T H E E Q U I T Y B U I L D P A R T N E R S H I P F U N D

The Hidden Gem of Real Estate Investment Funds

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Table of Contents

INTRODUCTION 3

REAL ESTATE INVESTMENTS 4

PRIVATE EQUITY FUNDS 6

COMMON INVESTMENT FUNDS 7

REAL ESTATE CROWDFUNDING: A DETAILED EXPLANATION 8

THE EQUITYBUILD PARTNERSHIP FUND 9

TAX ADVANTAGES 10

EQUITYBUILD'S CORE IDEOLOGY 11

CONCLUSION 12

DISCLAIMER 13

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INTRODUCTION One of the fundamental principles of portfolio management theory is to include alternative assets as part of a diversified portfolio. Popular investment options for diversification are private equity real estate funds.

According to Bloomberg, private equity funds have been shown to deliver boosts to portfolio performance and have less volatility than public markets because these assets are not subject to the daily fluctuations of stock markets.1

Historically, private equity funds have outperformed domestic, public markets, and the stability of returns are an important attraction for investors. Some additional benefits include:

Higher returns for a given level of portfolio risk Independent of the Federal Reserve interest rates Directly linked to the rents that are received from tenants Diminished risk exposure

1 Tan, Gillian; “Private Equity’s Booster Shot”,retrieved 23 May 2017 from http://www.bloomberg.com/gadfly/articles/2017-04-13/private- equity-will-stay-on-juice-until-it-stops-working

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REAL ESTATE INVESTMENTS Real estate appeals to many investors, whether they are starting a new portfolio or have an existing portfolio. These investments are as varied as those who utilize real estate as an investment vehicle. The following are examples of real estate investment options:

Buy and Hold

Perhaps the most widely known real estate investment vehicle, rental properties allow the owner to rent to a tenant. The owner becomes the landlord and is responsible for mortgage payments and operating expenses.

Real Estate Investment Groups

Real estate investment groups allow an individual to share responsibility for day-to-day management of rental properties. By employing a manager, these investment groups free the investor from the responsibilities of a landlord associated with owning the rental property.

Fix and Flip

So-called “fix and flip investors” are different from the landlords who purchase a building for the single purpose of renting the property to tenants. Fix and flip investors buy properties with the intention of holding them for a short period of time, often no more than three to four months, whereupon they hope to sell them for a profit. This technique is also called “flipping” and is based on buying properties that are either significantly undervalued or are in a very hot market.

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REAL ESTATE INVESTMENTS (continued)

REITs

When a trust or a corporation utilizes investor capital to purchase and operate income properties, a Real Estate Investment Trust (REIT) is created. Like traditional stocks, REITs can be privately traded or bought and sold on the major exchanges.

Leverage

Also referred to as debt financing, “leverage” refers to utilizing various financial instruments or borrowed capital to increase the potential return of investments. Simply put, leverage uses other peoples' money to make more money for the investor.

“Leverage” denotes the total amount of debt financing on a property in relation to its current market value. The “Loan-to-Value” ratio (also referred to as “LTV”) is a frequently used term when discussing leverage. While the loan-to-value ratio refers to the amount of a single loan, such as a mortgage as a percentage of the value of a property, leverage includes all the layers of debt used by the investor, such as first and second mortgages and mezzanine financing.

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PRIVATE EQUITY FUNDS Private equity funds, which invest in many ventures including real estate, as we think of them today, trace their origins to the 1940s and increased in prominence during the 1980s when endowments and public pensions began making investments. Market conditions in the early 1990s led to the development of opportunistic funds which aimed to capitalize on falling property prices to acquire assets at significant discounts. Private equity real estate emerged as an independent asset class in the beginning of the 21st century and has had significant growth in recent years. 2

These funds allow investors to invest in equity holdings in property assets. Much like owning stock in a publicly-listed company, private equity real estate funds involve taking an ownership interest in an underlying set of real estate owned privately or by businesses.

A private equity real estate fund is set up as a limited partnership by a private equity firm who oversees the portfolio and actively engages with the portfolio firms. Investors can then invest in that fund. Once the investment is made, the investor becomes a limited partner in the equity fund. Typically, however, these funds have very high minimum investments, and are not generally available to the individual investor who does not have access to large amounts of capital.

