American Homeowner Preservation
- Small min. for investing (USD 100)
- Accepts all kinds of people interested in investing
- Investors are dispersed through loan pools, offering a degree of diversity
- You get total interest and principal payments back until AHP receives income (2 percent annual charge)
- They are socially responsible
- Investors earn money, but upside is maxed out at twelve percent
- Pretty scarce history
- Small business, with the most (circa 90 percent) of control in one founder
- The company could utilize a max of seventy percent leverage to purchase loans
The founder of the American Homeowner Preservation had over 4k apartments across the states by 2004 and had a fortune amounting to tens of millions. But then came a huge storm and it damaged the founder's biggest asset - a complex in Ohio, holding 1,1k units. The founder, Jorge Newbery, ended up in litigation. He settled for 32m dollars, but that wasn't enough and didn't come fast enough. So, Jorge ended up losing it all and was left owning USD 26m.
This led him to start helping people who were faced with unfathomable debt. He established the firm in 2008 as a nonprofit that wanted to help out families who were facing foreclosure. A year later, they weren't a nonprofit anymore, but they still have the aim of making profit for investors and assisting families keep their houses.
Since transitioning from a nonprofit, the American Homeowner Preservation worked as an open-ended hedgefund for a couple of years and started providing closed-end funds via Reg D (only if you are an approved investor) and is currently providing investment opportunities via Reg A+ for all people.
AHP Forms of Investment
As an investor, you purchase in to a fund the company then utilizes to purchase a cluster of mortgages on a discounted price, and then they start renegotiating with homeowners. This can end in three ways:
- Loan Modification: The company can accept less than the homeowner owns or they agree upon a novel payment volume and schedule. Then, when some months of payments have passed, the loan is then sold to an other lender.
- Deed-in-lieu: The person owning the home agrees on a money incentive to give the asset to the company or work with them on a quick sale
- Foreclosure: The company starts the legal foreclosure procedure to get the owner of the house to accept the above-mentioned choices, or to repossess the asset at some moment.
The loans all fall into the categories equally, by approximately a third.
The Benefits of AHP Investing
Innovation keeps popping up on the website - both tech- and investment-wise. A twelve percent fixed yield on an underlying loan can seem as a debt investment, but this one is an equity one of an LLC.
This is a frequent model in property crowdfunding, but investors usually get a kind of a promissory note backed by mortgage. Here, there is no corresponding note. All in all, investors have little safety - a smaller level than you usually see in preferred equity investing and also have fewer upside potential when compared to a direct equity investment.
Investors get Class A shares in the LLC, which don't have rights to vote yet can get a 12 percent preferential profit and total return of any dividend prior it is received by the shareholders of Class M (the company owned by the American Homeowner Preservation).
How Does AHP Rake in Cash?
Straight charges to investors aren't imposed, but the LLC you will invest in will pay the company a two percent charge each year for different costs.
AHP maintains a loan service provider to assist in the distribution of loans (billing, processing of payments...) and the firm shall reimburse HSLLC for the wages of employees of HSLLC.
Possible Profits and Money Flow
As an investor, you can get a twelve percent yearly return and a full one of your principal, prior to the American Homeowner Preservation getting some of the returns.
You may hold investments for five years, but the company does aim to repay the principal and yearly return before this period.
As of this date, there is one choice for investing, and this is to be part of the fund that's operated at the moment. The company is investing in almost 50 states, as well as Puerto Rico.
Regulation Structure and Standards for Due Diligence
The company uses Tier II of SEC Reg A+ to offer investments, so this means SEC reviewed the offering. Also, you can rest assured investors get more details, yearly audited financial documents, yearly reports on SEC Form 1-K....
American Homeowner Preservation main features and highlights
- Residential Real Estate
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