AlphaFlow Optimized Portfolios   “Know what you own, and know why you own it.” – Peter Lynch This week marked a big milestone for us here at AlphaFlow, as we hit one year since launching AlphaFlow Optimized Portfolios! Our vision at AlphaFlow is to unlock the world’s opaque markets, and we do that by making it easy to invest in previously inaccessible asset classes. After launching the industry’s first multi-lender funds in 2016, AlphaFlow Optimized Portfolios (or “AOPs”) were about taking the next step and giving clients an unprecedented experience: an automated real estate investment platform. You make one investment, and we build you a diversified portfolio of real estate bridge loans. It’s that simple. One year later, the platform is working very well. Transparency is one of our core values and so we wanted to share some portfolio statistics and insights. To start, here is a bit about our last 12 months:

AlphaFlow Optimized Portfolios (as of 3/5/18)

AOP Stats   The missing statistics are our actual yield on our investments and total AUM. To produce our offering, we needed to become a registered investment advisor with a fiduciary obligation to our clients, meaning we’re bound to put your interests ahead of our own. Being a regulated entity comes with restrictions though, including those around showing performance, so we unfortunately can’t share these metrics. That said, our fiduciary duties align nicely with our culture of credit over volume. Our underwriting, led by our Director of Investments, Miles Deamer, has been conservative. The results speak for themselves: after one year our delinquency rate* is an astonishingly low 1.66%! To illustrate, you can see that our LTV actually decreased over time:  

Daily Weighted LTV

Daily Weighted LTV Our investments have been spread across the country, providing clients with tremendous geographic diversification:  

Current AOP Geographical Diversification

AOP Geographical Diversification   Our clients have been pleased, perhaps demonstrated best by the additional capital they’ve added to their accounts after launching their AOP. In fact, the average annualized growth rate of a portfolio after it’s been opened is 69% (ie clients are almost doubling down on their initial investment after experiencing the platform). Real estate bridge loans offer very attractive returns, but we’ve experienced the immense challenges that come with this asset class as well. Our 90%+ rejection rate tells you how much work we think it takes to find good investments. In addition, “cash drag” can absolutely kill returns. These loans typically have 12 month maturities, but we’ve found the actual average duration to be closer to 6.5 months and so making sure your money isn’t just sitting in your account and dulling your returns is critical. Our auto reinvest feature, which almost 80% of our clients use, makes this effortless and usually reinvests repaid capital within a matter of days. As we look to the next year, our focus is on a few areas: What else would you like to see? You can always reach me and the wider investment team directly at ray@alphaflow.com and invest@alphaflow.com, respectively. It’s been an incredible first year and we’re excited as we embark on the next step in our journey!  
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    *Delinquency rate defined as dollars invested in loans that are 60+ days delinquent on payment, divided by total active dollars invested.

About the author:

Ray Sturm, CEORay Sturm is a leading entrepreneur in financial technology, and is currently the CEO of AlphaFlow. Prior to launching AlphaFlow, he founded RealtyShares, one of the P2P industry’s top platforms for real estate investing. His early career in finance included investment banking at Bear Stearns, restructuring at Lazard Frères and private equity at CCMP Capital.

Ray has a BBA-Finance from the University of Notre Dame and a JD/MBA from the University of Chicago.

Legal Information and Disclosures This memorandum expresses the views of the author as of the date indicated and such views are subject to change without notice. AlphaFlow has no duty or obligation to update the information contained herein. Further, AlphaFlow makes no representation, and it should not be assumed, that past investment performance is an indication of future results. Moreover, wherever there is the potential for profit there is also the possibility of loss.  This memorandum is being made available for educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services or an offer to sell or solicitation to buy any securities or related financial instruments in any jurisdiction. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources. AlphaFlow Advisor, LLC (“AlphaFlow”) believes that the sources from which such information has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumption on which such information is based.  This memorandum, including the information contained herein, may not be copied, reproduced, republished, or posted in whole or in part, in any form without the prior written consent of AlphaFlow.  AlphaFlow Dashboard   At AlphaFlow, our mission is to create the most passive, diversified and transparent real estate investment product on the market. While our clients love being hands-off in selecting and managing investments and rebalancing their portfolios, they are very hands-on when it comes to understanding how their money is put to work and how their portfolios are performing.  We are excited to share the redesigned AlphaFlow Optimized Portfolios dashboard. Many improvements were made and are largely based on client feedback. With this redesign, we have laid the foundation to continually improve our reporting and bring complete transparency to client investments.

