Fund That Flip Review – Scam or Legit? Exposed!

Are you looking for a Fund That Flip review? But you may wonder if it is a scam.

A diversified portfolio could include real estate development loans with Fund That Flip as they are pre-screened. It is a passive investment that pays interest monthly. The risk of debt investments is mitigated by the fact that Fund That Flip pre-funds some loans and maintains loan-to-value ratios at reasonable levels.

One limitation of Fund That Flip is that it is only available to investors with audited financial statements. It is also important to be aware of the costs and potential losses associated with this form of debt investment.

As a disclaimer, I’m not affiliated with Fund That Flip. It means I’m not paid to write this review. So you can rest assured that you will get an honest and unbiased review from me.

At the end of this review, I’ll also tell you the best alternative to Fund That Flip that has enabled me to make a full-time passive income online.

What Is Fund That Flip?

Fund That Flip was founded in 2014 as a marketplace for real estate financing and investing. It is an efficient and cost-effective way for builders to obtain loans for construction projects. Fund That Flip also offers investors a straightforward way to get involved in the short-term real estate lending market.

Fund That Flip has made loans totaling over $1.9 billion since its inception and has returned over $48 million to investors. The minimum investment is $1,000 and participation is limited to accredited investors.

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How Does Fund That Flip Work?

In other words, Fund That Flip is a platform where investors can invest either in specific private real estate development projects or in pools of short-term bonds. 

Investing in short-term loans is a form of debt, and the money you earn is deposited into your account on a monthly basis.

Fund That Flip advertises an annual return of 10.8 percent for its investors, and it takes less than 10 months on average to repay the investment.

Specifically, you purchase “Borrower Dependent Notes” (BDNs). An investment in a note between Fund That Flip and the project developer results in the issuance of a debt instrument whose value depends on the performance of the note. 

Fund That Flip’s website clarifies that BDNs are unsecured debt instruments. However, each note is secured by a first priority security interest in the property.

Fund That Flip also provides important pre-funding for some loans. This allows borrowers to be sure that their projects will be funded. This also allows faster accumulation of interest for the investor. 

In addition, Fund That Flip invests its own capital in the loans, giving it a stake in the outcome.

As borrowers make monthly loan repayments, monthly distributions are also made on the promissory bill. Early repayment is possible, but only after a certain number of interest-only payments. This ensures that you receive at least a portion of the interest in addition to the principal.

Fund That Flip is attractive to investors because they can sit back and watch their money grow. The professionals at Fund That Flip save you time and effort in finding opportunities, coordinating with developers, and handling the legal details. 

Because of the short terms of these investments (typical loan terms are between 6 and 12 months), they are also considered short-term investments.

Borrowers can get fast hard money loans through Fund That Flip, with interest rates starting at 8.49% and terms ranging from 3 to 24 months. The company boasts on its website that 93% of its borrowers come back for more financing after their initial investment.

Fund That Flip Offerings

Fund That Flip offers two different types of investment opportunities:

  • Bridge Note Offerings: Invest in individual deals starting at a $5,000 minimum.
  • Series Note Offerings: Invest in a diversified pool of short-term loans in $1,000 increments.

Fund That Flip’s loan funds are an asset because they make it easier to build a diversified loan portfolio, which reduces overall risk. 

On the supply side, you’ll find a wealth of information to do your homework. The loan-to-value ratio, the term of the loan, the minimum investment required, the underlying collateral (usually the first item), and the property details are examples of information that may be included in a quote.

On the offer page, there is a “Use of Proceeds” section that states the intended use of the money. In addition, there is a section dedicated to strategy that describes the improvements that will be made to the property in question. You can also read a short risk statement and learn more about the developer’s previous work.

Fund That Flip has great tools that investors can use when inspecting properties. In addition, the company has its own underwriting team that inspects everything. 

Fund That Flip states that only 8.2 percent of applicants are approved for financing and that, on average, 99.6 percent of the principal is repaid.

