FREQUENTLY ASKED QUESTIONS

AN OVERVIEW OF CAPSTONE’S BUSINESS MODEL AND FRAMEWORK

Although direct fractional investments are no longer available, take a look at this quick 2-minute video for a brief overview of how our model works. You’ll also find answers to other frequently asked questions below!

  • A trust deed (or a deed of trust) is a security instrument for real estate loans. The trust deed serves legal notice that the subject property is pledged to secure a loan. In this case, it’s a first lien on a property. It also provides an accelerated foreclosure should a borrower default on a loan. The particulars of the loan are detailed in a separate promissory note, and the trust deed is recorded at the county recorder’s office. In short, it's a mortgage loan secured by real estate just like a bank secures their funds to real estate.

  • Residential:

    • Single family residences (SFRs)

    • Duplexes

    Commercial:

    • Office condominiums

    • Land (at lower LTVs)

    • Mixed-use developments

  • Every transaction handled generally includes:

    • Signed & Recorded Deed of Trust: An official signed document attaching the new loan to the property as a first lien. A recorded copy follows once it’s received from the title company.

    • Signed Mortgage/Promissory Note: A personal commitment and guarantee from the borrower stating the specific loan terms to the private lender.

    • Title Insurance Policy: A full title policy insuring the lender’s first lien to the property from any unknown potential title issues and/or outstanding liens.

    • Hazard or Home Insurance Policy: A policy insuring the entire loan amount against fire or other potential disaster to the property.

    • Loan Servicing Agreement: An agreement to collect the mortgage payment as stated on the promissory note for the lender’s new loan and to act as a liaison between both the lender and the borrower.

    • Online Access: Every investor receives a personal ID and password with online access to their investments.

  • Real estate developers, custom home builders, and rental income investors are our primary borrowers. Visit our lending website.

  • Capstone offers short-term bridge loans. Our borrowers are also typically seeking more creative terms and a timely closing. There are many variables as to why a borrower would pay a higher cost to get a private loan; however, we have identified two main reasons:

    1. Tightening of Credit: Our borrowers (many self-employed individuals) in many cases find it challenging to qualify with a stringent bank’s guidelines. Consistent income requirements and owning too many properties may lead banks to turn them away. Dodd Frank Laws make it especially difficult for certain individuals to qualify. Because of this, demand for private capital has increased.

    2. Speed: It’s usually not the cost of the money that counts, but the ability to receive funds quickly. They use this speed of financing to negotiate better terms with sellers, especially when they can use financing that is not subject to the standard qualifying methods. Because these loans are short-term (6-24 months) and more attainable, borrowers are typically able to welcome the higher costs in exchange for the benefits. The time required for a bank to fund some projects will cause borrowers to lose their deals. Capstone offers the speed they need.

  • Our starting minimum is typically $100,000; however, we have made exceptions for lower amounts for new investors to become acclimated with our programs.

    Please note we are only able to transact with accredited investors. What’s an accredited investor? Please access the following link to learn more about the criteria that qualifies one as an accredited investor: SEC.gov | Accredited Investor

  • Historically, our foreclosure rate has been low. In 2023, 2% of funded deals went into foreclosure. Capstone prides itself on its stringent due diligence and loan servicing, which are essential in mitigating foreclosure risks. Capstone's due diligence involves thorough assessments of both the asset being financed and the creditworthiness of the borrower.

    When evaluating the asset, Capstone focuses on factors such as market value, condition, location, and income potential. This ensures that the property serves as adequate collateral and supports the loan amount. Simultaneously, Capstone scrutinizes the borrower's experience and creditworthiness in order to gauge repayment ability. Adherence to strict underwriting standards further guides lending decisions, ensuring loans are extended only to eligible borrowers with minimal risk of default. These practices enable Capstone to make informed decisions, minimize default risks, and protect investments amid market uncertainties.

  • Yes!

    Total fundings since 2012: $500M

    Total foreclosures: 2% in 2023

    Average annual return: 8-10% (dependent on product)

  • All investors must be accredited. Learn about what it means to qualify as an accredited investor from the SEC. Please note for our fractional lending program, the lender must reside in Texas.

  • Getting started is easy. If you’d like to put capital to work and begin earning 8-9% annual returns on real assets, please get in touch!