Impact Investing - Making a Difference through Real Estate
by Christopher Levarek
“We make a living by what we get, we make a life by what we give.”
- Winston Churchhill
Have you ever taken anything to Goodwill or the Salvation Army? You know that feeling you get when you drop off all your unused stuff and drive off with the warming thought that you might have helped someone? Of course there is the benefit of your garage being a little less cluttered…but I’m sure you also have had this similar feeling. I have to say I make this trip probably every 3-6 months and each time, I always do feel just a little bit better about my life knowing I am in some way making a difference.
There is something very powerful in giving without expecting anything in return. Whether through donating goods to charitable causes like above or donating hard-earned cash to organizations working to improve the world. These actions are part of bigger purpose and each bring an improved state of being not only for the receiver but for the giver as well.
What if you could do this with investments? Imagine rather than simply investing into some stock in a company, your investment contributed in some way to improving the world. What if this was possible without investment returns being affected? Do you think this would be better investment for you and your goals in life?
This idea of investing for a bigger purpose, we like to call “impact investing”, investing into projects or investments that improve the world or create a positive impact. In our company, we greatly value the bigger picture and choose to make impact investing a part of every real estate investment deal we work on. Passive investors in our investment opportunities are able to achieve the amazing returns and tax benefits while also knowing they are helping to improve lives through these investments. Today, I’ll speak on how we structure this within real estate projects and even show some of the organizations we are contributing to.
Impact Investing - How Does It Work?
It is really all quite simple. As you know, our main focus for Valkere Investment Group is multifamily real estate syndication, or partnering with multiple investors to acquire/renovate value-add apartment complexes. In each project, we develop the legal paperwork with a securities attorney and develop a legal entity structure for the real estate acquisition.
Part of the legal paperwork is building what’s known as a PPM, private placement memorandum. This document simply outlines the ownership, fund contributions and the legal entity that will represent this ownership in the real estate property. In our case, we simply make a group of shares, similar to a stock share, that are allocated to contributing to a charity. It looks something like this :
Investment Fund Example, LLC
Class A Shares - 12% Preferred Return
Investors /Limited Partners
Class B Shares - Over 12%
General Partners
Charitable Organization
It is as simple as that. After the return structure is met for limited partners/investors, profits are then distributed to Class B Shares at a pre-determined percentage for the project. This means investor returns are not affected, yet limited partners know they are contributing to charitable organizations with these very same investments.
Which non-profit Organizations?
This is always a popular question with our partners and it depends per project. We typically align with organizations that match our core values and we feel some alignment with. So it can vary per project, however, the two organizations we have chosen to partner with and donate to are Big Sky Bravery and Unbound.
Big Sky Bravery - Post-Deployment Decompression Programs
Through structured activities and mentorship, this organization assists our military’s active duty special operations forces in reconnecting with themselves, their families and society. The BSB program builds trust, encourages engagement in activities and discussions and facilitates decompression.
Recipients leave the program with lifelong bonds and renewed feelings of connection to themselves and others. Big Sky Bravery provides our Military's Active Duty Special Operations Forces with post-deployment decompression programs throughout Montana's restorative surroundings. Big Sky Bravery tailors its programs to these elite forces by focusing on psychological and emotional well-being, and by building trust, brotherhood, and friendships that last a lifetime.
This organization has a very powerful purpose and one that resonates very strongly with our team. My brother Ashton, an ex-Special Operations member, can speak to the difficulties for many soldiers/special forces returning from combat or deployment. It is to this end, that we feel this cause is definitely one worth supporting and why we choose partner with this noteworthy cause.
Unbound - Making Communities Free From Human Trafficking
Unbound Global is a network of anti-human trafficking agencies working in communities in the United States and around the world. Although the work of each Unbound location is unique, depending on the needs of its community, Unbound has three main lines of effort:
PREVENTION & AWARENESS
Unbound works to educate and empower youth, spread awareness through citywide outreaches and provide human-trafficking presentations to groups and organizations.
PROFESSIONAL TRAINING
Unbound provides training to equip all professionals to use their skills to identify and serve victims of human trafficking.
SURVIVOR ADVOCACY
Unbound advocates for victims and survivors by meeting immediate needs, supporting survivors and their families, and connecting each survivor with resources for his or her unique restoration journey.
For Valkere, family is the core framework to our business and lives. We know that we are very fortunate to have all the blessings we’ve had and the strong family support systems, which sadly many are not always given. We hope to help Unbound with this strong battle against human trafficking and provide support for the affected families, children and victims.
In Final
Impact investing is a truly powerful form of investment. As a passive real estate investor, giving to charitable causes all while receiving a profitable return with tax benefits is a win-win scenario. If this sounds like something you would like to know more about, we invite you to reach out and join the Valkere Investor Club to learn how you to can be involved in these types of opportunities.