For Accredited Investors

Investment Term Sheet

This term sheet is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. Investment opportunities are available only to accredited investors and are subject to the terms of the Private Placement Memorandum.

Fund Overview

Paper Profits Income Fund is a private lending fund that generates consistent, passive income for investors by originating short-term loans secured by real estate and purchasing performing notes at a discount. The fund focuses on bridge loans, fix-and-flip financing, and other real estate-backed lending opportunities nationwide.

Key Terms

Fund Name Paper Profits Income Fund LLC
Fund Manager Freedom Management, LLC
Minimum Investment $25,000 – $100,000 (tier dependent)
Investor Eligibility Accredited Investors Only
Fund Structure Texas LLC, Reg D 506(c)
Investment Strategy 1st position trust deeds & discounted note acquisitions
Geographic Focus Nationwide (focus on non-judicial foreclosure states)
Target Loan-to-Value 70% or less
Typical Loan Term 6 – 18 months
Distributions Monthly
Compounding Option Available – reinvest for enhanced returns
IRA Eligible Yes – Self-Directed IRA compatible (no UBIT)

Investment Tier Comparison

Flex Tier

7.5%

per annum

  • Commitment Period 12 months
  • Minimum Investment $25,000
  • Renewal Rate 7.75%
  • Deployment Period 60 days
  • Interest Accrual Starts 1st of month after deployment

Growth Tier

8.5%

per annum

  • Commitment Period 24 months
  • Minimum Investment $50,000
  • Renewal Rate 8.75%
  • Deployment Period 60 days
  • Interest Accrual Starts 1st of month after deployment
Highest Return

Partner Tier

9.5%

per annum

  • Commitment Period 36 months
  • Minimum Investment $100,000
  • Renewal Rate 9.75%
  • Deployment Period 60 days
  • Interest Accrual Starts 1st of month after deployment

Early Redemption Terms

Early redemption is available after 12 months, subject to a 60-day processing window.

Standard Penalty

3% of NAV

Example at $50k: $1,500

Hardship Penalty

1.5% of NAV

Example at $50k: $750 (documented)

No penalty if redeemed at end of commitment term.

Loyalty Bump: 25 basis points increase upon renewal (one-time, does not stack).

Upgrade Path

Investors may upgrade to a higher tier at any time by increasing their investment to meet the next tier's minimum. Upon upgrade:

📈

Immediate Rate Increase

Your new preferred return takes effect immediately

🔄

Commitment Reset

Your commitment period resets to the new tier's term

⏱️

Fresh Start

Time already served does not carry over

Example

You invest $25,000 in the Flex tier (7.5%, 12 months). Six months in, you add $25,000 to reach $50,000 total. You now move to Growth tier at 8.5% with a new 24-month commitment starting from the upgrade date.

To upgrade, contact us to confirm availability and initiate the additional investment.

Distribution Reinvestment Option (DRIP)

Investors may elect to automatically reinvest their monthly distributions rather than receive cash payments.

How It Works

  • • Your monthly preferred return is credited to your capital account instead of paid out
  • • Your investment balance grows each month
  • • Future returns are calculated on the higher balance

Benefits

  • • Compounds your return over time
  • • No action required each month
  • • Build your position without writing another check

Example

You invest $50,000 at 8.5%. Your monthly distribution is approximately $354. With DRIP enabled, after 12 months your balance grows to approximately $54,250 — and your monthly distribution increases accordingly.

Terms

  • • Reinvested distributions maintain your current tier and rate
  • • DRIP does not extend or reset your commitment period
  • • You may turn DRIP on or off with 30 days written notice
  • • Reinvested amounts are subject to the same redemption terms as your original investment

To enroll, indicate your preference on your subscription agreement or contact us to update an existing investment.

Why Invest With Us

🏦

Asset-Backed Security

Senior position 1st trust deeds with full recourse guarantees

📊

Conservative LTV

Average loan-to-value of 70% or less

⚖️

No Fund Leverage

Funded solely by investor capital, reducing risk and eliminating UBIT

🛡️

Reserve Account

1% of prior year's interest set aside as buffer for income continuity

🤝

Principals Co-Invest

Management invests alongside investors, ensuring alignment

🔍

Third-Party Oversight

Independent administration by NAV Fund Services ($360B under admin)

🌐

Diversification

Portfolio spans U.S. states, property types, and borrowers

📈

Compounding Option

Automatic reinvestment available for enhanced returns

Use of Proceeds

Investor capital is deployed into a diversified portfolio of short-term, real estate-secured loans and discounted note acquisitions including:

Bridge Loans

Short-term financing for property acquisitions

Fix-and-Flip

Financing for residential renovations

Construction Loans

Financing for ground-up development projects

Commercial Bridge

Commercial real estate bridge financing

Performing Notes

Notes purchased at a discount for immediate yield

Fee Structure

Management Fee None
Manager Compensation Fund profits above investor return

No management fees are charged. Management receives distributable cash above investor preferred returns. See Investment Tier Comparison for complete terms.

