Personal experience with PPR Note Fund
Investor · Weston, MO · Member since 2016 · 6 posts · 2 votes
Anyone have any experience with PPR Note Fund?
@Justin Cress: The Colonial Impact fund is structured a little differently than the PPR fund.
With PPR (at least the fund I am in), the setup feels much like you are getting interest payments on a loan. It isn't a loan, I'm just using that as a description. Here is what I mean: The fund has a preferred return, you get that every month. If there is more upside in the fund, you don't participate in that. You get up to the preferred return, nothing more. From the research I did, they have always hit their preferred return. The overall effect is much like a consistent monthly payment on a loan. This wasn't a surprise, it was made clear reading the operating agreement and talking to them on the phone.
With the Colonial Impact II fund, the capital took about three months to deploy, during that time, I earned nothing on the money except for a week or two right at the end. This wasn't a surprise either, the operating agreement and conversations I had beforehand set expectations that this could happen. But I hoped it would be deployed faster. Payments come quarterly (or are re-invested quarterly), There's a lower preferred return than PPR, but you participate in the upside if the fund beats the preferred return. So overall, less consistent payment but more potential for upside.
Hi @Kevin Phu
Don't want to get too off topic of this thread or sound like I'm plugging our company but let me try to answer your questions as best as I can:
- Whatever they can afford and find. You might have to be more specific. We deal with re-performing 1st and 2nd mortgages currently, but that's just our model.
- Depends where you buy from and how much capital you have. For instance, we only sell individual notes but others on BP purchase pools or pool together capital to purchase pools from other note sellers.
- Every note seller is different. We currently vet note buyers that register through our site via a Note Application process.
Dave,
When is 15% preferred return coming back? ;)
Hi @Kevin Phu
Don't want to get too off topic of this thread or sound like I'm plugging our company but let me try to answer your questions as best as I can:
- Whatever they can afford and find. You might have to be more specific. We deal with re-performing 1st and 2nd mortgages currently, but that's just our model.
- Depends where you buy from and how much capital you have. For instance, we only sell individual notes but others on BP purchase pools or pool together capital to purchase pools from other note sellers.
- Every note seller is different. We currently vet note buyers that register through our site via a Note Application process.
No worries! You were the exact person I was directing my question too. I was out at sea so the Navy computers were acting funky with the B site and I couldn't quote your post. Thank you for all the information!
Sure thing @Kevin Phu. Feel free to PM me anytime you have more questions.
Anything's possible! But the rate is dictated by the market. I'm not sure you want interest rates to go up that high! ;)
@Dave Van Horn Will you be at 12% on your next fund (of which I'm patiently waiting for)? It appears that on your website the listed preferred rate is 10% now. If that's the case, interested to know why.
Hi @John K.
Good question. Starting this month we will have two funds open.
One is currently open with a 10% preferred return for a 3 year term. Due to high demand, we've only done a soft launch of this fund thus far to grant our legacy investors a spot before it fills up. Following these legacy investors, we will be going through our capital call list, so if you'd like to get on that list I'd suggest contacting our Investor Relations department asap.
Our other fund that should be open in a few weeks is a bit of a game changer. The rate will be 7% preferred return, but this will be what we're calling a "Liquidity Fund". So instead of a 3 year term, we will be allowing investors to redeem their investment back within 90 days of written notice. So it could be a perfect fit for investors looking to put capital to work and make a healthy return while waiting for their next Real Estate deal to become available. This fund will also offer complete transparency as well.
The lower rates are really market driven and we're lowering them now to enhance our current business model as we grow, which will enable us to increase buying power and improve overall trade efficiency.
The lower rates are really market driven and we're lowering them now to enhance our current business model as we grow, which will enable us to increase buying power and improve overall trade efficiency.
Para #1 of your post: Doesn't this introduce volatility in terms of cash operations for you. How would you handle en-masse withdrawal requests or is there a preferential gating system in place?
Para #2 of your post: Can you help me understand your statement of a lower rate enhancing your current business model because wouldn't a increased yield in today's time drive more investment $$$ to your fund.
