How Investing with Sky Capital, LLC Works
The Syndication Structure
Sky Capital, LLC includes active and passive investors to finance and manage investment properties.
- Passive Investors or Limited Partners - Passive investors provide the capital to acquire properties, receive preferred returns and receive a percentage of returns upon sale of properties.
- Active Investors or General Partners - Active investors have a hands-on role purchasing and managing properties. They put in time and make the day to day decisions.
Key Terms Used in Syndications
COC: Cash On Cash
- The rate of return that calculates the cash income earned on the cash invested in a property.
- Typically refers to the cash return annually to the passive investor.
AAR: Annual Rate of Return
- The average amount of money an investment makes each year.
- Includes the proceeds from the sale at the end of the hold period.
Equity Multiplier
- A financial metric used to assess the level of financial leverage or debt utilization in a real estate investment.
- A high equity multiplier indicates a higher level of financial leverage, which means a larger proportion of the property is financed through debt.
- A lower equity multiplier signifies lower leverage and a larger proportion of the investment is funded through equity.
Preferred Return
- The minimum return an investor must receive before the investor manager can receive a performance fee.
IRR: Internal Rate of Return
- IRR is a more comprehensive measure of the overall return on investment, taking into account the time value of money and cash flows over the entire investment period.
Equity Ownership
- Refers to the ownership stake each investor, whether a limited or general partner, holds in the investment. It's often represented as a percentage of the total equity in the project.