The main reasons investors choose hard money loans are:

• The speed with which they can obtain funds in order to not miss out on a deal.

• A profitable outcome with higher costs is much more favorable than missing out on an investment opportunity.

Arc Capital Management has been lending to students and graduates of the Milwaukee REIA Mentoring Program since 2017. These loans were funded with a mix of Arc Capital Fund and private investor funds.

 We want this fund to be available to as many of our investors as possible, so we’ve made the minimum investment $60,000. Investors can invest either with self-directed IRA/401K/SEP or other personal capital. This fund can accept funds of each type from the same investor and be tax compliant.

Yes. Please check with your financial, tax and legal professional as Sponsors do not provide financial, tax or legal advice and the above is not intended to or should be construed as such advice. Your specific circumstances may, and likely will, vary.

Our minimum hold period is one year, which can then be called for return by either party with a repayment timing of 90 days or less. Earned yield will be paid through the return date of invested capital.

With investor funds being used to underwrite loans that have a 4-6 month repayment periods, we need to ensure that we maintain adequate levels of liquidity and funding at all times.

Arc Capital Management only lends to LLCs (not to individuals) and to rehabbers focused on 1 - 4 unit properties. Lending only to LLCs significantly lowers investor risk.

No, based on the structure of the Fund, the associated investments, and how the investments are held. We would, however, suggest confirming this with your accountant if you will be investing with IRA/401K funds.

The fund raises capital for the sole purpose of making real estate loans to Milwaukee REIA members focused on rehabs/fix and flips in the Greater Milwaukee Area. We are only focused on lending on properties in the greater Milwaukee Area as we fully understand this market.

The Milwaukee Real Estate Investment Association (REIA) is a for-profit, member based organization of 550+ real estate professionals/investors that is owned and managed by Aimful Companies (owner of Arc Capital Management).

We began lending to all Milwaukee REIA members in late 2023, after listening to the feedback from members who desired a lending source for Milwaukee REIA members funded in part by Milwaukee REIA members.

Arc Capital Management collects interest, points, and fees from their borrowers on each funded loan, which we use to pay our investors and cover our business expenses. Each loan we fund includes a 4% origination fee (ie: points), lender fees of up to $1,800 (depending on structure of loan), and an interest rate ranging from 12-15% (based on borrower’s experience, property being lent on, and other intangibles).

We pay each investor 1/12th of their 10% interest on the last business day of each month. Your funds are deposited directly into your account through ACH Payment. Interest payments cannot be directly reinvested into the fund.

No.

We take a 1st lien position on each property we lend on. Additionally, we ensure that each borrower has cash reserves/collateral to support monthly interest payments.

We've been mitigating our risk by limiting our loans to 6 months and focusing primarily on value add flips. The refi required loans we fund for borrower have been either with folks we know, like, and trust (but verify!) and/or with borrowers that have a lot of the equity in the acquiring LLC. We know that our cost of capital is about 45% of what we're grossing.

The way we set up the business plan is as follows: First ask, first fulfill - with a max out of 10% in any given quarter. Folks looking to redeem would be stacked up in that order. If we reach a 50% threshold, we will automatically stop funding new business in the fund, and repay borrowers pari passu. The Fund Manager investments in the Fund would be repaid the same as everyone for better or worse.

We prefunded, and update it quarterly, a reserve equal to 5% of the fund amount. The reason our 5% in reserve is less than the amount of loans reported outstanding in the quarterly report is that we have been using Arc Capital Group to lend on deals the fund can't do for lack of money. Arc Capital Group loans are by assignment; whether using my funds or other investor's funds, we recapitalize right away when we assign the notes.

As of April 1, 2025, our first loss fund reserve is around $175k for Q2 (which should equal 6 months of payments to our investors) and would be forfeited before investors were at risk. If we ever use those reserve funds, then we would let the investors know inour quarterly update.

This answer is more about how we mitigate risks with our business plan, but I think that is the only real answer. For context, even during the GFC (2008-2102), Milwaukee dropped around 10% per year for 3 or 4 years. Some loans worked in that time period and traditionally work in any economic or interest rate era. Here our key points:

• Our loans are 6 months and have a 30% spread between what we believe the sale price will be and the loan amount - so there is room for our customers to absorb the loss and pay us off.
• We normally cap our loans at $350k based on a $500k finished ARV. First time homebuyer price ranges in our area are between $150k and $350k even though FHA caps at a whopping $525k (this has doubled since after GFC). Lower priced homes sell; higher priced homes are optional.
• We're holding on to repair funds until the work is being done/paid for.
• While we're not strong real estate financial pros, we do have 20 years in the fix and flip business here- one of our Fund Managers (Eric) still active buying a few houses each and every month. If the houses default, then Eric (through Sell Now Wisconsin) is prepared and able to step into our old borrowers shoes and, if not make a bad deal great, at least extract all the dollars possible out of it.