Real estate investing has become increasingly popular in recent years and now offers investors the opportunity to access potentially lucrative real estate markets and investments that may not have been as easily available in the past.1
One area that has really seen some interesting opportunities is in commercial real estate investing, and one of the companies that has shown some promise in this area is Cadre.
In this Cadre real estate investing review, we’ll explore this real estate investing platform in detail and help you to decide if it might be a good fit for your portfolio.
- Invest in commercial real estate.
- Excellent potential for returns.
- Access to large commercial real estate deals.
- Intense deal vetting process.
The Cadre Basics
Cadre is a real estate investment platform that has been operating since 2014, with a focus on quality rather than quantity for accredited investors. The overall aim of Cadre is to make commercial real estate accessible for those who would otherwise struggle to invest in this area.
Since inception, Cadre has transacted on real estate with a total value of nearly $4.7B.
While there are a lot of competitors within the real estate investing niche, many of these platforms hold far more properties or investments. Cadre’s more selective approach aims to produce better returns by focusing on investing in properties within high-growth markets.
Cadre uses extensive manual due diligence, data, and technology to identify good opportunities, investing in offices, industrial properties, hotels, and multi-family apartment buildings. Cadre also stands apart from much of the competition as it puts its own funds into the investment properties. Rather than acting solely as an investment platform, Cadre also has a financial investment, providing greater confidence in the due diligence performed for each specific deal. Investor confidence is further bolstered by Cadre’s historical rate of return, which is an impressive 18.6% per year. While this will not guarantee future returns, it does suggest Cadre knows what it is doing.
Cadre has a management team with deep institutional real estate investment experience. Investment Committee members at Cadre average over 25 years of experience, and previously led or worked at firms such as Vornado, the Four Seasons Hotel & Resorts, Goldman Sachs, and Blackstone among others.
The Cadre Platform Key Features:
While there is a lot to discover about the Cadre real estate investing platform, there are some key features, which may indicate if it is a good fit for you.
*please see important disclosures 2
- Investment Properties: The investment property options on the Cadre platform include multifamily apartment complexes, office buildings, retail properties, and other commercial property locations. Due to the nature of the investments, Cadre advises holding positions for approximately ten years to obtain maximum benefit.
- Geographical Diversification: Cadre invests in properties in the top 15 growth markets throughout the U.S. This is primarily in Sunbelt cities including Atlanta, Charlotte, Dallas, and Miami, along with Los Angeles, Seattle, Washington DC, and Denver.
- Minimum Investment: The minimum investment is $25,000 for Cadre Funds or $50,000 for Deal-By-Deal investments.
- Allocation and Commitments: You can submit a non-binding allocation request for participation in the various available investments. Allocations are granted after consideration of account timing, overall opportunity size, and interest level. When an application is accepted, you will receive an online subscription agreement that you need to complete before funding.
- Income Distributions: Income from the properties is distributed on a quarterly basis. Any income is deposited into your bank account, but the amount of distribution depends on each individual investment performance. The investment results will be reported to the IRS and you. The IRS Form K-1 will detail net rental income, income from interest, and any other income or expense information including depreciation.
- Customer Service Availability: You can contact the Cadre customer service team by email or phone. The customer service team is available from 9 am to 6 pm ET Monday to Friday.
How Investing With Cadre Works
Cadre is only open to accredited investors. To qualify, you’ll need to either:
- Have a net worth of $1 million excluding your primary residence, either individually or jointly with your spouse.
- Have an annual income of $200,000+ or $300,000+ for joint filers. This needs to be proven for the past two years and with an expectation that you will reach the same income level at the end of the current year.
This makes Cadre a good option for those with a high net worth who are looking to diversify and enjoy excellent returns without needing to spend their own time vetting investment properties.
If you qualify as an accredited investor, there are two different Cadre investor options. The first is the Cadre Funds. This option allows you to invest in a diverse property portfolio rather than just one single property. This is a good way to get started, as you don’t need to spend time vetting properties or looking at specific deals. Cadre sFunds portfolios are typically 50% multifamily apartment buildings and 50% hotel, office, and industrial properties.
The other investor option is Deal-by-Deal Investing. This is a good option if you want to have more control over which investments you access. You can look at the available properties on a deal-by-deal basis, which has the potential for a higher return on investment. However, you may miss out on the protection achieved with a more diverse portfolio.
