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How It Works

Better Capital Fund provides short-term loans secured by real estate to professional developers who purchase, renovate and resell single-family homes, multifamily buildings, and small balance commercial real estate projects. These loans provide investors with a steady stream of income from interest payments while borrowers are able to access working capital for their projects.

An individual identifies a property that he/she believes can be acquired, renovated, and sold at a profit.

BCF offers a loan of up to 70% of the purchase price of the property, at an interest rate of 9-12%. The loan is secured by the property.

The individual renovates the property, which increases its value and further secures the loan.

If all goes as planned, the individual sells the property within 6 to 12 months, repaying the loan to BCF.

In the event of default, BCF forecloses on the property using the 30%+ safety buffer to recoup the principal and any lost interest.

Strategy

Our Investment Logic

High Current Income:

Professional single-family home renovators have special requirements, such as short funding timelines, that traditional institutional lenders are unwilling to accommodate. This provides an opportunity for private lenders who cater to this market to command premiums on their capital.

Example:

An investor may have a loan with a maturity of 6 months, which means that the loan will be repaid before the interest rate in the market goes up.

Comfortable Margin of Safety:

Loans are secured by a first lien on a house. Borrowers typically provide 20%-30% of the capital needed to buy the house. Additionally, professional developers often create equity at the time of purchase by buying houses at prices below retail value. They further enhance the value of the collateral through renovations that they fund with their own equity.

Example:

An investor may have a loan with a maturity of 6 months, which means that the loan will be repaid before the interest rate in the market goes up.

Diversification Reduces Default Risk:

Investing in a well-diversified portfolio of loans across multiple borrowers protects the principal in the event of default.

Example:

An investor may have a loan with a maturity of 6 months, which means that the loan will be repaid before the interest rate in the market goes up.

Low-Interest Rate Risk:

In a rising interest rate environment, medium and long-duration bonds can lose substantial value. BCF Secured loans to renovators have short maturities as most projects last from six to twelve months, preserving principal in a rising interest rate environment.

Example:

An investor may have a loan with a maturity of 6 months, which means that the loan will be repaid before the interest rate in the market goes up.

Liquidity:

Due to the short-term nature of renovation loans, the portfolio is constantly turning over as loans pay off. This allows investors to redeem their investment on relatively short notice.

Example:

An investor may have a loan with a maturity of 6 months, which means that the loan will be repaid before the interest rate in the market goes up.

Conservative Approach to Underwriting:

Our Fund performs a consistent and detailed underwriting process on each investment that it makes. This underwriting combines a deep knowledge of local real estate markets to establish collateral value along with strong relationships with borrowers and an understanding of their strategy and capabilities. As a result of this approach, no losses have been incurred on any BCF investments since inception.

Example:

An investor may have a loan with a maturity of 6 months, which means that the loan will be repaid before the interest rate in the market goes up.

Established Relationships to Source High-Quality Investments:

Our Team has been investing actively in California since 2009 and has strong relationships with borrowers, brokers, and other lenders, resulting in a steady supply of loans that meet the Fund’s investment criteria. As a result, BCF has enjoyed more than 90% utilization (investments in income-generating loans) since its inception.

Example:

An investor may have a loan with a maturity of 6 months, which means that the loan will be repaid before the interest rate in the market goes up.

Audited Track Record of Consistent Returns:

All fund financial statements have been audited each year since the Fund’s inception in 2010. The Fund has experienced low volatility in its returns since inception, with quarterly returns ranging from 2.0% to 2.8%.

Example:

An investor may have a loan with a maturity of 6 months, which means that the loan will be repaid before the interest rate in the market goes up.

Diversify Your Portfolio, Secure It With a Tangible Asset

Disclaimer: No Offer of Securities—Disclosure of Interests. Under no circumstances should any material at this site be used or considered as an offer to sell or a solicitation of any offer to buy an interest in any investment. Any such offer or solicitation will be made only by means of the Confidential Private Offering Memorandum relating to the particular investment. Access to information about the investments are limited to investors who either qualify as accredited investors within the meaning of the Securities Act of 1933, as amended, or those investors who generally are sophisticated in financial matters, such that they are capable of evaluating the merits and risks of the specific investment. None of the content provided on this website should be seen as tax or legal advice. Please consult a licensed professional

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