Overview

The NDF8 is to help bridge the gap for the individual investor, enabling you to achieve diversification and earn a financial return with less time spent managing the portfolio. NDF8’s investment strategy is built around Lon Welsh’s four pillars of diversification: Strategy: Investments are balanced between new development and the value-add of existing properties. Geography: Most landlords have no geographic diversity in their portfolio. It’s hard to have active rentals spread across the US. NDF8 invests in 5-10 states, bringing geographic diversity that few investors have. Asset class: Traditionally, multi-family real estate performs best during recessions and in times of high inflation. Thus, Fund 8 will include more multifamily than other asset classes. We will also try to add workforce, industrial, self-storage, hospitality, and student housing (depending on which opportunities are best). Sponsor: We always work with seasoned, best-in-class operators who are taking down great deals and projects. How will NDF8 Investments work? As usual, Lon will be investing along with you and using the same strict underwriting methodology he has used for the past twenty years. NDF8 will: Make seven to ten investments in 2023-24 Have a total investment in the $7 to $12 million range Target limited partner (LP) returns of 17-20% IRR, with potential upside. Returns and Timeline NDF8 will mostly provide returns in the form of capital gains, not current income. (Please see STI and MTI for our income fund options.) Some projects will be completed or refinanced to return initial capital by the end of the third year. At the end of the third year, most initial investment capital will be returned The majority of the fund should be wrapped up by year five, although there may be some stragglers that take a year or so for the most optimal returns. Investment Size NDF8 will generally invest $0.5 to $3.0 million per project. This amount supports both access to premium projects and ample fund diversification. For projects that are an exceptionally good fit, the investment may reach up to $5 million. Several high-return projects have already been identified. NDF8 Details & Underwriting Here are some of the elements we’re seeking. These are common attributes for all asset classes: 17-20% net investor IRR, with potential upside. We are seeking a cash-on-cash return of 5% or more (not guaranteed): For new builds of any asset class, by the end of year four. For value-adds of any asset class, by the end of year two. Geographic Docus Our primary states are TN, GA, FL, and SC. Our secondary states are WA, OR, NV, ID, UT, AZ, CO, TX, KY, TN, NE, KS, WY, CA, OK, MO, MD, LA, MS, MI, OH, IL, IN, WI, MN, PA, NJ, NY, and MA. Sponsor Attributes We prefer sponsors that have fully completed at least four similar projects and will be reusing many members of the team that generated prior success (e.g., property manager, general contractor). It’s a bonus if the sponsor has run projects through the previous recession(s). Project Attributes Where practical, we’ll seek projects that can perform an asset segmentation to allocate bonus depreciation to the investors early in the life of the project. Where practical, we’ll prioritize projects that can be refinanced: In value-added projects, that would generally be after renovation and re-leasing are complete. In development projects, that would generally be after completion of construction and initial lease-up and stabilization We seek projects that have at least five-year financing (so we can wait out a recession if needed) at a conservative loan to a value of <=75%. 70% and even 65% LTV is preferred but not required. The projects should be adequately capitalized to minimize the risk of capital calls mid-project. It’s acceptable to invest in a single asset or a multiple property fund that specializes in a targeted asset class and strategy. We’re looking for projects with an overall capitalization between $15 million and $300 million. Investment-by-Investment Decision Subject to availability, LPs agree to participate in the pre-identified projects. LPs will be presented with detailed descriptions of the additional (not pre-identified) projects and will be allowed to participate on a first-come-first-served basis. As with all investments, an opportunistic project that does not strictly conform to the above criteria will be presented to LPs for discretionary consideration. Minimum Investment Amount The minimum investment amount is $50k.