Frequently Asked Questions

• The Lehigh Valley Private Equity Fund is a new, evergreen (doesn’t expire), $250 million Private Equity Fund set up by experienced real estate professionals to invest in Lehigh Valley real estate.

• The Fund is an open-ended “evergreen” fund with no set end date. The Manager expects to originate and acquire Fund Assets on a frequent and ongoing basis and will continue to do so indefinitely until the Offering Amount has been reached, or until the Manager believes market conditions do not justify doing so.

Yes. We are a Regulation D Fund. Our filing details can be found here.

An accredited investor, in the context of a natural person, includes anyone who:

• earned income that exceeded $200,000 (or $300,000 together with a spouse or spousal equivalent) in each of the prior two years, and reasonably expects the same for the current year, OR

• has a net worth over $1 million, either alone or together with a spouse or spousal equivalent (excluding the value of the person’s primary residence), OR

• holds in good standing a Series 7, 65 or 82 license

Financial professional licenses. The General Securities Representative license (Series 7), the Private Securities Offering Representative license (Series 82) and the Licensed Investment Adviser Representative (Series 65) are professional certifications and designations for financial professionals. In order to obtain and qualify for these licenses, an individual must pass the related exam. Whether one is considered in good standing is specific to the designation, and persons seeking accredited investor status as a Series 7, 65 or 82 license holder should consult FINRA rules and any state rules applicable to them.

There are other categories of accredited investors, including the following, which may be relevant to you:

• any trust, with total assets in excess of $5 million, not formed specifically to purchase the subject securities, whose purchase is directed by a sophisticated person, OR

• certain entity with total investments in excess of $5 million, not formed to specifically purchase the subject securities, OR

• any entity in which all of the equity owners are accredited investors.

In this context, a sophisticated person means the person must have, or the company or private fund offering the securities reasonably believes that this person has, sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment.

Under the federal securities laws, only persons who are accredited investors may participate in certain securities offerings. One reason these offerings are limited to accredited investors is to ensure that all participating investors are financially sophisticated and able to fend for themselves or sustain the risk of loss, thus rendering unnecessary the protections that come from a registered offering.

Unlike offerings registered with the SEC in which certain information is required to be disclosed, companies and private funds, such as a hedge fund or venture capital fund, engaging in these exempt offerings do not have to make prescribed disclosures to accredited investors. These offerings involve unique risks and you should be aware that you could lose your entire investment.

Yes. The minimum investment is $50,000.

The Fund intends to invest in assets primarily located in Pennsylvania and New Jersey however, the Fund reserves the right to make investments in properties in other jurisdictions across the United States.

In every decision, we begin with ensuring we are maximizing value while mitigating risk for our investors. Once you join the Lehigh Valley Private Equity Fund you’ll see that our investors always come first and are top of mind for everything.

Step 1: Identify Opportunity

We are constantly searching for new opportunities through various methods including but not limited to public listings, private contacts, cold-calling and regional development .

Step #2: Evaluation

We determine if the property or investment opportunity fits our criteria to meet our targeted returns for our investors.

Step #3: Investment

Once we have confirmed that a particular opportunity will provide our investors with optimal returns we will seek to invest at our targeted level.

Step #4: Investor Return

Our investors, you, will be provided monthly returns from the invested capital.

• The Fund will primarily originate, fund, and/or otherwise invest in Mortgage Loans. When investing in Loans, the Fund may fund the full or a partial amount of a Loan.

• The Fund may, when commercially reasonable, take back, receive, or otherwise acquire Non-Performing Loans secured by real property located throughout the United States. Real property will primarily consist of non-owner-occupied 1-4 unit residential, multi-family properties, mixed-use properties and commercial properties.

• The Fund will, either directly or through SPEs, also acquire, manage, remodel, develop, lease, repair and/or sell residential and commercial Properties located throughout the United States, with a primary focus in the States of New Jersey and Pennsylvania.

• The Fund may invest in Non-Real Estate Loans secured by non-real estate assets including but not limited to, inventory, equipment, furniture, fixtures, accounts receivables, liquor licenses, and other business assets. Loans may also be collateralized by both the business real estate and business assets of the borrower.

LVPEFUND is the only private equity fund in the tri-state region with a completely unique, proprietary system, which provides unfettered access to property owners through the “off-market” channel, allowing the fund to acquire properties at steep discounts and terms favorable to our investment process. Statistically rehab and resell projects are sold at around a 30% markup.

