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2 E X E C U T I V E S U M M A R Y A CONSERVATIVE LOW RISK APPROACH TO INVESTING If you are at the stage of your life where you are interested in creating your own passive stream of monthly income to build your wealth, you are within reach of achieving your goal. At The Note Factory, we are adamant in our belief that there is no better form of investment than notes secured by real estate. We will provide you the assistance and foundation you need to begin investing in real estate mortgage notes. At the Note Factory we provide our clients and members with not only the educational foundation needed to accomplish their goals but also simplify the investment process to ensure clean and clear understanding. We feel that is extremely valuable for our clients to feel comfortable and confident in their investments as well as the entire investment process. Our priority is to walk our clients through the investment every step of the way. We will facilitate the event of the initial investment as well as provide assistance to our clients after the investment has been made. If you re looking for an investment to build a source of passive income and maintain a conservative, low risk approach to investing, we honestly believe that there is no other investment that compares to investing in notes secured by real estate. In the current real estate market, many of the top investors are changing their strategy to allocate more of their investment capital to notes. Investors are finding that notes are a much more secure and hassle free opportunity to earn above market returns as the price of real estate continues to stabilize. There are many similarities between investing in real estate and investing in real estate notes. Among these are evaluating the collateral, and working with title, escrow and insurance companies. At the Note Factory we pride ourselves on our expertise and experience in all of these facets all work, and our ability to packaged these moving parts and deliver them to our investors.

3 O U R T E A M EXPERIENCED, RELIABLE, AND HERE FOR OUR INVESTORS Our team is dedicated to bringing our investors the most equitable investments possible. Our investors will surely benefit from the rich combination of experince of our team members. We bring to the table a variety of skill sets and knowledge basis from many different corners of the market. From decades of experince in the real estate market to the implementation of the latest technology and internet services, our end goal is to provide our investors with a clean and simple investment process yielding outstanding returns. MIKE ARCH Licensed Real Estate Broker Licensed Mortgage Loan Originator NMLS ID # Bonded Loan Servicer Has Acquired, Rehabilitated and Sold Hundreds of Homes in San Antonio ERIK SAENGERHAUSEN Has Acquired, Rehabilitated and Sold Hundreds of Homes in San Antonio over the last 10 Years Licensed Real Estate Broker HUD Foreclosure Expert Extensive Rehabilitation and Remodeling Experience HENRY MUNGUIA Licensed Real Estate Agent, License # Has Acquired, Rehabilitated and Sold Hundreds of Homes in San Antonio LINDA BUGOSH Office and Underwriting Manager MITCH ROCHELEAU Internet Sales and Marketing

4 H O W I T W O R K S THE DIVISIONS OF THE NOTE FACTORY Each of our divisions is represented by a gear within the larger Note Factory Machine. We are truly a well oiled machine, working together to bring our customers a safe, secure investment with excellent returns. To understand more about each of our divisions, continue reading. A C Q U I S I T I O N R E N O V A T E T U R N - K E Y I N V E S T M E N T

5 S A L E S S E R V I C E P A S S I V E I N C O M E

6 A C Q U I S I T I O N PURCHASING THE PROPERTY The first step in the process of creating a quality real estate note is acquiring a property in an area where good people and their families would want to live. Our acquisition team looks at hundreds of homes each month and purchases only the properties that fit our strict guidelines. All of the properties acquired by the Note Factory are bought below market value. We acquire properties that have the potential to be some of the nicest and most desirable homes in the community. As soon as we officially close on a property, our professional renovation team takes over and starts getting the home ready for the sales team to find a qualified buyer. Acquiring properties is the most important part of the Note Factory System because you make money when you buy not when you sell! Our acquisition team is highly trained and goes through an intense program to learn how to find the best deals available on the market. Once we have the home under contract, our senior acquisition manager reviews the property and the numbers to ensure that we will be producing the highest possible returns for our note buyers.

