Minimum investment amount?
The minimum investment in the Marketplace is $5,000.
The minimum investment in the Fund is $100,000 according to PPM but we can take less at our sole discretion.
Annual income $200K, or $1M without the house your live in. The prospective investor needs to be Accredited or Qualified. We run accreditation via VerifyInvestor.com
What is the difference between investing in the Fund vs. Marketplace?
The Fund’s benefits are that they are diversified with a small ownership interest in many loans, thus decreasing risk. The Fund is audited and there is a Third-party Administrator to control cash.
The Marketplace benefits are that an investor can pick and choose which projects they want to invest in with a lower minimum investment requirement.
How many people can participate per each Marketplace project?
There is a total investment amount (Loan Amount) for each deal and once that is filled up, the investment is closed. The spots in the investment are given out first come first serve in chronological. We can take an unlimited amount of investors, but that is subject to the amount needed.
What Tax forms does the investor receive in both Fund and Marketplace?
Fund is a K1 (The investor has actual ownership in an operating company, the Fund LLC) and Marketplace is a 1099, because they are getting ordinary interest income and don’t have ownership in an entity or company.
What is the business structure on both Fund and Marketplace?
When you invest through the Fund, you are part owner of an LLC.
In the Marketplace you receive a demand note but are not part of any LLC.
What are the exact steps to invest?
In the Fund, they will receive a PPM and Subscription documents from Panoptic Fund Administration (Third-party Fund Administrator), they will sign up with a commitment amount on the subscription documents, the investor will declare what their income and net worth is per the subscription documents, and Panoptic will confirm their accreditation status. After they are deemed accredited, when there are loans to fund, a call notice will go out to the investor and the investor has 10 days to send their commitment amount. When the money is received and a loan funded they are considered part of the Fund.
In the Marketplace, they sign up online to view deals and due diligence materials, they get their accreditation status confirmed through Verify Investor, etc. and when they pick the investment they want they send their money in and they are issued a demand note.
Can I use my IRA to Invest?
Only Self-Directed IRA’s are accepted at this time. This type of IRA account allows individuals to allocate funds from their IRA directly in the fund, not a third party.
In order to invest, what contracts do I sign?
For the Fund, the investor must review PPM and sign off on it and they have to fill out subscription documents.
For the Marketplace, the investor must fill out subscription documents and loan servicing documents available online.
Can all the document to be submitted online or by mail?
With the Fund they can submit documents online or by mail to Panoptic, our third-party service.
With the Marketplace, the investor can sign documents online though our marketplace.
When can I take back my investment principal?
For the Fund, after 1 year if there is liquidity in the fund (Liquidity typically occurs as loans pay off, which should happen consistently as we originate loans, they mature, and pay off).
For the Marketplace, they will get their investment back when the individual loan that they invested in pays off, whenever that is.
After one year with liquidity, what about invest in each loan, if there is more than one investor in the loan, who gets paid first?
Each investor is Pari Passu to all investors, whether they are in the fund or in the Marketplace. That means that no investor takes priority over another investor and investors get paid at the same time their pro-rata share of the investment.
If I invest from overseas, what tax advantages do I have?
The investor must seek advice from their own tax professional.
Is the fund performance available to investors?
Yes, they get monthly statements on the fund from Panoptic Fund Administration, it is completely transparent.
If the interest return fluctuates, how does an investor identifies the loans performing poorly?
In the Fund, because it is a huge pool of loans, they should be looking at overall fund performance and not individual loans (the diversification should be one reason they are in the fund).
For the marketplace, the return will vary depending on when and how much a borrower pays, it is easy to determine how the individual loan is performing. In the marketplace, as long as the borrower pays the interest rate is fixed.
How to invest in equity projects?
This will be through the marketplace at some point or through syndication, even though it isn’t live yet as well as potentially in a syndicated format. Equity investments times will vary by project.
When it comes to equity investments, do I directly invest in Rodeo Capital? Is Rodeo Capital the manager/servicing company?
This will be determined on a case by case basis. The investor will be investing in the LLC that owns the property and Rodeo Capital or affiliated entity will be the manager.
Which tax form do I receive in doing equity projects?
Not sure, depends on whether the investment is through the marketplace or syndicated (Most Likely a K1 but we need to confirm) It will potentially vary by project.
Why do you only lend on commercial real estate?
We do not do consumer loan lending as there are increased regulations involved and a lower return to the investor. We don’t only lend to commercial real estate, we lend on any type of real estate as long as it is for a business purpose. In more detail, a business purpose single family residence must not be owner-occupied.
What type of properties do you offer investments in?
Business Purpose Single Family Residences (1-4 units), Multi-Family Buildings, Office Buildings, Industrial Buildings, Self-Storage Facilities, Mixed Use Properties, Medical Facilities, and Entitled Urban Infill Land.
What’s the difference between investing in debt and investing in equity for both commercial & residential properties?
They are different parts of the capital stack.
If I invest through the Marketplace and the borrower pays back the loan in less than a year, what will happen to my money, do I take it back?
Yes, you can take your money back. The investor gets their principal and any accrued interest back.
If I don’t want to take my principal back but to reinvest in other projects, do I have to go through all the process again?
In the Marketplace, yes. You do need to allocate your principal manually on new projects.
In the Fund, your principal will get automatically deployed on other projects in line.
If I choose to invest in the Marketplace, do I still get title insurance protection?
The loan will have title insurance coverage. In fact all of our projects in both fund & marketplace have title insurance and hazard insurance.