Delta Real Estate Portfolio, LLC

THIS IS A PRIVATE PLACEMENT ONLY FOR QUALIFIED PURCHASERS
WHO ARE KNOWN TO US OR TO OUR PLACEMENT AGENT.

WE DO NOT SEND OUR PRIVATE PLACEMENT MEMORANDUM IN RESPONSE
TO UNSOLICITED INQUIRES.  THANK YOU FOR YOUR INTEREST IN US.

Beta Fund, LLC Bond Offering

View the Private Placement Memorandum

Aggregate Bond Value Target: $1.5 Million
Location Target: Midtown and Downtown Omaha, NE
Total Cash Contribution Target: $1,500,000
Units (or Shares) Remaining (of 15): 13
Contribution Deadline: 12/31/2011
Unit Price / Increments: $100,000

Inception: 4/15/2011

Contact Your Investment Manager to Learn More

We will gladly share our list of investors upon request.  Out of respect of their privacy we do not publicly display our list of investors.  Beta Fund is only available to managers, members of the board of directors of Beta Fund, LLC, and accredited investors (folks with annual income of $250,000 or more or a net worth of $1,000,000 or more.)

If you do not fall into one of those categories but are still interested in investing with Delta REP we will still be gladly to assist you through our guaranteed mortgage model or property direct model.

Who are the people that make this work?
The two most important people in our business at the moment would be our part time cleaning specialists Tierra Ramsey and Jessie Bowman, our leasing specialist Ben Mathes, our awesome contractors Jim Evans, Evan Gelbman, and Tyler Brasfield, and last but not least is our exterior maintenance team including Logan Derby and Jacob Brown.  Tierra keeps our properties in top notch shape when it comes to weekly cleaning.  Ben makes sure all the properties are full.  And Jim, Evan, and Tyler have nearly 40 years of combined experience with construction and repair related work.  Logan keeps the lawns manicured and snow scooped while Jacob rolls up his sleeves every week and takes the trash out at each property (all paid for by the residents).  Without Tierra, Ben, Jim, Evan, Tyler, Logan, and Jaob our properties would be a dirty mess with leaky pipes, bad wiring, tall weeds, and maggots all over the place!  Carol Miller and Mark Hennings of Omaha Video Solutions have also been a huge help on the photography and digital media front.   Carol handles the still pictures while Mark is a true artist with digital video.  They are critical components as nearly all of our marketing efforts to our end users are focused online.

Rounding out the rest of the team, Cole Stunkard (Operations Manager) graduate of Millard South High School in Omaha NE; Chris Miller (Investment Manager) graduate of Mead High School in the one horse town of Mead, NE; and Jason Hassler (Landscape and Project Manager) from Millard West of Omaha, all moved in together in 2006 when we acquired our first property.  In just over four eventful years, we have grown the business from nothing but $5,000 in a savings account to a management company collecting over $500,000 in rent checks each year.    Chris has since graduated from UNO with undergraduate degrees in Finance and Real Estate and is now working on his MBA.  Also at UNO, Cole is now one semester away from his bachelor’s in Small Business Management while Jason just graduated this past Spring with his bachelor’s in Construction Engineering.  Fate or luck put is in the same house and we feel we create a very well rounded leadership team, all great in our own separate field, all helpless without each other.

Although we appear to be a young company we have many years of advice to tap into in the form of our Board of Advisors.

Frank DeMonbrun, served in the Navy and experienced entrepreneur, now district executive of ITT Tech advises us on Corporate Strategy
Ted Vasko, a successful commercial real estate investor advises us on capital management
Brian Petranick, COO of a national franchise (Right at Home) advises us on scalability
Van Deeb, founder of Deeb Real Estate advises us on brokerage and sales activities
Frank Klesitz, President of Vyral Marketing lends his marketing insight
Joel Pape, President of Websplashes advises us with utilizing technology
and 7 other incredibly wise, seasoned, talented individuals

Without these incredibly talented and accomplished advisors we would be a ship lost at sea.

What is Delta REP?
Delta Real Estate Portfolio, LLC is the property management firm hired to manage the properties owned by Beta Fund as well as other individual clients.  They specialize in creating unique environments where young professionals can sign individual bedroom leases in a home while sharing the common areas with their roommates.  They are also capable  and experienced with traditional, whole property lease strategies.

