Firmus Financial LLC is a small-pool investment fund committed to growth. We are actively seeking out new investors who want to take advantage of our combined 110 years of experience in investment and real estate and high average returns.
But as an individual investor, why should you care?
Why is a pooled fund, with more investors and access to more capital, good for you?
There are 3 big reasons why a pooled fund is better for everyone in the fund.
Improved Market Capability
The more capital in our fund, the greater the variety of investment opportunities open to us. In a small fund we are limited to small investments - that is where the largest competition is, including mom-and-pop investors negotiating for the same deals we are. More competition means thinner margins. As a pooled fund, more markets are open to us, and bigger margin deals.
A pooled fund is a more secure fund in two ways. First, having a larger portfolio allows us to have more diversity, which reduces the impact of a downturn in any particular sector of the market. At the same time, in the event there is a loss on a deal, a pooled fund reduces the impact on the individual investor as it spreads the loss over a greater number of investments.
Second, it allows us to maintain a larger loan loss reserve, which is an accounting method of setting aside (on paper) a percentage of every return. During normal operations, this has minimal impact on each investor’s returns, but if a loss does occur on an individual investment, the loan loss reserve can be used to offset some or all of that loss in order to minimize its impact on the pool.
In a pooled fund, you get a better return on your overall investment by spreading fixed costs of operation across multiple assets. Although most costs of managing and operating the pool are paid by the management company, there are certain costs like accounting, tax preparation, and legal fees that are the cost of the fund. Many of these costs are fixed, meaning that no matter how many members are in the fund, these costs stay the same.
Some of these costs are not fixed, but the increase is only a small fraction of the increased income. As the fund grows these internal costs are spread over more investors, increasing everyone’s yield. The individual investor ends up paying less in fees and gets a better return on investment.
There are a few more notable advantages to a pooled fund.
As a pooled fund gets larger it can make investor withdrawals even easier.
Even though we have to maintain restrictions on investor withdrawals in order to protect the security of the fund as a whole, we aim to accommodate every investor, and we strive to fulfill all such requests as soon as possible. If the pool is bigger, there are more frequent transactions such as sale of a property or payoff of a loan that make funds available, which can translate to you getting your money out faster if you needed it for some unforeseen event or circumstance.
Flexibility to Move Quickly
A pooled fund has access to lower-cost credit loans, which allow us the flexibility to move quickly on favorable deals. In a smaller fund, you either need to keep a lot of cash “on hand” which means it is not yielding any return, or you need to wait a period of time to raise capital from investors in order to make the funds available. With access to low-cost credit loans, it becomes easier to manage your cash flow while maintaining improved yields.
Lastly, the bigger you are, the more word of mouth you generate. You build up momentum, and it’s that much easier to keep growing the pool - which in turn increases the advantages for all the pool members through strength in numbers.
Are there downsides to pooled funds?
There is one potential negative, and unfortunately it has probably sunk more funds than any other factor - and that is improper management. A pooled fund has more money and investments to keep track of, and a manager with less experience may not be up to the task.
At Firmus Financial, our managers have the combined experience of over 100 years in all aspects of real estate and investment syndication, including managing funds in excess of 200 million dollars.
Well-Positioned for Growth
$7 million invested
An average return of 12.3% over six years
Zero principal losses to our investors
Over 100 years of combined experience in real estate and note investment
With steady and experienced management, a pooled fund benefits all members while helping to mitigate risk.