Rental Property Investor · KY · Member since 2013 · 1k+ posts · 537 votes
I stumbled across the American Homeowner Preservation (AHP) Fund ad on a podcast. Upon going to their website and researching further, it appears it's a hedge fund that buys discounted mortgages and supposedly tries to let homeowner's stay in their homes (and obviously make a profit) in doing so. This is now open to non-accredited investors (as well as accredited) for as little as $100. They keep any profits above 12% and it appears they charge about a 2% fee plus a couple other nonsense items (based on my very brief skimming through some info). Anyone familiar with AHP? Thoughts?
Investor · Kingston, WA · Member since 2008 · 1k+ posts · 1k+ votes
6y
The virus has impacted a fund like AHP mostly in administrative delays with foreclosing on properties and getting them converted to REO properties for resale. One large component of their business model is to acquire distressed mortgage debt then foreclose and resell the property as REO on the open market.
Due to moratoriums on both foreclosures and evictions, as I understand it, AHP is essentially experiencing a log jam on the back end of their exit cycle to recover investor capital and profit.
They've recently introduced a program called "pre REO" which gives them a strategy to help pull investment capital from these assets which are waiting for foreclosure and exit so that they can recover some of the investment capital from the assets to meet redemption and capitalization requirements for the fund.
It's an innovative program, but seems like an over-complicated solution rather than just waiting for the moratoriums to be lifted and proceed was foreclosures and evictions. Even when the moratoriums are lifted there's going to be a backlog for scheduling especially in judicial states so exits on these assets will be much longer than anticipated.
I suspect AHP has most of its investors capital deployed into these type of assets and now it's jumping through major hoops to meet their capital requirements. This may be why many of you are experiencing delays in redemptions and distributions.
In the fund which I co-manage, we've stopped foreclosure activity on many of the non-performing assets since it doesn't make sense to pay our legal resources for activities that are in moratorium. We've also postponed any new capital raising activities since deploying new subscriber capital into distressed assets that we cannot resolve quickly does not make sense.
This virus has definitely forced distressed-debt managers to become more creative and patient in a market that they cannot effectively control.
Burbank, CA · Member since 2016 · 39 posts · 3 votes
9y
I'd like to share an update as well. I invested $240 initially (so that I could receive a measly $2 per month). So far, I've been getting about that much each month. I've also been reinvesting the proceeds into the fund. It's been pretty interesting to see my monthly distributions grow each month by a few pennies.
I'm still a bit hesitant to invest more into this fund due to how their fund is legally structured and all the power they have over investors. That being said, I do think I will put in another $740 into the fund. After all, who DOESN'T want a free cheese pizza every month?
Nope, its straight cash. This means that they will give you a form at the end of the year for taxes to my knowledge. Also, I'm pretty sure it would be taxed like interest income (meaning high tax rate).
Walnut Creek, CA · Member since 2017 · 21 posts · 7 votes
9y
I have 2 separate accounts with them. One I transferred funds from a self directed IRA and 1 cash.
I have what I would consider non trivial amounts of money. much more than getting a pizza each month.
1 account i've had longer than 1 month and the monthly dividends were re-invested as i elected. the other account is not a month old yet so haven't gotten dividends but seems to be working so far.
I think they don't take any taxes out but will provide more detail middle of next month. but i believe this will be taxed at my normal income tax rate when i do pay my taxes.
Washington, MO · Member since 2015 · 7 posts · 6 votes
8y
Not completely liquid, but they will work to get your investment back early if you need it. I've chosen not to reinvest dividends and they are directly deposited into my bank account each month. Here's a video where the founder talks about liquidity: https://youtu.be/ChORxCEyVqc
Walnut Creek, CA · Member since 2017 · 21 posts · 7 votes
8y
As they describe it, it is not a 5 year commitment.
If you want to withdraw your initial investment you can request that and they will use their best effort to return your funds within 30 days. They may or may not be able to get it. Sounds like they have never not been able to return the money.
Investor · San Jose, CA · Member since 2017 · 343 posts · 102 votes
8y
@Sai Gudlavalleti- Have been a part of similar entities in my previous life. I would be keen on watching the first income $1 after you recover your $100 principal @12% + Fees.