Ditmas Park Capital is a Limited Liability Partnership operating since 2015 that was established to initiate and invest in High Yield Real Estate Mortgages. We have over $20,000,000 under management and hold first lien mortgages on over 200 properties.
We bundle these mortgages together and have created a hedge fund structure that diversifies our investor portfolios and minimizes their risk.
These mortgages have an average loan to value ratio(LTV) of less than 68%. That means that our loans can only comprise of up to 68% of the value of the property that is taken as collateral. This gives us a substantial cushion to deal with the volatility of the real estate market.
Our Capital is generated from two sources: Direct Fund Investors and Fixed Rate 6% Lenders.
Our Direct Fund Investors receive returns based on the performance of the fund as a whole, in the way a hedge fund operates. Fixed Rate 6% lenders are a more standard form of lending and collect a fixed rate of 6% on their investment.
The investors comprise 75% of the capital and their return is subject to the success of our fund as a whole. The loans are 25% of the fund and earn an annual return of 6% and receive priority over the Direct Fund Investors.
Our risk analysis revealed that the properties would have to decline by 30% before Direct Fund Investors are affected and 82% before the Fixed Rate 6% Lenders are affected.
Our Business Model
Our revolutionary financial structure allows us to combine the consistent returns of hard money lending and the diversity of a hedge fund.
“Hard Money” Loans
These are high-interest short-term real estate loans that are issued quickly, usually within 3 days, have a short duration, and use the property as collateral. They are used by real estate investors looking to take advantage of a deal with a short window of opportunity or increase its value for future sale. The process is quick and easy. Whereas a bank loan can take 45-60 days for approval, these loans are issued within a week of the day requested.
Lenders are primarily interested in initiating mortgages with a low loan to value ratio (LTV) this makes the loan a low-risk proposition. Loan to Value ratios is used to evaluate the risk inherent in a mortgage loan. If a property is worth $100,000 and the loan is for $65,000 the LTV is 65%. Property values are determined by licensed realtor agencies.
A Hedge Fund is a capital management structure that pools the contributions of its investors in a variety of asset classes such as securities, futures contracts, options, bonds, and currencies. The goal is to minimize risk and diversify the holdings of investors.
Ditmas Park Capital
The issue with traditional Hard Money Loans is that returns are dependent on one loan, your money is tied up for its duration, and one singular default can result in a loss for investors. By bundling together these loans we have mitigated risk while ensuring high returns and liquidity for our investors. Our loans have an average loan to value (LTV) ratio of less than 68%. That means that we only lend up to 68 percent of the value of the property. This lowers risk and decreases the chance of default.