Wealth 212
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A rehabbed property in Chicago
A rehabbed property in Durham, NC
A funded property in NJ. The member received ≈$340k
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Wealth 212 LLC (also: Wealth 212˚) is an American diversified real estate services company that specializes in brokering funding and providing essential tools to businesses involved in real estate. The principal program offered by Wealth 212˚ is Keystone Funding Network. Other programs include entity1 structuring and credit repair2.
Access is member based, an organizational structure common3 in real estate where networking is key. The Network was founded by a group of investors in 2012, and the organization has since grown to be one of the top recognized private brokers in the nation. It serves all of the continental United States. Description [edit] Wealth 212˚ manages the brand Keystone Funding Network (KFN). The Network offers access to funding and its Member Center which is a software platform with tools, information and other essentials. Funding is offered as a solution to a major issue facing real estate entrepreneurs: the short window of time4 that a good real estate rehab opportunity is available. Finding a funding source and subsequently having them approve funding is often longer than investment properties are available. The network is comprised of hundreds of entrepreneurs and lenders nationwide, both commercial and private. Wealth 212˚ staff will match properties with funding, using the quality of the property (ie profit potential weighted against risk) rather than credit score or cash availability as the qualifying factor for funding. Members can choose between a number of funding options, specializing in “no money out of pocket” funding. In all but wholesale deals Wealth 212˚ will either “direct fund” or attempt to find investors to cover the loan and investors willing to cover GAP. The Member Center is a SAAS product. It contains access to essential tools for successful flipping such as a specialized profit calculator and and on-demand proof of funds (POF) letter, a form for automated submission for property evaluations5, and information “How-To” providing a non-time and -money prohibitive alternative to browsing the internet for real estate investing know-how.6 Real Estate Entrepreneurs typically view Wealth 212˚’s Keystone Funding Network as one option for their real estate business, not as the only option. The company encourages diversification7 to reduce risk and capitalize on opportunities. Keystone Funding Network [edit] Businesses focused on real estate have a need for immediate and long term essentials. Upon registration members join the Keystone Funding Network and receive instant access to the Network’s services. A membership ensures continued access. The following services are offered:
Reported Reasons for Membership Members report joining for access to all services, a combination of services or even a single component. The value10 of each component is justification11 for the purchase of a membership. 212˚ [edit] The company philosophy “212˚ The Extra Degree12” is a widely used analogy. It points to members living in one of the most prosperous nations in the world and as such being much closer to wealth than they often realize. The extra degree, from 211˚ Fahrenheit to 212˚, turns hot water into boiling water. The resulting steam can move engines. This is in line with that philosophy that a little extra that can turn someone’s fortunes to wealth. History [edit] In 2012 a group of Utah based real estate entrepreneurs founded the Keystone Funding Network13, a program in response to a limited local (Utah) property inventory. An exclusive offer was created, where out-of-State clients of the founders’ respective businesses were offered an opportunity to partner with them on real estate opportunities. Keystone Funding Network, at the time managed by a number of entities, would provide funding. The client’s role was to find the a property, and would then become a “field partner” with responsibilities to guide the purchase, rehab and sale stages of the real estate flip. As local “boots on ground” the client would be able to represent the Utah investors. Utah based project managers oversaw the field partner, managed the funds and provided reports for the founders. Complications (2012 - 2014) Initial success was paired with complications. For one, field partners were selected from only a few highly lucrative areas, a vetting process that was costly and time consuming and in spite of efforts had limited success. Field partners had too much influence in the process, leading to costly mistakes. Those who claimed to know real estate were rarely as knowledgable as they claimed to be. Client motivation was another issue, losing interest when the inevitable project issues arose, and weeks turned into months. This regularly left the Utah team scrambling to find a client replacement. Another complication was the entities managing Keystone Funding Network. Competing interests caused unnecessary delays and resulted in lost opportunities. Restructuring (2014) Encouraged by client interest and project success, the investors decided to organize in 2014 and create the roots of Wealth 212˚. Client criteria were created and project management was gradually shifted away from clients functioning as field partners to in-house experts, limiting client exposure and thus reducing mistakes. A dedicated team was hired, trained and tasked with management