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October 2024 – Mailbox Money

Happy Halloween 890 Capital Investors and Friends!

Frank Conway updates investors on the progress of 890 Capital through October 2024.

Transcript below:
October Update

Hey everyone! I hope you’re doing well. It’s been a fantastic month here at 890 Capital since our last update, and I’m excited to share everything with you.

Recap of Loan Activity & Pipeline
We’ve had multiple loans pay off over the past month, which is always great news. As soon as those funds came back, they went right back out to work with new loans already in our pipeline. It’s a constant cycle of opportunity, and I can’t stress this enough – we have a huge pipeline of deals we could be doing right now. The only thing holding us back is raising more capital to fully fund them. In the meantime, we are still underwriting these deals and sharing them with partners who might be interested in servicing them.

Let me give you two recent examples of properties we’ve funded:
• The first deal was a single-family home in Lincolnville, SC. It was purchased for $250,000, rehabbed with $25,000, and sold for $385,000.
• The second deal was another single-family home in Summerville, SC. This one was purchased for $178,500, rehabbed with $35,000, and sold for $288,000.

These kinds of projects show the power of quick, efficient lending – giving our borrowers what they need to seize opportunities and flip properties successfully.

We’ve also had the pleasure of welcoming new investors over the past 30 days! They’re already earning 10% annualized interest on their money, which we’re thrilled to be able to offer.

Right now, we’re continuing to offer 10% interest on 1-year terms to our investors. And honestly, if you compare that to what High Yield Savings Accounts are offering, it’s a no-brainer. I feel like I am getting a new email from Apple and Goldman Sachs every week telling me that my savings account APY is decreasing again… Food for thought.

The Fed still has two more meetings before the end of the year – on November 6-7th and December 17-18th – with expectations of additional rate cuts. If those cuts happen, HYSA rates will likely continue to drop even further.

But here’s the best part: We’re guaranteeing our 10% annualized return for new investors through the end of 2024 or until we hit $10 million to close out Fund I – whichever comes first. For all our existing investors, you’re locked in and will continue to renew at your current rates.

As 2025 approaches, we’ll take a closer look at market conditions and decide what rates we should competitively offer going forward. We always strive to provide the highest returns possible for our investors. However, it’s worth noting that new investors in 2025 may be looking at rates closer to 8-9%.

Investor Corner
Investor Question: Why Do Borrowers Take Loans at 12%?
I’ve heard this question from a few of you: ‘Why would borrowers take money at 12%? Are you guys loan sharks?’

The truth is, borrowers are okay with paying these rates because the alternative – going through a bank – is just too slow. Banks take 30+ days to close on a loan, and the paperwork is overwhelming. Our borrowers are typically real estate investors focused on fix-and-flip projects, so they need quick, reliable access to cash to keep their projects on schedule.

Since our loans are short-term, typically only 6 months, the interest rate isn’t as big of a factor.

These borrowers build the loan costs – including points and interest – directly into their proformas.

They know they can get in and out of deals quickly, and they prioritize speed and flexibility over a slightly lower interest rate.

Plus, many banks have slow draw processes, which can delay payments to contractors. That’s another reason borrowers love working with us – we move quickly so they can keep their projects on track and pay their teams promptly.

Our model is to lend to experienced operators with solid track records. Instead of charging the highest rates in the market, we aim to offer fair pricing in exchange for working with dependable borrowers who also sign personal guarantees. That’s a win-win for everyone involved.

Thanks so much for tuning in to this month’s update! As always, we’re grateful to have you on this journey with us. Reach out at any time if you want to chat about what we’re offering or have any questions. See you at the top!

Managing Volatility and Looking Ahead

Tired of the ups and downs of the stock market or concerned about what is going to happen to your portfolio?

This is what we are hearing from almost ALL of our investors!
As the holiday season approaches, we’re reflecting on the consistent performance of 890 Capital’s portfolio and sharing some exciting updates from our investment community. Here’s what’s new and what to expect as we close out the year:

Portfolio Update
Our portfolio continues to thrive, with all loans performing on time and no defaults—a testament to our rigorous underwriting and asset-backed investment approach. We’ve now surpassed $50,000 in monthly interest payments to our investors, with sights set on hitting the $100,000 mark soon! This steady performance reinforces our commitment to generating passive, reliable cash flow for all investors.

