Real Estate Funding
Echo Capital would like to introduce you to an alternative to bank financing or hard money loans that allows an investor to greatly leverage their capital, without incurring debt or interest payments. Our greatest strength is in our vast experience in real estate financing, where our expertise at handling complex situations is rare. If you want creativity and determination brought to your deal, Echo Capital has what it takes to get your deal funded. Our approach is to remain fast and flexible, with streamlined decision making and sensible underwriting. With international financial resources and the ability to commit from $2 million to $200 million of equity to any single investment, Echo Capital is the only source you need to fund your real estate acquisitions.
Why Echo Capital? – Today’s commercial real estate investor has fewer and fewer options available to them when it comes to leveraging their existing capital. There is traditional bank financing which becomes increasingly more difficult to obtain due to the crisis in the credit markets. There are hard money loans which, while readily available, still require low loan to value ratios, inflated closing costs and astronomical interest rates. Echo Capital uses a joint venture platform to partner with investors, offering up to 10 times capital investment in a real estate venture over and above the investor’s available capital.
How is a Joint Venture with Echo Capital Structured? Since this is a joint venture between Echo Capital and the investor, the capital invested by Echo Capital is an equity investment that exists jointly with the investor’s capital in a single purpose entity which then maintains an equity interest in the real estate asset. No debt is placed on the asset, no interest is charged, and the cash flow from the property is equitably divided between the investor and Echo Capital, with the investor receiving 30% of the cash flow of the asset for their 12% investment in the asset.
Why Capital Leveraging through Joint Venture? – The most effective way to demonstrate the financial leveraging power of a joint venture is through direct comparison to an all cash purchase and traditional bank financing. What you will see by the following illustration is that leveraging your capital with Echo Capital greatly increases your return on capital deployed, without increasing your risk or exposure. This example shows how an investor(s) with $10,000,000 in existing capital, targeting assets with an average net operating income of 7%, increases their return on investment from 7% on an all cash deal, to 9% using traditional bank financing, or to 18.8% using Echo Capital JV funding.
|All Cash Purchase||1/3 Down Bank Loan||90/10 JV Financing|
|Purchase Price||$10,000,000||Purchase Price||$30,000,000||Purchase Price||$89,600,000|
|Investor Cash||$10,000,000||Investor Cash||$10,000,000||Investor Cash||$9,600,000|
|Financed||$0||Financed||$20,000,000||One Time Deal Set Up Fee||$400,000|
|Loan Rate||N/A||Loan Rate||6%||ECC Funder||$80,000,000|
|Loan Cost||$0||Loan Cost||$1,200,000||Income||$6,272,000|
|Net Income||$700,000||Net Income||$900,000||Loan Cost||$0|
|Annual ROI||7%||Annual ROI||9%||Net Income||$6,272,000|
|Investor (30% Equity)||$1,881,600||18.8%|
|ECC Funder (70% Equity)||$4,390,400||5.5%|
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