CalTier REIT I plans to invest in a diversified portfolio of multifamily rental properties in established markets that require minimal improvements. It will focus on newly built core properties, primarily Class B & A assets in prime locations.
The primary investment criteria include stabilized properties that require minimal improvements and offer stable cash flow. We aim to generate stable and growing dividends by capitalizing on high rental income and lower vacancy rates.
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Benefits of a REIT
A Real Estate Investment Trust (REIT) offers a variety of benefits for investors, making it an appealing option for those looking to gain exposure to real estate without directly managing properties. Here are some key advantages:
Diversification
REITs provide a straightforward way to diversify an investment portfolio. By investing in a REIT, investors gain exposure to a broad portfolio of real estate assets, which can include commercial properties, apartments, office buildings, shopping malls, and more. This diversification helps reduce risk by spreading investments across various properties and geographic locations.

Access to Real Estate

For many investors, direct ownership of real estate requires significant capital and expertise. REITs offer a more accessible way to participate in the real estate market without the need for large upfront investments or the complexities of property management. This is especially beneficial for smaller investors who want exposure to high-value real estate markets.
Steady Income
One of the major draws of REITs is the potential for a steady income stream. REITs are legally required to distribute at least 90% of their taxable income to shareholders in the form of dividends. This makes them an attractive option for income-seeking investors, such as retirees, as they often provide consistent cash flow.

Professional Management

REITs are managed by experienced professionals who handle all aspects of property acquisition, leasing, management, and sales. This eliminates the need for investors to manage the properties themselves, which can be time-consuming and complex. Professional management ensures that the properties are well-maintained and strategically managed to maximize returns.
Tax Benefits
REITs can offer certain tax advantages. While REIT dividends are taxed as ordinary income, REITs themselves do not pay corporate taxes on income distributed to investors, which avoids the double taxation issue typically seen with traditional corporate dividends. Additionally, some REIT dividends may qualify for a 20% pass-through deduction under U.S. tax laws.

Potential for Capital Appreciation

While REITs are primarily known for their dividend income, they also offer the potential for capital appreciation. Over time, the value of the real estate held by a REIT may increase, leading to higher share prices and capital gains for investors. In addition to income, investors can benefit from long-term property appreciation.
Inflation Hedge
Real estate is often seen as a hedge against inflation. As the cost of living increases, so do rents and property values. This means that the income and asset value of a REIT may also increase, providing a cushion against inflationary pressures, which is a benefit not always found in other types of investments.

Conclusion
Investing in a REIT can provide a combination of real estate exposure, steady income, diversification, and liquidity, making it an attractive option for both experienced and novice investors. The benefits of professional management, tax advantages, and inflation protection further enhance the appeal of REITs as a versatile investment vehicle.
*Please note target returns are not guaranteed.