What is the Tulsa Real Estate Fund?

Greenwood, Tulsa is a celebrated freedom colony in Tulsa, Oklahoma. As one of one of the most prominent concentrations of African-American businesses in the United States in the course of the early 20th century, it was referred to as America’s “Black Wall Street” until the Tulsa race riots where the area of town was summarily destroyed. Since that time, black America has tried to “resurrect” the economic boom that the black community experienced at that time.

What is the Tulsa Real Estate Fund?

The Tulsa Real Estate Fund (TREF) the first 100 percent black-owned Tier 2 Real Estate Crowd Fund, has launched. As of recently, they have raised over $7.1 million dollars with the ultimate goal of investing in real estate and combating gentrification in areas that are primarily highly African-American concentrated.

The TREF is not based in Tulsa, Oklahoma in spite of the name of the fund. The Tulsa Fund is inspired by the events of what happened at the historic Black Wall Street in the Greenwood area of Tulsa, Oklahoma. In it’s website, https://tulsarealestatefund.com/, company states the following:

Tulsa Real Estate Fund is an SEC qualified Tier 2 crowd fund and economic vehicle inspired by the historic Black Wall Street of Tulsa, Oklahoma, created for the revitalization of urban communities and as a means for investors to own shares and equity in a portfolio of real estate assets that will combat gentrification.

CEO Jay Morrison of the Tulsa Real Estate Fund says the following:

Tulsa Real Estate Fund is our opportunity to redirect our $1.2 trillion in spending power into collective ownership and control for the redevelopment of our communities.

 

The quality of real estate investment is classified in certain tiers. According to the real estate investor website Biggerpockets.com the certain Tier levels of real estate are as follows:

Tier I – Cities have a developed, established real estate market. These cities tend to be highly developed, with desirable schools, facilities, and businesses. These cities have the most expensive real estate.

Tier II  – Cities are in the process of developing their real estate markets. These cities tend to be up-and-coming and many companies have invested in these areas, but they haven’t yet reached their peak. Real estate is usually relatively inexpensive here; however, if growth continues, prices will rise.

Tier III – Cities have undeveloped or nonexistent real estate markets. Real estate in these cities tends to be cheap, and there is an opportunity for growth if real estate companies decide to invest in developing the area.

Examples of Tier II cities in the United States are Miami, FL and Houston, TX.

Things to know about the Real Estate Fund:

  • There is a minimum $500 investment (10 shares) to become a member. This amount is locked in for 12 months.
  • After 12 months you can request money back, but the company isn’t obligated to liquidate assets to pay the money. In layman terms, you may not get all of your cash back.
  • No fee for processing ACH payments, unless rejected for insufficient funds which will trigger a $5 fee
  • $25.50 processing fee for each time your account is funded. $3 additional for countries outside for UK & Canadian investors. $60 additional fee for countries outside the UK & Canada.
  • You can fund your account anytime after June 1st up until we reach our $50 million dollar cap.
  • Before it’s IPO the company had $0 in cash and total liabilities of $15,350. This is a red flag because owners don’t have much skin in the game.

Important Facts About the Tulsa Real Estate Fund

  • TREF does have a 5.5 percent Management Fee on your investment.
  • TREF has an 8 percent preferred return for investors (ROI before the company makes a profit).
  • TREF is aiming to distribute 50 percent of profits to investors. The other 50 percent will go to the company.

The 5.5% upfront fee is, in our opinion, could be considered a yellow or red flag. Essentially, you’re deliberately starting yourself off in the hole -5.5% investment fee, when you don’t have to, especially in the real estate game. Paying 5.5% upfront to invest in real estate is the equivalent of paying a front end load on a mutual fund. If you are going to make an investment as small as $500, you might as well put it in the stock market.

The current average rate of return paid on the average money market at the majority of Black-Owned Banks in the United States at the time of writing this article are 1.09%.