Ben Cohn and Randy Model have launched BCRM Group LLC, a real-estate deposit funding startup that will fund earnest money deposits for real estate acquisitions in the United States.
The company offers buyers immediate financing for soft deposits, enabling them to sign contracts and close on properties.
Typically, real-estate buyers initiate their purchases with a “soft period,” during which they conduct due diligence before committing to proceed with the acquisition. Sellers customarily require an earnest money deposit of as much as 10 percent of the purchase price before granting the “soft period” to a purchaser and withdraw the property from the market.
BCRM Group was developed to ease the liquidity burdens of such deposits.
“Countless talented entrepreneurs are forced to pass on buying opportunities because they do not have immediate funds available for the deposit. With our platform, they will now have the ability to tie up deals while they raise the required equity and debt,” said Modell.
“Now investors will have the power they need to proceed with all real estate deals being considered.”
Cohn and Modell believe their platform is geared toward borrowers of varying profiles, including entrepreneurs, experienced investors whose immediate funds may be unavailable to tie up every deal being considered; investors with a preference for delaying the internal rate of return clock by funding deposits off the balance sheet, and 1031 exchange buyers who do not have the required funds to secure an exchange property.
“Inspired by contacts in the real estate industry who have approached us for assistance with deposit funding, we have created a success-based pricing structure that is sensitive to the buyer’s all-in costs,” said Cohn. “For deals that proceed to close after the due diligence is complete, services will cost the buyer approximately one percent of the total purchase price.”
Currently, the founders are financing the venture from their own resources, with institutional backing and crowd funding as the next development in their growth.