Can You Revolutionize Your Real Estate Investing with Fund That Flip? In this Upright Review, we’ll explore the High-Yield Short-Term Loans for Experienced Investors.
Quick Summary:
Fund That Flip (now called Upright) is a real estate investing platform allowing accredited investors to invest in a wide range of residential real estate debt and prefunding notes.
Overall Rating:
Investment Options:
Tools & Features:
Ease of Use:
Price:
Best For:
Accredited Investors interested in income-generating investing
PROS
- Collateral-backed investments
- Passive diversification through Real Estate Bridge Note Fund
CONS
- Accredited Investors only
- $5,000 minimum investment
Fees:
1 – 3% interest rate spread. Difference between what is charged to each borrower and the rate paid to investors.
Minimum Investment:
$1,000 for note funds
$5,000 for individual properties
Retirement Account Investing
Yes
Open To:
Accredited investors
Returns
10.8% on average
Dividend Reinvesting
No
What is Upright?
Fund That Flip is an online real estate crowdfunding platform for accredited investors to invest in short-duration, high-yield debt notes through residential real estate projects, commonly known as “fix and flip” projects.
Founded in 2014 by Matt Rodak, Fund That Flip has facilitated over $ 2 billion of investments, with over 2,500 loans repaid, yielding an average return of 10.8%, with the average loan repaid in under 10 months.
The company is headquartered in New York City.
How Does Upright Work?
Fund That Flip lists new investment options on nearly a weekly basis. The company will list investment details and metrics to help you make the most educated decision before investing.
Most BDNs have an average duration of less than 1 year, and the average interest rate earned is around 10%.
FTF has 3 investment options. The company primarily offers individual property investing via a Borrower Dependent Note (BDN). A Borrower Dependent Note is an unsecured debt instrument, and each BDN is secured by a first position lien on the underlying property (the collateral).
Individual BDNs have a minimum investment of $5,000, and borrowers must make monthly interest payments that go directly to their linked bank account.
When you invest in a BDN, it is possible for a borrower to prepay their loan ahead of schedule, but the borrower will be required to wait a specified number of months before doing so.
Note: Without getting too technical, FTF points out that a BDN is not secured because the collateral is not pledged directly to the holder of the BDN (investor) but is pledged to the Indenture Trustee for which the investor benefits as a BDN holder.
The other way you can invest is through FTF notes. Fund That Flip notes comprise two types of notes, a Residential Bridge Note Fund (RBNF) and a Pre-Funding Note Fund (PFNF). FTF notes have a lower investment minimum of $1,000.
Who Should Invest With Upright?
Upright is GOOD for…
- Investors who want to invest in real estate but do not want to lock up their money for extended periods of time (3-5 years). And at the same time, maintain a lower level of risk by investing in debt securities.
Upright is NOT GOOD For…
- Investors who may need to access their funds early
PROS & CONS Explained
PROS
- Investments back by collateral. The investments offered on the platform are backed by collateral, meaning you can have peace of mind in case of a default.
- They Prefund their loans. This means the platform funds the loans before they are sold on their platform, which means they stand behind the loans they offer.
- Diversification through Real Estate Bridge Note Fund. Invest in multiple properties at once through the note fund providing diversification.
CONS
- Accredited Investors only. The platform is only open to investors who meet net worth or income requirements, which may limit its accessibility to some investors.
- Illiquidity. Real estate investments can be illiquid, meaning that it may be difficult to sell the investment quickly if the investor needs to access their funds.
- Trending increase in delinquencies. Recent analysis shows there is an increase in delinquency rates(30 days past due)
Investment Options
Fund That Flip offers four ways to invest. The Residential Bridge Note Fund, Pre-funding note Fund, Horizon Residential Income Fund, and Borrower Dependent Note.
Borrower Dependent Note
Borrower Dependent Notes are a form of debt financing where investors provide funds to Fund That Flip, who in turn lend the money to real estate investors. BDNs are unique because they are tied to a specific loan made by Fund That Flip to a borrower, meaning that the performance of the BDN is directly linked to the borrower’s ability to repay the loan.
In other words, if the borrower makes their loan payments on time, investors in the BDN will receive regular interest payments and their principal back when the loan matures. However, if the borrower defaults on their loan, the BDN may be at risk of losing some or all of its value.
