Why Pledge Funds Are Becoming More Popular Than Blind Pool Funds

It’s a challenging environment for fund managers. Investors want more control over their investment decisions and to “know” exactly what they are investing in. Investors also want good overall returns while maintaining some control over what they are investing in. For these and other reasons, the Pledge Fund is exploding in popularity over the more traditional Blind Pool Fund.

Old concepts become new again, particularly in the investment world. Pledge Funds are an old concept that is finding increased usage in the real estate investment world. Investors are embracing the control and power that Pledge Funds give them over Blind Pool Funds. To understand just why they are becoming more popular, it’s important to know what they are and the advantages they have over Blind Pool Funds.

Pledge Funds Defined
Pledge Funds are private equity/debt funds that are set up to invest in projects within a very limited set of parameters. The managers of the Fund find projects to invest in that meet the pre-determined set of parameters. Investors are given information on the project and its expected returns. Projects are funded on an individual per deal basis. If an investor doesn’t want to fund a deal, they don’t have to, even if every other investor in the fund invests in the project.

VIEW THE PLEDGE FUND!

Login to view details about the ReV Single-Family Pledge Fund!

Pledge funds are seemingly a 21st-century investment vehicle, but a form of the pledge fund has existed for centuries. In fact, the railroads were built with a form of this fund. It was only recently that investors chose to turn over all investment authority over to fund managers.

It’s clear that Pledge Funds offer advantages when it comes to making investment decisions. These advantages are becoming even more pronounced in industries like real estate. Pledge Funds put decisions in the hands of individual investors, but the actual managing of the investment stays with the fund managers. It’s a powerful advantage for those who want an active role in their investments without the day-to-day management work.

Blind Pool Funds Defined
Blind Pools Funds for investors to investing private equity and debt fund where investors invest in the Fund and a fund manager has wide latitude in determining what investments are made and when they are made. Investors in the blind pool fund do not green light or red light investments as these decisions are made solely by the fund managers.

Blind Pool Funds became popular in the 1980’s and 1990’s with the rise of venture capital and angel investors. While they are still quite popular, some investors began to shy away from them after the dot-com bust. Many Blind Pool Funds had made investments in ideas that were never destined to earn money and some investors lost heavily. A good example is the spectacularly famous flop that was Pets.com.

The obvious advantage of Blind Pool Funds is that decisions are made by the fund managers. The fund managers know that they can throw the weight of the fund behind any project they feel should be backed. Investors don’t need to worry about investment decisions because they are made by skilled fund managers.

Pledge Funds vs. Blind Pool Funds
Pledge Funds have the distinct advantage of putting investment decisions in the hands of the individual investors. They are not bound to invest in what the majority of the investors in the fund want to invest in. If the majority of the investors want to invest in a new shopping mall, those investors who feel there is a shopping mall surplus can choose to abstain for investing in the project.

Pledge Funds can easily limit themselves to certain real estate sectors, like single-family real estate, making the investment parameters naturally narrow. Individual investors understand what the projects are doing and what the expected returns are. They know whether an investment is a good choice or not and can choose to pledge their funds accordingly.

VIEW THE PLEDGE FUND!

Login to view details about the ReV Single-Family Pledge Fund!

Investors without the time to manage or determine what investments to make are a good candidate for a Blind Pool Fund. It’s a set it and forget it method of investing that can solely focus on fund returns. Investors may also fall into this category if they don’t have access to investment information or support.

It is possible for Pledge Funds to provide the right kind of investment information support to these investors so that they feel more comfortable pledging or not pledging an investment. Just because a fund allows an investor to make a choice, it doesn’t mean they are forced to make a choice. The fund manager can give advice on real estate investments. It’s this flexibility that is making pledge funds a popular choice.

As the real estate investment market continues to change, investors should definitely look at the Pledge Fund as a popular alternative to the traditional blind pool fund. It may provide just what investors want and need when taking control of their investment choices. With the right kind of management, they can produce above average returns while providing investors with a good choice of real estate investment vehicles.

This is why RealtyeVest has chosen to focus its first ReV Pledge Fund on single-family homes in the hottest real estate markets in the United States. In the right market, single-family investments are predictable and offer returns ranging from 10% – 14% annualized yield. The ReV Single-Family Pledge Fund focuses on debt investments with limited up-side profits participation in Northeast Florida that are secured with a 1st lien mortgage. This short-term investment fund allows investors to pre-fund quality investments, securing their position in Northeast Florida’s highly competitive real estate market. The ReV Pledge Fund was designed for both novice real estate investors looking for a simple and seamless way to invest in single-family buy-and-sell projects as well as accredited investors searching for a great starting place with quick turn arounds. If you fall into either of these categories, the ReV Single-Family Pledge Fund is a great solution for you!

The post Why Pledge Funds Are Becoming More Popular Than Blind Pool Funds appeared first on RealtyeVest Crowdfunding News.

Leave a Reply

Your email address will not be published. Required fields are marked *