7 R E N O V A T E FIXING UP THE PROPERTY Right after a home is purchased; the renovation team gets to work. The goal of the renovation project is to make the home one of the most desirable properties in neighborhood. This is accomplished by having a knowledgeable team with the skills to handle all aspects of a renovation including plumbing, electrical, roofing, painting, carpentry and other general repairs. The end goal is to deliver a home to the sales team that every neighbor on the street wishes they had! The reason that we can renovate our homes up so nicely is because of the expertise of our acquisition team. They purchase all of our homes well below market value, which gives us a healthy budget to invest into our homes during the renovation process. This makes our homes some of the nicest on the block! Every step of the Note Factory process is focused on one thing: producing a quality product so that we can create double digit passive income for our note buyers.

8 S A L E S FINDING A BUYER FOR THE HOME Once a property is completely renovated, the sales team immediately contacts everyone on their extensive buyers list. We have been advertising homes for years and have accumulated a huge list of prospective buyers. We usually find a qualified buyer for our homes within the first two weeks the home is on the market and often times we have multiple families competing for the same home. This is not luck and it does not happen by accident. Our acquisition team knows which homes to purchase and our renovation team delivers a first-class home to the marketplace. Finding an interested buyer for a home is just the first step in the sales process. The Note Factory has a Proprietary Character Underwriting System that all buyers go through in order to officially qualify. After final loan approval, there are loan disclosures that get signed and often times pre-loan counseling that gets scheduled. All of our buyers have the opportunity to get their homes inspected and all transactions are closed at a title company with title insurance. Once again, the entire Note Factory process is designed to create quality real estate notes backed by quality homes that will produce double digit returns for our note investors. After the official closing of the transaction, our world class service team takes over to ensure that your stream of income keeps flowing smoothly.

9 T U R N - K E Y I N V E S T M E N T S SIMPLE, CLEAN, AND CLEAR INVESTMENTS At The Note Factory we offer True Turn-Key Real Estate investing. What is Turn-Key Investing and why is it better than doing it yourself? By investing in The Note Factory s Turn-Key real estate investments you get the luxury of realizing the doubledigit returns of real estate investing without the risk. We take all the risk out of the equation. The risky parts of investing in real estate are when you buy the house; rehab the house and when you sell the house. We have already done those things for you. By investing in The Note Factory s Turn-Key Investments we have already negotiated the house to be bought at the right price, rehabbed the house and dealt with all the risk associated with rehabs. We have found the qualified buyer to purchase the house and underwrote them as well as complied with all government disclosures and documents. All that is left is for you to realize double-digit returns month after month and year after year. Most new and even experienced investors lose money doing traditional flips. If you do not purchase the property at the right price you may find yourself upside down when an unforeseen circumstance arises during the rehab process. Electrical that is out of code or missing (stolen) during rehab. Copper for A/C and plumbing stolen or missing. Roof leak. A/C stolen or not functional when you thought it was. All of these plus many more can costs you thousands of dollars and cut into your profit and often times put you out of business. By investing in The Note Factory s Turn-Key Investments we have already been through all of those processes and have a profiting real estate note waiting for you to enjoy! Welcome to the Note Factory! Your online Marketplace for Real Estate Notes.

10 S E R V I C E PROTECTING YOUR RETURNS The Note Factory service team is in place and ready from day one to make sure your investment is safe, secure, and cash flowing properly month after month. Our highly trained team makes sure that you are compliant with all regulations and that taxes and insurance are up to date and paid annually. The Note Factory has all the latest software for easy reporting and annual tax forms needed for you and the borrower. You can sleep well knowing that our service teams main mission each day is to ensure your return on investment is fulfilled year after year!

