Why do you focus on non-performing mortgages?

They simply have a better risk vs. return ratio than any other investment we have found.

The steep discount in purchase price provides many opportunities for increased investor return such as:

  • Discounted settlement options with borrower
  • Getting the borrower paying again but at a payment they can afford
  • Selling the re-performing loan
  • Foreclose when necessary to then sell the property or rent it out
  • Pay-off in full or the majority of the unpaid principal balance
Why focus on second mortgages more than firsts?

As long as you know what you are doing and buy them correctly, second mortgages or trust deeds are only slightly riskier than firsts but can be purchased for a small fraction of the cost.  Many people within the Real Estate industry have not educated themselves in this area, so they have this perceived greater risk with a second mortgage, giving us an advantage.  We are able to purchase substantially more value with the same amount of money, therefore allowing us greater diversification with the sheer volume of loans we can buy.

A second reason the discount is far greater for a second than for a first is because banks are forced to sell seconds off, especially when they are non-performing.  Banks will usually be required to have a cash reserve of 10% for firsts but up to 50% for seconds, giving them a greater incentive to unload seconds off their books.

Seconds offer us a much greater opportunity for reward and return for our money.

What is the primary benefit in owning mortgages instead of physical real estate?
There’s a good chance you have already owned rental properties or know someone who has.  The cost and challenges of owning and operating rental properties are vast.  With a note, you simply own paper documenting your secured lien on the property and the borrower’s promise to pay.  You are the bank, not the landlord.  When was the last time you called your bank about a plumbing leak or your water heater going out?
How do the managers get paid?
We are paid on the excess returns produced each quarter.  The fund must achieve a value over and above all investor contributed capital and all cumulative preferred returns before the managers are compensated.
Where are the actual properties located?
Because we are buying right along with the hedge funds to get bulk pricing, we necessarily purchase properties across the United States.  The upside to this is that our assets are diversified, which greatly reduces our exposure to regional downturns.  Our servicing/workout partner is licensed in all 50 states.
Why do larger investments have a higher preferred return?

There are two reasons.  First, the health of this fund is greatly enhanced by the volume of notes we purchase.  If you study the Portfolio Breakdown you will see that the percentage of positive outcomes is far greater than the percentage of negative outcomes, so investors benefit by the fund purchasing as many notes as possible.

Second, the process of attracting investors is one of the larger expenses for our business.  Therefore, we reward investors that invest more with us since there is an efficiency for our business with bigger investments.

How will this fund perform in another economic downturn?
While it is impossible to predict something like that, we have done substantial stress test modeling of the effects an economic downturn would have on the portfolio.  We know it would take almost 50% of the mortgages to completely stop paying for investors to hit breakeven.  We do not think that would happen because our workout specialists have built relationships with these people and have the ability to keep them engaged and paying even if temporarily at a reduced rate.  If the banks could have done that during the last market downturn things would likely have turned out very different.
The returns on this fund seem very high. Does this mean it is risky?
There is of course risk in any investment, but high returns do not automatically equal increased risk.  Perhaps the best way to appreciate our confidence in the strategy of this portfolio is that we structured it so that we, as managers, only get paid on the excess returns beyond the preferred returns committed to the investors.
What is an accredited Investor?

Investors must be accredited to join our fund, Assuravest, LLC.  For most investors, this usually falls into two categories or both:

  • A natural person whose individual “net worth,” or joint net worth with Client’s spouse, exceeds $1,000,000 excluding the value of the primary residence; and/or
  • A natural person who had an individual income in excess of $200,000 in each of the two most-recent years or joint income with Client’s spouse in excess of $300,000 in each of those years.

There are other parts of the accredited definition but those mainly pertain to institutions, pensions, etc.

Can I use my IRA, Roth IRA, SEP IRA, Defined Benefit, 401K and/or 403b plan to invest?
Yes, it’s actually really easy! You do it by opening a Self-Directed IRA. Click here for a downloadable PDF that will explain how to open one.
How can I find out more?

This website only provides a cursory overview of Assuravest, LLC. For complete investment details, please call (775) 297-4970.  There’s absolutely no obligation. Just knowledge.

 
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