Multi-Year Investments

In 2023, Red Door began to roll out its newest class of multi-year investments which are targeted for 3 – 5 years. Like our short-term investments, our targeted return is an annualized rate of 10% over the life of the project, however the dividends paid will be highest upon sale of the project. Through our multi-year investment strategy, Red Door builds groups of investors to purchase dilapidated houses in middle-class neighborhoods through Los Angeles County. Red Door renovates these homes and converts the garage into a one or two-bedroom apartment.

Once the construction has been completed, Red Door manages these properties on behalf of its investors for three to five years depending on market appreciation. When the property has appreciated to a certain level, Red Door sells the property and distributes the profits to investors. Those individuals then have the option of reinvesting with Red Door on our next project, or receiving their principal back as well. For these projects, Red Door sells five shares to investors at around $70,000 a share, and $35,000 for half a share.

Improvements in a typical Red Door project include complete renovations to bathrooms and kitchens, installation of central air conditioning, new flooring throughout the main house, complete interior and exterior painting, new fixtures throughout the house, new landscaping, and more. Any functional deficiencies in the house are fixed, such a broken sewer lines or leaking pipes. All of this is done in addition to the construction of the ADU.

By purchasing single-family homes and creating these two-unit properties, Red Door is able to generate more rental income based on the cost of the project than if an investor were simply buy a duplex or triplex in Los Angeles. For example, a typical Red Door project will generate approximately $72,000 a year in gross income ($4,100 for the main house and $1,900 for the ADU). The total cost of the project is approximately $950,000. To purchase a building that generates similar annual gross income in the neighborhoods targeted by Red Door, a buyer would easily spend almost $1.1MM. In addition, the Red Door property is new, updated, and the tenants are hand selected by our management team. Red Door’s property management team has over ten years of experience managing rentals in Los Angeles.

While fluctuating mortgage rates impact the annual dividend a Red Door project can offer during the time the project is live, the ability to sell the project during a three to five-year window allows us to “time the market,” and ensure our investors earn a compounded, annualized return of 10%.