A Conversation with Mr. Barry Hertz of Ditmas Park Capital LP
By Simmy Horwitz
Why is it so much easier to spend money than to make it?
Wise money managers recognize that smart investments are often the key to enabling their money to work for them, rather than the other way around. Why not earn sizable returns on money that’s simply sitting in the bank?
Two main concerns often hold people back from pursuing investments: a worry that the investment will pose a risk to their capital; and a fear that the money won’t be available when they need it.
With the launch of Ditmas Park Capital LP, founder Barry Hertz was able to negate both concerns with a flick of his experienced hand. Welcome to a worry-free investment experience.
A Totally Different Approach
“There’s a concept in the industry called ‘hard money lending,'” explains Mr. Hertz. “This is a situation where someone finds a great deal, but they need to borrow money right away to take advantage of the opportunity; a bank’s lending process can take months, so the borrower approaches a hard money lender instead.
“Typically, a hard money lender will proceed with the deal by making some phone calls to different investors and putting together the sum. The investors are paid back when the deal completes.”
In this process, each time the lender is approached with a request for funding, he creates a new team of investors to fund the deal. Each deal is essentially its own entity; it has its own partnership of investors, and the returns can’t be given until the deal is paid back.
“We’ve taken a totally different approach,” Mr. Hertz says. “We have a hedge fund. All of our investors pool their money into our fund, and all of our loans come from the fund.”
The advantage to this system for investors is obvious: the investment is spread over many deals, rather than relying on one, so the risk is considerably mitigated; and investors have the ability to collect their funds at any point, rather than being forced to wait until the deal completes.
“With our fund, there is always a cash flow. There is always new money coming in.”
Operating with Care
The extremely thorough and secure process that Ditmas Park implements with every deal ensures that not only are borrowers vetted and carefully evaluated for reliability, but are responsible to pay many of their obligations upfront.
“Hertz actually goes a step further and will only lend 80 percent of the purchase price,” says experienced investor Avrumi Mashinsky.
Aside from the multiple safety precautions which ensure a safe and timely repayment of loans, Ditmas Park ensures the compensation to investors by placing them on the front line for collection.
“In our fund, capital is generated through investors and lenders,” says Mr. Hertz. “Investors, which make up most of the funds, receive a higher rate of return, but also have a higher risk. Lenders have little to no risk, and simply stand first in line for a great return.”
The lenders are the first to be paid on any deal. With a guaranteed six percent return and just about no risk, it’s a deal that many investors are keen to take advantage of. Additionally, the investment can be withdrawn at any time that lenders want to take their money back: a simple 30 days’ advance notice rather than waiting for a specific deal to mature, and the money is back in their hands.
A Trustworthy Team
“I’ve seen many times that Ditmas is a company completely upright in their dealings,” relates Mashinsky, when asked about his experience with the team.
Mashinsky lists the benefits of working with the company as having a personal touch, quick and efficient service, and direct, open communication, yet he stresses the honesty factor in particular.
“There was one time when they were holding my funds in escrow and waiting for an assessment to come through. The way it works is that you pay interest even on the funds in escrow, so they were collecting interest while they held the funds.
“It was an extremely short and hectic Friday afternoon when the assessment was complete and I got the call that the deal had been approved. Despite the fact that Hertz didn’t have a moment to spare in his busy schedule before Shabbos, he told me that since I was paying interest and I was now entitled to the release of my money, [he] ‘had no right to hold it for a single extra day, so I will drop everything and run to the bank to release the funds.’
“It sounds incredible, but it’s a behavior that I’ve seen from them in many cases.”
Real estate investor Y. Weinfeld similarly expresses admiration at Ditmas Park’s high caliber service.
“Mr. Hertz looks through every deal with his own eyes and is extremely thorough and honest in his dealings. There have been times that a property was assessed at a value lower than I needed and I’ve tried to convince Hertz that I know the property is worth more. He can’t be budged. He’ll tell me, ‘If it was my personal money, it would be one thing, but I can’t take a risk with the money of others.’
“I’ve worked with them as a borrower, but if I was looking to invest money, there is no question that I would entrust it with them.”
An Opportunity Awaits
Currently, Ditmas Park Capital is accepting both investors and lenders to join their fund.
The lenders are guaranteed a return rate of six percent on their investments and are always the first priority to receive compensation in the unique Ditmas Park structure.
“The Lakewood market and its surrounding areas are just booming with possibility right now,” describes Mr. Hertz. “It’s a phenomenon like no other, and it opens the doors for a wonderful investment opportunity.”
Ready for your money to start working for you?