Upload
larry-roberts
View
220
Download
0
Embed Size (px)
Citation preview
8/4/2019 Radiant Homes Booklet 01
1/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 1
RADIANTHOMES,LLC
aNevadalimitedliabilitycompany
OFFERING
TenMillionDollars
($10,000,000)
Of
2000MembershipUnits
$5,000perUnit
5Unit($25,000)MinimumIndividualInvestment
SECURITIESDISCLOSURES
The securities offered herebyhave not been registered under the Securities Actof 1933, as
amended, or the securities laws of any state and are being offered and sold in reliance on
exemptionsfromtheregistrationrequirementsoftheSecuritiesActandsuchlaws.
Furthermore, the securities offered hereby have not been approved or disapproved by the
SecuritiesAndExchangeCommissionorotherregulatoryauthorityofanystate,norhaveanyof
theforegoingauthoritiespassedupontheaccuracyoradequacyofthisdocumentorendorsed
themeritsofthisoffering.Anyrepresentationtothecontraryisacriminaloffense.
IMPORTANTCONSIDERATIONS
Thismemorandumisbeingfurnishedtoprospectiveinvestorstoconsideraninvestmentinthe
Fund.Duetoitsconfidentialnature,thismemorandummaynotbereproducedorusedforany
otherpurpose.Byacceptingdeliveryofthismemorandum,eachprospectiveinvestoragreesthathe, she or it will not divulge its contents to any person other than his, her or its attorney,
accountantorotherrepresentative,ifany,andwillreturnitwithallaccompanyingdocumentsto
theManageruponrequestiftheinvestordoesnotmakeaninvestmentintheFund.
Thesecuritiesofferedherebywillbeofferedinatransactionnotinvolvingapublicofferingin
relianceupontheexemptionfromregistrationaffordedbysection4(2)oftheSecuritiesActand
theregulationspromulgatedthereunder,andmayonlybeofferedandsoldtocertainqualified
investors.Subscriberswillberequiredtorepresentthattheyarefamiliarwithandunderstand
thetermsofthisoffering,andthattheymeetcertainsuitabilityrequirements.
Thismemorandumdoesnotconstituteanofferorsolicitationbyortoanyoneinanyjurisdiction
in which such an offer or solicitation would be unlawful. In addition, this memorandum
constitutesanofferonlyiftheOffererisaqualifiedOffereeunderapplicablesecuritieslaws.
Thismemorandumcontainsasummaryofthematerialtermsofcertaindocuments.However,
the description of the documents summarized herein is incomplete andshould notbe relied
upon by any investor without a complete reading of all of such documents and a full
understandingoftheircontents.Alldocumentsrelatingtoaninvestmentintheinterests(and
8/4/2019 Radiant Homes Booklet 01
2/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 2
anyadditionalinformationinconnectionwiththisofferingthatisavailableorcanbeobtained
without unreasonable expense) will be made available to the Offeree provided with this
memorandumorto his, her orits representatives,if any, upon request.TheManager and its
representativeswillbeavailabletotheOffereeortosuchrepresentativestoprovideanswersto
questions concerning this offering. Neither the Fund nor the Manager has authorized, andOffereesshouldnotrelyupon:(a)anyrepresentations(whetheroralorwritten)otherthanthose
set forth in this memorandum and the enclosures hereto or (b) any additional information
(whetheroral orwritten) except that contained indocumentsprepared anddelivered to the
OffereebytheFundpriortoamonthlytransactiondate.
Prospectiveinvestorsshouldnotconstruethecontentsofthismemorandumasindividuallegal,
taxorinvestmentadvice.Eachinvestorshouldconsulthis,heroritsowncounsel,accountantor
businessadvisersastolegal,taxandrelatedmattersconcerningthisinvestment.
Noofferingliteratureoradvertisingmaterialwillbeemployedintheofferingoftheinterests,
except the information contained in this memorandum, the operating agreement, the
subscriptionmaterials,anyinvestmentsummaryandadviserprofiles,otherenclosures,andthe
coverletterorlettersaccompanyingsuchdocuments.
ThisofferingwillcontinueuntilterminatedbytheManager.TheManagerintheexerciseofits
solediscretion,reservestherighttosuspendtheofferingtemporarilyandtoreopenthesame
without such action being considered a closure or termination of the offering, or the
commencementofa new offering. Furthermore, inconnectionwith the offerand saleofthe
interests, theManager reserves the right, in its sole discretion, to reject anysubscription, in
wholeorinpart,ortoallottoanyprospectiveinvestoralesserinterestthantheonesubscribed
forbysuchinvestor.
Theinformationcontainedinthismemorandumisintendedtobecurrentasofthedateofthis
memorandum.No representationorwarranty ismadeasto the accuracy orcompleteness of
such information, and nothing in this memorandum is, orwill be relied on as, a promise or
representationastothefuture.
AllStates
Thepresenceofalegendforanygivenstatereflectsonlythatalegendmayberequiredbythat
stateandshouldnotbeconstruedtomeananofferorsalemaybemadeinanyparticularstate.
ThisMemorandummaybesupplementedbyadditionalstatelegends.Ifyouareuncertainasto
whether or not offers or salesmay be lawfullymade in any given state, you are advised to
contacttheManagerforacurrentlistofstatesinwhichoffersorsalesmaybelawfullymade.
8/4/2019 Radiant Homes Booklet 01
3/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 3
NoticetoCaliforniaResidents
Thesesecuritieshavenotbeenregisteredunderthe1933act,orqualifiedundertheCalifornia
Corporations code by reason of specific exemptions thereunder relating to the limited
availabilityoftheoffering.Thesesecuritiescannotbesold,transferredorotherwisedisposedof
toanypersonorentityunlesssubsequentlyregisteredunderthe1933actandqualifiedunder
theCaliforniaCorporationscode,ifsuchregistrationandqualificationisrequired.
ForFloridaResidentsOnly
Whensalesaremadeto fiveormorepersonsinFlorida,anysale inFloridamadepursuantto
section517.061(11)isvoidablebythepurchaserinsuchsaleeitherwithin3daysafterthefirst
tenderofconsiderationismadebysuchpurchaserto theissuer,anagentofthe issuer,or an
escrow agentor within 3days afterthe availabilityof that privilegeis communicated tosuch
purchaser,whicheveroccurslater.
SpecialU.S.TaxDisclosure
Thetaxpayer(andeachemployee,representative,orotheragentofthetaxpayer)maydisclose
toanyandallpersons,withoutlimitationsofanykind,thetaxtreatmentandtaxstructureofthe
transactions and all materials of any kind (including opinions or other tax analysis) that are
providedtothetaxpayerrelatingtosuchtaxtreatmentandtaxstructure.
SpeculativeNatureofInvestment
InvestmentintheUnitsisspeculativeandbyinvesting,eachMemberassumestheriskoflosing
the entire investment. TheFundhasnooperations asof the date ofthisofferingandwill be
solely dependent upon theManager.Therecan beno assurances that the Fund's investment
returnobjectives will be realized,or that significantcapitallosseswill notoccur. Accordingly,
Investorsmustbeabletobearthelossoftheirentireinvestment.
FORWARD-LOOKINGSTATEMENTS
Certain statements in thismemorandum constitute '"Forward-LookingStatements"withinthe
meaning of section 27A of The SecuritiesAct Of 1933, as amended. And section 21E of The
Securities Exchange Act Of 1934, as amended. All statements that address expectations or
projectionsaboutthefuture,includingstatementsaboutinvestments,marketposition,expected
expendituresandfinancialresults,areforward-lookingstatements.Someoftheforward-looking
statements may be identified by words like "expects," "anticipates," "plans," "intends,"
"projects," "indicates,"and similar expressions. Any statements containedherein thatarenot
statements of historical fact may be deemed to be forward-looking statements. These
statements are not guarantees of future performance and involve a number of risks,
uncertaintiesandassumptions.Accordingly,actualresultsorperformanceoftheFundmaydiffer
significantly, positively or negatively, from forward-looking statements made herein.
Unanticipated events and circumstances are likely to occur. Factors that might cause suchdifferencesinclude,butarenotlimitedto,thosediscussedundertheheading"AdditionalRisk
Factors,"which investors should carefully consider. The Fund will undertake noobligation to
updateanyforward-lookingstatements.