What is Beta Fund?
Beta Fund, LLC (the fund) is a private real estate buying group structured as an LLC and taxed as a partnership, to perform like a bond.  15 (fifteen) $100,000 units (or bonds) will be made available to raise a total of $1,500,000.  After the initial funding, no additional units are planned to be created within this particular fund, plans will move forward with Gamma Fund the following year.  Beta Fund will own three categories of assets.

1 – Cash
2 – Real Estate
3 – A Small Amount of Personal Property (Appliances, Furniture, etc.)

Before reading any more, what do I need to know?
Since the investment is private, the terms we use are different than typical financial advisor jargon.  Since we are an LLC and not a Corporation (Inc.) the folks that own the fund will not be called shareholders.  They are called members (they’re liability is limited however, hence LLC.)  And the pieces of the company that the members own are not called shares, they are called units.  It is important for tax and legal purposes to keep these terms straight.

What does one unit get me?
One unit will initially get you 6 and 2/3% of all the cash, real estate, and property contained within the fund.  If we do not end up finding owners for all 15 units it will be a simple adjustment on the percentage of ownership.  For example, if we place 10 units you would then own 10% of the fund.

Make Sure You Read This: Most Important Part!

For tax and legal purposes you are purchasing units of Beta Fund, LLC as a member or an owner of the LLC.  However your investment will function as a simple bond, paying 7% interest amortized over 20 years, to be refinanced or paid off at the end of 15 years.  During the 15 year period a monthly dividend will be paid in the same amount of a would be loan amortized over 20 years at 7%.  At the end of 15 years there will still be a loan balance remaining that will be owed to you.  After all fifteen years of dividend payments are paid in full and the remaining balance is paid off  in full, Delta Real Estate Portfolio, LLC shall have an option to purchase your unit for $1, similar to us getting free and clear title on any other asset if we were to have a loan against it.

We have structured things this way for accounting and legal reasons.   For the accounting, it allows more of your income to be sheltered  from taxes by sharing depreciation benefits with you.  As an owner you can reap the tax benefits of depreciation, but as a banker you cannot.  Legally you will collectively own the fund with the other members during the first 15 years.  In the event Delta Real Estate Portfolio, LLC (the borrower or optionee) cannot make the monthly payment, their option to  purchase is automatically made null and void by the nature of the contract.  This saves the hassle, loopholes, legal costs, and delays created through a traditional loan which would require a foreclosure situations to get ownership back to the lending party.  In this case, rather than foreclosure it’s a simple expiration of an option agreement and you continue to own the property with your fellow members and are allowed to liquidate or manage the property as necessary.

Also, the payment schedule will be structured in a fashion that the monthly payments cannot be accelerated in any fashion, or in short you are guaranteed to get the same payment every month for the entire 15 year period without the ability of an refinancing or early payoff activities. In the bond world this is known as a bullet, meaning the bond will continue on it’s trajected path no matter what.  There are only two scenarios that would result in any changes to the payment schedule, the first being bankruptcy, the second being a mutual agreement with all parties, otherwise all payments during the 15 years must be paid as promised.

How Can Units be Purchased?
Any combination of the following can be done to purchase units:

1 – A Simple Cash Transaction
2 – Transfer of assets from an existing IRA
3 – Transfer of assets (rollover) from a 401(k) or similar vehicle into a self directed IRA

Contact us if you are interested in IRA options for more details.

What’s the basic game plan?
This fund is just one fund in the works of many similar funds we’d like to continue creating once a year.  The basic game plan for each fund will be to pool money, acquire real estate, manage it extremely well for the long term, and provide a safe, predictable, reliable, simple, easily understood, transparent return on your investment.  Our number one goal is to eliminate stress and protect the financial well being of our clients, investors, and members.

What do the projected numbers look like? What are they based on?
The numbers of your simple investment will look identical to a loan provided for an amortization term of 20 years at a 7% interest rate, with a balloon payment due at the end of 15 years.  We shortened the entire payoff to 15 years to reduce interest rate risk, or the possibility of  you being locked in at an investment at 7% when market rates may be much higher thanks to all the government spending and other upward pressure sources on interest rates.

The underlying real estate will be the vehicle that makes such payments.  We have a history on rent prices and operating expenses dating back to October of 2006.  Since inception our vacancy rate has been less than 1%.  For all of 2010 our collection rate was less than one half of 1% and our repair expenses were less than 5.5% as they have been every year we’ve been in business.  All of these percentages are based on the amount of rent we collected.  Compared to other property managers these figures are astounding.

Although our lawyers won’t let us guarantee this performance in the future, we are very proud of our track record and go to great lengths to uphold it.  Included below, is a link to our financial performance dating back to the very beginning.

