Voyager Opportunity Fund II, LLC - Investment Offering - SBREfunds

Voyager Opportunity Fund II, LLC

Non-Broker Vetted

Opportunity Overview

  • Asset Type:
  • Strategy Type:
  • Income Type:
    Income & Growth
  • Minimum Investment:
    $50,000
  • Capital Raised:
    $6,690,000
  • Target Return:
    12% - 16%

Investment Highlights

  • Invests in properties with delinquent property taxes: tax lien certificates, vacant land and rental homes.
  • Provides a 10% preferred dividend, target return is 12-16%.
  • Management team has worked together for 10+ years, and has closed over 11,000 transactions in 35 states.
  • Note holder or equity member investment choices. Can accept IRA funds.

Investment Terms

Two Investment Options

  1. Membership Units of the Fund
  2. Secured notes (“Notes”) to the Fund

 

Asset-Level Information

  • Acquiring properties with delinquent property taxes, when combined with the strategy of creating a monthly income stream, can create what we believe is a remarkably profitable synergy where the combination of all of the pieces can far exceed the sum of their individual parts. We use a wide variety of strategies to acquire these types of properties.
  • One strategy is the purchase of tax lien certificates. Tax liens offer us the opportunity to pay the delinquent property taxes on behalf of a property owner. If the property owner later chooses to pay their taxes, we recover our initial investment plus interest. If they elect not to pay the taxes, we are able to foreclose on the property, and we can then own the real estate for the amount we have invested in the taxes which, if we have done our underwriting properly, can be far less than the real market value. In fact, the price we pay for a property often has very little to do with its market value, but instead is based on the amount of past-due taxes. In these cases, we can profit by selling the property for far more than we paid for it. We can also produce attractive returns by selling the property to a buyer using seller financing and creating a note receivable, often enabling us to sell for a higher price than cash buyers would be willing to pay. Or we can choose to rent the property, and create rental income. During all of this, the property may also appreciate, creating yet another way for us to potentially profit from that asset.
  • In early 2014, we launched Fund I with the strategy of investing solely in tax lien certificates. As we became immersed in the tax lien space and developed more industry relationships, we discovered additional opportunities. We began to see ways we could create more value, and higher returns, by using what we know about land and seller financing, and combining that with opportunities in the tax lien business. As the raise period on that fund comes to an end, we decided to expand the scale and scope of Fund II to capture those opportunities.
  • In Fund II, we have created an open-ended, flexible model which not only allows us to acquire tax lien certificates, but also vacant land, rental homes, and other real estate assets we regularly encounter that meet our underwriting guidelines, and sell the properties using the same seller financing techniques we have perfected at LandCentral. We believe that using the combination of these strategies creates the potential for far higher returns, and allows us to leverage our core competency of creating passive income. These are the opportunities we are seeking in Fund II.

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  • What are the differences between the two investment options?

    Investors lending money to the Fund will be issued Notes and shall become Note Holders. Note Holders will be lenders to the Fund on a Pari Passu basis with other Note Holders and have a blanket secured interest in the Fund Assets. This secured interest will be in a senior position except in circumstances where individual Fund Assets have been or are being pledged by the Fund to any Credit Facility, as discussed in greater detail below. Note Holders will be issued Notes at interest rates which will vary from time to time, according to a Note Schedule, and initially ranging from 6% to 8%, depending on investment amount and maturity of the Note. The Fund intends to have multiple tiers of rates based on the amount of money lent by the Note Holder and duration of the maturity date. These tiers (including amounts, maturities and rates) may change from time to time at the prevailing interest rate and terms defined on the Note Schedule for a given period. Notes may be purchased at any time during the calendar quarter, subject to approval by the Manager, at the interest rate and terms defined for that period on the Note Schedule. The Fund may prepay the outstanding principal balance and interest to any Note Holder at any time without penalty. Interest to Note Holders shall be paid monthly.  The interests of the Note Holders will be represented by a Note Holder Representative, who will initially be the Manager. Note Holders shall be issued an IRS Form 1099 annually for any interest received.

    Investors purchasing ownership shares in the Fund will be issued Membership Units and shall become Members. Subject to performance of the Fund and after paying certain Fund Expenses, the Management Fee of 1.5% of aggregate Capital Contributions to the Manager, and interest to Note Holders, Members will receive a Preferred Return of 10%, paid monthly subject to availability of cash in the discretion of the Manager. Members will also divide with the Manager on a quarterly basis any Excess Distributable Cash (“EDC”) with 50% of the amount distributed to the Members and 50% distributed to the Manager. The Preferred Return shall be Cumulative, meaning that any shortfall in a given month shall carry forward until paid. After a 24-month Lockup Period, Members may ask the Fund to redeem their Membership Units.  Based on comprehensive financial modeling performed by the Manager, the projected overall return to Members is estimated to be between 12% and 16%; however, these returns are not guaranteed. Members will be issued IRS Form K-1’s annually for any distributions received and any other tax allocations by virtue of their membership in the Fund.

