Our Investment Strategy: Tapping into an Innovative Market Size

Desert Capital REIT’s strategy is to raise money to invest in REIT-eligible assets, using leverage to increase returns to our shareholders. Substantially all of our investments will be short-term (12 to 18 months), balloon mortgage loans with fixed interest rates.

We believe there is a significant market opportunity to make mortgage loans to owners and developers of real property whose financing needs are not met by traditional mortgage lenders. The strict underwriting standards and length of time required by traditional mortgage lenders, such as commercial banks, results in some potential borrowers being unable to obtain financing or who are unwilling to go through the time-consuming process often required by traditional lenders. Desert Capital REIT can take advantage of this need for rapid financing with the potential of creating favorable returns for our shareholders.

Through our advisor, Desert Capital REIT identifies loans originated by non-affiliated mortgage brokers and loans made to Consolidate Mortgage’s borrowers, and solicits new borrowers in the states in which we are licensed to operate. Additionally, Desert Capital REIT purchases existing loans originated by third-party lenders and acquired by Consolidated Mortgage.

We finance the acquisition of our mortgage loans with equity capital and term loans of less than one year. As part of our investment strategy, we also utilize leverage – or debt – to enhance our returns. If the asset earns more money than the interest payments on the debt, we are able to make more than we could if we did not borrow to buy the asset. We expect to use the loans we make as collateral on any debt that we may incur.

An important component in our investment strategy is our focus on keeping expenses reasonable. We strive to keep our operating costs low to add to our shareholder’s returns.