Why invest in Borrower Dependent Notes:
- Minimum investment: $5,000
- Average Returns: 10.8% returns as of this writing.
- Transparency: FTF offers unparalleled clarity into borrower history and experience to help you vet each project.
- Terms: 3 – 24 months
Residential Bridge Note Fund (RBNF)
The RBNF is designed to be representative of the entire book of business FTF originates and is comprised of BDNs and mortgages. Sometimes, the RBNF may also extend a line of credit to pre-fund mortgages.
The minimum investment is $1,000. Terms range from 6 – 9 months, with
returns in the 10% range.
Investing in this note is analogous to investing in a stock index fund such as the Vanguard 500 Index Fund ETF (VOO).
The RBNF is designed to create passive diversification. In other words, investors in this note won’t need to review and sign-up for new investments. Instead, investors can now invest across the entire FTF book with one investment.
The RBNF is a very unique offering. I have not seen this structure across any of the other real estate platforms I’ve reviewed, which allows passive diversification across an entire book of business.
It’s also worth pointing out that because investors do not have the option to pick individual investments in the RBNF, the RBNF invests 10% of its total capital in the fund, therefore showing aligned incentives between investors and the company.
Pre-Funding Note Fund (PFNF)
The other note offered by FTF is their Pre-Funding Note Fund (PFNF). Through PFNF, individuals invest in a line of credit used to fund mortgages before they are open for investing through the FTF platform or sold to institutional whole loan buyers.
You can invest in PFNF for $1,000 and increments thereafter of $1,000. The typical duration of a PFNF is between 3 – 12 months, with yields between 8% and 9.50%.
The primary benefit of pre-funding notes is that they allow investors to earn yield without taking on repayment risk.
In addition, the fact that FTF prefunds its loans shows it stands behind the investments on its platform. If FTF prefunds a loan and doesn’t live up to investors’ standards, the company is stuck with the loan.
I’m a huge fan of prefunding note investing due to the short duration of the notes and the fact that you are investing in a Line of Credit and not a loan.
However, since I’m not an accredited investor, the Pre-Funding Note Fund isn’t an option. A great alternative for non-accredited investors is Stairs by Groundfloor, which allows non-accredited investors to invest in prefunding notes for just $1.
Horizon Residential Income Fund
The Horizon Residential Income Fund invests in a diversified portfolio of short-term residential bridge mortgage loans, providing investors with income and diversification, while also providing the tax benefits of a REIT.
- Minimum investment: $25,000
- Targeted Returns: 10.% – 13%, 8% preferred
- Terms: 12 months minimum
Performance & Investment Metrics
Returns can vary greatly when investing in real estate, so comparing real estate investment platforms can be challenging.
For example, depending on where in the capital stack your investment stands can greatly influence your returns. For example, FTF investments are debt and lower on the capital stack and generally have lower returns and lower risk.
On the other end, common equity is higher on the capital stack and, as a result, generally has higher returns but also more risk.
Let’s take a look at FTF returns and performance metrics...
Since its inception, Fund That Flipped returned an average of 10.8% across $2 billion invested. According to FTF, only 6- 8% of loan applications are funded.
As of June 2022, 5.72% of its loan portfolio was 30 days or more past due and has been trending slightly upward over the past few months.
The company notes the two main reasons for an increase in delinquency are supply chain issues and numerous high-dollar loans that remain delinquent because they have a dependency on exit and repayment.
- Average Gross Yield: 10.8%
- Percentage of Principal Returned: 99.6%
- Number of Repaid Loans: Over 2,500
- Total Invested: $2billion
- Approved for Funding: 8% of loan applications
- Delinquency Rate: 5.72% as of June 2022
Fees
Fund That Flip does not charge any ongoing management fees to investors.
Rather, FTF deducts a spread of 1 – 3 % between what it charges borrowers and what it pays to investors. Other real estate investing platforms will charge an ongoing management fee which is deducted from your balance on a yearly or quarterly basis, so this makes it a little more seamless for investors.
Fee Example: If a borrower pays 11%, FTF takes a 2% spread, and the investor will receive 9%. All yields listed are net of the spread, so what you see is what you get.