8/4/2019 Radiant Homes Booklet 01
4/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 4
Contents1 PRIVATEPLACEMENTDOCUMENTS................................... ...................................... .................6
2 WHYMANAGEDRENTALPROPERTIES?...................................................................................6
3 SUMMARYOFOFFERING...............................................................................................................7 3.01 TheFund..................................................................................................................................................7 3.02 TermoftheFund..................................................................................................................................7 3.03 InvestmentObjectiveandProcess................................................................................................7 3.04 Advantagesofbuyingdistressedproperties............................................................................7 3.05 DistressedPropertyInvestmentRisks.......................................................................................7 3.06 Advantagesoftrusteesalepurchases.........................................................................................8 3.07 TrusteeSaleInvestmentRisks.......................................................................................................8 3.08 EligibleInvestors..................................................................................................................................9 3.09 HowtoPurchaseInterests...............................................................................................................9 3.10 NetAssetValue....................... ....................... ........................ ........................ ....................... ...............103.11 HowtoRedeemInterests................................. ........................ ....................... ........................ .......10
3.12 StartupFeesandExpenses........... ....................... ........................ ....................... ........................ ...113.13 DistributionsandTaxes................. ....................... ........................ ....................... ........................ ...113.14 RedemptionandTaxes........... ....................... ........................ ....................... ........................ ...........113.15 BusinessOperationsoftheFund....................... ........................ ....................... ........................ ...11
4 THEMANAGER................................................................................................................................114.01 Manager:LarryRoberts................. ....................... ........................ ....................... ........................ ...124.02 ManagerCompensation...................... ....................... ........................ ....................... .......................124.03 SharedProfitsandAlignmentofInterests........................................... ........................ ...........134.04 ManagersholdingsintheFund..................... ........................ ....................... ........................ .......134.05 ManagersPurchaseofPropertiesfromtheFund..................... ....................... ...................13
5 INVESTMENTOBJECTIVEANDAPPROACH...........................................................................13 5.01 MarketEnvironmentandOpportunity....................... ........................ ....................... ...............135.02 PhilosophyandStrategy............ ....................... ........................ ....................... ........................ .......145.03 RiskofDiminishedReturns............................. ........................ ....................... ........................ .......14
(a) Idlemoney.....................................................................................................................145.04 RiskofLoss.......................... ....................... ........................ ....................... ........................ ...................145.05 InvestmentProcess.............................. ....................... ........................ ....................... .......................15
(a) SelectPropertiesforInitialResearch................................................................15 (b) FilterPropertieswithFinalResearch................................................................15(c) BidatSale.......................................................................................................................15(d) TakePossessionafterSale......................................................................................16(e) PrepareforRental......................................................................................................16(f) HoldasLong-TermRental.......................................................................................16(g) LiquidatePropertiesasInvestorsRedeemInterests..................................16
5.06 TypicalInvestmentParameters,CostsandFees................................ ....................... ...........16
5.07 BreakevenAnalysisforTypicalInvestment........................................ ........................ ...........185.08 UseofPropertyandFundDebt...................... ........................ ....................... ........................ .......185.09 Appreciationand10-YearInternalRateofReturn............... ....................... .......................205.10 Ten-YearProjectionsforatypicalproperty..................... ....................... ........................ .......215.11 RentalStrategies........................ ....................... ........................ ........................ ....................... ...........22
(a) Rentingtotheformerowner.................................................................................22(b) Rentingtotheholdovertenant............................................................................22
8/4/2019 Radiant Homes Booklet 01
5/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 5
(c) Rentingtoanewtenant...........................................................................................22(d) Pricingstrategy...........................................................................................................22
5.12 DispositionTacticsandResponsibilities............... ....................... ........................ ...................22(a) 3%to5%ProfitTarget............................................................................................23
(b) LowerpricetoNetAssetValue............................................................................23(c) 45DaysonMLSbeforeredeemingforlessthanNetAssetValue.........23 5.13 FundtoPurchasefromAppleBlossomArbitrageLLC................ ....................... ...............235.14 InvestorsPurchaseofPropertiesfromtheFund................................. ........................ .......23
6 ADDITIONALRISKFACTORS......................................................................................................236.01 RelianceonManagement....................... ....................... ....................... ........................ ...................246.02 DiversificationRisk.............................. ....................... ........................ ....................... .......................246.03 LeverageRisk...................... ....................... ........................ ........................ ....................... ...................246.04 AbsenceofOperatingHistoryRisk........................................... ....................... ........................ ...246.05 LimitedTransferability....................... ....................... ........................ ....................... .......................246.06 AmendmentsofOperatingAgreement................................... ....................... ........................ ...246.07 SpecialConsiderationsforERISAFiduciaries...................... ....................... ........................ ...246.08 ChangesinApplicableLaw........... ....................... ........................ ....................... ........................ ...25
6.09 EffectsofSubstantialRedemptions...................... ........................ ....................... .......................257 CONFLICTSOFINTEREST............................................................................................................25
7.01 ServicesoftheManager......... ....................... ........................ ....................... ........................ ...........257.02 OtherSourcesofManagerCompensation.................................... ........................ ...................267.03 ManagerBuyoutofFundsInterest...................... ........................ ....................... .......................267.04 TradingByAffiliatedPersons............................. ........................ ....................... ........................ ...267.05 OtherAdvisoryAccounts............................... ....................... ....................... ........................ ...........267.06 NoIndependentCounsel........................ ....................... ....................... ........................ ...................26
8 HOWTOPURCHASEINTERESTS...............................................................................................268.01 EligibleInvestors....................... ....................... ........................ ........................ ....................... ...........268.02 PaymentofPurchasePrice.............................. ........................ ....................... ........................ .......28
9 HOWTOREDEEMINTERESTS...................................................................................................28 9.01 RedemptionInstructions.................................. ........................ ....................... ........................ .......289.02 InvoluntaryRedemptions...................... ....................... ....................... ........................ ...................289.03 FiduciaryResponsibilities,Exculpation,andIndemnification.......................................28
10 TAXASPECTS................................................................................................................................29 10.01 DISTRIBUTIONSANDTAXES........................ ........................ ....................... ........................ .......2910.02 FederalTaxAspects....................... ....................... ........................ ........................ ....................... ...2910.03 PartnershipStatus;PubliclyTradedPartnershipStatus..................... ........................ ...2910.04 Members,NotFund,SubjecttoTax....................................... ........................ ....................... ...3010.05 PassiveActivityIncomeandLoss....................... ........................ ....................... .......................3010.06 LiquidationoftheFund........................ ....................... ....................... ........................ ...................3010.07 AlternativeMinimumTax.......................................... ....................... ........................ ...................3010.08 UnrelatedBusinessTaxableIncome............................. ........................ ....................... ...........3010.09 StateandLocalTaxAspects...................... ........................ ....................... ........................ ...........3010.10 ForeignTaxes............................... ....................... ........................ ....................... ........................ .......3010.11 ERISAAspectsandRisks................. ....................... ........................ ....................... .......................30
11 DEFINITIONS.................................................................................................................................31
8/4/2019 Radiant Homes Booklet 01
6/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 6
1 PRIVATEPLACEMENTDOCUMENTSThepackageofmaterialsthatcamewiththisbookletcontainsthefollowing:
1. DisclosureDocument,2. OperatingAgreement,3. InvestorQuestionnaireand4. SubscriptionAgreement.
The DisclosureDocument explainstheOperatingAgreementand describeshow theFundwill
conductbusiness.TheSubscriptionAgreementisfilledoutbytheinvestorasanofferingtothe
Fund to accept the subscribers cash contribution in exchange for a claim to the assets and
profitsoftheFundsoperations.
TheOperatingAgreementaddressesitemslikethecompanyname,Managerandmembers,the
investmentplan,typicaltransactions,expenses,profitsandlosses,capitalcontributions,capital
distributionsandwithdrawals,andvariousproceduralandlegalnotes.
TheDisclosureDocumentdoesnothavethelegaleseoftheOperatingAgreement.Theintentofa
DisclosureDocumentistoinformcompletelyandmakeeverythingastransparentaspossible.
TheInvestorQuestionnaireisdesignedtohelpthepotentialinvestordetermineifthetypeof
investmentpresentedisrightforthem.Itestablishesthecontactinformation,investorfinancial
status,andotherdatatohelptheManagerevaluatethesuitabilityofthepotentialSubscriber.
The Subscription Agreement is the investors petition to the Fund for admission. The Fund
ManagermayacceptSubscribersintotheFundbyprocessingtheSubscriptionAgreementand
returning to the Investor a copy of the Subscription Agreement signed by the Manager. It is
recommendedthatthesedocumentsandfutureFundPerformanceReportsbekepttogetherfor
theinvestorsrecords.
2 WHYMANAGEDRENTALPROPERTIES?Rentalpropertiesofferthestabilityofregularcashflowandthepotentialforappreciationand
profiton resale. Investing in rental properties has lower risk than other formsof real estate
speculation.Withrentalproperties,unlesstheinvestorisforcedtoliquidateatapoortimeata
loss,the questionbecomes not oneof lossbuthow toachieve the highest rate ofreturn on
investedcapital.
TheanticipatedannualreturnstotheFundarebetween6%and8%.
The Manager may use leverage to increase overall Fund returns at the expense of current
cashflow.TheManagerwilltargeta2%yearlycashyieldor25%ofnetincometoprovidecurrentincometopaytaxes.TheremainderwillbetiedupinloanamortizationorFundreserves.Ifthe
ManagerisunabletofinddebtattermsthatwillmagnifyFundreturns,nodebtwillbeused.
Leveragedreturnscouldgreatlyexceedthe6%to8%rangeasthedebtwillbeusedtopurchase
additionalpropertieswithcurrentcashflowandappreciationpotential.Aswithanyinvestment,
there is no guarantee of success, and any investor should be prepared to lose their entire
8/4/2019 Radiant Homes Booklet 01
7/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 7
investment. However, if the Manager is successful, annualized returns of 12% to 15% are
possible. If the valueof therental properties appreciates significantly, returns could beeven
higher.
3 SUMMARYOFOFFERINGThisConfidentialPrivatePlacementMemorandumdescribestheofferingofanunlimitednumber
ofmembership interests in the Fund, RADIANT HOMES, LLC. An indexofdefined terms used
herein(whicharecapitalized)appearsatthebackofthisMemorandum.
3.01 THEFUNDTheFundisRADIANTHOMES,LLC,aNevadalimitedliabilitycompany.TheFundwasformedto
operate as a private investment company that will invest its assets according to a specified
investmentobjectiveandstatedinvestmentpolicies.
A copy of the Operating Agreement is enclosed with this Memorandum as APPENDIX A:
OPERATINGAGREEMENTOFRADIANTHOMES,LLC.
3.02 TERMOFTHEFUNDThe Fund is established for an indefinite period. The Fund will terminatewhen all Investors
redeemtheirownershipinterestsortheManagerdeclarestheFundclosed,liquidatesremaining
properties,andreturnsallfundstoInvestors.
3.03 INVESTMENTOBJECTIVEANDPROCESSTheinvestmentobjectiveoftheFundismaximumcurrentcashflowandcapitalappreciation.The
Fundwillbuyrealestateattrusteesale,improvepropertiesasnecessary,holdthemindefinitely
forrentalcashflow,andresellthemforprofitwhenanInvestordesiresliquidation.TheFundis
formedtoprovideinvestorswiththeopportunitytopurchaseinterestsinpropertieschosenby
theManager,LawrenceRoberts.
3.04 ADVANTAGESOFBUYINGDISTRESSEDPROPERTIES TheFundwillbebuyingpropertiesinadecliningmarket.For18to36months,itisanticipated
that prices will either remain flat or declinemodestly. The advantage to buyingunder these
circumstancesisthatpropertiesmeetingFundobjectiveswillbemoreplentifulasotherinvestors
speculating on appreciation and owner occupants will not be competing to acquire these
properties.DuringtheinitialperiodofFundacquisition,dealqualitymayimproveaslowerresale
pricesmakeforgreaterratesofreturnoninvestedcapital.
Since distressed properties are ostensibly trading below their true value, obtaining these
propertieswhile they are distressed and holding them untiltheyarenot distressed creates a
potentialforappreciationinexcessofnon-distressedproperties.
3.05 DISTRESSEDPROPERTYINVESTMENTRISKSTherisksforbuyingdistressedpropertiesaretoboththecashflowduringtheownershipperiod,
andtothedispositionresalevalue.Pricesofdistressedpropertiesmayfallfurtherandremain
8/4/2019 Radiant Homes Booklet 01
8/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 8
depressedforaverylongtimecreatinglossesatliquidation.Further,itmaybedifficulttofind
renters to obtain the income stream in the financial projections. Distressed properties may
requiregreaterupkeepthananticipatedduetotheiroften-dilapidatedstate.
3.06
ADVANTAGESOFTRUSTEESALEPURCHASES Duringthenextseveralyears,Nevadawillturnoverasignificantpercentageofitshousingstock
through foreclosure auctions (AKA trustee sales). Trustee sale purchases represent the best
methodforsophisticatedinvestorstoacquirerealestatebecausethesavingsmaypotentiallybe
quite significant. Typically,properties acquired at Trustee sale are 20% ormore under resale
valueafterfeesandcosts.Nomattertheenduse,theabilitytopurchaseatalowerpriceoffers
uniqueadvantages.
