SOUTHERN CALIFORNIA 505 Lomas Santa Fe Suite 130 Solana Beach, CA CA DEPT of RE BROKERS LIC #:

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1 NORTHERN CALIFORNIA 111 N Market St Suite 300 San Jose, CA SOUTHERN CALIFORNIA 505 Lomas Santa Fe Suite 130 Solana Beach, CA contact: Brian Cooke office: x5733 bcooke@hamiltonridge.com CA DEPT of RE BROKERS LIC #:

2 Trust Deed Investing Hamilton Ridge Capital is a California bridge lender. Hamilton Ridge underwrites the loan differently than a traditional lender - with the primary emphasis on the equity in the property. As a bridge lender, Hamilton Ridge provides this interim financing until the borrower can sell or refinance the property. Because these loans are short term in nature, they carry a higher interest rate than traditional loans. The capital to fund these bridge loans comes from individual investors, family offices, pensions, corporations, and individual retirement accounts. Security: Each loan is secured in 1st position on the subject property. The investor receives a title insurance policy with their name securing their interest in the loan. Loan to Value: Because the borrower s financial condition and real estate values can change at any time, Hamilton Ridge requires significant equity protection in each loan, generally lending up to 65% loan-to-value (for example: $650,000 secured by a $1,000,000 property). Return on Investment: Historically investors have earned 7% to 10% annual yield on their investments, paid monthly. The location, loan-to-value, and property determine the rate of return. Loan terms can be as short as 4 months to as long at 7 years. How Does the Investment Work? 1. Hamilton Ridge Underwrites the Loan: The borrower s financial information is reviewed, the property s value is determined through an appraisal or broker review, the title report is inspected, and the exit strategy is reviewed. 2. Property Inspection: Hamilton Ridge conducts an on-site inspection of each property. 3. Loan Committee: The loan package is reviewed by Hamilton Ridge and the loan committee. The majority of loan requests are turned down due to insufficient equity, problems with the property, or the financial condition of the borrower. Hamilton Ridge selects the most conservative trust deed investments to share with the investors. 4. Shared with the Investor: Hamilton Ridge will create a one-page overview of the loan for the investor to review. Each investor has the option to take a fractional interest in the loan or to fund the entire loan. 5. Loan Documents & Funding: Approximately one week after reviewing and selecting a loan to fund, the investor will sign the loan documentation and wire their funds into an escrow account held by a nationwide escrow company (typically Old Republic, Fidelity, Chicago Title, or Stewart Title). 6. Note & Deed: The investor receives a copy of the recorded trust deed and note with their name vested on the title. 7. Receive Interest Payments: The borrower s interest payments are cleared through a third party custodian (FCI Lender Services) each month and sent directly to the investor.

3 Sample Trust Deed Investments: San Anselmo, CA The subject property is a renovated single family home in the affluent town of San Anselmo in Marin County. The residence has 3 bedrooms, 3 bathrooms, in 1,600 square feet of living space on a 7,400 square foot lot. The borrower is a successful real estate investor who renovates homes in exclusive neighborhoods. The borrower purchased the subject property in 2010 and completely renovated the home with new plumbing, new electrical, and high-end interior finishes. The loan was paid off when the property sold for $729,000. Property Type: Single Family Home 1,603 Square Feet Security: 1st Trust Deed Loan: $350,000 Value: $729,000 LTV: 48% 12 months

4 San Diego, CA The subject property is an office condo located in the El Cortez building, a historic high-rise in downtown San Diego. The condo also includes a 1,272 square foot balcony with views of downtown. An existing sub-leaser of the office decided to purchase the office condo and leaseback part of the space to the seller. The new borrower requested a 2- year bridge loan to purchase the property and allow enough time to obtain a conventional refinance. Property Type: Office 3,061 square feet Security: 1st Trust Deed Loan: $390,000 Value: $857,000 LTV: 45% 24 months

5 Oakland, CA The subject property is a 4 bedroom (plus office), 3.5 bath, contemporary home in the Upper Rockridge area of Oakland. The surrounding neighborhood consists of homes in the $1.2M to $2.2M range. The home sits on an elevated lot with views of Oakland and Berkeley. The owner of the property built the home and loved the final product so much he moved into it. The borrower needed a $900,000 loan to build another contemporary home less than one block away. The proceeds of this loan will be paid off from the sale of the new investment property or a conventional refinance of the subject property. Property Type: Single Family Home 2,500 Square Feet Security: 1st Trust Deed Loan: $900,000 Value: $1,500,000 LTV: 60% 18 months

