Private Money411 Magazine - The Source for Real Estate Finance | Page 17
GCA Equity Partners, pg. 15
to properties that have
strong appreciation potential, such as so-called “fixand-flip” deals or new construction. However, when
this model applies, it can
increase the return potential
by adding an equity-based
component to the standard
interest-only model.
Private Lending
Funds
While much of the private
lending activity is single or
multiple investors supporting a single borrower, there
is another model based on
an investment fund. In this
approach, a fund manager
organizes a collection of
investments from multiple
investors, and then uses
the pool of money in the
fund to make loans to
borrowers. Currently, there
are a variety of real estate
mortgage funds available,
with a range of investment
strategies including the
same ones described previously for individual investors. Investing in funds, or
mortgage pools, has both
advantages and disadvantages relative to individual
private lending. One advantage is that capital efficiency
is typically higher, since it’s
easier for a fund manager
to match their larger pool of
capital to particular deals
and thus keep the funds
more fully invested. Another is diversification, since
funds from each investor
are distributed across multiple loans.
Some investors may
find a disadvantage, in that
they like to review their own
loans and make their own
decisions about whether or
not to lend on a particular
deal. With fund investing,
those decisions are made
by the fund manager rather
than the individual. Of
course, for other investors,
having a professional manager evaluate the deal is
actually seen as an advantage.
Private lending can be a
great way to invest in real
estate without the hassle
of owning property, dealing
with maintenance issues, or
managing tenants. It focuses on the financial aspects
of real estate investing by
allowing individual investors
(by themselves or as part
of a fund) to essentially
become the bank and to
finance real estate transactions using the security of
the real estate as collateral.
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Listen to The Creating Wealth Show,
Jason's Highly Acclaimed Investor Podcast:
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Change with Keith Fitz-Gerald
To learn more about private
lending, contact GCA Equity
Partners, LLC at 408-3691571, x101 or email: info@
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Realty411Guide.com
PAGE 17 • 2015
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Private Money411
PAGE A16 • 2014