Fund That Flip
- Investments are pre-funded
- 1,300+ loans funded to date
- Transparent view of the operation on previous loans
- Access only for accredited investors
- Relatively low number of available investments
Fund That Flip acts like a hard-money lender, providing developers short-term loans for residential rehab ventures, and selling the loans to those willing to invest on a fractional basis. Most of their investments are "pre-funded," i.e. Fund that Flip finances loans with their own cash (or cash from investors in one of their "Residential Bridge Note Funds"), and then recovers the money from investors. This might mean that investors can start collecting payments earlier than if the loan needed time to be completely funded via investors, which occurs on other platforms.
The firm was established in 2014 and has financed over 1,3k ventures for a total of more than USD 400 million. They raised USD 13 million in 4 financing cycles.
Kinds of Investments Offered
The company just provides investment in property debt, and just for residential ventures. Many of their loans have periods of 6-18 months. Borrowers sign up for loans straight to the company and, if accepted (the company claims less than eight percent of the applicants are accepted) the loan is pre-funded by the company. This means that the borrower can begin the venture immediately and doesn't need to wait for the loan to be totally financed by investors (it means that some offerings are kept underfunded when the loan period begins, which means that you can locate loans with shorter terms than the original one).
After you've signed in and checked your accreditation status, you can review the specifics of every possible investment, counting in background info on the borrowers (which comes with prior ventures of the company), venture finances and budget, and real estate info, counting in an appraisal if applicable.
The firm provides "Bridge Note Funds" that act as a fund utilized to pre-fund a portfolio of loans provided via the investment firm. The money offers a fixed profit amount and a fixed maturity date (as anyone who has made a home renovation can attest, property ventures are not always completed when they are supposed to...).
The Benefits Users Get
The good thing about the property sector and debt investments is the fact that there is a real, physical asset you can sell to get your investor money back in case something goes awry. Yet crowdfunding real estate platforms do not offer that security. You get a 'Borrower-Dependent Payment Note' that lets you have a particular part of the principal and interest payments got from the borrower on the mortgage.
How does the company make money?
The firm doesn't charge investors any straight charges. They make borrowers pay 1.5-3.5 percent of the loan sum at the time of closing (points), and there is a "gap" between the interest rate charged to borrowers and what are investors paid. For instance, the borrower will pay 12 percent on the loan, while the investors get 10 percent. The firm also receives total interest on any part of a loan not financed by investors.
Investors should also remember that if there are expenses associated with the restructuring of a defaulted loan, they will be excluded from the principal and interest payments.
Possible Profits and Cashflow
Their available investments are offering 10-12 percent APRs. The payments are made each month. The loans are prepaid by via borrowers, but lots of them have a min. interest level, like three months, for example, even if the loan is paid off in advance.
The Range of Options at the Company
The firm funded 1,3k+ ventures, and you can see the complete info on each of them on the web page (you must register to see the complete info), and there are currently fourteen available investments, counting in the Bridge Loan Fund. This helps fund the pre-financing of other loans. Instead of picking up individual loans, investors are shown to a variety of loans with a set maturity date.
You may also search by state for investors searching for individual loans.
Regulatory Structure and Standards for Due Diligence
The firm provides services just to approved investors, under SEC Reg D. Their loans come via a wholly-owned subsidiary.
They are adamant that they approve less than eight percent of those who apply. When people submit deals, 33% pass the risk assessment. Then, 15% of those who applied get to the due diligence step. After that, 5% of the initial deal amount is approved. The employees use MLS data from the whole USA to set up an ARV for every real estate asset. These are then checked with local appraisers that come and see the asset and give an estimate of value.
The firm holds a 65% Loan to After Repair and a Loan to Cost of 85%. The redevelopment sector holds a 15-205 balance for every deal that keeps incentives on track to being completed with success.
This company is really open with their previous projects, like detailed info on the underperforming ones. This gives you a great picture of what to expect. Fund That Flip says they have a 99% return on investor principal and that they paid out twenty million dollars in interest. None of this means that the loans got back the desired profit. So new investors should be diligent and check out the Bridge Note Fund for a cheaper way of getting exposed to a portfolio of loans, with a determined maturity and date.
Fund That Flip main features and highlights
- Borrower Dependent Note (BPN)
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