Brisco High Yield Fund

Min. Invest $25,000
Target Hold 12 mo
Annualized Returns 8%
Progress - 0% Pledged
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Private Mortgage Fund

Overview

Brisco Funding is a direct Private Lending company founded in 2012. We make short term construction and bridge loans to professional real estate developers and investors backed by first position mortgages. Funds from our loans are used primarily to purchase and renovate single family homes.
We are currently raising capital for our investment fund, Brisco High Yield Fund, which is a Private Placement Mortgage REIT. This fund will focus first and foremost on preservation of capital, which will be achieved by utilizing conservative underwriting criteria on all loans. The target yield to investors is 8%.

 

Business Strategy

Our business strategy is very simple: lend out money at 11% annual interest secured by first position mortgages on real property and personal guarantees from qualified borrowers.

Here are some of our guiding principals:

  • We take only first position mortgages. This way, if a borrower defaults, we can immediately begin foreclosure proceedings without having to worry about a senior lender.

  • We require that our borrowers have some of their own equity in every deal. This makes them less likely to default because they know they would immediately forfeit that equity.

  • We lend at a low 65% LTV, so if there is a default, we are able to foreclose and sell the collateral property for an amount well in excess of the loan amount.

  • Brisco High Yield Fund has no debt, so expenses are very low. With no debt payments of our own to make, we will be better prepared to work through multiple foreclosure at the same time if it ever becomes necessary.

As of August 2018, we have never suffered a loss on a loan. There is currently one loan in default. We are completing the rehab and will then sell the property, at which point we expect to recover the full loan amount.

 

Customers

Our customers are professional real estate developers and investors. They have a high degree of experience in renovating properties and has each successfully improved and resold multiple properties in their local market. Many of our borrowers buy bank-owned or distressed single-family homes at a discounted price, renovate them, and then sell them as quickly as possible. We also have customers who have used our funds to purchase and renovate multi-family and mixed use properties; in these cases, the borrower frequently seeks to refinance into a lower rate mortgage at the end of the loan term instead of selling the property. And, we have funded new construction as well. In every case, though, the experience and credit-worthiness of the borrower is a crucial factor in our decision to make a loan. We review financial documents such as bank statements and tax returns and run credit and criminal background checks (using TransUnion) on all of our borrowers.

 

Markets

Our primary markets are Long Island, northern New Jersey, and Atlanta. These are the areas we have identified as having the best combination of experienced, qualified borrowers and consistent source of good properties. However, presented with the right opportunity, we will consider lending anywhere in the United States.

 

Loan Terms

We will lend up to 90% of the purchase price plus 100% of the rehab amount up to a maximum of 65% of the after-repair value (ARV) as determined by a certified appraiser. Our loans are short-term, usually 12 months, and the interest rate is 11%-12%. Our loans range in size from $75,000 to $500,000. Our average loan size is $180,000.

 

Loan Types

Our loans fall into two categories: purchases and refinances. For purchases, funds towards the purchase price are sent directly to the seller at closing; at no point does the borrower have possession of these funds. The funds for the renovation are held back and then given to the borrower in draws as work is completed and verified by inspection. In the case of a refinance, the borrower is able to obtain all funds directly at closing. However, in all cases the properties must be non-owner occupied; we never lend to owner-occupiers.

 

Security

For each loan we make, we obtain the following documents to secure the loan:

  • Promissory note signed by the borrowing entity.

  • Personal guarantee signed by one or more borrowers.

  • First position mortgage which is recorded with the county.

  • Assignment of rents and leases which allows us to commandeer the rental income from a property if the borrower defaults.

  • Property insurance policy with Brisco Funding as Mortgagee and Loss Payee. This entitles Brisco Funding to be reimbursed directly from the insurance carrier if there is a loss, and also causes Brisco to be notified immediately of any lapses in coverage.

  • Lender title insurance policy to protect us from any defects in the title.

Investment Type: Term: Raise Amount:
Preferred Equity
12 Months $20,000,000

Financial Summary

Financial Sources

Investor Capital $20,000,000

Financial Uses

Fund loans $19,500,000
Operations $500,000

Market Summary