1912 Capital Fix-and-Flip Fund
Debt Fund
1912 Capital is a private fund providing fast, asset-backed bridge loans for fix-and-flip real estate investors in underserved U.S. markets. Focused on first-position loans at up to 65% LTARV, the fund offers a 12% fixed annual return with consistent client demand from repeat borrowers
Investing Simplified - Deal Summary
The 1912 Capital Private Debt Fund is a real estate-backed investment fund that provides short-term loans to real estate investors who buy, renovate, and quickly resell residential properties. These types of loans, called fix-and-flip bridge loans, are in high demand because they offer borrowers fast access to capital, unlike traditional banks, which have slower approval processes. The fund offers investors a fixed 12% annual return, which is higher than the industry average of around 10%, suggesting strong demand for this type of lending in the target markets of Little Rock and Kansas City.
The fund works by pooling investor money to provide loans to real estate investors who purchase homes in need of repairs. These investors typically renovate and sell the property within four to six months, meaning they don’t need long-term financing. Because they only hold the loan for a short time, they are willing to pay higher interest rates in exchange for fast and flexible funding. The fund keeps risk lower by limiting loan sizes to around $200,000 and lending at 65% of the estimated after-repair value, ensuring borrowers have enough equity in the deal. Additionally, all loans are secured by first-position liens, meaning if a borrower defaults, the fund has the legal right to take control of the property and recover its investment before anyone else ( by selling the asset).
Private debt funds like this one are generally considered safer than equity investments, such as buying stocks or investing in common equity positions in private real estate, because they provide fixed returns and hold senior positions in the capital stack. This means that if something goes wrong and the borrower isn't able to make payments, debt investors are repaid first before any profits go to equity holders. However, unlike equity investments, private debt funds don’t offer tax advantages or unlimited profit potential on the upside. Compared to public bonds, which are also considered safe, private debt funds usually offer higher returns but come with the trade-off of less liquidity, meaning investors must commit their money for a set period ( this funds term is 2 years)
The 1912 Capital Private Debt Fund is run by a team that is solely focused in this type of lending. It also offers a monthly compounding option, allowing investors to reinvest their returns for even greater growth. By focusing exclusively on short-term real estate loans in underserved markets, this fund provides investors with a structured, high-yield opportunity while meeting the growing demand for quick and flexible real estate financing.
Investing Simplified - Projected Returns
This fund returns 12% or 12% with dividends compounded monthly.
The fund pays investors by charging borrowers interest on loans. That interest is paid to investors. The fund generates income for the manager by charging an origination fee to the borrower for each loan they make (usually between 1 and 5%)
Example at 12% (non compounding)
You invest $100K, your returned $12,000 per year or $1,000 per month. (paid monthly)
Example at 12% (compounding)
You invest $100k, your monthly return is $1,000 per month but in month one instead of taking this dividend you ask the fund to reinvest it at 12%. At the end of the year instead of $12,000 in total return, you will have accumulated $12,682.
AltSpot Analyst Notes
- Managers claim that 70% of loans originated in a given year are to prior customers. Familiarity with borrowers is a great layer of risk mitigation. These brewers have proven they can complete projects, create value, exit projects an repay their loans.
- Strong return profile, with option to compound investment.
- First position liens only - lending in first position is the safest place for investors in the capital stack.
- Sponsors have one default to date, making for a good lending track record.
- Singular focus allows executives to be market experts, understanding home demand and values.
AltSpot Analyst Notes
- Strong interest rate, great if they have a stronghold on the market, however if competition is introduced by other firms in the area, borrowers may seek more cost effective solutions
- Lending on after repair value is speculative, if the borrower fails to compete all of the planned updates and repairs, or the executives over estimate the value of these repairs, the fund can be over leveraged. We would prefer to see the fund lend on current value. It woud be wise for investors to understand where and how these ARV's are derived and what resources fund mangers use to arrive at these value assessments.
- Counpoiding is a nice feature but if a small percentage of investors choose to reinvest cashflow, how will the fund immediately put the reinvested capital to use in small amounts month to month. This is a great feature if many investors are reinvesting, giving the fund 50K + per month to put to use, but if the sum of reinvested capital is less than this the capital may sit stagnant not accruing interest. f
The 1912 Capital debt fund is a great placement for investors seeking steady stable dividends. 12% is a strong return for a fund that only lends in first position liens. If the fund can continue their clean track record and continue to attract quality borrowers, this fund will remain a great passive income vehicle for investors.
Debt funds do not have any inherent tax advantages, but do offer a more predictable income stream.