General

What is SCI Growth & Income Fund III (Fund)?

The Fund is a private commercial real estate fund that owns and operates mobile home parks and parking properties.

What is the Fund structure and how does it work?

The Fund is structured as a limited liability company (LLC). Individuals will make their investment into the Fund LLC which will purchase properties via subsidiary entities. In this way, properties are owned by the Fund and cash flow passes from the property to the Fund, which then makes distributions to investors based on the number of Units they own.

Why did you launch this Fund?

The Fund was created to deliver both current income and capital appreciation in a tax-efficient manner. The Fund’s strategy is to invest in niche market segments which are currently out of favor, inefficient and in which there is less competition. We currently see opportunities in mobile home parks and parking assets. Our strategy for parking assets is similar to our mobile home park strategy in that we intend to acquire properties, improve operations, cash flow, and provide distributions to our partners.

What is the Fund’s target return?

The Fund is targeting net returns between 14% and 17%, inclusive of 8% preferred return, paid quarterly.

What is Sunrise’s co-investment in the Fund?

The principals will invest a minimum of $250,000 into the Fund.

Do you provide audited financials?

Yes. A copy of the auditor’s report will be made available to Members on an annual basis.

How Do I Invest?

How do I invest?

The Fund is available to accredited investors through the Sunrise website platform. Click ‘Invest Now’ when you are ready to invest. From there, you will receive instructions on how to verify your accreditation, sign legal documents, and fund your investment.

Who can I contact with questions about an investment offering?

Feel free to schedule a call with a member or our team. Furthermore, you are always welcome to contact Sunrise directly at 833-CASH-FLW or [email protected].

Can I invest in the Fund through my solo 401k, self-directed IRA, or other retirement account?

Yes, you can invest in FUND3 as an individual, jointly with your spouse or other related person, through several different types of retirement accounts, or through an LLC, Corporation, Trust, and many other types of entities.

Is the Sunrise platform secure?

Sunrise takes the security of our users’ data seriously and we consciously take steps to ensure all information remains secure. All components of the platform are held to industry standard compliance for cyber security and data redundancy. Where necessary, Sunrise works with third-party services in an effort to provide our customers with the most efficient and secure experience possible.

Will my commitment be invested at one time or drawn down on a periodic basis?

You will fund 100% of your commitment at once.

Can I add to my initial investment later?

Yes. You can increase your commitment to the Fund at any time.

What is the duration of this Fund?

An investment in the Fund should be considered long-term in nature. Investors should be in a financial position to hold membership units for the duration of the Fund, which is projected as up to ten (10) years, or longer.

Distributions

Where will my distributions come from?

Distributions will come from cash flow generated by the Fund’s properties.

When are distributions made?

Distributions may occur on a quarterly basis. Direct deposits are provided to investors on the 10th of the month following the end of a given quarter.

When do I begin to accrue a return?

An Investor’s account begins to accrue immediately upon acceptance into the fund.

When will distributions likely begin?

The Manager’s goal to begin distributions at the conclusion of Q4 2020.

Taxes

Are my distributions taxed at the ordinary income rate? Do I receive the benefit of depreciation?

In short, yes. Investors will receive the benefit of depreciation. The Fund is structured as a partnership for tax purposes. In a partnership, the investors are taxed based on their share of taxable income or loss from the Fund, rather than on actual cash distributions. The nature of income at the Fund-level determines whether the income will be taxed as ordinary income or capital gains. Distributions from the Fund will be treated as either ordinary income, return of capital or capital gains. Distributions, to the extent that they are from current or accumulated earnings and profits, will generally be taxed as ordinary income. However, we anticipate that the depreciation available to the Fund will reduce the amount of its taxable income and profit, and that this reduction will enable the Fund to make distributions that will be treated as a return of capital. Any portion of the distribution that is in excess of current and accumulated earnings and profits is considered a return of capital for U.S. federal income tax purposes and will reduce the tax basis of the investment. Once the investor’s tax basis has been reduced to zero, any further distributions will result in capital gains. Because each investor’s tax considerations are different, we recommend that you consult with your tax advisor.

Do I receive the benefit of the long-term capital gains rate?

Yes. Investors in the Fund for more than one year will generally be eligible for a long-term capital gains tax rate on the capital gains achieved by the Fund.

Is the Fund eligible for a 1031 Exchange?

No, but you may be able to mitigate capital gains exposure by leveraging by using a Deferred Sales Trust.

What tax forms will I receive?

The Fund will issue federal K1s to all investors on an annual basis.

When can I expect to receive my annual tax forms?

We make every effort to provide K1s to investors in early April.

Fund Assets

Will the Fund acquire assets solely or in joint ventures?

The Fund will target sole ownership of the properties it acquires. However, the Fund may also enter into joint ventures or other co-investment opportunities with third parties for the acquisition and management of properties. Joint ventures and co-investments may allow the Fund to access unique resources and expertise of partners, gain access to projects and assets that it would not otherwise have, acquire assets at prices lower than they would transact in a marketed process, and share the risk of an investment with such partners. In situations in which the Fund enters into a joint venture, Sunrise will conduct an extensive analysis of each prospective partner’s management organization, performance in prior or existing transactions, and its current and past borrowing relationships. The Fund will retain substantive management and control rights in any joint venture vehicle.

What is the target loan-to-value ratio for multifamily investments?

The Fund will target a 40%-60% loan-to-value ratio for investments in the Fund.

Are you a REIT?

No.

Do I need to be accredited to invest in the Fund?

Yes. The Fund is available to accredited investors. An accredited investor is a term used by the U.S. Securities and Exchange Commission (SEC) under Rule 501 of Regulation D.
https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/updated-3

Will I be asked to verify my status as an accredited investor?

Yes. Once you decide to invest in the Fund, your accreditation status will be verified.

How will I be updated on the progress of my investment?

Investors can access updated account information 24/7 by logging in to the investor portal. Investors also receive detailed asset management updates on a quarterly basis. In addition, Sunrise provides investment partners with a private monthly podcast to keep them abreast of their investment.

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