HomeUnion Fix-and-Flip Fund

HomeUnion Inc.

Offering Description

HomeUnion invites qualified investors to participate in the HomeUnion Fix-and-Flip Fund. Using proprietary algorithms and local market expertise, the fund identifies properties in active HomeUnion markets that present opportunities to increase values and command higher rents through renovation. The fund purchases, renovates, and places renters in these properties. The properties are then sold as tenanted assets on HomeUnion’s online investment marketplace – a leading destination for single-family real estate (SFR) investments, where more than $150 million in transactions have closed to date.

HomeUnion is the only real estate investment platform offering a fully integrated solution for investors. Unlike other websites, which source third-party projects and act as middlemen or brokers, HomeUnion is the investment manager on its projects and controls the performance of all its real estate investments.

Investors purchase interest in the HomeUnion Fix-and-Flip Fund, LLC, which then acquires these properties for subsequent sale on the HomeUnion marketplace.  Proceeds from the sales are used to pay semi-annual dividends and to purchase additional properties.

Questions?

Fund Summary

Investment Strategy

The Fix-and-Flip Fund buys single-family, and 2- to 4-unit properties in the Atlanta, Austin, Charlotte, Chicago, Dallas, Raleigh and Tampa metro areas. The fund may add other markets in the future. HomeUnion uses a proprietary neighborhood rating and will acquire properties in A, B and C neighborhoods. At the end of the rehab and leasing process, the properties are sold on HomeUnion’s online investment marketplace to individual retail investors. The average purchase price varies by market, but generally ranges from $75,000 to $200,000, with an average rehab amount not to exceed $35,000. The Fund’s goal is to earn a profit of between 3 percent and 5 percent per deal, and turn the capital three times per year to reach our targeted annual return.

Estimated Fund Timeline

The Fund will be launched in March 2018. Once funded, the acquisition process will commence. It is estimated to take around four months to buy, renovate, lease and sell the assets. Renovated properties will be listed on the HomeUnion marketplace for sale. Profits from the sale of the properties are used to pay dividends and reinvest into additional properties within the Fund.

Target Assets

Properties are selected using local market experts and HomeUnion’s proprietary analytics model that has been trained by analyzing over $160 billion of properties. HomeUnion’s existing portfolios within these markets provide further insight into market conditions and factor into the selection process. Acquired properties satisfy HomeUnion’s existing underwriting criteria to ensure a seamless transition from the fund onto the online investment marketplace. Below are representative properties post fix.

Representative Properties

HomeUnion Atlanta Investment Property - A - Fix and FlipHomeUnion Charlotte Investment Property - B - Fix and Flip HomeUnion Raleigh Investment Property - B - Fix and Flip

Investment Highlights

    • Focus on proven markets: Properties are purchased in active HomeUnion markets, similar to properties previously identified and sold on the HomeUnion marketplace with proven performance.
    • Data-driven market sourcing: HomeUnion analyzes data from multiple sources and transactions to maximize returns and minimize risk. Leveraging machine learning, HomeUnion analyzes a property’s value, rent potential and anticipated future performance. These powerful tools have been generated and tested utilizing our existing portfolio and other market metrics. Our Business Intelligence team continuously analyzes 110 million homes in 200,000 neighborhoods across the country.
    • Unique property sourcing model: Properties are sourced in real time from Multiple Listing Services (MLSs) as well as off-market sources. We have rules in place to minimize the potential risks of investing in real estate while maximizing returns. Historical performance data and proprietary HomeUnion models are utilized to identify assets with the best long-term performance for investors. HomeUnion also employs Investment Location Managers, on-the-ground, licensed real estate experts who understand the nuances of local investment market conditions, and provide feedback to our underwriting team.
    • Extensive property renovation experience:  HomeUnion has managed renovations for over 1,000 properties. The company’s Asset Management team brings all properties to a HomeUnion Home standard – a minimum level of quality for appliances, lighting, flooring, landscaping and other physical attributes of a property. This level of rehab improves the value of the investment by reducing maintenance costs, maximizing rents and building an attractive livability brand for tenants. Due to the large volume of acquisitions, HomeUnion investors also benefit from economies of scale. Our vendors and contractors are willing to move projects up in the queue and provide volume discounts.