  • How much can I invest? What is the minimum?

    $50,000 per unique Investor is the minimum investment, which amount may be adjusted in the sole discretion of the Manager. There is no set ceiling on the amount of investment from each Investor and shall be at the discretion of the Manager.

  • Who manages the Fund?

    The Manager of the Fund will be Voyager Pacific Capital Management, LLC (“VPCM”), a Delaware limited liability company. VPCM is owned 90% by Stephen Seal and 10% by Bowline Partners, LLC, a Delaware limited liability company, which is an entity owned 100% by Stephen Seal.

  • Does the Manager have any skin in the game?

    Yes. The Manager intends to invest a portion of its EDC from time to time into Units and/or Notes of the Fund on an ongoing basis as long as the Fund is not in liquidation.  It is the Manager’s goal and intent to accumulate over time a sizeable investment in Units and/or Notes of the Fund, Pari Passu to all other Investors in whichever instrument is owned.  Any further investment by the Manager will be made according to the then current Unit Price and Note Schedule and otherwise be in such form and in such amount as determined by the Manager it its sole discretion. Please see the “CONFLICTS OF INTEREST” section in the PPM for more details.

  • What happens to the Fund if the Manager or its Key Person is not around for any reason to manage the affairs of the Fund?

    The Manager recognizes that one of the main concerns of Investors in a 506 Reg D Private Placement such as the Fund is what would happen in the event the Manager is not available to manage the Fund for whatever reason. Therefore, we have proactively attempted to address and mitigate this concern, including the following:

    • Under the Fund’s Operating Agreement, the Manager is contractually obligated to provide at least two (2) year notice to the Members before being permitted to resign. Members may elect a replacement Manager by majority vote.
    • The Manager is the beneficiary of a life insurance policy on the life of Stephen Seal in the amount of $1,000,000. This amount is expected to be sufficient to provide the Manager ample time to operate while a new Key Person is identified and procured by the Members without undue duress or financial pressure.

    The Manager’s principal is Stephen Seal who is considered an integral part of the Fund’s investments and operations (a “Key Person”). The Fund’s Operating Agreement shall contain a provision that, upon the death or permanent disability of Stephen Seal, the Fund shall place an immediate moratorium on new investments for up to one year. The Members shall have the right to appoint a replacement Key Person by majority vote during the moratorium period. If no replacement Key Person is appointed by the Members within the maximum one year moratorium period, the Fund shall permanently cease to make new investments and shall proceed with an orderly liquidation of its Assets.

  • What can Investors expect in the way of transparency and communication?

    Many well developed best practices for corporate governance have been established and promoted by various leading organizations in the fund industry. VPCM believes in adhering to industry best practices as much as possible in terms of fund governance, oversight, transparency and communication with Investors. While the Manager has the flexibility to modify its practices over time to meet the needs of the Fund, VPCM has endeavored to incorporate best practices into the way it manages the Fund. Among others, VPCM accomplishes this objective in the following ways:

    • The Fund will be audited by outside CPAs on an annual basis once it has reached $5,000,000 in AUM or as required by any particular state regulations. The audit shall be available to Investors upon request.
    • The Manager will cause the Fund to have CPA prepared year-end financial statements and tax returns each year which will be available to Investors upon request.
    • The Manager may be removed for Cause by a vote of the holders of eighty percent (80%) of the Ownership Interest at any time during the life of the Fund. The Members shall have the ability to elect a replacement Manager upon a vote of the holders of sixty percent (60%) of the Ownership Interest.
    • The Manager will provide Members with frequent (typically quarterly) qualitative and quantitative information about the Fund along with investment statements and any distributions and/or interest.
    • Meetings will be held a minimum of once per year to provide a forum for Members to ask questions and be heard. Members also have the ability (with a simple majority) to require the Manager to convene a meeting (with appropriate notice) at any time.

    The Manager has initially engaged Fairway America, LLC to provide the Fund with professional administration in the areas of financial statement preparation, investor subscriptions and redemptions, and other back-office administration functions. Fairway America has the relevant infrastructure, resources and experience that are expected to significantly assist the Fund and Manager in the professional administration of the Fund.

