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| Frequently Asked Questions |
| How much money will I make?
We use a sliding scale to figure out an investors returns. In general we pay points (like origination fees), interest and a percentage of the net profits.
Example: If an investor had $200,000 to invest they could receive 2 points, 12% interest and 7.5% of the net profits. So in this example the investor would recieve
$4,000 for the 2 points...
$24,000 for the interest (for 1 year)
$7,500 for 7.5% of the net profit (if the net profit was $100,000 on the project).
In this example the investor would have recieved a total of $35,500 return on their $200,000 investment or an 18% annual return. |
| How long will my money be invested in a project?
We ask that the money be invested for 12 months. Most of the projects we deal with can be accomplish in 1-2 years, many projects have been completed in only 6 months. However, real estate investing is not an exact science and quite frequently a project will meet with unanticipated delays. If we can complete a project more quickly than 12 months we pay the investors their returns and find them their next project to invest in. |
| How is my money going to be secured?
1.) The first and best security is our deal process, called the Foundation to Success. This process says (in short) that we find property with a Higher & Better use, buy the property, create "new" equity by changing the use of the property, and selling for a profit or refinancing for an equity position. Because we create equity we can guarantee a profit or equity position, even in a declining market.
2.) The second security is our Deal Evaluation Process. Before we put an investor's money into a project we go through a very strict deal evaluation process to make sure it meets all of our investing criteria including a guaranteed 20% (or more) equity position for the completed project. While you may not understand everything is the deal evaluation, it has been placed there because of years of experience doing these kinds of investments.
3.) The third security is the property itself. For investments over $100,000 we secure the money with a "Trust Deed & Note." The Note is the promise to repay your money with returns as agreed. The Trust Deed ties the note to the property so that, in the event that you didn't recieve your agreed principle + returns, you could take the property as collateral and sell it to recover your loses. Because of our deal evaluation process your money is secured in property that will have at least 20% equity or more (we do not over-encumber property that is secured by investor's money). |
| How good is the deal?
Every deal we do must create at least 20% equity based on the future value of the property. For example, if we buy a property for $200,000 and invest $45,000 to improve the property and the resulting value of the property is only $300,000 then our equity position is $55,000 (18% equity position). Even though this property has a large equity position we would not invest in this project.
Before you can invest in any deal you will recieve a pro-forma of the project and the detailed deal analysis for review. Once you have approved the project we invest you money and purchase the property. |
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