All Distributions tier 2 over-allocates: shares sum to 200%, not 100%
Critical“Any remaining Available Cash from Operations as to Class B Members shall be distributed fifty percent (50%) to the Class B Members as a class”
PPM p.1195% confidence
Cascade · Distributions
Where each dollar goes
$875K
LP $698K · Fees $177K · GP $0
Gross proceeds at exit
$875K
FFees to Manager
$176,650 · 20.2% of gross
taken before the waterfall→ GP $177K
T1Return of Capital
$500,000 · 57.1% of gross
uncapped — takes what remains→ LP $500K
T2Preferred Return (8%)
$198,350 · 22.7% of gross
uncapped — takes what remains→ LP $198K
Where it lands · of gross proceeds
LP $698K (79.8%)Fees $177K (20.2%)GP $0 (0.0%)
Standard scenario · $500K equity · 5y hold · 1.75× exitRun your own cascade →
Class structure · 3 classes
How MHPI III, LLC divides the cap table
The cascade above models the blended LP view. Click a class below to view per-class economics.
Class B
LP/PreferredMin · $250K“Class B Members will receive a 'Special Preferred Return'... an amount equal to a return of ten percent (10%) on the Class B Members'... Unreturned Capital Contributions”— PPM p. 7
Class C
LP/PreferredMin · $50K“Class C Members will receive a 'Preferred Return'... an amount equal to a return of eight percent (8%) on the Class C Members'... Unreturned Capital Contributions”— PPM p. 8
Class A
Manager“The principals of the Managers, along with Academy Fund, LP... and Providential Holdings, LLC... will hold one hundred percent (100%) of the Company's Class A Interests.”— PPM p. 8
PPM Review
6/12 key terms · 3 flagsWhat this PPM costs, protects, and pays — every claim links to its source page. Missing items read “not stated,” never “no.”
Load at close
~5.3%
of equity, upfront
Recurring drag
~6.00%
per year, pre-split
LP share of next $
~100¢
at 1.75× base case
Key-term findability
6/12
located in the PPM
Needs attention
flagPreferred return is non-cumulative
flagNo GP clawback
flagFees taken above the waterfallp.12
cautionGP commitment not stated
Offering & eligibilityReg D 506(b) · accredited only▶
Eligibility
Accredited investors onlyA 506(b) offering may not be publicly advertised — being cold-marketed one is a red flag.
Structure
Reg D 506(b)Sold via broker-dealer — 8.0% selling commission
p.15“The interests described herein are not being registered under the Securities Act of 1933, as amended (the "Securities Act"), and must be acquired for investment purposes only and not with a view to the distribution thereof. Offers of partnership interests will be made only to "accredited investors" within the meaning of Regulation D under the Securities Act.”Where your dollar goes~5.3% load · GP commit n/s▶
Load at close
~5.3% of your equity is consumed by upfront fees at closing (estimate).
- Administrative Fee (Acquisition Fee): 5.3%p.12“At the closing of each property acquired by the Company, the Company will pay the Class A Members a fee in the total amount of five and one-third percent (5.33%) of the purchase price”
Recurring drag
~6.00% of your equity per year, before any profit split — comparable to an expense ratio.
LP share of next $
~100¢ of each additional dollar reaches the LP at the 1.75× base case.
Not stated
GP commitment
Protections & red flags3audit n/s · 3 off-market▶
Independent controls
Off-market (3)
- Preferred return is non-cumulativeA cumulative pref is the market norm
- No GP clawbackA clawback is the market norm
- Fees taken above the waterfallLP-friendly deals subordinate fees to the prefp.12“Class A Members will be entitled to receive a management fee in the amount of five percent (5%) to seven percent (7%) of gross rental income per annum”
- GP commitment not statedGPs typically disclose their co-investment
Minimum raise
$250K minimum raise
$10M maximumSubscriptions held in escrow by Wells Fargo Bank, N.A.If the minimum isn't reached, subscriptions are returned in full.p.8“The Company is offering the Membership Interests on an "all or none basis" with respect to the initial $250,000 of Membership Interests (the "Minimum Offering") and thereafter, on a "best efforts" basis until up to a total of $10,000,000 of Membership Interests are sold (the "Maximum Offering")... If the initial closing is not held by the Termination Date, all subscription proceeds will be returned to the subscribers without interest or deduction and the Offering will terminate. Pending the closing of the Minimum Offering, all subscription proceeds will be held in escrow at Wells Fargo Bank, N.A.”Not stated
Audited financials
Cash flow & horizonannual distributions · hold n/s▶
Distribution policy
Targets distributions — AnnualBegins within sixty (60) days following the end of each taxable year of the CompanyTargeted, at manager's discretionDistributions are a target at the manager’s discretion — not a guarantee.p.11“Current Distributions of Available Cash from Operations. Except as otherwise provided in Section 4 below (with respect to liquidating distributions), all of the Company's Available Cash from Operations shall be distributed to the Members not less frequently than annually and within sixty (60) days following the end of each taxable year of the Company”
Capital stack
3 share classes — your class's priority in the money line depends on the waterfall.
Not stated
Hold / fund life
Governanceno LP removal▶
Removal & amendments
No LP right to remove the manager
Amendments require an LP supermajority
Reporting
Members sent unaudited financial statements annually plus annual tax information needed to complete tax returns; on a quarterly basis each Member furnished the Company's unaudited income statements; Company anticipates providing estimated annual federal tax information to Members prior to April 15.
