94% Growth in 5 Years
An investment that started at $20,521.54 grew to $39,977.92
over the course of only 5 years under the care of the Firmus Financial.
At the core of our investment model, we are currently focused on high-yielding distressed income properties. We locate projects with existing income and the potential for increased returns through the rehabilitation and possible resale of the asset, with the capability of either holding or flipping, depending on which path will yield the better return for our investors.
Whereas some funds may take a more conservative approach by only investing in large complexes with long holds in “recession-proof” markets, the fact of the matter is that nothing is truly recession-proof, and limiting an investment model to such a narrow scope would be to forego the full benefits of an upward trending real estate economy.
One inconsistency in the claims made by such funds is that they ignore the changes in true market value for the assets they hold, by only citing cap rate calculations based on the original investment and annual returns to imply the value of the asset. This creates a false sense of security in a down market since it overlooks the exposure to potential losses that would occur from liquidating these assets. More significantly, it also leaves money on the table in an upward trending market.
At Firmus, we recognize the advantages of responding to market conditions to capitalize on the very real opportunities in the current economic cycle to add value and accelerate returns. As seasoned Realtors and investors, we take a proactive role in the performance of our members' capital. We achieve this by spending time on the ground to review and analyze each project with our team of local experts with a proven track record in the acquisition, rehabilitation and management of investment property.
For properties that do not fit into our real estate investment model of offering immediate positive cash flow, we also have the flexibility to handle projects as a lender for short-term bridge loans and/or development of primarily income properties, with targeted interest rates of 12-15% plus points charged, depending on the evaluated risk of the borrower.
The types of equity loans that currently best fit our portfolio are for the development of multi-residential projects in Phoenix, the Silicon Valley and the Greater Bay Area with projected positive cash flow upon completion. This strategy is intended to avoid the pitfalls of carrying a long-term negative cash flow in the event that a property we have financed is taken back by the Fund.
Fund member and servicer Jade Street Partners has multiple direct sources to draw upon for new loan opportunities, built up from over 20 years of handling private financing that provide a continual pipeline for the Fund. And with every loan overseen by the experienced members of their Fund servicing team, we offer an elite level of in-house expertise to underwrite, process and service loans large and small, ensuring all loan files stay in full compliance with the latest federal regulations.
One of the challenges most pools face in maintaining target yields and a healthy return on investment is the logistical difficulty of overseeing multiple projects in multiple markets. In order to capitalize on the better returns in other markets, we have developed partnerships with allies in those markets who specialize in locating opportunities and handling the project management for the rehab and development of these properties.
Originally, many of these partnerships started out with us providing short-term loans of capital to the partner, but these working relationships have often evolved into a closer collaboration, generally in the form of Joint Venture or a Tenancy In Common Agreement, with regular progress reports and strategy sessions between the partners and our management team. A typical arrangement will be where we provide the funds for the venture, with Firmus taking a controlling interest in the property and the profits, generally seeking a preferred return of 15% or better.
We have also cultivated working relationships with several local developers who have demonstrated sufficient merit to become a trusted resource for projects that meet both our financial objectives and our vision for responsible development in such a way that Firmus can together with the developer become an active player in forging the future of our community.