multifamily Growth & Income Fund II
BAM Capital created this fund in order to yield consistent and reliable cash flow, long-term appreciation, and accelerated tax benefits. The fund aligns with BAM Capital’s demonstrated track record of successful multifamily investing by continuing to implement our signature investment thesis, now in fund format. The fund aims for greater overall returns and lower risk through a multi-asset diversification strategy.
- Consistent passive income
Lower-risk assets with in-place cash flows with the ability to distribute preferred return after acquisition. - Significant tax benefits
A cost segregation analysis allows for accelerated deprecation to years of ownership. This large passive loss gets passed onto investors through a K1. - Vertically integrated company
In-house property management and construction allow for predictable cost reduction and value add.
The above link will take you to the free Investor Portal to view all current offerings. If you do not have an account already, please create one to view the information.
1.The above chart contains merely hypothetical examples to illustrate some differences between asset classes. Returns are not guaranteed. The possibilities and examples are not an indication, promise or guaranty of future results, of any particular return, or of any return at all. 2. BAM Capital LLC is not an investment advisor under the Investment Advisers Act of 1940 and offers no investment advice to the reader. Please contact a financial advisor or investment advisor for further information on investment advice. 3.BAM Capital LLC is not an accounting firm and offers no accounting advice to the reader. Please consult your own tax advisor for further information concerning the tax implications of any potential investment. Each prospective investor should consult its own tax and legal counsel. 4. For further information on the BAM Multifamily Growth & Income Fund II LLC, please see the full private placement memorandum. In the event of any conflict between this document and the private placement memorandum, the private placement memorandum shall control.
