No doubt about it, we are not conducting “business as usual,” especially in the state of California. However, what might be unsettling and a bit nerve wracking is actually a huge opportunity for investors, specifically those in real estate.
If you aren’t in real estate now, you will probably want to be soon, at least a little!
Here’s the background: Investors typically include a great deal of stock assets in their portfolio, but right now stocks are very unpredictable due to what’s happening with COVid-19. Historically, when stocks are shaky, investors turn to the bond market. However, according to the NY Times, the typical inverse relationship between stocks and bonds is not holding true, due in part to the already low interest rates. When bonds have low interest rates, mortgages have had them, too, making real estate an attractive investment at such a time.
Besides the tipsy-turvy market, real estate companies are reporting that there’s fewer property showings, fewer people ready to move. On the flip side, more people want out of the cities and are scrambling to find places in secondary markets. A very interesting concept is, how low are mortgage lenders willing to go? Add to that the difficulty in getting building supplies as developers are trying to answer the housing crisis found in many cities. Did you know that the majority of imported building supplies comes from Italy? A close second is China, then Spain and Germany. (Altas.media.mit.edu)
Which brings us to a very interesting question: What should you be doing to capitalize on this situation?
Paradyme Investments has been working on a couple of solutions that we think you will find very interesting. First is the “Real Estate Impact Fund,” and second is the “Diversified Asset Fund,” a Reg A + Tier II fund.
“We’re looking at businesses going through a hard time due to the virus,” said Paradyme CEO Ryan Garland, who comes from a background that includes the Great Recession of 2008 and dealing with short sales. “We want to use our expertise and our network of connections to help some of them stay alive.” Garland explains that as in single family housing, so it can be for small businesses who have been in business for 10 to 15 years and in that time have accrued some real estate assets. “We’re not talking about investing based on their business plan or model but based on their real estate holdings.”
Instead of the businesses failing and going through foreclosure—and being impacted with those foreclosure fees—Garland wants to take the equivalent of those fees, bring their loans current and invest back into the business to keep it going. The investors will then have some ownership of the real estate that is integral to the business. The money invested (instead of paid to fees), will be pumped into the business so they can keep their employees and continue operations. “We want to be impactful. We want to do something good.”
The second fund is the Reg A. This fund is for accredited and non-accredited investors and requires a low minimum investment of $20,000 (as opposed to the $50,000 for Reg D).
“Reg A allows non-accredited investors to get involved,” said Garland. “Maybe you don’t know us, maybe you just want to dip your toe in the waters and find out what we’re all about.” This fund will allow more people to be involved to help solve the housing crisis that so many cities are facing. These buildings will be one to four units, with one unit being occupied by the owner and the others rented out. It is financially modeled as a multi-family, but is a single-family development.
“We’re going to build these ourselves,” said Doug McAllister, Paradyme President. McAllister’s background as a city elected official has given him vast insight into how developments, construction and builders work. “We have vetted some excellent builders who will work for us in a fee-based relationship. We will own the projects and have continuing control over their progress.”
Garland added that Paradyme will be managing the money, that this is not a loan. “We have in-house project managers with extensive experience, plus designers, architectural development, engineering and so on. We will be watching over this project daily.”
Reg A is actually considered a public offering, making Paradyme approved, or credited, by the SEC, meaning that any investor into the fund can log into the SEC and see how their money is operating. Investors can also review the third-party audit and drill down into the financials. “It’s very transparent,” said Garland.
Having McAllister on the team means having an advantage over other funds, since very few have the expertise of a government insider + developer/builder. “I speak both languages,” said McAllister. Paradyme’s network of contacts will make possible the smoother, more complete working of the build, saving time, mitigating risk and compressing costs.
“It’s a really cool project,” said McAllister. “People could lose their homes or their business,” added Garland. “People always need a place to live and rebuild. These will be ‘green’ buildings with circadian rhythm lighting, hospital grade air, solar, and more. We will make sure it’s a good product, that is good for the environment and exactly what the city wants.”
“We want to make clear that Paradyme is not sitting on our hands,” said McAllister. “We believed something was going to happen some day and we have planned accordingly. We can do well by doing good.”
For further information on either of these funds, to know more about Paradyme Funding or to speak to Ryan Garland or Doug McAllister, please contact them through the website, or call 951.901.5304.
