In today’s economic environment, there are plenty of investment options, and they all come with some level of risk.
Fidelis Private Fund is a direct portfolio lender specializing in commercial and residential investment real estate loans and offers accredited investors the opportunity to invest in a pool of real estate secured loans generating a competitive rate of return with moderate risk and reasonable liquidity.
When it comes to making private money bridge loans, it’s an art, not a science.
We find inefficiencies in the market to help borrowers and generate an excellent return for our investors.
Fidelis has generated an annualized yield of over 8% since inception by creating value in satisfying a borrower’s real estate need, and not by taking on additional real estate risk like higher leverage.
For example, when conventional lenders cannot meet a borrower’s demand for a loan on time, Fidelis steps in to make it happen at the same conservative loan amount by eliminating the bureaucracy involved with most traditional lenders and without additional real estate risk.
Here are three types of loan scenarios that add value to our borrowers and generate a premium for our investors without the additional risk:
- Where Timing is Critical: Occasionally, a borrower needs to close a loan where timing is critical to make the transaction happen.
For example, a buyer finds a property to purchase and negotiates a below-market purchase price with a motivated seller and needs a loan, but must close within ten days. Due to the short time frame, most conventional lenders could not meet the timeline.
Since Fidelis can move quickly and close a loan in a matter of days due to a less cumbersome bureaucratic underwriting process, the borrower will pay a premium for the service, especially where there is plenty of profit in the transaction.
The choice to use a lender like Fidelis, who can perform within days will save the buyer way more than the higher cost of the private money. Thus, the premium paid was not a result of an increase in risk, but only timing.
- Where Convenience is Wanted: A borrower who values simplicity and ease of doing business as a high priority.
For example: When a self-employed borrower who owns numerous entities with complex tax returns goes through a conventional lender who requires extensive paperwork, the result is a lot of “brain damage” in getting the loan done. At Fidelis, we focus on the equity in the real estate, the borrower’s character, and their ability to repay the loan, and don’t get caught up in the bureaucracy of paperwork.
This makes a much quicker, smoother, and easier loan process. For many borrowers, the higher financing cost to use Fidelis is well worth it when facing the demanding, time-intensive, conventional lender underwriting requirements.
- Where Thinking Outside the box is Needed: A borrower that does not fit the typical lender criteria required by a conventional lender.
For example, a borrower who filed bankruptcy due to a complicated divorce resulted in a low credit score. Because of the bankruptcy, the borrower could not get a conventional loan, not because of the lack of equity in the real estate, but strictly on the bankruptcy. At Fidelis we look into why the bankruptcy was filed and how the borrower handled his credit as a factor in making the loan.
With Fidelis’s willingness to look beyond the surface and think outside the box, we can fund secure real estate loans with adequate equity for character-worthy borrowers that conventional lenders often overlook without the additional real estate risk.
Three common traits: Integrity, follow-through, and the willingness to understand a borrower’s story, as illustrated above, are reasons a borrower chooses to get a loan with Fidelis and pay the higher cost.
Our ability to perform for our clients has resulted in developing strong, lasting relationships with our borrowers, brokers, and other referring lenders.
The element of timing, ease of doing business, and the ability to look beyond the surface and understand the story are where value is added and a premium is received without the additional risk.
No matter where we are in the economic cycle, there are always opportunities to create value and generate a premium for lenders like Fidelis and their investors.