Risk Factors

Risk Factors

The most significant risk to the investors will be the potential inability to raise the capital required to purchase and develop the real estate. If required at closing, The Fund will be in negotiation with several FDIC commercial lending institutions for backup conventional financing to supplement the offering. Under the proposed agreements with the property sellers, The Fund intends to have no risk in the forfeiture of earnest money deposits. The offers to purchase will be negotiated on a “best efforts basis” and contingent upon inspections, financing and due diligence reviews.

Also, per contract, the risk of loss or damage by fire or other casualty prior to closing shall be upon the seller. After closing, and per the terms of the lease, all property, casualty and liability insurance premiums shall be paid by WNCREF.

Business and Properties

The business of The Fund is the acquisition of property for the purpose of producing income and capital appreciation. The property selection is based upon a professional feasibility analysis and by the qualifications of the corporate officers. Collection of rent from tenants will be through a property management agreement with The Real Estate Exchange of Asheville where the Broker-In-Charge is a licensed real estate broker.

Suppliers

The Fund has no major supply contracts and is not dependent upon a limited number of suppliers. The Fund was not limited to, or intends to be limited to, properties listed with Board of Realtor member firms; however, by management agreement, all real estate transactions will be handled through The Real estate Exchange of Asheville.

Customer Sales and Orders

The Fund does have a plan for the purchase and development of the target properties at the estimated cost of $1,000,000 in equity combined with conventional debt at a 3/1 LTV. Under the property management agreement with The Real Estate Exchange of Asheville, a customary fee of 10% of the gross rent will be deducted for services rendered. The remainder will be disbursed to The Fund.

Competition

There are both private and public companies that purchase and lease properties for profit. The Fund will compete as a "for profit" private entity with a professional contractor for property management and improvement of real estate to maximize income and capital appreciation.

Marketing

Traditional marketing activities for a company involved with income producing properties are through advertising for suitable real estate and tenants.

Employees

The company currently has no employees and all operations, including clerical, administrative, and property management, will be handled on a contract basis. The company is not involved with any collective bargaining arrangements of labor union

Properties

The Fund does not currently own any real estate assets, but intends to purchase property and lease the real estate to tenants for the purpose of producing income and capital appreciation for The Fund.

Research and Development

The Real Estate Exchange of Asheville has absorbed all research and development expenses for The Fund and will be compensated through real estate commissions at closing and subsequent property management fees.

Government Regulations

The Real Estate Exchange as licensed by the NC Real Estate Commission will handle the business of acquisition, property management and divestitures. Les Smith, Registered Investment Advisor, will handle the business of investment banking. The Securities Division of the respective Secretary of State’s and/or Attorney General’s Office regulates member NASD firms and Registered Investment Advisors on a State level and the Securities and Exchange Commission regulates on a Federal level. "The Fund", the Officers, Directors, or the Prospective Shareholders in and of themselves will not be required to have a license or permit for any of these activities since they will be addressed through a contractual relationship with third parties; however, “The Fund” may require registration as determined by the respective regulatory authorities.

"The Fund" Company History and Organization

The primary material event in the development of the company was the introduction of Les Smith to Asheville, NC. His track record will serve as the basis of the model for WNCREF. The rents generated from the activities of WNCREF will be reflected as the primary source of income to The Fund.

A preliminary draft proposal for the securities offering may be submitted to several Securities Broker/Dealers for due diligence. Smith will be a registered investment advisor representative to the firm for regulatory compliance purposes. Smith chose the Reg. D. Private Placement Memorandum ("PPM") Offering format to serve as a vehicle for the corporate finance. Since syndication expenses for full SEC registration may ultimately dilute the stock value, the reduced cost for a "PPM" Offering as a $1,000,000 size underwriting appeared to be in the best interest of the investors.

No stock splits, recapitalizations, mergers, acquisitions or reorganizations have occurred, are pending or will be anticipated. Transfer of rental income from WNCREF to the shareholders will be in the form of dividends. No spin-offs of this venture are anticipated; however, new entities may be formed in other areas as additional opportunities arise.

