Tufa First Home Fund.
Tufa First Home Fund is a fund to be offered under Regulation A. The First Home Fund invests alongside first-time homebuyers. It is designed to hold appreciation-based second liens on homes as portfolio assets, and will issue shares that represent exposure to that portfolio.
Appreciation-based second liens
The fund will hold a portfolio of appreciation-based second liens, each recorded behind the buyer’s conventional first mortgage and alongside their down payment. Every position is entered on the same terms:
- Price: The fund invests at the purchase price, only in homes that appraise for at least that price.
- Credit: Every buyer qualifies for a conventional mortgage on their own, with documented income, verified assets and a qualifying credit profile.
- Selection: Every purchase has a family member investing their own money in it.
- Position: The first mortgage and the fund’s share together stay at or below 95 percent of the price.
An example sale.
15% of the $600,000 sale price.
15% of the $500,000 sale price.
15% of the $400,000 sale price. The fund's share moves down with the home's value.
Illustrative. The fund’s share applies to the home’s value at sale, less documented capital improvements the homeowner paid for.
Protective by design:
The fund’s share applies whether the home’s value rises or falls. If prices drop, the fund’s share drops with them, so your family member is never left with a second lien larger than their home can support. The fund receives its share when the home sells or when the homeowner chooses to settle early. A refinance to lower the rate leaves the Shared Appreciation Agreement in place.
Price risk:
That protection is a cost the fund carries. Its position sits behind the first mortgage and selling costs, so if values fall far enough, what is left may not cover the amount the fund invested, and the fund can receive far less, down to nothing. It has no claim against the homeowner for the difference, except in narrow cases of fraud, intentional waste or misapplied insurance proceeds.
How the fund is structured.
Fees.
Residential real estate can lose value. So can the fund.
The fund’s return comes from residential appreciation, which means it carries residential risk. Home prices can fall. When they do, the amount the fund receives on each home falls with it, and the fund can lose money on a position or across the pool. The homepage section What residential real estate has done shows residential has declined in real periods, not only risen. Past behavior is context, not protection.
Two things work in your favor, and it’s worth being precise about what they do and don’t do.
Diversification spreads the risk.
The fund is designed to hold many positions across many homes, so that no single home, including your family member’s, determines the outcome. This reduces the chance that one bad position drives your return. It does not remove the risk that residential as a whole declines.
The fund’s claim is limited to the home.
The fund receives its share when the home sells or when the homeowner chooses to settle early. A refinance to lower the rate leaves the Agreement in place. The Agreement also settles if the first mortgage is paid off without the Agreement staying in place, including a cash-out refinance beyond the program limit, or after an uncured default described in the Agreement. On any single home, the Settlement Amount is the fund’s Appreciation Share of the home’s value at settlement, so it already falls when the home falls. Its lien sits behind the first mortgage. At a low enough sale price, the proceeds remaining after the first mortgage and selling costs may not cover even that reduced share. The fund looks only to the home and its proceeds; the homeowner is not personally liable for the Settlement Amount except in narrow cases of fraud, intentional waste or misapplied insurance proceeds.
Spreading across many homes limits the effect of any one of them. It does not protect against a broad decline in home prices, and no return is guaranteed.
Pre-launch.
Tufa is preparing to offer fund shares under Regulation A of the Securities Act, through offering documents that will be filed with and qualified by the SEC. Until that qualification, no securities are being offered or sold, and nothing on this page is an offer.
The fund is designed to be held. A shareholder may request a repurchase of shares on the terms below.
The program may be limited, suspended or ended at any time, and the fund may be unable to fill requests in any given quarter.
Questions
What does a shareholder actually own?
Shares in the fund, representing a pro rata interest in the portfolio of appreciation-based second liens it is designed to hold. Not an interest in any specific home.
How is the fund taxed, and what will I receive?
Tax treatment depends on your own circumstances. Tufa does not provide tax advice. Please consult your own tax advisor about how an investment in the Fund would affect you.
What are the fees?
A management fee of 0.75% per year of net asset value, calculated quarterly in arrears. Transaction costs of up to 1.5% per purchase, minimum $1,000, borne by contributing families. There is no carried interest, no performance fee, and no preferred return.
Can I request a repurchase of my shares?
After a one-year holding period, a shareholder may request a repurchase of some or all shares. Requests are considered quarterly, and a request may be withdrawn up to five business days before quarter end. The fund repurchases at net asset value per share as of quarter end and pays within 21 days. Repurchases are limited to 5 percent of shares outstanding in any twelve months. A deduction of 2 percent of NAV applies to shares held under three years, and 1 percent to shares held three to five years. There is no secondary market for the shares. The program may be limited, suspended or ended at any time, and the fund may be unable to fill requests in any given quarter.
Does a shareholder have a claim on a specific home?
No. Each home is owned outright by its buyer. Only the buyer, along with any co-borrower on their mortgage, is on title. The fund will hold a second lien as a portfolio asset, and a share represents exposure to the portfolio, not to any one home.
When will the fund be available?
Tufa is not yet available. A Reg A+ Form 1-A filing is in progress and the offering is not yet qualified. Request early access to be notified.
Tufa is not yet available. A filing is in progress and the offering is not yet qualified. Nothing on this page is an offer to sell or a solicitation of an offer to buy.