Modern real estate investing has moved far beyond just knowing some people who are building new properties, buying shares of an investment trust, or having tenants. Today, real estate investing relies on technology to make tracking and managing investments easy and transparent, as well as relationships with actual humans for support and to build trust in the process.
As we continue our guide to investing blog series, make sure you don’t miss any of the information we’ve been sharing to get started investing in crowdfunded real estate. Below, we’ve collected some common questions we get from our investors when they’re looking for an online alternative investment platform.
What is Fund That Flip’s approach to underwriting?
Fund That Flip is a private money lender, and we specialize in underwriting single-family properties. We will also finance multi-unit properties, but primarily focusing on single-family residential homes allows our team to be very knowledgeable about this asset class.
We originate short-term, residential mortgages to borrowers on distressed properties, and therefore, we’re able to give our investors access to notes that are tied to the performance of these mortgages. Every single investment opportunity on our website has already been funded by us — meaning our team pre-vets the deal according to our underwriting and risk standards. Our deep knowledge in underwriting real estate deals comes from analyzing thousands of funding applications submitted through our platform — and maintaining great relationships with our borrowers.
More than 93% of our borrower customers come back and fund another deal with us, which is a testament to the transparent, trust-based relationships we build with our clients — getting to know their businesses, the markets they work in, and their unique funding needs.
We also have teams dedicated to both borrower and investor success. For investors, we provide updated stats and numbers on our lender page, as well as provide monthly performance reports on our blog. Our investor relations team is also available at ir@fundthatflip.com.
What happens if Fund That Flip goes out of business?
FTF Lending, LLC is a Delaware limited liability company and wholly-owned subsidiary of Fund That Flip, Inc. FTF Lending, LLC is the entity that loans money to the borrower and issues the borrower-dependent notes (BDNs) to investors.
To limit the risk of Fund That Flip’s insolvency, we’ve granted an Indenture Trustee a security interest in all of the underlying loans corresponding to the BDNs and the related payments. The Indenture Trustee may exercise its legal rights to the collateral only if an event of default has occurred under the Indenture. A complete overview of these mechanics is provided in the Private Placement Memorandum and associated investment documents.
Delaware Trust is the company serving as the Indenture Trustee. A key role of the Indenture Trustee, in addition to administrative responsibilities, is to protect the interests of investors in the BDNs. Delaware Trust and FTF Lending, LLC entered into an Indenture which is a contract between a debt issuer and a trustee that dictates the responsibilities of each party. In the case of an event of default by FTF Lending, LLC under the Indenture, the Indenture Trustee will exercise its rights for the benefit of the holders of the BDNs.
Is Fund That Flip audited?
Yes, Fund That Flip is audited annually by a third-party firm.
Does Fund That Flip guarantee my returns?
Returns are not guaranteed. Fund That Flip, however, does take steps to mitigate risk and ensure aligned incentives — including the aforementioned underwriting and pre-funding processes.
We've built our business on the model that Fund That Flip's incentives are aligned with the incentives of our investors and of our borrowers. We work to ensure borrowers have the resources they need to successfully exit projects and investors are compensated for their capital and time. While historical performance is not a guarantee of future returns, the Fund That Flip team has been successfully originating and syndicating short-term mortgages since 2014, and we continue to be radically transparent with the performance of our loans.
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