Rental Property Investor · KY · Member since 2013 · 1k+ posts · 539 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.
Washington, MO · Member since 2015 · 7 posts · 6 votes
8y
Invested $5000 the last day of August. Got $51.67 in returns for September. Expect $50 for October to post soon. No reason to believe I won't receive $50 per month for the life of this fund.
Rental Property Investor · Malvern, PA · Member since 2016 · 1k+ posts · 936 votes
8y
@Mark S. Did you confirm the 2% annual management fee is deducted from principle prior to principle being returned?
It is not stated that way in the offer which states, "Investors have received their 12% annual return and all their invested capital" as their return goal. They don't guarantee it, but I did not see anywhere in the offering material or my investment agreement that they are deducting 2% from what is paid to investors. My presumption was this fee was deducted above the 12% and is a risk to the 12% if the company is not profitable, but I didn't see that clearly stated either.
Any more feedback from the past few months? My payments have come in regularly on my big $1,000 investment. I'm thinking of adding more.
Fulton, MD · Member since 2017 · 32 posts · 7 votes
8y
I just moved my Roth and Rollover IRA's into SDIRAs at Equity Trust. I was considering either converting my Rollover to Roth or I could just put all my Rollover IRA into AHP. I figure since I was going to be taxed, might as well let it do something till I'm ready to convert it.
Walnut Creek, CA · Member since 2017 · 21 posts · 7 votes
8y
My understanding is that it will be taxed like ordinary income, not capital gains. I'll probably find out for sure in the next 6 weeks when they send out a 1099.
Hilton, NY · Member since 2017 · 3 posts · 0 votes
8y
What are peoples thoughts on this report from AHP
The Company will bear a monthly management fee equal to 0.1667% (2% annually) of the aggregate capital accounts of the members as of the last day of each calendar month, plus an annual fee equal to $60 for each active asset of the company. Such management fee shall be paid to the Managing Member no later than the fifteenth (15th) day of the following month. The Managing Member shall be responsible for the compensation of the Investment Adviser. The Company will also bear fees, costs, and expenses as reasonably determined by the Managing Member.
AHP Capital Management LLC (the "Investment Adviser"), a company affiliated with management, shall provide investment advisory services to the Company pursuit to an agreement between the Investment Adviser and the Company. As of June 30, 2017, the Investment Adviser has advanced $482,803 to the Company related to expenses paid on the Company's behalf. The Investment Advisor is under no obligation to continue to fund the Company's expenses. Such advances are recorded to the balance sheet as an Advance from Related Party and include certain payments made on the Company's behalf prior to formation of the Company. All activity and balances related to or on behalf of the Company were transferred into the Company effective on the inception date, and accordingly are reflected as activity on the inception date. All such expenses were allocated under the specific identification method as the Company has not yet commenced substantial operations to warrant the allocation of any common expenses. Management asserts that the allocation methodology is reasonable and reflects management's estimate of what the expenses would have been on a stand-alone basis.
American Homeowner Preservation, LLC, a company affiliated with management, is a co-obligor on the Company's accounts payable of $220,500 as of June 30, 2017. It is under no obligation to continue to fund the Company's expenses or become liable to any future expenses incurred by the Company.
If Im reading this correct there is a 2% maintenance fee and a $60 fee annually. So a $500 investment would only get $50 a year return but pay a $60 fee annually??? No money made???
Walnut Creek, CA · Member since 2017 · 21 posts · 7 votes
8y
I don’t think you are reading the correctly.
I think the $60 fee is per property they own and manage. So has nothing to do with investor accounts.
I’m not sure about the 2% management fee.
My general understanding of how they pay is that they pay any and all expenses at the end of each month and if they are still able to pay the 12% with remaining profits they pay the 12%.
Hilton, NY · Member since 2017 · 3 posts · 0 votes
8y
I see what you are saying. I was reading that section from AHP and it seemed as if someone with $100-$500 investment would have a hard time ever make any money back. So if all goes well and I invest let say $500 the end of the year I could see $560 back from my $500 investment??? or will it take 5yrs to get my $500 principle investment back?
Hilton, NY · Member since 2017 · 3 posts · 0 votes
8y
I was under the impression this was basically a 5 year fund. Do you know what they are referring to with the 5 year return or earlier where they talk about returning your initial investment?
Thank you for the help guys.
Does anyone know what fees a class A investor are up against if any at all?
1) Is this a 5 year fund? See FAQ How long are the investments for?
AHP response: Under the terms of our Operating Agreement, AHP must try to return all of an investor’s money no later than the fifth (5th) anniversary following the investment. If for some reason AHP is unable to meet this obligation, investors might receive a return of their investment later than five years, or not at all. If AHP is profitable, as it has been and we anticipate will continue to be, it is very likely that investors will receive a return of their investment sooner than five years.
2) Fees for Class Investors: See FAQ Are there fees for investors?
Investor · Kingston, WA · Member since 2008 · 1k+ posts · 1k+ votes
8y
That's that's interesting, so if Matt invested$500 over a 60 month period, he would see a total of $300 income from his investment. If AHP does not return his capital then he's made an interest-free loan to them and not even collected his principal balance back. Seeing words in that language like might, try and "not at all" would concern me if I were reviewing their fund for investment!
Rental Property Investor · Portland, OR · Member since 2017 · 22 posts · 7 votes
8y
In doing my research on AHP, I came across this note on YieldTalk.com:
"While at first glance a 12% fixed return based on an underlying loan sounds like a debt investment, in this case is actually an equity investment in an LLC."
I was considering throwing them some cash out of my self-directed IRA, but now I'm wondering if, since it's not a loan, per se, if this might be a prohibited transaction?
In doing my research on AHP, I came across this note on YieldTalk.com:
"While at first glance a 12% fixed return based on an underlying loan sounds like a debt investment, in this case is actually an equity investment in an LLC."
I was considering throwing them some cash out of my self-directed IRA, but now I'm wondering if, since it's not a loan, per se, if this might be a prohibited transaction?
Chicago, IL · Member since 2018 · 2 posts · 1 vote
8y
Am I the only one who misses the old funny videos? Also any update on when the fund closes? I just started investing with them a few months ago, and I'm new to the game here.