As with all investment, there is risk of loss of capital. Investors in ALFIE are exposed to the risk of a variable rate of return, but the biggest risk is a temporary or longterm suspension of liquidity by the fund manager. A wave of Real Estate defaults and foreclosures would slow payoffs thus reducing our return and could potentially get to a point that overwhelms the liquidity of our facility. This scenario is most likely to occur in a severe recession or as the result of an external shock to markets.

We protect against this risk by underwriting conservatively and insisting on first lien positions and borrower cash in projects. In the most extreme case of a major real estate downturn, we believe that many of our borrowers would complete their projects and rent their properties to pay ALFIE until the market recovers. The final protection rests on the flexibility of our team to shift into acquisition and property management to ensure preservation of investor capital.

To date, ALFIE has made over 1500 loans. As of the beginning of 2025, we have foreclosed upon or taken deed-in-lieu of forclosure on forty properties. This puts ALFIE’s historic default rate at less than 2.75%. We make every effort to help our borrowers work themselves out of bad situations, yet we have the experience to manage foreclosures as needed.