In 2020, we launched our lending business (aka the real estate debt fund) after having decades of private lending experience and solid performance year over year. There was a growing need in the market to have a good lender provide great service to high-quality borrowers, so we decided to fill that need.
In addition, there was another need from our investors to have a secure place to invest capital, earn a return, and have access to capital in a short amount of time. We refer to this short-term access as having an investment with liquidity.
Our lending business, called Rehab Wallet, is focused on doing short-term loans that are typically about six to nine months in duration. This allows us to provide loans to borrowers and allows investors to have liquidity and access their money as they may need it. Rehab Wallet became a great win-win for borrowers and investors. We have funded just over $250,000,000 in loans since launching in 2020 with 1,240 loans originated.
As the managing partners, we invest our capital in the Real Estate Debt Fund as well. We have over seven figures invested and continue to let it grow with compound interest. Here are three reasons we invest and you should consider it too:
1. Compound Interest
The power of compound interest can be best understood when looking at the chart summarizing returns for how a $100,000 investment continues to grow over time and earn more income every time the principle is compounded on a monthly compounded basis. With the power of time and compound interest, the $100K investment can earn a seventeen percent (or more) return in ten years when it’s earning eight percent compounded interest.
2. Diversification
When funds get invested into the debt fund, they are immediately diversified across all the loans in the fund, so capital is more secure. If you carry a bank balance greater than $250,000, it might be a good time to think about diversifying the funds out of the bank and into the debt fund, so your capital is protected and earning a return.
3. Liquidity
Having access to your capital when you need it is important and the lending business is set up to have short-term liquidity. This short-term liquidity is a good way to balance your personal portfolio if you have other long-term and illiquid investments like multifamily, self-storage, or car wash investments.
—————————————
The Real Estate Debt Fund continues to be a secure place for capital and a consistent investment vehicle for returns. If you are interested in learning more, check out the current offerings section on passiveinvesting.com or click the button below:
