Flip Slice is an online investment platform that connects real estate investors with experienced house flippers. Our platform provides convenient investment access to thousands of real estate development projects across the country.
There is a wide array of different projects available on the platform. You can discover projects looking to turn average homes into ones with luxury appeal. You can also find projects seeking to rehabilitate distressed homes. You get to choose what type of project you want to help fund as an investor or seek funding for as a borrower.
We provide investors like you with a network of peers, with whom you can pool your capital to fund house flipping projects. This is especially beneficial for larger projects where providing most or all of the capital is either out of reach or too risky.
Put simply, there are three primary benefits for you in using Flip Slice.
We provide borrowers like you with the ability to connect to our network of over 19,000 investors. Instead of spending half your time searching for funding, you can use our platform to showcase your project to thousands of investors at once.
And since we pre-vet deals and borrowers like you, and allow funding increments as low as $5,000, you don’t have to worry about placing all your faith in just one or two investors. There may be 10, 50, or even 100 investors providing smaller amounts of capital, making your dream a reality one slice at a time.
Flip Slice is primarily a technology platform and service that simplifies the financing of residential redevelopment projects. We provide first-level screening and due diligence of each borrower and their projects before they are made available on our platform to thousands of investors.
We have structured our service to be transparent and easy to use for investors so they are able to make informed investment decisions based on available details about each project.
We have also created an efficient investment product called a Borrower Dependent Note which allows us to pool investors’ capital together while keeping the transaction straightforward for both borrower and investor.
Crowdfinancing is when a number of unconnected individuals pool capital together to invest in a collective business venture. It’s a common practice in real estate.
The JOBS Act enabled real estate operators to generally solicit or advertise their raising of capital for their projects. Before the JOBS act, you would have had to personally know a real estate borrower to gain access to their project flow.
We earn our revenue from three primary sources. First, we charge an origination fee (points) for each loan that is funded on our platform. This is charged to the redeveloper and is collected when a loan closes. This fee is fully disclosed on each note and is typically between 2 and 4 percentage points of the total amount borrowed.
The second source of revenue is from an interest rate spread. This is the difference between the interest rate we charge each borrower and the rate we pass through to investors. This amount is fully disclosed in each note and is typically between 1 and 3 percentage points.
Third, we pre-fund each loan meaning we use our balance sheet to originate each loan. This means we’re earning the full coupon of the underlying mortgage until it is fully syndicated to investors.
Flip Slice makes significant effort to reduce the risk of default, including our pre-vetting and due diligence efforts for each deal. Still, due to the inherent risks of real estate investing, a project may go into default and investors may lose their entire investment.
Should a borrower default, Flip Slice will work with the borrower and pursue action based on the specific circumstances of the default, condition of the property, general real estate market conditions, and other factors to most effectively mitigate any loss.
Example actions may include selling or restructuring the non-performing note, selling the subject property as-is to another buyer, completing any in-progress rehabilitation and then selling the subject property, or some other commercially viable option (including foreclosure). During this time, investors may not receive monthly interest payments and the maturity date of the investment may be extended.
Such loss mitigation activities may require Flip Slice to incur expenses. Upon sale of the asset, Flip Slice will be reimbursed for any expenses. Afterward, the remaining funds will be distributed to investors on a pro-rata basis. Details of how this will be handled is further outlined in the Borrower Dependent Note and Private Placement Memorandum, which we encourage you to review with an investment professional.
Investing through Flip Slice in four easy steps:
Step 1: Create an account and complete your profile as an investor.
Step 2: Read the Private Placement Memorandum and associated sample investor documents.
Step 3: Review and diligence the current projects open for funding.
Step 4: Select a project and start investing with a minimum of only $5,000!
We know real estate. We have the best connections with other savvy investors like you — over 19,000 in fact. Plus, we do the upfront legwork of vetting the selection of borrowers and real estate projects presented on our platform.
Plus, we offer a high level of transparency and simplicity in the investment process, enabling you to easily compare deals and their risk-return profiles. With Flip Slice, you’ll be able to easily build a robust, diverse real estate portfolio in one convenient place.
When you invest in a project on Flip Slice, you are investing in a Borrower Dependent Note (BDN). The performance of the BDN aligns directly with the performance of a note that Flip Slice invests in with the borrower of the project you've chosen.
The underlying note is typically a first-position mortgage or similar security. While the note that you purchase is unsecured, the terms of your note give you rights to the proceeds generated from the underlying note that is securing the real estate — hence the name “Borrower Dependent”.
A Borrower Dependent Note (BDN) is a promissory note that entitles the investor to a fixed rate of interest and principal at maturity, with payments to the holder of the BDN being dependent on payments received from the underlying loan between Flip Slice and the property borrower.
Per the note terms, we use the proceeds from the BDN to invest in a mortgage note for the project you have selected. The name “Borrower Dependent” indicates that the performance of the BDN is tied directly to the performance of the underlying borrower note. Your investment will perform in accordance to how the underlying investment performs.
While a Borrower Dependent Note (BDN) is technically an unsecured debt instrument, each debt offering is secured by a first-position lien on the underlying property (the collateral). The reason that BDNs are not technically secured is that the collateral is not pledged directly to the holder of the BDN; instead, it is pledged to the Indenture Trustee under which investors benefit as BDN holders.