Liquidity
There is no secondary market or early redemption options if you want to sell back your BDN or RBNF, or PFNF early.
However, given the short duration of its notes (average repayment in 10 months), this is a very short timeline when it comes to real estate investing.
Many other real estate investing platforms require you to hold your investment for 3 -5 years or pay an early redemption fee of up to 3%, which can eat into your profits.
Best Alternatives
Fund That Flip’s closest competitor is Groundfloor. Both companies focus on residential real estate debt investing and offer prefunding investing. However, the main difference is the FTF is open to only accredited investors, while Groundfloor is open to all investors.
Bottom Line
| Features | |  |  |
|---|---|---|---|
| Overall Rating | |||
| Minimum Investment | $5,000 | $10 | $500 |
| Fees | 1-3% taken as a spread | None | 2% |
| Investment Type | Debt | Debt | Varies |
| Open To All Investors? | |||
| Retirement Account Investing? | |||
| Current Promotions | None | None | None |
| Sign-Up | Groundfloor Review | Diversyfund Review |
Fund That Flip is definitely worth considering if you are an accredited investor interested in investing in short-duration real estate debt. While their returns are on par with its closest competitor, Groundfloor, FTF is able to stand out against the crowd.
I like that all BDNs are secured by underlying collateral, thereby providing additional security for investors. In addition, the Real Estate Bridge Note Fund, which provides passive diversification across FTF’s entire book of business, is a very unique offering that I have not seen available on any other real estate investing platforms.
Lastly, I can really appreciate the level of transparency and explanations of the company’s operating model and structure, not something I have seen in other real estate crowdfunding platforms. I spent some time listening to the FTF podcast, which provides a level of detail I have not seen before.
Frequently Asked Questions
Our Review Methodology
Investing in the right financial products is crucial for achieving your financial goals. That’s why our review methodology is designed to give you a comprehensive understanding of various investing platforms and tools. Here’s a breakdown of what we focus on:
Tools and Features
We dig deep into the suite of tools that each platform offers. Whether it’s automated investment features, tax optimization, or the number of offering, we evaluate how these features contribute to smarter investing decisions. We ask questions like:
- What is its main offering, and how does it compare to its peers?
- How effective are the risk assessment tools?
- Are there any value-added services like educational content?
Price and Value
Price matters, especially when it comes to investing, where every penny counts. We analyze:
- Subscription fees
- Hidden Charges
- Price compared to the overall value received
We’ll let you know if the platform gives you the most bang for your buck.
Ease of Use
User experience can make or break an investment platform. We assess:
- Interface Design – Is it intuitive and easy to use?
- Mobile app availability and functionality
- Customer Support – where applicable.
Nobody wants to navigate a clunky interface when dealing with their hard-earned money.
Our Review Methodology
Investing in the right financial products is crucial for achieving your financial goals. That’s why our review methodology is designed to give you a comprehensive understanding of various investing platforms and tools. Here’s a breakdown of what we focus on:
Tools and Features
We dig deep into the suite of tools that each platform offers. Whether it’s automated investment features, tax optimization, or specialized charting tools, we evaluate how these features contribute to smarter investing decisions. We ask questions like:
- What is its main offering, and how does it compare to its peers?
- How effective are the risk assessment tools?
- Are there any value-added services like educational content?
Price and Value
Price matters, especially when it comes to investing, where every penny counts. We analyze:
- Subscription fees
- Hidden Charges
- Price compared to the overall value received
We’ll let you know if the platform gives you the most bang for your buck.
Ease of Use
User experience can make or break an investment platform. We assess:
- Interface Design – Is it intuitive and easy to use?
- Mobile app availability and functionality
- Customer Support – where applicable.
Nobody wants to navigate a clunky interface when dealing with their hard-earned money.
How We Do It
- Hands-On Testing: I signed up for Fund That Flip to provide real insight. This is how I give my unique perspective. We’re unlike some other sites where they simply rehash marketing materials.
- Customer Reviews: What are other users saying? We look at reviews and customer feedback to gauge public opinion.
- Comparative Analysis: Finally, we compare each platform against competitors regarding features, pricing, and user experience.
