Ernst Capital Securities, Inc. is a licensed securities broker-dealer devoted solely to offering Real Estate, Direct Participation Programs (DPPs) through Private Placements. We are registered with the Securities and Exchange Commission (SEC) and regulated by the Financial Industry Regulatory Authority (FINRA). We offer investments to qualified individuals, companies and trusts who seek the return potential and tax benefits of direct participation in real estate development efforts or existing properties.

A Direct Participation Program (DPP) is a type of investment program that allows for flow-through treatment of the results of a business operation to the investor. You are able to enjoy the benefits of a direct investment in tangible assets without many of the complications and risks that normally accompany such investments. As an investor, you own a fraction of a company that is organized for the purpose of developing and/or owning real estate.

Real estate ventures that offer DPPs are generally formed as Limited Liability Companies (LLCs) or Limited Partnerships (LPs). The partnership’s sponsors pool investors’ funds to make investments in real estate development projects or existing properties.

The managing member or managing general partner, who in the case of a DPP is known as a sponsor, is responsible for managing the business’ assets and running its operations. Limited partners are not liable for losses beyond their own investment and do not participate in the partnership’s management.

A Private Placement is a type of investment offering that is exempt from registration with the Securities and Exchange Commission (SEC). Public and large private companies must register with the SEC, which can be very expensive and time consuming.

Typically, real estate projects are structured as LLCs or LPs and capitalized through a Private Placement offering allowing those efforts to save time and money. These offerings still go through a due diligence process, but many of the administrative costs related to SEC registration can be avoided. This is necessary for small investment programs or else much of potential profit of an opportunity may be eroded away through offering costs.

Private Placements are offered only to a select group of qualified individuals and businesses that generally must be accredited investors. Individual accredited investors have either a net worth of $1 million, net income of $200,000 for the last two years and the expectation of receiving the same income during the current year for single investors, or net income of $300,000 over the same time period for married investors.

Ernst Capital Group works with many area developers and owners to seek out high-potential opportunities that need capital. We continually work with our developer/owner partners to evaluate potential deals and help structure them into a win-win opportunity for all parties involved. This process may take just a few weeks or even years before an opportunity is ready to pursue an offering.

No, real estate DPPs are not suitable for all types of investors. Generally, you must be a sophisticated and an accredited investor to be eligible to make this type of investment. Accredited investors have either a net worth of $1 million, net income of $200,000 for the last two years and the expectation of receiving the same income during the current year for single investors, or net income of $300,000 over the same time period for married investors.

There are also minimum investment requirements. For most offerings, the minimum investment amount ranges from $25,000 to $100,000, but will depending upon the specific offering.

In addition to meeting the financial requirements, the investment must be suitable for your level of risk tolerance, investment objectives, timeframe, experience, and with respect to your other current investment holdings. One of our registered representatives will discuss all of this with you to determine if an investment is suitable.

Ernst Capital Group is the asset manager or company administrator for most of our offerings. We send monthly statements to our investors keeping them informed about their investments. Investors are always welcome to contact us to ask questions as well. If we are the asset manager or company administrator, it will be fully disclosed. In cases where we are not, the sponsor will be responsible for keeping you informed.

Our equity programs generally range from 7 to 12 years, though they may last longer and can be open-ended. Debt programs may have a shorter duration, however, this is generally not guaranteed and our position may have terms that allow for a conversion to equity.

Every program is unique and has characteristics that may allow for or necessitate it to be shorter or longer in duration. Real estate is often cyclical in nature and it may take time to wait for favorable market conditions.

This illiquidity is especially important to keep in mind because there is no formal secondary market to sell your ownership interests. The long-term nature of these investments may make them unsuitable for some investors.

Our investments are structured as Private Placements and therefore are not available to the general public. We do not advertise or openly discuss opportunities that we may have available. You must first go through a qualification process and open an account to hear about our current opportunities.