Direct to market venture firm Legion Capital has launched the Legion High Yield Mortgage Fund I, a USD25 million real estate mortgage fund to finance property acquisition, renovation and rent.
"The US real estate market is experiencing a sustained recovery, with home equity nearly doubled since 2011. However, banks are still not lending money to builders and developers – creating a huge void in the market for real estate finance,” says Jim Byrd, chairman and CEO of Legion Capital Corporation. "This creates a great opportunity for investors looking for secured income in the current volatile market environment."
The fund targets the growing demand for real estate finance in this expanding market. It will provide short term (six to 24 month) loans, secured by mortgages on qualified real estate, to developers, builders and real estate entrepreneurs.
Typical loan terms are 2 per cent to 4 per cent origination fee plus 14 to 16 per cent annualised interest, as well as a 3 to 5 per cent profit participation in the acquisition and ultimate resale or monetisation of the financed property.
The fund pays an 8 per cent fixed annual interest distribution to investors, payable quarterly, with the overall annual return expected to be in the 12 per cent range.
"This fund was formed as a response to tight bank lending practices during the recession. Those same conditions continue today, providing rewarding opportunities for investors," says Brad Hilton, president and director. "We believe the fund will appeal to investors looking to earn steady secured income with relatively low risk."
The fund will be managed by Byrd, Hilton and Legion Capital co-founder and marketing expert Shane Hackett.
