A Private Lending Debt Fund with Dynamo Capital

Executive Summary Offering

High Interest rates have made it hard to find cash-flowing rentals, but they also make it a great time to “be the bank.”
Debt Funds can be a great way to achieve cash flow in today’s market.

Dynamo Capital is generating a strong risk-adjusted return by diversifying their lending portfolio exposure across multiple loan programs over a range of borrowers and markets:

Fixed annual returns of 12-14.25%

1 to 2-year lockup, but investing for longer gives better annual returns

Distributions are paid quarterly with the ability to reinvest and compound your principal

Invest for as little as $10,000, open to accredited investors

Book a Call to Get Started

Return Matrix for Investment Amount and Term

Meet the Sponsor: Dynamo Capital

Dynamo Capital allows their borrowers to leverage their funds across a greater number of deals, allowing them to increase their profitability at scale. By diversifying their lending portfolio exposure across multiple loan programs and a range of borrowers and markets, Dynamo Capital generates a solid risk-adjusted return.

Management Team

Justin Rocheleau

CEO, Managing Partner

Justin founded JR Mortgage Group, rising to be the leading residential broker by volume in Kansas, and established multiple financial firms including, Vici Funding, Pollux Wealth Management, and Dynamo Capital. His national recognition stems from his deal underwriting and closing abilities, and he has built a trusted network of brokers and lenders. His success is driven by a strong grasp of data analysis and the ability to exploit market inefficiencies.

MATTHEW MEDRANO

CRO, Managing Partner

Matt brings a diverse background with expertise in finance, real estate, and lending, complemented by an education in economics and a strong grasp of customer relations. He has established multiple multi-million dollar pipelines in commercial lending and is recognized for surpassing sales metrics and fostering team growth in both start-up and corporate settings.

What is a Debt Fund?

A private lending debt fund fills the need in the market for loans that are not standard agency loans (for example, 30 year fixed on your primary) and bank loans. Debt funds take money from private investors (for example, you) and lend the money out to individual borrowers.

How Debt Funds Offer Superior Diversification Compared to Individual Notes

A debt fund operates by writing loans and collecting the principal, interest, and fees associated with those loans. The fund then passes the collected funds to its investors in the form of quarterly interest payments. By investing in a debt fund, investors can spread their risk across dozens of properties at once, with professionals managing the underwriting, loan draws, and servicing.

When investors attempt to manage loans themselves, they concentrate their risk into a single property, which can be problematic if the property is located out of state. If things go wrong, the investor may be forced to foreclose on the property, which can be a massively risky and time consuming undertaking. managing the underwriting, loan draws, and servicing.

The fund approach offers diversification by spreading investments across multiple assets, typically dozens of properties, and numerous borrowers in various markets. Investors’ investments in the fund are guaranteed by the fund itself, while the fund’s loans are secured by the borrowers’ mortgages, properties, and other assets.

Three Loan Products

Dynamo Capital is generating a strong risk-adjusted return by diversifying their lending portfolio exposure across multiple loan programs, over a range of borrowers and markets.

Three types of loans

Value-add loans

Involves improving existing properties to build equity via strategies ranging from minor and major renovations to group-up construction
  1. There is a massive shortage of housing in the country, meaning that there is a ready market for refinished and new-construction homes.

  2. Builders and flippers have lots of demand for renovated homes, but bank loans are often only able to loan on their projects under strict circumstances that do not apply to the vast majority of flip proejcts.

  3. Private loans are a great way to bridge the gap and fund these projects.

  4. Dynamos clients love their product because flippers want to preserve liquidity. 
  • Flipper was only out of pocket a total of $606 for loan costs – The loan included all acquisition and construction costs, so he was able to do even more deals (with Dynamo).

  • Flipper converted to DSCR with a very healthy remaining cash flow.
  • Private loans are a great way to bridge the gap and fund these projects.
  • Dynamo helps their clients grow their portfolios quicker, easier and cheaper.

Permanent financing (DSCR loans)

A streamlined strategy for Dynamo's value-add and bridge clients, providing an end-to-end solution while ensuring their involvement in the return of capital.
  1. A Debt Service Coverage Ratio (DSCR) loan looks at the cash flow generated from an investment property to qualify for a mortgage instead of personal income.

  2. Many DSCR loans with 30-year fixed rates currently have lower rates than Fannie Mae and Freddie Mac.

  3. These loans are often taken out at the end of the fix-and-flip or ground-up to facilitate a long-term loan, whether this was the original business plan or a change.
  • Its very convenient for the flipper to take this loan directly from Dynamo as they’ve already done the paperwork and underwriting on the original loan.
  • This loan is funded by large institutional groups so Dynamo can reinvest, or recycle, investor’s capital with Dynamo taking origination fees and a spread which is passed back to investors, driving high returns.

Opportunistic loans

Dynamo reserves funds for loans outside their established programs using only a small portion of the portfolio.