of the projects. Creating Wealth 212˚ LLC (2015) In 2015 Wealth 212˚ was officially created and Keystone Funding Network became a brand rather than an organization. The project again underwent some major restructuring. For one, clients had to become members to participate. This increased both property submissions and eliminated less-motivated individuals from participating. Another change was that client memberships became business to business transactions (as opposed to business to consumer). Reorganization also affected the role of the client as field partner. While still somewhat involved in the rehab and sale part, client involvement was shifted to the funding and submitting part of real estate flipping. This exclusive focus on the front end of flipping became company policy in 2017: members were no longer involved post property purchase (in 2020 this exclusive focus broadened with new financing options available to members). Wealth 212˚’s in-house teams took over the entire rehab including the sale of the property, a process that is still in effect of the company’s top funded properties. Other parts of the reorganization included new pricing structures to offer flipping opportunities to a broader audience, the introduction of the “member center” and an increase of staff. The latter included hiring a dedicated team of specialists trained to respond to member submissions and questions, several teams of experienced real estate investors focused on managing the rehabs, and a new team trained to respond to potential client and media requests. Other departments were also beefed up, including the accounting and legal. Recent Developments On January 1 2020 Wealth 212˚ announced the addition of the “under $50k program” allowing for clients to apply membership benefits like brokered funding to extend to properties with less than $50,000 in after-rehab profits. Members who wanted to be more hands-on involved in flipping now had the option to keep the contract in their own name and use more traditional-style funding. Wealth 212˚ vs Traditional Funding [edit] Wealth 212˚ has grown into a niche provider with a balanced offering for its members that include direct and brokered funding, tools such as a profit calculator that accounts for the standard costs involved in flips and on-demand Proof of Funding documents, a submission process that guides the member through analysis to actual submission with personalized advise and feedback, and lots of “how to” information. Members can submit and participation is not conditional, except that the property needs to have profit. Members will get services, referrals, and access regardless of their financial status and experience. Primary is that depending on the property, funding can be brokered in such a way that the member has no or little out of pocket expenses. Traditional funding sources such as banks and hard money lenders have strict and often varying requirements, and can choose not to work with investors as they do not have a relationship with them. Usual requirements for funding include a good to great credit score, cash for GAP and other costs, and experience - which is limited to having flipped properties under the borrower’s name, not ancillary experience such as being a realtor, contractor or having flipped for someone else. In addition the property will need to meet their requirements, and they will request financials such as tax documents and proof of employment and income. Risk [edit] Risk is part of being in business, and as such risk management is essential for success. In case of Wealth 212˚ the risk is mostly related to the membership costs and being able to submit. If a member does not actively flip and submit properties the membership has less value. Risk also comes into play if a member chooses to have Wealth 212˚ broker funding. This results in the member flipping the property with their name on title, managing the rehab and sale on their own and also being able to pocket all profits. Another risk factor is related to time invested, even though most members argue that they would have spent the same time, if not more, if they had pursued other funding sources. In case of traditional funding sources risk is more significant. Real estate entrepreneurs risk time, money and assets in the process of flipping deals. All of these are used by lenders to secure the funds they extended. They secure against losses, and thus reducing their risk, by making sure the borrower is likely to succeed and has resources in case the property flip ends up as a flop. Memberships and Programs [edit] Memberships are extended after an intense intake process by specialists. These specialists are trained to identify motivated business owners and assess likelihood of success based on location, goals, finances and other key components. TV shows, books, and rumors have created a hype around real estate entrepreneuring that often translate into impossible expectations. Real estate is lucrative exactly because it is difficult, time consuming, expensive, risky and stressful. If it was easy it wouldn’t be lucrative. The challenge specialists face before extending a membership invitation is to steer conversations and set realistic expectations, explain how Keystone Funding Network works, outline what is required of members, encourage, motivate and use restraint in enrollments. Membership dues consist of a one time up-front registration fee and for continued access a small monthly fee. Programs range in benefits and access, and in profit share with Wealth 