3.07 TRUSTEESALEINVESTMENTRISKSTheonlytransactionsanticipatedfortheFundareTrusteeSalepurchasesandresales,although
othertypesoftransactionsincludingshortsalesanddistressedMLSresalesarepermitted.The
purchaseofrealestateataTrusteeSaleisinherentlymorespeculative,complicated,andriskythanpurchasebyconventionalmeans.Theabove-averageriskisduetosuchconsiderationsas
potentialtitleproblems,thepossibilityofunknownliens,unpaidpropertytaxes,delayedholding
periods,unknownpropertyconditionpriortopurchase,potentialactsofvandalism,unforeseen
governmentalintervention,etc.Themajorrisksandlimitationsareasfollows:
CashOnly:TrusteeSalesonlyallowcashbids.Theexclusionoffinancebuyerscreatesthediscountatauction.
EvaluationofResaleComparables:TheManageroftheFundandhisrepresentativesresearchpropertyvaluesintheresalemarket,buttheirevaluationmaybeinerror.This
errormaycausetheManagertooverpayforpropertyonbehalfoftheFund.Insuch
instancestheFundmaylosemoney.
Selection:ApropertyfittingaFund'spropertyparametersandpricerangemaynotbescheduledforaTrusteeSaleinareasonabletime.Theresultofscarceopportunityisidle
moneyandadiminishedrateofreturn.
NoInspection:TheManageroftheFundandhisrepresentativeswillnotbeabletoviewtheinsideofthepropertypriortothesaleunlessthepropertyisactivelylistedinthe
MultipleListingService,orintheunusualcasewherethecurrentownerallowsaccess.
Thepropertyisacquired"asis"whichmayincludeundetectablephysicaldamage.
NoInsurance:TheManageroftheFundcan'tpurchasetitleinsuranceatthesaleandprotectagainstunrecordedmechanic'sliensorjudgmentliensagainsttheowner.Thisis
rare,butitdoeshappen,andthebuyerisliablefortheseclaimsagainsttheproperty.
NoRemorse:TheSaleisfinal. Unannounced Postponements and Late Cancellations: Most Trustee Sales are
postponedat leastonce,andmany are postponednumeroustimes, sometimes for a
periodofseveralweeksormonths.IftheSaleispostponed,thepostponementmaynot
beannounceduntilbuyerattendsthescheduledsale,unusedcashier'schecksinhand.
8/4/2019 Radiant Homes Booklet 01
9/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 9
Someownersareabletosellorrefinancetheirpropertiesatthelastminute,cancelling
theTrusteeSalealtogether.
High Opening Bids: Most or all properties fitting Fund's criteria may be overencumbered, and the published opening bids are often higher than the property's
marketvalue.Theforeclosinglenderhastheoptionofstartingthebiddingatlessthan
marketvalue,andtheymaynotdecidewhetherornottodosountiltheauctioneer
beginstocalltheSale.
Competition:TherewilloftenbecompetingbiddersattheSale,andsomewillbidabovetheproperty'smarketvalue.
3.08 ELIGIBLEINVESTORSInterestsintheFundwillbeofferedto"accreditedinvestors"andsophisticatedinvestorsas
thattermisdefinedinRegulationDunderSection4(2)oftheSecuritiesAct.
3.09 CLOSINGDATETheFundwillbeclosedtoallnewinvestmentonDecember31,2012orearlierattheManagers
discretion.
3.10 HOWTOPURCHASEINTERESTSTheFundwillprovideanunlimitednumberofaccreditedinvestorswithopportunitytopurchase
MemberInterests.
The Fund will be closed to sophisticated investors once 35 sophisticated investors have
purchasedFundshares.TheFundwillbeclosedtoallnewinvestmentonDecember31,2012or
earlierattheManagersdiscretion.
TheminimuminitialCapitalContributionofaMemberisfiveunitsof$5,000eachwhichequals
$25,000. Subsequent units canbe purchased for$5,000 each. TheManager maypermit anyMembertomakefractionalunitpurchasesathisdiscretion.AllInterestswillbefullypaidand
non-assessable;andnoMemberwillbepersonallyliableforthedebts,obligationsorliabilitiesof
theFundinexcessoftheamountstheMemberisobligatedtopayasthepurchasepriceforthe
Member'sInterestsintheFund.
EachInterestrepresentsapercentageinterestinFundcapital,profitsandlosses,asdescribed
morefullyintheOperatingAgreementattachedasAppendixA:OperatingAgreementofRadiant
Homes,LLC.EachMemberwillreceiveanacknowledgmentoftheirInterest,butnocertificate
willbeissuedtoevidencetheinvestment.AllmembershiprecordsofInterestswillbemaintained
bytheFund.
MembershipInterestswillbesubjecttoongoingdeductionsformanagementfees,advisoryfees
andotheroperatingexpensesoftheFundasdescribedmorefullyintheOperatingAgreementattachedasAppendixA:OperatingAgreementofRadiantHomes,LLC.
Payment for purchasesof Interests must bedeliveredeitherby check (fourbusinessdays in
advance) or wire (two business days in advance) according to instructions provided by the
Manager.
8/4/2019 Radiant Homes Booklet 01
10/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 10
3.11 NETASSETVALUEWhile the Fund isopen tonew investment (December31, 2012 at the latest), theNet Asset
Value is the total of the Investors Contributed Capital. Once the Fund is closed to new
investment,The NetAssetValue isdetermined ona quarterly basisby a brokers opinion of
value.
TheNetAssetValueisdeterminedasshown
on the table to the left. First, a schedule is
generated with properties owned by the
Fund.Basedonrecentcomparablesales,the
Manager determines comparable values and
assigns those values to the appropriate
property.Thesumofallpropertiesisreduced
by8%toallowforLiquidationcostsincluding
a full 6% commission (3% list, 3% buy) and
allowing2%forsellerclosingcosts.Theresult
is the total cash value of the propertiesowned.
Each property also has its own reserve
accountwheremoney isset aside for future
repairandrenovationexpenses.Thiscash-on-
hand is not available for investment in new
properties.Theremainderofcash-on-handis
availableforInvestment.
NetAssetValueisthesumofthefollowing:
TotalCashValueofProperties, TotalMaintenanceReserves,and TotalCashonhandforinvestment.3.12 HOWTOREDEEMINTERESTSDuringtheFiscalYear,profitsaredistributed
quarterly, and beginning in 2013, the Net
Asset Value of the Fund is reevaluated by a
brokers opinion of value and the Member's
CapitalAccountsareadjusted.
All petitions for return of Capital Accounts
must be in writing to the Manager andacknowledgedbysame.
IntheeventaMemberpetitionstoManagerforreleaseofCapitalContribution,theManagerhas
oneyeartoliquidatesufficientCompanyholdingstoreturnmember'sContributedCapital.Inthe
eventsufficientworkingcapitalisreleasedpriortotheone-yearperiodandtheManagerdeems
8/4/2019 Radiant Homes Booklet 01
11/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 11
returningtheamountoftheCapitalAccountwillnotdisrupttheworkingsoftheCompany,the
Managermayathissolediscretionreturnthefundsduringtheone-yearwaitingperiod.
3.13 STARTUPFEESANDEXPENSESInterestswillbesoldprimarilybytheFunditselfthroughtherecommendationofitsManager,althoughtheManagerandFundreservetherighttohireaplacementagentorotherbrokeror
agenttosellInterestsintheFund.Therearenosaleschargesorplacementfees.TheFundmay,
atManager'sdiscretion,payanyagentorthirdpartywhorefersinvestorsmorethananominal
amount.Paymentandfeemaybecontingentonwhether the referral resultsin a transaction,
howeverthereferralfeeisnotbasedontheamountofthetransactionbutaflatfee.TheFund
paysitscreation,syndicationandoperatingexpensesoutoftheinvestableassetsoftheFund,
andpaymentofsuchexpensesisreflectedintheNetAssetValueoftheFund.
The Fund bears the costs of the custody and valuation of its properties, transaction costs,
organizational,syndicationandstartupcosts,andadministrative,legalandaccountingfees.The
startupfeesandmanagementandoperationsfeesareprojectedtobeapproximately$5,000,but
itmaybehigher.
3.14 DISTRIBUTIONSANDTAXESAllprofits,ifany,aredistributedattheendofeachquarter. Inordertopreventdilutionofearly
investors,no investor will receive any payments on the first quarterly paymentafter they
invest.Sinceitwilltake90to150daysfortheManagertoinvestthecontributedcapitalandget
thepropertyrented,thisdelayisexperiencedbyallFundinvestorsregardlessofthetimingof
theirinvestment.
After theFund is closedNetAssetValueof eachMember's Capital Accountis adjusted ona
quarterlybasisbasedonabrokersopinionofvalueforeachoftheFundsholdings.
Investorswillberequiredtopaytaxesonrentalincome,andtheFundwillnotwithholdfortaxes.
MemberswillreceiveacopyoftheannualfinancialstatementandtaxreportsonIRSformK-1.
3.15 REDEMPTIONANDTAXESAll investorswillbepartoftheFundforat leastoneyeardueto restrictionsonthe timingof
redemptions.When fundsare redeemed, the Fundwill repurchase sharesfor theirNetAsset
Valueadjustedforactualcosts.Thisredemptionwillbereportedasacapitalgaintotheinvestor.
3.16 BUSINESSOPERATIONSOFTHEFUNDTheManagerisresponsibleformakingallbusinessandinvestmentdecisionswithrespecttothe
Fund.
4 THEMANAGERTheactingManageroftheFundisLarryRoberts.TheManagerhasexperienceineveryaspectof
theFundsoperation.However,itmaybeinthebestinterestoftheFundtohavetheManager
supervisetheworkofothersandworkasa teamtodeliverpotentiallyprofitabledealstothe
8/4/2019 Radiant Homes Booklet 01
12/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 12
Fund.TheManagerwill hireoutside consultantsasnecessaryto performFundfunctions.The
Fundwillhavenoemployees.
4.01 MANAGER:LARRYROBERTSCredentials:
ManagerofAppleBlossomArbitrageLLC,a$2,000,000purchase-to-saleflippingFundoperatinginLasVegas,NV.
ProjectManagerresponsibleforevaluation,acquisition,development,anddispositionofover$100millioninrealestateassets.
LicensedCaliforniaRealEstateAgent#1868521 MasterofScienceinLandDevelopment-TexasA&MUniversity1994 BachelorsofScience-UniversityofWisconsinatStevensPoint1992 PrimarywriterfortheIrvineHousingBlog AuthorofTheGreatHousingBubble
The Fund is the primary responsibility of Larry Roberts. He has extensive experience with
managinglargerealestatefundsdevotedtospecificprojects.Muchofhisexperiencehasbeen
withhomebuilders,so he fullyunderstandsthe constructionand renovation issuesassociated
with single-family homes. Since September 2010, Larry Roberts has been managing Apple
BlossomArbitrageLLC,apurchase-to-saleflippingfundoperatinginLasVegas.Inthefirstyearof
operations, he oversaw the purchase, renovation and sale of more than 30 homes. This
experiencemakeshimanexpertinLasVegasrealestate.
