At MLG Capital, we are committed to providing innovative and strategic investment opportunities for our clients across the United States. One compelling offering is the Dividend Fund option that lives within our Series of MLG Private Funds. The Dividend Fund was first announced in 2018 as a parallel offering of MLG Private Fund IV LLC. This Fund option presents a unique pathway to investing in private real estate with retirement accounts, through foundations, endowments, or even cash investors.
What Makes the Dividend Fund Special?
The Dividend Fund is designed as a secondary pathway to investing in our Private Fund series, offering the same underlying assets, return targets, and investment strategy as our primary Private Fund. This option, however, features a distinct legal structure that can exempt investors from additional taxes typically associated with debt-backed asset investments within retirement accounts, or with foundation or endowment investors, commonly known as Unrelated Business Tax Income (UBTI). This can make it a good choice for those looking to diversify their retirement, foundation, or endowment investment accounts while maintaining compliance requirements for these types of investors.
Why Would a Cash Investor Consider the Dividend Fund?
Additionally, the Dividend Fund option may be a consideration for cash investors seeking to diversify their investments into private real estate and wanting to avoid the complexity and cost associated with multi-state tax-filings. With the Fund’s targeted holdings in 10-15 states, some investors review their portfolio, long term goals, and cost of servicing an investment such as this relating to their annual tax filings.
An important consideration for this option is tax. This option may be less tax-efficient for cash investors as they will not be able to benefit from the Net rental real estate (loss) allocations that Private Fund investors are able to receive rental (in the main Private Fund – click for example of tax-efficiency). Dividend Fund investors will primarily receive Long-Term capital gain dividends and ordinary REIT dividends which may be less tax-advantaged to cash investors in comparison to the Private Fund.
As always, consult with your tax, investment or legal advisors regarding your personal situation and long-term goals.
Why Invest in the Dividend Fund?
- Timing: Private real estate is not intended to be an overnight success. Time, tax-advantaged cash flow and appreciation over time is the focus. The series of MLG Private Funds operate on a ±10-12 year lifecycle, which may align with the nature of retirement, foundation and endowment investment accounts. Since these types of investors are generally focused on a long-term horizon, concerns about locking up money for an extended period may be mitigated.
As the saying goes, “Don’t wait to buy real estate, buy real estate and wait!”
- Diversification: Diversifying investments is a key strategy within an investment portfolio. Your current retirement account is likely heavily allocated towards stocks and bonds Diversifying into private real estate may be an excellent way to further mitigate risk in your portfolio.
- Long-term Wealth Generation: Investing in real estate has a longstanding reputation for creating substantial wealth which can be passed down through generations. However, investors could miss out on this potential due to a lack of sustained commitment or by reallocating their funds to other expenditures. Retirement accounts offer a unique advantage by limiting access to funds until retirement age, which enforces a disciplined investment approach. This restriction helps ensure that your investments grow uninterrupted, leveraging the power of compounding returns to potentially build wealth over time. By maintaining a focused investment strategy, you could steadily grow your financial legacy for yourself and future generations.
Maximize the Potential of Your 401k or IRA
Investing in MLG Capital’s Dividend Fund via Private Fund VI offers a unique opportunity for investors to invest with their retirement accounts. With its unique structure, the Dividend Fund can enable investors to potentially diversify their investment portfolio while avoiding UBTI
Start your journey with MLG Capital’s Dividend Fund today. Visit MLG Capital for more information on our investment offerings.
Disclaimer: MLG Capital and its affiliates are not investment advice fiduciaries for purposes of the Employee Retirement Income Security act (ERISA) as described in the Retirement Security Rule issued on April 23, 2024, or any amendment or supplement thereto.
This article does not constitute an offer to sell an investment in a security. Offers to sell an investment in a security can only be made to a qualified purchaser by delivery of a Confidential Private Placement Memorandum accompanied by a Subscription Document Booklet. The information contained herein may be preliminary in nature and may have not been independently verified by MLG Capital or its affiliates. Recipients should consult with their own investment, tax and/or legal professionals about the merits of any investment. MLG Capital does not make any representation or warranty as to the accuracy or completeness of any information presented. Any financial information or projections may be initial estimates and may be subject to change without notice to recipient.
