Smooth Out Retirement Income: How Private Debt Aims for Consistent, Predictable Cash Flow.
For Baby Boomers shifting from saving to spending in retirement, the primary goal becomes generating reliable income to cover living expenses. The challenge lies in finding investments that provide consistency without the gut-wrenching volatility of public markets.
Private debt strategies, particularly Asset-Based Lending (ABL), are fundamentally designed around income generation. The core return comes from contractually obligated interest payments made by borrowers. A key feature attractive to retirees is the prevalence of floating-rate loans. Unlike fixed-rate bonds that can lose value when interest rates rise, these loans adjust their rates upward, potentially increasing income distributions to investors during inflationary periods or when rates climb. This acts as a potential hedge against inflation eroding purchasing power.
Furthermore, ABL often involves collateral (like leases or receivables) that naturally produces steady cash flows, supporting regular income distributions. Investor Underwriting focuses on ABL strategies structured to potentially deliver consistent income. We aim to structure funds that provide regular distributions, potentially monthly, aligning with the cash flow needs of retirees.
By prioritizing loans with strong collateral backing and often floating rates, we seek to create income streams that offer resilience against market fluctuations and rising rates. Our goal is to provide Baby Boomers with an investment avenue geared towards the predictable income essential for retirement security. The mechanics of generating stable income through private debt, including floating rates, are key considerations for retirees.
Example Offering: The Southern Legacy Real Estate Investment Fund
To address the need for consistent retirement income and capital preservation highlighted for Baby Boomers, Investor Underwriting offers specific fund options aligned with our asset-based lending philosophy. One such example is the Southern Legacy Real Estate Investment Fund LLC.
This fund specifically targets the generation of stable, predictable income by investing in first lien mortgages on single-family homes, primarily in the Southern US. Key features designed with retiree concerns in mind include:
- Income Focus: Aims for consistent monthly cash flow with a 7% preferred return target*.
- Security Emphasis: Loans are secured by tangible real estate with a maximum 70% loan-to-value, creating a significant equity cushion to prioritize capital preservation, reflecting the security principles of ABL.
- Investor Alignment: Features like zero asset management fees* and a 25% annual profit distribution* aim to maximize investor returns.
- Transparency: Includes annual third-party audits for independent verification.
While offering potential stability and income less correlated with public markets, investors should note the trade-offs common to private investments, including specific liquidity terms such as a 12-month lock-up period and quarterly redemption limits with notice, as discussed previously. This fund is designed for accredited investors seeking income and understanding these characteristics.
Ready for potentially more predictable retirement income? Discover Investor Underwriting’s ABL approach.
*(Returns are not guaranteed. All investments involve risk. Please refer to the Private Placement Memorandum for full details and disclosures.)