Market Trends & Insights
While market volatility has challenged many sectors, 890 Capital’s focus on the Southeast U.S. real estate market has provided stability. The region remains one of the fastest-growing areas in the country, and we’ve strategically positioned our lending services to meet the demand for fast funding.

Looking ahead, we’re closely monitoring the Federal Reserve’s rate policy decisions. Regardless of rate fluctuations, our investors continue to earn annualized returns of 10% or more—paid monthly.

Opportunities for New Investors
Our fund remains open to accredited investors looking for secure, high-growth opportunities. Please reply to investors@890capital.com if you want to know more about how the fund works!

Why Refer a Friend?
Know someone who might benefit from investing with 890 Capital? Referrals are a great way to build our community, and to make it easy, we’ve created a short YouTube video about our platform.

Share it with your network and help others access the advantages of passive income through real estate investing.

Risk Management You Can Count On
In uncertain times, investor protection is more critical than ever. That’s why every loan we make is backed by first-position mortgages and conservative loan-to-value ratios. Additionally, our relationship with The Caleb Pearson Real Estate Team at REMAX ensures that underperforming assets can be quickly managed and sold if needed.

Thank you for your continued support and trust in 890 Capital. We look forward to a prosperous close to 2024 and an exciting year ahead! If you have any questions or wish to discuss your investment, please don’t hesitate to reach out.

See You At The Top!

Caleb Pearson & Frank Conway
890 Capital

September 2024 – Mailbox Money

Cue Earth, Wind & Fire — we’ve made it to September, and you can feel fall in the air! Football, pumpkin spice lattes, apple picking, flannel, and interest rate cuts—what more could you ask for? Here’s the latest from 890 Capital.

Fund Performance & Updates

The Fund’s current average loan-to-value (LTV) across all outstanding loans is 69.6%, with an average loan size of $236,454. We had one borrower complete his fix-and-flip project ahead of schedule, successfully selling the property and repaying the loan—two months before maturity. This is the second loan to be fully repaid in the last month.

890 Capital has 12 outstanding loans, with all borrowers making payments on time, and zero defaults in the portfolio.

On the investor side, we’ve surpassed $50,000 in interest paid to investors and are quickly closing in on $100,000. We look forward to the day, in the near future, when we are paying our investors $100,000+ per month!

We are always seeking referrals. If you know anyone who may be interested in working with us, please let us know! To make it easier on you, we’ve created this short YouTube explaining what 890 Capital does. Share it with a friend and follow us on Facebook, Instagram, YouTube and LinkedIn for all of the latest updates!

Market Insights

Last month, we discussed investing with 890 via tax-advantaged IRAs and the uncertainty in the public markets. While uncertainty remains, a recent study caught our attention, examining how sports gambling impacts household savings. Conducted by researchers from the University of Kansas, Northwestern University, and Brigham Young University, the study revealed a negative influence, especially on “financially constrained households.”

The findings suggest that the legalization of sports gambling has reduced net investments by bettors by nearly 14%. Every dollar spent on sports betting reduces net investments by $2.13. What does this mean? Instead of safely investing in a steady, asset-backed portfolio like 890 Capital, some households are dipping into their savings to bet on sports.

Looking ahead, we have September 17th and 18th circled on our calendar as we await the Federal Reserve’s decision on interest rate cuts. The Fed is expected to lower rates by at least 25 basis points, which could offer some relief to the broader economy. However, these cuts may not immediately reduce mortgage rates, as much of the expected decrease has already been priced in. CoreLogic’s Chief Economist, Selma Hepp, projects that mortgage rates will remain in the 6% range throughout the year.

What won’t change with these cuts? Our returns to investors. Regardless of whether the Fed cuts 25 or 50 basis points, 890 investors will continue earning a 10% annual yield, paid monthly.

Investor Protection

One of the most common questions we get from prospective investors is:

How is 890 Capital, and my investment, protected in a downside market?