Delta REP Financials Since Inception

Will there be any other capital involved?
The only other capital that may be raised is private equity or lines of credit to weather financial storms if needed which will not affect the ownership of units of the fund nor will it affect when and how monthly payments are made.  We have already received pledges of $100,000 in private equity and $100,000 in the form of a line of credit from Mutual of Omaha bank in the event we need to roll up our sleeves and call in reinforcements if times get tough.

What are the risks?
As a long term bond holder the major risk you face is credit risk, or simply put a timely payment schedule.  We are biased and feel our business will last like a cockroach, but are happy to share any information you need to find that to be true 100 times over.  Interest rates may increase in the future which would negatively affect the market value of your future stream of payments if you were ever contemplating a sale of your unit within the 15 year schedule.  We are only seeking patient, long term, financially strong partners who would be unlikely to ever be in such position in the first place so this should not apply to you.  Reinvestment risk is another risk bond holders face.  It will be up to you to reinvest the monthly payments as you see fit, but we won’t leave you stranded.  If good opportunities come up on individual properties or other funds are made available in the future as an invested client you will hear about before anyone else outside of our network gets wind of  it from us.

While owning the property we will be exposed to all of the typical risks an individual real estate investor takes.  Some of these consist of vacancy risk, collection risk, repair risk, legal risk, market risk, and others.  We suggest you to consult with a third party legal or financial counsel to fully understand what other risks are involved that may affect our ability to be able to continually make payments.

What is the worst case scenario?
Sometime before the first monthly payment, Beta Fund, Delta REP, Chris Miller, and Cole Stunkard all go bankrupt and the value of the properties are found to be $0 for some crazy reason and your entire investment is reduced to $0.  To help you sleep at night, we will provide a list of  all the ways you could find us and murder us in our sleep.  We take that comment very seriously and follow Warren Buffet’s advice about accepting outside captial, which involves imaging your financial partners holding a gun to your head and the second you lose a penny of their principal, they pull the trigger.  It took us 5 years of risking our own money to be confident enough to let you hold that gun.

What is the best case scenario?
The properties perform as expected, the automatic payments keep filing into your bank account, we refinance or sell and payoff the remaining balance at the end of 15 years and we are able to merge multiple funds as Delta REP scales its’ business, and we all live happily (and wealthily) ever after.

What are the benefits for me?
Other than the guaranteed 7% payment each month, the structure of the investment provides faster recourse if payments are not made and delays payments of taxes as late as possible (possibly altogether!).  For the first 14 years your dividend payment (or loan payment) will be received with zero added tax liabilities.  In a sense, it will act as a tax free bond the first 14 years.  In year 15, the majority of your dividend payment will be taxed at the dividend tax rates, and the additional loan payment after the refinance or liquidation will be taxed at capital gains rates.  It will be possible to execute a 1031 exchange (assuming this rule is not removed from the IRS rules) and we can divert the assets of Beta Fund into other pieces of real estate without paying any sort of taxes.

Another added benefit, is the exclusive rights to assist Delta REP in it’s subsequent funds the following years.  We are very loyal to our clients that help us grow and only offer opportunities to those that have dealt with us in the past first.  Only when all of our past clients and investors say no to opportunities do we look outside our circle of trusted clients.

Our favorite benefit of the fund is to put money to work into an investment you truly understand, can physically see, and know inside and out (or at least have the cell phone number of the person who is actually putting your money to work vs. just sending it to some big mutual fund company thanks to a salesman.)  Also, with other folks being involved right along side you, investing in a buying group or bond offering such as this also adds more liquidity as you will have a list of fellow members to sell your interests to in the event of major life changes requiring you to convert your unit(s) to cash.

What are the benefits for you?
Delta REP will benefit by one day (after 20 years) becoming the proud owner of the properties held within Beta Fund. Additional free cash-flow will be generated from the properties as well above the 7% payments.  This cash-flow will be used to improve properties, held as retained earnings, or paid to Delta REP.  Chris Miller will also be acting as the representing real estate broker and the typical commissions a broker would make will also provide a financial benefit for the creator of the fund.  Chris plans to use these funds to payoff a private loan received from his sister in 2007 when he bought his second house.  This will create more margins in Delta REP’s monthly cash-flow and strengthen our balance sheet.

What financial returns do I get?
We leave it up to you and your accountant to calculate the after tax returns.  Before tax, you will receive 240 monthly payments like clockwork in the amount of $775.30.  You will in turn be giving up $100,000 today, for a steady stream of payments totaling $186,071 over 20 years.  This does not include and additional returns that will add up as you reinvest the monthly payments into other investments.