ThecontractbetweenLawrenceRobertsandtheFundistheOperatingAgreementattachedas
APPENDIXA:OPERATINGAGREEMENTOFRADIANTHOMES,LLC.
4.02 MANAGERCOMPENSATIONTheManagerreceivescompensationthroughfourevents:
5%ofinvestedcapitalretainedasaFundownershippositionbyMontereyCypressLLC. 1%grosscommissiononpropertyacquisitions. 10%ofnetoperatingincome. 3%typicallistingcommissiononsale.
TheManageralsohastherighttopurchasepropertiesfromtheFundat-costasanindirectform
ofcompensation.
Managermaytake compensationpersonally,or itmaybeputto abusinessentitywithwhich
Manager hasan interest such as IdealHome Brokers orMonterey Cypress LLC.Manager will
determinewhethertotakeanyincomepersonallyorfunnelitthroughanentityathisdiscretion.
8/4/2019 Radiant Homes Booklet 01
13/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 13
4.03 SHAREDPROFITSANDALIGNMENTOFINTERESTSTheprimarycompensationfortheManagerisfromsharedprofitswiththeFund.Thiscreatesan
alignmentofinterestswherebythemanagerisstronglyencouragedtomaximizetheprofiton
eachtransaction.
4.04 MANAGERSHOLDINGSINTHEFUNDInadditiontoanydirectFundinvestment,theManagerwillobtaina5%ownershipstakeinthe
company as properties are acquired. As each property is acquired, the Managers account
holdingswillbeincreasedby5%ofthetotalproformacostoftheproperty.TheManagerhasno
ownershipclaimtoInvestorcapitaluntilpropertiesarepurchased.
TheManagermaynotredeemhisinterestintheFundacquiredthroughacquisitionofproperties
forthefirsttwoyearsoftheFundsoperation.Thisongoingownershipinterestistheprimary
reasontheManagerhaspreparedtheFundandofferedownershipinteresttoothers.
4.05 MANAGERSPURCHASEOFPROPERTIESFROMTHEFUNDTheManagermaypurchaseanypropertypurchasedbytheFundwithin90daysofcashingthe
firstrentalcheckfromthefirsttenanttooccupytheproperty.ThisprovidestheManagertimeto
securefinancingtopurchasetheFundsinterest.TheFundwillsellthepropertyforits invested
costwith noprofitotherthan rentalfeesobtainedwhiletheManager isprocessing theloan
financing. TheManagermaypurchaseanypropertybeforeits leasedalso at the Fundscost
basisresultinginnoprofitfortheFund.
4.06 MANAGERSDELEGATIONOFPOWERSManager has appointed Jacqueline Evansasvice president ofoperations. She, or someother
designeeasManagermayappoint, has thepower toenter into contracts on theCompanys
behalf.
5 INVESTMENTOBJECTIVEANDAPPROACHThepurposeofthissectionistodetailtheinvestmentactivityoftheFund.Itwillanswermany
basicquestions:
Whydoesthisopportunityexist? Whataretherisksassociatedwithtakingthisopportunity? Whatistheprocessforidentifyingopportunities? HowdoestheFundparticipateandprofitfromtheopportunity? Whatisthebreakevenpointandparametersforriskofloss? Howwillothersparticipateinthisopportunity?
5.01 MARKETENVIRONMENTANDOPPORTUNITYThe entire nationexperiencedan unprecedented real estatebubble fueled byloosecredit.In
Nevada,whereRadiantHomeswillprimarilyoperate,theupsanddownsofthehousingbubble
havebeenthemostextreme.Asaresultofthecollapseofthebubble,manyhomeownersarein
distress,andmanywilllosetheirhomestoforeclosure,alsoknownastrusteesale,ortheywill
8/4/2019 Radiant Homes Booklet 01
14/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 14
sell the house on the MLS in a short sale. Residents who sell either through short sale or
foreclosurehavedamagedcredit,andtheyareunabletoqualifytopurchaseanotherhomefor
anextendedperiodoftime.Iftheystillhaveajobinthelocaleconomy,mostwillstayonand
rent.
Thesecircumstancescreateauniquesituationwheretheexcesssupplyhaspushedpricesdown
significantly relative to the cost of a comparable rental. This Fund seeks to profit from this
situationintwoways:first,sincethecostofownershipismuchlowerthanmarketrents,buying
andholdingthesepropertiesofferssignificantreturnsfromcurrentcashflow,andsecond,since
pricesaresolowrelativetorentsandincomes,whenthecreditscoresoflocalresidentsimprove,
thenewdemandwillpushpriceshighercreatingtheopportunitytoprofitfromappreciation.
5.02 PHILOSOPHYANDSTRATEGYThe investment objective of the Fund is profit through buying real estate at trustee sale,
improvingpropertiesasnecessary,rentingthemoutforcurrentcashflow,andresellingthemin
theopenmarketwherebuyerscanobtainfinancingafterpricesreboundbacktorentalparity
levels.
5.03 RISKOFDIMINISHEDRETURNSTherisksofthisFundcomeintwoforms.Oneisatrueriskoflosstooriginalcapital.Thesecond
isariskthereturnswillnotbeashighastheproformawouldsuggest.Thissecondriskisoneof
diminishedreturns.
The riskofdiminished returns tothe Fund comes from,but isnot limited to,severalprimary
sources:
1. Overestimation ofresalemarketcomparables that prompted the Fund tooverbid forproperty,and
2. Underestimationofacquisitioncostsorrenovationcostsrequiredtobringthepropertytoarentableorsalablestandard.
3. Overestimationofmarketrents.4. Underestimationofvacancylosses,maintenance,andrepairs.
Managing these risks requires good data and sound analysis. The skills and efforts of the
ManagertomanageriskwilldeterminethesuccessoftheFund.
(a) IdlemoneyFindingdealsthatmatchesinvestmentparametersmaybecomedifficult,andsuchdealsmaynot
bepresentinthemarketforlongperiodsoftime.Idlemoneylowerstherateofreturn.Ifittakes
twoorthreemonthstoacquireaproperty,aninvestormissedpotentialrentalincomeduring
thatperiod.Further,onceapropertyispurchased,itmaynotberentedforasignificantperiodof
timewhileformeroccupantsareevicted,renovationsarecompleted,andarenterisfound.
5.04 RISKOFLOSSTheriskoflosstotheFundcomesprimarilyfrommarketriskatresale.Thecurrentstateofthe
marketisfallingprices.Ifpricescontinuetofallandfailtorecover,andiftheinvestorwantsto
8/4/2019 Radiant Homes Booklet 01
15/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 15
liquidatetheirholdingswhilepricesaredepressed,theinvestormayexperiencelossoforiginal
capital.
Toavoidriskoforiginalcapital,investorsmustanticipateatleastathreetofiveyearholding
timewhilethemarketdropsthenrecovers.
Sincethecurrentcashflowofthesepropertiesyieldshighreturns,investorswillnotbepressured
bycarryingcostsorotherinvestmentrelatedneedsforliquidation.Onlyaninvestorspersonal
circumstancesmyrequireredemptionandsubsequentpropertyliquidationwhilepricesarestill
depressed.Forthisreason,investorswhoanticipateneedingtheirfundsinthenextfiveyears
shouldnotinvestinthisFund.
5.05 INVESTMENTPROCESSThis section contains a conceptualoverviewof the Trustee Sale processwhich is the primary
methodofpropertyacquisitionforthisFund.
(a) SelectPropertiesforInitialResearchThe Fund has identified certain market areas where it has expertise in determining resaleproperty values. The Manager will contract with a service to function as the
Trustee Sale Buyer. Any possible acquisition targets are further researched to obtain the
followinginformation:
DetaileddescriptionofProperty Propertytaxinformation(taxrate,MelloRoosstatus,etc.) BasicHomeOwnersAssociationinformation,ifany Recentmarketcomparablerentals Recentmarketcomparablesales Recentcomparableforeclosuresales,ifany
(b) FilterPropertieswithFinalResearchForthosePropertiesinwhichManagerhasacontinuedinterest,TrusteeSaleBuyerwillprovide
thefollowing:
PhotographsonthemorningofthesaleeachprospectivepropertyscheduledforauctionisphotographedandprovidedtotheManager.
Title-allpersonscurrentlyvestedontitle,orpreviouslyvestedatanytimeasoforsincetheacquisitionoftheProperty.
Liens-allTrustDeedsandallotherlienscurrentlyencumberingProperty,andananalysisoftheireffectorstanding,ifany,atorfollowingtheSale.
PropertyTaxStatus-totalpropertytaxesowedagainsttheproperty,ifany,includingcurrenttaxes,delinquenttaxes,andpenalties.
PriortotheSale,Managerwill(1)reviewtheaboveinformation,(2)makea finaldeterminationastowhetherornottobidattheSale,and,ifso,(3)determinethemaximumbid.
(c) BidatSaleOnthedayofthescheduledSaleTrusteeSaleBuyerwillattendtheSaleandbidonPropertyon
Fund's behalf. If there is no bidding competition and opening bid is less than the Buyer's
8/4/2019 Radiant Homes Booklet 01
16/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 16
determinedmaximumbid,Brokerwillbid$.01morethantheopeningbid,andtheFundwillbe
the winning bidder. If there is active bidding competition, Trustee Sale Buyer will continue
bidding by increasing each higherbid by a predetermined increment,until the Fund has the
winningbidoruntilManager'smaximumbidamountisreached.
IftheFund isthewinning bidder, Trustee Sale Buyerwillprovide paymentfroma third-party
escrowcompanyto theTrustee,and TrusteewillprovideTrusteeSaleBuyerwitha receiptof
transaction.
TheTrusteewillmailtheTrustee'sDeedUponSale,whichtransferstitletoFund.Thisdeedmust
berecordedwithin 15calendardaysofthe Sale for Fund's ownership tobe ofrecord onthe
morningofthedateofthesale.Atthetimeofrecordation,theFundwillberequiredtopaythe
StateTransferTax,$1.10perthousanddollarsofpurchaseprice.
(d) TakePossessionafterSaleIfPropertyisoccupied,ListingAgentwillattempttonegotiateanewrentalagreementwiththe
occupants.Formerownersaresometimeswillingto stayonandpaya premium rent toavoid
movingout oftheirfamily homes.Former tenants are also sometimeswilling tostay on,butmanytenantshavebeengivenbelowmarketrentsbyformerownerswhowereskimmingtheir
rentpaymentsandnotpayingthelender.Inthosecircumstances,therentermaynotbeableto
affordfair-marketrentsandwillneedtomoveout.
If unsuccessful, Listing Agent will attempt to negotiate a voluntary vacancy, whereby the
occupantleavesaccordingtoatimeframeapprovedbytheManager.