212˚’s elite “Club 212˚” program offering up to 50% of profits on qualifying properties. Properties [edit] Qualifications for accepted properties are the same as most lenders. Simply put, they need to have profit and the submission has to be done manually. Non-acceptable submissions include lists such as auctions, printouts of analysis by third party software, or submissions prepared by a realtor or agent. This ensures the member has personally looked at the deal, and if there are issues the member will know what is being referred to. Properties are non-primary single family residential only, even though members are free to use the Proof of Funding for any property as long as they use a third party for funding. The team is also available for general advise on other types of properties, time permitting. Initial value analysis comes from comps, which usually points at cities over 50,000 in population and excludes rural areas and smaller cities. For the top program with direct funding the property will need to have $50,000 in profit minimum, rehab cannot exceed purchase price and it has to be under $600,000 ARV. Over - and under $50k [edit] The company splits properties into two main types: Over $50,000 in profit and under $50,000 in profit, with wholesale as a component of the latter. Profit is what is left after rehab and other standard costs are deducted from purchase price. Over $50k Profit Program The “over $50,000 profit” program is Wealth 212˚’s main program. It was all that was offered until January 1, 2020. Two other qualifiers were that rehab could not exceed purchase price and the property had to be under $600,000 ARV. In this program the company takes over title of the property, and in return the member receives a Joint Venture agreement which outlines profit splits upon successful completion of the rehab. Most members have little to no involvement with the property they find after the JV is executed. Wealth 212˚ has specialized in-house teams who will manage the rehab all the way to the sale of the property. Under $50k Profit Program The “under $50,000 profit” program was a response to members’ requests to help find third party funding. After the company and the member concluded that profits didn’t qualify the member was left to find funding elsewhere. Wealth 212˚ decided to offer services as a funding broker as an additional member benefit. Properties that do not qualify for the “over $50,000 profit” program are forwarded to their network of thousands of private and public lenders. This is strictly a member benefit; the company does not charge the members for these brokering services. Unique to this service is the attempt to also find a GAP lender in addition to the main loan. This is commonly known as “100% funding” even though the member is still responsible for normal costs such as closing fees, realtor fees, staging and holding costs. Note that in this program the risk shifts to the member, as Wealth 212˚ limits its involvement to making connections and introductions only. A major benefit for the member is that profits in this situation are all theirs, they are not shared with the company. Wholesale If the property has too little profit to find interest in the funding network, Wealth 212˚ will offer wholesale as final option. These are usually a reasonably fast transactions, often closing in as little as two weeks. Member Challenges [edit] Challenges members report are the same as what all real estate investors report. Finding properties with profits can be discouraging when realtors and sellers are telling investors one thing, and a careful analysis tells another story. Costs are always a challenge, whether they are up front for a membership or down payments to cover GAP and other costs. Time involved can be extensive. It can take months and dozens of submissions to succeed, depending on where a member lives and their experience level. Wealth 212K offsets some of these challenges by providing more than just funding solutions. Taking the program as a whole, any member level will provide more than can be purchased separately. The program solved the top real estate challenge: great properties do not wait for funding to be approved. The delay is near non-existent with members having instant tools to contract properties. Member Benefits [edit] Depending on membership level, memberships include the following:
Other benefits include live or email access depending on membership level and general types of support. Reception [edit] The program was launched without much fanfare, and memberships were initially “by invitation only” resulting in a few people being aware of the program. As part of the vast network of thousands of private and public U.S. lenders and brokers, Wealth 212˚ has been ranked as a top provider by its members. Success is by definition subjective, with members reporting business success in financial terms, in number of properties flipped, experience gained, connections made, but also on more personal levels of achievement of life goals, direction, and support. Corporate Affairs [edit] Utah Team The core program is managed from corporate offices, located in South Jordan, Utah. Each member is assigned to a team, with team members communicating through email and ticket system. In case of live access, usually communications are with one of the managing supervisors. Extended Team The Utah team is also composed of various specialists, such as legal, accounting, real estate agents and General Contractors. As properties are nationwide and laws and