The AlphaFlow Optimized Portfolios Dashboard

Key changes to the AlphaFlow Optimized Portfolios Dashboard include more detail around earnings, portfolio value, and optimization metrics. Let’s take a look at each:

Earnings

With the new earnings card, you get complete transparency into what you’ve been paid and how much you’re accruing. Each day you can check in to see exactly how much you’ve earned. We also provide a visualization of earnings over time so you can see how your money grows. Scrolling over the graph shows you exactly how much your earnings were on that particular date, and you’re able to adjust the date range to see your earnings over time.

Maturity Schedule

AlphaFlow Maturity Schedule

With the new maturity schedule, you can see when the notes in your portfolio are scheduled to be repaid, giving you more visibility into your projected principal repayments*.  

Portfolio Value

AlphaFlow Portfolio Value

With the portfolio value table, you get a comprehensive overview of essential investment data. Every dollar of your portfolio is clearly laid out: total invested capital, cash earmarked to be invested into new notes, cash reserves (returned principal and earnings available to be withdrawn or reinvested, your choice!), and unreturned matured allocations (principal repayments that are being processed).  

Optimization Metrics

Optimization Metrics See how your optimization metrics have changed on a daily basis with the Optimization Metrics card. This card shows your portfolio’s average LTV, net interest rate, geographic diversification, and how many notes you’re currently invested in.

Investment Footprint

 Investment Footprint Though the investment footprint is not a new feature of the AlphaFlow Optimized Portfolios dashboard, it is our clients’ favorite visualization tool! In a single shot, you can see where your loans are allocated across the country. The map does more than aggregate loans into an MSA (metropolitan statistical area). You can zoom in and see where the loan and underlying property is located. Click on the pin to open the loan details. For a comprehensive, loan-by-loan summary, tab into Allocated Notes where you can also export the list of notes as an Excel file.

What’s Coming?

When we launched  the industry’s first automated real estate investment platform earlier this year, we knew that metrics and data would be a key to our clients’ experience of a new investment product: actively managed, broadly diversified, passive income-producing personal portfolios without the high fees and high minimums of traditional real estate investing. We are committed to providing the most transparent, thorough and valuable data and metrics. Open dialogue with our clients about what they need, and want to see, helps us to create a better user experience through constant improvements. To that end, we are already working on changes to the Balances page of the AlphaFlow Optimized Portfolios, in addition to providing downloadable monthly account statement reports. We’ll be sharing more about those changes soon!  
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  *The dashboard images shown above, and all the content of the dashboard, are provided solely as an example, and do not relate to any actual or model underlying real estate loans or mortgage notes, or any actual or model investments by investors. AlphaFlow does not represent, directly or indirectly that any information on this page of its Website, including but not limited to any graph, chart, formula or other device: (a) can in and of itself be used to determine what securities to buy or sell, or when to buy or sell them, or (b) will assist any person in making his/her own decisions as to which securities to buy or sell, or when to buy or sell them. Alphaflow does not make investment recommendations, and no communication through this Website or in any other medium should be construed as such. Any sale or purchase of securities is in the sole discretion of, and is conducted directly between, the issuer and the prospective investor. AFx This week, we were very excited to launch The AlphaFlow Exchange. For the first time, investors can easily see and compare real estate crowdfunding deals from some of the industry’s most respected platforms. The Exchange, or the AFx, has been live about 24 hours now and in that time, we’ve sent $181,000 in investments to the platforms. The feedback from our users has been tremendous. Ryan Smolek wrote in to say, “The Exchange! Finally! I can’t remember being this excited to see a filter on a Web page.” We’ll see if we can bring things more exciting than a web filter next, Ryan! 🙂 AlphaFlow is now working with investors in a number of ways, so I wanted to step back and tie this all together. As an active investor in the crowdfunding space, many of you have a number of accounts around the industry. There are many great platforms out there, and while some are fading away, we’re also seeing a number of new platforms being launched by experienced real estate professionals. The result is more fragmentation. That creates challenges in not only managing your portfolio, but also in building it the right way. AFx SquareWe could do better as an industry, and so we launched AlphaFlow! We asked ourselves, “As an investor, what would I want the experience to be?” I’d want to see all my investments in one place. I’d want to have analytics around my portfolio, making it easy to understand if too many of my deals were correlated. And of course, I’d want easy ways to invest across the industry – both passively in funds and actively by seeing all of the available deals. In short, I’d want a platform that empowers me to do with my P2P portfolio what E*TRADE lets me do with my stock portfolio. I’m proud to say that we’re moving down that path today. We’re fortunate to now call some of the industry’s most respected platforms our partners. The AFx was launched with Fund That Flip, Patch of Land, PeerStreet, and RealCrowd. This week we’re excited to also add LendingHome, and we’re working through a backlog of additional platforms which will be joining soon. We’re already talking with one platform about closing your investments on AlphaFlow, so building and managing a diversified portfolio will be easier than ever.