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Fund That Flip Fees

Both initial registration and ongoing use of Fund That Flip are free for investors. To make a profit, Fund That Flip adds a margin to each loan, usually between 1% and 2% above the interest rate you receive on the loan. The amount of the margin can be determined by examining different offers.

Fund That Flip Historical Performance

Fund That Flip has reportedly returned more than $535 million in interest, fees and principal to investors, in addition to more than $1.9 billion in loans the company says it has made. 

That includes more than $48 million in interest payments and the repayment of more than 2,600 loans. Fund That Flip claims an average gross yield of 10.8 percent.

Even more astounding is the company’s claim that 99.6 percent of investors’ initial capital has been repaid. This figure suggests, but does not prove, that Fund That Flip does a good job of selecting borrowers and minimizing risk for lenders.

Fund That Flip, on the other hand, issued helpful monthly performance reports for audit purposes.

This shows that 5.72% of its portfolio was 30 days or more past due. In addition, 2.13% of its loans are in foreclosure, a huge increase from the numbers we saw just a few months ago.

Several large loans are still past due, and ongoing supply chain issues and a lack of available labour have contributed to a “slight increase in delinquent loans,” according to Fund That Flip’s performance report.

Fund That Flip has a proven track record and does a good job of limiting risk by using low loan-to-value ratios. However, those looking to invest in real estate should know that the industry isn’t free of danger.

Liquidity of Fund That Flip

For this reason, Fund That Flip is a very illiquid investment, as there is currently no secondary market for BDNs. Investors are required to hold their BDNs until maturity. 

Fund That Flip can sometimes offer a maturity extension of several months.

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Is Fund That Flip Scam or Legit?

Adding short-term real estate loans to your investment portfolio has never been easier than with Fund That Flip. 

However, as the company notes on its website, investing in real estate loans comes with some risk. Also, there is no guarantee that borrowers will complete their projects on time and make all required repayments, as each project is unique.

However, one of Fund That Flip’s main goals, as you would expect, is to protect investor capital. In addition, we like Fund That Flip because the company is hands-on and pre-funds some loans. The company also tends to maintain lower loan-to-value ratios, which further lowers overall risk.

Are Fund That Flip Investments Risky?

Fund That Flip investments are no less risky than stock investments, contrary to popular belief.

No low-risk investment yields a return of 10% or more. 

The platform prioritizes the success of its investors by only accepting between 6% and 8% of submitted property proposals. 

Moreover, borrowers are expected to invest 15% to 20% of their equity in each flip, and default is always possible.

Fund That Flip Transparency

Fund That Flip’s monthly performance figures are available on its website. The percentage of loans in default or foreclosure is not zero, but it fluctuates over time.

Loans secured by real estate have a better chance of being fully repaid in the event of default, but losses can still be high.

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Who Is Eligible To Invest In Fund That Flip?

Currently, only accredited investors can invest in Fund That Flip.

What Are Accredited Investors?

Permitted investors are those who meet the criteria set by regulators for buying and selling unregistered securities.

Examples Of Accredited Investors

Institutions such as banks, insurance companies, brokers and trusts, and wealthy individuals all have an interest in the market.

At Least One Of The Following Criteria Needs To Apply To Become Accredited Investors:

  • You have a net worth of at least $1 million, excluding the value of your principal residence.
  • You earned at least $200,000 in the last two years ($300,000 if married and filing jointly) and expect to earn the same amount this year.
  • You make an investment on behalf of a well-known company, such as a venture capital fund.

Non-Accredited Investors May Be Able To Invest In Fund That Flip In The Future

“The SEC has outlined the standards under which non-accredited investors can participate in the future,” the company said. 

“Current regulations make it impossible for Fund That Flip to accept non-accredited investors as business partners. We will keep an eye on the new legislation.” – Matthew Rodak

Investors can self-certify to gain access to the offerings, but Fund That Flip will still manually verify their information before making the first investment.