When you invest in the Cadre Funds, you will be investing in the same properties that are available for deal-to-deal investments. However, only a certain percentage of each project is available for deal-to-deal investing, the rest is allocated to the fund.
The minimum investment for Cadre is $25,000 for Cadre Funds or $50,000 for Deal-by-Deal. You also have the reassurance that all available deals on Cadre have undergone its intensive vetting process.
Cadre Fees And Costs
There are two sets of fees imposed on every Cadre deal. There is an upfront fee of 1% to 3% of your gross investment per transaction. This means that if you invest the minimum of $25,000 or $50,000 depending on the option, $250 or $500 respectively will come off the top.
The other fee is 1.5%to 2% of the net asset value as a recurring annual management fee.
Cadre also negotiates a share of the sponsor’s “promote”. This is a percentage of the profits sponsors will earn when a deal has gone full circle and the property has been sold, typically above the minimum profit threshold.
While this may seem like Cadre is taking a bigger piece of your potential profits, it actually incentivizes having deals complete and outperforms their targets. Instead of relying on simply getting a transaction funded, Cadre will make more money if your investment deals are profitable.
How To Sign Up With Cadre
If you’re a qualified investor, you can start the Cadre sign-up process directly on its website.
Simply click “Get Started” and you will need to specify whether you are a financial advisor or an individual investor.
The next stage requires you to confirm your accredited investor status and provide your name, contact phone number, and country of residence. You’ll also be asked for a valid email address and to set a unique password.
From this point, your account is opened, but you’ll need to answer a series of questions. This will help Cadre evaluate your investment goals, risk tolerance, time horizon, and any previous real estate investing experience. You will also be asked your approximate net worth, but there is the option not to disclose this.
Once you complete all these questions, you will then have access to the Cadre investment platform to browse the current deals and options. You will receive an email confirming your account and Cadre allows you to schedule an introductory phone call if you would like one.
At some point, you will also need to link your bank account to your Cadre account. This will allow you to fund your investments.
Before you can start investing, Cadre does require some verification. You will need to verify your identity to open up your Cadre account. You can do this by uploading your passport or driver’s license and Social Security card.
Cadre also needs to verify your accredited investor status. You will need to upload appropriate documentation, which can include complete tax returns, W-2s, or a verification letter from your broker-dealer, licensed attorney, CPA or SEC-registered investment advisor.
Expectations For Cadre
As with any investment, it is important to have realistic expectations before making any Cadre deal, so you can be sure that you are completely confident with the liquidity and timescale of your investment.
Cadre investments are not considered liquid, like many other real estate investing platforms. Deals are typically held for five to 10 years, but Cadre does not put a specific limit on investment durations. This means that you need to be prepared to hold your investment for a minimum of five years.
However, Cadre does offer a secondary market. After at least six months from the initial funding period, it is possible to sell your investment on the secondary market during quarterly windows.
Although selling on the secondary market can provide an option if you need or want to sell, there are no guarantees of liquidity during these windows. There are also some limitations to selling on the secondary market.
Cadre determines the sale price for your investment, determined on specific discounts to “Marked Value”.
There is also a fee paid on the gross transaction price, which is 1.5% for the buyer and 1.5% for the seller. People buying on the secondary market are likely to be looking for discounted investments. So, it should only be considered a last resort if you need to get out of your investment before completion, because you likely won't get what you put into it.
If you do use the secondary market and find a buyer, you can expect the proceeds from the sale to be transferred into your bank account within 45 days after completion.
Cadre Pros And Cons
As with any investment product or platform, there are both positives and potential negatives associated with Cadre. It is important to be aware of both the pros and cons before making your final investment decision.
- Intense Vetting: While Cadre does not offer the large selection of deals you’ll find with some other platforms, they are incredibly selective. Their vetting process is exhaustive, which is particularly helpful if you lack real estate investing expertise or experience.
- Excellent Returns Potential: Cadre has an impressive history of delivering excellent returns. While there is no guarantee for future performance, a track record of an 18.2% rate of return is appealing.
- Access to Large and Commercial Real Estate Deals: Investing in large projects of commercial real estate is not within reach for many investors. Cadre makes it not only possible but easy.
- Limited History: Although Cadre has been operating since 2014,since many deals run for five to 10 years, there have only been a handful of completed deals.
- Liquidity Issues: While this is typical with real estate investing, Cadre’s secondary market is only available once per quarter and you may get far less than you believe is fair.
