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AHP (American Homeowners Preservation) Servicing Comprehensive Review

Category: Non-accredited investor funds
Honors: None

What is AHP Servicing?

UPDATE: 3/7/2020 company financials can be difficult to interpret because each one does it differently. At the same time, investors allege that AHP's financials filed with the SEC may show that they are paying out signficantly more in distributions than they are making in profit from the investments (on both 2015+ and AHP Funds). I hope that this is just incorrect and/or a misunderstanding. But, to be cautious and for the time being, this is being downgraded to the lowest rating of 1 star out of 10 until this can be resolved.

AHP Servicing offers both nonaccredited and accredited investors a niche strategy: distressed-debt investments in single-family residential homes. It currently has a single fund available which offers investors access to a portfolio of these notes at a very low $100 minimum. The fund projects a 8-10% return which is paid monthly, and has no investor fees.

On the other hand, the blackbox nature of the investment class makes it impossible to do a recession stress test before investing. This may be a showstopper for many conservative investors. Additionally they don't have full bankruptcy protection and the unusual profit split structure may cause concern for some.

Also, the latest 

(More on these and other things is in the "pros and cons" section below.)

How does AHP Servicing work?

AHP Servicing invests in nonperforming single-family residential notes that are mostly in low income areas. These are notes/loans where the homeowner has stopped making their mortgage payments.

Many banks and lenders do not want to keep these loans because they are at an exponentially higher risk of permanent default (i.e. not getting any payments) and they can become very expensive to service and potentially foreclose on. So they sell them to a company like AHP, who steps in and purchases them at a discount.

AHP then tries to get the borrower to repay (perhaps by restructuring the loan). If they're unsuccessful then they foreclose and take possession of the house to recoup their costs. The idea is that if they can purchase it at a low enough price, it will make up for the potential risks. If they do, then the note is profitable. If they don't then they and the investor take a loss.

AHP diversifies the investor into a fund of many notes, to insulate the investor from the risk of any one individual note skewing the end result.


What are AHP Servicing Pros and Cons?


  • Advantages: They accept non-accredited investors. Very low $100 minimum. No investor fees. Ability to withdraw early.

  • Disadvantages:  No ability to do a recession test before investing. Principal has a less than stellar record in the last recession. Bankruptcy protection is incomplete.  Unusual equity structure may not be acceptable some. Some may consider the business model to be predatory.

  • Accolades: None.

Investors with AHP servicing invest in a fund that accepts both accredited and nonaccredited investors. So this will be a plus to nonaccredited investors looking to get into this asset class. Non-accredited investors are subject to investment maximums and cannot put in more than 10% of their annual income or net worth (excluding the value of their primary residence). 

AHP projects monthly distributions (which is a potential plus for income oriented investors if they are realized). The fund has an unusually low $100 minimum which makes getting into the fund very easy for virtually any investor. 

They project the ability to return capital in five years but also offer the option to withdraw early at a lower projected return (8% for those withdrawing in the first year and 9% for those withdrawing in the second).

On the downside, conservative investors who do a recession stress test before investing in any deal, will be disappointed in this asset class. Since the selection criteria for the notes and the makeup of the portfolio itself are "black boxes" (not revealed to investors) there is no way to do this. This may be a show-stopper for these types of investors. 

Additionally, investors say the PPM of the last AHP Servicing fund disclosed that in 2004 the principal lost not only his entire net worth (which was claimed at $10 million) but ended up $26 million in debt. Losses of this magnitude aren't usually associated with conservative investing tactics. So this may be very troubling to some conservative investors. Others who are more aggressive or who like the offering may not have an issue with it.

If the firm should go bankrupt, the bankruptcy protection of the fund is incomplete and could cause problems for investors. On one hand AHP Servicing claims that the fund is bankruptcy remote and would not be sucked into their bankruptcy proceedings and used to pay creditors. On the other hand, there is no backup administrator specified and no way for investors to vote on one. Without someone running the fund, investors would be like passengers stuck in a car without a driver. So it's hard to imagine how the investors in such a situation would not be put in an uncomfortable position. I hope AHP will consider changing this setup in the future.

The fees and profit splits are a mixed bag of unusual features, that some may love and others may not. On one hand, they have no investor fees. The majority (about two thirds) of note funds do charge some sort of management fee which is typically about 1% per year. So they compare very favorably there.

Also, the preferred return/performance hurdle on the profit split is very high at 10% (versus anywhere from 6 to 8% on some competing note funds). So the fund does not participate in profits until that hurdle is achieved, which is nice to see.


