Patch of Land provides pre-funded real estate transactions with a low minimum investment required. In addition, when vetting each deal, the company employs a detailed due diligence process.
Is this platform suitable for you? Time to write reviews!
This review will go over Patch of Land to see if it really is the best real estate platform out there.
You’ll learn whether real estate is the right online business for you.
And at the end, you’ll find answers to some of the most frequently asked questions regarding Patch of Land and real estate in general.
But most importantly, you’ll see the exact system many others have used to build their own internet marketing business to over $40,000 a month in mostly passive income.
This system made them swear off real estate for good, because it uses some of the same skills but in a much more powerful and profitable way!
Patch of Land (PoL) is a lending platform for real estate investors that works on a peer-to-peer basis. The firm connects institutional and accredited investors with borrowers looking for cash to complete fix-and-flip real estate transactions.
Patch of Land’s mission is to bring the private real estate lending business into the internet age by utilizing technology and data to underwrite projects that traditional lenders would not touch. This technique enables it to offer investors access to short-term investments with high yields that are secured by real estate.
Patch of Land employs typical underwriting techniques, such as arms-length third-party assessments with a full walkthrough, an assessment of the local market, the performance of that specific asset class in that market, and the borrower’s risk profile.
To mitigate risk, PoL works with skilled developers and limits investment. The following are the investment guidelines:
While each property and project is different, Patch of Land’s investments begin to collect interest right away and are paid back to investors monthly or quarterly, with a balloon payment of leftover principal and interest at loan maturity.
Many real estate crowdfunding platforms will host a project & wait until it is fully funded before proceeding with the developer’s rehab work.
This is a disadvantage since investors who have contributed funds to these potential projects must now wait for the project to be completely funded while their money stays dormant in a nonperforming investment.
Patch of Land’s business model is to pre-fund all projects before they are offered to investors. They arrive at the closing table with the monies necessary to complete the transaction.
They are so confident in their underwriting criteria and process that they commit 100% of their resources to the projects they approve—and get the borrower the funds and approval to move forward on the same day.
Patch of Land was established by two brothers, e-commerce entrepreneur Jason Fritton and software developer and system architect Brian Fritton. Paul Deitch, formerly of Oaktree Capital Management, joined the company as CEO in April 2016.
Deitch has more than 25 years of experience in financial services, including risk management, finance, product development, and compliance.
Deal Transparency: PoL, like most other real estate crowdfunding sites, publishes detailed information and records on each project before and after the crowdfunding process.
This enables investors to conduct their own due diligence ahead of time and receive continuing support, information, and updates both before and after investing.
Short-Term Debt Investments: PoL only funds short-term debt investments, which are regarded safer than equity positions in real estate since they are first in line for repayment if a property loses value.
The majority of projects include short-term transactional real estate debt for repair, refinancing, and bridging loans.
Pre-funded loans: PoL pre-funds all transactions. The borrower receives funds upon closing and can begin work on the project immediately. The day an investor invests, he or she begins earning interest.
IRA Accessibility: You can invest in Patch of Land offerings if you have a self-directed IRA. You cannot invest using IRA funds kept with a regular broker at this time.
Terms: The majority of offers are for 12-month residential loans. Some commercial loans are for 18 months, and PoL is introducing a 36-month mid-term loan package.
Fees: Neither investors nor borrowers are charged an annual fee. PoL collects between 1% and 2% of the interest distributions made by borrowers. PoL does not impose transaction or campaign success fees, as do many other crowdfunding platforms.
They operate much like a traditional loan marketplace, with transaction fees for property appraisal, closing costs, and origination points already built into each contract published on the platform.
Non-U.S. Residents Can Participate: While other P2RE sites exclude non-U.S. citizens, PoL welcomes investors from anywhere in the world as long as they have a U.S. bank account and are accredited by the definition of their country of origin.
