•  Real Estate

New Silver DeFi Securitized Mortgage Fund Review

New Silver is a US-based fintech founded in 2018 and specializing in data-driven lending for the “fix and flip” real estate sector. Their newly created “DeFi Securitized Mortgage Fund” provides accredited investors with access to their blockchain-securitized loan portfolio.

New Silver

  • Founded: 2018
  • Investment Types: Real Estate
  • Sectors: Residential Real Estate
  • Minimum Investment: $100,000
  • Advertised Returns: 17-22%
  • Must be accredited
 Pros
  • Quarterly cash flow payments
  • New Silver as a company is co-invested in the underlying loan pool with "skin in the game"
  • Investors don't need to interact with tokens or blockchains
  • Redemptions allowed after 1-year lockup
 Cons
  • High minimum investment
  • Only open to accredited investors
  • Underlying blockchain technology is still new
  • Short track record for the new Fund offering

Overview

This New Silver Review will help you learn more about New Silver's investment offerings, including how the alternative investments on New Silver are structured, and what your potential returns might be. You can read more about the criteria we use to review investment platforms here.

New Silver is an online lender, offering a variety of real estate and personal loans. New Silver was founded in 2018 by entrepreneur Kirill Bensonoff, and has originated more than $100M in loans to date, including $26M securitized using a “DeFi” blockchain protocol.

The New Silver DeFi offering is a new “DeFi Securitized Mortgage Fund” that invests in a pool of some of the short-duration mortgages they offer to borrowers, with the securitization and administration managed on a blockchain.

According to New Silver:

New Silver’s securitized asset pool is built on Tinlake, a DeFi protocol developed and administered by Centrifuge, Inc. Tinlake enables New Silver to access leverage and significant liquidity from MakerDAO, Aave, and other DeFi protocols. New Silver’s pool is the first in the world to be approved for leverage by MakerDao, the leading DeFi protocol with $15B of assets.

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Types of investments New Silver offers

The New Silver DeFi Securitized Mortgage Fund invests in short-term (typically “fix-and-flip”) mortgages secured with a first-priority “perfected” lien on US residential investment property. New Silver also uses leverage to expand their origination pool and boost investor returns (with a concomitant risk in the event of significant defaults).

What do you get when investing with New Silver?

When you invest in the New Silver DeFi Securitized Mortgage Fund, as with many real estate investment crowdfunding platforms, what you actually receive is a membership interest in a Special Purpose Entity (in this case an LLC) created specifically for the investment. Each year you’ll receive a K1 at tax time to report your share of the income received by the LLC.

The LLC in turn will own the tokenized mortgages, drawn from the larger New Silver loan pool. Investors will not directly own any tokens, nor be required to buy or transfer any cryptocurrency to participate.

How does New Silver make money?

New Silver does not charge any up-front fees to investors. They charge an annual management fee of 1%, and a performance fee of 20% of any cash flow after investors receive a 14% preferred return.

Potential returns and cashflow

Investors in the New Silver DeFi Securitized Mortgage Fund receive quarterly cash distributions. The target return for the fund is 17-22%, net of fees. Investments in the New Silver DeFi Securitized Mortgage Fund may be redeemed after a 1-year lockup period.

There are two tranches of loans within the New Silver pool, and the Fund will invest in both of them. First, there is a Senior Tranche with 3.5% fixed interest payments; second, there is a Mezzanine Tranche, where the remaining proceeds are allocated.

The Fund is also entitled to additional incentive rewards (tokens) from Centrifuge in exchange for providing liquidity to the overall loan pool. According to New Silver, they plan to periodically liquidate those reward tokens and distribute the proceeds to investors (net of performance fees).

Breadth of offerings on New Silver

New Silver currently offers only one investment product, the DeFi Securitized Mortgage Fund. The underlying loan pool is currently more than $26M, representing 105 loans. New Silver offers loans in 41 states.

Regulatory framework and due diligence expectations

New Silver offers investments only to accredited investors, under SEC Reg D.

According to New Silver, their loan maximum is 90% of Loan-to-Cost, with a maximum of 80% of After-Repair Value (ARV). Their average loan size is $250K. New Silver says that their borrowers are experienced real estate operators with an average of 15% equity in each deal, an average credit score of 700+, and each loan also requires a personal guarantee from the borrower. According to New Silver, they have not experienced any foreclosures since inception.

This review was first published on 25 March 2022.


Our Rating

Excellent

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Active Offerings from New Silver

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DeFi Securitized Mortgage Fund

The Fund seeks to generate income by investing in a pool of short-duration mortgages that have been securitized using Decentralized Finance capital and leverage without direct correlation to cryptocurrency.

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