American Homeowner Preservation (AHP) Fund

[Mark S.]

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?

[Bob Malecki]

We have bought some loans from them from our fund. Jorge Newberry is the principal and a very good guy from my experience. I cannot comment on the performance of his fund though. 

[Mark S.]

Thanks @Bob Malecki.  Is this structure standard, though, in terms of capping investor returns at 12%?  I would prefer to at least be able to share in additional upside.  I've heard of the whole 2+20 (2% fee + 20% of profits) approach with hedge funds, but haven't heard of performance caps before.  Seems very limiting for the investor.  

[Patrick Desjardins]

If you want to share in the upside (but also risk your capital) you can do joint ventures with small investors. Fixed rates are very common for note funds.

[Bob Malecki]

Hi @Mark S. each fund is different in structure, some are preferred return only, some are profit split, some are a hybrid, some are debt only, depends on the fund and the sponsor. Our recent fund was a preferred return plus a split on profit after expenses. Our next one may be preferred return only. The one following may be a profit split with some leverage, depending where the market is and our goals for that fund. 

Bob

[Mark S.]

Thanks, @Bob Malecki.  Just opened an account with them and threw a small amount in there for giggles.  We'll see how it goes.

[Mark S.]

Bob Malecki , I'm assuming income from funds like this are generally taxed at ordinary income tax rates, correct?

[Bob Malecki]

Yes, its mainly ordinary income from interest payments. On our recent fund when we sell off the performing notes in year 5, that will be a capital gain from the difference from the adjusted cost basis of the assets to the net sales income, but the income to our fund members from the loan payments up to that point will be ordinary income. 

[Akash Sky]

i was thinking about investing a hunded dollars into this.  The one thing i don't like is how much power they have over you.  Basically ,they have the right to reject your capital and essentially "pre-buy" you out.  So, lets say they hit a huge series of grand slams and are returning 20% / year annualized.  The company can buy you out and just keep their 20% / year.  Basically, you are taking a lot of risk and have limited upside.  I don't think its that great of an investment, but I like the concept and the ability to diversify into notes.

[Mark S.]

@Akash Sky, they are pretty much consistently hitting grand slams of more than that.  If they have to pay 12% to investors FIRST before they make any money (other than their 2% management fee), they have to consistently be earning more in order to be able to "keep the difference" or "excessive return."  I think the language you mentioned basically just means they have the right to say no, but not simply because they're hitting grand slams.  Also, if you look at their past performances of other offerings, you'll see their returns are far north of 12%.

[Akash Sky]

that may be the case, as I know very well how lucrative buying debt pennies on the dollar can be.  The issue I have here is how much control they have over my position, ( they have the right to buy me out at any time).  Essentially there's a conflict of interest risk with this investment in addition to the regular buying non performing debt risk.  Can you show me a link to the performance of their past offerings?  I am actually thinking about invest a hundred bucks into this because of how interesting I think it is.  I just don't like how they legally worded their offering and the rights they have over me 

[Gregory N.]

12% return, less 2% fees, followed by taxes as ordinary income suddenly become a very ordinary 6%, and a pretty illiquid investment at that.  

[Jeff L.]

I just skimmed their FAQ and they say no fees at all, just a 12% return. Did something change?

[Abhishek B.]

Hi..I recently invested $500 with them just to see how it goes. It's been six days and the money still shows as sitting in escrow. How long did it take before your funds were invested? 

[Mark S.]

My understanding is 12% annualized return, paid at 1% monthly, on your investment.  The annual 2% management fee comes out before you get your principal back.  At least that way, in the event you never get your entire principal back (targeted within 5 years, although they'll make a best efforts attempt to get you out sooner penalty-free after 12 months (slight penalties months 1-6 and 6-12)), they still got to collect their management fee along the way.  Distributions are generally paid around the 10th of each month.  I invested $1,000 to test it out and get $10/month in distributions.  #Cashflow.  LOL

[Todd Krzeminski]

Originally posted by @Abhishek B.:

Hi..I recently invested $500 with them just to see how it goes. It's been six days and the money still shows as sitting in escrow. How long did it take before your funds were invested? 

I invested via my SDIRA back in late January. The site was under construction and I only recently got a login to the site. But it's now showing that my funds were invested on 2/9/17. I've received two distributions since then, and both were reinvested into the fund (as I requested). So far, so good.

[Abhishek B.]

Thanks @Todd Krzeminski. I am still waiting for my funds to be invested. Hopefully should be done in the next week or two.

[Jamal Page]

Do I just google to find or are there some sites you can recommend?

[Jamal Page]

Do you have to be an accredited investor?

[Linda Hastings]

Originally posted by @Mark S.:

Just opened an account with them and threw a small amount in there for giggles.  We'll see how it goes.

Although it may be too early to tell, I'm curious to see how this is going for you. Any updates?

[Mark S.]

It's going great.  I get the equivalent of a large cheese pizza deposited into my checking account each month.  

[Andy N.]

I just put in $1,000.00 to see how it goes. 

[John B.]

Originally posted by @Andy N.:

I just put in $1,000.00 to see how it goes. 

I did the same, I also want a large free pizza coming in every month :-)

[Mark S.]

Originally posted by @John B.:

Originally posted by @Andy N.:

I just put in $1,000.00 to see how it goes. 

I did the same, I also want a large free pizza coming in every month :-)

 😂

[Jeff L.]

Interested in this even though they're closed to new investors at the moment.

Questions for people that are currently investing with them:

1) Under their FAQ, it says they distribute 12% to each investor first, then "return to Investors all of their invested capital." What does the second part mean? So do they actually give higher than a 12% return, or are they just buying you out of your initial investment (after they've returned all your investment, are you still invested?). Can you give me an example of a monthly distribution you've received from them, let's say with an investment of $1000.

2) Are there any fees?

3) Is your investment secured by anything?

4) Any other opinions about this fund? Has it been working great or poorly for you? How much have you invested with them?

[James Mc Ree]

They pay 12% interest on your principle for a term, then return your principle at the end - just like an interest only loan.  Fees are built into the operation of the company.  You won't see fees, just 12% if all goes as planned.  The investment is secured by the notes in which AHP invests - no guarantees!  In fact, they explicitly disclaim virtually everything and write you can lose your entire investment.  That's not likely, but possible.

I just invested with them a couple months back and all is good so far.  As I read about them, it seems like they have a solid track record so far, but it is short and during an awesome real estate market.