Frequently Asked Questions

Contemplating an investment raises many questions in an investor’s mind that may not be clearly answered in the written materials presented. Following are answers to the most Frequently Asked Questions about The Grace Fund.

• Who may invest?
All Grace Fund investors must be Accredited.

• What is the minimum investment?
The minimum investment is $20,000, which may be increased by any amount at any time in the future.

• How safe is my money?
Grace Fund mortgages are structured to minimize risk and are limited to a maximum 75% loan-to-value (LTV) of the security property. This creates a large cushion of equity between the property's value and the total financing to protect the Fund's money. Ultimately, the size of the equity cushion best determines the risk involved. No investor has ever lost a penny of principal or interest with a Grace Realty Group affiliated investment.

• How much interest will my investment earn?
All Grace Fund mortgages are underwritten to earn 15.5% annual interest.

• How often do I receive payments?
Interest checks and Account Statements showing the current and year-to-date payments are mailed to investors monthly. If they are using an IRA or don't need income, investors may choose to enroll in the Distribution Reinvestment Plan to increase their annual yield.

• What is the direct security for my investment?
The Grace Fund LLC is known as a Direct Participation Mortgage Program. This means that investors purchase Units in the Grace Fund LLC (Similar to purchasing shares of a corporation), which creates a pool of capital. This pool of capital finances Grace Fund loans, which are secured by mortgages on many different properties in many different locations.

• What if I need to get my money back?
We ask that you commit your investment for one year. After that, you may withdraw a portion or all of your investment with a 60-day notice. In an emergency situation we will do our best to accommodate the investor.

• How much of my investment goes into mortgages and how much for expenses?
A full 96% of the Fund's contributions from investors goes into making mortgages and 4% is placed into a working capital reserve.

 • Who manages The Grace Fund?
Grace Fund Management Services, Inc. (GFMS) is the Manager of The Grace Fund LLC.
For conducting the Fund's business, GFMS earns an annual management fee based on 1/2% of the outstanding balance of the Fund's mortgage loans and cash. All other compensation to GFMS comes from fees charged to mortgage borrowers.

• Can I use my IRA to make this investment?
Yes. The Grace Fund is registered with a number of nationally known IRA custodians with Self-Directed IRA programs. If your current custodian does not have a Self Directed IRA program, give us a call. We'll direct you to the custodian of your choice who will handle the paperwork for you.

• What kind of properties are suitable as security for a Grace Fund mortgage?
The Grace Fund will finance commercial turnaround properties such as shopping centers, office buildings and warehouses. The property must be well-located, structurally sound and have significant potential to increase in value through upgrading.

• How do you know how much the collateral property is worth?
Grace Fund Management Services receives an independent appraisal for each property by at least one licensed and qualified commercial appraiser. The principals of Grace Fund Management are seasoned real estate investors who understand and recognize value and they will personally make a thorough inspection of every property prior to funding a mortgage.

• Will the Fund own any properties?
The Grace Fund is in the business of making mortgages, not owning property.

• I read about the sub-prime mortgages that are causing widespread foreclosures and mortgage companies will go out of business. How does that affect the Grace Fund?
It doesn't. The sub-prime mortgage is a residential lending product that carries high interest rates because of the lender's increased risk associated with a high-risk borrower.

• What are the risks of an investment in The Grace Fund?
Obviously, there are risks in any investment but real estate has intrinsic value and can only fall so far, not to zero like a stock. The chapter "Risk Factors" of the Private Placement Memorandum is an in-depth discussion of risks. The single most important factor limiting risk is the low loan-to-value ratio of the Grace Fund's mortgage loans. The maximum loan-to-value the Fund will make is 75%, leaving a minimum 25% equity cushion in the collateral property.

• What kind of communication will I have with management once I've sent my investment check?
We understand that when it comes to their hard-earned money, investors need to know they can communicate directly with top management. Fund investors have the cell phone numbers of GFMS principals if direct communication is desired. Our business hours are 9 a.m. to 5 p.m., Monday through Friday, and the phone will always be answered by a staff member.

THE FREQUENTLY ASKED QUESTIONS IS FOR INFORMATIONAL PURPOSES ONLY. IT IS NOT INTENDED TO BE AN OFFERING OF SECURITIES NOR A SOLICITATION TO PURCHASE SECURITIES. OFFERS OF SECURITIES CAN ONLY BE MADE PURSUANT TO A PRIVATE PLACEMENT MEMORANDUM DELIVERED TO QUALIFIED OFFEREES. INTERESTED PARTIES MAY DIRECT INQUIRIES TO:

Grace Fund Management Services, Inc.
10086 Griffin Road
Cooper City, FL 33328
Tel: (954) 252-7595 • Fax: (954) 252-7576
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