  • First Position Mortgages: 890 takes first-position mortgages on every asset we lend against. This means all loans are secured and cross-collateralized by a pool of hard real estate assets in the fund.
  • Loan-to-Value (LTV) Limits: We only lend up to a maximum of 75% LTV to account for potential market corrections.
  • Resale Capability: We maintain a direct relationship with an established real estate team that can quickly step in to fix and resell projects that borrowers cannot complete.
  • Target Market: 890 lends to homes in the $100-700k after-repair-value (ARV) range. By staying within this market segment, we avoid exposure to the ultra-high-end market. If market dynamics change, we expect to first see corrections in the luxury segment, allowing us to adjust our underwriting accordingly.
  • Asset Security: Investors are secured by the entire portfolio of assets in 890’s fund. If one asset underperforms, the remaining assets serve as collateral for investor protection.

Thank you for your continued support of 890 Capital. If you have any questions or would like to discuss your investment, please don’t hesitate to reach out. We’re here to ensure a profitable and secure journey for all current and future investors.

 

Warm regards, 

Frank Conway & Caleb Pearson

890 Capital

August 2024 – Mailbox Money

As we move towards the end of summer (that was fast!) I wanted to take a moment to update you on the progress and performance of 890 Capital. The fund continues to deliver strong results, providing our investors with returns of 10%+. 

Fund Performance and Updates

The average LTV of the Fund’s outstanding loans is 69.02% across all loans with an average loan size of $206,100. All borrowers are paying on time and we have had no defaults in the portfolio. 

One important update for existing investors and anyone who has read our fund docs relates to the collateralization of investor notes. We have received feedback from some of our investors regarding the clarity of this aspect in our documentation. To address this, we have made a change to our documents to ensure that it is explicitly stated that the notes are collateralized by the fund’s portfolio of real estate assets, as was always intended. This change has been formalized in the latest versions of our PPM and Investor Booklets. We appreciate your patience as we ensure all documentation accurately reflects our commitments.

Market Insights and Loan Forecasts

According to Bankrate, the current national average interest rate for the benchmark 30-year fixed mortgage has dropped to ~6.51%, down from 7.5%. For every 1% drop in rates, you can expect to see 5M borrowers entering the market nationally. 

Wars in Europe and the Middle East, a tense presidential election, recent market turbulence and Federal Reserve Chair Jerome Powell commenting “a reduction in the policy rate could be on the table as soon as the next meeting in September,” all that seems certain is continued uncertainty in the near-term. 

Meanwhile, our pipeline of loan opportunities remains robust, with more requests for loans than we currently have capital available. This “good problem” underscores the demand for the flexible, fast financing solutions while allowing us to be selective to ensure deals are properly underwritten. 

Tax-Advantaged Investing

We understand the importance of maximizing your returns, not just through strong fund performance but also through tax-efficient strategies. As ordinary income may impact your net returns, we have been exploring opportunities to mitigate this impact. We now offer the option to invest through retirement accounts / IRAs, leveraging an industry leading low-cost custodian. This provides steady, passive growth using retirement funds. 

By investing through a self-directed IRA, you can benefit from tax-deferred or tax-free growth defer taxes on your returns, allowing you to realize the full benefit of the 10%+ returns that our fund provides. 

Is any portion of your retirement account earning a steady, consistent return? If this is of interest to you, please let us know, and we can assist you with setting up your account. The process is quick and a white-glove approach. We are committed to exploring additional tax-efficient vehicles for our investors and will keep you informed of new opportunities as they arise.

Looking Ahead

As we look forward to the coming months, our focus remains on raising capital and delivering consistent returns while maintaining transparent communication with you. We continue to seek out high-quality opportunities that align with our investment strategy and are dedicated to ensuring the long-term success of the fund.

Thank you for your continued trust in and support of 890 Capital. If you have any questions or would like to discuss any aspect of an investment, please do not hesitate to reach out. We are here to support a profitable and secure journey with all investors.

 

We appreciate you!

Frank & Caleb

890 Capital LLC

 

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