Partners & Service Providers

Fund Administration NAV Fund Services
Banking Wells Fargo
Legal Counsel Fortra Law
Insurance Farmers

Risk Factors

An investment in the Fund involves significant risks. Prospective investors should carefully consider the following:

Illiquidity

LLC interests not freely transferable; 12, 24, or 36-month commitment (tier dependent); early redemption available after 12 months subject to penalties

Real Estate Market Risk

Property values and loan performance may be affected by market conditions

Borrower Default

Borrowers may fail to repay loans as agreed, requiring foreclosure

No Guaranteed Returns

Past performance does not guarantee future results

Concentration Risk

Portfolio concentration in certain property types or geographic areas

Please review the Private Placement Memorandum for a complete discussion of risk factors.

Management Team

Joshua Andrews

Joshua Andrews

Managing Partner, Operations & Loan Management

Launched his lending career in 2007 as a mortgage loan originator. In 2012, began acquiring defaulted junior mortgages from banks and credit unions. Over the years, Joshua has successfully purchased, managed, and sold more than 1,000 mortgage loans. Author of "Paper Profits: How to Buy and Profit from Notes," a beginner's guide to mortgage note investing available on Amazon. As a speaker at industry events and mentor to successful investors, he has helped many achieve financial independence, enabling them to pursue more fulfilling work so they can focus on what energizes them. His hands-on experience spans residential and commercial notes across nearly all 50 states.

Jane Wabs

Jane Wabs

CFO

CPA with over 20 years of expertise in accounting, tax planning, and retirement investment strategies. Known for her resilience, work ethic, and meticulous attention to detail, Jane joined Paper Profits in March 2020. Her 15-year career in corporate finance and accounting laid the foundation for her entrepreneurial pursuits, including owning and operating an accounting firm and multiple restaurants. A seasoned real estate investor with extensive experience in commercial and residential properties, Jane is highly skilled at structuring complex financial transactions.

Operator Track Record

$28.6M

Assets Under Management since 2020

2

Prior funds completed full cycle ($5M & $10M)

100%

Preferred returns paid since December 2020

Available

References from current investors upon request

Sample Investments

Below are examples of loans in the fund's portfolio, demonstrating our investment approach and conservative underwriting:

Luxury Single-Family Home in Hood River, Oregon

Funded Loan Example #1

Luxury Single-Family Home — Hood River, Oregon

Property Value

$1,250,000

Loan Amount

$750,000

LTV

60%

Position

1st Lien

Interest Rate

18%

Term

12 months

Highlights: Repeat borrower (experienced custom home builder), brand-new luxury construction in sought-after development, strong 40% equity buffer.

Special-Use Property in Fairlawn, Virginia

Funded Loan Example #2

Special-Use Property — Fairlawn, Virginia

Property Value

$6,000,000

Loan Amount

$600,000

LTV

10%

Position

1st Lien

Interest Rate

18%

Term

12 months

Highlights: Unique special-use asset requiring quick funding, underwritten to "as-is" value only, extremely conservative 10% LTV for exceptional security.

Custom Home with Buildable Lots in Hood River, Oregon

Funded Loan Example #3

Custom Home + Buildable Lots — Hood River, Oregon

Property Value

$2,475,000

Loan Amount

$1,550,000

LTV

62.63%

Position

1st Lien

Interest Rate

18%

Term

12 months

Highlights: Repeat borrower (experienced custom builder), $900K home plus seven county-approved buildable lots, desirable subdivision with strong lot demand.

Ready to Learn More?

Schedule a 15-minute call to discuss how the Paper Profits Income Fund can help you earn dependable monthly income backed by real estate.

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Contact Information

Paper Profits Income Fund LLC

12600 Hill Country Blvd, Suite R275

Bee Caves, TX 78738

Phone: (888) 735-9403

Quick Links

Website: www.paperprofitsfund.com

Schedule a Call: calendly.com/joshandrews

This document is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy securities in any jurisdiction where such offer or solicitation would be unlawful. The offering is made pursuant to an exemption under Rule 506(c) of Regulation D and is available only to verified accredited investors. Investments involve substantial risks, including the potential loss of principal, and are illiquid. Past performance is not indicative of future results. Neither the SEC nor any state securities authority has approved or disapproved these securities or determined if this document is truthful or complete. Investors should review the full Private Placement Memorandum and consult independent financial, legal, and tax advisors before investing.