In most cases, any investment you make is going to carry some sort of risk. So when you make the decision to invest your hard-earned money, it’s important to look for the lowest risk option possible. At Walnut Street Finance, we do everything we can to help ensure that our funds offer a low-risk and high return for our investors by following our proven processes.
Over 20 Years Experience
The first thing that makes Walnut Street Finance a low-risk investment option, which is also what sets us apart from other real estate investment firms, is that we’ve had experience on both sides of the coin. We were formed over 20 years ago as a real estate development firm and had great success in that arena. Eventually, we decided to shift our focus to investments and lending - but since we know what a successful project should look like on the development end and we know our developers’ target markets well, we are able to make lending decisions based on more than just purchase price, expected expenses, and projected resale values.
Due to our aforementioned 20 years of experience, our vetting process may be a bit different than what other investment firms out there do. For example, at Walnut Street Finance we vet every aspect of the entire project, and we stay involved (to some degree). When a developer comes to us with a proposal, we do our due diligence to make sure that they’re getting a good price for the property, that their plans for renovation are cost-effective, but will provide high quality, and that the entire project will result in a high enough profit to make the deal worthwhile for all involved. If a proposal is approved, we then keep our ear to the ground - we make visits on site to ensure that the project is running on time. We speak with the general contractor or foreman to see what pricing they’re getting for materials, labor, and equipment, and we check to ensure that all of the proper permits have been pulled. If anything seems off to us, or if things aren’t moving as smoothly as we’d like to them to be, we reserve the right to take action, which brings us to ...
This is something that’s fairly unique to Walnut Street Finance. For many developers and investment firms, if a project is running drastically behind schedule or costing more than anticipated, the end result is that there’s a net loss of funds and that the investors themselves don’t see a high return. We do things a bit differently here. If we get the sense that something is amiss, or we begin to realize that a project isn’t going to be successful, we step in. With our “Friendly Forbearance” program we get the property signed over to us, take over the project from the developer and complete it, market it, and sell it. Once our investors and all tradespeople have been paid, we then also pay out the original borrower from any remaining profits. Of course, we do everything in our power to make sure that things don’t get this far (after all, we’re not in the development game anymore!), but in an effort to ensure that our investors are always seeing a high rate of return, we do whatever it takes!