Milestones

During the 12 months following receipt of the offering proceeds, management intends to maintain profitability by consulting with various professional contractors regarding improvements to existing structures and additional land development. Up-fitting may include improved fire protection and safety features, renovating the structures for additional bedrooms, office or meeting space for any commercial buildings, and addressing other issues with regard to compliance with state and local ordinances. This should occur as shares are sold to cover the cost of improvements above and beyond the property acquisition price less the investment banking fees. Assuming a regular increase in property values over time, coupled with future improvements to the real estate, the effect should be an enhancement to stock values.

Use of Proceeds

The Company cannot use the proceeds of this offering unless an impoundment of $50,000 is exceeded. At that point, the funds will be considered a refundable earnest money deposit towards the properties targeted for acquisition. Once the minimum capital is raised, the additional offering proceeds, less offering expenses, will be escrowed until a real estate closing has occurred. Legal, accounting, copying, advertising, due diligence, and other expenses will be paid out of the gross commissions and finders fees.

In the event that insufficient capital is raised to purchase and develop the real estate within one year, The Fund may request for an extension from the seller, a lease with the option to buy and/or apply for conventional financing to complete the transaction. In the event that a commercial lender is required, The Fund will accept a subordinated second position on the real estate and make the mortgage payments from the rental income. This factor may reduce the dividends to the investors for the period of the loan. In the event that conventional financing cannot be secured to make-up any deficit in the capital raise, and the seller exercises the right to terminate the contract of sale, the officers of the company will attempt to locate alternate properties suitable for WNCREF. In the event that the fund subscriptions exceed the amount required to purchase the real estate, the additional proceeds can be loaned to the tenant as start-up capital and for tenant up-fitting.

Proceeds as a Percentage to the Total Offering of $1,000,000 (100,000 Shares @ $10 Each)

	If Minimum Sold	If Maximum Sold
Total Proceeds	$50,000 (5.0%)	$1,000,000 (100%)
Commissions and Fees:	$...5,000 (0.5%)	$...100,000 (10.0%)
Net Proceeds from Offering:	$45,000 (4.5%)	$...900,000 (90.0%)
Use of Net Proceeds
Escrow:	$45,000 (4.5%)	$ 0 (00.0%)
Cash at Closing: Improvements and Expenses:	$45,000 (4.5%) $45,000 (4.5%)	$ 900,000 (90.0%) $ 900,000 (90.0%)
Total Use of Net Proceeds	$45,000 (4.5%)	$...900,000 (90.0%)

Note:
After reviewing management’s discussion of the steps it intends to take, potential investors should consider whether achievement of each step within the estimated time frame is realistic. Potential investors should also assess the consequences to the Company of any delays in taking these steps and whether the Company will need additional financing to accomplish them. See "Other sales Persons and Finders" for information about proceeds used to compensate sales agents. See "Management Transactions" for information about proceeds used to purchase assets from Officers, Directors, key persons, or principal stockholders or their associates or to reimburse them for services previously provided of monies borrowed.

Selected Financial Information

NOTE:
The Company has adjusted all numbers in this section to reflect any stock splits or recapitalizations.

General

Since this is a start-up venture, there are no gross or net after-tax earnings or losses for the last fiscal year.

Capitalization

No preferred stock, options or securities other than the authorized 100,000 shares of common stock are to be issued by The Fund. The par, or stated value, of the shares is $10.00 each.

Dilution

Prior to the offering, The Fund has no assets; and, therefore, there is no net tangible book value for the stock. The management has no options to exercise and will pay the same price per share as the public. The $10.00 per share price of the securities in this offering is determined by the acquisition and development cost for the real estate of $1,000,000, less the offering expenses of 10%, and any oversubscriptions above those amounts, divided by the 100,000 shares of common stock authorized. Using the offering price of these securities, the management is attributing a value to the entire company of $1,000,000.

