New York City, New York Dec 22, 2022 (Issuewire.com) - Created at Stanford in 2022, digital financing platform Duckfund is on a mission to help commercial real estate investors by providing low-cost and quick soft deposit financing, ensuring that they can work on several deals simultaneously without freezing their capital.
Through their financing solution, Duckfund will help to further accelerate the growth of the US real estate market by supporting buyers in ways that traditional banks cannot. Duckfund’s application process for soft deposits only takes one minute, has a low-interest rate of 2% (of the deposit size monthly), and due diligence takes just 24 hours, making financing widely accessible. This is in line with the company’s aim to “provide equal access to real estate investing for all by simplifying the whole application process,” says Anna Kogan, CEO, and Founder of Duckfund.
Once an investor's application is successful, Duckfund creates an LLC and a call option agreement between itself and the buyer for a membership stake. The LLC then signs the real estate purchase and sale agreement and wires the deposit to an escrow account.
If the buyer decides to continue with the deal, they will then wire the deposit amount to Duckfund for a 100% stake in the LLC. After this, the buyer will take control of the purchase and sale agreement. However, if the buyer decides to rescind, the purchase and sale agreement is canceled and the deposit amount is returned to Duckfund.
The US commercial real estate industry continues to grow in both the number and value of deals. According to data from Costar, the volume of real estate deals in the US grew by an average of 7% between 2012 and 2021. At the end of 2021, deals worth $546 billion were made in the US commercial real estate market.
Nevertheless, many investors still find it hard to tap into these opportunities due to funding challenges. Almost all commercial real estate deals now require soft deposits (up to 5% of the purchase price) as a sign of commitment when the investor can't pay the purchase price immediately. This deposit gives them the right (not obligation) to purchase the property at an agreed price within a certain period.
Yet, funding for deposits can even be hard to come by. Accessing bank loans is both difficult due to high rejection rates and delays in the due diligence process, as well as expensive for individual investors. Today, even business loans can be commonly denied for a variety of reasons. The realities of the past two years – global pandemic, global inflationary pressures, and global economic stagnation – have intensified this problem.
Using its fast online financing solution, Duckfund is working to capture 5% of the soft deposit market, which was worth about $81 billion in 2021 (5% of the total deal volume of $546 billion). The company now aims to reach 4% annual growth over the next five years, a growth projection that will bring Duckfund to $1.2 billion in annual revenue and allow it to extend its financing services to even more investors.
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