Many investment properties are financed with mortgages. When Realbricks acquires a home, the entity that owns the property holds the title free of mortgage debt at the time of the offering. Learn how this ownership structure works and what it may mean for investors.
When evaluating a real estate investment, prospective investors often focus on the property’s location, condition, rental income potential and local housing market. Another important consideration that may be overlooked is how the property is financed.
Many residential rental properties are purchased using mortgage financing. In those cases, the property-owning entity has debt obligations to a lender, and the lender generally holds a lien on the property until the loan is repaid. Financing with debt, otherwise known as leveraging, is a common practice in real estate and may increase both potential gains and potential losses depending on market conditions and property performance.
Realbricks uses a different approach.
When Realbricks acquires a home, the entity that owns the property holds the title free of mortgage debt at the time of the offering. This structure means there is no mortgage lender with a lien against the property. As a result, the property-owning entity does not have ongoing mortgage payments, an expense that might otherwise be paid using any positive rental income that a property would generate.
Investors purchase ownership interests, or shares, in the entity that owns the property rather than purchasing a direct ownership interest in the underlying property. The property serves as the primary asset of that entity, as described in the applicable offering documents. Investors can purchase shares in available Realbricks offerings knowing that the property was acquired without leverage.
No mortgage debt at the property level. Because the property-owning entity does not have mortgage debt, rental income is not used to make principal and interest payments on a mortgage loan.
Instead, rental income may be used to cover operating expenses such as property management, maintenance and repairs, property insurance, taxes, reserves, and other obligations as detailed in the offering documents. If net operating income remains after these expenses, the entity may make distributions to investors. Any distributions are determined in accordance with the offering documents and are not guaranteed.
Invest without leverage risk. Leveraged properties may involve investment risks that are specifically associated with mortgage debt, including refinancing requirements or changes in borrowing costs related to that financing.. Properties associated with current offerings on the Realbricks platform are acquired without mortgage financing. As a result, the property-owning entities do not have mortgage-related obligations.
Eliminating mortgage financing does not eliminate investment risk. Real estate investments remain subject to a variety of factors, including vacancy, tenant turnover, maintenance and repair costs, insurance expenses, changes in property values, local market conditions, regulatory changes, and other operational risks.
A Long-Term Ownership Structure. Realbricks has chosen a property ownership structure that does not rely on mortgage financing for its current offerings. This approach reflects the company's current operating model and guiding principles, promoting access to disciplined, long-term real estate investing for everyday Americans.
Realbricks’ mission is to help more people participate in real estate investing by providing transparent, accessible investment opportunities designed to support long-term financial goals. Fractional real estate investing enables investors to participate in residential rental property investments without having to purchase an entire property. Through Realbricks' SEC-qualified offerings, investors purchase ownership interests in entities that own residential rental properties. Investments start at $100.
Realbricks is a Midwestern company with Midwestern values. The Realbricks platform emphasizes long-term ownership, transparent property information, and a straightforward investment structure rather than short-term trading activity.
Explore the current offerings on the Realbricks marketplace or review our offering circular for the terms, risks, and disclosures associated with each offering.
Disclaimer: Investing in real estate involves risks, including the potential loss of capital. This content is for informational purposes only and is not intended as investment advice. A debt-free property structure reduces certain risks but does not eliminate the risks of real estate investing, including vacancy, maintenance costs, and changes in property value. Distributions are not guaranteed and depend on a property being tenanted, collecting rent, and generating net operating income. Investors should perform their own research and consult with financial professionals before making investment decisions.
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Property information shown has been provided from various sources, which can include the seller and/or public records. It is believed reliable but not guaranteed and should not be relied upon without independent verification.
Disclaimer: Images, Information and Floor Plan and Measurements are approximate and are for illustrative purposes only. We make no guarantee, warranty or representation as to the accuracy and completeness of the floor plans, measurements and or any information provided. You or your advisers should conduct a careful, independent investigation of the property to determine to your satisfaction as to the suitability of the property for your space requirements. All pricing and availability is subject to change. The information is to be used as a point of reference and not a binding agreement.