Due Diligence and Underwriting Procedures: PoL uses traditional underwriting procedures, such as arm’s-length third-party appraisals that include a full walkthrough and value analysis, as well as pulling comparable data and metrics to evaluate the local market, the performance of that particular asset class in that market, and the borrower’s risk profile.
Patch of Land allows investors to invest in borrower payment-dependent notes (BPDN). These promissory notes allow investors to get a fixed interest rate for the duration of the BPDN as long as the borrower makes timely payments on the underlying loan with Patch of Land.
The BPDN grants investors interest in the underlying property, but they do not hold equity or title to it.
BPDN interest rates vary for every loan, but typically start at 7.5 percent and can reach more than 10 percent. Meanwhile, loan periods range from one to twelve months, with a six to eight-month average forecast, depending on how quickly a developer completes a project.
While BPDNs are backed by underlying real estate, they are not guaranteed investments. As a result, a BPDN investment could result in a loss.
Patch of Land’s performance has not been publicly updated since the third quarter of 2018. At the time of the report, the company had originated over $750 million in loans and returned over $185 million to investors. They’d earned a 10.65% average return on their investment.
Patch of Land’s co-founder, CEO, and executive chairman is Jason Fritton. When the SEC adopted Title II of the JOBS Act in 2013, he founded the company.
His ambition was to transform real estate financing into a technologically enabled, data-driven, and easily accessible marketplace for investors and borrowers. Jason started and grew a telecoms design and procurement company before starting Patch of Land, and he was the director of digital marketing for a national retailer.
Patch of Land sources loans on its platform from real estate developers and hard money lenders. Furthermore, it enables potential borrowers to submit requests. Each project is subjected to thorough due diligence by both the corporation and outside parties.
Except for Arizona, Nevada, Utah, South Dakota, Idaho, and Minnesota, the company presently takes projects from all states. It does not accept projects from outside the United States.
Patch of Land’s BPDNs are only available to institutional and accredited investors.
Each BPDN requires a $5,000 minimum investment.
Patch of Land may charge investors a fee ranging from 0% to 3% of the loan amount to cover the costs of administering and servicing the loan, as well as compliance charges. If a loan defaults, the company will levy fees to third-party suppliers such as lawyers.
A typical BPDN on Patch of Land will have a duration of up to 12 months and will pay monthly interest to investors. Once an opportunity has been fully funded, investors begin earning interest. Payments are normally made on the 15th of each month for the initial monthly payout.
While most loans have a 12-month term, borrowers often repay loans in six to eight months because that is the normal length of a restoration project.
As a result, investors can reasonably anticipate to receive monthly interest payments for the next six to eight months, followed by a final balloon payment of the remaining principle and interest.
These returns, however, are based on the borrower not defaulting on the loan. Patch of Land works with borrowers to design solutions, such as extending the loan term, in the event of a default. Other alternatives include seizing ownership of the property and completing the project, as well as foreclosure and liquidation.
If Patch of Land is forced to take the latter approach, investors may lose some of their initial investment in the property if the net proceeds are less than the loan’s worth.
Patch of Land BPDNs are illiquid investments because there is no secondary market for them. As a result, investors must hold them until repayment. Loans are typically for a brief period of time, with the average loan repaying the whole debt in eight months.
However, if a borrower fails and Patch of Land has foreclose on the loan, some loan repayments can take 18 months or longer.
Patch of Land’s BPDNs are secured investments with a first lien position in the underlying property serving as collateral. While this makes them a less dangerous investment than an equity holder, it does not mean they are without risk.
Borrowers will occasionally fail on a loan owing to construction mismanagement or a downturn in the real estate market. As a result, an investor’s principal invested in a BPDN may be lost or minimal principal loss due to poor job underwriting.
However, because Patch of Land demands an 80 percent pre-repair loan value and a 65 percent ARV, there is some margin of safety to assist safeguard against losses. As a result, unless the borrower committed fraud, it is unlikely that an investor would risk a total loss of cash in a BPDN from Patch of Land
However, there are certain safety issues about the platform. The company’s website is not updated on a regular basis, and it has been entirely unresponsive to requests for performance data. As a result, investors should proceed with caution while dealing with Patch of Land.
