FAQs

Below is a list of our most frequently asked questions. If you have a question that is not listed, please feel free to contact us.

 

 

 

 

This sounds too good to be true. How does Blue Moon make their money? Top

Blue Moon Capital is a money management firm that takes pools of money raised by their Broker Dealer and purchases, rehabilitates and finances real estate assets. Blue Moon Capital purchases property at a deep discount usually around 40% of a property’s targeted value. They invest another 20% into the property’s rehab, and sell the property at 75% to the investor. Blue Moon Capital makes 15% in profits, and you the investor make 25% in equity. It’s a win-win situation for everyone involved.

 

 

 

 

How does Blue Moon choose a market? Top

First and foremost, you will never see Blue Moon Capital in a market like Las Vegas or Miami. We have avoided the speculative markets in the past and have protected our clients from the depreciation we are seeing in these areas today. We pick markets based on an average 4% to 6% appreciation per year,  strong economic conditions and a higher than average level of redevelopment.

 

 

 

 

Do you repair or replace items when doing rehabilitation of a property? Top

Every property that Blue Moon Capital renovates is different. Depending on the condition of the property and the inspection report that we receive prior to purchase, Blue Moon Capital with the assistance of our professional contractors determine what needs to be repaired and what needs to be replaced.

 

 

 

Are there property managers in place? Top

Although Blue Moon Capital is not a property manager, we understand the need of strong and responsive management companies to take care of our clients’ investments. For this reason, we have developed relationships with 3-5 local property managers in each market who promise that our investors will receive top level customer service. We encourage our clients to interview our referrals and make the decision of which management company to use. We also encourage our clients to interview other local property managers who do not have relationships with Blue Moon Capital.

 

 

 

  

What are the benefits of using a property manager? Top

Many of our clients live out-of-state from their investment property and rely on the property manager to be their eyes and ears on the ground. The property manager will collect the rents, handle tenant issues and report to you any maintenance issues that might occur. The overall benefit of a property manager is that you don’t have to deal with the day to day headaches of owning rental property.

 

 

 

 

What if I don’t want a property manager? Top

We give you the option of whether or not to be directly involved with your renters. Some of our clients prefer to manage their property on their own using internet advertising sources to place tenants, hiring a local “handy man” to be around for any maintenance.

 

 

 

 

Can I sell the home anytime I want? Top

Blue Moon Capital, LLC recommends a minimum 3-5 year hold on each property. With the always changing market conditions, we discourage a “quick flip” or “short sale” in that it is unpredictable and can become detrimental to the overall market. A long term hold is the safest exit strategy in real estate.

 

 

 

 

How can I buy a Blue Moon property without putting 20% down? Top

Based on a lender’s pre-approval, Blue Moon Capital will give you a temporary and deferred payment Bridge Loan which will transfer ownership into your name. You refinance out of this bridge loan into a traditional mortgage at 75% of the final appraised value. Your “would-be” down payment is actually the 25% Built-in equity we give you. There are no additional down payments at the refinance, and you get all this for a total $5,000 investment.

 

 

 

 

Why do lenders now require 20% down? Top

The subprime mortgage crisis is a result of individuals financing more real estate than they could afford. Because of this, the lending industry has tightened its standards by requiring up-front capital as “more skin in the game”, verification of their income and assets and providing proof of credit-worthiness (higher credit scores). The days of 100% financing are over and many investors are required to put at least 20% down on an investment property.

 

 

 

 

What is the ‘$5,000 Investment'? Top

The $5,000 investment is your fee to purchase a rehabilitated property from Blue Moon Capital. The Investment does not go toward your purchase price. It is an up-front fee that goes toward costs associated with the transaction such as title transfer fees, closing costs, and $1,000 of it toward brand new major appliances.

 

 

 

 

Why can’t other people offer this? Top

Blue Moon Capital has spent seven years building the infrastructure and perfecting the investment to create an innovative real estate investing experience for our clients. We are able to do this with our experience, our education and purely from learning from our mistakes. Individual investors spend a rigorous amount of time, money and effort to find, rehabilitate and finance a single property. We do what you could do, but on a larger, risk-mitigated scale that offers you the same benefits or more. Read the Blue Moon Capital feasibility study here (.pdf). 

 

 

 

What are the credit requirements? Top

Due to changes in the Lending environment, all of our clients must meet certain financial requirements including a FICO score of 720 and above. Other qualifications include 12 months of liquid reserves, no bankruptcies in the past three years and the financial wherewithal to support the investment for 3-5 years.

