RBNF & PFNF: What's the Difference?

We are excited to announce the launch of our Pre-Funding Note Fund (PFNF), which will allow investors to invest in a line of credit used to pre-fund first-position mortgages originated by FTF Lending.  

Earlier this year, we launched our Residential Bridge Note Fund (RBNF), which proved so popular, we had to create a waiting list. With the launch of the PFNF, we wanted to outline the key differences between the two funds so that you can make informed decisions in relation to the fund which best suits your investment criteria.

RBNF allows investors to invest via a series note in a portfolio of whole mortgages and borrower dependent notes, BDN’s, rather than directly and individually in a loan. The mortgages and BDN’s that RBNF hold are representative set of the book of business of FTF Lending.

To date, we have issued eight series notes for RBNF and raised circa $2.5M. The lengths of the notes have ranged from nine to twelve months at rates of return at or near 10%. The investor receives a monthly distribution, and the maturity date of the note is fixed.

Key benefits of investing in RBNF:

• Diversification: A single investment spread across multiple whole and fractional mortgages.
• Fixed Maturity: Each note has a fixed maturity date, allowing investors greater certainty.
• Passive: You will not need to select individual investments.
• High Utilization: Your investment will be fully utilized, from the day funds clear escrow.

Is RBNF the choice for you? Click below for exclusive information and advanced notice of offerings.

The Pre-Funding Note Fund (PFNF) is another fixed maturity passive investment. By purchasing a Series Note, the investor (via the fund) invests in a line of credit that PFNF issues to FTF Lending to originate loans prior to either syndicating them on the FTF platform or selling the loans to institutional buyers. Investors have the opportunity to gain exposure to a pool of loans via the credit line for a short duration.
Key benefits of the PFNF:

• Diversification: A single investment will be spread across multiple loans via a line of credit used to pre-fund loans originated by FTF Lending.
• Fixed Maturity: Each note has a fixed maturity date.
• Short Duration Exposure: The Line of Credit gives you access to pre-funding and construction draw exposure which is typically repaid within a short timeframe.
• Passive: You will not need to select individual investments.
• High Utilization: Your investment will be fully utilized, earning interest from the day your funds clear escrow.

The benefits of investing in the funds are largely similar as both are passive investments made via a Series Note into a debt fund. One key difference is that RBNF invests in loans, and PFNF invests via the fund into a short-term line of credit.

PFNF notes will be shorter than RBNF notes, likely up to a maximum of six months. As a result, the risk profile of the PFNF results in a lower rate as the investment is relatively short in term. Furthermore, the line of credit to FTF Lending reflects a lower risk than investing in a loan directly or via a series of loans as in an RBNF investment, so the PFNF rate will be adjusted accordingly to reflect the security of the investment.

Is PFNF the choice for you? Click below for exclusive information and advanced notice of offerings.

An investor looking to maximize return with more flexibility around investment duration will find RBNF attractive. If you're looking for a shorter duration capital deployment, PFNF is an attractive investment opportunity.

If you'd like more information on either fund, or about investing with Fund That Flip in general, please reach out to Paul McFadyen at paul.mcfadyen@fundthatflip.com.