Ifalsounsuccessful,theManagerwillattempttonegotiateaCash-For-Keysagreement,approved
byManager andat Fund's expense,whereby occupant vacates the property andremoves all
personalpropertybyacertaindateinexchangeforaspecifiedsumofmoney.
If also unsuccessful, Manager will contact a qualified eviction attorney to begin the eviction
processalsoattheFundsexpense.
(e) PrepareforRentalManagerisresponsibleforrenovationandresale.Managerwillapproveabudgetandscopeof
workrequiredtobringeachpropertyuptoarentablestandard.
(f) HoldasLong-TermRentalManager will contract with a local property management company to deal with day-to-day
managementissuesonthevariousproperties.
(g) LiquidatePropertiesasInvestorsRedeemInterestsManager will liquidate properties as investors want to redeem their interests. Due to rent
rolloversandleaseobligations,investorsmustallowtheManageroneyeartoobtainfair-market
valueforthepropertiesandreturninvestedcapital.
5.06 TYPICALINVESTMENTPARAMETERS,COSTSANDFEESAtypicaltransactioninvolvespurchasingatrusteesalepropertyat22.5%orgreaterdiscountto
resalevalue.Theactualdiscountiscalculatedbysubtractingknownandestimatedcostsfrom
theprojectedresalevalue.
8/4/2019 Radiant Homes Booklet 01
17/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 17
Theknownandestimatedcostsincludethefollowing:
MaximumbidforacquiringpropertyatTrusteeSale, trusteesalefeesandcommissions, realestateimprovements, backandcurrentpropertytaxes, carrycostsduringthepre-leaseperiod, tenantmove-outcosts, transfertaxes, marketrent, propertytaxes, homeownersinsurance, homeownersassociationfees, propertymanagementfees, maintenance and replacement
reserves,
vacancyandcollectionlosses, anydebtapplied,and othercosts.
Thefollowingisareportdemonstratingthe
typical costs associated with acquiring,
improving and reselling a trustee sale
property.
Atypicalpropertywillhavea resalevalue
of approximately $100,000. Liquidation
costs include a 6% commission (3% listgoestoManager,and3%tobuyersagent)
and a 2% allowance for sellers closing
costs.TheLiquidationValueisalsotheNet
AssetValueoftheproperty.
TrusteeSaleFeesincludetheserviceused
by the Manager to acquire the property
which typically charges 3%, and a 1%
acquisitionfeechargedbytheManager.
The Managers compensation includes a
feeequal to5%of the total cost basis in
the property. The primary acquisitionmethodforthisFundwillbetrusteesales.
Sincethesepropertiesarepurchased ata
22.5% or more discount to resale price,
partoftheManagerscompensation(5%of
total cost basis), is made up for by the
8/4/2019 Radiant Homes Booklet 01
18/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 18
savingsonacquisitionsatauction.ThenetassetvalueoftheInvestorsholdingsisequaltothe
acquisitioncosts.Inotherwords,savingsatauctionindirectlypaystheManagersfee.
Real estateimprovements areapproximately 5%of theauctioncosts. Anycosts not spenton
improvementsatthetimeofpurchasewillbeaddedtoareservefundforfuturemaintenance
andrepairs.
Carryingcostsassumethreemonthsofexpensesfortaxes,insurancehomeownersassociation
fees,propertymanagementandotherexpenses.
Projectmanagement includes the compensation for theprojectmanager whocoordinates all
activitiesbetweentheauctionandleasingoftheproperty.
The allowances for tenantmove-out andmove-inmaybeavoidedif eitherthe property was
emptywhenacquired,oriftheexistingoccupantcanbeconvincedtostay.TheFundwillseekto
keepexistingoccupantsinplacewheneverpossible.
Transfertaxesandrecordingfeesarerequiredwheneverapropertyissold.
The operating expenses are broken down into two categories: cash expenses and reserveexpenses.Cashexpensesarepaidouteachmonthorinthecaseofpropertytaxeseachquarter.
Property taxesare typically1%,and homeowners insurance isapproximately0.65%of value.
Homeownersassociationsvary considerably,but typically theFundwill targetpropertieswith
lowfeesornofees.Associationfeesaretypicallyadrainoncashflow,althoughtheydoprovide
someoffsettoongoingmaintenanceexpenses.TheFundwillemployapropertymanagement
servicetodealwiththeday-to-dayoperationalissuesofdealingwithmultipleproperties.
Thereserveexpensesincludeallowancesformaintenanceandforvacancyandcollectionlosses.
Sincetheseexpensesarevariableandunpredictable,eachmonthmoneyissetasideinareserve
accounttopaytheseexpenseswhentheyoccur.
The gross rent minus cash expenses and minus reserve expenses equals the net operating
incomeoftheproperty.TheManagerchargesa10%FundAdministrationfeebasedontheNetOperating Income. This encourages the Manager tomaximize Net Operating Income thereby
aligningtheinterestsoftheManagerwiththeInvestors.
Afterallexpenses,investorscananticipatean8%returnonatypicalpropertyresultingina6%
to8%returnonallmoneyinvestedafterotherFundexpensessuchasaccountingandallowing
foridlemoney.
5.07 BREAKEVENANALYSISFORTYPICALINVESTMENTForatypicalinvestment,liquidationcostsplusthecostoftheManagersownershipshareare
builtintotheprojections.Atthetimeofpropertypurchase,theInvestorsFundinterestsare
alreadyatbreakeven.ThisisoneofthecompellingreasonstoacquirepropertiesatTrusteeSale.
5.08 USEOFPROPERTYANDFUNDDEBTIf debt can be obtained under terms that would magnify the returns to the investors, the
Managermayathissolediscretionobtainfirstmortgagedebtusingcash-outrefinancingorsome
8/4/2019 Radiant Homes Booklet 01
19/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 19
formofacquisitiondebttoacquiremoreproperties.Anydebtappliedtothepropertieswillbe
usedtoacquireotherpropertiesormakeimprovementstoexistingproperties.
TheManagerwillseektoensureatleast25%ofthenetoperatingincomeispaidouttoinvestors
eachquartertoprovideenoughcashflowtopaythetaxburdenontheinvestors.Theremaining
cashflowmaybetiedupinloanamortizationandserveasaformofretainedearnings.However,
theFundwillreportthisasadistributionevenifthecashisnotactuallypaidtotheInvestors.
This phantom income cancreate a taxburden inexcess of themoney paid from the Fund
duringtheyear.Furthertheuseofpropertydebtcreatesunrelatedbusinessincometaxmaking
thisinvestmentunsuitableforself-directedretirementfunds.
Thedebtmaybeeitheraclaimagainstindividualproperties,groupsofproperties,ortheFundas
awhole.Nomemberwillbeliableforanydebtappliedasitwilleitherbenon-recoursedebt,or
personallyguaranteedbytheManager.
Thedebtassumptionsaboveareconservative.Thedebtwillneedtobenon-recoursedebtissued
toanLLC.TheManagerknowsofseveralsourcesofprivatefundingwillingtomaketheseloans
atrateslessthan7%withloan-to-valuesof50%orhigher.Thelowertheinterestrateandthe
8/4/2019 Radiant Homes Booklet 01
20/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 20
higher the loan to value, the greater the potential investment returns to the investors. The
MangerwillbeconstantlysearchingforbetterdebttermstoimproveFundperformance.
Theuseofdebtmayleveragethecurrentcashreturnssomewhat,butthemainreasonforusing
debtistoacquiremorepropertywhichwillprovidemorepotentialforgainsfromappreciation
andgreatercashflowoncethedebtisfinallyretired.
5.09 APPRECIATIONAND10-YEARINTERNALRATEOFRETURNThe Las Vegas housingmarket held steadyat rentalparity levelsprior to the Great Housing
Bubble.Asiscommonwhenfinancialbubblesburst,themarkethasovershottothedownside.
Whentheinventoryproblemscausedbytheplethoraofforeclosureabates.Theopportunityto
buy cashflow properties with tremendous capitalization rates will disappear. However, the
reboundappreciationmaybequitesignificant.Themarketiscurrently40%belowrentalparity.
Theasymmetricnatureofdrawdownsmeansthatpricesneedtoreboundfarmorethan40%to
reachthepriorequilibrium.LasVegascouldeasilyseedouble-digitappreciationfivetotenyears
from now. Ifprices rise80% during the next ten years whichwouldstill leaveprices below
rentalparitytheappreciationreturnswillbetremendous.
Whena10yearholdingperiodwithan80%increaseinpricesisfactoredin,theinternalrateof
returncomesto13.2%onanall-cashbasis.Withleveragethereturnscanexceed20%.
8/4/2019 Radiant Homes Booklet 01
21/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 21
5.10 TEN-YEARPROJECTIONSFORATYPICALPROPERTY
Toestimatetheperformanceofa$10,000,000fund,takealltheabovenumberstimes100.Theratesof
returnwillbe the sameasfor the individual propertiesexcept forsomereduction for idlemoneyand
generalfundexpenses.
8/4/2019 Radiant Homes Booklet 01
22/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 22
5.11 RENTALSTRATEGIESPurchasingpropertiesatTrusteeSalecreatesuniqueopportunitiesfortheFundtoobtainbetter
thanexpectedresults.Manyofthepropertiespurchasedatauctionarealreadyoccupied.Funds
withabusinessplanto flippropertieswillgenerallyevict anyoccupants inorderto resell the
property to a new owner-occupant. This Fund focused on rental cashflow will seek to keep
occupantsinplacebeforeresortingtoevictionorcash-for-keystoclearthepropertyforanew
tenant.
The advantages to keeping a holdover occupant in place are twofold: first, the property has
immediate cashflow when the occupant is willing to stay on and pay rent, and second, the
renovation budget can be saved as reserves for futuremaintenance as renovation costs are
minimalwhenanoccupiedhouseremainsoccupied.
(a) RentingtotheformerownerTheformerownersarethebestpossibletenants.First,theywilltreatthepropertyastheirown,
afterall,itusedtobe.Formerownerswilloftenpayabove-marketrentsinordertostayinthe
property they viewastheirfamily home. Inthe future, ifthe Fundneedsto liquidatedue toredemption,theformerownersareprimecandidatestopurchaselater.
(b) RentingtotheholdovertenantThenextbestscenario istokeepaholdoverrenter intheproperty.This isnotaseasyasone
mightthink.Inmanycases,thetenantispayingbelow-marketrentastheformer-owneroften
rentsthepropertyoutforwhatevertheycanandskimstherent.Manyofthesetenantscannot
affordmarketrents,andmanywillmoveoutwhenaskedtopaymore.
(c) RentingtoanewtenantIn theevent a deal cannot be reached to keep the holdover occupant inplace, negotiations
ensuetopaycash-for-keys.Ifthesenegotiationsfail,theFundwillresorttoevictionstoclearthe
property and prepare for a new tenant. Once the previous tenants are out, any necessary
renovationsarecompletedtoprepareforoccupancy.Thisisthecostliestmethod,soitisthelast
optionchosen.
