Ways We Invest
Our mission is to help you generate cash flow and legacy wealth through commercial real estate investing.
At Sunrise, we work hard for our money, and we know you do too. Capital protection is key to building legacy wealth.
INSTEAD OF SWINGING FOR THE FENCES WITH RISK, WE FOCUS ON RECESSION-RESISTANT ASSET CLASSES THAT CAN PERFORM IN BOTH GOOD AND BAD ECONOMIES.
Real wealth doesn’t happen overnight by taking outsized risk in an effort to generate lofty returns. Real wealth grows over time through efficient management of capital, buying right, and investing for the long term. These are the guiding principles for our team, and this philosophy helps us build legacy wealth alongside you and your family
SCI WILL CONTINUE TO ACQUIRE TOP-TIER MOBILE HOME PARK AND PARKING ASSETS IN AN EFFORT TO CONSOLIDATE HIGHLY FRAGMENTED INDUSTRIES
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 acquire properties, improve operations, cash flow, and provide distributions to our partners.
The Company specifically targets low-risk, cash-flowing assets that generate capital preservation, immediate income, and equity growth through repositioning and increasing the net operating income.
We seek to acquire each property at a discount to its intrinsic value, providing investors with a comfortable margin of safety.
2. Add Value
SCI improves operations to increase the cash flow and add value to the property.
3. Cash Flow
Since all properties are cash flowing, SCI allows favorable long-term economics to serve as a tailwind and help build legacy wealth over time.
Distributions from cash flow are provided quarterly for investors until each asset is sold and the final return is distributed
Featured Assets in Fund 3
Dutch Gardens MHP
Rome, GA – Nov 2020
Acquired with a nice margin of safety, this asset appraised for $430k above the purchase price at acquisition. Based on the appraisal of $2.63mm, we were able to achieve a 20% return on equity on day one. Our buy, improve, refinance, and hold strategy in this property will help generate cash flow & build legacy wealth for all of the investors in Fund 3.
Princess St Parking Lot
Wilmington, NC – Oct 2020
Sunrise negotiated a $695k purchase price, which pencils out to a 9.3 capitalization rate at acquisition. Based on the purchase appraisal of $1mm, we were able to achieve a 43% return on equity on day one. Our long-term lease provides stable, recurring income for many years into the future. This visibility of income over the next decade provides safe, predictable cash flow (and clarity) for our Fund 3 partners.
Valdosta, GA – June 2020
Sourced via cold-call and negotiated direct-to-owner, this asset appraised for $680k above the purchase price. Based on the appraisal of $2.33mm, we were able to achieve a 41% return on equity on day one. Once the business plan has been executed, we project this asset will significantly outpace the metrics necessary to exceed investors’ Fund 3 projections.
Why Combined MHP/Parking is a Smart Investment
“Never depend on single income. Make an investment to create a second source.” – Warren Buffett
The Fund has been designed to deliver stable, passive income and capital appreciation.
Investing in recession-resistant assets with favorable long-term economics ultimately lowers volatility, without sacrificing upside.
With the recent volatility in stocks, many prudent investors are seeking to diversify into non-correlated assets, such as real estate. In the realm of real estate, MHPs and net lease properties provide the best risk-adjusted returns in the marketplace.
This partnership is structured such that investors receive their Preferred Return before fund managers participate in any of the profits.
Meet Our Expert Leadership Team
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Best Performing Asset Class During COVID-19
Despite COVID-19’s impact on the real estate sector, MHPs have maintained a strong outlook throughout the year. In the case of MHPs, most residents own their unit and only pay rent on the land it sits on. These residents are therefore highly incentivized to remain current on rent and utility payments. Many MHP operators report high rent collection rates despite COVID-19 hurting other real estate sectors.
Why Invest in Mobile Home Parks?
“Trailer parks are the best real estate investment that has ever existed. They have a decent yield, high barriers to entry, solid demographics, a tenant base that remains with you for life, and tiny capex requirements.” – Sam Zell, Forbes 400 Member
Strong and Increasing Demand
As middle and lower class families continue to be pressured financially, growing demand for inexpensive housing makes MHPs the most attractive housing option for those hovering near the poverty line. Mobile homes will continue to be the best option for those unable to pay the high costs of conventional homes.
Artificially Constrained Supply
Due to increasingly burdensome zoning regulations, few MHPs are being built. These government regulations artificially constrain the supply of MHPs. In addition, profit margins for MHP developers are often inferior to those in the apartment industry.
Low Tenant Turnover
The cost of moving a mobile home is roughly $5,000. This is very high cost for most of the residents in a mobile home park. Mobile Home Parks in which you rent the land to the homeowners have a much lower turnover ratio as compared to apartments. In most cases, once the home is moved into a park, that home will stay for many years. When residents decide to move, they simply resell the home – which remains in the park – and the new homeowner becomes a tenant.
Access To Exclusive Off-Market Deals
Through the Fund, investors can participate in purchasing at a steep discount to the prices one must pay to own MHPs through a publicly traded REIT. These off-market deals are purchased directly from owners who have not maximized the NOI of their investment. Acquisitions are negotiated based on the current NOI, which can be increased shortly after closing on the property.
