* 07/16/96 Legal Organization *

Basic Setup Form “Base” LLC Articles of Organization Operating Agreement Syndicators – Member-Managers Investors – Non-Voting Members

Option 1 – “Easy” Setup Deal Flow: Purchase property under base LLC or/and form one LLC per property If property purchased under base LLC, once Deed recorded: Quitclaim property to “new” LLC “New” LLC will have as member-managers the investors and the syndicators (owners) File Note and Deed of Trust to secure investor’s interest in the property Deed of Trust will state ownership interest At Sale/Closing everyone will sign off

Option 2 – “Regular” Setup Intrastate Offering Exemption As the SEC says, "This exemption facilitates the financing of local business operations.“ To qualify for the intrastate offering exemption, your company must: be incorporated in the state where it is offering the securities; carry out a significant amount of its business in that state; and make offers and sales only to residents of that state.

Option 2 – “Regular” Setup … continue If buying across State lines: You have to register with the State and Federal SEC Have Attorney specializing in lending requirements draw necessary paperwork Disclosures and Compliance must be signed In other words … Use local money lenders for properties financing so you can use the SEC exemption

Recommendations on Don’ts Advertising in newspapers, Craigslist, Radio, Billboards NEVER guarantee ANYTHING! DO NOT advertise your returns. (IE Make 10% or more on your money by investing with me now!) DO NOT come out and say 'I'm Looking for Investors!'

Recommendations on Do’s Luncheons (general and educational) Work with a mortgage broker (one that specializes in investment property financing) (they act as a middle person to find the private lenders. They'll examine the offering and market it to their private lenders for you) Online Marketing (general and educational)  THE RULE OF 45: contact 3 times within 45 days