Bob FraserCFO & Macro Strategist | Data-Driven Investing Expert | Speaker & Author

They Paid Investors 18%… But Only Earned 10%

Name: They Paid Investors 18%… But Only Earned 10%
Uploaded: 2026-03-23T19:00:56+00:00
Duration: 17 s
Channel: Bob Fraser
Description: In this conversational excerpt, Bob Fraser and Ben examine a puzzling real‑estate credit fund that advertises 18% returns to investors while offering…

23 Mar 2026 · 0 min

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0:17

In this conversational excerpt, Bob Fraser and Ben examine a puzzling real‑estate credit fund that advertises 18% returns to investors while offering loans to borrowers at only 10%‑12%. They explore why the fund can afford this spread, proposing three possibilities: (1) the fund uses massive leverage, turning the 10% loan rate into a much higher gross return on a levered basis, which also raises risk; (2) the operation is a Ponzi scheme, using new investor capital to pay existing investors; or (3) the fund simply loses money but continues to write checks to investors, perhaps for growth or other motives. The discussion highlights the red flags of such credit funds and the need for scrutiny of their financial structure.

One of the ones you and I were looking at, Ben, they were paying, I think it were maybe this one, they were paying, you know, 18% to their investors. And we went on their website and they're offering loans to real estate guys at 10%. So I'm like, how are you doing that? How are you receiving your revenues are 10%, but you're paying your investors 18%.
There's only two ways. We actually have this conversation in our school community because there are people asking about these credit funds. I went and just found these online and it was exactly that. They're paying 15%, but they're charging their borrowers 10 to 12%. It's backwards. But here's the only way they can do that. One, they're using a massive massive amount of leverage, so that 10% that they're actually charging now is 20% or 25% gross on a levered rate, which then massively increases risks. Or two, it's a Ponzi scheme.
Or they just like to lose money. They're excited about writing checks every month into their business.
Or they're just good Samaritans. They're happy to just fund a business that is not profitable.