Interview with Andy Strott Founder/CEO – Resolute.Fund
Could you describe the objective of the project?
Resolute.Fund is a diversified real estate fund with a focus on investing in distressed mortgage loans across the United States. We have created a digital share class on the ethereum blockchain with our partner, Swarm, to represent a share in our fund, which is expected to track the investment performance of the portfolio. And, which will offer our investors an option to buy, sell (or hold) shares anytime.
What are the opportunities in US real estate?
Distressed mortgage investments can produce significant returns, especially because they can be bought at deep discount prices.
The distressed mortgage loans Resolute.Fund will be investing in the loans where the borrower is late in payments or the seller is selling at lower than the market price. The $5 to 15 million dollar market is not large enough for corporate investors and too large for smaller investors, there is thus a lack of participants in this market. This fact combined without our expertise gives us an edge in the market place.
In this market, we plan to find deals that we can acquire at below market price, and with extensive due diligence performed on the property collateralizing the loan, this reduces the risk in case the property would need to be sold. Once acquired these loans are managed to get the maximum monetization. Our team has experience in foreclosures, refinancing, loan modification, and deficiency judgments. We plan to use all those tools to get as much value a possible to our investors.
Our first course of action is to work with the market participants to restore their payment on schedule, this is a win-win, the borrower restores their credit rating and the loan increase in value. We can then liquidate the loan and with the additional profits seek similar deals in the marketplace. Distressed sellers sell at a loss because they want to dispose of the loan urgently, we are on the other side of this equation, meaning, we can wait to sell the loan at the right market price. The Midwest, Southwest and Southeast are our areas of focus. Our team has been in this business in these areas since the late 1980s.
Our pipeline of investments is deep, having sourced more than $2 billion of distressed assets in 2018.
Will the fund make regular payments like a REIT? If not what are the options for disbursement?
Yes. The fund will make quarterly dividend payments to investors. Disbursement will be available in fiat and cryptocurrencies.
What are the main risks for investors?
The principal risk for us and our investors is a softer real estate market — if we take over a property in foreclosure and have difficulties selling it because of a weak resale real estate market, that would drag down our returns. We would have to hold it for a longer period of time, but, still earn income on it. Or if we underwrite/analyze a property incorrectly pricing it higher than it should be. But with our 25+ years of experience, we mitigate this risk with a deep and extensive due diligence/analysis process.
What steps is the team taking to minimize these risks?
Our team has been analyzing and investing in U.S. real estate and distressed mortgages for more than 10 years with a proven process and track record. Our due diligence process is extensive and thorough. We dedicate team members and time to analyze every aspect of a property and borrower prior to investing. This process has proven very successful for our clients over more than a decade.
What are the fees that the fund will charge?
2% Management Fee, 20% Profit Fee
How can investors participate in this project?
Can you provide links to all your disclaimers?
All of our disclaimers can be found in our (Debt Payable by Assets) investment document, which can be viewed by registering on our website for our offering. Also, in our Whitepaper. https://resolute.fund/wp-content/uploads/2019/05/RESOLUTE.FUND-THESIS-PAPER-MAY-2019-2.pdf An updated version will be available soon.
Would you like to add any further information?
Resolute.Fund offers the first opportunity to invest in a professionally managed U.S. real estate fund, that offers an option for investors to control their investment through a liquidity option. Something that has never been offered to traditional real estate investors before. By offering a digital share class of our fund, our investors will be able to hold, sell, or buy shares in Resolute.Fund, therefore controlling their holdings directly. We have built Resolute.Fund with some of the leading partners in the blockchain business: Swarm and McCarter & English law firm. Our investment strategy is proven over more than 10 years and is targeted to provide an above average risk-adjusted return. We welcome investors from many parts of the world to our offering.
We thank Andy Strott for the interview.
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