Compound is a real estate investment marketplace based in New York City and led by an experienced team of professional real estate investors. Compound allows investors to buy equity shares of condominiums in major cities.
Compound finds and "slices" a condominium’s ownership into 100,000 equity shares. Each share owns an equity interest in one apartment, and only one apartment. Shares can be purchased by individual investors.
The Compound App is a mobile application that allows investors to review available offerings, purchase shares, manage their portfolio, and trade shares in the secondary market.
You are investing in a single condominium unit, the ownership of which has been divided into 100,000 equity shares. For example, if you buy 10,000 shares, you would own 10% of that condominium’s stock.
All of the condominiums are owned by Compound Projects, LLC. When you invest in a condominium, you become a shareholder in a sub-company (a Series) of Compound Projects, LLC that owns a specific condominium.
Technically, you own membership interests in a Series of Compound Projects, LLC. Each Series intends to elect to be taxed as a real estate investment trust (“REIT”). Each REIT owns one single condominium apartment.
Compound is not a broker, but we do partner with North Capital Private Securities, a FINRA & SIPC registered broker-dealer to administer our securities transaction. They effect the sale of our securities and are responsible for ensuring that all transactions remain in compliance with FINRA and SEC regulations.
High quality condominiums in the world's best cities, the types of properties that we aspire to own and live in.
We target certain cities that we feel have extraordinary catalysts for appreciation potential. We then seek out condominium units in our favorite buildings that we can acquire at a price that makes sense.
The condominium will be rented to a traditional market-rate tenant.
Compound manages the property. We may engage local staff to assist in the management of the property.
Feel free to walk by but we can’t allow all of our shareholders access to the units.
We intend to manage the properties as traditional apartment rentals, rented out to market-rate tenants through 12-month leases. The expected hold period for each property is 3-5 years at which point we intend to sell the property and distribute the sale proceeds to investors.
Download our app from the App Store or Play Store. Find a property that you like and click the “Buy Shares” button.
Our app accepts ACH payments via Plaid. You can also pay using Apple Pay, and Google Pay.
The minimum investment is typically 10 shares. Shares are usually $5-$20 each.
Yes. You may make an investment through your IRA or other tax-deferred retirement account. If you would like our assistance in opening a new IRA account, please let us know.
No, the investment opportunities on Compound are available to all investors, provided that you do not invest more than 10% of your annual income or net worth in any of our offerings. If you are accredited, that limitation does not apply.
At times we will open up an asset for reservations before we actually start accepting investments. When you reserve shares you express an interest in an upcoming offering. There’s no binding commitment on your part, but this allows us to evaluate demand and ensure there is enough availability of shares when the offering goes live. We don’t accept any unsolicited payments until the SEC has qualified the investment. At that time, we will provide you with key documents and, should you decide to participate, instructions on how to transact.
If we have not raised the full amount required to purchase a property, Compound may provide an acquisition loan for the balance. The loan will not pay any interest and is expected to be repaid through subsequent equity offerings. In the event it is not repaid within 18 months, it will convert into equity under the same terms of this offering.
The offering amount includes operating and capital reserves, closing costs, and offering costs.
Prior to the closing of a property offering, funds will be held in an escrow account with North Capital Private Securities. Upon closing, the funds will be used to acquire the property.
We hope to give you all the information you need to make a decision that you feel comfortable about. Here are some documents which you can review before you decide:
At the end of every year, investors will receive an annual 1099-Div.
We do not currently offer a redemption program.
When we sell the property we will distribute proceeds pro-rata based upon the number of shares you own. We intend to hold the property for 3 to 5 years. Deciding when to sell the property will be at Compound’s discretion.We are also building out secondary market trading capabilities so that prior to the sale of a property, liquidity for investors would be obtained by trading their shares through the Compound App. There will be a 90-day lock-up following the closing of an offering before secondary trading is available for a property.
We will provide bi-annual reports which will include financial performance. We will also provide ongoing updates if there are any material changes to the property or its operations.