(d) PricingstrategyWhenthepropertyisfirstputonthemarket,askingrentis$50overrecentcompsunlessthere
are manymodel match comps in a tight range. After twoweeks,the rent is lowered to the
proformarate.Attwotofourweekintervals,therentisloweredby$50untilarenterisfound.
5.12 DISPOSITIONTACTICSANDRESPONSIBILITIESWhen anInvestorprovideswrittennoticerequestinga redemption, theManagerwill identify
specificpropertiestobeliquidatedtofreeupthecapitaltosatisfytheredemption.TheManager
will select those properties with thehighest resale value relative to itsmarket rent. Inotherwords,theManagerwillsellthepropertieswiththelowestcapitalizationratesfirst.Thisislogical
for two reasons; first, investors seeking a redemption were likely primarily motivated by
appreciation,andtheyshouldbecompensatedbythepropertiesthatgavethegreatestchange
invaluerelativetorents.Second,theremainingInvestorswanttoobtainthegreatestcashflow
relative to theirinvestments, so retaining thepropertieswiththegreatest capitalizationrates
8/4/2019 Radiant Homes Booklet 01
23/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 23
bestservestheirinterests.TheresultoftheseredemptionsovertimewilllikelybethattheFund
willendupwiththeleastdesirablepropertiesintheFundsholdingsasowner-occupantswillbid
upthepricesofthemostdesirablepropertiesovertime.
Oncethepropertiesforliquidationhavebeenidentified,theManagerwillputalargernumberof
propertiesforsaleandletthemarketdecidewhichonessellfirstandobtainthebestprices.The
ManagerwillbasehisselectionsontheNetAssetValueoftheproperties,butiftheactualsales
pricesandproceedsarelowerthanthebookNetAssetValue,theredemptionamountwillbe
adjustedbythedownwardbythedifference.
TheManagercannotguaranteetheFundwillnotlosemoneyonanytransaction.TheManageris
duty boundto prevent orminimizeFund losses,butif theManager deemsa sale ata loss is
preferabletosustainedownership,theManagerhastheunrestrictedrighttosellforaloss.
(a) 3%to5%ProfitTargetTheManagerwilllistthepropertiesforsaleata3%to5%markupoverNetAssetValuefortwo
tofourweeks.
(b) LowerpricetoNetAssetValueIftheManagercannotobtainabidresultingina3%to5%profittotheredeeminginvestor,the
ManagerwilllowerthepricetotheNetAssetValueforanadditionaltwotofourweeks.
(c) 45DaysonMLSbeforeredeemingforlessthanNetAssetValueToensureredemptionsmeetorexceedNetAssetValue,allpropertieswillbeadvertisedonthe
MLSforatleast45dayspriortosellingforaresultlessthantheNetAssetValue.After45days,
theManagermayreducepricebelowNetAssetValueathissolediscretionuntiltheproperties
aresold.
5.13 FUNDTOPURCHASEFROMAPPLEBLOSSOMARBITRAGELLCThisFundmaypurchasepropertiesdirectlyfromanotherFundoperatedbytheManager,AppleBlossom Arbitrage LLC. Any purchases would be at cost plus a 6% profit to Apple Blossom
ArbitrageLLC.Thismaybeanimportanttoolforusingfirstmortgagedebttoacquireproperties
forRadiantHomes,LLC.
5.14 INVESTORSPURCHASEOFPROPERTIESFROMTHEFUNDAnyinvestorin the Fundmayalsopurchasea property from the Fundat theManagers sole
discretion. The Fund must obtain a price equal to the net asset value of the property. The
manager will charge a 3% commission, but the 3% that would typically be a buyers agent
commissionwillberetained asFundprofit tocompensatefor the lostrentrevenuewhilethe
capitalisredeployed.
6 ADDITIONALRISKFACTORSProspectiveinvestorsshouldcarefullyconsiderthefollowingriskfactorsamongtheotherrisks
describedinthisMemorandum:
8/4/2019 Radiant Homes Booklet 01
24/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 24
6.01 RELIANCEONMANAGEMENTTheFund'sinvestmentsuccessdependsontheskillandtheinvestmentmanagementexpertise
oftheAdviseranditspersonnelresponsibleformanagingtheFund'sassets.Aninvestmentinthe
FundissubjecttotheriskthattheAdvisermaynotobtaintheperformanceanticipatedfromthe
Fund'sassets.
AlldecisionswithrespecttotheFund'sinvestmentobjectiveandpoliciesandthemanagement
oftheFundwillbemadeexclusivelybytheManager.Investorshavenorightorpowertotake
part in the management or affairs of the Fund or to participate in the Fund's investment
decisions.
TheMembersalsoagreetoholdtheManagerharmlessfromtheconsequencesofsuchdecisions
providedtheManageractsingoodfaithandisnotfoundtohaveengagedingrossnegligence.
6.02 DIVERSIFICATIONRISKTheOperatingAgreementdoesnotrequirediversificationoftheFund'sinvestments.Therefore,
theFundmayinvestitsassetsinarelativelysmallnumberofproperties.
6.03 LEVERAGERISKTheuseofleveragewillbeemployedtoenhancetheFund'sreturns.DebtwillmagnifytheFunds
interestinthepropertyanditwillexposetheFundtoagreaterriskofloss.
6.04 ABSENCEOFOPERATINGHISTORYRISKTheFunddoesnothaveanoperatinghistoryfromwhichprospectiveinvestorsmayevaluatethe
likelihoodofsuccessfulinvestmentperformance.TheManagerisexperiencedwithoperatinga
similarFundpurchasingthesepropertieswithadifferentfinancialobjective,buttheManager
hasneveroperatedaFunddevotedtomanagingrentalproperties.
6.05 LIMITEDTRANSFERABILITYThe Interests have not been registered under the Securities Act of 1933 or applicable state
securitieslawsand,therefore,aresubjecttorestrictionsontransfer.Inaddition,theOperating
AgreementcontainssignificantrestrictionsontheabilityofMemberstotransfertheirInterests.
Inmost instances, Interests may not be transferred by a Memberwithout the prior written
approvaloftheManager.
6.06 AMENDMENTSOFOPERATINGAGREEMENTTheOperatingAgreement canbeamendedby thewrittenconsentof both theManager inits
capacityassuchandthemajorityinInterestoftheMembers.TheManageralsomay,however,
without the approval of the Members, modify the Operating Agreement under certaincircumstances.
6.07 SPECIALCONSIDERATIONSFORERISAFIDUCIARIESAfiduciaryofanemployeebenefitplansubjecttotheU.S.EmployeeRetirementIncomeSecurity
Actof1974,asamended("ERISA"),shouldbearinmindatleastthreeimportantconsiderations
8/4/2019 Radiant Homes Booklet 01
25/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 25
indeterminingwhethertheplanshouldinvestintheFund.First,underERISA,fiduciariesmust
dischargetheirduties solely in the interestofthe plan'sparticipants andbeneficiaries andin
accordancewiththeso-called"prudentman"rule.
Second, ERISA fiduciaries must also satisfy themselves that only the interest in the Fund
constitutesa"planasset,"andtheunderlyinginvestmentsoftheFunddonot.Iftheunderlying
assets of the Fundwere determined tobe "planassets," (i) the requirement that plan assets
mustbeheldin trustmay beviolatedand (ii) Fund transactionscouldbecome subject tothe
"prohibited transaction" rules of ERISA. The issue of whether the underlying assets of an
investmentfundsuchastheFundconstituteplanassetsissubjecttoU.S.DepartmentofLabor
RegulationSection2510.3-101.TheManagerwillrestrictthenumberofInterestsoftheFund
thatmaybepurchasedbyemployeebenefitplansandbenefitplaninvestors(withinthemeaning
of U.S. Department of Labor Regulation Section 2510.3-101(0 (2)) so as to avoid possible
characterizationoftheFund'sunderlyingassetsasplanassets.
Third,as discussed ingreaterdetailunder the heading "TAX ASPECTSANDRISKS"below,it is
possible that a portion of the income of the Fund and, therefore, a portion of the income
allocatedtoeachMembertherein,includingERISAplansandothertaxexemptentities,couldbeunrelatedbusinesstaxableincomesubjecttofederaltaxation.
6.08 CHANGESINAPPLICABLELAWTheFundmustcomplywithvariouslegalrequirements,includingrequirementsimposedbythe
U.S.Federalandvariousstatesecuritieslaws,taxlaws,commoditieslaws,andpensionlaws,and
therespectiveregulationsthereunder.Shouldanyofthoselawsorregulationschange,thelegal
requirementstowhichtheFundandtheMembersmaybesubjectcoulddiffermateriallyfrom
currentrequirements.
6.09 EFFECTSOFSUBSTANTIALREDEMPTIONSSubstantial voluntary redemptions within a limited period of time could require the Fund toliquidateinvestmentssoonerthanwouldotherwisebedesirable,andthiscouldadverselyaffect
theperformanceoftheFund.Inaddition,regardlessoftheperiodoftimeinwhichredemptions
occur,theresultingreductionintheFund'sNetAssetValue,andthusinitsequitybase,could
makeitmoredifficultfortheFundtodiversifyitsholdingsandachieveitsinvestmentobjective.
Under certain circumstances, the Manager may suspend or limit redemptions as it deems
necessaryinitssolediscretion.
7 CONFLICTSOFINTERESTVariousconflictsofinterestmayariseinconnectionwiththeoperationsoftheFundandthesale
of Interests. These conflicts of interest, which should be carefully considered before an
investmentdecisionismade,include,butarenotlimitedto,thefollowing:
7.01 SERVICESOFTHEMANAGERTheOperatingAgreementprovidesthattheManager,itsaffiliates,andtheirofficers,directors,
shareholders,employees,limitedpartnersandagentsarenotexpectedtodevotetheirfulltime
tothebusinessoftheFundandtheperformanceoftheirduties,butarerequiredtodevoteonly
8/4/2019 Radiant Homes Booklet 01
26/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 26
suchtimetotheaffairsoftheFundaswillbenecessaryfortheproperperformanceofitsand
theirduties.
7.02 OTHERSOURCESOFMANAGERCOMPENSATIONSincetheManagerisreceivingsomecompensationthroughhisbrokeragearrangementsfromthe transaction irrespective of profit and loss, the incentive exists to enter unprofitable
transactionsinordertogeneratefees.
7.03 MANAGERBUYOUTOFFUNDSINTERESTSincetheManagerhas theoptionofbuyinganyFundproperty,theManagerhas incentiveto
cherrypickwhathebelievestobethebestdealsandleavetheFundwiththeworstperforming
propertiesobtained.
7.04 TRADINGBYAFFILIATEDPERSONSOfficers,directorsandemployeesoftheManagermayalsoinvestfortheirpersonalaccountsin
thesameareasofinvestmentopportunityasthoseinwhichtheFundproposestoinvest.Thepersonal records of such persons or anyother affiliates of the Manager will notbe open to
inspectionbytheMembers.
