The Offering is for Preferred Stock with dividends accruing at 6% per year, paid in preference to any distributions paid on common stock when declared as cash or as additional preferred stock. The Preferred Stock has an option to convert to common stock at a 1:1 share ratio in the event of a public offering. Preferred Stockholders also have the option to have their shares repurchased by the company as defined in the Form C document.

Funds raised in the Offering will be used to make investments in real estate properties primarily through True Equity Share Plans utilizing LLC;s for the membership share ownership of the properties in which we invest.

FFL will receive proportionate earnings distributions from the LLC’s, plus service fees for accounting, legal, tax, administrative services, lease/rental income, and capital gains when properties are sold. These revenue streams that can be used to fund dividends and normal company operations. 

FFL True Equity Share Plan investments will typically be in locations and periods of high expected appreciation in real estate prices, such as the metro Austin Texas market where single family homes appreciated 42% in the twelve months ending July 2021.

Business factors supporting the Preferred Stock dividends:

Based on assumptions of declining rates of appreciation in real estate prices over the coming years, the financial projections for FFL’s proportional shares reflect a 33% internal rate of return. If national real estate prices continue to appreciate at the 2020-2021 rates, the long term internal rate would be over 60%. Conversely, starting at rates of appreciation below half the national rate for 2020-2021, and declining in coming years, the projected internal rate of return would drop to around 15%. 

Financial projections for Freedom From Loans are highly dependent on many variables including inflation, real estate appreciation, local and regional markets, and cost of capital

The projected rates of return in the ProForma are based on single family residences and focused on assumed interest costs (3.5%), FFL leverage (60%), lease rates (as a ratio of the cost of the property), and service fee rates necessary to support  profitable operations by FFL. 

In transition periods when increased uncertainty exists in national or local market appreciation potential, a greater emphasis will be placed on immediate and near term cash flow. Builder assist, fix-and-flip, and other types of investment transactions offer the potential for short term gains not tied to long term capital appreciation.  Also where cap rates permit, solid and stable cash flows may be sought from Class A multi-family properties that have solid and stable cash flow returns as a stable balance to returns based on appreciation potential.

Various forms of protection of capital may be sought in the True Equity Share Plans.  For example, in markets where the recent price of real estate has appreciated much faster than historic norms, rental and lease rate increases may have lagged behind.  Investment protections will be sought to insure that the investments made by FFL are supported by rental and lease prices that make the investment rational and profitable, including protection against near term reversals of exceptional appreciation immediately prior to an investment by FFL.

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