If only the minimum offering of 5,000 shares or less is achieved, no offering expenses will be deducted and each share purchased will have a net tangible book value of $10.00. If the offering exceeds the minimum, then a 10% real estate commission will be deducted from the impounded funds, and will continue to be deducted on a per share sold basis, until the maximum offering of 100,000 shares is achieved.

The difference between the amounts a purchaser pays for a share and the amount of net tangible book value that share represents is the dilution to the purchaser. Since the total offering expenses are included in the 10% real estate commissions, and there are no existing stockholders prior to the offering, after the minimum each share will have a net tangible book value of $9.50

NOTE:
You should consider carefully whether the Company has this value at the present time. Some issues you should think about include: (1) the risks to which the Company is subject before it achieves success (see "Risk Factors"); (2) the exercise prices of outstanding options (see "Options and Warrants"); and (3) the prices that the Company’s Officers, Directors, and principal stockholders paid for their shares (see "Sale of Securities”)

Management’s Discussion
and
Analysis of Certain Relevant Factors

Since, prior to the offering, the company has no assets or liabilities, it has no cash flow or liquidity problems. The company is not in default of the terms of any note, loan, lease, or other indebtedness of financing arrangement requiring the company to make payments. None of the company’s trade payables are more than 90 days old, nor is the company subject to any unsatisfied judgments, liens, or settlement obligations. The company has no loss from operations since the company has no historical operating results. In the opinion of management, there are no obvious changes now occurring in the underlying economics of the company’s business which will have a significant impact upon the company’s results of operations within the next 12 months.

If less than the maximum number of shares are sold, then the available funds will not satisfy the company’s cash requirements for the 12-month period following receipt of the proceeds. In this event, the company will first seek conventional financing to supplement the offering for the purchase of the real estate and make the mortgage payments from the rental income. In the event that insufficient capital is raised to qualify for conventional financing, then The Fund will attempt to locate a suitable alternate property.

Description of Securities Offered

The securities being offered are common stock. These securities have no cumulative or other special voting rights, no preemptive rights to purchase any new issue of shares, no preference as to dividends or interest, no preference upon liquidation, no anti-dilution rights, and no other special rights or preferences. The securities are not convertible. There are restrictions on the resale of the securities. The offering will be a Private Placement. (See Legends in Exhibits).

Preferred Stock
None. (Not Applicable.)

Debt Securities
None. (Not applicable.)

Ratio of Earnings to Fixed Charges
None. (Not applicable.)

NOTE:
See the Financial Statements and especially the Statement of Cash Flows. Exercise care in interpreting the significance of ratio of earnings to fixed charges as a measure of the "coverage" of debt service. The existence of earnings does not necessarily mean that the company will have cash available at any given time to pay its obligations. (See "Management’s Discussion and Analysis of Certain Relevant Factors"). Prospective purchasers should not rely on this ratio as a guarantee that they will receive the stated return or the repayment of their principal.

How These Securities Will Be Offered and Sold

Company Sales Persons

The only officer of The Fund that intends to offer or sell these securities is Les Smith, 124 College St., Asheville, NC 28801. Phone: 828-254-0001 Email: leesmithjr@prodigy.net

The only compensation that Smith will receive for selling the stock will be property management fees and real estate commissions, and registered investment advisor fees (only after the minimum shares have been sold).

Other Sales Persons and Finders

The only other sales persons or finders that may receive compensation will be licensed stockbrokers with member NASD/SIPC firms or Registered Investment Advisors that have an approved selling agreement. The commission split will be negotiable between the broker/dealer firms, registered investment advisors and Les Smith, but the gross selling concession will not exceed the 10% as stated in this memorandum.

Purchaser Limitations

The offering is not limited to certain purchasers or subject to any purchaser limitations other than the maximum of 35 non-accredited investors per Reg. D securities offerings.