  • How does the Fund make money?

    The Fund shall receive as income 100% of any interest collected on Fund Assets, 50% of any and all origination fees collected on Mortgage Loans, with the other 50% paid to the Manager, 100% of any rent collected on real estate Assets owned by the Fund, 100% of any interest collected on deposited funds or receivables owned by the Fund, and 100% of the net sale proceeds in excess of basis on the disposition of any Fund Asset.

  • How does the Manager and/or its Affiliates get paid?

    In addition to the 1.5% Management Fee and the 50% split of any EDC, the Manager will receive as income 50% of any and all origination fees collected on Mortgage Loans, with the other 50% going to the Fund.  The Manager will also receive a 1.5% Acquisition Fee, which is based off the acquisition price of any Asset, with the exception of Mortgage Loans, acquired by the Fund. The Manager will also receive a 1.5% Disposition Fee, which is based off the net gain on any REO sold by the Fund, with the exception of an REO sold via Seller Financing.

    The Manager intends to use the sales and real estate marketing services of Synergy, its Affiliate, and intends to enter into a Collection Services Agreement between Synergy and the Fund.  The Fund shall pay to Synergy a Collection Fee of fifteen percent (15%) of the principal and interest received on certain Fund Assets.

    All fees except the Management Fee and any Collection Fees due to Synergy shall be subordinated to the Preferred Return and shall accrue, but will only be paid when the Preferred Return is completely current as of the most recent calendar quarter end.

    Synergy shall manage the online marketing of the Fund’s Assets which are offered for sale with Seller Financing, including administration of pay per click campaigns and search engine optimization for organic search.  Synergy shall provide a monthly accounting to the Fund of costs associated with the online spending for the marketing of the Fund’s Assets, and the Fund shall reimburse Synergy only for actual costs incurred on behalf of the Fund.  These marketing expenses payable to Synergy are a Fund Expense, but should also be considered additional management fees as they are payable to an Affiliate of the Manager.

  • What do I need to do to purchase Units and become a Member?

    Investors who wish to purchase Units must complete and sign the Subscription Agreement, a signature page to the Operating Agreement, an Investor Suitability Questionnaire and other such documentation as is deemed appropriate by the Manager, and send them together with a check or wire for the purchase price of the Units to the Manager. Upon receipt of appropriate executed documents, the Fund will immediately deposit Investor funds into its holding account (the “Subscription Account”), the date of which shall be the “Deposit Date”. Investors may execute the Unit Subscription documents at any time throughout a calendar quarter. However, an investment in the Units would only become effective as an equity investment upon the Company’s transfer of an Investor’s funds into its operating account (the “Operating Account”) and as of the first day of the calendar quarter (the “Effective Date”) immediately following the Deposit Date. Investor funds held in the Subscription Account shall pay no interest to the Investor.

    The Company may utilize a new Investor’s funds for its operations between the Deposit Date and the Effective Date by transferring all or a portion of such funds as determined by the Manager (the date of which shall be the “Transfer Date”) from the Subscription Account to the Operating Account. Any such amounts transferred shall be treated as a loan to the Fund for which the Investor shall receive interest at 10% (annualized) during the period between the Transfer Date and the Effective Date.  The Fund will pay the accrued interest (running from the Transfer Date of any funds to the Effective Date) on any funds transferred from the Subscription Account to the Operating Account in the form of a check to the Investor to be prepared and mailed on or shortly after the Effective Date. An Investor’s obligation to purchase Units with their full deposited amount shall be irrevocable during the time between the Deposit Date and the first day of the subsequent calendar quarter.

    As soon after the Effective Date as is practicable (typically on or around the 15th of the first month of the quarter), the Fund shall issue Units to the Investor at the prevailing Unit Price for any and all amounts transferred into the Operating Account since the Deposit Date (i.e. funds that were treated as loaned to the Fund between the Transfer Date and the Effective Date). On the Effective Date, the Fund shall also be obligated to transfer some or all of any remaining Investor funds from the Subscription Account into the Operating Account and issue Units at the prevailing Unit Price, and/or to notify the Investor of any amounts it intends to let remain in the Subscription Account based on the Fund’s financial position or projected yields at the time, or for other reasons in the Manager’s sole discretion. Upon notice to the Investor of any such amounts it does not intend to transfer to the Operating Account and issue Units, the Investor shall have ten (10) days to decide to either leave the money with the Company in its Subscription Account, or to have the Company reimburse the remaining funds in the Subscription Account to the Investor. If an Investor chooses the reimbursement option, the Investor shall have no further right or obligation to use these remaining funds to purchase Units. If an Investor chooses to leave the remaining funds in the Subscription Account, the Investor’s obligation to utilize such funds to purchase Units (and the Company’s right to transfer the funds to its Operating Account) shall once again be irrevocable, and the funds shall again be treated during each successive quarter as detailed in this section.