Yes, you can make money with real estate investments.
But, there’s a lot that comes along with real estate that many people struggle with.
Now, don’t get the wrong idea…
It’s not impossible to make money with real estate, but if you’re gonna put in the amount of grueling work to do this business (which, trust us, isn’t easy), you might as well bring in some REAL money while you’re learning the ropes.
The program that helped skyrocket many online businesses to over $40,000+ per month is so simple that making money really does become second nature.
Patch of Land is not a scam. They make sure that that fund invested by investors are paid back.
However, they have had issues with their clients as you can read from this Trustpilot Review:
I generally do NOT write reviews, but I really want to do good by warning other potential investors to NOT invest with Patch of Land. My experience with Patch of Land is a particularly bad one.
Of the 10 loans I have invested with Patch of Land, 6 have been in default for more than 4 years. When I called them, they assured me that there would be no loss of principal as their “contracts are iron-tight.”
All was going well as I was promised no or minimal principal loss until recently I was issued a “Non Performing Loan Reconciliation” where I lost over 60% of my principal with no interests earned for 5 years.
I’m typically not an emotional person, but I was extremely depressed and infuriated when I saw this. When they sold off my loan to a 3rd party, they sold it for 70 cent on a dollar. However, they made sure that THEIR portion of the fund invested got paid off in full (meaning they suffered no principal lost). To add salt to injury, they made a killing orchestrating the sale of the non-performing loan they did a such a poor job underwriting in the first place.
If any other investors have suffered big losses as I have, I am interested in filing a class-action lawsuit against Patch of Land.
Now, it is entirely possible to build a profitable, successful real estate business… But there are better ways to build a business other than with real estate, in my opinion.
Because unlike Patch of Land, it actually provides real proof of real success from real people as recently as a few days ago.
Yes, Patch of Land is a legitimate organization that allows investors to invest in real estate-backed notes.
But, when it comes to building a business, you have plenty of options.
And even if you’re dead set on becoming a real estate investor, you’ve got way better options than Patch of Land, in my opinion.
Keep in mind, we don’t get paid to promote any of the programs we review. We personally think real estate is a great business model, but you could end up leaving way too much money on the table.
Where this Patch of Land falls short is in scalability. Because in order to make a good amount of money with real estate, you have to own several different houses.
And who has that kind of capital to start?
But what if you went local?
With Local Lead Generation, you will be getting service requests from multiple sites at every minute of the day from people who are willing to pay a lot of money for what you can provide them.
I was watching a YouTube video once where the host made a comment that it isn’t about making a lot of money from one website… it’s about making a little bit of money from lots of different websites.
So, think of it this way….
What if you could have streams of investment income where you operated 10 rental units that you could charge anywhere from $750-1,000 per month?
That’s $7,500-10,000 per month in passive income!
What If You Invested Into 100 Rental Units?
But instead of spending $Millions to build houses or apartment complexes… you spend a couple hundred dollars to build websites.
You then get those websites ranked in the search engines for specific home-based services that customers are searching for.
Next, you offer your lead generation system to local business owners who are looking for customers and are willing to pay you for their information.
You’ve just created a Digital Real Estate Investment Empire that is potentially earning you 4-5 figures in PASSIVE INCOME on a monthly basis without spending a single dime on ads.
With conventional digital real estate, you have to compete with thousands, if not millions of others who are selling the SAME product to the SAME customers.
Once the training program is completed you will also have access to a Facebook group much better than the Patch of Land group in our opinion. This group is much more active.
Unlike Patch of Land, where you’re profiting maybe $250 per property, you could be getting 5-10X THAT.
With Local Lead Generation, the competition is virtually nothing and your profit margins are 85-90%.
Now, I could go on and on, but I’m sure you have tons of questions about how to create Digital Real Estate assets and start building YOUR digital empire!