Many investors find it important that the sponsor, Doug Smith in this case, have a vested financial interest in the fund. This “skin in the game” is being provided in various ways:
Doug is currently paying over $300K per month in interest to the fund via his entities that borrow from it.
He is spending over $125K per month on payroll and general overhead (office, equipment, advertising, etc.) through his entities that buy, improve and sell the land.
He fronts the money for improvements, and those invoices add up to well over $100K at times.
His investment in the fund has reached as high as $6M, and much of his net worth is allocated to land deals.
He was the sole investor for the first 2+ years of the business.
His business reputation is tied to Hawthorne Capital. He protects that and his investors above all else.