  • How is the price of a Membership Unit (the “Unit Price”) determined?

    The initial Unit Price shall be $1,000 but will fluctuate on a quarterly basis, starting with the first (full) quarter after the date of this PPM based on the collective Stated Value of the individual Fund Assets. At the end of each quarter, the price of a Unit will be calculated by dividing the total Stated Value of all of the Assets by the total number of outstanding Units. The Stated Value of each Fund Asset shall be determined on the last day of each calendar quarter by the Manager in its sole discretion. The Manager, however, shall establish and follow a methodology for determining the Stated Value of each Asset and may modify, alter or improve the methodology from time to time in its sole discretion. The Stated Value of the Fund Assets shall be used to assist in the determination of the Unit Price of the Membership Units as well as the AUM.  For more information on the Stated Value, the Unit Price and the AUM, please see the section “Risks Specific to Members” in the PPM.

  • How often are Distributions expected to be made to Members and in what amounts?

    Subject to the Fund’s performance and sufficient cash flow, the Manager intends to pay the Preferred Return to the Members on a monthly basis, and the allocable portion of any Excess Distributable Cash (as the Manager deems to be in the best interests of the Fund), to the Members on a quarterly basis. Members will share Distributions in proportion to their respective Ownership Interests.

  • Are Units liquid at any time? Can I redeem them whenever I want?

    No. Members will be required to hold their Units for a minimum of twenty four (24) months (the “Lockup Period”) before they may request Redemption.  Redemption requests for reasons of financial hardship or emergency during the Lockup Period may be considered on a case by case basis subject to a penalty (the “Redemption Fee”) of five percent (5%) of the then current Unit Price. The Manager shall have no obligation to consider any hardship Redemption requests during the Lockup Period and shall be entitled to charge a higher or lower Redemption Fee. All Redemption Fees charged and collected will be considered income to the Fund.

    After the Lockup Period, Redemption requests will be considered on a first come, first served basis. A Member shall be required to provide the Manager a 60 day notice for any Redemption request and any Redemption actually provided shall be done only as of the first day of the calendar quarter immediately following the end of the 60 day notice period at the then current Unit Price as determined by the Manager. Any Units purchased by Members via the Reinvestment Option shall be considered, for purposes of any Redemption requests, to “tag-along” with the original date of purchase of the Units for which the Reinvestment Units are associated. For purposes of this provision, Redemption requests will not be considered to be outstanding until the first day of the subsequent quarter.

    The Manager shall have no obligation to grant any particular Redemption request and shall retain sole discretion as to whether or not to redeem any Unit. No Member will be given priority for Redemption over any other Member for any reason other than the date upon which the request was made The Manager may redeem Membership Units Pari Passu at any time at the then current Unit Price in its sole discretion without penalty to the Manager or the Fund.

    All of the above parameters notwithstanding, the Manager will endeavor to manage the Fund in such a manner as to be able to accommodate Redemption requests at any time after the Lockup Period as consistently as possible.

  • What do I need to do to purchase a Note and become a Note Holder?

    Investors who wish to purchase a Note or Notes must complete and sign the Note Holder Subscription Agreement, a signature page to the Intercreditor Agreement, an Investor Suitability Statement, a Note Schedule, and such other documentation as is deemed appropriate by the Manager, and send them together with a check or wire for the purchase price of the Note to the Manager. Upon acceptance of the prospective subscription and receipt of payment, the Manager on behalf of the Fund will sign the Promissory Note and send the original to the Note Holder. Investors may execute subscription documents for Notes at any time throughout the quarter, subject to acceptance by the Manager.

  • What happens at maturity of my Note?

    A Note Holder shall be required to provide sixty (60) days’ written notice to the Manager of Note Holder’s desire to cash-out and receive payment of outstanding principal and interest upon the Maturity Date (the “Cash-Out Notice”). If the Note Holder does not provide the Cash-Out Notice at least sixty (60) days prior to the Maturity Date, the Note upon the Maturity Date will automatically extend at the Note Rate less one percent (1%) until either (i) the Note Holder notifies the Fund that it wishes for the outstanding balance of the Note to be rolled over into a new Note, based on the then current Note Schedule, and such new Note is executed, or (ii) 60 days after the Note Holder provides a Cash-Out Notice.