Impound and Offering Proceeds

The Fund will impound the proceeds of the offering until it raises the minimum offering proceeds. The minimum amount of proceeds that the company must raise and place in an escrow account before the company can receive and use the proceeds is $50,000. If the company has not raised the minimum amount of proceeds, the offering will end in one year from the date of this disclosure document, or April 1, 2006. The company may reserve the right to extend the impoundment period if the company has entered into a contract of sale for an alternate property. The impound agent shall be Wachovia of NC / SC. Any interest earned during the duration of escrow will be paid if the offering proceeds are returned to the investors at the end of the impound period.

Management

Officers and Key Persons of “The Fund”

Chief Executive Officer

Les Smith, Age 45, 124 College St., Asheville, NC 28801.
Phone: 828-254-0001.

Mr. Smith is a Commercial Broker with the Real Estate Exchange of Asheville and is also licensed for Property, Casualty, Liability, Life and Health Insurance as an Independent Agent. He also has over 10 years of experience in the syndication of securities offerings. He has passed the NASD Series 7, 24, and 65 (Registered Investment Advisor) exams and has served as a registered principal for member NASD Broker/Dealers. Les attended Wofford College in Spartanburg, South Carolina on a full academic scholarship, and graduated with a B.A. double major in both Philosophy and the Humanities.

Directors of the “The Fund”

The officers appoint the directors for the company.

The names and titles are:

Les Smith, Chairman of the Board and Broker-In-Charge for The Real Estate Exchange

Robert Fleming, Board Member and President of The Real Estate Exchange

Consultants
None. (Not Applicable.)

Other Key Persons
None. (Not Applicable)

Arrangements with Officers, Directors, and Key Persons

The Officers and Directors will be required to enter into a standard non-compete agreement and remain with the company for the duration of their tenure within the limits of the contractual property management agreement between The Fund and The Real Estate Exchange. The company intends to fund the premiums for key man life and disability insurance from the rental income, and any replacements will be chosen by the surviving officers and directors. The company shall be the beneficiary.

Compensation

No “up front” or direct compensation has been paid, or intends to be paid, to the officers other than through a listing agreement with the current property owners for a 10% real estate commission. The directors are officers of The Real Estate Exchange and will also derive compensation from a property management agreement with The Fund in the amount of 10% of the gross rent from WNCREF properties and any real estate commissions for subsequent acquisitions and divestitures. Les Smith will serve as the Registered Investment Advisor to WNCREF and shall also receive an annual fee of 2% based on the totals of assets under management.

Prior Experience

Les Smith and Robert Fleming represent over 50 years of experience with real estate acquisitions, start-up and development stage enterprises, syndications, and property management.

Certain Legal Proceedings

Insolvency

No petition for bankruptcy, receivership, or similar insolvency proceedings have been filed against any officer, director, or key person of the company within the last five years, or longer if material; nor has any officer director or key person been an executive officer, director, or in a similar management position for any business entity that was the subject to a petition for bankruptcy, receivership or similar insolvency proceedings within the past five years, or longer if material.

Criminal Proceedings

No officer, director or key person is the subject of a pending criminal proceeding, excluding traffic violations or other minor offenses. Les Smith is required to report on NASD Form U-4, as a matter of compliance for securities, an $18 check that bounced to a grocery store in 1993. His lawyer never informed him of the court date. This has never affected his licensed status or continuity of registration and is simply a disclosure.

Civil Proceedings

No officer, director or key person has been the subject of a court order, judgment or decree in the last five years related to his or her involvement in any type of business, securities or banking activity except that Les Smith is currently disputing litigation over $200 in personal credit card charges, Robert Fleming is dissolving a business known as Apex Properties due to the untimely and unexpected death of an associate and principal stockholder. Otherwise, no officer, director, or key person is the subject of a pending civil or action related to his or her involvement in any type of business, securities, or banking activity; nor has any civil action been threatened against any officer, director, or key person related to his or her involvement in any type of business, securities, or banking activity.