    Before

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    After

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    • Deep property management experience:  With over 1,000 units under management, HomeUnion deploys state-of-the-art proprietary management technology coupled with local market presence for the management and oversight of all its properties.
    • Value-add plan: HomeUnion’s acquisition team identifies properties that are available at a discount to market prices, and can be renovated to add immediate value at acquisition. Purchasing with cash will allow the team to secure further discounts and close quickly.  Additionally, properties with attractive growth potential will be acquired, renovated and sold.
    • Marketplace featuring lower risk: HomeUnion has a leading online marketplace for residential investment properties where more than $150 million in transactions have closed to date. Fund properties will be made available to the more than 100,000 users in the marketplace.

Financial Summary

Fund investors are to invest in HomeUnion Fix-and-Flip Fund, LLC (the "Company"). The Company will use the equity for the purpose of purchasing, renovating, managing, and disposing of single-family residential properties located in active HomeUnion markets.

Fund Details

Est. Fund Capital $2,000,000
Term 1 year with manager option to extend 1 year
Target Dividend Payment 8% (annualized, paid semi-annually)
Target Preferred Return 8% (annualized)
Fund Manager Catch Up up to 2% (annualized, paid after 8% Preferred Return)
Profit Split After Catch Up 50:50 (Investor:HomeUnion)


Early Redemption

No early redemption allowed

Markets

HomeUnion has managed over 1,000 renovations in the markets targeted by this fund. As a result, the firm is well-positioned to identify attractive investments based on actual performance of the existing portfolio. These markets also present excellent investment opportunities for retail investors seeking a turnkey asset. Below are the annual growth rates for SFRs in these markets for the last year based on data from the Federal Housing Finance Agency (FHFA).

Locations FHFA 1 Year Annual Growth Rate for SFRs
Atlanta 8.4%
Austin 7.2%
Charlotte 9.1%
Chicago 5.0%
Dallas 11.3%
Raleigh 7.9%
Tampa 10.5%

Atlanta

Atlanta offers a diverse mix of investment opportunities. The market’s largest sector, trade, transportation and utilities, is supported by the nearby port of Savannah, which offloads container ships and sends them to the metro to be distributed. The market boasts the world’s 18th-largest economy and is home to seven Fortune 500 headquarters. A friendly business climate and quality distribution infrastructure positions the metro for future growth.

  • The Atlanta region is expected to have 1.5 million job openings by 2040
  • With the lowest cost of doing business out of all primary U.S. metros, Atlanta attracts aspiring entrepreneurs and global investors
  • Atlanta-Hartsfield Airport is the busiest in the world, and its employees fuel area rental demand
  • The area’s 22-mile Atlanta Beltline Transit Loop will be completed by 2030, spurring a $10 to $20 billion increase in economic growth
  • 15 companies in Atlanta metro are ranked in the 2017 Fortune 500 companies

Austin

Austin is an attractive option for real estate investors seeking investment opportunities in markets with strong tech sectors. Entry-level home prices are considerably lower, while the reduction in salaries is not nearly as pronounced. Most of the major tech employers have a presence in Austin, including Apple’s second-largest world campus. The strong base of local technology firms, along with the state government and one of the largest universities in the nation, make Austin a well-positioned real estate investment market for years to come.

  • In 2017, Austin was named the best real estate market to invest in by PwC and the Urban Land Institute
  • Tech companies with regional headquarters: Apple, AMD, AT&T, Dell, Google, Facebook, 3M, and PayPal
  • With a heavy concentration of highly-educated millennials, Austin was ranked the eight-best place in the U.S. for business and careers by Forbes in 2017
  • According to the Austin Downtown Alliance, Austin is one of the fastest-growing cities in the U.S. The population in its urban core has doubled since 2000 and shows no signs of abating

Charlotte, N.C.