6 Santa Clara, CA The subject property is a four-unit commercial retail property located one block from Santa Clara University. The property sits on a corner lot and currently is leased to three tenants: a property management company, a popular sandwich shop, and an army-surplus store. Property Type: Mixed Use 7,780 Square Feet Security: 1st Trust Deed The borrowers purchased the building from a bank at a discount. Due to the foreclosure on the property the existing tenants were on month-tomonth leases. Once the building established long-term leases and stabilized income, the borrowers were able to refinance with a traditional commercial lender. Loan: $828,750 Value: $1,705,000 LTV: 48% 24 months

7 San Jose, CA The subject property is a 5 bedroom, 5 bathroom, new construction home built in the San Jose community of Willow Glen. The borrower purchased the previous home for $870,000, tore it down and built the existing 4,200 square foot home in 6 months. Hamilton Ridge was able to provide the initial acquisition funding as well as full construction financing once plans and permits were acquired. The construction funds were held in an escrow account and disbursed as the project reached milestones. The loan was paid off when the property sold for $1,830,000. Property Type: Single Family Home 4,200 square feet Security: 1st Trust Deed Loan: $932,500 Value: $1,830,000 LTV: 51% 12 months

8 San Diego, CA The subject property is a historic mansion in the Mission Hills area of San Diego. The 7-bedroom, 6-bath, house was built in the 1930s on a large 16,800 square foot lot overlooking the San Diego Bay. Property Type: Single Family Home 7 bed, 6 bath Security: 1st Trust Deed The Borrower requested a $1,125,000 loan to purchase the property and provide renovations. Hamilton Ridge provided a 6-month loan with no pre-payment penalty. The borrower upgraded the entire home while maintaining the historic character. Loan: $1,125,000 Value: $1,900,000 LTV: 60% 12 months

9 Frequently Asked Questions What is a trust deed? A trust deed is a legal document that secures the borrower s obligation to repay the loan from the investor(s). The deed is recorded in the public records of the county where the property is located. Similar to a bank, the trust deed provides the investor the legal ability to foreclose and sell the asset to pay off the loan if the borrower fails to pay the loan. How do fractionalized trust deed investments work? For each loan, up to eight investors may fund a fractional interest or one investor can fund the entire loan. For example: with a $500,000 loan, one investor can commit $100,000 and another investor can commit $400,000. In this example each investor has a specific portion of the trust deed investment and will receive interest proportional to their investment. Many investors prefer to spread their capital over several notes and fractionalize their investments. Another diversification vehicle would be the Cavallino Fund, a mutual fund of trust deed investments managed by Hamilton Ridge. What happens if the borrower doesn t pay? Although Hamilton Ridge has never originated a loan that has resulted in foreclosure, there are borrowers who are late on their payments. If the borrower is late on a payment, a Hamilton Ridge Principal contacts the borrower to remind them of the late payment. Should the borrower be 30-days late on payment, Hamilton Ridge will immediately file a Notice of Default and proceed with foreclosure. Because the investor will also receive a late penalty fee, the vast majority of borrowers pay on time. Why do you focus on 1st position trust deeds? Although we have originated 2nd position loans in ideal scenarios, Hamilton Ridge s lending program focuses on 1st position loans. If a borrower did default on a 2nd trust deed, it is likely the senior position loan would be in default as well. This would mean the 2nd trust deed holder(s) would have to keep the senior lender current while they proceed with the foreclosure. Although 2nd trust deeds carry a higher rate of return, 1st trust deeds provide lower-risk returns for Hamilton Ridge investors. Can I invest with my retirement funds? Yes, provided your have control of your retirement account and your custodian allows trust deed investments. Most IRAs, Corporations, Keoghs, Pension, and Profit Sharing Plans are great vehicles for trust deed investments. This is not a solicitation to invest. The funding of a loan is an investment which involves risk. Trust deed investments are for accredited investors only. Please contact Hamilton Ridge or your investment advisor to see if you are an accredited investor. Past performance does not guarantee future results. NORTHERN CALIFORNIA 111 N Market St Suite 300 San Jose, CA SOUTHERN CALIFORNIA 505 Lomas Santa Fe Suite 130 Solana Beach, CA contact: Brian Cooke office: bcooke@hamiltonridge.com CA DEPT of RE BROKERS LIC #: