1. What is the investment structure of Menlo Gate's Level One investments?

Menlo Gate, LLC’s Level One investments are designed to cater to the entry level real estate investor. Six investors are placed into an “offering group”. The required investment for Level One offering groups is $57,500. Once the offering group is completed, Menlo Gate purchases a duplex for that offering group. A proportionately large down payment is applied to the purchase. The proportionately large down payment facilitates a positive income stream for the investment. Approximately $25,000 of the capital pool raised is placed into a dedicated interest bearing account for the offering group. This insures that there will be sufficient capital to cover any unanticipated capital expenditures for the property. In this regard, the investor can rest assured that there will be no further “capital calls” for the investment which can arise with other investment companies. This helps the investors forecast their future spending and cash flow requirements. Menlo Gate then manages the property for an annual fee of 8% of gross rental revenue which is below market for property management. At the end of each year, positive cash flow from the investment is distributed to the investors at the discretion of the management. In order to encourage economical management of the property, the company also shares in this distribution. After seven years, the property is placed on the market for sale. The sale date can be extended by six months at the discretion of the management in order to obtain a better sales market. Subsequent to sale, the investors’ initial capital contribution, minus applicable fees discussed herein, is returned to the investors. The equity in the property or “appreciation” is then divided into seven equal shares. One share for each investor and one for the company. The shares are then distributed to the respective investors and the company. For further explanation, please see pg. 11 of the company’s Private Placement Memorandum. The company encourages all investors to read the Private Placement Memorandum in detail prior to investing.

2. Are there any fees that are paid to Menlo Gate, LLC for organizing and managing the investment?

Menlo Gate earns an Asset Acquisition fee of 5% from each investor at the close of escrow for each offering group. There is also a onetime Organizational Fee of $5,000 for each offering group that pays for (1) legal fees for the creation of the Limited Liability Companies (“LLC’s”) that hold and manage the asset, and (2) requisite fees payable to the Secretary of State for operation of the LLC’s. The company also earns an annual Property Management Fee of 8% of gross rental revenue. There is also a Dissolution/Winding up fee of $5,000 payable to the company subsequent to sale of the asset to pay for legal fees incurred for dissolution and winding up of the respective LLC’s created to hold and manage the asset. Subsequent to sale of the Property, the investors first receive the return of their Initial Capital Contribution of Fifty-Seven Thousand and Five Hundred ($57,500) Dollars, minus the application of the Asset Acquisition Fee, Organizational Fee, Dissolution/Winding Up Fee, and any outstanding Property Management Fee(s) discussed above. Accordingly, each investor receives Fifty-Two Thousand Nine Hundred and Fifty-Eight Dollars and Thirty-Three Cents ($52,958.33) of their initial capital investment upon sale of the asset after seven years.

3. Who manages the property and the tenants once it has been purchased?

Menlo Gate manages the property for the entire term of the investment. The investors will never be called upon to provide any service for the property. Menlo Gate’s property management activities include the performance of general landlord/tenant responsibilities such as the qualification of tenants, receipt of rents and deposits, performance of rental increases, services of requisite statutory notices for termination of tenancy or renewal of leases, maintenance of contracts for gardening, landscaping, and laundry, termination of tenancies, return of deposits with requisite statutory notifications, retention of third-parties for the performance of unlawful detainer proceedings if required, preparation of rent rolls, distribution of operating statements to the subscribers, responding to lock outs and service calls, retention of contractors, repairmen and servicemen for the purpose of building maintenance and to improve or prepare vacated units for rental to new tenants. Menlo Gate has a team of qualified individuals that are well versed in the roles of property management. The company also maintains much needed relationships with contractors and repairmen that are instrumental to a prompt response to tenants’ needs. Menlo Gate’s founders have actively management dozens of buildings on the Mid-Peninsula for over 15 years.

4. Can I use my IRA or 401(K) funds to invest in Menlo Gate, LLC?

Yes. Self-directed IRA or 401(K) investments in Menlo Gate are made through licensed and accredited IRA custodians. Investors must retain the services of an IRA custodian since the IRS does not allow the investor to personally “touch” the self-directed IRA account. The IRA custodian does all the work for the investor. The IRA custodian opens an account for the investor, contacts the existing IRA custodian, transfers the requisite investment funds to the self-directed IRA, and then completes the investment with Menlo Gate. The self-directed IRA custodian charges a fee to complete the transaction. The fee is generally between $350 and $500 depending on the company. Investors generally find that the fee is clearly justified by the increased rate of return of the investment that occurs do to the leveraged rates of return for real estate investments. With a self directed real estate IRA, the type of investments the investor acquires are the same as presently made in a personal account. The investor controls where, when, and with whom the investments are made. As a passive custodian, the IRA custodian does not sell investment products or give investment advice, so the investor does not have to worry about conflicts of interest or high-pressure sales tactics. Simply put, it is as easy as a phone call and filling out a few forms. Although Menlo Gate, LLC does not endorse specific IRA custodians, we have had positive feedback from our investors that have retained the services of IRA Services, Inc. IRA Services, Inc. is a locally owned and operated company in San Carlos, CA. Their local offices are open during the week. Our investors have found IRA Services, Inc. to be professional and responsive. They have also enjoyed the presence of the local office to help facilitate their transactions. You may view their webpage at http://www.IRAServices.com.

5. Do Menlo Gate, LLC investments pay dividends or provide for profit distributions throughout the term of the investment?

The investment structure of Menlo Gate’s Level One investments is designed to provide for profit distributions throughout the term of the investment. The investment structure provides for a proportionately high down payment for each property. This, in turn, provides for a pro forma profit distribution throughout the term of the investment. The exact amount of profit distribution, however, is dependent upon the strength of the rental market. This is obviously a variable that is beyond the control of the company. Assuming an average rental market with average appreciation of rents, however, the Level One investments are designed to provide for an escalating return throughout the term starting at approximately $1,500 the first year to $2,500 during the last year. Accordingly, it is estimate that each investor will receive distributions of approximately $15,000 throughout the term of the investment. This equates to a return of approximately 26% of the capital investment to the investor through the term of the investment.

Profit distributions are not paid during the first year after acquisition. This allows the Company sufficient time to stabilize rents at the property through rental increases, address deferred maintenance issues, perform necessary improvements during turnovers, and increase prudent reserves for the Group.

6. Am I able to sell or transfer my interest during the term of the investment?

Yes, it is possible to sell or transfer the investment during the term of the investment as long as the investor complies with the transfer requirements set forth in the Operating Agreement for the LLC. In short, the investor must first offer the investment interest in the offering group to the company for purchase. If the company declines to exercise its right of first refusal, then all or part of the remaining investors may purchase the exiting investors interest. If neither the company nor the investors decide to purchase the exiting members interest, then the exiting member may sell the interest to a third-party. The third-party will be required to execute all requisite documentation in connection with the transfer.

7. Can I invest on behalf of my children or transfer my investment to them?

Absolutely, parents can invest on behalf of their children. In the alternative, investments can later be transferred from parents to children, or vice versa. The Menlo Gate Level One Operating Agreements have foreseen these types of inter-familial transfers and provided for them in the context of the investments.