Elite Wholesale Properties is currently a division of Verity Investments LLC, a Colorado Limited Liability Company. Please refer to our investors page on our sister website, Smith Syndication, for investing in small to medium commercial income properties.
Elite Wholesale Properties provides syndication investment opportunities in distressed small residential properties, like single family houses, duplex, triplex, and four-plex residences. These are median priced (or below), bread-and-butter houses that are physically distressed and situated in good areas.
Our syndication opportunities are for equity and debt investments to acquire and renovate the distressed properties, then sell those properties to owner-occupants or to landlords for rental income. These investments are short term, high profit margin investments with strong protective equity margins.
After Repair Value (ARV) $200,000 (30-day “sell it now”)
Net Profit Margin –$50,000 [25% ARV]
Investment to Value (ITV) $150,000 [75% ARV]
Closing cost to buy –$2,560 [3% MAO]
Repairs –$20,000 (GC estimate)
Project Manager Fee –$6,000 (varies)
Assignment Fee –$6,000 (varies)
Carrying Costs –$4,460 (utilities + interest)
Staging and Marketing –$500 (end of hard costs)
Closing cost to sell –$2,000 [1% ARV]
Buyer Incentives –$6,000 [3% ARV]
Commissions –$12,000 [6% ARV]
Financing Points –$5,000 (end of soft costs)
Maximum Allowable Offer (MAO) $85,480 [42.74% ARV]
The hard costs total $125,000=$39,520+$85,480 (expenses plus acquisition price). The soft costs total $25,000=$2,000+$6,000+$12,000+$5,000, which are paid by the end buyer. Our private lender earns $5,000 in financing points plus compound interest on the escrowed $3,750 in interest payments. The interest payments are “rolled” into the private loan (i.e., a “straight note” with deferred interest). The effective yield for the private lender is 11.6% annualized interest plus 4% (points) of the loan amount. Private lenders may lend from their Self-Directed Individual Retirement Account (SDIRA) with review by their custodian before committing the funds to escrow.
A private equity financier would earn 60% of the $50,000 net profit (that’s $30,000) for bankrolling the entire $125,000 investment to value. The project duration is estimated at 90 days from acquisition to resale. $30,000 profit on $125,000 investment over 90 days is an annualized yield of 96%. That’s practically doubling your investment each year.
The trade-off between a private lender compared to a private equity financier is that the lender is secured by a 1st position lien on the property at a Loan to Value (LTV) ratio of less than 65% ARV (62.5% ARV in this example). That’s why the effective yield is much lower than a private equity financier. The private equity financier is a 60% majority owner of the property and our 40% equity is subordinated to the private equity financier. The property resale must fully redeem the private equity financier’s entire investment before any net gain is split between us.
We also look for “hard money” lenders that will lend on similar terms for short duration projects. We can handle multiple concurrent renovation projects by using a combination of “hard money” lenders, private lenders, and private equity financiers.
We only retain General Contractor (GC) companies that are experienced, licensed and insured.
You can learn more about equity investments by visiting our Smith Syndication investor page and disclaimer page. You can learn more about private lending by visiting our Starfury Capital Management investor page and disclaimer page.
If you are interested in learning more about our business model, then please review our Wealth Creation page. There is a form on that page for contacting us with your questions.