Fund Details
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Pride of Austin High Yield Fund I, LLC is a Texas limited liability company located at Frost Bank Building, 401 Congress, Suite 1540, Austin, Texas 78701. The LLC was formed for the primary purpose of making and arranging 1 to 4 family residential (including mixed-use, and covered loans), commercial, and construction loans to the general public, acquiring existing loans, and selling loans, all of which are or will be secured by liens, deeds of trust and mortgages on real estate or personal property throughout the United States. The fund is limited to lending no more than 20% of its capital outside the State of Texas.
Pride of Austin High Yield Fund 1, LLC will engage in the business of making loans to members of the general public, and acquiring existing loans, all secured in whole or in part by deeds of trust, mortgages, security agreements or legal title in real or personal property, including but not limited to, 1 to 4 family residential properties, multiple unit residential property (such as apartment buildings), unimproved land (including land with entitlements and without entitlements), commercial buildings, construction and development, mobile homes, and other personal property. The use of loan proceeds by the borrower will not generally be restricted, except for construction loans where the use of proceeds will be controlled for the building, remodeling, and/or development of the property securing the loan.
If a loan is for construction, rehabilitation, or development of a real property, the loan will be directly secured by a security instrument encumbering the property being improved, rehabilitated, or developed and will be subject to a disbursement agreement between Pride of Austin High Yield Fund 1, LLC, as Lender, the Borrower, and the Borrower’s general contractor (if any) and may be funded in installments.
Pride of Austin High Yield Fund 1, LLC may invest in loans that are themselves secured by a loan secured by a deed of trust or mortgage. In these cases the underlying loan instruments will be assigned to Pride of Austin High Yield Fund 1, LLC as collateral for its loan pursuant to agreements that govern the collection of Pride of Austin High Yield Fund 1, LLC’s loan as well as the underlying loan collateral. In addition to deeds of trust or mortgages Pride of Austin High Yield Fund 1, LLC may secure repayment of its loans by such devices as co-signers, personal guaranties, irrevocable letters of credit, and assignments of deposit or stock accounts, personal property, partnership interests, and limited liability company interests.
LLC loans will be made pursuant to a strict set of guidelines designed to set standards for the quality of the security given for the loans. Such standards are summarized as follows:
- (a) Priority of Mortgages. The lien securing each LLC loan will generally be first lien position deeds of trust or mortgages but will occasionally be junior to one or more other deeds of trust or mortgage encumbrances on the real property which is to be used as security for the loan.
- (b) Loan-to-Value Ratios. Pride of Austin High Yield Fund 1, LLC intends to make or purchase loans according to the loan-to-value ratios set forth below. These ratios may be increased if, in the judgment of the Manager, the loan is supported by sufficient credit worthiness of the borrower, other collateral and/or desirability and quality of the property, to justify a greater loan-to-value ratio. The word “value” as used in the term “loan-to-value ratio”, shall mean the appraised value of the security property as determined by an independent written appraisal, Broker Price Opinion (”BPO”) or the Manager at the time Pride of Austin High Yield Fund 1, LLC makes the loan or which is “current” at the time Pride of Austin High Yield Fund 1, LLC makes or purchases a loan. An appraisal or BPO will be considered to be “current” if the Manager has inspected the security property and made a reasonable determination that the value of the security property has not declined since the date of the appraisal or BPO. The term “loan” includes both the amount of Pride of Austin High Yield Fund 1, LLC’s loan and all other outstanding debt secured by any senior deed of trust on the security property. The amount of Pride of Austin High Yield Fund 1, LLC’s loan combined with the outstanding debt secured by any senior deed of trust on the security property will not exceed a specified percentage of the value of the security property as determined by an independent written appraisal or the Manager at the time the loan is made.
Each month, the Manager will distribute Pride of Austin High Yield Fund 1, LLCs accrued Net Profits, to the extent that there is cash available and provided that the quarterly distribution will not impact continuing operations of Pride of Austin High Yield Fund 1, LLC as follows: 100% to the Members on a pro-rata basis.
“Net Profits” is defined as Pride of Austin High Yield Fund 1, LLC’s monthly gross income less the payments of Pride of Austin High Yield Fund 1, LLC’s quarterly operating expenses (such as the Manager’s Fees, amounts due by Pride of Austin High Yield Fund 1, LLC on any loans or line of credit, audit costs, and LLC taxes) and an allocation of income for a loan loss reserve. All distributions will be made on a quarterly basis, in arrears.
**NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS OFFERING IS MADE IN RELIANCE ON AN EXEMPTION FROM REGISTRATION WITH THE SECURITIES AND EXCHANGE COMMISSION PROVIDED BY SECTION 4(2) OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED (THE “ACT”), AND RULE 506 OF REGULATION D PROMULGATED THEREUNDER. THIS INVESTMENT INVOLVES A DEGREE OF RISK THAT MAY NOT BE SUITABLE FOR ALL PERSONS. ONLY THOSE INVESTORS WHO CAN BEAR THE LOSS OF THEIR ENTIRE INVESTMENT SHOULD PARTICIPATE IN THE INVESTMENT.
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