On the other hand, that 10% preferred return is reduced from the 12% accredited investors were getting in their last fund. So repeat investors may not be as happy or as eager to jump into this current fund. 

Also, if the fund does as well as they are projecting and the performance hurdle is surpassed, AHP gets extraordinarily expensive. A typical fund will take 20% of the profit and give 80% to the investor. AHP takes 100% of the profit and gives 0% the investor. So if things go very well, the investor might be paying significantly more than with a competitor.

The other issue with this unusual structure is that the risk/reward structure are out of whack with what's typical. Typically an investor who want to safer investment will invest in the debt. In exchange for a capped interest rate (say 10%) the investor also gets the protection that if something goes very badly they have the ability to foreclose and recoup some or all of their investment. That protection is also called "collateral protection".

And typically an investor who wants a more aggressive investment will invest in equity. This will usually offer an unlimited potential return (say 15%-20% and higher) in exchange for the investor taking more risk. To get that, the investor gives up collateral protection. So if the deal goes bust, they may lose some or all of their investment.

In the case with AHP, there is no collateral protection. So typically an equity investor would expect to be offered an unlimited potential return. However, this return is capped at 10%, like a typical debt investment.

So a person could argue that it is combining the worst aspects of a typical equity deal (no collateral protection) and a debt deal (a capped return).


Additionally, some investors may find the business model of nonperforming notes to be somewhat predatory. There is quite a bit of wording on AHP servicing website that claims they perform a "vital service for homeowners" and "local communities" by providing people a second chance to restructure their loans. They claim it allows investors to "directly impact families in need, and see concrete results".

So I asked AHP servicing 3 times to quantify this and tell me exactly what percent of their loans have been successfully restructured and paid off. So far they have not answered (although they have answered every other question I've asked). If this changes and they do provide an answer I will update it here. 

Is Investing In AHP Servicing Legal?

AHP Servicing markets to investors under regulation A+, meaning that it's available to both accredited and unaccredited investors. As mentioned earlier, non-accredited investors can't invest more than 10% of their income and/or net worth (excluding their house).

What does an AHP Servicing deal/fund look like?

Here is my step-by-step due-diligence on a random AHP Servicing investment. So it may or may not be a typical investment. (Note: they currently have only one fund open on the site, so that is the one I picked).

Also I'm a very conservative investor, so something that's way too risky for me might be the perfect fit for someone else who is more aggressive. Finally, I'm not a financial advisor, attorney or accountant. So this is just my personal opinion and always consult your own financial professionals before making any financial decisions.


The investment is in distressed notes on single-family rental houses. Projected returns are from 8 to 10% and paid monthly.

The first step is to check if the asset class and strategy even make sense for my portfolio. (If you don't know how to do this, please see The Conservative Investor's Guide to Due Diligence). Let's say that it does and dive in.

Experience: this is a very specialized field, and usually in a specialized field I want as much experience as possible. As a conservative investor, I would like to see at least one full real estate cycle of experience in the exact asset class and strategy of the open fund. And I want to see that they did not lose any money.  

According to the PPM of the previous fund, AHP started their first fund in 2013. So for me this would be a showstopper. For someone who is more aggressive, this might not be an issue.


As mentioned above, investors say the PPM discloses that in 2004 the principal lost not only his entire net worth (which was claimed at $10 million) but also ended up $26 million in debt. For me personally, this large and sudden collapse, could signal a principal that was willing to take significantly larger risks with investor money than I would ever be willing to participate in. If so, someone could argue that it's possible the sponsor has change. If true, with so many investments to choose from, it's hard for me to think of a reason to even take the possibility of the risk. So from my point of view, this is a red flag. A more aggressive investor might have a very different point of view and be ok with this. Someone who is in-between might wish to probe this incident and ask further questions. 

Strategy of owner-occupied homes: loans on owner-occupied homes (where people live in them) have significantly more risks in certain areas compared to investor owned homes (which is the focus of the typical note fund). Due to numerous consumer protection laws, owner-occupied is in general very expensive, difficult and time-consuming to foreclose on (often taking years or more, and perhaps going to the court system to fight expensive legal battles). In comparison, investor owned property in a nonjudicial state, can be foreclosed on without going to an expensive legal battle in court, and finish in a couple of months and for a fraction of the cost. As a conservative investor, the exposure to this risk is a yellow to red flag for me, at this stage of the cycle.  Others who are not as worried about a downturn, or are more aggressive or something like the asset class may feel differently.

Model risk: the key to their model is that they need to purchase notes at enough of a discount to make up for the fact that some of these notes are going to be duds/money losers. Companies like this have proprietary black-box models that they will not reveal, that they claim gives them an edge in doing this and will sustain them through a downturn. This may or may not be true, but ultimately there is no way to know for sure until the next downturn comes. So investing in this company requires the investor to be taking a leap of faith.