Our real estate team is constantly placing offers on properties that meet our criteria and financial analysis. The LVPEFUND team spends seven days a week reviewing properties in and around the Lehigh Valley resulting in several site visits, extensive property analysis, and contract delivery. The first stage is the identification process, in which LVPEFUND has a particular advantage over other buyers in the regional market. Stage two is the filtration process where we use numerous methods to select the investments we will consider for further analysis. Stage three is analysis, where we use rigorous analysis of multiple financial and operational metrics to refine our investment choices. The final stage is the selection process where the fund selects the best possible investments for the highest return to our investors with limited risk.

Yes! We are self directed IRA friendly.

1. Selection of Properties: The Fund will focus primarily on non-performing Properties with opportunities to add value through improved management and modern upgrades. These Properties will be sourced through the commercial real estate community, whether listed or off-market Properties. The Fund, either directly or through SPEs, may acquire, improve, and sell single-family residential, multifamily, or commercial properties. Properties may be acquired, without limitation, from the following:

(a) Sellers who, for various reasons, are in some position of distress which requires them to dispose of the property quickly or in other manner that does not allow them to realize full market value;

(b) REO property from other lenders who do not have the expertise, experience, time, or desire to take the necessary steps to maximize the property value;

The Fund’s investment in Properties will be to acquire title to the property, including through an SPE and/or a joint venture partner (such as developers of the properties, or with Affiliates of the Fund).

(c) Properties purchased at an auction, either through judicial or non-judicial foreclosures;

(d) Bulk purchases from lenders willing to sell groups of properties at deeper discounts due to volume;

(e) Short sales on individual properties negotiated on a deal by deal basis with motivated sellers at discounts to perceived value;

(f) Properties that may require rehabilitation, repair, additions, or other improvements that will be accretive to the property’s value upon completion;

(g) The expectation at acquisition is that the sum of the acquisition price plus the Fund’s costs to repair/improve the property will be substantially below the expected future sales price by the Fund or would produce strong cash on cash returns when rented at expected levels;

(h) Well located real estate that is expected to outperform the general market over time;

(i) Properties that may be profitable due to their location, size, property type, or other characteristics of the real estate; and

(j) New-build construction opportunities when the lot is priced at a significant discount and is located in an area where the resulting market values after completion are clearly established.

2. Maximum Investment: The Fund may use the same standards as the Loan-to-Value Ratios set forth above to determine the maximum amount of leverage the Fund will incur when investing in a Property. In other words, the Manager may generally seek to limit the total amount of debt, loans, or financing (i.e. leverage) to acquire a Property to the same percentage of a Property’s market value as set forth in the Loan-to-Value Ratios set forth above.

3. Location of Properties: The Fund intends to invest in Properties primarily located in New Jersey and Pennsylvania; however, the Fund reserves the right to make investments in Properties in other jurisdictions across the United States.

4. Types of Properties: The Fund will focus primarily in acquiring single family non-owner occupied residential properties, multi-family properties, and commercial properties. Commercial properties acquired by the Fund will include, without limitation, retail, office, storage units, industrial, senior living facilities, gas stations, hotels, shopping centers, medical related offices, retail, convenience stores, and other specialized commercial properties (if alternative use is viable).

5. Purchase Price: The Fund will seek to acquire properties offered for sale at a price that is generally Twenty Percent (20%) or more below market rate. Notwithstanding the foregoing, the Manager reserves the right to purchase properties at market value if the Manager determines, in its sole discretion, that it is in the best interests of the Fund to do so.

• Loan to Value Ratio

  When originating real estate loans, one of the most important metrics is the loan to value. Requiring significant equity in the investment allows us to account for unforeseen changes in the economy or the property. For our most of our loans, we limit the LTV to 65%.

• Title Insurance

  One of the risks in real estate investing is a “clouded” title. Investors want to be sure the title is free of any outstanding litigation or liens. When investing in private notes, it is important to be in first position, so no other lenders have claim to the property before you. Working with a reputable title company and a partner who can help with all the administrative work can be beneficial if you do not have experience doing this yourself.

• Hazard Insurance

  Our private note investors are secured through hazard insurance in the event anything happens to the property, such as a fire or flood. The insurance payout goes to the investor before the property owner can receive the funds.

• Escrow of Rehab Funds

  When LVPEFUND lends money to any borrowers, all rehab funds are held in escrow with the fund and are only released after each stage of the renovation is complete.

• Professional Project/Renovation Management

  LVPEFUND controls the renovation by employing professional project management and/or third party inspectors to oversee the renovation, ensuring the work is completed to our satisfaction and that our investors are exposed to very little risk.

• Strong Borrowers

  When LVPEFUND lends capital to investors, a thorough financial and credit analysis is performed. Our fund focuses on lending to experienced, seasoned, and financially stable borrowers.