THE MERITS OF INVESTMENT FUNDS

Investment funds are a method of investing capital in conjunction with other investors to benefit from the inherent advantages of working as part of a group. Some advantages include:

Access to professional investment managers Potential for better returns Lower transaction costs Increased asset diversification

2 “The Development of Private Equity and Venture Capital”, Hungarian Private Equity and Venture Capital Associationretrieved 23 May 2017 from http://www.hvca.hu/pevc-explained/private-equity/the- development-of-private-equity-and-venture-capital/

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COMMON INESTMENT FUNDS Real Estate Crowdfunding *Additional information to follow on page 8

In the past, investment in real estate development was only available through REITs or private equity in the development company and was not viable as a direct investment for most individuals. Crowdfunding allows people to invest a small amount of money, and as multiple people do this, large sums of capital are raised in a relatively short period, thus, opening doors to investors and businesses that would have otherwise never been reached.

Growth Funds

With capital appreciation as a principle goal, a growth fund is a diversified portfolio of stocks that pays a small return or pays no return at all. These funds tend to have higher potential for capital appreciation during the five to ten-year investor holding period.

Real Estate Hedge Funds

A hedge fund is a business structure and investment tool that aggregates capital from multiple investors and invests that capital in securities and other investments. As the name suggests, real estate hedge funds invest heavily in real estate, often through the acquisition of properties. Unlike a REIT, a real estate hedge fund owns the asset as the investment.

HOW PRIVATE EQUITY REAL ESTATE FUNDS WORK

Private equity real estate funds allow investors to invest in equity holdings in property assets. Much like owning stock in a publicly-listed company, private equity real estate funds involve taking an ownership interest in an underlying set of real estate owned privately or by businesses. The private equity real estate fund is generally set up as a limited partnership by a private equity firm who oversees the portfolio and actively engages with the investors. Investors can then invest in that fund. Once the investment is made, the investor becomes a limited partner in the equity fund.

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REAL ESTATE CROWDFUNDING: A DETAILED EXPLANATION

Prior to the passage of the Jumpstart Our Business Startups Act in 2012, access to private real estate investment opportunities were limited to ultra-wealthy investors who had connections in their personal network. The ban on public solicitation for these private investments and the high buy-in requirements meant the door to real estate wealth was shut to the average investor; a large segment of the real estate market.

In 2016, the Securities Exchange Commission (SEC) finalized rules for Title III of the JOBS Act, which effectively removed some of the barriers which kept non-accredited investors out of the crowdfunding marketplace. Small businesses and start-ups were given access to a greater populace with which to advertise their products and raise capital. 3

While individuals can begin investing with a small amount of capital through a crowdfunding site, the fee structure alone eats into future profits, thus decreasing the potential for true wealth.

Crowdfunding sites charge fees to developers to host their campaigns (current investment opportunities) on their crowdfunding platform. In addition to the platform fee, there are processing fees for accepting payments. These fees are typically passed to you, the investor. According to Forbes, crowdfunding sites raised more than $1.9 billion and collected between $152 million and $190 million in fees. 4

At EquityBuild, we are the developer, and, as the developer, we pass that savings to you. Your returns are not diminished through crowdfunding site fees compiled with developer fees – we help you build wealth by taking out the middle man.

3 “Jumpstart Our Business Startups (JOBS) Act”, U.S. Securities and Exchange Commission retrieved 23 May 2017 from http://www.sec.gov/spotlight/jobs-act.shtml

4 Barnett, Chance; “Trends Show Crowdfunding to Surpass VC in 2016”, retrieved 23 May 2017 from http://www.forbes.com/sites/chancebarnett/2015/06/09/trends- show-crowdfunding-to-surpass-vc-in-2016/#7baaac7b4547

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THE HIDDEN GEM: THE EQUITYBUILD PARTNERSHIP FUND

Real estate investing is not a one-size fits all solution to building wealth. As such, EquityBuild has established multiple models of investing through the EquityBuild Partnership Fund.

The EquityBuild Partnership Fund has two subgroups – debt and equity.