To limit the risk of the company’s insolvency, the company has granted an Indenture Trustee a security interest in all of the underlying loans corresponding to the BDNs and the related payments. The Indenture Trustee may exercise its legal rights to the collateral only if an event of default has occurred under the Indenture. A complete overview of these mechanics is provided in the Private Placement Memorandum and associated investment documents.
[COMPANY A] is the company serving as the Indenture Trustee. A key role of the Indenture Trustee, in addition to administrative responsibilities, is to protect the interests of investors in the BDNs. [COMPANY A] and [COMPANY B] entered into an Indenture which is a contract between a debt issuer and a trustee that dictates the responsibilities of each party. In the case of an event of default by [COMPANY B] under the Indenture, the Indenture Trustee will exercise its rights for the benefit of the holders of the BDNs.
[COMPANY B] is a [STATE] limited liability company and wholly owned subsidiary of Flip Slice. [COMPANY B] is the entity that loans money to the borrower and issues the BDNs to investors.
Borrowers are allowed to prepay their loans subject to a minimum number of months of interest, which they are required to pay. In the case of a prepayment, investors will receive at least this minimum amount of interest, in addition to their principal, at the time of prepayment.
BDNs are not liquid securities. There is currently no secondary market for BDNs, and no secondary market is expected to develop in the near future. Investors should be prepared to hold their investments to maturity, or longer in instances where the underlying note may be extended.
Accredited investor is a term used by the Securities and Exchange Commission (SEC) under Regulation D referring to investors who have enough financial sophistication to have a reduced need for the protection provided by certain government filings. Accredited investors include individuals, banks, insurance companies, employee benefit plans, and trusts.
To qualify as an accredited investor as an individual, one of the following must be true about your financial situation:
The investments on Flip Slice are private placements that are made pursuant to SEC rule 506(c) of Regulation D. To qualify for certain filing exceptions, the SEC allows only accredited investors to participate in these types of offerings. Legislation has been passed which will allow for unaccredited investors to participate in the future and the SEC has recently finalized under what circumstances this will be allowed. Currently, these new regulations do not make it commercially possible for Flip Slice to offer investments to unaccredited investors, though that may change in the future.
Under Rule 506(c) of Regulation D, the Securities and Exchange Commission requires companies to take reasonable steps to verify their investors are accredited. We've partnered with a reputable third party to help verify your status through a non-intrusive verification process.
Signing up, browsing projects, and reviewing all other site content is 100% free. While there are no out-of-pocket fees for investors, we do collect a spread on each loan. The interest rate you see for each project is the annual interest rate you collect. We are likely charging the borrower 1-2% points more than that to service the loan. Our spread is disclosed for each BDN we offer.
Investing in real estate is inherently risky. Each project on the platform has different risk factors, which are discussed on each project page. In addition to project risk, there are numerous other risk factors which you should consider prior to investing. A comprehensive list is provided in each Borrower Dependent Note and Private Placement Memorandum. We encourage you to review and consider all risks with your financial and legal advisors.
Most notes offer interest rates between 9 -12%; however, each offering differs based on the understood risks and local market conditions of the specific project.
No, we do not take an equity position in your project.
Our offerings are 100% debt secured by a first-position lien against the subject property, with all costs disclosed up front. We want you to be motivated to successfully complete your project and retain the upside. We only take a first-position lien against the property to secure the note.
Each project is underwritten separately. Most of our projects are funded between 9% and 14%, with 1 to 4 points charged at closing. These rates are a function of local market conditions, the loan-to-value ratio, and the scope of the rehab. Once you submit a project, your underwriter will be able to give you a clearer indication of expected rates.
We can get loans funded in as little as 7 days. It's best to set up your profile and get pre-approved by Flip Slice prior to having a project ready for funding. This will enable us to move directly to underwriting the project.
In most cases, once your project is approved, we will use our own capital to fund your project. We'll then go to the crowd to refinance our position, so we have capital ready for the next loan. In this manner, you can get the capital you need quickly.
We require that you bring at least 20% of the purchase price to the closing table. Depending on the scope of the rehab and your experience, we may ask for a greater percentage.
Our investors want to see that you are committed to each project, and the best way to do this is to require you to take a reasonable equity stake. This also signals to investors that you are serious about seeing the project through to success, increasing their confidence and willingness to lend.
We do have the capability to fund 100% of the construction costs. Similar to other funding mechanisms, we'll likely hold a percentage of these construction funds in escrow and release them as project milestones are met, subject to inspection.
We start with looking at your qualifications. We seek to partner with professional flippers who have a track record of success. You should have completed at least three projects and have a network of contractors, legal professionals, and real estate agents who help you achieve your goals.
Once you are pre-qualified, we look at each project on a case-by-case basis. Each project is different, but we typically look for a few things:
Share as much information as you can. The more the better. This will speed up the decision-making process. You can easily submit all relevant information on our platform.
Growing and maintaining a network of private investors takes far too much time, especially when that time could be spent on developing more projects. Plus, a limited number of available investors means they may not always be willing or able to fund your next project.
Partnering with Flip Slice provides you with a number of benefits:
While we have formalized underwriting processes and procedures similar to a hard money lender, the capital we deploy comes from the “crowd,” which is more in line with a group of private lenders.
As you develop online relationships with our network of private lenders, it is possible that your projects start to see similar economics provided by friendly private lenders.