Each Series of Compound Projects, LLC will elect to be taxed as a real estate investment trust (REIT). Unless your investment is held in a qualified tax-exempt account, your dividends will generally have tax implications. Dividends will typically come in three forms – (i) return of capital dividends (which are generally not taxed and instead reduce your tax basis for future capital gain consideration), (ii) capital gain dividends (which are generally taxable at long-term capital gain rates), or dividends from current or accumulated earnings or profits (which are generally taxed at ordinary income rates). This allows for depreciation to be passed through to investors up to an amount equal to the net income (can reduce taxable income to zero, but won’t result in a pass-through loss). However, because each investor’s tax considerations are different, we recommend that you consult with your tax advisor.
Compound does not charge any asset management fees. We also do not take a piece of the profits.
For each apartment that we purchase, we act as the buy-side real estate broker and earn brokerage commissions. These fees are paid by the seller. We may also act as the selling broker when we dispose of a property.
We are primarily focused on sourcing opportunities that have the potential for capital appreciation. Many types of real estate are valued based on income multiples (cap rates) or dividend yields- and there’s plenty of options for investors who are looking for income. Urban condominiums on the other hand, are valued based on supply and demand and using metrics such as price per square foot. This creates the opportunity for enhanced appreciation. Income and appreciation potential are directly linked (in opposite directions). Think about growth stocks like Netflix or Amazon. They don’t pay dividends and no one invests in these companies for the income- they invest for the appreciation. Condos are the same- you invest to capture future appreciation, not to clip coupons.
We intend to make semi-annual dividend payments based on cash available (after reserves.)
No additional cash outlays or capital calls are required. In the rare event that shortfalls exceed the reserves, then Compound can lend money to the project to fund the shortfall.
At Compound, we’re realists. That means we don’t make up numbers.What we do, put very simply, is find condominiums that we can buy at prices that make sense.How do we determine if a purchase price makes sense? Well, first of all, we’ve done this before. Our team is made up of people who have a few decades of professional real estate experience (each!). Together, we take a hard look at supply (new units coming to market) and demand (new household formation and market occupancy). We look at what other similar units have sold for (comparable sales) and we look at current market conditions (average rents, market occupancies, and operating expenses.)Then, we compare the price we believe the unit is worth against the asking price--and we negotiate to acquire a property at a price that we think is attractive from a value perspective.
Of course, we know what they are, and we acknowledge that in most real estate investments, they’re incredibly important. But the cold, hard truth is that when it comes to condominiums, they’re almost irrelevant. Condos do not sell on the basis of their ability to generate income. Instead, their value is largely based upon supply and demand. Think of condominiums more like a commodity--like oil or gold--that have both a real-world value and an economic value that makes them a store of wealth. When the market thinks they are rare, their value increases. Neither oil nor gold throws off any current income, and yet, they are very valuable assets to own.
Investors love to talk about IRR (or internal rate of return). But guess what? There are really only a few facts that can be known with certainty in real estate investment: where the property is located, how big it is, and what you pay for it. Everything else, from future rents to projected returns, are little more than fantasy–right up there with unicorns and UFOs.IRR can only be calculated using assumptions about the future. Who can really predict the future? Since we lost all faith in both Zoltar and our Magic 8 ball, we instead rely on the things we know.We admit that we have no idea what interest rates or inflation---or what economic policy will be in five years. And guess what? Neither does Blackstone or any other real estate asset manager. Which is why any deal that is touting its projected IRR is always accompanied by lengthy disclaimers in tiny print which says, quite plainly, that the projections are meaningless.
You know how magicians swear never to reveal the secrets of their tricks? We’re about to become the rogue magician of the real estate investment industry.That’s because you will have a hard time finding a real estate firm willing to admit that their ingenuity is actually a very tiny component of their success. Rather, real estate returns are mostly a matter of being in the right market at the right time.The equities world has already faced this reality, which is why more capital is being passively managed than ever before. But in real estate, every investor is a self-proclaimed genius. (They are always the best managers who can find the best “off-market” deals and blah blah blah.) We are happy to admit it: the markets we invest in will determine the majority of our returns. We will seek to buy at the best values possible in order to enhance those returns, but at the end of the day, you are investing in a market and, drum roll please, the market is king.
Cityfunds are a product that is in the works and only available to Institutional investors.
To be clear, your investment would be in a Series of Compound Projects, LLC. This investment does not represent an investment in Compound Asset Management ("Compound"), the Manager of Compound Projects. If Compound goes bankrupt then Compound will assist in making an orderly transition of the management of Compound Projects, or may elect to sell the property and distribute the proceeds to shareholders.Please review our offering circular here for even more details