In the case of the real estate debt investment, you act as a lender, as opposed to an owner of the property. While you do not receive the benefit of property appreciation, the property secures your investment, you receive regular interest payments, and your principle is returned at maturity.

Like a standard private equity fund, our equity model begins with the creation of a LLC, in this case the EquityBuild Partnership Fund, which is jointly owned by the fund's investors and EquityBuild. In other words, you invest in the fund, and the fund invests in the building. Over the course of the investment, multiple buildings are purchased which can increase your wealth substantially.

Our fund offers the traditional advantages found in a mutual fund, such as professional management and diversification.

MERITS OF THE EQUITYBUILD PARTNERSHIP FUND • �Expertise from the largest buyer of small and medium multi-family units in the mid-west• Extensive knowledge and unique Operational Mastery of the real estate investing process• Professional back office specialists and general management• Direct access to the developer, unlike crowdfunding sites• Transparency and diversification• Investment property ownership without the added responsibilities• Increased stability• Compounded returns from the purchase of multiple buildings over the life of the investment• All the tax advantages of ownership

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TAX ADVANTAGES THIS BROCHURE IS NOT LEGAL OR TAX ADVICE. YOU SHOULD CONSULT YOUR INDVIDUAL TAX ADVISER(S) FOR SUCH ADVICE PRIOR TO ENTERING INTO ANY INVESTMENT. Accuracy related penalties - Any tax advice in this communication is not intended or written by us to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed by any governmental taxing authority or agency, or (ii) promoting, marketing or recommending to another party any matters addressed herein. Individuals should consult their professional advisors prior to acting on the information set forth herein.

As a preferred investing option for many individuals, real estate offers substantial tax incentives and, when you partner with EquityBuild, those tax savings are passed on to you.

When you invest in the EquityBuild Partnership Fund, you are generating passive income which may exempt you from self-employment tax. For example, an investor that flips houses as a primary source of revenue and makes a profit would be subject to ordinary income tax, as well as self-employment tax. By investing passively through the EquityBuild Partnership Fund, you may be able to avoid the additional self-employment tax entirely.

The fund increases your tax efficiency through appreciation. As Warren Buffet says, “my favorite holding period is forever.” 5 By allowing your investment to appreciate over time, your net worth can grow with minimal tax exposure.

Another key facet of the EquityBuild Partnership Fund centers on how the investments are taxed regarding capital gains. According to Forbes, the long-term capital gains rates can be 20%, dependent upon your tax bracket; however, most people will fall in the 15% capital gains rate. 6 Low capital gains rates are the advantage of a long-term investment strategy. The EquityBuild Partnership fund is largely a buy and hold proposition with a holding period of five years for our offered models. While the preferred rate of return is treated as ordinary income, you receive the tax benefits of long-term capital gains rates from the profit of the sale of the buildings.

Most people understand the benefit of investing in real estate is the potential for that investment to appreciate in value over time. People often invest in income-generating economic activities like real estate rental properties because it allows investors to deduct capital costs from their taxes in a process called depreciation. Depreciation distributes the deductions over the useful life (the time the asset is likely to generate revenue) of the property, and as such, has substantial tax advantages for you.

5 Buffett, Warren, E.; “To The Shareholders of Berkshire Hathaway, Inc.”, retrieved 23 May 2017 from http://www.berkshirehathaway.com/letters/1988.html

6 Ervin, Eric; “This Dividend Strategy May Save You on Next Year's Taxes”,retrieved 23 May 2017 from http://www.forbes.com/sites/ericervin/2017/04/28/what-you- need-to-know-about-taxes-on-mutual-funds-etfs-and-dividends/2/#15f9f1f15bc8

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TAX ADVANTAGES (continued)

THIS BROCHURE IS NOT LEGAL OR TAX ADVICE. YOU SHOULD CONSULT YOUR INDIVIDUAL TAX ADVISER(S) FOR SUCH ADVICE PRIOR TO ENTERING INTO ANY INVESTMENT. Accuracy related penalties - Any tax advice in this communication is not intended or written by us to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed by any governmental taxing authority or agency, or (ii) promoting, marketing or recommending to another party any matters addressed herein. Individuals should consult their professional advisors prior to acting on the information set forth herein.

