ZINC Income Fund II, LLC

Founded in 2006, ZINC Financial (“ZINC”) is a California-based specialty lender that originates private money loans to individuals in the real estate rehab & resale business. ZINC also manages an investment platform that provides exposure to these underlying private money loans.

  • Collectively, the team has originated and serviced over $330 million face value of loans since inception.
  • Across these loans, yields have typically ranged from 8.5% to 12.0%.
  • ZINC is the investment manager of the ZINC Income Fund II, LLC.

Key Facts & Figures

  • 1,034 Loans Funded
  • $330M+ Total Amount Funded
  • $224K Average Loan Size
  • 10.66% Weighted Average Coupon
  • <5% Default Rate*
  • 90% Of Business in California

*As of April, 2020, all experienced default events have been cured successfully. Note: The facts and figures contained herein are representative of ZINC Financial, Inc. Past performance is not a guarantee of future results.

Property Geographic Area Details

AZ, CA, CO, IN, MI, NM, OH, TN, TX, WA

Investment Type

Mortgage Fund

Target Return

8.5% to 12% Annually

Minimum Investment

$100,000

Lien Position

Only 1st Liens

Average Loan Term

9 months

Property Types and Loan Types

Collateral Types

  • Residential Property
  • Commercial Property

Property Types

  • Residential Investment
  • Multifamily

Loan Types

  • Purchase
  • Refinance
  • Fix & Flip
  • Rehab Value Add

Investor Types

  • Individual Accredited
  • Individual Non-Accredited
  • Ultra High Net Worth Investor
  • Family Office

Preferred Return

6%

Commitment Term

24 months

Redemption Notice Period

90 days

Distributions Paid

Monthly

Inception Date

April 27, 2020

Maximum Offering

$50,000,000

Management Fee

0.5%

Performance Split

Class A: 80%/20%, Class B: 65%/35%

Securities Exemption

Regulation D 506(c)

IRA Investment Option

Yes

Mortgage REIT

No

Executive Summary

Investor Benefits: 

  • Core values transparency to investors
  • Maintained a portfolio-wide loan loss ratio of less than ¼% since 2006
  • Deliver attractive yields with 1st lien protection and limited liability

Generally Proven Market Niche:

  • Operate in a specialty asset-backed lending niche for the rehab of distressed, entry-level housing
  • Not a subprime lender; borrowers are actual property investors with good liquidity and credit
  • Operate in a specialty asset-backed lending niche for the rehab of distressed, entry-level housing

Strong Alignment of Interests:

  • Licensed lender, not a loan broker
  • ZINC Principals actively invest with their own capital in the fund alongside investors
  • Principals have invested materially all of their net worth in ZINC Financial

Zinc’s private money loans have historically outperformed cash investments and demonstrated lower risk than stocks. Investments in these loans are secured by first position lien on physical real estate. They offer an element of principal protection not afforded by other investments.


ZINC’s Typical Loan Characteristics

  • Loan Type: Bridge financing for real estate investment properties
  • Property Type: Properties can be of any type (residential or commercial)
    • Usually single-family residences or smaller income type properties i.e. 1-8 unit apartments
  • Geography: Primarily California, with mild presence in other favorable states
  • Experience: Typically have some element of experience in real estate investment, rehab, or construction
    • Understand the basic elements of short term financing, valuations, construction, and local real estate markets
  • Loan-To-Value: Generally loans up to 90% of the acquisition cost not to exceed 75% of the After Repaired Value (“ARV”)
  • Down Payment: Mandatory 10-20% cash down payment by the investor
  • Rates & Fees: Fees and origination points range from 1-3% of the loan amount
    • Interest rates range from 8% to 11%
  • Term: Short duration; often written for 9 months with up to 1 (90-day) extension
    • Extensions not guaranteed
    • Monthly payments are required
  • Rehab Financing: Option to finance up to 100% of the rehab portion
    • If any portion of rehab is financed, the entire rehab budget is escrowed in a “control fund”
    • Tight restrictions on when funds are disbursed subject to certain milestone achievements

Typical Loan Underwriting & Funding Process

Rehab lending requires rigorous due diligence and borrower participation that may exceed the depth of the conventional bank underwriting process.

ZINC ensures that all loans conform with the California Department of Real Estate and Department of Business Oversight Financial Lender License requirements.

General Process for Each Individual Loan:

  1. Borrower to complete submission with supporting documents at Zinc Financial
  2. Borrower receives term sheet and executes; an appraisal is ordered
  3. Receive additional supporting documents from the borrower
  4. Order additional due diligence materials (credit, background check, etc.) and review appraisal
  5. Complete and review underwriting; conduct borrower interview
  6. Confirm closing date; prepare loan documents
  7. Close and fund loan

Stages 2-7 typically take 6-10 days.


