Ulta Short Term Transactional Real Estate Funding
High-level Summary:
In December, we closed on acquiring 45% of a company called Marquee Funding that does ultra short-term financing for single family and commercial real estate to wholesalers for immediate flips. Generally, Marquee earns a high rate of return for only 1-7 day financing and we take a deed in lieu as collateral.
We have two deals for a total of ~$6.5M that we need to fund within the next 30-45 days and we expect to continually see similar deals on a weekly/monthly basis.
Investors will get paid within 1-7 days, and if for some reason it went 8-30 days our fee doubles, as does the investor’s return.
These two deals are ultra low risk because we will ensure that the third party acquisition funds are in escrow with contracts executed before we release our funds to buy the properties on behalf of the wholesalers.
We will do a simple notes guaranteed by Marquee with a exhibit that describes the properties and the deed in lieu that Marquee will have on the properties. The notes would have a minimum interest/points payment as described previously.
Right now Alder is covering any investor short-fall of approximately $2M, but we are looking to get regular investors that we can go to each time these opportunities come up. Annual returns expected in the low to mid double digits depending on the number of deals we transact.
The Alder Group was formed in 2012 by Patrick Gahan as a 1st generation Multi-Family office with the combined wealth and knowledge of the Gahan, Kolb and Chatterjee families. The families primarily have backgrounds in finance, tech and intellectual property. The Gahan family sold a cyber security business in 2010, The Kolb and Chatterjee families have had multiple exits in tech and IP businesses.
The families have strong ties to philanthropy with a desire to help kids that receive heart transplant live long, healthy, and normal lives. Patrick and his wife started a charity called Enduring Hearts that is projected to fund research at the $10M/year level by 2021. The Alder Group has been an active supporter of this cause as well as several others.
More recently the Alder Group has focused on direct investments in the single family real estate as well as a variety of other hard asset backed investments, as well as early stage venture and opportunistic and high income investing.
The typical practice of the Alder Group is to invest its own funds first to prove out business models and then expand the operations with more general managed investor funds or direct partnerships with other families.