Partners

From day one, our mission at AlphaFlow has been to help investors like you easily build and manage a P2P portfolio. We’ve come a long way since we launched in September, but we’re just getting started! If you have any suggestions or requests, please feel free to reach out to us directly. We’re excited to get to know you! Welcome to the future of real estate crowdfunding! Note: AlphaFlow is available today for all accredited investors in the United States. If you enjoyed this post, sharing it on Facebook, LinkedIn or Twitter with the links below is the highest form of flattery. Thank you!

About the author:

Ray Sturm, CEORay Sturm is a leading entrepreneur in financial technology, and is currently the CEO of AlphaFlow. Prior to launching AlphaFlow, he founded RealtyShares, one of the P2P industry’s top platforms for real estate investing. His early career in finance included investment banking at Bear Stearns, restructuring at Lazard Frères and private equity at CCMP Capital.

Ray has a BBA-Finance from the University of Notre Dame and a JD/MBA from the University of Chicago.

This week we launched AlphaFlow to bring transparency and insights to your peer-to-peer investments. Today’s investors are having an increasingly difficult time keeping up with portfolios that can often include 5-15 different platforms. Two years ago, I co-founded what is today one of the industry’s leading platforms. I had responsibility for making sure investors had a great experience. There were challenges my customers had though that no single platform could solve. Many platforms were doing a good job of presenting deals, return metrics, and notifications, but each was doing it in a unique way and customers were having an increasingly tough time checking multiple dashboards. For some, this meant simplifying things and only working with one or two platforms, even if that resulted in missing out on good deals. Others tried to keep up, but few had any understanding of how their portfolios broke down by geography, asset class, sponsor, or even platform. Diversification is one of the fundamentals of prudent investing, but simply understanding your portfolio was becoming impossible in today’s P2P environment. So what got us here? We’ve come to a tipping point with a combination of (1) fragmentation in the P2P/crowdfunding world (there are over 700 platforms out there today), (2) huge strides by these platforms in building a supply of investment opportunities, and (3) massive investor interest. Historically, Wall Street went through patters of disrupting itself with new products, followed by stabilization. Now that pattern itself has been disrupted, with P2P Investing creating new opportunities and leaving Wall Street to knock on the door to try to participate too. The new equilibrium is now defined by constant disruptions. This creates the types of challenges that only a true third party like AlphaFlow can solve. My favorite part of working at RealtyShares was always dealing with our customers and helping to bridge the knowledge gap for new investors – many of whom are wildly successful in careers such as medicine, law, or technology – and professional investors who had traditionally dominated these type of investments. Given the increasing number of great (and not-so-great) platforms out there today, we wanted to give investors a single platform to both understand their existing portfolios and to make intelligent decisions on how they invested going forward. We’re already partnering with some of the industry’s leading platforms, and we’ll continue to add more. There’s a long way to go, but it’s going to be an exciting journey and we’re going to help you absolutely transform the way you understand and manage your P2P portfolio. If you’re reading this and haven’t yet joined, we hope you will here!

If you enjoyed this post, please share it on Facebook, LinkedIn or Twitter with the links below. Thank you!

About the author:

Ray Sturm, CEORay Sturm is a leading entrepreneur in financial technology, and is currently the CEO of AlphaFlow. Prior to launching AlphaFlow, he founded RealtyShares, one of the P2P industry’s top platforms for real estate investing. His early career in finance included investment banking at Bear Stearns, restructuring at Lazard Frères and private equity at CCMP Capital.

Ray has a BBA-Finance from the University of Notre Dame and a JD/MBA from the University of Chicago.

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