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BLACK LABEL CAPITAL FUND I DELIVERS Consistent Returns to Accredited Investors Through Private Real Estate Debt

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INVESTORS TRUST BLACK LABEL CAPITAL FUND I

Since 2018, Black Label Capital has been providing consistent returns to accredited investors through private real estate debt. Developers seek our financing options due to our ability to provide a unique skill set that traditional banks struggle to match. As an asset-based lender, we utilize common sense underwriting techniques to evaluate opportunities, allowing us to make fast and flexible decisions and close loans in a matter of days, not weeks.

We specialize in business purposes, 1st lien position loans collateralized against residential and commercial real estate throughout the United States. Our loans are primarily intended for property developers and investors who are planning to construct, renovate, or improve properties and then either sell them for a profit or convert them to income-producing properties in their portfolio.

Black Label Capital has established a history of performance by originating high-quality loans, typically generating double-digit returns for our investors and building a reputation as an innovative leader in the private lending industry. This level of efficiency and reliability is what makes private lending a desirable option for real estate investors seeking financing for their projects, and capital investors seeking consistent, passive returns. 

Investing

Debt Funds vs. Trust Deed

Capital investors have a wide variety of options when it comes to private lending. However, there are typically two distinct vehicles for investing in private loans, trust deed investing and private debt funds. Both options have the ability to net the capital investor 10%+ returns annually.

Trust deed investing is a type of private lending where an investor lends money to a borrower to finance a property, typically secured by a first or second lien on the property. The investor is the lender and the borrower is the property owner. The loan terms and repayment schedule are outlined in a legal document called a deed of trust or mortgage, which is recorded with the county. The investor earns a return on the loan in the form of interest payments. However, the investment is typically illiquid and the investor’s return is dependent on the borrower’s ability to make the interest and principal payments, and the value of the property securing the loan.

Private debt funds, on the other hand, involve pooling money from a group of investors to make loans to borrowers in the same fashion as trust deed investors, except the fund is the lender of record. The fund is typically managed by one of the general partners who is responsible for sourcing and underwriting loan opportunities, managing the portfolio of loans, and distributing returns to investors. The fund may also seek alternative investments like joint ventures or acquiring income-producing properties through the fund. The fund’s returns are generally tied to the performance of the portfolio of loans, and the fees and expenses of the fund. Private debt funds are typically available to accredited investors and institutions due to regulatory and legal requirements. 

INVESTMENT PHILOSOPHY

The private lending industry has grown tremendously, and with that has a come a major disconnect between the lender and their clients. Private lending is slowly getting away from its roots, and some lenders in the space are indistinguishable from the large banks that forced the growth of the industry in the first place. No matter our size, we will remain steadfast in our investment philosophy: 

Provide us with the problem and we will craft custom tailored financing solutions.

Repeat clients and referrals are what drive our business.

When we say we’re going to fund your loan, we stand behind that promise.

Capital investors are paid monthly, on time, every time.

We have nothing to hide.

We strive to keep as many of our processes in house, which allows us to move quickly and efficiently. We also do not rely solely on selling loans, which means the majority of our underwriting decisions are not dictated by wall street. We raise our own capital and write our own set of rules.

STRATEGIC UNDERWRITING

Although the specifics of each deal vary, our basic underwriting criteria does not change: 

We dig deep into the reputation, integrity, and overall trustworthiness of the client.

We look at the client’s overall ability to repay the loan, including their income, employment history, financial obligations and track record of similar projects. We may also reach out to previous lenders to get a better understanding of who we are working with.

We ensure the client has sufficient liquid funds to support the project. Our typical liquidity requirements require the client to show proof of funds that cover the down payment, closing costs, 6 months of interest payments and 10% of the construction budget.

We gravitate towards single family residential projects and assets that are likely to move quickly on the open market.

For value-add projects we require a detailed line item budget prepared by the client or their general contractor.

To ensure the safest position, we originate the vast majority of our loans in 1st lien position.

Our loans generally do not exceed 75% of the property value, providing a significant equity cushion.

We seek strong real estate markets that are characterized by high demand for properties, limited supply and increasing home values. Additionally, a strong economy, job and population growth can also contribute to a strong real estate market.

All subject properties will be valued and inspected by either an independent appraiser, local real estate agent or in-house by the general partners.

We originate short term debt, with most loans paying off between 6 and 12 months.

CLOSING & FUNDING

The documents securing private loans are not much different than those that traditional banks would use when originating a consumer loan:

  • Attorney Drafted Loan Documents (to include a Personal Guaranty, Promissory Note, and Deed of Trust/Mortgage)
  • Title Insurance
  • Builds Plans (if applicable)
  • Scope of Work/Line Item Budget
  • Dwelling & Liability Insurance (wind, hail, flood, etc. as necessary)
  • Entity Documents & IDs · Credit Reports
  • Bank Statements
  • Experience Track Record
  • Purchase Contract

On closing day, the full set of loan documents are carefully reviewed for accuracy, security instruments are recorded, wires are initiated and funding is authorized. 

POST CLOSING

We self-service the vast majority of the loans we originate. If a loan is sold, typically a sub-servicer is utilized. We constantly monitor loans to ensure that renovations are happening in a timely manner and clients are staying on track and on budget.

We schedule construction draws with our 3rd party vendors. The velocity of capital is important and most of our loans qualify for virtual draws, where clients are eligible to receive same-day funding.

As maturity dates approach, we are in constant contact with our clients to either assist in refinancing the loan, marketing the property for sale, or extending the loan as necessary. 

INTERESTED IN LEARNING MORE ABOUT PRIVATE LENDING?

If you are an accredited investor and would like more information, please complete the form below and a member of our leadership team will reach out to you. 

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