How The Funds Work
For Mortgage funds, the investor purchases shares of the mortgage fund, which then lends the money out to borrowers. The loans are secured against the borrowers’ equity at a maximum loan-to-value ratio of 65%.
For REO (Real Estate Owned) funds, investors purchase preferred interests in the fund, and those funds are used, in turn, to buy and sell properties. The fund assets are liquidated at the end of the fund term, whereupon all cash is distributed to the investors. Distribution guidelines vary among funds.
Participation in the funds is offered exclusively to accredited investors who can meet minimum standards of income and/or net worth. To qualify, you must demonstrate accredited investor status. Accredited investors will meet at least one of the following requirements:
Current and expected income equals or exceeds $200,000 per year if the investor is single or $300,000 per year if the investor is married.
– OR –
Current net worth exceeds $1 million, excluding the value of your home.
Self-Directed retirement accounts such as IRA, 401K, Profit Sharing and Pensions provide a great way to invest funds while maintaining the tax advantages of the original accounts. Stonecrest funds have been approved by a growing list of custodians for self-directed investment accounts including: TD Ameritrade, PENSCO, Fiserv, Trust Company of America, Polycomp, Sterling Trust and Entrust. This list is constantly growing and changing so contact us to for the most updated list of all approved custodians.
Income Reporting for Taxes
Income information for tax reporting is provided by Stonecrest via a Schedule K-1 tax form.