• Disciplined Acquisitions

  The demand for apartment communities is very high. Investors are often willing to pay low 5’s to low 6 cap rates for Class B and C communities. Bidding frenzies can make it easy to get caught up in “the market” and overpay – even for sophisticated institutional-quality investors who are consistently being outbid by other investors. Our discipline ensures we never get attached to a deal. We also believe in a conservative investment approach to factors we control and even more conservative in the expectations we do not control such as interest rates; rent growth; etc. We believe that when we buy assets that generate strong double-digit cash flow, based on current market rents, we will be in the best position to weather market changes.

• Strong Property Management

  LVPEFUND has a significant advantage in choosing a property management company that is aligned with investors and the fund. LVPEFUND works with three property management companies that have a reputation to drastically beat industry benchmarks in terms of physical occupancy, effective occupancy, tenant retention, and collected revenue.

Our team has over 60 years of lending experience reviewing thousands of loan requests, covering a diverse set of loans. Our lending experience includes commercial real estate, residential real estate, mixed use properties, and non-real estate business loans. We have identified key characteristics of good borrowers for our niche business. They are: character, experience, financial condition, credit history, and collateral. Each borrower goes through an extensive interview process to gather information and understand their background and experience. We want long-term repeat successful borrowers and believe quality over quantity has been a hallmark of our success.

We have helped many borrowers build wealth, increase their income and create financial freedom through real estate investing. At the same time, we have provided consistent high-yield returns to our Fund investors will zero losses to any of our investors with our prior Funds. We are proud of our track record, we have never missed an interest payment to any of our Fund investors. We bring this commitment of excellence to the Lehigh Valley Private Equity Fund investors.

Our business model is built on identifying already successful real estate developers and plugging them into our lending system that seamlessly takes them from application to closing in less than two weeks. We do this by pre-qualifying our borrowers; using their financial statements, tax returns, and credit report along with existing and past projects to determine their probability of success based on their exit strategy. The exit strategies are either sell the property or refinance it as a rental property. Each borrower goes through an extensive interview process where we learn about their background and experience level to make sure they have what it takes to successfully complete the project and payoff the loan.

We also take a close look at the project to see if it meets are requirements. We want to see a complete renovation or construction budget with a contractor’s estimate. We want to make sure the borrower has not missed anything in the planning process and the numbers make sense. Each project is fully inspected and photographed before, during, and after the development process. Renovation funds are held in escrow and released in draws after a draw inspection has been performed by our inspector. These inspections take place within 24 – 48 hours after an inspection is requested and funds are sent to the borrower shortly thereafter.

A preferred return—simply called, “pref” —describes the claim on profits given to preferred investors in the fund. The preferred investors will be the first to receive returns up to a certain percentage, LVPEF is designed to provide a preferred return and an overall annualized target return with no limit on returns.

The fund will endeavor to produce overall annualized non-compounding non-cumulative returns to Members equal to the target rate with no limit on returns.

The capitalization rate (also known as cap rate) is used in the world of commercial real estate to indicate the rate of return that is expected to be generated on a real estate investment property. This measure is computed based on the net income which the property is expected to generate and is calculated by dividing net operating income by property asset value and is expressed as a percentage. It is used to estimate the investor's potential return on their investment in the real estate market.

Means (i) all cash receipts of the Fund derived from Fund operations and Fund Assets other than Capital Contributions (as defined in the Operating Agreement), reduced by (ii) Fund expenses, contributions to capital of subsidiaries, payment of the Preferred Return, and any reserve for future expenses, contingencies or other amounts deemed appropriate in the judgement of the Manager acting in good faith.

A cash-on-cash return is a rate of return often used in real estate transactions that calculates the cash income earned on the cash invested in a property. Put simply, cash-on-cash return measures the annual return the investor made on the property in relation to the amount of mortgage paid during the same year. It is considered relatively easy to understand and one of the most important real estate ROI calculations.

Our lending team has over 60 years of experience and has closed $47 million in loans over 410 real estate projects while NEVER missing an interest payment to the investors. LVPEFUND provides real estate investors with an efficient and reliable way to fund their development projects in PA and the surrounding regions. Our standards only allow for real estate developers with experienced, proven track records to take place in our funding.

LVPEFUND is the only private equity fund in the tri-state region with a completely unique, proprietary system, which provides unfettered access to property owners through the “off-market” channels. This gives our fund a competitive advantage in acquiring properties at steep discounts and terms favorable to our investors. Statistically, rehab and resell projects are sold at a 30% profit margin.

Through our proprietary “off-market” acquisition system, LVPEFUND purchases properties at a steep discount and favorable terms, allowing for a profitable long-term buy and hold. These properties provide a consistent return over a 5 - 10 year period. LVPEFUND team is constantly reviewing and putting potential projects under scrutiny to meet our long-term investment targets. This results in purchasing properties at cap rates between 10% - 15%, yielding double-digit cash on cash returns to our investors.