Representative Questions from Some of Our Investors
Bullseye Capital has been involved in the deployment of many opportunities that involve investor capital, and we are therefore sensitive to the concerns and questions that prospective investors have before they become involved with us. To help address these issues, we are publishing the answers to the most frequently asked questions we receive so that prospective investors will have all of the information they need to be able to make an informed decision about moving forward with Bullseye Capital and our Fund. If you have other questions that are not satisfactorily addressed here, please contact our office.
Is the Manager putting any “skin the game”?
Yes, as promoter and sponsor of the investment, the Manager will be making a cash investment and each Member of the Manager’s organization who functions as a co-Manager is also required to make a capital contribution to the project. In addition, the Manager will guarantee any debt placed upon the project. The investors, themselves, will not incur any additional liability for the project.
What will the Manager do to protect the investment?
We will closely evaluate each acquisition for the potential to upgrade the property and increase rents. We will closely manage the property and the maintenance of the property to forestall problems with the real property itself and to maintain or increase rent. In addition, our understanding of the particular markets will allow us to maximize the opportunity to increase rent and cash flow at the time of renewals and maximize selling prices at the time of disposition.
Why should investors rely on our strategy for income protection and investment returns?
We thoroughly analyze our investments to accurately predict the cash flow stream during the period of the investment and the likely challenges that will result from our difficult economic times. By carefully selecting target properties and purchasing them at favorable prices, we have a higher probability of achieving our investment goals.
How does the economy impact this strategy?
The turbulence in the economy affects some consumers more harshly than others. Accordingly, some real property owners may be placed in a position of forced sale. Other real property owners might have neglected maintenance and upkeep. These factors create irregularities and anomalies in the real estate market. However, these irregularities and anomalies create the favorable opportunities for us. We analyze the level of distress that the property or owner is suffering so that we may make investment decisions on real property that we think has high potential upside.
How much money can we make?
Investors will receive an 8% preferred return on their investment per annum before we receive any return from our ownership of shares in the Company. If the Company has available cash, this preferred return will be paid quarterly. That means that before we share in the profits, the investors are first paid for the use of the capital. In addition, at the end of the life of the Fund, when the Fund is closed, investors will be paid their share of capital gains, appreciation or other items that have resulted in increased value to the Fund. Though we cannot predict the total return, we hope that investors will average over 15% in total annual return on investment for the duration of the investment. Please bear in mind that this is our hope not our guarantee or prediction.
How much cash will we get along the way?
In addition to the preferred return of 8% described above, at least 45% of all annual profits made by the Fund which are allocable to the investors will be paid in cash to the investors each year. The remaining profits can either be distributed to the investors or reinvested at the discretion of the Manager.
How will we get our money back when the investment is over?
The investors will receive their capital investment back plus any accumulated profits that have not previously been distributed within five years. We anticipate that all assets of the Fund will be sold at the end of the Fund’s life.
If the deal doesn’t work out, what is the most likely reason that this would happen?
What is the hardest part of executing this strategy?
Our most difficult task is identifying and acquiring the real estate assets with the highest return and the lowest risk. In particular, we must be able to identify the level of rents that are achievable and the level of capital investment to restore and upgrade the real property to achieve such rents. Furthermore, once we have identified the real property, we must act quickly to acquire the assets before other buyers recognize the same opportunity and compete with us on price.
What is the minimum investment?
Each share is $25,000 (US). The minimum investment is two shares or $50,000 (US) and the maximum investment is 40 shares or $1,000,000 (US). The total amount of capital being raised is 200 shares, or $5,000,000 (US).
How will you safeguard my investment?
Only the amount needed to operate the Fund will be released to the Managing Director. All capital acquisition funds will remain in a restricted account until they are invested into assets deemed by the fund to be suitable according to the criteria of the fund. More information is available in the section of this document called “Safety for the Investors”.
How can I verify that the company is real and not a hoax?
The company is chartered as a Series LLC and domiciled in the state of Delaware. In order to verify the legitimacy of the company, please review the following information. The full name of the company is “Bullseye Capital Real Property Opportunity Fund, LLC” (File #4815098), and interested readers may review the Company’s status by going to: http://corp.delaware.gov.
Does the Fund have relationships with any affiliates of the Manager?
The Fund will have business relationships with affiliates who may have conflicts of interest with regard to the Fund. These affiliates will receive fees and other compensation from the Fund for services rendered. The relationships with such affiliates and the fees payable to them are fully documented in the Offering Materials. Investors will be provided with these materials in which full disclosure is made.
Can we have our capital investment back before the investment is completed?
This should be considered a long term investment and investors should not go into this investment planning to ask for their capital back before the three year hold period has expired. However, we understand that unforeseen situations can occur making such requests necessary. To protect the United States securities exemption and the United States tax status for all of our investors, we must retain the unilateral right to deny or grant requests for early withdrawal from the investment. If we do allow an early withdrawal, the investor will receive a final payout. However, the payout amount will not include participation in the upside capital appreciation of the Fund’s investments since the Fund will not make distributions of capital appreciation until such appreciation has actually been realized through the sale of the real property. A full description of the early withdrawal provision is described in the Operating Agreement. What could go wrong? Risk exists in all real estate investments and the strategy of the Fund is intended to mitigate risk. The risks are thoroughly discussed in the full private placement memorandum. However, some of those risks include the following: (1) other competitors might follow the same strategy and bid up the price on desirable properties; (2) we might underestimate rehabilitation expenses; (3) we might be unable to resell the property at a high enough price to generate the expected profits; (4) we might encounter delays related to building permits and regulatory issues; (5) we might over-estimate deal flow; (6) we might be unable to find competent contractors to perform the rehabilitation; (7) we might encounter time delays in acquisition, rehabilitation and resale of the properties; (8) we might experience further deterioration of the economy that might negate the value added through rehabilitation; (9) we will engage in related party transactions which generate conflicts of interest; (10) the investors do not have independent representation; (11) we determined the terms of the deals that are the basis for the projections, and we did not engage in arms-length negotiation with any other person – so the actual terms might not be as favorable as the terms that independent parties might negotiate.