All investments carry risk, and real estate loans are no exception. But risk exists on a spectrum. Real estate loans sit below stocks and crowdfunded real estate deals in terms of risk, while carrying more risk than something like US Treasuries. The question is not whether risk exists, it is how well it is managed.
Here is how we manage it: every loan we make requires a minimum 30% down payment from the borrower, which means a property would have to both default and lose more than 30% of its value before your principal is at risk. On top of that we cap our loan-to-value ratios at a strict 65% maximum, often much lower, based on rigorous independent property valuations. When we acquire non-performing notes at a discount, that cushion gets even wider.
Beyond the numbers, we vet borrower litigation histories thoroughly, manage property renovations in-house, and operate primarily in Connecticut where we have historically resolved defaults within nine months. Even when a deal faces legal complications, the physical collateral is doing its job in the background.
Since our inception in 2018 we have had zero investor principal losses. Past performance does not guarantee future results, but that track record reflects a disciplined underwriting process built around one priority: protecting your capital first.
If you would like to talk through how this applies to your specific situation, please schedule a call at your convenience.