Andy Strott is the Co-Founder, of Realecoin™ – A fund that invests in income-producing multi-family housing that needs redevelopment or renovation and in distressed mortgage debt opportunities across the U.S
Andy has worked as an executive with some of the largest fund managers in the United States – BlackRock, Alliance Bernstein and MFS Investment Management. He has worked in two different European countries, having been selected to lead new initiatives abroad. Mr. Strott has structured real estate funds and joint venture opportunities as well as performed underwriting for more than $5 billion in new development, multi-family redevelopment, non-performing loans, bridge and mezzanine financing. Mr. Strott has also served as an advisor to technology startups, and developed the first of its kind cross-border commercial real estate listing portal for Chinese investors in collaboration with Fang.com, the largest real estate website in China. Mr Strott received his Masters in Business Administration from Columbia Business School.
AT: You mainly specialize in income-producing multi-family properties that need redevelopment or renovation. How do you source these properties?
AS: The Realecoin fund invests in multi-family properties that need redevelopment or renovation AND distressed mortgage debt across the U.S. We source all of our projects from a longstanding network of relationships in the real estate industry dating back more than 30 years.
AT: What’s your average holding time for a property?
AS: Each investment is unique, but for our multi-family properties, our hold time should average between 3-5 years. For our distressed mortgage debt, our hold times are approximately between 18-36 months.
AT: Are there certain states or cities that you focus on, or alternatively that you avoid?
AS: For our multi-family properties, we look across the U.S. in primary and secondary cities. For our distressed mortgage debt, we invest mainly in the Southeast, Southwest and Midwest regions. We tend to avoid the NYC metropolitan area and many parts of California due to a more litigious environment that adds to our hold time and cost.
AT: Currently you focus on US real estate. Any plans on going international?
AT: The first property you are purchasing is 162-164 East 82nd St. on the Upper East Side of New York City. What made you choose this development to be your first?
AS: This has been a property the Azrak’s have been working on and have invested more than $2MM into to renovate the apartments and raise the rents. The property is fully leased at this stage and represents an attractive IRR to the fund portfolio.
AT: How are you planning on differentiating yourself from competitors such as BlockEstate and Property Coin?
AS: Our main differentiator is that we are a diversified portfolio of both real estate equity and debt.
AT: Will you be paying dividends? If yes, are these to be distributed quarterly or annually? What’s the expected dividend payout?
AS: Yes. Quarterly. 6-8%.
AT: How is the fund’s senior management compensated?
AS: 2.5% Management Fees, which will pay salaries of our entire team. Plus 20% of profits. We will also hold 10% of Realecoin digital securities that are issued.
AT: Could you briefly share with us some of the items on the due diligence checklist when you are reviewing properties to potentially acquire?
AS: This includes:
- Tenant Information – Leases, copy of current rent roll, listing of security deposits, copied of common area agreements.
- Third Party Agreements – Structural Reports, Environmental Reports, New Phase I Report, when available HVAC Study, when available Roof Repairs.
- Title/Survey – Commitment of Title Policy with Exceptions, Survey, Title Insurance, Copy of Declaration of Easements.
- Reports/Plans – Certificates of Occupancy, Building Certificate, All Tenant Certificate of Occupancy, Complete Set of Building Plans, Complete Set of CAD Files for Property, AsBuilt Plans.
- Site Development Plans and Approvals
- Schedule of Outstanding TI’s and LC’s
- Service Agreements – Elevator, Water Treatment, Security, etc.
- Warranties – Roof, Other
- Financial/Operational Documents
- Operating Budget (Past Three Years, YTD)
- Operating Budget Forecast
- YE Monthly Income/Expense Statements
- Itemized Capital Improvements
AT: Anything else you want to mention about Realecoin?
AS: We at Realecoin are at the forefront of a tremendous initiative at the crossroads of real estate and tech to make investing in U.S. real estate easier for investors. Needless to say, a substantial amount of time and work by many people has gone into reaching our Presale, and yet, we are only at the beginning days of this venture and look forward to the next phase of our business.
AT: Thank you for taking the time to do this interview. Anyone wanting to learn more can visit the Realecoin website.
*Realecoin has since re-branded as Resolute.Fund. Company operations and goals remain the same, with the only change being in name*