How Does the Real Estate Debt Fund Work?
When you invest in the SRP Real Estate Debt Fund, you become the bank. Your capital funds loans to property investors who pay interest while they renovate and sell. The fund manages everything while you collect returns. Here is a detailed breakdown of the fund and how it works from start to finish.
- SEC Reg D 506(c)
- Accredited Investors Only
- First‑Position Liens
- Diversified Across 140+ hard money loans
* See Private Placement Memorandum for full terms and exclusions.
Key Terms
6% ($25–99k) or 8% ($100k+); enhanced options at $1M+ with 12‑month lock.
Investor‑friendly 90‑day liquidity request window.*
Monthly compounding available; or elect monthly ACH distributions.
$25,000 initial investment.
First‑position liens on real property; personal guarantees; title protection.
Capital spread across the fund’s loan portfolio at admission.
* See PPM for details and any exclusions. Actual results may vary. Capital at risk.
Risk Controls
- Low leverage, first‑lien collateral with title protection and personal guarantees.
- Diversification across many small‑balance loans and markets.
- Experienced sponsor group with a long operating history in private lending.
- !Real estate markets are cyclical; defaults can occur. Recovery outcomes vary by asset and market conditions.
How It Works
- Loans are short‑term (often ~6 months) rehab and bridge loans originated via Rehab Wallet.
- Underwriting emphasizes borrower experience and asset value (typically 65–75% ARV).
- We hold first‑lien positions with immediate rights and remedies on default.
- Institutional‑grade servicing software and third‑party valuations.
- Monthly cash flow with option to reinvest for compounded growth
Example Borrower Profiles
Experienced operator (5+ yrs) purchasing at a discount; ~$15k rehab; ARV ~70% of value; exit via refi to conventional loan inside 6 months.
Purchase ~$164k with 10% down; borrower funds rehab; ~58% LTV to ARV; exit via retail sale within the term.
Agent‑borrower with strong comps; purchase ~$48k; rehab ~$72k; exit target < 4 months.
The Power of Monthly Compounding
Reinvesting monthly distributions can increase effective annual returns over time. For example, at an 8% stated rate with monthly compounding, the effective annual yield is higher than 8% due to compounding effects. (Illustrative only; not a guarantee.)
Illustrative Snapshot
Stated Rate
Eff. Annual (Comp.)
Initial Capital
Year‑10 Balance*
*Illustrative only; actual performance will vary.
Fund Performance Since Inception
– 2357 loans funded totaling $500 million
– 1.42% default rate
– 100% capital recovery on defaulted loans
– Consistent monthly payments (never missed)
– Zero principal loss to investors since inception in 2019
*Past performance does not guarantee future results.
Sponsorship & Management
LeadOut Invest collaborates with the PassiveInvesting.com team and the borrower‑facing platform Rehab Wallet. Combined, the group brings decades of private lending, asset management, and investor relations experience.
Please direct investment inquiries to LeadOut Invest only.
- Deal flow via Rehab Wallet with local presence in target markets.
- Institutional processes: third‑party valuations, servicing tech, standardized underwriting.
- Alignment: sponsor co‑investment alongside investors.
Frequently Asked Questions
Common questions about investing in our real estate debt fund
How quickly can I access my capital?
The fund offers 2-3 week liquidity windows. Submission for redemptions are currently being returned at an average of 2-4 weeks for investments under 100k. Full terms and any exclusions are detailed in the Private Placement Memorandum.
What happens if a borrower defaults on their loan?
As first-position lienholders, we have priority rights to the collateral. We initiate foreclosure proceedings and recover capital through one of three methods: selling the property as-is to another investor, completing the rehab ourselves and selling at retail, or wholesaling to a qualified buyer. Our conservative loan-to-value ratios (65-75% of ARV) provide substantial equity protection even in declining markets.
What is the minimum investment amount?
The minimum initial investment is $25,000. Investors with $25,000-$99,999 receive a 6% preferred return, while investors with $100,000 or more receive an 8% preferred return. Enhanced terms are available for investments of $1 million or more with a 12-month lock period.
How is this different from a real estate investment trust (REIT)?
Unlike publicly traded REITs that own properties, our debt fund provides loans secured by real estate. We hold first-position liens rather than equity ownership, which offers different risk characteristics. Our fund is a private placement under Regulation D 506(c) for accredited investors only, while REITs are available to all investors. We also offer monthly compounding options and more direct exposure to private lending markets.
What are the tax implications of investing in the debt fund?
Interest income from the fund is generally taxed as ordinary income. You will receive a Schedule K-1 annually for tax reporting purposes. The fund structure may offer certain tax advantages compared to traditional fixed income investments. We strongly recommend consulting with your CPA or tax advisor to understand how this investment fits into your specific tax situation.
Who can invest in this fund?
This is a Regulation D Rule 506(c) offering available exclusively to accredited investors. You qualify as an accredited investor if you have: (1) individual income exceeding $200,000 ($300,000 with spouse) in each of the past two years, or (2) net worth exceeding $1 million excluding your primary residence. We verify accredited status through third-party documentation before accepting investments.
How diversified is the loan portfolio?
Your capital is immediately diversified across the fund’s entire loan portfolio upon admission. We maintain loans across multiple markets (primarily South Carolina and Texas) with varying loan sizes, property types, and borrower profiles. No single loan represents more than a small percentage of the total fund, reducing concentration risk significantly compared to direct lending.
Can I choose between monthly distributions and compounding?
Yes. You can elect to receive monthly ACH distributions or reinvest distributions for monthly compounding. You can switch between these options at any time. Monthly compounding significantly increases your effective annual return over time due to compound interest effects.
What risks should I be aware of?
All investments carry risk. Real estate markets are cyclical and property values can decline. Borrowers may default, requiring foreclosure and asset management. The fund offers limited liquidity compared to publicly traded securities. Interest rate changes can affect property values and refinancing options. Economic downturns can extend loan timelines. This is a private placement with no secondary market. You should only invest capital you can afford to have illiquid for extended periods. See the PPM for comprehensive risk disclosures.
Get Access
Please complete the form to receive the Deal Summary, full PPM and get more information about this opportunity. Also, you may email Mike directly for more questions: mike@leadoutinvest.com
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LeadOut Invest
Austin, Texas
mike@leadoutinvest.com