Origin vs MLG. Also a question about MLG Fund structure.

[The White Coat Investor]

Thanks.
Follow-up questions. I know I'm getting into the weeds, no obligation to answer if you're not sure.

With the typical syndications, for a 50 K investment, you might be getting 40-45k in depreciation. The majority of it would be in the first year and you can carry it over to future years.

Do you get this high level of losses with the DIV fund? can you carry it over to future years?

Expect Bonus Depreciation to be decreasing in coming years.

No, depreciation doesn't pass through with the DIV fund, at least not directly. It probably does indirectly via "return of capital" distributions like a REIT though. Never owned that version of it, but after seeing all the K-1s from MLG, I can understand why one might, even in a taxable account.

[HM7]

Typically the depreciation is taken at the fund level, so your 1099 may show a loss or no gain even though you did get cash (depending on the deal). What you lose is the opportunity to count passive losses from Fund A against passive gains from Fund B, or some other opportunities that probably don't apply.

Redemptions are in the docs, and usually in the fund summary. BREIT was setup to be an evergreen fund with quarterly redemption options. MLG VI is a lifecycle fund. If you put your money in, don't expect anything other than cashflow until THEY decide to give it to you, either through refinancing or sales. I can't speak to Origin. I had a conversation with them a few years back and get their marketing emails still, but they didn't match my needs at the time.

Thanks.
Follow-up questions. I know I'm getting into the weeds, no obligation to answer if you're not sure.

With the typical syndications, for a 50 K investment, you might be getting 40-45k in depreciation. The majority of it would be in the first year and you can carry it over to future years.

Do you get this high level of losses with the DIV fund? can you carry it over to future years?

[Molar Mechanic]

Question about the 1099 dividend fund, I've never invested in one.
Do you lose out on the depreciation benefits you would otherwise get on a fund structured with K1 reporting?
My opinion would be that you are losing the full benefit of the investment if you are not getting the depreciation.
With the 1099, do you get any depreciation?


Another question, since the Origin fund is evergreen, do they have gated redemptions like BREIT (Blackstone)? BREIT, had a redemption issue because too many people wanted their investments redeemed. They have it capped it at 5% per quarter.

Typically the depreciation is taken at the fund level, so your 1099 may show a loss or no gain even though you did get cash (depending on the deal). What you lose is the opportunity to count passive losses from Fund A against passive gains from Fund B, or some other opportunities that probably don't apply.

Redemptions are in the docs, and usually in the fund summary. BREIT was setup to be an evergreen fund with quarterly redemption options. MLG VI is a lifecycle fund. If you put your money in, don't expect anything other than cashflow until THEY decide to give it to you, either through refinancing or sales. I can't speak to Origin. I had a conversation with them a few years back and get their marketing emails still, but they didn't match my needs at the time.

[HM7]

Question about the 1099 dividend fund, I've never invested in one.
Do you lose out on the depreciation benefits you would otherwise get on a fund structured with K1 reporting?
My opinion would be that you are losing the full benefit of the investment if you are not getting the depreciation.
With the 1099, do you get any depreciation?


Another question, since the Origin fund is evergreen, do they have gated redemptions like BREIT (Blackstone)? BREIT, had a redemption issue because too many people wanted their investments redeemed. They have it capped it at 5% per quarter.

[deanyar]

This is helpful information. So with the Origin income plus fund, you only get a single K1 form per year? How do they manage to do that since the fund seems to invest in real estate in multiple states?

So, this is from their FAQ section on their IncomePlus fund... " What tax forms will I receive? The Fund will issue federal K1s to all investors on an annual basis. Since the Fund utilizes a REIT subsidiary, the burden of having to file K-1s in each state that the Fund owns property is alleviated."
That is about as much as I know/understand...

https://www.fplcapital.com/wp-content/uploads/2019/10/Origin-IncomePlus-Fund-FAQ.pdf

[Eimaise]

One difference is that with MLG, be prepared to file a zillion (or so) state tax forms from the K1s...whereas with Origin Income Plus fund, they are consolidated. Also, the Origin fund is evergreen, whereas the MLG is not (at least I do not think it is...)

This is helpful information. So with the Origin income plus fund, you only get a single K1 form per year? How do they manage to do that since the fund seems to invest in real estate in multiple states?

[bovie]

Thank you. Do you think this is ultimately a negative thing?

TBD. I don't think it's definitely a positive thing, though.

[The White Coat Investor]

Would you expect them to come out and say that they view this as a negative?

Of course not. That was my opinion above, not theirs.

[CordMcNally]

Nobody likes changes but it certainly doesn't appear to be a negative in the short term, possibly not in the long term, and maybe even a positive in the long term. Michael Episcope just agreed to come back on the podcast to talk a bit about it. In the meantime, they put out a webinar about it that you can watch.

Would you expect them to come out and say that they view this as a negative?

[The White Coat Investor]

Thank you. Do you think this is ultimately a negative thing?

Nobody likes changes but it certainly doesn't appear to be a negative in the short term, possibly not in the long term, and maybe even a positive in the long term. Michael Episcope just agreed to come back on the podcast to talk a bit about it. In the meantime, they put out a webinar about it that you can watch.

[Eimaise]

Be aware that Origin has just entered into a "strategic transaction and partnership" with a wealth management firm...

Thank you. Do you think this is ultimately a negative thing?

[Eimaise]

Thank you all for the helpful feedback. Despite reading about these investments and trying to educate myself, I still missed details.

I am looking more for a larger long term return rather than a passive income stream at this time which I suppose is why I’m leaning toward the MLG fund. The dividend fund seems like a better choice for me as I have no other passive income at this time and would also prefer to keep things simple tax-wise. I’m early in my career (3.5 years out of residency) and plan to keep working for a good number of years hopefully, so I may end up using more of an income fund like Origin in the future.

[The White Coat Investor]

That's a good point. A smaller investment may be better for the 1099/dividend fund.

[Molar Mechanic]

Don't underestimate the tax complications that can come with a fund that invests heavily in states with income tax filing, but at the same time, MLG absolutely can let you invest into a structure that will give you a single 1099. This is ideal for IRA/401k investments, but for small investments it may be a good idea to save the tax complications. For larger investors and those with many investments across multiple timelines, the K1 tax filing MAY be beneficial as you can use losses from one entity to delay taxes against another.

[bovie]

Be aware that Origin has just entered into a "strategic transaction and partnership" with a wealth management firm...