Charlotte’s economy features a robust financial services sector anda growing energy sector. But the emergence of new companies in the energy sector have earned Charlotte a second nickname in recent years: Charlotte USA – The New Energy Capital. As of mid-2017, more than 240 firms in the energy sector employed 26,400 people in the region.

  • 14 Fortune 500 companies expected to locate to Charlotte by 2025
  • The Charlotte metro is home to some of the top-ranked public schools in the nation, which boosts local property values
  • King’s Mountain Catawba, a $600-million-dollar casino, will generate visitors and create hundreds of jobs in the region
  • With its central location in the Southwest, there are more than 100 distribution centers in Charlotte
  • The Lynx Light Rail provides alternative transportation to Charlotte area residents, which many renters rely upon

Chicago

Chicago is the third largest metro in the U.S., with a diverse economy featuring distribution, finance and tourism and economic anchors. The metro attracts the third most visitors annually, surpassed by only Orlando and New York City. Chicago boasts the largest intermodal port in the nation, making the area a distribution hub for much of the Midwest.

  • 36 Fortune 500 companies have headquarters in Chicago
  • Gross metro product in Chicagoland is larger than all but 20 countries
  • The Windy City attracts more than 50 million visitors annually, making it a leading tourist destination in the country
  • Chicago is one of four cities with five or more major professional sports teams

Dallas

The Dallas/Fort Worth Metroplex is the nation’s fourth largest-metro and home to more than 20 Fortune 500 headquarters. In the current economic expansion, the market has consistently ranked near the top in total job growth, fueled by a diverse economy featuring technology, back-office operations for major corporations, and the finance/insurance sector. D/FW also serves as a major distribution hub with two intermodal transfer facilities handling goods coming from Mexico and the port complex in Houston.

  • The largest metro area in the state of Texas, Forbes ranks Dallas as the top city for jobs in 2017
  • A total of 22 Fortune 500 companies are located in Dallas/Fort Worth, the second-highest number in the nation
  • Trinity River Park, a 10,000-acre urban park more than 10 times larger than NYC’s Central Park
  • CNBC ranked Dallas as the second-healthiest housing market in the U.S.
  • Job growth continues to strengthen in Fort Worth, with such projects as a recently developed data center for Facebook

Raleigh, N.C.

An emerging technology market, Raleigh-Durham is garnering increased attention from both corporations and investors. Home to the Research Triangle Park (RTP), tech firms have flocked to the area to take advantage of the local universities and collaboration between public and private institutions. The RTP covers 7,000 acres and over 22 million square feet of commercial space. More than 200 companies are located within the park employing over 46,000 workers in biotechnology, information technology and related sectors, with expansion efforts underway to house additional firms.

  • Wake County’s population is projected to increase by 24.5% through 2027
  • Raleigh is ranked second in affordable housing markets with good schools in the U.S., according to RealtyTrac
  • The three-county Raleigh metro is said to be the fastest-growing metropolitan area through 2025, climbing to 38th in metro population
  • Three highly ranked universities and colleges drive demand for rental housing: University of North Carolina at Chapel Hill, Duke University and Davidson University

Tampa

Tampa features a diverse economy and remains a top retirement destination for Northerners seeking warmer climates. The older population supports a robust healthcare industry, which is one of the few sectors largely immune to recessions. The market has more than 50 hospitals, along with clinics that support thousands of jobs. Several financial institutions also hold a significant presence in the market.

  • Ranked by CNBC as the nation’s healthiest housing market in 2017
  • According to Forbes, Tampa was named the fastest growing metro in the U.S. in 2017
  • Wallet hub named it the third-best city in which to find a job in 2017
  • Tampa is home to five Fortune 500 companies

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$1,720,000

Raised Of $2,000,000 Goal

$1,720,000
 
$10,000 Min. investment
50% Profit Split Over 10%
1 Year Target hold
  • Property TypeSingle Family
  • Target hold1 Year
  • Offer TypeEquity
  • Target Dividend8%
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