Because the government treats real estate investments largely as depreciating assets, property owners are permitted to recover the cost of assets over time. There is an annual allowance for the deterioration of the property that can be written off. In other words, instead of paying tax on the initial revenue from the property, depreciation allows you to deduct your out-of-pocket expenses that go into building upkeep or general rehab, thus reducing the level of taxable income on your federal taxes.

Self-Directed Retirement Accounts *

Many people are not aware that a self-directed retirement account, such as a 401k, SEP account, or traditional and Roth IRAs can be used to invest in a real estate fund; as a result, they invest in real estate without potentially gaining the tax benefits specific to the utilization of self-directed retirement accounts.

For example, an individual who invests in real estate rental properties without utilizing a retirement plan could owe tax on the rental income as it is received. Once that individual sells the property for a gain, he/she would owe taxes on that gain, even if he/ she planned on reinvesting that money in other real estate investments.

Self-directed retirement accounts can delay those taxes on your real estate income, as long as the money is kept in your retirement account.

Key Benefits of Investing with a Self-Directed Retirement Account:

• Delayed taxes on investment gains• Tax-free growth• Tax-free positive cash flow• No time limit for holding property

*TO INVEST YOUR IRA FUNDS IN REAL ESTATE, YOU MUST CREATE A SEPARATE “SELF-DIRECTED IRA”, WHICH MUST BE HELD BY A CUSTODIAN. CREATION OF SUCH A “SELF-DIRECTED” IRA MAY REQUIRE THE PAYMENT OF SETUP FEES AND ONGOING FEES.

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EQUITYBUILD'S CORE IDEOLOGY

You, the equity partner are at the heart of the EquityBuild and the EquityBuild Partnership Fund.

Beginning with the inception of EquityBuild, to the establishment of EquityBuild Finance, our founder Jerry Cohen and his son and co-founder Shaun Cohen have adhered to the principles of helping individuals achieve their dreams of a legacy of wealth and security. The focus of financial freedom for everyone has been a driving force for this father-son team through the years.

From the development of dynamic financial systems and scalable tools – including a unique turn-key real estate management system with EquityBuild, to the establishment of a model of operational mastery to maximize profits and streamline operations with EquityBuild Finance, Jerry and Shaun have combined their masterful strategies to create the EquityBuild Partnership Fund.

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UUnncover the hidden gem of real estate investing The EquityBuild Partnership Fund

THROUGH OUR DECADES OF EXPERIENCE investing in real estate, we have developed

operational mastery of the real estate investing process. This makes us an invaluable resource

and partner to our clients.

EquityBuild’s operational mastery gives investors insider access to real estate investing and unparalleled wealth creation. We help investors achieve their dreams of a

lasting legacy of wealth and security through private equity real estate funds, made possible by our continual

innovation.

To learn how you can start building your portfolio through a lower-risk, higher-yield private equity real estate fund, call us today at 877-978-1869 or visit us online at

www.equitybuild.com.

We’re excited to bring you the power of the new EquityBuild Partnership Fund.

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Disclaimer The opinions and analyses expressed herein are subject to change at any time, as are statements of financial market trends, which are based on current market conditions. Any suggestions contained herein are general, and do not take into account an individual’s or entity’s specific circumstances or applicable governing law, which may vary from jurisdiction to jurisdiction and be subject to change. Any third-party information contained herein is from sources believed to be reliable, but which we have not independently verified. Past performance is not indicative of future results. Investments in securities may lose value, and fees, charges, and taxation can have an adverse effect on investment returns. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.

No warranty or representation, express or implied, is made by EquityBuild, nor does EquityBuild accept any liability with respect to the information and data set forth herein. Distribution hereof does not constitute legal, tax, accounting, investment, or other professional advice. Recipients should consult their professional advisors prior to acting on the information set forth herein.

THIS DOCUMENT IS NOT AN OFFER TO SELL ANY SECURITIES. SUCH AN OFFERING TO SELL SECURITIES CAN ONLY BE MADE THROUGH A CONFIDENTIAL PRIVATE PLACEMENT OFFERING MEMORANDUM.