It’s also important to note that Fund That Flip welcomes contributions from tax-deferred accounts like IRAs and other types of self-directed investment vehicles. 

If you do not already have access to a bank account that allows you to do this, Fund That Flip can put you in touch with a financial professional who will be happy to help you get set up. It is possible that this financial advisor is licensed as a broker-dealer or investment advisor.

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Is Fund That Flip A Good Real Estate Investing Company?

If you’re looking for a reliable income stream and don’t care at all about building equity, Fund That Flip is the platform for you. 

To be clear, most people can’t afford it. Although the company retains up to 3 percentage points of a qualified investor’s profits, it still generates substantial income with minimal risk.

Fund That Flip Loans: Duration, Sizes, And Interest Rates

Loan Duration

Most investment-grade loans have terms of three to eighteen months and mature in less than one year.

The loan term may be extended by up to a few months for the borrower for a fee.

Loan Size And Interest Rates

Borrowers pay interest rates ranging from 8.49% to 12% on loans with amounts ranging from $100,000 to $5 million (the average loan balance is $300,000).

Minimum Investment

Fund That Flip requires a minimum investment of $5,000 for each transaction or fund.

This type of interest-only loan is common in the home improvement industry. 

You receive interest payments on your investment throughout the life of the loan, and you get your original principal investment back in full when the loan is paid off.

Fund That Flip discloses to borrowers the interest margin it earns on each deal.

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What I Like About Fund That Flip

  • Numerous individual transactions and sham funds are available.
  • Investors can obtain relevant documents and information to assist them in their due diligence.
  • 10.8% average historical return
  • Loan to value ratio is low.
  • Some loans are pre-funded, which speeds up closing and allows investors to get their money faster.

What I Don’t Like About Fund That Flip

  • Only accredited investors are eligible to participate.
  • An investment of $1,000 is required.
  • There is no secondary market for the sale of borrower-dependent promissory bills.

How to Contact Fund That Flip

To contact Fund That Flip’s IR department, write to [email protected]. Alternatively, you can reach us by phone at 646-895-6090 between 9 AM and 5 PM Eastern Time (ET) Monday through Friday.

Fund That Flip Review: Final Verdict

If you want to diversify your portfolio with short-term real estate bonds, Fund That Flip is a good choice. You can also invest in debt funds that are diversified and have low costs. 

There is a lot of useful information and documentation on the website to help you do your homework, which we appreciate.

The biggest drawback is that the offer is reserved for high net worth individuals only. If this applies to you, our post on the best real estate investment websites for non-accredited investors might be of interest to you.

Remember that investing in short-duration debt instruments is dangerous. Never invest more than you can afford to lose, and consider how debt would affect your asset allocation before using Fund That Flip.

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Best Alternative of Fund That Flip to Make Passive Income

If you want to make a stable and secure stream of passive income, I would suggest you start an affiliate marketing business online.

Affiliate Marketing is perfect for anyone who is new to online business. 

In fact, of all the online business models I’ve tried, affiliate marketing is the easiest and most rewarding so far.  

In affiliate marketing, you can actually run your business almost with zero cost and achieve a steady and sustainable passive income to pay for your bills. You don’t need any initial capital and can even do it as a side hustle.

And if you really want to learn affiliate marketing and build a business from scratch, I’d recommend you to get started with the most reputable platform for affiliate marketing: Wealthy Affiliate.

Wealthy Affiliate is an all-in-one platform for building your affiliate marketing business from scratch. It offers you a free account (including a free website) with comprehensive training on SEO (free traffic methods), which enables you to get started with affiliate marketing right away without paying a penny.

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A 21-year old student from Wealthy Affiliate was able to earn $7,395 in just 1 week, which means he made more than $1k a day…all while using free traffic methods.

Fund That Flip Review

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To give you more examples, here are some of the other inspiring success stories of Wealthy Affiliate members.

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