realestateinvesting

REAL ESTATE INVESTING

For generations, savvy investors have created enduring wealth through real estate. We all know someone who’s done exceptionally well as a real estate investor.  However, owning and leasing property brings a host of hassles—from tenant phone calls, to property management, to dealing with banks.  Aloha Capital offers a different and complementary approach to real estate investing–whereby we are the lender, and you are the investor in a professionally managed, private portfolio of real estate loans.

Benefits and Objectives Include:

  • Compelling absolute and relative returns
  • All loans are secured by residential real estate
  • No leverage means less risk
  • Consistent returns vs. typical equity investments
  • Earned returns distributed monthly, or compounded
  • Greater liquidity than owning real estate
  • Passive income, your capital works for you
  • IRA accounts are eligible

Private lending, also known as hard money lending, allows Aloha’s investors to participate in real estate deals, while eliminating certain risks and drawbacks. By investing in a fund which holds first mortgages or trust deeds with collateral behind them, Aloha’s clients are currently earning attractive and consistent monthly returns.

REAL ESTATE INVESTING FAQ

How does investing with Aloha differ from owning income-producing real estate?

Real estate owners are responsible for maintenance, taxes, insurance, licenses, finding and vetting tenants, collecting rents and complying with regulations. In today’s market, a quality income producing property generates annual income of approximately 6% to 7%, plus any appreciation.

As an investor with Aloha, which holds first mortgages that are personally guaranteed by the borrowers, your investment is backed by real estate, but is passive, so you are not burdened with day-to-day management. The fund is structured to generate significantly higher income for our investors than real estate owners generally experience, but without the opportunity for additional capital appreciation.

How do you mitigate risks as a real estate lender?

The most important way to maintain a margin of safety is by lending 70% or less of the value of the property. We lend on appraised value as determined by local, licensed appraisers with intimate knowledge of the market, and in other cases based on CMAs. We require a first lien position and lender’s title insurance to insure clean title. Like a bank, Aloha has the ability to foreclose on the property if the borrower does not perform.

Our loan terms are short, typically 6 to 9 months vs. bank loans of typically 5 to 30 years. Although real estate markets can be volatile, major fluctuations tend to occur over multi-month or multi-year periods.

How does the safety of real estate lending compare to owning real estate?

In real estate, like any investment, leverage can increase risk and possibly return.

In a typical deal if you put 30% down and personally guarantee the mortgage; your investment is leveraged more than 3 to 1. If the environment changes, and the income generated from rents does not cover the carrying costs, you can get in a vicious cycle of negative cash flow until the property is foreclosed upon to pay creditors. The worst case scenario is that you lose 100% of your investment and because of the personal guarantee, possibly more.

Our investors may have distinct advantages in difficult times as you are the lender not the borrower, and Aloha’s loan portfolio is not leveraged. Of course there are always risks. If a borrower fails to perform, the lender bears the expense of foreclosure and takes ownership of the property. The property may need repairs to bring it up to market standards for sale or rent. If the value of the property drops quickly and dramatically, you may lose principal value as well as income.

What are mortgages and trust deeds?

Mortgages and trust deeds are legal contracts that evidence a debt and create a lien on a piece of property. They are typically recorded in the county in which the property is located.

How does one invest in these contracts?

You can invest with Aloha, which pools mortgages and trust deeds, or directly in an individual mortgage or trust deed, though generally with less diversification than a fund can offer.

What is a private lending fund?

Aloha’s private lending fund invests in a portfolio of first mortgages and trust deeds, which are pooled together and professionally managed. The primary benefits and objectives of our fund are diversification among different deals, borrowers and real estate markets, lower minimum investment, less administrative hassle and having your capital invested continuously.  One primary focus as a money manager is to underwrite quality deal flow for our investors.

How does one invest in an individual mortgage or trust deed?

With individual investing, the investor is the sole lender for an asset backed loan. Investors with specialized knowledge might value the control in selecting and underwriting particular deals to lend to, or in managing a foreclosure.

How much money do I need to invest in real estate loans?

For individuals, the minimum amount of capital required could be as little as $25,000, but will generally be higher because individual loan amounts tend to average closer to $100,000 and go much higher. When investing in real estate loans through Aloha, the $50,000 minimum will give you access to an entire portfolio of borrowers, markets and properties.

May I use IRA money to invest in real estate loans?

Yes, but you’ll need to have a Self-Directed IRA through a qualified custodian that offers this service. We prefer Millennium Trust Company, but there are numerous options.

What level of returns should I target?

Our target returns are currently 12% per year, with earned income distributed back to investors monthly, or compounded onto one’s capital account balance.  Past performance is not indicative of future returns.


DISCLOSURE
Under no circumstances should any information presented on this website be construed as an offer to sell any securities or interests, a solicitation of an offer to purchase any securities or interests, or a promise to undertake or solicit business. This website does not contain the information that an investor should consider or evaluate to make a potential investment. Offering materials relating to investments in entities managed by Aloha Capital are not available to the general public. We are not utilizing the website to provide investment or other advice, and nothing on the website is to be deemed a recommendation that you buy, sell or hold any security or other investment or that you pursue any investment style or strategy.