11 P A S S I V E I N C O M E MAILBOX MONEY Everyone wants passive income. Everyone would like to walk to their mailbox and pick up a nice healthy check each month. The problem with many investment strategies that potentially offer double digit returns is the lack of control that you have when something goes wrong. This is what separates real estate note investing from other investments. If you invest in a stock and the stock plummets, all you can do is hope and pray the stock goes up again someday. If you take a chance on investing in an oil well, you may get lucky or you may have just thrown your money away on a dry hole and there is nothing you can do about it. The notes produced by The Note Factory are backed by hard assets (houses) and there is a huge demand for affordable housing. If you own a real estate note and a buyer quits making payments, YOU CAN DO SOME- THING ABOUT IT! You can foreclose on the property and quickly resell the house to get your stream of income back on track. If you purchase notes from The Note Factory, we handle any and all issues if there is a disruption to your stream of income. Our service team watches over your investment and we have less than a 5% default rate. A default in the note investing world is not bad thing. Each and every time we have had a default, we ended up MAKING MONEY for our investors when the house was resold. This is due to the fact that our acquisition team purchased a home in a very desirable area and our sales team has a list of buyers ready to make a down payment a mile long! STOP investing in things you have no control over and STOP accepting the ridiculous safe returns offered by banks. TIME IS MONEY. The time to invest in real estate notes is now. Use this web site to educate yourself on real estate notes and take control over your investments and your future.

12 T E S T I M O N I A L S FROM OUR INVESTORS December 05, 2013 My wife and I are relatively new to the The Note Factory investment team approaching one year in March To date we have been thrilled by the excellent returns on our investment notes and plan to continue purchasing quality notes in the future. Approaching our retirement goals soon, we were in need of a more reliable and consistent passive investment return without the volatility and risks of the stock market which we had tolerated the last 20 years. The Note Factory was our answer! As of November 2013 we own ten individual notes and look forward to adding new notes as well as opening self-directed IRA s to create individual retirement portfolios of notes as well. Mike Arch and the team at The Note Factory have been a godsend and have exceeded our expectations with this truly remarkable investment plan. We feel very fortunate to be part of this knowledgeable group and fully recommend The Note Factory for investors. Mark & Shannon Zeman The Woodlands, Texas I bought my first note from The Note Factory almost 3 years ago. I felt at the time their business plan to buy single family homes, remodel, sell & create a marketable owner finance note was a good one! Today I believe their business plan is a GREAT ONE. That first note was purchased for $54.5K and so far it has returned over $22K in principal and interest. You cannot find a more reliable and high yielding stream of passive income ANYWHERE! Since I purchased that first note in early 2011 I have purchased a total of 23 notes because......the Note Factory Team DELIVERS! Richard Gueringer San Antonio, Texas Gentleman, I wanted to express my sincere appreciation for the outstanding work you have both diligently done to produce outstanding returns, on my large investments; I have with The Note Factory. In today s economic market it is rare to find such work ethic, integrity, and morality in the non-agency mortgage note investment business. The Note Factory has consistently produced an investment return of over 10% to 12% annually. As you know I have referred friends and family to this wonderful business opportunity with your company and they are very pleased with the return on their investments also. If you have any other individuals that would like to discuss potentially investing with Alamo Home Source, please don t hesitate to have them contact me. I look forward to a successful business partnership with The Note Factory for decades to come. Sincerely, Charles R. Bergstrom IV

13 Prior to September, 2011, we had our IRA money invested with an investment firm which specialized in value stocks. Although this company had great results since its founding in 1974, our investments were going sideways, and we were concerned about the long term future of our retirement portfolio. At this time we were introduced to Mike Arch and Erik Saengerhausen from The Note Factory who presented us with the opportunity to purchase discounted real estate notes. The rates of return they projected on the notes were 10.9% %. My former boss prior to retirement had purchased several notes and since I respected his judgment in financial matters, we decided to give them a try. On September 11, 2011 we purchased our first note, and over the next ten months we bought eleven more. I jokingly told Mike, We ve got all our eggs in one basket and you re holding the basket. We have never regretted that decision. The Note Factory services all our notes, does any collection work required and notifies us via three times per month of direct deposit amounts to our bank for note payments received. The rates of return we have actually realized have been slightly higher than projected, and we are extremely satisfied. There have been a couple of bumps in the road. We have taken two properties back via deed in lieu of foreclosure. The first was in December, 2012, but The Note Factory got the property back to market ready quality for $2,600 and resold the property for more than the original purchase price in February, The second house was taken back in November, 2013 and is presently in the rehab, remarketing phase. Mike and Erik and their employees are as diligent about handling our investments as they are in handling their own. I ve told them to make collection decisions on our notes as if they were their own because we trust them totally and have very similar credit extension philosophies. We left the stock market when it was in the 12,000 range, and now that it is at or near 16,000, it could be tempting to second guess the decision to forego all that potential profit. We re earning double digits on our investments with The Note Factory, and we don t have to endure the gut wrenching cyclical rise and fall of the stock market every day. For anyone who might be contemplating getting out of the market at its latest historical high and wondering what to do with their money, we would highly recommend investing with Alamo Home Source, a company that unites home buyers and investors in a win-win relationship. Ivan and Diane Estes San Antonio, Texas