MHPs outperformed other real estate sectors during the most recent recession. Demand for our product (affordable housing) actually increases as the economy tightens. The unique, favorable economics of MHPs produce superior risk-adjusted returns for investors.
Our Value-Add Strategy
Mobile Home Parks
During the turnaround stage, SCI will stabilize the park, recapture the loss-to-lease, lower expenses, and reduce vacancy. We are typically able to accomplish this feat within 18-24 months. At the outset, our team allocates the capital necessary to complete deferred maintenance projects and get each park operating at peak efficiency. The goal is to inject minimal capital for maximum effect.
The immediate aesthetic improvements in the community can be very impactful, often kicking off a virtuous cycle of resident pride of ownership where homeowners clean up their own property and demand the same from their neighbors. This provides long term value to both the residents and our bottom line.
Injecting Minimal Capital
Spruce Up Community
Community Clean-up Day
Fix Anything That is Broken
Renovate Vacant Units
Fill Pot Holes
Remove Non-running Vehicles
Fix Water Leaks
Benefits to Current Tenants
Power-wash & Paint Homes
Repair & Replace Skirting
Enforced Rules & Regulations
Remove Unruly Residents
Recapturing the Loss-to-Lease
Many of our residents are on month-to-month leases with significantly below market lot rent at acquisition. Once we have improved the community’s aesthetics, residents are more than happy to pay a slightly higher monthly cost to receive a significantly better living experience. At that point, we raise rents to just below the local market value. Recapturing this loss-to-lease dramatically increases our top line revenue. Because our lot rents are still below the market rate, we experience little to no turnover, and the vast majority of that additional revenue falls to the bottom line.
Upon completion of a successful turnaround, residents experience a bolstered pride of ownership in their homes and in their community. In addition to looking nicer, the community will generate more net income and will have built-in sweat equity.
Why Invest in Parking Lots?
“There is embedded demand in this sector, which we believe will provide continued growth opportunities for the foreseeable future.” – Sam Zell, Forbes 400 Member
As the population grows, so does the demand for parking due to the increased number of passenger vehicles on the road. Currently the U.S. has 325 million residents, the population is projected to grow to over 400 million by 2050. At more than 285mm, the growing number of passenger vehicles increases the demand for parking every year
A Shrinking Supply of Parking
There are more than 40,000 parking facilities in the country, but that number is shrinking. Census data from 2008-2017 shows a 7% decline in the total number of parking facilities.
Stable, Recurring Income
When it comes to parking, we prefer to sign favorable long-term, 5-to-10-year leases with third-party operators. This type of lease is most commonly found in NN or NNN investments, such as Walgreens, CVS, Dollar General, etc. In addition to the base rent, these leases contain annual rent increases tied to the consumer price index (CPI), which protects the investment from inflation risk. These long-term leases ensure parking investments provide stable, recurring income for many years into the future.
With recent advancements in technology, owners can leverage sophisticated third-party operators who can institute a dynamic pricing model to maximize revenue. With this technology, operators can modify the price for parking to reflect the changing market conditions. The higher the demand, the higher the price. This ensures the parking facility maximizes revenue during the workday, at night, over the weekend and for special events.
Our Core-Plus Strategy
In the parking niche, SCI creates stable, recurring income by structuring favorable long-term leases with credible third-party operators. This type of lease is most commonly found in NN or NNN investments, such as Walgreens, CVS, Dollar General, etc. In addition to the base rent, these leases contain annual rent increases tied to CPI, which protects the investment from inflation risk.
The long-term leases provide stable, recurring income for many years into the future. The visibility of income over the next decade provides safe, predictable cash flow (and clarity) for our partners.
Prioritize Location, Location, Location
SCI acquires targeted properties in exceptional locations with solid demand generators
Government and Courthouses
Sporting and Event Venues
Create Predictable Returns
Safe, predictable cash flow is created by negotiating favorable leases with operators prior to acquisition.
Secure Guaranteed Long-Term Net Leases
Include Annual CPI Increases
Receive Revenue Participation Above Threshold
Increase The NOI
With recent advancements in technology, SCI can leverage sophisticated operators to improve operational efficiency and increase cash flow
Optimize Operations Through Automation
Implement Dynamic Pricing
Benefits of Investing
Strong COVID-19 Performance
MHPs have performed better than any real estate niche since COVID-19 swept the globe. Green Street named MHPs the biggest winner in the COVID pandemic because not only are long-term returns the highest, but there is also near-term upside.
Investors receive quarterly cash flow distributions, allowing them to buy more time with their families. The stable cash flow generated by MHPs and parking reduces investor risk and ensures consistent and predictable passive income.
Because real estate investments tend to behave differently than typical stock and bond investments, adding them to a portfolio may provide broader diversification, enhance returns, and increase income levels. The Fund intends to diversify across assets, geographic regions, and asset classes.