Administrative Proceedings

No government agency, administrative agency, or administrative court has imposed an administrative finding, order, decree, or sanction against any officer, director, or key person in the last five years as a result of his or her involvement in any type of business, securities, or banking activity; nor is any officer, director, or key person the subject of a pending administrative proceeding related to his or her involvement in any type of business, securities, or banking activity; nor has any administrative proceeding been threatened against any officer, director, or key person related to his or her involvement in any type of business, securities, or banking activity.

Self-Regulatory Proceedings

No self-regulatory agency has imposed a sanction against any officer, director, or key person in the last five years as a result of his or her involvement in any type of business, securities, or banking activity; nor, is any officer, director, or key person the subject of a pending self- regulatory organization proceeding relating to his or her involvement in any business, securities, or banking activity; nor have any self-regulatory organization proceedings been threatened against any officer, director, or key person related to his or her involvement in any type of business, securities, or banking activity.

Note:
After reviewing the background of the company’s officers, directors, and key persons, potential investors should consider whether or not these persons have adequate background and experience to develop and operate the company and make it successful. In this regard, the experience and ability of management are often considered the most significant factors in the success of a business.

Outstanding Securities

General
None (Not Applicable.)

Dividends, Distributions and Redemptions

The Fund intends to pay, at least, annual dividends generated by the net rental income through the lease of the properties. The dividends to the investors is to be at least 90% of the net rental income amount, less any mortgage payments, less 10% for property management fees, and less any unforeseen, incidental or miscellaneous expenses regarding the operations of The Fund. No expenses are anticipated for office space, salaried employees or major costs normally associated with real estate enterprises since these amounts are already included under the operating budget for The Real Estate Exchange.

Options and Warrants
None. (Not Applicable.)

Sales of Securities
None. (Not Applicable.)

Principal Stockholders
None. (Not Applicable.)

Management Relationships and Transactions

Family Relationships
None. (Not Applicable)

Management Transactions

The company will not use any offering proceeds to acquire assets from any officer, director, key person or principal stockholder; nor will the company use any offering proceeds to acquire assets from an associate of any officer, director, key person, or principal stockholder.

The company will not use offering proceeds to reimburse any officer, director, key person, or principal stockholder for services already rendered, assets previously transferred, or moneys loaned or advanced, or otherwise. The company has not made loans to any officer, director, key person or principal within the last two years, nor does it plan to in the future.

The company does plan to do business with the officers and directors of the company currently and in the future. In order to avoid conflicts of interest, the The Fund will contract with The Real Estate Exchange of Asheville to provide property management services for 10% of the gross rental income. The officers and directors will conduct activities on behalf of The Fund in accordance with the standards and procedures as set forth by the National Association of Realtors.

No officer, director or key person has ever guaranteed or co-signed the company’s bank debt or other obligations.

Litigation

The company is not subject to, or threatened by, any pending litigation or administrative action which has had, or may have, a material effect upon the company’s business, financial condition or operations.

Tax Aspects

There are no material tax consequences to investors in this offering. Distributions are expected to be taxed as ordinary income unless paid to a custodian for a qualified pension account.

Other Material Factors

There are no other material factors, either adverse or favorable, that will or could affect the company or its business or which are necessary to make any other information in this Disclosure Document not misleading or incomplete.

Additional Information

The company intends to provide the stockholders with both quarterly and annual reports, including financial statements, and copies of all press releases relating to the activities of the tenant. Prior to the receipt of proceeds of the offering, the company has no assets, liabilities, income or expenses to report.

Signatures

The Company’s Chief Executive Officer, Chief Financial Officer and its directors represent by signing this disclosure document that they have diligently attempted to confirm the accuracy and completeness of the information in this Document.

The Chief Financial Officer represents by signing this Document that the financial statements have been prepared in accordance with generally accepted accounting principles which have been consistently applied, except where explained in the notes to the financial statements. He represents that the financial statements fairly state the company’s financial position and results of operations, or receipts and disbursements, as of the dates and periods indicated. He also represents that year-end figures include all adjustments necessary for a fair presentation under the circumstances.

__________________________________

Les Smith, CEO & Chairman of the Board