The Manager, or any of its officers, directors or employees, may become aware of, and
participate in, business opportunities inwhich the Fund will not be given an opportunity to
participate.
7.05 OTHERADVISORYACCOUNTSTheManagermayformandmanageasimilaryetcompetingFund.
7.06 NOINDEPENDENTCOUNSELNoindependentlegalcounselhasbeenengagedtorepresenttheinterestsoftheMembers,and
therehavebeennonegotiationsbetweentheManagerandanyotherpartyinconnectionwith
the terms of the Operating Agreement or any other matter affecting remuneration to the
Manager,orthefinancesoroperationsoftheFund.CounselfortheFundmayhaveacontinuing
relationshipwiththeManageranditsaffiliatesapartfromtheFund.
8 HOWTOPURCHASEINTERESTS8.01 ELIGIBLEINVESTORS
TheunitsarebeingofferedonlytoaccreditedInvestorsorsophisticatedinvestorspursuant
to certain exemptions from the registration of securities afforded issuers of securities under
Section4(2)oftheSecuritiesActof1933andRule506ofRegulationDpromulgatedthereunder.Inordertoqualify,investorsmustrepresentandwarrantthattheyqualifyundereitherSection1
or2.
8/4/2019 Radiant Homes Booklet 01
27/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 27
Section1.
a._____I,eitherindividuallyorwithmyspouse,haveanetworth(i.e.,totalassetsinexcessof
totalliabilities)currentlyexceeds$1,000,000;or
b._____Iamanaturalpersonwhohadanindividualincomeinexcessof$200,000,or$300,000jointlywithmy spouse, in the last two years and reasonably expect an income in excess of
$200,000,ifanindividual,or$300,000ifjointlywithmyspouse,inthisyear.
c._____Iqualifyasatrust,withtotalassetsinexcessof$5,000,000,notformedforthespecific
purposeofacquiringunits,whosepurchaseisdirectedbyasophisticatedpersonasdescribedin
Rule506(b)(2)(ii)underthefederalSecuritiesActof1933.
d._____IamanexecutiveofficerordirectoroftheCompany;or
e._____Iqualifyasaninstitutionthatqualifiesasanaccreditedinvestor,whichisdefinedas
AnybankasdefinedinSection3(a)(2)ofthefederalSecuritiesActof1933,oranysavingsand
loanassociationorotherinstitutionasdefinedinSection3(a)(5)(A)ofthefederalSecuritiesAct
of1933,whether actingin its individualor fiduciarycapacity;any brokeror dealerregistered
pursuant to Section 15 of the federal Securities Exchange Act of 1934, as amended; any
insurance company as defined in Section 2(13) of the federal Securities Act of 1933; any
investmentcompanyregisteredunderthefederalInvestmentCompanyActof1940orabusiness
developmentcompanyasdefinedinSection2(a)(48)ofthatAct;anySmallBusinessInvestment
CompanylicensedbytheU.S.SmallBusinessInvestmentActof1958,asamended;anyemployee
benefitplanwithin themeaningof TitleI oftheEmployeeRetirementIncome SecurityActof
1974,asamended,iftheinvestmentdecisionismadebyaplanfiduciary,asdefinedinSection
3(21)of suchAct,whichiseither abank,savingsandloanassociation,insurancecompany,or
registered investment adviser, or if the employee benefit plan has total assets in excess of
$5,000,000or,ifaself-directedplan,withinvestmentdecisionsmadesolelybypersonsthatare
accredited investors or ; Any private business development company as defined in Section
202(a)(22) of the federal Investment Advisers Act of 1940; or Any organization described inSection501(c)(3)of the InternalRevenueCodeof 1986,corporation,Massachusetts orsimilar
businesstrust,orpartnership,notformedforthespecificpurposeofacquiringtheUnits,with
totalassetsinexcessof$5,000,000;or
f._____IfIamanentityinwhichalloftheequityownersmeetthecriteriasetforthundereither
(a),(b),(c),(d),or(e)above.
OR
Section2.
_____I, either individually or through my Purchaser Representative, am not an accredited
investorbuthavesuchknowledgeandexperienceinfinancialandbusinessmatterssoastobe
capableofevaluatingthemeritsandrisksof,andprotectingmyowninterestinconnectionwithinvesting in the Interests. The total investment in the Interest does not exceed 20% of the
Investors net worth at the time of purchase of the Units (excluding personal residence(s),
furnishings,andautomobiles).
8/4/2019 Radiant Homes Booklet 01
28/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 28
8.02 PAYMENTOFPURCHASEPRICETheinvestormusteither:
1. ProvideachecktotheManager,MontereyCypressLLC,atleastfourbusinessdays(fivebusinessdaysforinitialpurchases)(unlesseithersuchrequirementiswaivedinwholeorinpartbytheManagerinitssolediscretion)beforetheClosingDatemadepayableto
theFund;or
2. WireFederalFundsby3:00P.M.atleasttwobusinessdays(unlesssuchrequirementiswaivedinwholeorinpartbytheManagerinitssolediscretion)beforetheClosingDate.
9 HOWTOREDEEMINTERESTS9.01 REDEMPTIONINSTRUCTIONS
RedemptionrequestsmustbeprovidedinwritingtotheManageratleastoneyearinadvance.
IntheeventaMemberpetitionstoManagerforreleaseofCapitalContribution,theManagerhas
oneyeartoliquidatesufficientCompanyholdingstoreturnmember'sContributedCapital.Inthe
eventsufficientworkingcapitalisreleasedpriortotheone-yearperiodandtheManagerdeems
returningtheamountoftheCapitalAccountwillnotdisrupttheworkingsoftheCompany,the
Managermayathissolediscretionreturnthefundsduringtheone-yearwaitingperiod.
A redemptionrequestmustinclude:(i) a letter ofinstructionor anassignment specifying the
dollar amount to bewithdrawn from the Member's capital account, signed by all registered
owners of the Interests in the exact names in which they are registered; and (ii) any other
necessary legal documents, if required, in the case of estates, trusts, guardianships,
custodianships, corporations, partnerships, pension and profit sharing plans, and other
organizations. Signature guarantees will be required at the discretion of the Manager for
redemption requests where proceeds are to be sent to someone other than the registered
ownersandtheregisteredaddress,orforInteresttransferrequests.
9.02 INVOLUNTARYREDEMPTIONSBecauseonlyalimitednumberofbeneficialownersareallowed,theManagerreservestheright
toredeemaninvestor'scapitalaccountwhenthevalueoftheInterestheldbysuchinvestoris
lessthan$25,000.Managermayalsoinvoluntarilyexcludeanyinvestorforreasonsincludingthe
event of their legal incapacity, liquidation or bankruptcy, all as provided in the Operating
Agreement.
9.03 FIDUCIARYRESPONSIBILITIES,EXCULPATION,ANDINDEMNIFICATIONInvestors should be aware that, subject to possible contractual limitations, the Manager is
generally accountable to a Fund as a fiduciaryandmust exercise good faith and integrity inhandlingFundaffairs.InvestorswhohavequestionsconcerningthedutiesoftheManagershould
consultwiththeircounsel.
TheOperatingAgreementprovidesthattheManagerwillnotbeliabletotheMembersforthe
returnofanycontributionsmadetotheFundbytheMembersthereof.Inaddition,theManager
8/4/2019 Radiant Homes Booklet 01
29/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 29
willnotbeliabletotheMembersortheFundfor,andtheFundwill,tothemaximumextent
permittedbyapplicablelaw,indemnifytheManagertotheextentofitsownassetsfrom,any
lossordamageincurredbyreasonofanyactoromissionundertakenbytheManageronbehalf
oftheFundingoodfaith,providedthatsuchconductdoesnotconstitutegrossnegligence,bad
faith, fraud,orwillfulmisconduct. TheManager will not be responsibleor liable forany act,omission, debt or obligation of any service provider of the Fund, suchas a prime broker or
custodian bank. In view of these provisions and the provisions contained in the Operating
AgreementforindemnificationoftheManageragainstvariousliabilities,purchasersofInterests
willhaveamorelimitedrightofactionagainsttheManagerthantheywouldhaveintheabsence
of such provisions. To the extent that indemnification provisions purport to include
indemnificationforliabilitiesarisingundertheSecuritiesAct,suchindemnification,intheopinion
of the U.S. Securities andExchange Commission, is contrary to public policy, and, therefore,
unenforceable.
10 TAXASPECTS10.01 DISTRIBUTIONSANDTAXES
TheCompanyoperatesasa growthfund.Allprofits,ifany,aredistributedat theendofeach
quarter.TheNetAssetValueofeachMember'sCapitalAccountisupdatedeachquarterbased
ontheFundsNetAssetValue.
10.02 FEDERALTAXASPECTSThisdiscussionwilloutlinesomeofthemostsignificantaspectsofU.S.federalincometaxlaw
thatmightaffect,orresultfrom,aninvestmentintheFund.
ProspectiveMembersshouldnotethatnorulingshavebeenorareexpectedtobesoughtfrom
theUnitedStates InternalRevenueService (the "IRS")with respect toany oftheU.S. federal
incometaxconsequencesdiscussedbelow,andnoassurancecanbegiventhattheIRSwillnot
takecontrarypositions.
Because it is impractical in this Memorandum to cover all the U.S. federal income tax
consequences of an investment in the Fund, each prospective Member should consult the
Member'sowntaxadvisertosatisfytheMemberastotheincomeandothertaxconsequences
oftheMember'snewinvestment.
10.03 PARTNERSHIPSTATUS;PUBLICLYTRADEDPARTNERSHIPSTATUSTheFundwillbeclassifiedasapartnershipforU.S.federalincometaxpurposes.Whetherthe
Fundwillbetreatedasapartnershipunderthevariousstateandlocalpartnershiplawsthatmay
applytoMembersdependsonthespecificlawsofeachsuchjurisdiction.
The Fund, as currently structured and intended to be operated, shouldnotbe consideredapubliclytradedpartnership("PTP")undertheCode.
8/4/2019 Radiant Homes Booklet 01
30/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 30
10.04 MEMBERS,NOTFUND,SUBJECTTOTAXTheFunditselfwillnotbeliableforanyfederalincometax.Rather,eachMemberoftheFund
willberequiredtotakeintoaccountincomputingtheMember'sfederalincometaxliabilitythe
Member'sallocableshareoftheFund'sincomeorlosses.
10.05 PASSIVEACTIVITYINCOMEANDLOSSTheCodegenerallydisallowsthedeductionofpassiveactivitylossesagainstnon-passiveactivity
incomebyan individual, estate, trust,or personal service corporationor,withmodifications,
certain closelyheldcorporations.TheFunddoesnotexpect torealizepassive incomeor loss.
