Portfolio Overview

Stonecrest Managers, Inc., through its REO Investment Portfolio, invests with its partners in residential REO (real estate owned) properties found in low and moderate income communities located throughout the United States. Properties are purchased from lenders, loan servicing companies, and government agencies. Our investment strategy is to secure a low purchase price and then to resell each property quickly for cash, or to provide financing for a purchaser. We invest in as many homes as possible during the period our portfolio remains active in order to maximize its assets. We try to sell any mortgages carried back between the 4th and 5th year of our portfolio, and liquidate all properties and mortgages within 5 years, at which time cash and other assets are distributed.

Steps We Take

Property Acquisition Through National Loan Servicers and Lenders.

Stonecrest has a unique relationship with national loan servicers who understand the strict Seller profile and low price requirements set by the Stonecrest. In addition to finding houses through loan servicers, Stonecrest aggressively looks for and considers purchases from other owner types.

Property Disposition.

After acquisition, Stonecrest executes a resell strategy through various channels.

Sales of Mortgages.

Stonecrest sells its equity in its land sale contracts and notes secured by deeds of trust or mortgages, with all contracts sold between the fourth and fifth year of the portfolio. These mortgages are sold into the private investor/secondary market. Stonecrest's goal is to generate an all-cash price on each mortgage for 80% of the face value.

Liquidation of All Assets.

Our strategy is carried out over a five-year period. Sometime during the fourth year or sooner, Stonecrest ceases purchasing homes in order to begin efforts to sell and liquidate all mortgages and properties and generate as much cash for the portfolio as possible. Stonecrest will attempt to distribute all its cash assets, liquidate, and terminate the portfolio within 5 years.

Our Objectives

Safety of Capital

The Houses will be purchased on an all-cash basis. Thus the risks normally associated with leverage are eliminated.

Diversification

The Fund will be acquiring hundreds of different Houses in many states and many cities. Thus if any one location where a House or group of Houses are located underperforms, the effect on the entire portfolio will be minimal.

REO Acquisition Profile:

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Average purchase price: $3,500-$10,000
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Closing goal: 15-30 days
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Retail cash sales profit goal: $10k-$19k per house
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Retail note carryback goal: $25,000
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Interest on land sales contracts: 8-12%
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Average monthly mortgage payment: $325
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Mortgage term: 10-30 years

Generate Heavy Cash Flow

Direct purchasing combined with unique, demonstrated retail sales and proven carry-back financing structures, can generate heavy cash flow.

Returns of Superior Profits

Our portfolio only acquires properties with the potential to achieve pretax, total annualized returns of 20-30%.

Investing in REO's: Risks & Rewards

When buyers purchase a block of REO properties from the bank or other institutional sellers, they are not invited to evaluate or preview any single property. In effect, the properties are purchased blind. Properties may have outstanding utility or property tax bills, code violations, be in very poor condition, etc.

Stonecrest is experienced in the REO marketplace and has found that the rewards substantially outweigh the risks. Those rewards include purchasing properties for a fraction of their real value, collecting immediate and substantial profit with all-cash re-sales, offsetting risks by buying in bulk, significantly offsetting risks for investors by pooling the properties into a portfolio, etc. By investing in an REO portfolio, rather than individual homes, Stonecrest and our partners diversify their risks over many properties, reap the benefits of this marketplace, and gain the advantages of professional, experienced management.

Illustration

One property in the portfolio may cost $3,500. Stonecrest might spend another $1,500 to get it ready to sell, making the total investment $5,000. The portfolio might then sell the property for $27,500, at 10% interest, taking a down payment of $1000, issuing a carry back note of $26,500, and receiving monthly payments of $350 for 10 years. In this scenario, costs are returned in approximately 2 years. Stonecrest anticipates selling all mortgages between the 4th and 5th year of the portfolio for 80% of the loan's face value.

Case Studies

For an All Cash Sale: Location: 311 Second St., Fulton KY Stonecrest’s Purchase Price: $3,500.00 Other Costs: $500.00 (insurance and signage) Sale Price: $25,000.00 Stonecrest’s Net (including closing costs): $23,500.00
For a Land Contract: Location: 4823 Mainstreet Valley Close, Stone Mountain, GA Stonecrest's Purchase Price: $4,916 Other Costs: $1,000 Sale Price: $37,000, 99 Month Mortgage @ 10% interest Monthly Mortgage Payments: $550.00
Dump Property: Location: 11414 Prospect, Lansing MI Stonecrest’s Purchase Price: $3,000.00 Status: City demolished due to creek water running under property making property unsafe to live in.

As you can see from the above case studies, there are a variety of outcomes possible when investing in REO properties. The potential profits on the sellable properties should easily cover losses on the worthless ones.

If you are interested in becoming a buyer REO properties click here.

If you are interested in becoming a Stonecrest investor client and would like to request our Investor's Kit, click here.

To download a short pdf file titled: Market Recap Report, click here.