How a Partnership Works
With all of our deals there are 3 major players:
Lenders - play a significant role in our investment deals. We use hard money lenders to secure short term loans (less than 1 year) for the purchase of the property and its renovation costs. Most lenders fund 100% of the rehab costs. However, they only fund a maximum of 80% of the purchase price of the home.
Radicle LLC - Is legally responsible for the debt and for paying back lenders in time. If a deal ever goes sour, Radicle is the only party on the hook. In addition we’re also responsible for
finding the deals
Closing the deal
Managing contractors and rehab work
Selling the property
Managing investors and payouts
Partners - that’s you. You're an investor and others like you will be investing as either equity or debt partners. Your money is used for:
Earnest money - Lenders want investors to have "skin in the game". Which is why they only loan up to 80% of the purchase price. They do this to ensure investors have a vested interest in seeing the project through to success.
Rehab down payments - Although our lenders fund 100% of the rehab cost, they only “pay out” once the work is done. The majority of contractors require a downpayment before they'll do any work on the property. Want custom cabinets, or windows? Contractors need a downpayment, sometimes up to 50% of the cost of the work. As a result, we use your money to fund down payments. Upon completion of the work the loan company funding the rehab will cut Radicle a check for the full price of the work.
Contingency fund - We have to be ready for the unexpected. Although we have multiple board certified inspectors look at a property, there are times we won’t catch everything. Your funds may be used to pay for unforeseen expenses like mold, asbestos, etc. This is all calculated into the final budget when considering a project.