Real Estate Crowdfunding, part II

RE: Real Estate Crowdfunding, Part I

In my first segment on my series of articles on Real Estate Crowdfunding I explained that this asset class currently comprises 32% of my overall asset allocation.  I feel very strongly about real estate investing and I find that the crowdfunding online investment platform the “new frontier.”  Imagine owning a slice of real estate properties (or real estate debt) without ever dealing with tenants, never having to chase anyone down for rent and never having to manage the property hands-on.  All of these perks while earning a nice cash flow of 8%, plus appreciation (I.R.R.).  That is why I invest in real estate through this platform.  Having many friends who invest in physical properties and being aware of their problems with tenants, real estate crowdfunding is the only way to go for me!

Crowdfunding platforms Realtyshares offer equity deals, value-add (renovation and improvement, then earn cashflow from the rent roll), opportunistic/early developments (new projects under construction) and debt deals (Trueline Capital)

Debt deals are what I will be focusing on in this segment.  I am currently invested in several equity and value-add deals and feel well-diversified in this area. Based on the managers’ reports, the properties are doing well and I am receiving quarterly payments of 8% annualized (or 2% per quarter).  About 10 months ago I discovered a terrific income investment opportunity through one of the real estate crowdfunding sponsors.  This is a fund that originates mortgages for residential real estate developers in the Northwest (OR, WA areas).  This area of the country is growing rapidly and this creates a demand for new construction of residential homes.  The Trueline Capital Fund provides financing for those developers.  The loans are shorter term (12-24 month in duration) with an average rate of 9.89% (each loan is based on it’s own individual merits).  The fund pays distributions on a monthly basis at a rate of 8% annualized AND every quarter investors receive an additional bonus distribution when the funds earns a return above the projected 8%.  The fund began two years ago and the 2-year return has been an annual 10.8%.  I just learned that in 2017 the fund earned 11.31%!!!

Some additional attributes of this fund and the fund sponsor; they are an Ethical company.  Their core values are managing investors’ money with integrity and with a careful eye toward risk management.  Taken from the latest Q4 letter to investors:

“Although we manage US dollars in our day-to-day business, our real currency is trust – trust with our investor partners and trust with our homebuilders and real estate partners. Trust is built on communication and consistent character. If we step back, we all recognize that real estate cycles and business opportunities come and go but partnerships with people we trust are rare.”

The benchmark LTV (Loan-to-Value) for all loans in the fund’s portfolio is 65%.  That means the developer has to bring equity to the table at closing.  This is huge!  Think of it this way, how likely is a developer to default on a bridge loan when they have skin in the game equal to 35%?  The fund currently has 34 projects in the portfolio and in the fund’s two-year history, there’s only been one problem loan.  In lieu of foreclosure proceedings the fund negotiated possession of the deed, hired a quality contractor to finish the project, will soon be leasing up the property with plans to sell the fully-occupied property to an institutional investor.  All of this will greatly benefit the fund’s investors like myself.  This is smart management and risk mitigation.  This is the type of investment management I want to partner with and invest my money alongside.

As a current investor I have a special arrangement with Trueline.  Any new investor who is referred by me will receive a bonus unit (PAR value: $1000!) in addition to their initial investment!  In other words, if an investor invests $50,000. in the fund (minimum investment is $25,000. and a minimum hold time of 2 years), the actual value of their investment becomes $51,000 and future distributions are based on $51,000.   How does the fund do this and who pays for this bonus?  The fund has set up a marketing budget and the investor’s bonus is paid from this.

If any readers are interested in this investment and want to take advantage of this bonus opportunity, email me at:  email me and I’ll put you in touch with the fund sponsor.  You must be referred in order to receive the $1000. bonus offer.

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