Noble Capital / Advisor Edge

Loans made by a private individual or organization to another company or individual. While banks are traditional sources of financing for real estate and other purposes, private money is offered by individuals or organizations and may have nontraditional qualifying guidelines. Often referred to as peer to peer lending, Private Lending provides investors with the opportunity to make a higher return than other investments.

Noble Capital is a Private Lending institution that attracts investors and borrowers alike. The firm’s specialty is making private loans to real estate entrepreneurs seeking to acquire residential property in Texas, where they will add value and later sell for profit or refinance into their personal asset portfolio.

Though the answer is ultimately contingent upon your goals, a significant benefit of alternative investments and private lending is that you have a security backed by real estate. These deals consist of tangible assets as opposed to stocks which can fluctuate with volatile markets. Another benefit is operating with hard money and earning a short-term yield. Essentially, the loans in the fund turnover quickly due to their short-terms which creates a lot of diversity.

Private Lending, especially as it applies to real estate loans, is very different than most investments for one overwhelming reason – the investments are secured by tangible assets. In the event that the borrower defaults and cannot meet the financial obligations, Noble Capital takes control of the underlying asset on behalf of the investors, in this case through foreclosure. Investments like stocks are based on valuations with no tangible security. If those investments fail to perform, there is little to nothing that can be done to protect the value of your investment other than liquidation.

Private Lending comes in all different shapes and sizes, and there is not a one-size-fits-all answer to “what am I investing in?”. The type of private lending that Noble Capital specializes in, however, is a real estate investment fund.

By far, the most common and popular way to enter the Private Lending space is through a Fund. A Fund is a supply of capital belonging to numerous investors used to collectively purchase securities (in this case real estate notes) while each investor retains ownership and control of his or her own shares. Funds provide a broader selection of investment opportunities, greater management expertise and lower investment fees than investors typically can obtain on their own.

Each loan considered goes through a rigorous underwriting process referred to as the “Five ‘C’s of Underwriting”:

• Credit – A measure of belief and anticipated reliability. We check thoroughly to ensure that our borrowers are in good financial standing.
• Character – We want to be happy to shake our clients’ hands. To ensure that everyone feels good at the end of the day, we also run thorough background checks on the local, state and national levels.
• Credentials – It is important for our program that only experienced, knowledgeable clients are given the opportunity to borrow. A base level of prior experience is required of all clients.
• Cash – We require that the client brings cash to the deal.
• Collateral – This is the most important criterion for backing up a deal if it should run into an issue. Seventy percent of our decision is based upon the value of the collateral as this is what protects the lender’s principal.

This is a niche investment opportunity that is typically offered by very specialized firms. As such, there are only a handful of opportunities like these in existence.

Our fund is a private placement which is a security that is not publicly offered on exchanges like
the NYSE and NASDAQ. The Securities and Exchange Commission (SEC) limits private placements
to accredited investors only. These regulations limit this kind of offering to those with the
necessary sophistication to protect the investor from taking on an adverse level of risk.

Our investment model differs from REITs in the following ways:

• They are privately traded.
• We only deal with Texas-based single-family real estate, not commercial or multi-family properties.
• You can use cash or qualified money to invest directly in these properties unlike REITs which require that you invest through a company, exchange-traded fund or mutual fund.
• They offer a preferred return and no fluctuation with RE swing.
• They are taxed as K-1.
• There is no research needed on how that property’s market is doing or if it is cash-flowing. We do that for you.