Overview

The Fund purchases first-lien, business purpose mortgages originated to finance property stabilization, rehabilitation, and new construction. All loans are originated and underwritten by Upright. The Fund provides investors with portfolio diversification, quarterly income distributions, and the significant tax benefits of a REIT, with returns amplified through leverage. Download the Horizon Overview Brochure to learn more about the Fund and it's investment thesis.

Horizon Overview Brochure

The Details

Tax Advantages

Horizon is equivalent to a much higher return due to its favorable tax structure.

Diversification

Residential property investments means diversification through volume. We don't invest in one or two massive complexes, we invest in multiple individual projects and communities.

Leverage

Returns are amplified thanks to the additional investment power of senior financing and Horizon Notes.

Prior Quarterly Return

6.82% - 7.06% depending on admittance date

Preferred Return

8%

Distributions

Quarterly

Minimum Holding Period

12 months

Members may not withdraw or redeem their Membership Interests until Twelve (12) months from the purchase of said Membership Interests. Members who have been Members of the Fund for a period longer than Twelve (12) months may request withdrawal (the “Withdrawal Request”) from the Fund by providing prior written notice no later than Ninety (90) days from the intended date of withdrawal from the Fund. All Withdrawal Requests must be made in writing and include the intended date of withdrawal (the “Withdrawal Date”) and the specific balance of Membership Interests the Member seeks to withdraw and redeem (the “Withdrawal Balance”). The withdrawal date shall be effective upon the Manager’s approval of the Member’s Withdrawal Request (the “Effective Withdrawal Date”).

The Fund shall deliver the Withdrawal Balance on a limited basis, as follows: Twenty Five Percent (25%) of such Member’s Withdrawal Balance, remitted quarterly, such that it will take at least Four (4) quarters for a Member to withdraw the total Withdrawal Balance. Any remittance of a Member’s Withdrawal Balance shall be made on the first day of the month. The foregoing shall be limited by the following restrictions: (1) The maximum aggregate amount of Withdrawal Requests that the Fund will process each fiscal year is limited to Ten Percent (10%) of the total outstanding contributions to the Fund, or One Million Dollars ($1,000,000), whichever is less.

It is presently intended that after April 1, 2026, the limitations on Withdrawal Requests described in the preceding paragraphs (with the exception of the Manager’s right to suspend withdrawals) shall be removed, and upon Manager’s approval, Withdrawal Requests shall be processed on a pro-rata basis as the Fund’s loans mature and are paid off.

Investment Minimum

$15,000 initial, $5,000 incremental

Fees

Management fee of 1% of net asset value. Performance fee of 20% of net profits after payment of preferred return and other fees and expenses.

Structure

Delaware limited liability company with a REIT subsidiary.

Maximum Offering

$50,000,000

Number of Investors

361

Fund Equity

$21,961,000

Loan Amount Managed

$25,383,415.84

Number of Loans

79

Next Admittance Date

July 1st, 2025

Disclaimer: Accreditation, Sub Agreement Signature, and Fund Clearance must be complete before final date of admittance. This can take as long as 4 business days.

The Horizon Advantage

WHY INVEST IN Horizon?

All loans purchased by Horizon must pass a thorough underwriting and analysis process. All loans are first put through the underwriting process at Upright. Additionally, all loans go through the FTF Capital Management investment committee before being approved for purchase by the Fund.

The Horizon Fund offers accredited investors the opportunity to spread a single investment across a managed portfolio of short-term, first lien, residential mortgages originated to finance property stabilization, rehabilitation, and new construction. Through the fund, investors get the benefits of:

  • Instant diversification across multiple geographies, borrowers, and projects, with the potential to amplify returns through senior leverage
  • No need to research and select individual projects, while eliminating the time and effort to redeploy capital when investments repay
  • Tax benefits of a REIT to amplify net income
  • Short-term loans with fixed interest rates, minimizing the impact of rate fluctuation

How does this work?

When you invest and become a member in the Horizon Fund, you invest in a diverse, curated pool of whole loans originated by Upright. The Fund may utilize leverage to offer higher returns and offer greater diversification. Income is distributed to members quarterly.

tax advantages equate to a higher return

Factoring in the 20% pass-through deduction, a given return on Horizon is equivalent to a much higher return for taxable investors on an otherwise similar investment without the REIT tax benefits.

REITs have always received favorable tax treatment in that they do not pay income tax at the entity level despite being a corporate entity.

Since the passage of the Tax Cuts and Jobs Act of 2017, most taxpayers are generally eligible for a deduction equal to 20% of qualifying business taxable income from the federal income tax.

This deduction generally applies to qualified REIT dividends, including any REIT dividends earned through a pass-through entity such as Horizon.

