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October 2024 – Mailbox Money

October 31, 2024

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!