Frequently Asked Questions
At ZINC, we understand that navigating the world of investing can be overwhelming. To help you get started and feel confident, we’ve compiled answers to some of the most commonly asked questions. If you don’t find what you’re looking for, reach out to us to learn more.
How and when are the cash distributions? When does the profit sharing occur?
Investors have the option to receive monthly cash distributions or to reinvest monthly earnings automatically. Cash Distributions occur every month through wire transfer directly to the investors account.
What is the minimum investment?
The minimum investment is $50,000.
What is the difference between a Class A and a Class B-1 investor?
Class A investors receive a 6% cumulative non-compounding preferred return, an Excess Cash Distribution (profit split) of 80% / 20% (Investor / Manager) and have a 12-month lock-up period with 60-day notice. While Class B-1 investors receive a 6% non-cumulative non-compounding preferred return, no Excess Cash Distribution and have a 6-month lock-up period with 30-day notice.
How long is the lock-up period and why?
ZINC Income Fund has a lock-up period of 12 months with a 60-day notice of withdrawal. By having a lock-in period, it allows for stability of the fund.
What is the margin of safety in the ZINC Income Fund?
ZINC ensures that each borrower provides a solid cash down payment creating a cash alignment of interest. Each loan is secured with a first position lien against the property, creating substantial protection of principal. The loan cannot exceed 70% of the After-Repaired Value.
How selective is ZINC in choosing which loans to fund?
ZINC is very selective through the underwriting process. ZINC’s average borrower has prime credit, a solid cash down payment, and extensive exposure to real estate. ZINC only funds a small percentage of actual submissions, as our borrower qualifications are strictly enforced.
What are the tax advantages of this REIT and can everyone qualify?
Investors are taxed in the state that they are domiciled in- For example, an investor that lives in Texas, Arizona, or Nevada would pay no state income tax even though they are investing in a fund that operates in California. If an investor uses their IRA money, they are not subject to UBIT tax- UBIT tax stands for Unqualified Business Income Tax. The ZINC Income Fund allows individuals to invest through their IRA, which offers this huge tax benefit. Investors are eligible for a 20% federal tax deduction on all income earned through the ZINC Income Fund.
Can an investor get their money out in the event of an emergency?
An investor may get their money out in the event of an emergency based on the manager’s discretion.
Why does ZINC focus so much on the California region?
ZINC focuses on California, because it is a nonjudicial foreclosure state. ZINC is able to be to quickly repossess the foreclosure property to rehab and sell. This allows ZINC to better protect our investor’s capital. ZINC also focuses on California due to our extensive knowledge and proximity of the California Real Estate market.
Who handle defaults and how are they handled for ZINC?
ZINC handles all defaults. ZINC works with its borrowers to get current on loans. If not, ZINC will foreclose on the property. Once the property is in ZINC’s control, the property will be rehabbed and sold on the market.
What is the loss ratio of capital for ZINC?
ZINC’s loss ratio of capital is less than 1/8%.
What is the typical Delinquency rate for ZINC loan product?
ZINC has a delinquency rate of <5%.
Are there any fees?
There is a 1.0% servicing fee and 0.5% assets under management fee.
How protected is the investor from risk?
The Investor’s risk is limited to only the amount in the fund. The capital is secured by a 1st position lien on the deed of trust. Our historical losses average less than 1/8%, virtually none.
Who is the manager of the REIT?
The Fund will be managed by ZINC Financial, Inc., a California corporation. The Manager is located at 1525 E. Shaw Avenue, Fresno, CA 93710.
Who is ZINC’s Third Party Administrator and Auditor?
ZINC Income Fund’s auditor is Spiegel Accountancy Corp and its Third Party Administrator is Verivest LLC.