FAQ
Fund Overview | Fund Details | Request a Memorandum | Trust Deed Investing | FAQ
What is a Mortgage Pool Security?
Pride of Austin High Yield Fund 1, LLC is a Texas Limited Liability Company that allows investors to pool their financial investments through the acquisition of membership interests. The Fund’s pooled resources will be loaned to real estate owners and developers and secured by deeds of trust encumbering the underlying real estate.
What is the minimum investment required?
The minimum investment is $25,000 for investors.
What is “Hard Money”?
Hard money is a term that is used to describe loans that have credit quality that typically would not qualify for traditional financing. It is highlighted by the fact that the subject properties have a large amount of protective equity – typically at least 35%. However, in today’s banking climate even A plus borrowers are turning to hard money lenders for loans.
What is my security?
You have an interest in the entire portfolio of Trust Deeds owned by the mortgage fund rather than one individual Trust Deed. In the unfortunate event of a default, having your investment capital diversified among many Trust Deeds will mitigate a temporary reduction of your monthly income.
What happens if the real estate market experiences more volatility?
Investing in a dynamic pool of residential mortgages allows investors to diversify their portfolio, but more importantly in today’s declining market, where loans are made every month, the portfolio enjoys the benefit of dollar-cost-averaging, by adding new loans at the new real estate price on a continual basis.
Is there a minimum term?
Yes. There is an initial 24-month term once you purchase your shares. After that time you may redeem some or all of your shares at will by giving us written notice and we have 60 days to redeem your shares based upon the availability of cash resources within the fund.
Can I move my current investments into the mortgage fund?
Yes, we can do this for you immediately or when your current investments pay off.
Why do real estate owners and developers borrow from the Pride of Austin High Yield Fund 1, LLC?
A variety of circumstances lead borrowers to private money. A sampling of what we see on a daily basis:
- Real estate purchase opportunities with a short escrow
- Reducing the need for equity participation
- Credit challenges
- Unexpected project cost overruns
- Every borrower and lending opportunity is unique and it takes experience and discernment to select the best.
What happens if the borrower defaults?
Pride of Austin Capital Partners, LLC, the Managing Partner of the Fund will be the one in dealing with borrower defaults and the foreclosure process. Foreclosure and sale of the real estate may be part of the process.
What is my protection as an investor?
You are a member of the Pride of Austin High Yield Fund 1, LLC with all the rights and limited liability protection afforded to members of a limited liability company by law.
Why invest in the Pride of Austin High Yield Fund 1, LLC?
- Diversification of investment risk
- Portfolio of multiple loans
- A variety of property types, borrowers and locations.
- High Performance Income Investment
- High historical annual returns
- Monthly income distributed or reinvested at your choice
- Fully invested at all times
- Ability to Leverage using institutional investment partners
- Excellent investment for IRA’s
- Effective risk management
- Secured by a trust deed recorded against real property
- Loans selected by the fund are all underwritten by Pride Of Austin Capital Partners, LLC, using our underwriting experience and guidelines developed over the last twenty years.
- Fund Management (more on Management)
- Professional management by an experienced team
- Low management fee
- Minimum Personal Commitment
- Less time and hassle invested for due diligence
- No need to hold a capital reserve in the event of a non-performing loan
Is the fund investment open to everyone?
No, there are investor suitability standards. Please request an Investor Questionnaire to determine if you or your entity meets the suitability standards of an investor.
What role does Pride of Austin Capital Partners, LLC play in the Pride of Austin High Yield Fund 1, LLC?
Pride of Austin Capital Partners, LLC is the parent company of the fund manager and the fund invests in loans originated and underwritten by the firm’s underwriting guidelines.
Can a member/investor continuously add or subtract contributions to the fund?
Investors can invest in the fund as long as the fund is offering membership interests. Subject to the 24-month holding period, investors can redeem their shares by giving written notice to the fund.
Who regulates the fund?
The fund is licensed by the Securities and Exchange Commission and filed with the appropriate department of each State from which there is an investor.
What are the fees charged?
The fund pays its manager a management fee of 1% per annum. In addition the fund pays Pride of Austin Capital Partners, LLC a loan servicing fee of 0.5% per annum on loans in the portfolio and a maximum of 0.5% per annum for costs of administering the fund.
What yield can I expect?
Investors receive the actual interest paid by the borrowers to the fund less the costs of managing the fund, servicing the loans and administering the fund. The Fund will make monthly distributions in an amount equal to eight percent (8%) per annum of each Members’ respective outstanding capital account balance as of the first day of the preceding month. At the end of each calendar quarter the Manager will adjust the monthly payment in accordance with the actual return realized by the Fund for the preceding quarter. In the event the actual return is less than eight percent (8%), the Manager will collect the shortfall upon the earlier to occur of the next quarterly adjustment or the Members’ withdrawal from the Fund.
Why does the Fund borrow money to make or purchase Trust Deeds?
The fund has the ability to utilize leverage by borrowing funds against the portfolio of loans in order to offset the costs associated with the fund and to increase investment returns.
How do I know how much money I’ve made with the Pride of Austin High Yield Fund 1, LLC?
As an investor you will receive a monthly statement of your account. You also have the ability to go online at anytime to view the details of your account.
What type of loans will the fund make?
Fund loans will be secured by deeds of trust almost exclusively on 1 to 4 family residential real estate; however the fund is licensed to do loans on improved commercial, industrial and unimproved land. Properties will be located primarily in the State of Texas, but the fund is permitted to operate nationally. Fund loans may consist of: (1) loans secured by fully improved commercial or residential real estate located within or outside Texas; (2) construction loans made pursuant to a construction loan agreement governing the construction of one or more new structures on the security property; (3) rehabilitation loans, where a portion of the loan proceeds may be used to make repairs or construct certain rehabilitation type improvements to the security property; and (4) loans secured by raw land. No more than 20% of Fund loans will be secured by property located outside of Texas.
Can dividends be reinvested?
Investors have the choice of (1) receiving regular monthly cash distributions of Fund income, or (2) having their income credited to their capital accounts and reinvested by the Fund. An investor may elect to switch from one of these options to the other only upon ninety (90) days’ notice to the Manager.
Can I invest funds from my IRA or self-directed pension plan into the fund?
Yes – Pride of Austin High Yield Fund 1, LLC is excellent for self-directed IRA and Pension Plans. If you weren’t aware that you could invest in trust deeds through your IRA, talk to us. We can show you how.
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