I've personally taken a leap of faith with several companies whose black-box models who have all disappointed me (Lending Club, Funding Circle, etc.) So I've said "never again" to this concept. But that doesn't mean that their model is bad or wrong or that it won't succeed. It's possible that it might do very well. So this is a red flag for me, but would probably be fine for someone more aggressive.


Recession stress test: I personally always stress test every investment based on the worst things that happened in the last couple of recessions, and see what the result is. Only if I can live with what would happen, do I invest. There is no way to stress test this investment, because they don't reveal their black-box model, nor what is inside the portfolio currently. So for me that's a red flag. A more aggressive investor that does not require recession stress test may be fine with this.

Split terms: they offer a 10% preferred return which is reduced from the 12% preferred return that they gave in their last accredited investor offering. After that the profits are split 0% investor/100% sponsor. The average equity fund split is 80% investor/20% sponsor. So if this fund does well, it will probably end up being very expensive compared to competitors.

Also, I personally don't like the idea of taking the risk of equity (no collateral for protection) while being stuck with a debt like return ceiling of 12%. There is no opportunity to participate in the upside despite taking the usual risk for it...which for me this is a yellow to a red flag. Someone who really likes this deal may be willing to overlook this.


If the investment passed all my initial checks, I would have dived in further to check out the sponsor, the property itself, the projections, etc. To learn how I do those things, check out The Conservative Investors Guide to Due Diligence.


Where can I discuss AHP Servicing deals?

You can do this with thousands of other investors in the private investor club. While the club is free, membership is restricted to investors who have no business connections to sponsors or platforms. Also, all members must agree to keep all club info confidential by signing a nondisclosure agreement. Click here to join or get more info.

Other Non-accredited Investor Deal  Sites:

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Who are AHP Servicing Debt Competitors?

Here are the reviews and rankings for other debt sites (note that many of these are accredited investor only):

OR...if you're looking for more volume and/or more conservative LTV's than most crowdfunding sites provide, then a fund might be a better choice for you. If so, here is our Guide to the Top 15 Hard Money Loan Funds (and honors)

Debt Investing Tutorials:

Looking to learn more about debt (hard money loan) investing? Here's our 4-part step-by-step series : "The Comprehensive Guide to Hard Money Loan Investing".

How to pick?

Check out our step-by-step guide.

AHP Servicing Comprehensive Review and Ranking
  • Code of Ethics: To maintain objectivity, I do NOT accept any money from any outside sponsor or platform for ANYTHING (including but not limited to affiliate ads, advertising etc.). See code of ethics for more.

  • Personal opinion only: All info is my personal opinion only as an investor. I am not an attorney, nor an accountant, nor your financial advisor. Always do your own due diligence and consult with your own licensed professionals before making any investment decision. Information is believed to be correct but may have errors, so use at your own risk. If you find an error, please let me know.

  • Ratings are general: In my opinion, every investor comes from a different risk tolerance and financial situation, so there's no such thing as a single investment or platform that's great for everyone. There are many deals that aggressive investors love, which I won't touch, and vice versa. And every investor has their own way of doing due diligence. I believe there's no one right way to do it. 

    So, the site ratings are based on criteria which I feel are important to the broadest range of investors (transparency, volume, bankruptcy protection, etc). And even though I have my own personal, conservative, due diligence method (and talk about how the site's deals measure up in the "deep dive section"), I don't use my personal criteria as a factor in the ratings. So for example, a high ranking/rating doesn't mean that I would personally invest in a site (and vice versa). Click here to see what's in my own portfolio.

About Ian Ippolito
Ian Ippolito: investor and serial entrepreneur

Ian Ippolito is an investor and serial entrepreneur. He has been interviewed by the Wall Street Journal, Business Week, Forbes, TIME, Fast Company, TechCrunch, CBS News, FOX News, USA Today, Bloomberg News,, CoStar News, Curbed and more.


Ian was impressed by the potential of real estate crowdfunding, but frustrated by the lack of quality site reviews and investment analysis. He created The Real Estate Crowdfunding Review to fill that gap.

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This site has been ranked and reviewed as part of our in-depth, 100+ site industry review. All data is believed to be correct, but may have mistakes. Please contact us if you notice one. All non-data (including rankings, investor comment summaries, etc.) are my opinion only. I'm just an investor and not an attorney, accountant, or certified financial advisor. To maintain neutrality: I do not own a portion of any of the companies reviewed. 

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