    The Fund shall also have the right to continue to make interest payments on a monthly basis to the Note Holder at the existing Note Rate plus one percent (1%) for up to 90 days beyond the Maturity Date, or up to 90 days beyond the date on which a Cash-Out Notice is given if such notice is given beyond the Maturity Date, whichever is later, without such continuation constituting an event of default.

  • How often are payments on the Notes made to Note Holders?

    Interest on the Notes is paid monthly to the Note Holders, at the rate specified in each individual Note.

  • Can I reinvest my distributions or interest, as the case may be?

    Members shall have the option to receive any Distributions either paid to them via check or ACH or to use these funds to automatically purchase additional Units at the prevailing Unit Price. Note Holders shall have the option to receive their interest either paid to them via check or ACH or to use these funds to automatically add to their Note principal balance and thereby earn interest on an increasingly higher balance. Investors shall make such an election at the time of subscription and may change this election with a 90 day notice to the Manager and not more frequently than twice per year.

    The Manager reserves the right to terminate the Reinvestment Option at any time throughout the life of the Fund in its sole discretion.

  • Other than borrowing from Note Holders, will the Fund utilize any other debt when originating or acquiring Fund Assets?

    The Fund and/or any SPVs of the Fund may choose from time to time to borrow money from a Credit Facility and utilize one or more Fund Assets as collateral for any such borrowing, subject to certain restrictions imposed in the Operating Agreement.  The Operating Agreement grants the Manager significant latitude and discretion in its ability to use Credit Facilities in the operation of the Fund. Among other things, the Manager may elect to use warehouse lines and other Credit Facilities to manage short-term cash flow issues, and it may also use Facilities to acquire specific Fund Assets. However, the Operating Agreement also places specific limitations on the use of Credit Facilities by the Manager, namely:

    • The Fund will not provide any Facility with a first lien position on any existing Fund Assets already encumbered by Note Holder interests for the specific purpose of acquiring cash to accommodate Member Redemption requests;
    • The Fund will specifically not utilize any large Facility that would require it to pledge all or a majority of its Assets using a borrowing base formula. It may, however, pledge some or all of its Assets to a Facility being used as a short-term warehouse line in order to attempt to manage its cash effectively on terms other than a borrowing base formula.
    • The Fund may utilize a Facility to finance the acquisition of a Fund Asset, however it shall not utilize such a Facility to finance any more than seventy five percent (75%) of the Stated Value of that Fund Asset at the time its acquisition.

     

    Any Facility shall be non-recourse to the Investors. The Manager and/or the Fund may agree to provide its Guaranty for a given Facility but is not required to do so. Any Facility will likely have covenants that may affect the Fund, any SPV(s), the Investors, and the Manager.

  • What is the priority of cash flow? Who gets paid in what order?

    The following outlines the priority for distributions from the Fund (“Waterfall”):

    1. Interest and principal payments on any Credit Facility (depending on what Fund Assets are pledged to a particular Facility);
    2. Fund Expenses, including any Collection Fees due to Synergy;
    3. Manager annualized 1.5% Management Fee (paid monthly) on aggregate Capital Contributions as of the last calendar day of each month;
    4. Note Holder interest, payable monthly;
    5. Repayment of maturing Notes, if any;
    6. Preferred Return to Members, payable monthly, subject to availability of cash in the discretion of the Manager;
    7. Manager Acquisition and/or Disposition Fees as earned;
    8. Any available EDC, as determined by the Manager, to be split 50/50 between the Members and the Manager at the end of each quarter.

    The following outlines the expected priority for distributions from the Fund in the event of a liquidation (“Liquidation Waterfall”):

    1. Interest and outstanding principal balance of any Credit Facility (which may be limited to individual Fund Assets depending on which are pledged as collateral for any Facility);
    2. Liquidation and/or other Fund Expenses, including any Collection Fees due to Synergy;
    3. Manager annualized 1.5% Management Fee (paid monthly) on aggregate Capital Contributions  as of the last day of each calendar month;
    4. Note Holder principal, followed by accrued Note Holder interest, all on a Pari Passu basis among the Note Holders;
    5. Return of Member Capital on a Pari Passu basis among the Members (or by order of priority for Redemption requests, if any, in the sole discretion of the Manager);
    6. Members Pari Passu as to the Preferred Return;
    7. Manager Disposition Fees as earned;
    8. Any remaining EDC, as determined by the Manager, to be split 50/50 between the Members and the Manager.

    This order of priority is expected, but changes to the order of priority may occur as a result of court order, administrative ruling, changes in the law, or agreement of the affected parties.

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