CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM [ENTITY NAME, LLC] [Date] THIS DOCUMENT IS CONFIDENTIAL AND FOR THE SOLE PURPOSE OF PROVIDING INFORMATION TO PROSPECTIVE INVESTORS IN [ENTITY NAME, LLC] (THE “COMPANY”). THIS PPM DOES NOT CONSTITUTE AN OFFER TO SELL, NOR THE SOLICITATION OF AN OFFER TO BUY, SECURITIES TO ANY PERSON OR IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. INVESTORS MUST BE ABLE TO BEAR THE ECONOMIC RISK OF THIS INVESTMENT FOR AN EXTENDED PERIOD AND POTENTIALLY THE LOSS OF THEIR ENTIRE INVESTED CAPITAL. TABLE OF CONTENTS 1. Notice to Investors & Disclaimer 2. Executive Summary 3. Company & Sponsor Overview 4. The Offering / Terms of Securities 5. Use of Proceeds / Sources & Uses 6. Project Description, Construction & Exit Strategy 7. Financial Projections & Returns (Pro Forma Summary) 8. Fees, Sponsor Compensation & Related‑Party Transactions 9. Risk Factors & Conflicts of Interest 10. Investor Suitability, Transfer Restrictions & Subscription Procedures 11. Legal, Tax & Regulatory Considerations 12. Appendices / Exhibits --- 1. NOTICE TO INVESTORS & DISCLAIMER This Private Placement Memorandum (“PPM”) is confidential. The securities described herein have not been registered under the Securities Act of 1933 or any state securities laws, and are being offered in reliance on exemptions from registration. This PPM does not constitute an offer to sell securities nor a solicitation to purchase securities in any jurisdiction where such offer or solicitation would be unlawful. An investment in the Company involves substantial risks, including complete loss of capital. This document does not purport to present all information that a prospective investor should consider. Prospective investors must conduct their own due diligence and consult with their own tax, legal, and financial advisors before investing. --- 2. EXECUTIVE SUMMARY - **Project**: Acquisition of land parcels in the Greater Houston area, development of ten (10) two‑unit duplex buildings (total 20 single‑family residential units), and sale upon completion. - **Sponsor/General Contractor**: [SPONSOR NAME] (Managing Member & Sponsor) and affiliated construction company, Equity Construction, will act as General Contractor (GC). - **Equity Raise**: US$2,000,000 in equity from investors, via membership interests in the Company. - **Use of Proceeds**: Land acquisition, construction hard costs, GC fee (12% of hard costs), soft costs (permits, design, legal, fees), contingency, sales/marketing, reserves. - **Structure & Exit**: The Company will be formed as a Texas LLC. Upon sale of all units/buildings, proceeds will be distributed to investors and Sponsor per the distribution waterfall defined in the Operating Agreement. - **Sponsor as Builder**: Equity Construction will build the project under a GC contract; builder fee equals 12% of hard construction costs, paid via monthly draws per an agreed draw schedule. - **Projected Investor Returns**: Based on pro forma modeling, investors may achieve attractive returns — subject to cost control, market conditions, and execution — with downside protection and upside potential. --- 3. COMPANY & SPONSOR OVERVIEW - **Company**: [ENTITY NAME, LLC], a limited liability company organized under the laws of the State of Texas (or alternative jurisdiction as chosen). - **Sponsor / Managing Member**: [SPONSOR NAME, ADDRESS, CONTACT], licensed real‑estate professional, with experience in residential real‑estate investment and development in Texas. - **General Contractor (GC)**: Equity Construction — Sponsor’s affiliated construction entity — retained to perform construction services for the project. Responsibilities: - Sponsor/Managing Member — acquisition, financing, investor relations, sale strategy, management oversight. - Equity Construction (GC) — construction procurement, contractor/subcontractor management, scheduling, quality control, permitting, site work, build-out. - Investors — provide equity capital, receive updates and reports, and share in net proceeds per Operating Agreement terms. --- 4. THE OFFERING / TERMS OF SECURITIES | Term | Description | |------|-------------| | Securities Offered | Membership interests (“Units”) in [ENTITY NAME, LLC] | | Total Equity Raise | US$2,000,000 (subject to adjustment) | | Minimum Investment | US$[INSERT MINIMUM] | | Use of Proceeds | Land acquisition, hard construction, GC fee, soft costs, contingency, sales/marketing, reserves | | Expected Hold Period | Approximately 18–24 months (land acquisition → construction → sale) | | Distributions | Upon sale of units/buildings, after repayment of costs, fees, expenses, and return of capital; distributions per waterfall in Operating Agreement | | Transfer Restrictions | Units are illiquid; transfer or assignment restricted; Right of First Refusal / Company buy‑back provision applies | --- 5. USE OF PROCEEDS & SOURCES & USES **Sources** - Equity from Investors: US$2,000,000 - Debt or Other Sources (if any): $[INSERT] - **Total Sources**: $2,000,000 + $[INSERT] **Uses (Example Budget Framework)** | Use | Amount (est.) | |-----|----------------| | Land acquisition / lot purchase | $[INSERT] | | Hard construction costs | $[INSERT] | | GC Contractor fee (12% of hard costs) | $[INSERT] | | Soft costs (permits, design, legal, fees) | $[INSERT] | | Contingency reserve / buffer for overruns | $[INSERT] | | Sales/marketing, broker fees, closing costs | $[INSERT] | | Working capital / carry / reserves | $[INSERT] | | **Total Uses** | $[Total Project Cost] | _All amounts and budgets to be refined based on actual land cost, bids, and detailed estimates._ --- 6. PROJECT DESCRIPTION, CONSTRUCTION & EXIT STRATEGY - **Location**: Parcels located within Greater Houston, Texas — targeting zones suitable for duplex development, favorable market demand, and resale potential. - **Development Plan**: Acquire land → obtain permits and zoning (if required) → site work → construction of ten duplex buildings → obtain certificates of occupancy → market and sell units (individually or as duplex buildings). - **Construction Management**: Equity Construction retained as GC; construction will follow a draw‑schedule; monthly (or milestone-based) draw requests will be submitted to the Company, along with supporting documentation — subcontractor invoices, material receipts, lien waivers, cost logs — for investor review. - **Exit Strategy**: Sale of units/buildings; after sale, Company distributes proceeds to investors and Sponsor per agreed waterfall schedule. Anticipated hold period: approximately 18–24 months from initial land acquisition to final sale, depending on market conditions. --- 7. FINANCIAL PROJECTIONS & RETURNS (PRO FORMA SUMMARY) Detailed financial projections, including base, conservative, and upside scenarios, are included in the Pro Forma Spreadsheet (see Appendix). Key assumptions will include hard cost, GC fee, soft costs, contingency, sales costs, sale price per square foot/unit, and hold period. Investors should note that, while projections indicate attractive returns under base and upside scenarios, actual results will vary depending on cost control, market demand, timing, and execution. --- 8. FEES, SPONSOR COMPENSATION & RELATED‑PARTY TRANSACTIONS - **GC Fee**: Equity Construction will be paid a fee equal to 12% of actual hard construction costs, payable via monthly draws under the draw schedule. - **No Hidden Mark‑ups**: The fee structure and any related‑party transactions are fully disclosed; all subcontractor selections, change orders, costs, and payments will be documented and provided to investors. - **Profit Split / Promote (If Any)**: After repayment of invested capital and any preferred return (if adopted), net profits will be split per waterfall structure defined in Operating Agreement. - **Conflict Disclosure**: Sponsor is also GC — dual role may constitute a conflict of interest; full transparency is committed, with cost documentation, draw request support, lien waivers, and periodic investor reporting. Investors have the right to review all cost-related documents, change orders, and final cost reconciliation. --- 9. RISK FACTORS & CONFLICTS OF INTEREST Potential risk factors include, but are not limited to: - Construction risk: cost overruns, subcontractor issues, delays, unforeseen site or permitting problems. - Market risk: demand for duplexes or resale units could fall, interest rates may rise, financing for end-buyers may tighten, affecting sale price or timing. - Liquidity risk: units will be held until completion and sale; no public market for units prior to sale — investors’ capital may be illiquid for the duration. - Related‑party risk: Sponsor acts as both Manager and GC; investors rely on Sponsor/GC’s integrity, cost estimates, and transparency. Poor management or conflicts could harm investor returns. - Regulatory and legal risk: compliance with securities laws (federal and state), zoning or building code risk in Houston area, environmental or permitting delays. - Holding and carrying cost risk: if sale is delayed, carrying costs (taxes, insurance, utilities, maintenance) may erode returns. - Exit risk: inability to achieve assumed sale price, or delay in sale, could reduce investor returns or extend holding period. Prospective investors should assess these risks carefully and consult their own advisors. --- 10. INVESTOR SUITABILITY, TRANSFER RESTRICTIONS & SUBSCRIPTION PROCEDURES - Minimum investment amount: US$[INSERT MINIMUM]. - Investors must complete and sign a Subscription Agreement and Investor Questionnaire, providing required information and representing that they meet suitability requirements (e.g., accredited or sufficiently sophisticated). - Interests are not registered; transfer, sale, or assignment of Units is restricted. Transfers require Company consent, and are subject to Right of First Refusal or Company buy‑back provisions as defined in Operating Agreement. - The offering will be made in reliance on private placement exemptions — compliance with federal (e.g., Regulation D) and applicable state (“blue‑sky”) securities laws, including required filings, will be completed. --- 11. LEGAL, TAX & REGULATORY CONSIDERATIONS - The Company will be organized as a Texas limited liability company (LLC), or other appropriate jurisdiction as determined. Membership Units are private securities and not intended for public trading. - The offering relies on exemptions from registration under applicable securities laws; investor documentation, suitability assessment, subscription procedures, and compliance (including filings) will be implemented under counsel guidance. - Investors should seek independent legal and tax advice. Treatment of distributions, sale proceeds, capital gains, depreciation, and other tax implications depends on individual investor circumstances and may vary widely. --- 12. APPENDICES / EXHIBITS - Appendix A: Detailed Pro Forma Spreadsheet (hard costs, GC fee, soft costs, contingency, sales costs, return scenarios, sensitivity analysis) - Appendix B: Draft Operating Agreement (LLC) including GC / Construction Services clause, draw schedule, related‑party disclosures, distribution waterfall, transfer restrictions, governance provisions - Appendix C: Subscription Agreement (to be signed by each investor) - Appendix D: Investor Questionnaire (for accreditation / suitability, investor information, risk acknowledgment) - Appendix E: Draw Schedule Template — milestone-based payment schedule, documentation required for draw release (invoices, lien waivers, cost logs) - Appendix F: State Blue-Sky Notice Legends (for states where investors may reside) - Appendix G: Projected Timeline / Gantt Chart (land acquisition → permitting → construction → sale) --- END OF PPM