regulations vary sometimes even city by city, the company relies heavily on contracted specialists. This often results in advise coming from someone in the same city as the member. At any given time contracted team members can run in the hundreds, depending on volume of properties being flipped. Finances In 2018* the average submission had $84,000 in profit, with a purchase price averaging between around $100,000, ARV around $300k and an average rehab around $75,000. An average rehab took 7 months from submission to sale. (*Privacy laws prohibit in any way disclosing members’ financial gains and losses, public reports are limited to submissions.) Direct funding is usually provided from one or a combination of entities partnered with Wealth 212˚, much like financing a car or obtaining a mortgage can come from different sources than the finance manager’s direct bank. Many are familiar with getting a mortgage from their local bank, and then ending up paying a massive lender such as Penny Mac. Brokered funding uses a nationwide network with thousands of lenders, both private and public. When a property qualifies, it is usually first sent to lenders local to the property. If they decline, it is offered to the network at large. Their motto is “if it has meat on the bone, someone is interested.” The same goes for wholesale. Members can also find their own third party lenders, in which case Wealth 212˚ will be limited in helping with GAP funding, direction and guidance. Headquarters and Offices Wealth 212˚ moved in 2019 from Sandy, Utah to South Jordan Utah to accommodate a larger in-house team. COVID-19 [edit] Traditional (bank, hard money) non-primary residential lending has greatly been affected by COVID-19, with many lenders reduced to servicing only a dozen or so States. Requirements for these funds have also become more stringent. Wealth 212˚ has always relied on a vast network of private lenders in addition to other sources. This means funding is still available for all continental States. There have been some minor changes, for example in the “under $50k” brokered funding program. These funds are more difficult to obtain, but members are not faced with the daunting task entirely by themselves. Ground work of property evaluations is still done by the Wealth 212˚ teams, and introductions between members with funds are still facilitated by the team. A side effect of COVID-19 is increased anxiety, which has resulted in a significant increase in member questions and concerns. In response, Utah increased staff. All urgent communications are still handled in the two-business day requested time frame. 1 businessdictionary.com. entity: A person, partnership, organization, or business that has a legal and separately identifiable existence. Retrieved 2020-06-25. 2 Credit Report Accuracy and Access to Credit. Federal Reserve Bulletin. Summer 2004. 3 www.jobstars.com. Membership in Real Estate Professional Associations & Organizations also looks great on your Resume and LinkedIn profile to bolster your credentials and qualifications. Retrieved 2020-05-22. 4 Hall, Craig. “In the real estate market, that means buying in markets that are ready to take off and cashing out before prices crash.” Timing In The Real Estate Market. 2003. 5 Property Evaluations come in the form of a Member Submission Report™ which is an extensive evaluation performed manually by live real estate professionals. Automated reports typically lack the “expert” insight investors need to evaluate risks. 6 Friedman, Jordan. March 19, 2018. https://www.usnews.com/higher-education/online-education/articles/2018-03-19/7-ways-you-can-study-real-estate-online. 7 ways you can study real estate online. U.S. News. Retrieved 2019-12-21. 7 Karen Eilers Lahey, Aigbe Akhigbe, Melinda Newman, T. Leigh Anenson, Real Estate and Alternative Asset Allocations of U.S. Firms' Defined Benefit Pension Plans, Journal of Real Estate Portfolio Management, 10.1080/10835547.2012.12089932, 18, 3, (273-287), (2020). 8 Funding for non-primary properties is complex, time consuming and can be risky. A web search (e.g. “funding for flipping”) will get novice and experienced investors the (updated) info they need. 9 Members have access to a calculator inside the member center. 10 Compared to 1. Coaching/education programs: can go up to 40,000 for top programs (note: several coaching companies were shut down by the FTC in 2019, mainly in Utah). 2. Tools like Proof of Funding: nearly impossible to find without getting approved first, one company charges $750 per letter regardless of getting the contract. 3. Becoming a member of a REIT or other program: member dues can be as high as a few hundred a month after signup fees. 4. Costs of a flip like GAP, holding costs, realtor fees, taxes, staging fees etc. 11 https://www.nerdwallet.com/blog/investing/5-ways-to-invest-in-real-estate/ 12 Numerous references can be found to 212˚: Programs, books and videos. Wealth 212˚ does not claim to own the rights to any of these, nor the concept of “the extra degree.” 13 Keystone Funding Network (KFN) is both a brand as well as a DBA of Wealth 212˚ LLC. |
Wealth 212 headquarters in South Jordan, Utah
Company Logo as used in most marketing and branding
Keystone Funding Network, a brand offered exclusively by Wealth 212˚
Real Estate Entreprenuer, a magazine featuring Wealth 212
Club 212˚ is a membership program exclusively reserved for top Real Estate Entrepreneurs
Materials are available for Club 212 members and for purchase
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