14 F A Q THE BASICS What is a Note? In the United States, a mortgage note (also known as a real estate lien note, borrower s note) is a promissory note secured by a specified mortgage loan; it is a written promise to repay a specified sum of money plus interest at a specified rate and length of time to fulfill the promise. While the mortgage deed or contract itself hypothecates or imposes a lien on the title to real property as security for a loan, the mortgage note states the amount of debt and the rate of interest, and obligates the borrower, who signs the note, personally responsible for repayment Do I own the house? This is the most asked question when it comes to investing in real estate notes. The simple answer is no, you do not own the home but rather the home is an instrument used as collateral. In case of default on the note you will get the home after foreclosure and can then resell or rent. Mortgage Note vs Tax Lein? The advantage of a mortgage note over a tax lien or tax deed certificate is that a mortgage note will allow one to collect the interest on a monthly basis. Tax lien and Tax deed certificates are only paid when the lien or deed is redeemed. Is it Safe? All investments come with some kind of risk, however we feel that investing in real estate notes is a lot less risky than the stock market. When you invest in the stock market you have zero control over whether the stock goes up or down. When you invest in real estate notes if something goes wrong you can roll your sleeves up (or we can) and do something about it. If a stock goes bad you are at the mercy of the corporation. We have had a couple of notes go into default and have made money when we resold on every single one of them! Is it like a rental? Kinda You are collecting monthly payments from someone living in the house. However, you do not own the home and the homeowner has to pay for all of their own repairs etc. No late night calls because the toilet is overflowing! Rentals Vs Notes From an investment standpoint a rental is risky like the stock market. You have up and down years in which you may make money or you may lose money. With a real estate note you know exactly what you are going to make month after month. Your net return does not change when taxes or insurance prices go up, as it is the homeowners responsibility to pay them.

15 Servicing? The Note Factory prides itself in servicing. The two things that separate us from the competition are realistic values and servicing. We have a highly trained staff that makes sure your investments are protected and performing at a high level. We also report to credit agencies so that the borrowers can begin to rebuild their credit and also so that they will pay on time. Return? Each note is different but most of our investors realize double-digit returns. Can I purchase from my Ira/401k? Yes! About 80% of our investors purchase real estate notes through their IRA and or 401k. Our specialized team can help you get yours set up and start investing out of in a matter of weeks. What is a self directed IRA? A self-directed Individual Retirement Arrangement is an IRA that allows the account owner to direct the account trustee to make a broader range of investments than other types of IRAs. For example, Real Estate Notes. What happens if they stop paying? If they stop paying there are a couple of options. Deed In Leui (they sign the house over to you) Foreclosure- Texas is Non-Judicial and this process takes less than 2 months. We facilitate the entire process for you and resell the house once foreclosure proceedings are over. We have created over 200 real estate notes and only had 7 go into default. The odds are in your favor, but if it does go into default our highly trained team is the best at getting your investment producing the stream of income again. Did you check credit on the home buyers? Absolutely. However, we have developed a proprietary character underwriting system that looks at the borrower as a whole not just their credit. This system has allowed us to have less than a 5% default rate on ALL notes created. Unmatched by our competitors! Where are your notes located? As of right now we are mainly in and around the San Antonio, Texas area. How many notes have you created? We have created over 200 notes.

16 t h a n k y o u f o r v i s i t i n g... T H E N O T E F A C T O R Y 5119 San Pedro San Antonio, TX P: E: Mitchell@thenotefactory.com