As 2012 comes to a close, all the media can talk about is the “Fiscal Cliff”. All I see is 8 successive months of increasing stats in the single family housing market; a gradual – but constant – increase in the jobs picture; land prices rising for the last year; a government that is pledging to keep interest rates low; and every single house that we make a fixer loan on flying off the shelf – for equal to or more money than we projected.
Because the current real estate market is still stressed but improving rapidly, PHF sees good reason for inclined Investors to take an Equity position in single-family homes and enjoy yields that usually come only with ownership.
Accordingly, PHF has established various “Equity Participation Programs”. If an experienced cash Investor desires to passively participate as an Equity Investor, we can pair them with a Buyer/Borrower that does the work. The cash Investor gets a set, preferred yield paid before the Buyer/Borrower gets his profit. We accomplish this by collateralizing that obligation.
PHF could collect a significant fee from Borrowers for arranging this type of Equity Participation, but we put our money where our mouth is and take no upfront fees on our Equity Participation Programs. The cash Investor gets paid all of his or her agreed upon yield before the Buyer/Borrower gets a dime or PHF takes any fee on the Equity!
The yields on these programs will vary between 20 -30% APR depending on:
- the amount of collateral we have to secure the obligation
- the experience of the Borrower
- the track record of the Borrower with us
- the cash in of the Borrower, if any (after all the idea is to provide the Borrowers’ down payment in exchange for a high yield)
Basically, we tailor the yield to the risk but make no pairing that we do not think will pay off for everyone. If you think an Equity Participation has a position in your portfolio, then talk it over with Paul, Tracy, or me at your convenience.