What is the investment?
We offer a fund that invests solely in high yielding first mortgages secured by commercial real estate.
How long has the Fund been operating?
The Fund Manager, Pacific Horizon Financial, Inc, has been operating as a mortgage loan broker licensed by the Department of Real Estate (License #01032661) since 1989. The Fund “Pacific Horizon Mortgage Investors I, LLC, has been operating since October 2003.
What makes Pacific Horizon Mortgage Investors I, LLC a good investment?
We focus on obtaining yields that are significantly higher that those that can be earned with money market or CD accounts and we secure our investment with first mortgages or commercial real estate.
What is the minimum investment amount for Pacific Horizon Mortgage Investors I, LLC?
The minimum investment is $10,000. You can add to your investment in any increments at any time.
Are Pacific Horizon Mortgage Investors I, LLC investments open to everyone?
No, there are residence and net worth requirements. You must be a resident of the state of California. Your net worth—exclusive of your home, auto, and furnishings—must be at least $250,000 or you must have a net worth of $65,000—exclusive of your home, auto, and furnishings—and an annual income of $65,000.
Why doesn't Pacific Horizon Mortgage Investors I, LLC invest in second mortgages?
Safety! With the exception of property taxes, the first mortgage holder is in first position in event of a default. Since Pacific Horizon Mortgage Investors I, LLC limits its exposure to less than 65% loan-to-value on developed properties, the fund is rarely in the position to be substantively hurt if the loan is forced into foreclosure.
How much money is in the Fund?
Since the Fund is comprised of only 1st mortgages, we keep very little cash on hand. As of March 2006, the Fund owned approximately $16,000,000 invested in 22 different first mortgages.
What role does Pacific Horizon Financial, Inc. play in Pacific Horizon Mortgage Investors I, LLC?
Pacific Horizon Financial, Inc. provides loan management services. The company charges extremely low management fees.
Do the investors participate in loan commissions earned by Pacific Horizon Mortgage Investors I, LLC?
Yes, the Fund receives 10% of commissions.
Can a shareholder continuously add or subtract contributions to the fund?
Once you execute a subscription agreement, you can later add money to your account in any amount by completing a 1 page addendum & returning it with your check. This investment is not intended to be a savings account, so you can't continuously withdraw funds. However, there are means by which you can redeem shares if necessary.
Who regulates the Fund?
The Fund is licensed as a California Finance Lender and Broker (license #603 9241) and it operates under a Permit (file # 309-3091) pursuant to Section 25113(b)(1) of the California Corporate Securities Law of 1968 dated as renewed each year. The current Permit is effective as of October 4, 2005 As of March 2006, the California Department of Corporations is the governing authority. The procedures and limitations on the Fund are spelled out in its Offering Circular.
How long is one committed to the Fund? [or What is the procedure for liquidation of units?]
The prospectus states that once you've had funds invested for 1 year, then you can give written notice of your desire to sell all or a portion of your shares. We then have 90 days to make a best effort to accommodate your request.
However, barring an unusual circumstance, we should be able to honor your request within a 30 day time frame even if your funds haven’t been invested for 1 year. On a monthly basis, we have cash available from the following sources: New investor funds, Loans paying off, or our Line of Credit.
What are the fees charged?
This is a ‘no-load’ investment. PHF does not charge fees for raising money. Pacific Horizon Financial (PHF) services all the loans in the Fund's portfolio and charges a typical servicing fee. The servicing fee is 12% of the yield. For example, on a loan that pays 11%, PHF's servicing fee is 1.32% (11% x 12% = 1.32%). The Fund also allocates money to cover its anticipated expenses (tax returns, audit, yearly business tax, unforeseen losses, etc.)
How do I know my money is safe?
PHF is proud of it’s17 year track record of underwriting real estate mortgages and the quality of its personnel. Every single one of PHF’s employees has significant money invested in the Fund and they see the value of a collection of first mortgages vs. single ownership of a trust deed. Accordingly, PHF regards the Fund as its premier investment vehicle. All loans in the Fund are 1st mortgages. No loan in the Fund exceeds 65% of the value of the securing real estate. All loans in the Fund are carefully underwritten and documented. Appraisals, hazard insurance, title insurance and credit examination are required for all loans. Copies of our recorded liens, notes, appraisals, and title insurance policies are always available to an investor or his consultant for every single loan in the Fund. Additionally, the Fund is audited by an independent CPA annually and reviewed by our bank auditor quarterly.
What yield can I expect?
Our motto is “home of the safety firsts”. It doesn’t say “.. let’s take a flyer on this one cause the rate is great”. In the current interest rate environment, we believe 8% is a very good net yield for a well secured 1st mortgage. That said, the Fund’s target yield is 9% but it has paid investors in excess of 10% since its inception in 2003.
Why does the Fund borrow money to make or purchase first mortgages?
The Fund has a $3,000,000 line of credit (LOC) with Community National Bank. In accordance with the Offering Circular, the line of credit will not exceed 50% of the value of the fund. Currently the line of credit is only 20% of the Fund Value. The primary purpose of the LOC is to enable the Fund to pounce on a quality mortgage when it is available. The Fund can then pay the Line of Credit off as other loans payoff or as new investor money is received.
The LOC can also be utilized to fund draws on the construction loans in the Fund's portfolio and then the LOC is paid down in the same manner as previously described. This allows us to manage the cash flow in a way that is most advantageous to the Fund shareholders.
What happens if the President of PHF gets hit by a truck?
The manager of the Fund is Pacific Horizon Financial, Inc., a California corporation. Pacific Horizon Financial, Inc is a licensed real estate broker and can act through it’s president Ron Bedell or in his absence, the vice president Tracy Hatfield. Ms. Hatfield has been with Pacific Horizon since 1997 and is a vested employee who is very knowledgeable about all aspects of mortgage lending. In addition to Ms. Hatfield, Pacific Horizon’s staff attorney (as well as a licensed real estate broker), Andrew Kean, is qualified and empowered to act on behalf of the company
Are there any seminars in Northern CA?
We don't currently offer any seminars in Northern California but are happy to talk with you at any time.
How do I know how much money I've made with Pacific Horizon Mortgage Investors I, LLC?
We'll send you a comprehensive statement of your personal account monthly. We know of no other firm in the industry that provides more account information every month than Pacific Horizon Mortgage Investors I, LLC.