Source
p.20“A Manager may only be removed by the unanimous vote of the Class A Members.”
Document quality6/12 findable · 52 pp▶
Key-term findability
6 of 12 key questions answered.
- ✓Preferred return
- ✓Profit split / promote
- ✓Distribution waterfall
- ✓Fee schedule
- —GP commitment
- —Audited financials
- ✓Distribution policy
- —Lock-up / liquidity
- —Fund life / hold
- —Leverage cap
- ✓Minimum investment
- —Conflicts / related-party
Structural complexity
LP classes: 3Cash pools: 4Max tier depth: 5Conditional branches: 0
More moving parts, not necessarily worse — takes longer to understand.Document heft
52 pages
Fee-load figures are modeled estimates from extracted terms, not a guarantee. Peer context is shown to Analyst-tier members.
Deal diligence7 findings · worst critical
Automated checks across the fund's extracted PPM. Every finding is shown with the evidence it's based on — proven numbers or a verbatim quote and page.
Waterfall structure
Structural checks run against MHPI III, LLC's extracted waterfall. Each is a deterministic test — the numbers shown are proven from the PPM, not estimated.
All Distributions tier 4 over-allocates: shares sum to 200%, not 100%
Critical“Available Cash from Refinancing shall be distributed to those Members whose Unreturned Capital Contributions exceed zero”
PPM p.1195% confidence
All Distributions tier 5 over-allocates: shares sum to 200%, not 100%
Critical“as to Class B Members shall be distributed twenty-five percent (25%) to the Class B Members as a class”
PPM p.1295% confidence
Diligence gaps
Questions a standard diligence questionnaire would ask that the PPM leaves unanswered.
DDQ gap: Does the fund engage an independent auditor?
HighThe offering documents don't answer a standard institutional DDQ question (Governance). An allocator will ask this directly — the GP should be ready with an answer.
90% confidence
DDQ gap: Does the fund use a third-party fund administrator?
MediumThe offering documents don't answer a standard institutional DDQ question (Governance). An allocator will ask this directly — the GP should be ready with an answer.
90% confidence
DDQ gap: Is there a key-person provision?
MediumThe offering documents don't answer a standard institutional DDQ question (Governance). An allocator will ask this directly — the GP should be ready with an answer.
90% confidence
DDQ gap: What is the GP's capital commitment (skin in the game)?
MediumThe offering documents don't answer a standard institutional DDQ question (Economics). An allocator will ask this directly — the GP should be ready with an answer.
90% confidence
DDQ readiness
How much of a standard institutional due-diligence questionnaire this fund's offering documents answer out of the box. Gaps are questions an allocator will ask directly.
79%
Coverage
15 answered0 partial4 gaps19 questions
Economics
- What is the preferred return (hurdle) rate offered to LPs?Preferred return of 8%.Answered
- What is the LP/GP carried-interest split above the preferred return?50% LP / 50% GP residual split.Answered
- Is there a GP catch-up, and at what rate?No GP catch-up.Answered
- Does the fund have a GP clawback provision?No clawback provision disclosed.Answered
- What is the GP's capital commitment (skin in the game)?Gap
Structure
- What distribution-waterfall structure does the fund use?Waterfall type: Class-based with per-class promote (50/50 for Class B, 40/60 for Class C on operations; 25/75 and 20/80 on refi/sale).Answered
- What is the fund's investment strategy / asset class?Equity · Mobile Home ParksAnswered
- What is the fund's vintage year?Vintage 2014.Answered
- What is the target offering size?Target offering of $10,000,000.Answered
- What is the minimum LP investment?Minimum investment of $50,000.Answered
- Are investor subscriptions protected by a minimum-offering escrow?Subscriptions are held in escrow until a minimum is met.Answered
- Is the securities-offering exemption and investor-eligibility standard disclosed?Offering exemption disclosed (accredited).Answered
Fees & Expenses
- Is the fund's fee schedule disclosed (management fee, etc.)?3 fee line item(s) extracted from the offering documents.Answered
Governance
- Does the fund engage an independent auditor?Gap
- Does the fund use a third-party fund administrator?Gap
- Do investors have the right to remove the manager / general partner?The PPM states investors have NO right to remove the manager.Answered
- Are material amendments to the operating agreement subject to investor consent?Amendments require an investor supermajority.Answered
- Is there a key-person provision?Gap
Distributions
- Is the fund's distribution policy disclosed?Distribution policy stated (annual).Answered
Fee scheduletaken before LP distributions
Modeled load 35.3% of equity over a 5-yr base caseFee
Trigger
Basis
Rate
Administrative Fee (Acquisition Fee)
At closing of each property acquisition
Purchase Price
5.33%
Placement/Broker Commission
On subscription
Subscription Proceeds
8.00%
Service providers3 gaps
Legal Counsel
Not disclosed
No independent counsel named for investors. Common in small syndications where Manager and Fund share counsel — reduces independence. Verify during diligence.
Auditor
Not disclosed
Audit intent not stated in PPM. Ask the sponsor: will the fund be audited, by whom, and on what frequency?
Fund Administrator
Not disclosed
No third-party fund administrator referenced. Manager likely handles admin internally — common for <$10M raises but reduces independence.
Placement Agent
No placement agent engaged
No placement agent engaged. Direct placement by Manager — no placement fees eat your invested capital.
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