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Multifamily residences Origin Investments has taken the decision to plant a ticking clock halfway down its home page. The accompanying message tells potential investors that “Time is running out” if they want to buy into the firm’s QOZ Fund at the “current unit price.” It doesn’t make for a great first impression. But Origin Investments’ first impression is not necessarily for you. This firm offers bundled real estate investment opportunities for accredited investors only. If you have extensive experience or the wealth to meet this category of investor, then Origin Investments might be an option. Otherwise they’re little more than an interesting way to see another part of the marketplace in action.

Ordinary, retail investors have numerous opportunities to invest in real estate, and a financial advisor can clearly lay those out for you.

Services & Features: What Does Origin Investments Offer?

Origin Investments offers bundled real estate investments made up of properties in which the firm has purchased an interest. The specific ownership or interest stakes vary based on the individual property, with Origin Investments owning equity in some properties and purchasing the debt of others.

Each fund posts returns based on the collective performance of all the properties which make up that portfolio. As an investor you buy shares and, as with any other fund-based asset, your returns are based on your pro-rata ownership of the overall fund. In this way the product that Origin Investments offers is similar to a real estate investment trust (REIT), although the firm operates under an LLC structure rather than as a REIT. While the difference in these two business models is complex, ultimately it means that an investment with Origin has different tax implications and receives less regulatory oversight than most REIT portfolios would.

Origin Investments focuses exclusively on multifamily residential real estate, which typically means apartment buildings and similar properties. At time of writing it offered two funds: the QOZ Fund and the IncomePlus Fund. Origin Investments also advertises that investors can periodically access individual properties and similar opportunities outside of these two funds as they arise.

This firm does not crowdfund its investments. It makes all of its purchases with its own money, seeking investors based on the portfolio as built. If you invest in an Origin fund it will already own all of the properties advertised. It uses investor money to make additional purchases going forward.

Unlike many of the products that we review here at SmartAsset, Origin Investments is not a trading platform. Instead it is a financial assets firm which allows investors access to a very specific segment of the market.

The difference is in how a firm offers investment opportunities. An investment platform is, ultimately, a tool that investors use to make their own choices about financial products offered primarily by third parties. For example, through a product like E*TRADE or TD Ameritrade you would select stocks, bonds, options and other assets to buy and sell as you see fit. For example, E*TRADE itself doesn’t offer the stocks and bonds in your portfolio. Instead the platform would provide you access to those products and the tools you need to trade them, while the brokerage underlying that platform would execute the deals. (In some cases a platform will include access to some first-party products, such as when a brokerage offers its own mutual funds alongside third-party funds.)

In other words, for an investment platform the technology is the point. The core product is the set of online tools that you use to make your investments.

A financial assets firm like Origin Investments, on the other hand, exists to offer the financial products that it creates. As an investor you have few or no options to choose from, because the firm doesn’t support a marketplace of choices. While most firms will offer online portfolio management or another form of web-based interface, this technology is not the company’s product. The financial asset, fund or portfolio under management is the company’s product.

In this case, Origin Investments buys either ownership or debt interests in multifamily real estate around the country. It packages these properties into a series of portfolios, and the firm’s product is shares in those portfolios. As an investor you have very little trading activity to conduct beyond buying or selling your interest in these funds.

Fees: How Much Does Origin Investments Cost?

Newspaper article on real estate investingAlthough Origin Investments requires a hefty minimum investment in either of its funds, it has not published information about its fee structure, which makes any additional information on this subject speculative. It only releases these details to accredited investors. Third-party reporting suggests that Origin Investments charges a management fee of 1.25%, as well as an up-front setup fee of 2% for any initial investment. Periodic additional fees can apply as well, such as when the firm acquires new real estate.

As with many real estate investment funds, this is a highly illiquid asset. Depending on your specific investment, the firm will place restrictions on when you can withdraw your money and how long you must leave an investment in place.

In general, however, there are usually four types of fees to look out for when choosing a trading platform. You should look out for these when evaluating any investment or trading service:

  • Trading Fees – Any fixed charge attached to each trade that you make. This can come in the form of a flat fee or what’s known as the “spread.” This is when your broker charges you based on the difference, if any, between the buying and the selling price of an asset.
  • Trading Commissions – This is when a broker will charge you a percentage based on the volume or value of each trade.
  • Inactivity Fees – Any fees that the broker charges you for not trading, such as for keeping money in a brokerage account.
  • Non-Trading/Other Fees – Any form of fee for trading on this platform not covered above. For example, a brokerage might charge you for making deposits into your brokerage account, taking money out of it or signing up for additional services.

Effectiveness: How Well Does Origin Investments Work?

Two real estate agents

As mentioned above, reliable and current data on Origin Investments’ actual results is not publicly available. That’s the case for both of the funds the company runs, its QOZ Fund ($50,000 minimum) and Income Plus ($100,00 minimum). However, Origin Investments has been around for 14 years, and is a residential real estate firm that survived the real estate crash. That’s a strong legacy, though it’s no reason not to do your due diligence.

Perhaps the most important detail about Origin Investments is that this firm is only available for accredited investors. You cannot buy into one of this firm’s funds otherwise. Many alternative investments are restricted to accredited investors by law. This is generally to protect laypeople from predatory behavior on the part of the financial industry. When an asset class is considered particularly risky or exotic, the government restricts it to investors who either have the knowledge to understand the risks they’re taking or the money to lose. Regulators don’t want underhanded traders scamming ordinary investors with promises of outsized returns based on products that nobody can be expected to understand.

This is particularly true of any financial product or investment opportunity that is not regulated by the SEC. As a real estate firm that has chosen to organize itself as a series of LLCs rather than a regulated REIT, Origin Investments falls under that category. This can be a very smart way to operate for firms that are not concerned about missing out on the retail market. The lack of regulatory oversight can help keep costs down, while the firm can structure its returns to minimize any tax implications for its investors. However it does mean that details are hard to come by.

Keep in mind that an accredited investor should not be confused with the more loosely defined “sophisticated investor,” another very specific legal class. The SEC defines an accredited investor as one of the following:

  • A household with an annual income of more than $200,000 for single investors or $300,000 for married investors, over at least two years
  • A household with more than $1 million in assets (not counting primary residence)
  • A bank, investment bank, financial firm or similar institution with more than $5 million in assets
  • Or an individual or institution which can demonstrate “defined measures of professional knowledge, experience or certifications” in the field of financial products

The Bottom Line

Origin Investments is a firm that runs two real estate investment funds. This firm is limited to accredited investors only, but it promises strong returns for those who can handle the complexity and risks that come with this market.

Tips for Investing

  • Make sure your investment assets fit your risk profile. SmartAsset’s free, easy-to-use asset allocation calculator will help align your assets with your risk tolerance.
  • Accredited investors are investors with a wealth of financial knowledge at their fingertips, but you don’t have to have their money or experience to capture the same benefits. That’s where a financial advisor comes in, and finding one doesn’t have to be hard. With SmartAsset’s matching tool you can find your very own financial professional to lend you their expertise, whether you’re looking to branch out or just make a few tweaks to your portfolio. It just takes a few minutes. If you’re ready, get started now.

Photo credit: ©iStock.com/agil73, ©iStock.com/Bet_Noire, ©iStock.com/gremlin

Eric Reed Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.
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