Every taxpayer is different. Please consult with your tax advisor for advice and guidance related to your specific tax situation. Example above assumes a taxable investor subject to the 37% maximum federal income tax bracket and ignores state, local and other taxes. Comparison is to an investment that does not have the tax benefits of a REIT, with all income being taxed as ordinary income. Tax law may change, which could have an adverse affect to the tax benefits available through the current law.

Frequently Asked Questions

The following is a summary of Frequently Asked Questions as it relates to the Horizon Fund.

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What do I own when I invest in the Horizon Residential Income Fund I (Horizon)

You will own a membership interest in Horizon Residential Income Fund I, LLC ("Horizon", or the “Fund”), a Delaware limited liability company.

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What will Horizon invest in?

Horizon will invest in short-term residential bridge mortgage loans originated by Upright. These loans typically range in term from 6 to 18 months, bear fixed rates of interest, and are made to experienced borrowers to provide financing for fix-and-flip and new construction projects, with a heavy focus on the single family residential sector. Horizon may also use leverage to optimize returns and diversification.

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What is the investment objective of the Fund?

The primary objective of Horizon is current income, while using diversification and a rigorous underwriting process to manage risk and preserve invested capital.

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Who will manage the Fund?

The Fund will be managed by FTF Capital Management, LLC (the “Manager”). The Manager is a wholly-owned subsidiary of Fund That Flip, Inc., dba Upright and draws upon the extensive industry and asset class experience of the Upright team for the benefit of investors in Horizon.

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Who can invest in the Fund?

Horizon is only open to accredited investors. The definition of an accredited investor can vary based on the type of entity. To qualify as an accredited investor, a person must generally meet at least one of the criteria listed below. Additional criteria apply to other types of entities. 

To qualify as an accredited investor, an individual must have:

A net worth of at least $1 million, either alone or together with a spouse or spousal equivalent (excluding the value of the person's primary residence), or

Earned an income that exceeded $200,000 (or $300,000 together with a spouse or spousal equivalent) in each of the prior two years, and reasonably expects the same for the current year, or

A Series 7, 65, or 82 license in good standing.

Read more here.

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What is Real Estate Investment Trust (REIT)?

A REIT is a company that owns, operates, or finances real estate. REITs were created by Congress in the 1960’s to give all investors, especially smaller investors, access to real estate investments that were previously available only to large institutional investors. REITs – and the dividends distributed by REITs – also receive favorable tax treatment on a number of levels.

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Is Horizon a REIT?

Horizon has established a subsidiary REIT (the “sub-REIT”) that will be used to conduct the Fund’s lending and investing activities. This sub-REIT structure provides operational flexibility to the Fund, while still allowing investors to enjoy the tax benefits of a REIT. The resulting income from the sub-REIT is distributed to investors through the Fund and generally retains any tax advantages associated with REIT dividends, even though Horizon itself is not technically a REIT.

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What are the tax advantages of a REIT?

REITs have several tax advantages. One major tax advantage of a REIT is the 20% deduction for pass-through business income, which includes qualified REIT dividends. For taxable investors, this typically means a 20% tax savings. These tax savings equate to a higher return relative to an otherwise similar investment that does not offer the same tax advantages. In addition, REITs are not taxed at the entity level, eliminating the issue of “double taxation” that exists when a corporation is taxed at the entity level and distributions are taxed yet again at the investor level. Finally, the REIT structure utilized by the Fund is expected to block any unrelated business taxable income (UBTI). 

As a reminder, we do not provide tax advice or guidance. Each person's tax situation is different, and investors should consult with their financial advisor, tax preparer, or CPA to understand how an investment in the Fund will be taxed.

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What type of tax form will I receive?

Horizon investors will receive a Schedule K-1 each year. A Schedule K-1 (often simply called a “K-1”) breaks down each investor’s share of the Fund’s income, losses, deductions, and credits for the tax year. The deadline for the Fund to file a tax return is generally March 15 of each year. However, it is very common for entities of this type to take advantage of an automatic tax extension. The Fund will use its best efforts to deliver K-1s to investors in a timely manner. Due to the interdependencies of the tax preparation process for entities such as the Fund, there is a risk that delivery of K-1s will be delayed beyond the March 15 deadline, requiring investors to extend their own tax filing accordingly. 

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What do you mean by "leverage"?

Leverage refers to the use of borrowed money for an investment, with an expectation that any additional earnings or investment income will be greater than the interest payable on the borrowed funds. The Fund expects to make use of leverage to enhance returns and increase the level of diversification within the Fund’s investments, but only to the extent deemed prudent so as not to expose investors to excessive risk.

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What is a"preferred return"?