Both MHPs and parking have a long history of being affected far less than other asset classes in the past recessions. Long-term guaranteed leases create reliable revenue in parking, and MHPs outperform during recessions because demand for affordable housing actually increases as the economy tightens.
Best Risk-Adjusted Returns
Per Green Street, MHPs are expected to produce the best risk-adjusted return of any property type. For decades, MHPs have outperformed other real estate sectors. With the highest long-term same-store NOI growth projections of any property type, MHPs are well-positioned to outperform for the foreseeable future.
Significant Tax Benefits
The tax code favors real estate investors. MHPs in particular are remarkably tax-efficient since the majority of the purchase price can often be depreciated in the first year. Investing passively allows you to get the cash flow and tax benefits of owning real estate, without the headaches of being a landlord.
Frequently Asked Questions
What is SCI Growth & Income Fund 3 (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 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 an average 8% cash-on-cash return, paid quarterly.
How Do I Invest?
How do I invest?
You can request access to the full investor presentation right here on this page. This will take you to a webpage where you can review the Private Placement Memorandum and watch the Fund3 webinar. When you are ready to invest, simply click the ‘Invest Now’ button on the investor presentation webpage. This begins the online investment process, which should take less than 5 minutes. If you have questions or need assistance, please call (833) 227-4359.
Who can I contact with questions about an investment offering?
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 in multiple tranches?
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.
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. An investor is formally accepted into the fund on the date the investor’s capital is drawn down from the escrow account by the company. In the interest of fairness, capital will be accepted into the fund in the order in which commitments are received by investors.
When will distributions likely begin?
The Manager’s goal is to begin distributions at the conclusion of Q4 2021.
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 your investments?
The Fund will target a 40%-60% loan-to-value ratio for investments in the Fund.
Are you a REIT?
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.
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.
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?
If you are considering a 1031 exchange when selling real estate you own in order to mitigate capital gains tax, we may be able to provide you with a suitable replacement property to help accommodate your tax and cashflow needs. In addition, if you own a mobile home park or parking asset that fits within our investment guidelines, we may be willing to acquire your property in a Section 721 exchange where you receive equity in our Fund. If any of this may apply to you, please schedule a call. We would welcome the opportunity to speak with you about your situation.
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.
Important Information and Disclaimers
*The information contained herein must be kept strictly confidential and may not be reproduced or redistributed in any format without the approval of Sunrise Capital Investors, LLC, a Florida limited liability company and the Sponsor of the Investment (the “Sponsor”). Neither the Sponsor nor any of its affiliates makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein and nothing contained herein shall be relied upon as a promise or representation whether as to the past or future performance. The interests in the Investment are subject to restrictions on transferability contained in the Offering Package. No representations are made as to the accuracy of any targets, estimates, approximates or projections or that such targets, estimates, approximates or projections will be realized. Forward-looking statements are based upon certain assumptions and information available on the date hereof. Actual events are difficult to predict and may be beyond the Sponsor’s control. The information contained herein does not purport to contain all of the information that may be required to evaluate an investment in the Investment and any recipient of this document is encouraged to read the Offering Package and should conduct its own independent analysis of the data referred to herein prior to making an investment in the Investment. All track record and prior investment performance is subject to and qualified by the following:
A. As used herein, the term “Sunrise Capital Investors,” or “Sunrise” refers to the umbrella brand of real estate investments sponsored by SCI PHX Build-to-Rent Fund 4 LLC and/or its affiliates. Accepted investors will be investing in SCI PHX Build-to-Rent Fund 4 LLC, a Delaware limited liability company (the “Fund”) and the assets of the Fund will vary from those of Sunrise.
B. All references, if any, to net investment returns reflect returns on an investment-by-investment basis. There can be no assurance that unrealized investments will be realized at the valuations used to calculate the net investment returns contained herein and transaction costs connected with such realizations remain unknown and, therefore, are not factored into the calculations.
C. Unless otherwise stated, all financial information provided herein is unaudited.
D. Any reference to a targeted or projected NOI, cash flow, annual return, IRR, or multiple of invested capital contained in is merely an estimated “target” and inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those predicted or anticipated. While the targeted performance is based on assumptions that the general partner believes are reasonable, the actual returns will depend on a very broad range of factors applicable to individual investments. There are risk factors that could cause certain assumptions to prove to be incorrect, which may include, without limitation: (i) changes in government policies and government activities in the debt markets; (ii) changes in interest rates; and (iii) economic and market conditions. No assurance, representation or warranty is made by any person that any targeted returns will be achieved, and no recipient of this document should rely on such targets.
E. The summaries of various investments are intended to be a brief summary of certain key terms and does not contain all material information regarding these investments. Additional information regarding these potential investments is available upon request.
F. There can be no assurance that any potential transaction will be consummated or, if consummated, the terms on which such transaction will be consummated, until the final execution of the investment documents.
G. Past performance of investments made by persons affiliated with the Fund is not indicative of future results and there can be no assurance that the Fund will achieve results that are comparable to any prior investment described herein.
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