Thanks for the input. I’ll just give a bit more info in response and hopefully help others learn. While I obviously haven’t ran a fund myself yet, I have a few friends in the industry who do exactly that, a fix and flip fund, and it’s very successful.
Our investors so far have seen about a 60% annualized return, but they have to choose to reinvest after each deal. You are correct that we incur more overhead with a fund, legal fees, accounting, marketing, etc. This inevitably lowers the returns. My projected returns are 20-30%. Other fix and flip funds I know of and talk with often are generating 30% annualized returns for their investors.
All funds are somewhat unsecured. Not to be naive about it but that’s somewhat the nature of a fund. We have past deals to show a track record, financial statements to prove profitability, legal documents to provide security and limit liability, etc. Most investors I have worked with these past few years have said in some form that they don’t actually want their money back after each deal, they just want to place it and know that it’s working for them.