A preferred return – often simply called the “pref” – is the minimum return that an investor must receive before certain income or fees are paid to another class of investors or to the fund manager or sponsor. In the case of Horizon, the preferred return is an annual percentage – 8% to be exact - that is payable to investors prior to any profit participation by the Manager. The preferred return is calculated and payable on a quarterly basis. The payment of the preferred return prior to any Manager profit participation is designed to keep the interests of the Manger aligned with those of the investors.

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What is a "target return"?

A target return is the return – expressed as an annual percentage - that an investor may expect to receive after payment of all fees and expenses. In the case of Horizon, the target return includes the preferred return plus any share of net profits allocable to investors. Investors in Horizon receive 80% of net profits after payment of the preferred return and other fees and expenses.

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What fees will I pay as an investor in Horizon?

The Manager will earn an asset management fee equal to 1% of the net asset value of the Fund. The distinction of “net” asset value is important, as it means that the Manager will not earn an asset management fee on any debt incurred by the Fund. In addition, the Manager will participate in the distribution of net profits of the fund, but only after investors earn the full preferred return for each quarter. Profit sharing, combined with the concept of the preferred return – which is paid to investors prior to any profit sharing – helps to align the interests of the Manager with those of the investors. The Manager will receive 20% of the net profits of the Fund after payment of the preferred return and all fees and expenses, with 80% of the net profits going to investors. The Fund is responsible for paying its operating expenses, which could include, but are not limited to, expenses for accounting, banking, interest, transactional fees, legal costs, tax preparation, and custodial expenses.

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How can I invest in Horizon?

Through Upright.us, investors can create a user account and investment entity, link a bank account, sign a subscription agreement, and verify accreditation before they will be admitted into the Fund. Once admitted as a member of Horizon, an investor will begin to participate in the earnings of the fund, including accrual of the preferred return. The Fund will generally admit new members on the first day of each month.

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Will the Fund make distributions?

Horizon will make quarterly distributions of earnings to investors, with distributions expected to begin with the quarter ending June 30, 2023. Distributions will be made in arrears as soon as practicable after the end of each calendar quarter. Statements will also be provided on a quarterly basis, matching the timing of distributions.

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What are the risks of investing in Horizon?

As with any investment, an investment in the Fund entails risk. Please refer to the Private Placement Memorandum for more information.

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How will I know the status of my investment?

The Fund will regularly update investors as the projects related to Fund investments progress. Further, each investor will receive quarterly performance statements prepared by our fund administrator.

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What is the minimum amount I can invest?

The initial investment minimum is $15,000. Once invested in the fund, any incremental investments have a minimum of $5,000.

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How long should I expect to hold my investment?

Investors should expect to hold their investment for at least 36 months.  Withdrawals prior to this period are restricted, as summarized above.  Ultimately, fund members may not withdraw or redeem their investment in the Fund without penalty until 12 months after admission to the Fund. After 12 months, investors may request withdrawals from the Fund, subject to strict limitations outlined in the Private Placement Memorandum (PPM).

Any withdrawals granted after the initial 12-month minimum holding period will not be subject to any penalties but collective withdrawals cannot exceed $250,000 per quarter. In general, the Fund is designed for investors who do not need liquidity in their investment, as the fund plans to operate and generate income for our members indefinitely.

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Can I request a withdrawal from the Fund?

Yes, however, there are restrictions that are made clear within the Private Placement Memorandum (PPM). To summarize, a withdrawal request within twelve months of an initial investment will be subject to a 3% fee, and only honored if undue hardship is documented and the fund performance is not hindered.  Members who have been members of the Fund for a period longer than twelve months may request a withdrawal from the Fund by providing written notice no later than ninety days from the intended date of withdrawal from the Fund without penalty. However, the maximum aggregate amount of Withdrawal Requests that the Fund will process each fiscal year is limited to One Million Dollars. The Fund shall distribute the withdrawal requests on a limited basis, as follows: Twenty Five Percent (25%) of such Member’s Withdrawal Balance, remitted quarterly, such that it will take at least Four (4) quarters for a Member to withdraw the total Withdrawal Balance requested.

It is presently intended that after April 1, 2026, the limitations on Withdrawal Requests described above shall be removed, and upon Manager’s approval, Withdrawal Requests shall be processed on a pro-rata basis as the Fund’s loans mature and are paid off. The Fund will use its best efforts to honor Withdrawal Requests subject to, among other things, the Fund’s then cash flow, financial condition, and prospective transactions in assets. Any and all returns of contributions associated with Withdrawal Requests shall be processed at the Manager’s discretion and in the best interest of the Fund.

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Can I sell my investment?

There is no public market for an investment in the Fund, and none is expected to develop in the future. An investment in the Fund is subject to substantial restrictions on transfer.

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Where can I go for more information?

Please refer to the Fund’s Private Placement Memorandum for further information. This information is available here.