Hey Reader,

If you've ever thought about investing in a private fund or wondered what that even means, this email is for you. It's also why I'm hosting a free live class on Wednesday, October 1st at 4PM CT.

On September 16th, the Fed raised rates for the first time since 2023.

Same news for everyone. Very different outcomes depending on the fund you're in.

First, let me provide context on what a private fund is and why investors choose them.

Most of us don't have the time, expertise, or capital to buy an apartment building or a portfolio of loans on our own.

A fund pools money from many investors, and a manager puts it to work so the investors can earn income passively.

You bring capital, the manager brings the deals and does the work.

Here's the part most new investors never get told.

HOW the fund buys its deals matters as much as WHAT it buys.

Most private funds, apartments, self-storage, and business acquisitions don't buy with investor money alone.

They borrow most of the purchase price from a bank.

That loan creates a line for who gets paid.

The bank is always first in line, and investors are last.

Investors get whatever is left after the bank's payment.

When rates rise, that bank payment can rise too.

A bigger bank payment means less left over for investors, so investor payments can shrink or stop.

And in the worst case, if a deal can't afford its loan at all, the bank takes the property, and the investors at the back of the line can lose what they put in.

Take a look at what happened to current rates in just the last 30 days.

Every red arrow is an increase.

Some of these loans got half a point more expensive in a single month.

That's the payment sitting in front of investors in those deals.

That's what a rate hike means if you're behind a bank loan.

As a fund manager, this hike gave me 3 things to think about:

1. It confirmed the strategy our fund is built on, which is that owning investment property is riskier than most people realize.
2. It created a chance to buy mortgage notes (the loans behind properties) at better prices. When rates rise, existing loans sell at discounts.
3. It’s a reason for more discipline, not less. An economy that stresses other funds can eventually stress anyone.

Our fund works differently. There's no bank ahead of us, because we ARE the lender.

We collect fixed monthly payments secured by real property, so our investors aren't waiting at the back of any line, and no bank can wipe out their position.

No strategy is immune to the economy, and I'll always tell you that straight.

But being first in line changes everything about how a rate hike feels.

If this is new to you, that's exactly why I'm teaching it live on Wednesday, October 1, at 4PM CT (replay will be provided)

​Save your seat here​

P.S. While everyone is welcome to attend and learn, investment in the fund is limited to verified accredited investors.

Sierra

Educational content only. This email is for informational purposes only and is not an offer to sell or a solicitation to buy securities. Any offering is made only to verified accredited investors through official offering documents. Investments involve risk, including loss of principal.