- Limited Available Options: Since Cadre states its focus is on quality rather than quantity, this does mean that there is a limited number of available deals at any time. Currently, there is only approximately one new deal each month.
- High Minimum Investment. You’ll not only need to be an accredited investor, but also put down at least $25,000, or $50,000 for Deal by Deal investments.
Who Is Cadre Best Suited For?
Cadre is a good choice if you’re an accredited investor looking to diversify into real estate investing. Real estate is not directly correlated with the financial markets, but it is a high risk and high reward opportunity.
Unfortunately, finding solid real estate investment deals can be a time-consuming and long-winded process. This is where Cadre can help. Cadre has an intense vetting process and the company invests its own funds in the projects. So, while you still need to perform your own due diligence, you can feel confident that any deals presented within the platform have already been fully researched and evaluated.
On the other hand, if you’re not an accredited investor, need your investment funds to remain fairly liquid or simply don’t understand the risks that are associated with real estate investing, Cadre is not a good fit for you.
Cadre: A Good Choice For Many Investors
Real estate is an investment niche that is considered a portfolio cornerstone for many millionaires. However, while commercial properties such as multifamily apartment buildings and hotels offer massive investment potential, they have traditionally been out of reach for many individual investors.
Real estate investing platforms have changed this, making these types of investments more accessible for investors. Overall, Cadre is a solid and well-capitalized platform. All Cadre investments are separate and standalone legal entities. This means that your investment would not be at risk if Cadre were to face any financial issues. Cadre acts as the investment manager, owning a stake in the investments. However, creditors would not be able to go after your stake to meet any Cadre obligations.
Cadre investment deals also have a developer sponsor who actually does the developing and operating of the properties. Cadre has solid results identifying great properties and sponsors for profitable deals.
So far, Cadre has produced solid results, but its track record is limited due to the timeframe involved for each investment, so there has only been a relatively small number of projects made to date.
Cadre has some excellent plus points. The platform has an innovative approach to technology and data to determine the projects with the greatest potential. However, the platform is only open to accredited investors and there is a relatively high minimum investment requirement.
While past results will not provide any guarantees for success, if you meet the investor requirements, Cadre does offer an intriguing opportunity. Just make sure you perform your own due diligence.
1Private placements are high risk and illiquid investments. As with other investments, you can lose some or all of your investment. Nothing here should be interpreted to state or imply that past results are an indication of future performance nor should it be interpreted that FINRA, the SEC or any other securities regulator approves of any of these securities. Additionally, there are no warranties expressed or implied as to accuracy, completeness, or results obtained from any information provided here. Investing in private securities transactions bears risk, in part due to the following factors: there is no secondary market for the securities; there is credit risk; where there is collateral as security for the investment, its value may be impaired if it is sold. Please see the Private Placement Memorandum (PPM) for a more detailed explanation of expenses and risks.
2Performance Not Guaranteed: Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections are not guaranteed and may not reflect actual future performance.
Risk of Loss: All securities involve a high degree of risk and may result in partial or total loss of your investment.
Liquidity Not Guaranteed: Investments offered by Cadre are illiquid and there is never any guarantee that you will be able to exit your investments on the Secondary Market or at what price an exit (if any) will be achieved.
Not a Public Exchange: The Cadre Secondary Market is NOT a stock exchange or public securities exchange, there is no guarantee of liquidity and no guarantee that the Cadre Secondary Market will continue to operate or remain available to investors.
Private Securities: Any securities offering is private and you may be required to verify your status as an ‘Accredited Investor’ to participate. No securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through us. Please refer to the investment opportunity and memorandum for additional information and disclaimers.
Opportunity Zones Disclosure: The discussion regarding “Opportunity Zones” – including the viability of recycling proceeds from a sale or buyout – is based on advice received regarding the interpretation of provisions of the Tax Cut and Jobs Act of 2017 (the “Jobs Act”) and relevant guidance, including, among other things, the regulations issued by the IRS and Treasury Department. A number of unanswered questions still exist and various uncertainties remain as to the interpretation of the Jobs Act and the rules related to Opportunity Zones investments. As such, we cannot predict what impact, if any, additional guidance, including future legislation, administrative rulings or court decisions will have on such unanswered questions and uncertainties and there is risk that any investment marketed as an Opportunity Zone investment will not qualify for, and investors will not realize the benefits they expect from, an Opportunity Zone investment. We also cannot guarantee any specific benefit or outcome of any investment made in reliance upon the above.
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