How do you determine the value of my investment as time goes on?
If there is a willing seller and a willing buyer, we will let free markets determine the value.  In the event a member is forced to liquidate their unit(s) because of death, divorce, or bankruptcy, or any other reasons and the acquiring party is not approved by the fund, the payments will be sent to wherever the courts or their will decides.  If any question arises as to where the money shall be sent, it will instead be placed in an escrow account until the matters are settled.

How long will it take to get my money back?
The default plan is to have the 7% payments sent out over time it will take approximately 14.2 years to return 100% of the capital you contributed.

If you would like to tap into the rest of the underlying value of your unit(s) before the fund liquidates or make the amount of cashflow you want available to you, there are a few ways we could help you get access to the cash you need.  Besides the following options, you would also obviously have the ability to sell your unit to any other person or entity as long as the fund approved of the sale including the other members involved in the fund.  Otherwise;

1 – If Beta Fund has cash available on hand it may buy back your unit(s)
2 – If Delta REP has cash available on hand it may buy back your unit(s)
3 – If you just need a little extra cash for whatever reason but don’t want to let go of your unit, the fund or Delta REP could lend you money with your unit(s) acting as collateral.
4 – New units of following funds cannot be created or sold until all the existing units have owners that are happy owning them

These options are simply possibilities and are not guaranteed outlets for sale. Although you are owning a percentage of a company, the company is private and your unit is essentially a bond and the primary assets held are real estate which makes for an investment meant for long term purposes.

What obligations do I have? What paperwork will this add for taxes?
The only thing you would have to do is file a K1 statement at the end of the year on your taxes which would simply show your portion of the net income of the partnership.

What if?

- I want my money back sooner? Other than the options above, you can sell your unit(s) on your own.

- I die, get divorced, or file for bankruptcy? Your unit is transferred to your beneficiaries as decided by your will or the courts.

- Chris dies? The fund will be a beneficiary of an adequate term life insurance policy

- Chris is in a coma? Same as above, minus the life insurance.  If any of your capital is in any minute danger, Chris says pull the plug!

- Cole dies? His replacement in training will step in or Chris will step down to take over the day to day management of the properties.

- Cole is in a coma? Replacement steps in, or Chris steps down.

- Chris and Cole die at the same time? If Cole’s replacement cannot step in, we have a designated property management company to take over the properties.  Loans would be paid off by the insurance policies to give the members time to relax and room to breathe.  If needed, members can initiate a liquidation of the properties via majority vote.

Chris and Cole go into a coma at the same time?  Cole’s replacement would step in and the member’s could vote to liquidate if necessary.  Although Chris was the one who set this all up, Cole is clearly the one who provides value when it comes to the operations of the assets.  Chris says pull his plug, and keep Cole alive!  Just make sure you dedicate some of the life insurance money to something nice for Chris (preferably a scholarship at Mead High School and UNO).

- The fund starts losing money? Before halting the annual 7% return of capital, Delta REP has located backup equity partners to assist with rough times if needed.  These equity partners will receive ownership of the underlying properties at the end of 20 years at a predetermined amount.  If these actions failed to suffice, the monthly payments could be halted and members could choose to liquidate the properties and recoup their principal the best way as decided by vote.

How much of the fund is spoken for?
Until we get placement agreements in writing, we do not consider units to be sold.  The listing at the top of the page mentions how many units are remaining that have not been spoken for in writing including an earnest deposit check of $1,000.  This number does not include any units that may have verbal interest.

Who are the other investors?
After getting to know you we will give you a brief rundown of the other investors.  We have purposely designed our funds to be a tight nit group of friends, family, and clients that we already service, in which we have created a long standing level of trust.  If you are a new investor you will only be allowed in by the recommendation of another member or the founders of the company.

What’s the timeline for all of this?
We aim to have the majority of units funded and put to work in properties before the end of July.  We will allow the remaining units to be placed no later than December, 31st, 2011.  We typically try to set up properties all year round, but the bulk of our expansion occurs in our busy summer months. Christmas break also provides a good time to grow.

What else should I know?
You should meet with your legal, financial, and accounting counsel before investing.

What decisions do I need to make?
A – Is this an opportunity that you would like to act on?
- Do you understand it?
- Do you believe in it?
- Does it fulfill your financial goals?
B – Should you purchase it with cash or through an IRA?
C – How many units would you like to purchase?