 

 

 

 

How long have you been in business? Top

We have been in business for eight years.

 

 

 

 

Do you provide references? Top

Yes, we do provide references for investors who are interested in Blue Moon Capital.  However, first we ask for your reference as well, in the form of a bank pre-approval.

 

 

 

 

Why Blue Moon? Top

Blue Moon Capital, LLC is an innovative leader within the real estate investment industry. We have found an opportunity to take neglected properties across the country and turn them into renovated assets that will be a home to a renter and an investment to an investor. When asking, ‘Why Blue Moon?’, also ask yourself, ‘Why invest in real estate?’ Then ask yourself ‘How will I Invest in real Estate? How many Realtors will I work with? How many offers will I have to make to find the right property? How much cash do I need to put down on an investment property? How much time and money will it take to renovate a property? What profits can I expect? What if the rehab goes over budget? Do I have enough cash to take a potential loss?’ Once you’ve answered these questions, ask yourself again, ‘Why Blue Moon?’ We mitigate the risks of investing in real estate, from the time it takes to find the deals to the money it takes to renovate the property. Learn more about our Real Estate Management Perspective here.

 

 

 

  

Can I participate in your investment if I already own multiple properties? Top

Currently, we may be able to accommodate an investor with 3 or less properties. Unfortunately, due to recent Freddie Mac revisions, as of August 1st, 2008 any investor with more than four properties will not be able to obtain additional property financing. To learn more about these changes, please read this news release by Freddie Mac (.pdf)

 

 

 

 

What are the risks? Top

We mitigate many of the risks of property acquisition, rehabilitation and financing. There are several risks related to being a “landlord” in general. These may include: A tenant causing damage to the property, a tenant breaking the lease term, a tenant not paying rent, etc. One qualification requirement by Blue Moon and by Lenders is that you must be financially stable to maintain the investment with 12 months of reserves, or 12 months of mortgage payments in your bank account. This is to ensure that you are financially capable to assume any of the potential risks of owning rental property.

 

 

 

 

Do I have to do any deferred maintenance? Top

Blue Moon Capital properties are renovated to withstand the test of time. We update or replace major systems such as HVAC, roofs, windows, plumbing, and electrical. Our contractors warranty the Scope of Work for one year and Blue Moon Capital purchases a 1-year home warranty for you!

 

 

 

 

What about taxes and insurance? Top

Once you are the owner of the property (after the Bridge Loan), you are responsible to transfer taxes into your name. Blue Moon Capital purchases your first year’s insurance policy.

 

 

 

 

Is this a REIT or a partnership? Top

No, unlike a REIT, each property is individually owned in full. Property cash flow, potential profits and equity are not shared with Blue Moon Capital or any other investor.

 

 

 

 

How do you know how much a property will be worth? Top

Blue Moon Capital orders over $1,000 of due diligence before they make the initial property purchase on your behalf. This due diligence enables us to target a PROJECTED after rehab value (ARV). Your lender will be the final decision maker in determining the property’s value based on their ordered Final Appraisal. Read more about our Due Diligence process here.

 

 

 

 

How do I know if I qualify? Top

If you have a 720+ FICO Score, cash reserves and the financial stability to invest in real estate, then you may qualify! Contact us to see if you qualify.

 

 

 

 

What if this is my first investment property?Top

If this is your first investment property, then you’ve found the best place to start! Instead of finding Realtors, managing contractors and risking up to $80,000 hard cash on your first deal, you can skip the headaches and invest in a Blue Moon property. We will interview you, get you qualified and require that you attend one online training webinar prior to investing. It’s that easy! Contact us to get qualified.

 

 

 

 

What if home values decline?Top

Real estate is a cyclical vehicle to achieving financial freedom. The Office of Federal Housing Oversight Home Price Index suggests that in the past 25 years home values have almost QUADRUPLED. Imagine how much equity you would be sitting on today! Historically, housing declines in our real estate markets have not lasted more than one or two quarters and have only happened once or twice. Based on this trend, it is safe to say that a long-term hold strategy will protect you from declining home values as the market will always stabilize to a state of equilibrium. Blue Moon Capital also protects you from a potential property value decline since we give you 20% equity. If you were to put 25% down on a property to build the amount of equity we give you, a housing decline would risk your direct cash investment.

 

 

 

 

 What is gentrification?  Top

“Gentrification, or more specifically urban gentrification, is a process in which low-cost, physically deteriorated neighborhoods experience physical renovation and an increase in property values, along with an influx of wealthier residents who typically displace the prior residents” – Wikipedia.com

 

 

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