Why We Created South Bend 7, LLC | South Bend 7 Private Real Estate Equity Fund
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Why We Created South Bend 7, LLC

Why We Created South Bend 7, LLC

Why We Created South Bend 7, LLC

We created South Bend 7 with the safety of our investors in mind. We grew tired of seeing our friends placed in risky deals in real estate and private lending, and then hear stories of them and others losing their life savings and having to start over from scratch. We watched our friends grow in anger when they hadn’t been paid for over a year, and the property they lent on was never built or completed. 

South Bend 7, LLC was created to provide our friends and investors a safer way to place their hard earned money and watch it grow.

Continuing Education 

Leo and I were at at four day private lending course in San Jose, CA in 2015. We both wanted to further our knowledge base about financing and lending.  While attending, we learned about deal structure, what to stay away from, and what to go for.

It was here where we were able to expand our creative thinking in regards to real estate, investing, and structuring deals. Instead of thinking of a problem in a linear fashion, we are able to solve problems using innovative methods. This better equips us to improve our deals while creating win win situations for all parties involved. 

Sharks Everywhere

At many events we attended, speakers who were presenting taught and emphasized SAFETY and how to keep yourself out of trouble. What we found was that their teaching and words of advice differed tremendously from what the event’s “deal sponsors” were doing.  Once we started speaking to these deal sponsors, we quickly learned that they were practicing the complete opposite of safety.

What really rubbed us the wrong way is that some of our new friends got caught up in their traps and have since lost a decent amount of money.  After taking a closer look at some of these deals, their loss of money was due to the poorly structured strategies these deal sponsors were implementing in their deals. Deal sponsors would give you big promises of 16% annualized return, as well as, 3 to 5 back end and front end points. These potential high returns made their deals sound enticing, but there is always a downside to these types of investments.  In order to produce these higher returns, investors would be placed in second position, which in turn, places investment capital in a more risky position. 

In addition to these risky deals, we also disliked the way deal sponsors would enroll investors. If a deal sponsor found out you had money, you would have many new best friends attached to you at the hip until you became their investor. We saw time and time again, deal sponsors promising investors the world and then hiding behind their contracts as soon as the deal went sideways.

Pivoting

As a result of  watching our friends lose money in risky investments over and over again, Leo and I wanted to create an investment option that places our investors in the safest position possible in real estate. We strive to create a safer environment and decrease risk as much as possible. 

South Bend 7 chooses to buy all of our investment assets using all cash and no leverage. This eliminates the risk of losing an asset in a turning market. No bank can ever take the assets from us because we owe them nothing. Our investors are essentially in the first position in real estate. 

South Bend 7 purchases properties in the midwest. By doing so, this eliminates the volatility or large swings in property value.  Our assets may not appreciate quickly in value; however, they will not lose their value as quickly either. 

Consider California, and how quickly property values rise and fall in Los Angeles. The ranges are astronomical compared to the midwest. Furthermore, by purchasing in the midwest we are able to buy more asset for the same dollar amount.  

Tenants Are People Too

Since we started investing out of state, we have found that some investors will let the investment property sit with tenants and never fix a thing.

Some out of state investors only care about receiving their monthly check from the property manager and won’t ever fix the property for the people living in them. This leads to leaking faucets, bad floors, or even a bad roof.   Not only do these issues create bad living conditions for our tenants, but also can turn into more extensive and expensive repairs down the road.  

Our property managers and tenants know that we fix what is broken and we provide a safe livable space.  

Most of our tenants have our direct contact information. This way, we keep informed of any issues that haven’t been taken care of in a timely matter. This helps create more accountability for everyone involved.

Bettering Communities

Currently, we have our eyes on St. Louis as our new investment city. There are billions of dollars in Federal money going to new constructions of a new FBI/NSA/CIA site in North St Louis.

We have sat down with a current senator, Brian Williams, about moving into his district. Leo spoke about how we can help change the lives of current residents for the better. We are meeting with the Mayor and Congressman later this month to continue the conversation.

These meetings are opening up greater opportunities for South Bend 7. We will continue to focus on the people we serve and we need your help to continue to thrive and grow. We need your help to continuously improve the lives of others. Become an investor to

Contact Leo or myself with the questions you have. You can also fill out our application to request a PPM to become our newest investor! We look forward to speaking with you soon! 

 

Post by Geoff Southworth