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2018 Mid-Year Report: Bringing it Home With Firmus 5.0

By Fund Manager Datta Khalsa

As we approach our fifth anniversary in the latter half of 2018, the Firmus Fund has attained multiple milestones, surpassing $5 Million in assets. . .

As we approach our fifth anniversary in the latter half of 2018, the Firmus Fund has attained multiple milestones, surpassing $5 Million in assets in five different states across the country, as our membership ranks have crossed the mark of 20 investors—including investment entities—and counting.

Our assets are mostly in the form of real estate holdings, the two largest of which are the 16 unit apartment complex we have in Phoenix, and the three-plus acre commercial property we own with 15 carrier tenants encompassing an entire city block in Fresno, slated for high-density mixed use in its final stages of entitlement with a developer who specializes in low-income housing. Both of these properties met our ideal profile of having both positive cash flow and significant upside potential, and both are currently in escrow scheduled to close this Summer for roughly twice what we originally paid for them, two and three years ago, respectively.

We also hold five different loans with combined capital of about $900,000 earning the fund returns of between 12 and 15%. The majority of these are secured against real estate holdings that would fit right in with our portfolio of properties with positive cash flow and/or upside potential, along with a small loan secured by a UCC-1 against the assets of a prominent local real estate company.

The balance of our portfolio is diversified between assets in the form of joint ventures with partnerships we have formed, primarily on SFR flip projects in Texas, Pennsylvania and Ohio, with our typical share of funds in each project averaging between $50,000 and $300,000, and targeted ROI’s generally running between 20 and 40% with hold times of 6 months or less. We have also retained several of these properties with our partners based on level of income generated relative to the amount of capital invested.

Our most exciting focus over the past six months has been the formation of new partnerships with developers on projects both across the state and closer to home here in Santa Cruz County that are structured with targeted profits of between 15 and 20%. These deals are being entered into as either Tenants-In-Common or Joint Venture Agreements where our partners take the lead on the design, entitlement and build-out process and Firmus is given a preferred return to hit our investment goals and recoup our capital before the balance of proceeds are allocated pro rata back to the partners.

One of these projects is a $65 Million commercial Ag greenhouse and warehouse facility in Blythe, CA where we co-own a primary position on the deed with $572,000 capital invested for a scheduled 20% return on a one-year hold. Another project we are investing in is a one-plus acre parcel in Aptos with two carrier rental houses being entitled to develop between 15 and 17 apartments or townhomes. We like this type of deal for several reasons, not the least of which is the fact that we are able to exchange our proceeds from Phoenix and Fresno into it to defer the capital gains of our significant profits from those holdings. And the finished project will have a positive cash flow position which makes a good hedge to fall back on in the event that the economy takes a turn.

We are currently reviewing several other local projects of similar appeal, including a proposed Joint Venture with a partner pursuing development of an 11-unit micro hotel in Downtown Santa Cruz that also happens to match up nicely with our exchange proceeds from Phoenix and Fresno as a minimum two-to-three-year hold of a property that is being developed to produce income.

Profits aside, these deals give us the added satisfaction of being positively impactful for our local community, where we can tangibly see these talented developers’ visions take shape, and this marks perhaps our most important milestone to date, on a personal level. All of this is made possible with the infusion of the large block of capital coming available with the pending disposition of our two current largest holdings elsewhere, which we will use (a) to pay down the majority of our current debt as a further hedge against any potential economic downturn, and (b) to bring the rest of the money back home where we live.

Datta Khalsa is a licensed Real Estate Broker (Cal DRE#01161050) and a member of the management team for Firmus Financial, LLC. He can be reached at (831)818-0181 or

Firmus Financial, LLC is a small-pool investment fund that is regulated by the State of California per exemption with the SEC and open to accredited investors in all 50 states. Any projections made herein, whether specific or implied are purely speculative as past results are not indicative of future performance. Prospective investors are able to purchase shares by signing a Subscription Agreement after reviewing the fund’s Operating Agreement and Private Placement Memorandum. Interested parties are advised to consult a qualified financial advisor and/or tax professional before making any investment.


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