Property Value Determination

As the primary underlying security is the real estate itself, it is critical to carefully evaluate the property in which the trust deed is secured.

ZINC performs its own detailed valuation of the underlying property through the following tools:

  • Property Inspection Report
  • Appraisal A.R.V. and As-Is value
  • B.P.O.
  • A.V.M.
  • Zillow
  • RealQuest
  • Neighborhood Report
  • Loan IQ
  • Agent First Comps
  • Google Earth Color with pin market
  • Google Street view map
  • Transaction History
  • Property Profile
  • A.R.V. Validation

Servicing & Portfolio Management

Fully In-House:

  • All loan investments are serviced in-house by ZINC Financial
  • Utilize premier private money loan servicing software, The Mortgage Office
  • All loans are onboarded within 24hours of funding

Detailed Tracking:

  • Loans have a 75-day timeline to complete rehab
  • Every 30-days a status update is required
  • Borrower to provide color pictures, paid receipts, proof of install, etc.
  • Field site inspections conducted by 3rd party inspection company

Risk Management:

  • Regular correspondence with borrower
  • Foreclosure proceedings are generally initiated at 45 days past due
  • Foreclosures are typically concluded within 105 days from inception at which time we secure the property, conduct process for disposition

Best In Class:

  • ZINC believes through its in-house stringent monitoring and reporting process it provides best-in-class portfolio management capabilities and ultimately protection of investor principal
  • ZINC estimates it will initiate foreclosure against 4% of its portfolio and will take back 2% of all properties loaned upon

Why ZINC Financial?

  • Market Niche In Rehab Financing: Market niche in rehab financing fulfills a much-needed capital source for investors that are unable to borrow from traditional banks
  • Two Decades of Experience: Leadership owns two decades of experience in real estate investment and lending, presiding over $300 Million of private money rehab loans
  • Underwriting Guidelines: Strict valuations, underwriting guidelines, and rigorous fraud protection underpin every transaction
  • Demonstrated Above-Market Returns: Demonstrated above-market returns, collateral protection, and a strong partner with significant capital contribution are a proven platform of capital preservation and wealth creation

Summary of Key Terms

The Fund and Its Objectives: ZINC Income Fund II, LLC is a California limited liability company. The Fund has been organized to conduct the following business: to make, purchase, originate, fund, acquire and/or otherwise sell loans secured by interests in real or personal property located across the United States with a primary focus in CA, WA, AZ, NM, TX, CO, MI, IN, OH, and TN. The Fund may also manage, remodel, repair, lease and/or sell real properties acquired through the Fund’s lending activities, including but not limited to, properties acquired through foreclosure and real estate owned (“REO”) properties.

  • Target Fund Size: $50,000,000
  • Minimum Subscription:
    • Class A: $500,000
    • Class B: $100,000
  • Fund Term: Evergreen
  • Lock-Up Period: 24 months, subject to 90 days notice
  • Asset Management Fee: 50 bps of the Assets Under Management, calculated and payable monthly
  • Preferred Return: 6%, annualized cumulative non-compounding payable monthly
  • Excess Cash Distribution:
    • Class A: 80%/20% (Class A/Manager)
    • Class B: 65%/35% (Class B/Manager)
  • Servicing Fee: 1.0% servicing fee

Leadership Team Biographies

Todd Pigott, President

Todd is passionate about his involvement in the private money equity space. Previously, over an 18-year period, Todd held the position of President of one of the largest interior and exterior maintenance companies in the Central California Valley employing over 400 individuals. Sold in 2006 to a private equity firm from New York, Todd now devotes his full-time into ZINC Financial and its Affiliates.

To date, the Manager and its Affiliates have originated over a billion dollars in private money loans, with a loss ratio of less than one-quarter of one percent (0.25%). The Fund and its Affiliates oversee, originate, fund, manage, or invest in millions of dollars in private equity loans on a consistent basis.

John Evangelista, Chief Financial Officer

John joined the ZINC team in August 2012. John has over seven years of experience in accounting, financial and data analysis, and oversight of private money real estate loans. He acquired his license as a certified public accountant in the state of California in February 2012.

Prior to joining ZINC, he practiced in public accounting for six years at CBIZ & Mayer Hoffman McCann, P.C., a national independent CPA firm, with his primary focus being on litigation and valuation services. In this capacity, he performed analyses on hundreds of litigation engagements involving marital dissolutions, fraud, and fund tracings.

John is a member of the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants.

 

Note: Please see Fund`s confidential private placement memorandum for all the Terms and conditions of the offering. For any inconsistent remarks, the private placement memorandum governs.

Zinc Financial Inc.

559-540-2455

Office Locations

7815 N Palm Avenue, Suite 200, Fresno, California, 93711
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