In investing, “alternative” simply refers to options beyond traditional stocks and bonds. Think of alternatives as investment vehicles not typically offered by major banks or brokerages. These assets can include a range of choices outside mainstream financial markets such as:

• Real estate
• Commodities (like gold or oil)
• Public Equity
• Private Equity
• Hedge Funds
• Cryptocurrency

But for this post, we’re focusing on two real estate-based alternatives:

• Private mortgage funds
• Private Mortgage REITs (Real Estate Investment Trusts)

These are investments that don’t move in lockstep with the stock market. They can add variety to your portfolio, help spread out risk, and sometimes deliver steady income in ways traditional investments can’t, such as Red Tower Capital’s mortgage fund, RTC VI, which is now structured as a real estate private mortgage REIT.

What Are Private Mortgage Funds and REITs?

A private mortgage fund pools money from private investors to make short-term loans for real estate, earning money from interest payments, while a REIT (Real Estate Investment Trust) is a company that invests in mortgages and mortgage-backed securities, paying most of its earnings to shareholders as dividends.

Where Does Private Money Lending Fit In?

Private money lenders provide short-term financing (outside of banks) for real estate projects, with the loan always secured by the property itself.

Borrowers usually need quick financing for things like:

• Buying a property fast (bridge loans)
• Fix-and-flip projects
• New construction
• Business-purpose renovations

These loans are short-term, with clear rules and timelines, and always secured by real estate.

This approach also forms the foundation of real estate private mortgage funds. For investors, this can mean more diversification and a consistent income stream.

• Spreading risk across multiple deals instead of just one project
• Professional underwriting, monitoring, and servicing
• A steady pipeline of secured, income-oriented opportunities in real estate

Why Investors Look at Alternatives

Here are the reasons why investors are paying more attention to alternative assets:

1. Diversification

This just means don’t put all your eggs in one basket. If the stock market crashes, having other types of investments can help soften the blow.

Real estate tends to behave differently from the stock market, so it’s a great way to spread out risk.

2. Regular Income

Many alternatives like REITs or private mortgage funds offer monthly or quarterly payouts, kind of like a paycheck. That’s appealing, especially to retirees or anyone looking for a steady income.

3. Higher Potential Returns

While stocks can go up and down wildly, real estate investments (especially private mortgage funds) often aim for steady high-yield returns, which is attractive compared to the low interest you get from a savings account.

4. Hedge Against Inflation

As prices go up (hello, inflation!), so do rents and property values. That means real estate often keeps up with or even beats inflation over time.

What Makes Private Mortgage REITs Attractive

You don’t have to be a real estate tycoon to invest in property anymore. Tools like REITs and private mortgage funds have opened the doors for everyday investors to get into the real estate game without needing to buy or manage buildings themselves. Investors are diversifying and strengthening their portfolio by allocating a portion of your portfolio to select alternative assets.

Here's why investors are choosing Red Tower Capital’s mortgage REIT, RTC VI:

• 10-year audited track record 
• 10 consecutive years of returns exceeding 9% net to investors
• Outperforms the average of audited California mortgage funds by ~2% annually.
• REIT tax benefits, such as a 20% qualified business income deduction

As always, it’s a good idea to do your homework or talk to a financial advisor before jumping in. But it’s definitely worth a look.

Why Choose Red Tower Capital

Since 2011, Red Tower Capital has been offering rewarding alternative investment opportunities for qualified investors. Our experienced team helps income-oriented investors participate in real estate by investing in our mortgage funds. These provide simplicity, convenience, current income, and low volatility. We are committed to delivering attractive risk-adjusted returns with transparency, professionalism, and exceptional client service to our investors. Contact us to learn more about our mortgage REIT and how we can help you strengthen and diversify your investments.