The company, a crowd funding investment platform recently received 4.1 million in start up funds from well-known investor Steve Cohen.
The 4.1 million dollars was raised by the venture capital branch of Steve Cohen’s Point 72 asset management group. Cohen’s reputation precedes him as the head SAC capital, a firm which paid the highest ever fine for insider trading to the SEC. Alphas Flows founder Ray Strum is not concerned about Cohen’s past, claiming he found Cohen and his team to be of “high integrity.” Strum also helped found Realty Shares, another crowd funding web site, but left to form Alpha Flow in 2015.
The Alpha Flow platform focuses on investment in real-estate loans listed on crowd funding websites. Alpha Flow buys these bridge loans from crowd funding sites and hard money lenders and lists them on its platform where individual investors can buy stake in each loan. Alpha Flow’s flagship product is Alpha Flow Optimized Portfolios. The product aggregates and analyzes different loans and helps investors diversify the loans they want to invest in. The process is automatic and the loans the platform invests in are spread across 29 states, with an average loan to value ratio of 72 percent and target returns of 8 to 10 percent. Strum claims that the default rate on these loans is half the industry standard.
Strum got the idea for Alpha Flow during his time at Realty Shares where he noticed investors “enjoyed picking equity deals one by one but when it came to debt they were happy to hand it off to the platform.” The Alpha Flow platform intends to do just that, by automating investment in real-estate loans listed on crowdfunding web sites.
Cohen’s investment in Alpha Flow will strengthen the group as a commercial lender.
Strum claims Cohen’s investment will not only add strength to the groups balance sheet, but also help them leverage Cohen’s relationships on Wall Street in order to attract institutional investors to the platform. However AlphaFlow is primarily interested in making improvements to its data science team in order to improve their platforms analytical capabilities. Strum claims the investment will help Alpha Flow to achieve its goals of “ providing investors and financial advisors with the resources they need to diversify their portfolios with real estate through cutting-edge technology and data analytics.”
As Alpha Flow and other automated investment platforms improve , it will become increasingly easy for any to become a commercial lender.
The ability of the Alpha Flow platform to automatically analyze hundreds of various loans on crowd funding websites will add to the viability of crowd funding as a source of financing. Crowdfunding sites will able to fund loans at a faster rate without the need to rely solely on small investors. Josh Fritton, CEO of Patch of Land, a real estate crowdfunding website, claims that Alpha Flow and similar platforms will “ help us scale (our lending efforts) significantly.” The question lingers about whether automation will ever be able to replace informed decision making by investment advisors.
Level 4 Funding LLC Private Hard Money Lender
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About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.