Rather,itiscontemplatedthattheincomegeneratedbytheFundwillbeclassifiedasportfolio
income.
10.06 LIQUIDATIONOFTHEFUNDUponliquidationgainwillberecognizedbyaMembertotheextentthatanymoneydistributed
exceedstheadjustedtaxbasisofhisInterests.
10.07 ALTERNATIVEMINIMUMTAXDue to the complexity of thealternative minimum tax ("AMT") calculations, investors should
consultwiththeirtaxadvisersastowhetherthepurchase,holdingorredemptionofanInterest
mightcreateorincreaseAMTliability.
10.08 UNRELATEDBUSINESSTAXABLEINCOMEAlmostallentitiesthatareexemptfromfederalincometaxundertheCodemustnevertheless
paytaxontheirunrelatedbusinesstaxableincome("UBTI")attheregularincometaxrates.UBTI
includesdividends,interest,andgainsfromsalesandotherdispositionsofpropertyonlyifthey
are attributable to "debt-financed property." To the extent that the Fund or an investment
vehicleinwhichitinvests,incursindebtedness,aportionoftheFund'snetincomewillconstituteUBTI.TheFundwillincurgeneralobligationdebtinconnectionwithitsactivities;therefore,itis
anticipatedthatunrelatedbusinesstaxableincomewillresult.
10.09 STATEANDLOCALTAXASPECTSAsa result oftheirownershipofInterests,Membersmaybe subject tostateand localtaxes.
Membersmayberequiredtofileincometaxreturnsinthosestatesandmaybesubjecttoa
penaltyifnoreturnisfiled.
10.10 FOREIGNTAXESShouldanyinvestorwhoiseitheracitizenoraresidentofacountryotherthantheUnitedStates
acquireInterests,thetaxconsequencesofhisinvestmentunderthelawsofthecountryofhiscitizenshiporresidencymightdiffersubstantiallyfromthosedescribedabove.
10.11 ERISAASPECTSANDRISKSSection 406 ofERISAandSection4975of the Codeprohibit certain transactions involvingthe
assetsofanERISAPlan[aswellasthoseplansthatarenotobjecttoERISAbutwhicharesubject
8/4/2019 Radiant Homes Booklet 01
31/73
CONFIDENTIALPRIVATEPLACEMENTMEMORANDUM
August8,2011 31
toSection4975oftheCode,suchasindividualretirementaccounts(togetherwithERISAPlans,
"Plans") ] and certain persons (referred to as "parties in interest" or "disqualified persons")
having certain relationships to such Plans, unless a statutory or administrative exemption is
applicable to the transaction. A party in interest or disqualified person who engages in a
prohibitedtransactionmaybesubjecttoexcisetaxesandotherpenaltiesandliabilitiesunderERISAandtheCode.
The foregoingdiscussion isnot intendedasa substitute for careful tax planning.Taxmatters
relating tothe Fundandto the transactionsdescribedhereinarecomplexand aresubjectto
varyinginterpretations.Moreover,theeffectofexistingincometaxlawsandpossiblechangesin
suchlawswillvarywiththeparticularcircumstancesofeachinvestor.Noopinionastothetax
statusoftheFundorthetaxconsequencesofaninvestmentintheFundhasbeenobtainedby
theFund.Accordingly,aspreviouslystated,eachprospectiveMembershouldconsultwithand
relyonhisownadviserswithrespecttothepossibletaxconsequences(includingstateandlocal
taxconsequences)ofaninvestmentintheFund.
11DEFINITIONS
The following terms, as used in this Memorandum, have the following respective meanings.
Capitalized terms defined in the Operating Agreement and not otherwise defined in this
MemorandumwillhavethemeaningssetforthintheOperatingAgreement.
"AccreditedInvestor"willhavethemeaningsetforthinRule501ofRegulationD,promulgated
undertheSecuritiesAct.
"AdvisersAct"meanstheInvestmentAdvisersActof1940,asamended.
"ERISA"meanstheU.S.EmployeeRetirementIncomeSecurityActof1974,asamended.
"Fund"meanstheRADIANTHOMES,LLC,aNevadalimitedliabilitycompany.
"Investment Company Act" or "1940 Act" means the Investment Company Act of 1940, asamended.
"Manager"meansLarryRoberts.
"Members"meanstheManagerandotherPersonsadmittedtotheFundasinvestors.
"Offering"means the offer and sale of an unlimitednumberofmembership interests (called
"Interests")intheFund.
"OperatingAgreement"meanstheOperatingAgreement,intheformprovidedasanenclosure
withthisMemorandum,asthesamemaybeamended,modifiedorsupplementedfromtimeto
time.
"PercentageInterest"willhavethemeaningascribedtosuchtermintheOperatingAgreement.
"Regulations" means regulations promulgated by the Department of Treasury of the United
StateswithrespecttotheCode.
SecuritiesAct"meanstheSecuritiesActof1933,asamended.
"UBTI"meansunrelatedbusinesstaxableincome,assuchtermisusedintheCode.
8/4/2019 Radiant Homes Booklet 01
32/73
APPENDIXA:
OPERATINGAGREEMENTOFRADIANTHOMES,LLC
August8,2011 A-1
THESEMEMBERSHIPUNITSOFRADIANTHOMES,LLC,ANEVADALIMITEDLIABILITYCOMPANYHAVE
NOTBEENREGISTEREDUNDERTHESECURITIESACTOF1933ORANYAPPLICABLESTATESECURITIES
LAWS. THE MEMBERSHIP UNITS CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSEDOFEXCEPTINCOMPLIANCEWITHTHEAPPLICABLEFEDERALANDSTATESECURITIES
LAWS, THE LIMITED LIABILITY COMPANY OPERATING AGREEMENT, AND WELL NOT BE
TRANSFERRED OF RECORD EXCEPT IN COMPLIANCEWITH SUCH LAWS ANDAGREEMENTS. THE
PURCHASEROFTHESESHARESHASREPRESENTEDTHATHEORSHEPURCHASEDTHEMFORHISORHER
OWNACCOUNTORFORATRUSTACCOUNT,IFTHEPURCHASERISATRUSTEE,FORINVESTMENTPURPOSESAND
NOTWITHAVIEWTOWARDRESALE.
OPERATINGAGREEMENT
OF
RADIANTHOMES,LLC
8/4/2019 Radiant Homes Booklet 01
33/73
APPENDIXA:
OPERATINGAGREEMENTOFRADIANTHOMES,LLC
August8,2011 A-2
THIS OPERATING AGREEMENT is made asof September 1, 2011 of Radiant Homes, LLC (the
"Company"),aNevadalimitedliabilitycompany("RADIANTHOMES,LLC").
TheManagerisLarryRoberts.AlsoasignerfortheFundisvice-president,JacquelineEvans.Larry
RobertsmaychangetheoperatingentityunderwhichofRadiantHomesLLCisoperated,buthe
willalwaysremainthepersonoperatingthefund.
TheMembers,listedonSchedule1,areadmittedasmembersoftheCompany.
Background
TheManagerformedtheCompanyasalimitedliabilitycompany.
TheManagerfiledArticlesofOrganization(the"ArticlesofOrganization")withtheSecretaryof
StateoftheStateofNevadaonAugust9,2011.
LarryRoberts ishereby authorizedto sign the ArticlesofOrganizationasManager ofRadiant
HomesLLC.
Thepartiesherebyagreeasfollows:
1 THECOMPANY1.01 NAME
The name of the Companywill beRadiantHomes, LLC. The businessof the companywill be
conductedinthatnameor anyothertheManagerdeemsnecessaryorappropriatetocomply
withanylegalorotherrequirementsoftheUnitedStatesofAmerica,theStateofNevadaorany
otherjurisdictioninwhichoperationsoftheCompanyareconducted.
1.02 REGISTEREDAGENTANDOFFICETheregisteredagentfortheserviceofprocessandtheregisteredofficeshallbethatPersonand
locationreflectedintheArticlesasfiledintheofficeoftheSecretaryofState.
TheRegisteredAgentisEastbiz.com,Inc.
TheManager,may,fromtimetotime,changetheregisteredagentorofficethroughappropriate
filingswiththeSecretaryofState.Intheeventtheregisteredagentceasestoactassuchforany
reasonortheregisteredofficeshallchange,theManagershallpromptlydesignateareplacement
registeredagentorfileanoticeofchangeofaddressasthecasemaybe.IftheManagersshall
failtodesignateareplacementregisteredagentorchangeofaddressoftheregisteredoffice,
anyMembermaydesignateareplacementregisteredagentorfileanoticeofchangeofaddress.
1.03 PRINCIPALOFFICETheprincipalofficeis:
6069S.FortApache,Suite100
LasVegas,NV89148
The Companymay have a principal place ofbusiness andother offices as the Manager may
designate.
8/4/2019 Radiant Homes Booklet 01
34/73
APPENDIXA:
OPERATINGAGREEMENTOFRADIANTHOMES,LLC
August8,2011 A-3
1.04 PURPOSETheinvestmentobjectiveoftheFundismaximumcurrentcashflowandcapitalappreciation.The
Fundwillbuyrealestateattrusteesale,improvepropertiesasnecessary,holdthemindefinitely
forrentalcashflow,andresellthemforprofitwhenanInvestordesiresliquidation.
2 TERMTheCompanywilloperateuntiloneofthefollowingtwoconditionsismet:
aslongasInvestorswishtohavecapitalinvestedincashflowproperties,and aslongastheManageriswillingandabletooperatethefund.
Members will receive the balance of their accounts at termination of the fund unless they
requestdistributioninwritingsubjecttothelimitationsofSection7.
2.01 CLOSINGDATETheFundwillbeclosedtoallnewinvestmentonDecember31,2012orearlierattheManagersdiscretion.
3 MANAGERANDMEMBERS3.01 MANAGER
The Manager is Larry Roberts who will serve as operationsManager until his resignation or
dissolutionofthefund.
3.02 MEMBERSTheManagerherebyagreestotheadmissionofnewMemberstotheCompanyontheClosing
Date.AdatalistwillbemaintainedbytheManagerinordertoidentifytheMembersbeingso
admitted byname, address, andCapital Contributionof suchMember. A current scheduleof
MemberswillbekeptattheprincipalofficeoftheCompany.TheinterestsoftheMembersinthe
Companyaredescribedherein.
3.03 LIABILITYOFMEMBERSNoMember will be liable to creditors of the Company for the repayment, satisfaction and
dischargeofanydebts,liabilitiesandotherobligationsoftheCompanyinexcessoftheamount
ofsuchMember'sCapitalAccountatsuchtime.PropertiestheFundinvestsinmaycarrydebt,
butthedebtiseithernon-recourseorpersonallyguaranteedbyLarryRoberts.
3.04 ADMISSIONOFNEWMEMBERSThisisaclosedfund.Nonewmemberswillbeadmittedaftertheclosingdate.
8/4/2019 Radian