@Dave Van Horn, are either of these new funds open to non-accredited or sophisticated investors?
I've purchased a total of 3 individual notes from PPR and am extremely happy with my purchases....but would also like to invest in some funds since I end up with funds sitting idle in my IRA between purchases. Unfortunately I'm likely a few years away from breaking the accredited status.
These are good questions. The answers may be a little too nuanced for a forum post but let me attempt to do them some justice.
1.) It does not introduce volatility because we have multiple ways to regulate this fund.
Firstly, the fund has liquidity through what it invests in. So we're investing in performing and re-performing notes which we can liquidate very fast. So if we were ever in need of cash, we could always just sell loans. The fund is also investing in other longer term note funds that are our affiliates which can provide liquidity if need be.
Secondly, in the risk disclosures of our PPM we detail how we have the ability to delay the return of capital if a scenario like you described were to happen. Now we never have done this or had a need to in our 11 years of existence but we could if there were a mass withdrawal of some sort . And as the fund manager, if I saw a pattern of large amounts of capital being redeemed (which I can see with our robust fund management accounting reports that I receive daily), I can also simply stop raising capital and even start another offering in the same fund with a different rate and terms, if necessary.
We also know from experience that we have the ability to raise significant amounts of capital within any 90 day period, which would also mitigate this potential risk.
The point is, we have a lot of flexibility to regulate the capital to avoid this scenario. I'd also like to mention that likelihood of this happening is quite rare, in my opinion. The reason I say that is with so many different investors utilizing various types of capital - i.e. disposable investment funds, retirement capital, and other qualified plans, a mass withdraw by more than 50% of our investors isn't likely. The limiting of investment capital to a $1 million dollar investment per EIN number also helps to mitigate that risk.
2.) It lowers our overall cost of capital which allows for more competitive bidding, so we can essentially buy better and we can buy more assets. Plus we can operate as a company more efficiently with the tighter margins brought on from the current upmarket we're experiencing.
In terms of raising capital, we've found it's actually the opposite of what you suggest. In the current marketplace, a lower rate is seen as less perceived risk. When we started 11 years ago we were raising capital at rates as high as 18% and we raised much less money than we do today and we were seen as a risky investment vehicle because of it. So "the more volatile the investment the higher the return" is usually the perceived take from most investors I've encountered. It's not always true in my opinion but there's enough evidence to justify that perspective.
The PPM docs should be available for review next week if you'd like to look at them or you can schedule an appointment with our Investor Relations department if you'd like to discuss more. And feel free to PM me anytime, I'd be happy to answer any other questions you may have.
Hi @Matt Devincenzo,
Glad to hear you had a positive experience with us! Unfortunately these two new funds will not be open to unaccredited investors. If anything changes in terms of requirements for any of our future funds, I'll be sure to let you know.
- Dave
hi @Dave Van Horn, just a silly question: how are your funds (the new and existing ones) related to notes purchasing? I guess investors can still buy individual notes, outside of the funds?
That's correct. Anyone can purchase a note whether they choose to invest in the fund or not.
Our note funds are essentially a way for accredited investors who are looking for a more passive return to invest in a wide variety of notes (that the fund invests in). It diversifies their risk and limits their liability that way and also allows them to benefit from our experience as fund managers, as well as our team, analytics, etc
Thanks @Dave Van Horn. PM'ed you a message.
One more question: in this note jargon, "preferred rate" means actual yield, right? So how is a 7% preferred rate note fund different to a 7% coupon bond or bond fund?
Yep, that's correct.
They're really just different asset classes.
Our liquidity fund is backed primarily by 1st mortgages (which are backed by hard real estate), whereas a bond fund is backed by debt instruments. And our preferred return also doesn't fluctuate within the term, where I believe a bond fund yield can fluctuate depending on it's value.
Will take a look at your PM now.
How come no one is talking about PPR in the past year?
Is this fund legitimate? Is there any bad press? any horror stories?
How come more people are not investing with a 10% return and no money lost?
Is this too good to be true???
@Paul B Fleming I hope it isn't too good to be true! :)
Y'know I was just talking to an investor yesterday and I was saying the one drawback to note fund investing from an investor's perspective is that it's pretty boring. Really, you just get a check in the mail (or paid via ACH) each month and there's not much more to it. We have an investor dashboard/online portal where investors can view their statements and we like to keep our investors up to date with a quarterly newsletter but that's pretty much it.
As for your other questions, there hasn't been a ton of talk in the past year about the 10% fund specifically because it has only just recently re-opened. In an effort to regulate capital, the first half of the year was dedicated towards launching our liquidity fund offerings at various rates (now at 4% and 6%, at 60 & 180 day terms), as well as our Reliant Income Fund 8% offering with a 1 year commitment.
That said, with major changes in the second half of the year, 2019 is proving to be our biggest year yet. We were just recently awarded a large trade to date with HUD ($30 million in first liens), and we're seeing many more opportunities of that size on the horizon. The re-opening of the 10% fund coincided with the winning of that trade in an effort to raise such a large amount of capital in a limited amount of time. The good news is we've already exceeded that goal as of this week! And you can learn more about that specific trade and the re-opening of the fund here:
Aside from the 5 or so investors who chimed in on this thread, and the various investors of ours who have talked about us positively on other forum posts, you can also connect with a number of our investors at either our upcoming MidAtlantic Summit or at one of our Strategic Investor Alliance (SIA) events. Both of which aren't just PPR specific, dealing with wealth building and preservation strategies for the accredited investor, but our investors do attend and it's a value add for them.
Lastly, not sure where you're based but you're also more than welcome to come into our office and meet the team before investing (or feel free to reach out directly if you have any specific questions)
@Paul B Fleming I can't speak to the funds as I'm not (yet) accredited, but as far as individual note purchases they are indeed legitimate. I'm actually purchasing one right now, and have bought two others since last year bringing me to 6 total notes from PPR. All have been re-performing and continued to perform after my purchasing them. I still get PPRs note guarantee which I'm thrilled to never need. The staff at PPR have always been great to deal with in my individual transactions, and I can tell you that several, if not all, of the people I dealt with on the original transaction nearly 4 years ago, are still there today. To me retaining employees and having the depth of knowledge and experience within a company, helps to mitigate the risks associated with any potential market volatility.
How come no one is talking about PPR in the past year?
Is this fund legitimate? Is there any bad press? any horror stories?
How come more people are not investing with a 10% return and no money lost?
Is this too good to be true???
To update my previous post from 2 years ago: Nothing has changed except time. They've never missed a payment, or even been late. Dave's right, it all sounds kind of boring but I don't feel too bored when I look at my bank account balance on the first of every month. And that should be the ONLY excitement in this type of passive investment!
Dave, I hope to get up to PA and meet you one of these days. I'd love to make it to one of the Strategic Investors meetings! Maybe life will slow down enough one of these days. Keep up the good work! Btw, I look forward to the weekly newsletters, they are always well done and informative.
Hi Dave,
Thank you for replying to my questions.
I would like to talk to you directly, I have left messages with Colleen.
Can we set this up please, thank you.
Paul
I have done business with PPR and have found them to be great to work with. I have had to use the warranty and they bought back the loan with no delays. I also bought a note that cashed out before making the first payment which gave me a nice profit. I currently have two notes with them that have stayed current since I purchased them.
I am invested in one of PPR's funds and they have never missed a payment. @Dave Van Horn, please keep it boring! I have enough drama with other investments, haha.
Thanks for the kind words everyone!
And sure thing @Paul B Fleming, happy to help
Colleen in our Investor Relations Department let me know you two spoke today. Look forward to talking to you myself later this week!
All the best
Dave
Hello Dave Van Horn,
Thank you for taking the time to give me a call personally and walk me through your business model and explain all the different things you do, I look forward to meeting you in person , I would love to come up to Philadelphia sometime and meet you and also get involved with the strategic investor alliance that you invited me to. I am always looking to meet other like-minded investors with good ideas of preserving and growing wealth. I look forward to meeting you in the near future.
Thanks again, Paul Fleming.