Acquiring Distressed Nonperforming Notes Secured By Real Estate
$10,000,000.00
Accredited Investors Only Regulation D, Rule 506(c) Exemption Only
Company Overview
Silverwood Capital Fund I LLC (the “Company” or the “Fund”) was formed to take advantage of a narrow niche in the mortgage note industry. The Company will seek to acquire, workout and manage nonperforming real estate notes secured by residential 1-4 unit properties. While the primary emphasis will be focusing on nonperforming junior and Home Equity Line Of Credit (“HELOC”) notes, we will purchase select senior liens and REOs. Using our network of banking and equity fund contacts, and advanced marketing techniques, the Fund will purchase mortgages and real estate at significant discounts to its underlying value. By focusing on distressed mortgages and properties, we know the potential for above average returns exist. Our initial focus will include, but not be limited to nonjudicial foreclosure States such as Minnesota, Texas, and Georgia.
Silverwood Capital Nonperforming Note Fund Benefits
- 8% Preferred Return To Class A Investors
- 50/50 Split Of Net Profits With Fund Managers
- Aggregate Internal Rate Of Return (IRR) is Approximately 17%
- Risk Is Reduced by Spreading Funds Over Pools Of Notes
- Lower Acquisition Costs Due To Volume Purchases
- Experienced Fund Managers With 22 Years Of Combined Real Estate Experience
Why Nonperforming Notes?
Investing in nonperforming notes is a great way to invest in real estate without getting dirty, or smashing your finger with a hammer. Nonperforming notes are home loans the homeowner stopped paying on for one reason or another. When they stop paying their loan the bank usually sells them at a discount to the amount owed. Depending on many factors such as location, age, condition, and type of asset, you can pay as little as $0.05, all the way to Par, or the amount owed. When you buy nonperforming notes for a discount, the potential to make more than your investment is possible, though there is no guarantee.
Strategy And Implementation
The Fund intends to operate as a hybrid real estate investment equity fund with a certain portion of the allocated capital being utilized for short-term opportunities, and the balance for acquisitions that will mature over a three to five-year period.
We have found there are eleven exit strategies we can employ to profit from nonperforming notes. If the home is occupied, the homeowner can be contacted to either start paying again or settle for a lump sum. If repaying, the loan can also be modified to more favorable terms if needed. This paying loan will supply years of payments, and at any time, it can be sold for a higher price than purchased.
If the home is rented, we can keep the renter and receive the rental payments, and or sell it to the renter with a lease-option or land contract. If unoccupied, you can go right to foreclosure and it will usually be uncontested if they are deceased, or they vacated it. At that point, the home can be sold as is to a rehabber or do-it-yourselfer, fixed up and sold for a higher price, or rented out.
Short Term Investments (under 18 months)
The Fund Manager anticipates that up to fifty percent (50%) of capital from the Offering will be allocated towards opportunities that involve asset acquisition, re-position and/or rehabilitation, and disposition within 18 months. Many of these opportunities will be sourced from distressed sellers or "special circumstance" type acquisitions (package Bank REO, buyer or seller joint venture, etc.) wherein a significant amount of equity and value is pres- ent from the time of acquisition, and additional equity and profit is realized through the re-position, rebranding, and the rehabilitation process.
Properties in this category are anticipated to require more re-positioning and rehabilitation work and would be reflected in the distressed level acquisition costs. The construction and rehabilitation experience of the Fund Manager is a critical part of this process as that expertise will allow the Fund to fully assess expected costs, time- frames, and other important metrics to maximize net profit and minimize risks related to unexpected rehabilita- tion costs and re-position expenses.
Long Term Investments (2 to 4 years)
The Fund Manager intends to allocate up to fifty percent (50%) of invested capital towards acquisitions that will require a longer duration of time to mature prior to disposition & expects that these assets will still be sourced at attractive acquisition rates, however the properties may not require as much rehabilitation or may demand a higher acquisition premium and thus less initial equity immediately post-acquisition. The Fund Manager intends to deploy elements of rehabilitation and re-positioning to maximize value and allow assets in this category will typically be held in the Fund’s portfolio for three to five years prior to disposition including performing notes that give us high yields, or rental properties.
The return on investment for renegotiated debt with performance as agreed are expected to yield an annualized minimum of 15%; with typically annualized yields potentially exceeding 20%. Since the Fund Manager is vertically integrated, it has the ability to manage all aspects of investing, due diligence, servicing, workout, foreclosure, rehab, and disposition. By focusing on acquisition prices less than 50% of Fair Market Value in growing and mature urban areas, homes worth $80-100,000 or more, and avoiding rural and “C” and “D” class neighbor- hoods, we avoid many of the problems and additional expenses associated with them.