These are thoroughly reviewed and points and rates are risk adjusted for each individual deal.

Value Add Loan Case Study

Value add

case Study

About the deal

price - $144,000

Rehab - $48,000

ARV - $275,000

Challenges

Fix and Flip loan needed with low out of pocket.

Key Initiative

Because we fund 75% of ARV, and on this deal, we were only at 69%,we were able to roll in origination fees and the out of pocket at closing was only $606.00.

Business Impact

With little out of pocket and smooth closing, we were able to get the project funded without headaches for the customer and a huge upfront cost for the loan.

Permanent Financing DSCR Case Study

DSCR

case Study

About the deal

price - $144,000

Rehab - $48,000

ARV - $275,000

Appraised - $280,000

Net cash out - $15,900

Challenges

Payoff Fix and Flip loan via cash out refinance.

Key Initiative

Because we fund 75% of ARV, we were able to comfortably refinance this property based on the appraised value with equity to spare for the client’s next opportunity.

Business Impact

Because of our knowledge and history on the first opportunity for the client, we were able to seamlessly move this loan into a DSCR with ease.

Fund Approach = Diversification

Loaning money is not new in the world of real estate investing. A common example is an investor loaning money from their self directed IRA to an individual on one property. managing the underwriting, loan draws, and servicing.

A debt fund spreads the risk across multiple loans. Rather than having all your money in one loan to a property, you have a fraction of dozens or hundreds of loans.

Programmatic Approach to Lending

Dynamo currently has 3x more demand than they can fund, even though they are in their credit box. This lets them be extremely selective in what they choose to fund

1. Average LTV 63.8% LTV

2. Close in 7 days

Programmatic Approach

How Is Dynamo Different From Other Debt Funds?

Most debt funds don't include origination. Dynamo does!

There are three different loan products in one fund. It allows for recycling the capital faster and the ability to originate more loans from the same investor (example: BRRRR loan that includes the Rehab loan and long-term take-out financing)

Risk Factor: Foreclosures in the Fund

How Dynamo Approaches Risk

The inherent risk to the fund is default on the notes. In the event of default, the fund would foreclose on the asset, which would slow their recycle of capital and potentially add additional legal cost. Most foreclosure events still result in a positive return for the fund, but in an extended timeframe.

Another potential risk is that borrowers do not exit their loans in the anticipated timeframe. This directly impacts the recycle rate and can be mitigated by selling the note later into the life cycle of the loan.

Dynamo’s underwriting guidelines have been developed based on industry best practices and their experience brokering loans of this nature. These guidelines are consistent, regardless of the client’s exit, or the fund’s exit from the note. Most loans are underwritten in a way that allows the fund to sell the notes or hold on their balance sheet, giving the fund the flexibility to recycle capital if needed.

How Do I Invest?

To invest in Dynamo, they are offering promissory notes with a fixed return. A promissory note is a financial instrument that represents a written promise by one party (the issuer) to pay another party (the investor) a specified sum of money, either on-demand or at a predetermined future date. In this case, the debt fund is the issuer of the promissory note, and you, as the investor, are the lender.

The notes are personally guaranteed by Dynamo’s managers

Ready to Invest?

STEP 1

How much do you want to invest, and what term?

STEP 2

Book a call to get started

Frequently Asked Questions

Is the Fund Leveraged?

The fund is not currently levered

What Markets Do You Lend in?

Dynamo has lent in most midwest states. They have loaned lent on properties in KS, PA, FL, GA, MO, IL, & WI. The will continue to expand in the midwest, moving north and slightly east of Kansas.

What is Your Average LTV?

Average LTV 63.8%

How Many Fix and Flip Loans Convert to DSCR?

40% of short-term loans convert to DSCR

Do I Need to Be an Accredited Investor?

Yes, for now the fund is opened only to accredited investors

What is the Minimum Investment?

$10,000

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INVESTMENT IN THE FUND INVOLVES HIGH RISK

Investments in the Fund will be offered exclusively to financially sophisticated, accredited investors, high net worth individuals, family offices and institutional investors capable of evaluating the merits and risks of an investment in the Fund. Interests in the Fund are highly speculative and illiquid investments that involve substantial risk. No active secondary market in the interests exists, and the Fund does not anticipate that any such market will develop. Interests in the Fund are suitable investments (if at all) only for a limited portion of the risk segment of an investor’s portfolio. Investors could lose all or substantially all of their investment in the Fund.

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The information contained in this presentation has been prepared solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any securities or to participate in any investment strategy and may not be used or relied upon in connection with any offer or sale of securities. Any description of the Fund’s portfolio is for illustrative purposes only. The Fund’s actual portfolio may vary from the parameters described herein. The Fund will only sell securities pursuant to the terms and conditions set forth in its governing documents, including, without limitation, its private placement memorandum (“PPM”), its subscription agreement and its operating agreement.

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