To own properties through Coral, you must be a U.S. resident (or foreign resident with a U.S. tax ID), over the age of 18, who qualifies as an accredited investor.
You generally qualify as an accredited investor if any of the following are true:
- Annual income greater than $200k (for the last 2 years)
- Joint household income greater than $300k (for the last 2 years)
- Net worth greater than $1M (excluding your primary residence)
For a complete definition of "accredited investor" and related criteria, click here.
Owning rental real estate can be a smart approach to diversifying your investment portfolio and generating a steady income. With most investments (stocks, art, jewelry, bitcoin, etc.), you buy something hoping it will appreciate in value so that it can later be sold for a profit. With rental homes, by generating positive cash flow through rental income, you profit regardless of whether you later sell the profit for a profit (or not).
Housing is a persistent need (people will always need a place to live), which makes it one of the most stable types of real estate investments available.
+ Economies of Scale: Multi-family housing generally has a lower "cost per door" than single-family, which ultimately increases profitability. The renovation, repair and maintenance cost per unit is lower for multifamily homes since these costs are distributed across the full property. Furthermore, management is typically more effective and profitable, and improvements can lift the value of all or multiple units (not just one).
+ Control and Stability: The income and value of a multi-family property is more controllable than that of a single family property. It is valued on its net income, not comparable sales (as is the case with single family). As landlords, we have the freedom to adjust rents, increase operational efficiency and augment income with services such as laundry or internet. Conversely, the valuation of single family is largely based on supply and demand factors (as viewed through comparable sales), which tend to be much more volatile.
+ Leverage: In what other investment (outside of real estate) can you borrow money from the bank, pay that loan back with money from someone else (the tenant), and keep the difference for yourself (minus expenses of course)? Leverage can allow you to generate an outsized return without outsized risk.
+ Inflation works with you, not against you: The majority of big expenses in multifamily ownership (mortgage, property taxes) stay fixed for the majority of the time you own the property. Meanwhile, as the value of money decreases due to inflation, the price of goods and services (including rents and home values) increase.
Multifamily investment has traditionally been reserved for institutional investors or ultra high net worth individuals due to its larger capital requirements, financing realities, tenant screening and property management needs. Coral divided the traditional multifamily investment opportunities into smaller chunks, so that accredited investors can easily access institutional-level service.
Select a Coral property, choose how many shares you want to own, and acquire fractional ownership of the property through a property-specific LLC. Coral obtains a bank mortgage (typically ~65% of the purchase price) on behalf of the LLC in order to provide leverage.
Once your transaction is complete and the property is acquired, you receive any monthly distributions of pro-rata net rental income (rents minus fees, expenses and additional reserve allocations) generated by the property, plus potential tax benefits normally associated with direct property ownership, such as appreciation, depreciation and expense write-offs.
Coral handles operational responsibilities of the property, and keeps you in the loop every step of the way. Coral ensures that any planned renovations get done, and that the property is well managed. Coral helps owners "realize appreciation" when the property rises in value. When you want to sell your allocation, we help with that too.
Through Coral, you will have (fractional) direct ownership of a property. As a result, your returns can be generated through both recurring income (from rentals), and potential capital appreciation of the properties themselves.
Income – As a fractional owner, you are entitled to your pro-rata portion of any operating cash flow, distributed on a monthly basis.
Capital Appreciation – If and when Coral refinances or sells the property, you can expect to receive the return of your initial capital (the value of your initial investment paid back) as well as any pro-rata capital gains.
We aim to make the cost of co-ownership comparable the cost of DIY. We charge three fees to acquire, operate, and sell the property (transparent pricing, no hidden fees).
(1) Acquisition Fee (Upfront) – Equals 2% of the purchase price; each investor pays their pro rata share.
Coral finds and analyzes the property, prepares a business plan, sets up the legal infrastructure, secures financing, finds your co-owners, and closes the deal.
(2) Property Management Fee (Annual) – Equals 8% of annual gross rent; each investor pays their pro rata share.
Coral finds and vets tenants, collects rent, manages maintenance and repairs, finds and manages vendors, sets rental rates, manages budget.
(3) Sale Fee (Sale)– Equal to 3% the property sale price; each investor pays their pro rata share.
Coral serves as your broker to find great buyers and sell the property (or your allocation of the property).
We do not charge any investment fees, which typically include an asset management fee (~ 0.5-2% of investment, paid annually) or "carry"/"carried interest" profit share (a percentage of profits paid to the sponsor, generally after meeting a certain return threshold). We do not charge a separate financing fee or leasing fee. We do not have any hidden or layered fees.
Why don't we charge other fees? We reduce our own costs through vertical integration, enabling us to reduce costs for our investors and keep our fees simple, straightforward, and aligned with our investors interests.
Coral co-invests alongside other property owners for 10% ownership of each property. We pay the same price per share as other owners who purchase the same property at the same time. As a result, Coral has a vested interest in the financial success of each property and has aligned interests with the other investors in the property.
Coral investments are intended to be long-term investments, but in the event that you want to sell your shares, Coral will help find a buyer through our platform.
In the event that we cannot find you a buyer, you can exercise your right to liquidity at the fifth anniversary. At each fifth anniversary, if any owner wants to sell and there is no willing buyer, the property will be listed for sale and the proceeds of the sale will be distributed to each owner pro rata.
No, investors will never be required to contribute additional capital to a property they've invested in. When Coral acquires a new property, the acquisition price includes any intended renovations and a small reserve for necessary repairs (e.g. a water heater breaks, the roof needs repairs). There will be no incremental capital calls.
Depreciation is the biggest tax benefit unique to real estate. You can depreciate the cost of the building itself based on a set depreciation schedule — 27.5 years. This means you have a tax write-off of over 3.6% of the cost basis (building cost + improvements) of the property each year, in addition to the cash expenses. This phantom expense "offsets" your rental income, which ultimately makes your taxable income much lower.
As noted above, depreciation expenses lower your cost basis in the property, which determines your gain or loss when you sell. This is referred to as "depreciation recapture."
Many REITs and other real estate investment products don't extend the tax benefits of depreciation to you directly, but Coral does.