Silverwood Capital Fund I Management
The Fund is managed by two highly experienced real estate and finance professionals in the distressed secured debt market that specializes in asset acquisition and management. With a proven track record to implement a balance investment strategy in the distressed real estate debt industry, and twenty-two years of combined real estate experience of the buying, workout, and disposition of nonperforming assets including over 80 notes, and rehabbing over 500 houses, Silverwood Capital Management LLC (the Fund Manager) has the ability to handle the challenges and complexities of the Fund and intends to deploy a similar methodology to produce superior anticipated returns for Investors.
Fund Manager Biographies
Christopher Winkler is the President and COO of the Fund and the Fund Manager. He is currently President of Silverwood Capital LLC (SC), and a licensed Texas REALTOR®. He has five years experience as a note investor, plus thirty years of experience in raising venture capital, sales, marketing, negotiation, investor acquisition and retention, debt mediation, and collection practices. SC is a Texas based real estate investment firm that has purchased fifty-two (52) loans and resolved thirty (30) loans by all eleven exit strategies. While past performance is not indicative of future results, his experience has led to a 34.22% return on investment for SC.
Pavel Sakurets is the CEO of the Fund and the Fund Manager. He is a Minnesota real estate Broker and REALTOR®, note buyer, licensed general contractor, licensed builder, and owns four other businesses. He has seventeen years of experience in buying, selling, fixing, flipping, and wholesaling real estate, and three years of note investing. Since 2001 Mr. Sakurets has purchased, flipped, or sold more than 500 residential and commercial properties. In 2015 he noticed his rental portfolio was not bringing the returns it once did, even with property managers and an in-house construction team, so he decided to sell the majority of his rental portfolio to invest in mortgage notes.
Silverwood Capital Fund I Advisors
Tiger Mynarcik is a licensed Nevada real estate Broker, Realtor®, Property Manager, and owner of Tradewind Investments. He has twenty-seven years of real estate experience, twenty-three years of property and asset management, and has managed a team of agents and staff since 1994. He is also a Registered Mortgage Loan Originator in both Nevada and Arizona, and has nine years of project Financing, origination, processing and underwriting. For the last sixteen years his focus has been on acquisition and disposition of $160 Million in distressed properties, now evaluated over $1 Billion. His strengths are development of project planning, construction, stabilization, financing, disposition, lending and evaluation. He has developed, built, leased, and sold over ½ dozen multiple multi-million dollar office parks, retail centers, casinos, hotels, and condominium’s. He has sold over 2,400 residential homes, and 6,000 leases since 1990.
Daniel Rosario is the managing partner of R&R Capital Holdings, a Miami based mortgage investment fund founded in 2010. The company acquires and advises both buying and selling financial institutions in secondary markets, with a bold focus in Florida. Mr. Rosario studied Financial Services and Business Administration at Miami Dade College, and has traded over $50 million dollars of Real Estate debt through private capital placement with close investor relationships. He brings to the Fund the network he has build over the years in capital markets, which allows ongoing deal flow, as well as his knowledge of acquisition, due diligence, loss mitigation, and disposition of distressed real estate debt.
The Market
In the 2nd Quarter of 2018, US banks held approximately $32.7 Billion dollars in non-accruing residential 1-4 unit loans according to the Federal Deposit Insurance Corporation. Of that amount, $9.9 Billion is in our primary target type of asset, non-accruing junior and HELOC liens. The majority of the nonaccruing or nonperforming loans are $19.9 Billion in nonaccruing senior liens, and $2.9 Billion in REO.
Nationally as of December 2017, the percentage of loans over 90 days late was approximately 1%. By compari- son, the states of Minnesota, Texas and Georgia were .6%, 1% and 1.1% respectively. Based on this, SMG has concluded that the opportunity for distressed debt acquisition in non-judicial foreclosure states is on par with national averages.
To find out how to participate in the Fund visit:
WWW.SILVERWOODCAPITALFUND.COM
Silverwood Capital Fund I LLC
1920 Central Ave NE St. 201, Minneapolis, MN 55418
1-844-984-6683
Regulation D 506(c) Mandated Legend
These securities are being offered under an exemption provided by SEC Regulation D Rule 506(c). Only accredited investors who meet the SEC Regulation D 501 “accredited investor” accreditation standards and who provide suitable verification of accredited status may invest into this Offering.
- Any historical performance data represents past performance. Past performance does not guarantee future results;
- Current performance may be different than the performance data presented;
- The Company is not required by law to follow any standard methodology when calculating and representing performance data;
- The performance of the Company may not be directly comparable to the performance of other private or registered funds or companies;
- The securities are being offered in reliance on an exemption from the registration requirements, and therefore are not required to comply with certain specific disclosure requirements;
- The Securities and Exchange Commission has not passed upon the merits of or approved the securities, the terms of the offering, or the accuracy of the materials.
