FORM 1-K/A

ANNUAL REPORT PURSUANT TO REGULATION A

For the year ended December 31, 2018

BRIDGEWELL PREFERRED INCOME LP

Commission File No. 024-10687

Florida

(State or other jurisdiction of incorporation or organization)

BridgeWell Preferred Income LP

2400 E. Colonial Dr., Ste. 200

Orlando, FL 32803

Office: (407) 447-5000

Email: manager@bridgewellfunds.com

All correspondance:

Kevin Kim, Esq.

GERACI LLP

90 Discovery

Irvine, CA 92618

(949) 379-2600

EMAIL FOR CORRESPONDENCE: k.kim@geracillp.com

Class A Interests

(Title of each class of securities issued pursuant to Regulation A)

STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

We make statements in this Annual Report on Form 1-K/A (“Annual Report”) of BridgeWell Preferred Income LP (the “Company,” “BW PI,” “we,” “our” or “us”) that are forward-looking statements within the meaning of the federal securities laws. The words “believe,” “estimate,” “expect,” “anticipate,” “intend,” “plan,” “seek,” “may,” and similar expressions or statements regarding future periods are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any predictions of future results, performance or achievements that we express or imply in this Annual Report or in the information incorporated by reference into this Annual Report.

The forward-looking statements included in this Annual Report are based upon our current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive, and market condition and future business decision, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements.

Management’s discussion and analysis of the Company’s financial condition and results of operations are based upon our audited financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to:

• our ability to effectively deploy the proceeds raised in the offering;

• our ability to purchase suitable loans and real estate to be held by the Company;

• changes in economic conditions generally and the real estate and securities markets specifically;

• limited ability to dispose of assets because of the relative illiquidity of real estate investments;

• increased interest rates and operating costs;

• our failure to obtain necessary warehouse financing;

2

BRIDGEWELL PREFERRED INCOME LP

ANNUAL REPORT ON FORM 1-K

For the Year ended December 31, 2018

TABLE OF CONTENTS

ITEM 1.	BUSINESS	4
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	5
ITEM 3.	DIRECTORS AND OFFICERS	7
ITEM 4.	SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS	7
ITEM 5.	INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS	7
ITEM 6.	OTHER INFORMATION	7
ITEM 7.	FINANCIAL STATEMENTS	8

3

PART II

BridgeWell Preferred Income LP

Item 1. Business

The Company

BridgeWell Preferred Income LP is a Limited Partnership organized on January 25, 2016 in the state of Florida for the purpose of investing in (1) mortgages secured by real estate and (2) directly in real estate. It is managed by Preferred Income Manager LLC (“PIM” or the “Manager”).

The Company was formed to raise up to $50 million under Regulation A Plus from a wide range of individuals, focused equally on individual accredited and non-accredited investors, to acquire loans on non-owner occupied single-family residential properties, as well as real estate to hold for appreciation and/or income production. The fund-raising activity is done through the General Partner, BridgeWell Preferred Manager LLC, and is focused primarily on raising funds through investment seminars held in Central Florida.

We operate under the direction of John Parrett, who is the Manager of the General Partner, Preferred Income Manager LLC (“PIM”, the Manager, or the “General Partner”). Mr. Parrett is also the President and CEO of an affiliated company, BridgeWell Capital LLC, who is the originator and servicer of a large percentage of the loans that are purchased by the Company.

We are offering up to $50 million in Class A Interests (the “Interests”) in this offering for $1,000 per unit (the “Offering”). The minimum initial permitted purchase is $10,000. See Item 2 – “Management’s Discussion and Analysis of Financial Conditions and Results of Operations-Overview” for more information concerning the current status of the Offering.

Investment Strategy

The Company invests primarily in Mortgage loans secured by mortgages issued to companies whose purpose is to buy, fix and sell, or hold and rent, non-owner occupied single-family residential homes. The Company also invests directly in real estate development projects with the goal of selling them for retail market value or holding them for appreciation and/or income production. The Company focuses on purchasing loans and real estate primarily in the states of Florida, Georgia, North Carolina, South Carolina, Tennessee and Indiana, although it purchases loans throughout the United States.

The loans that the Company purchases are held by companies (typically LLC’s or Land Trusts) and personally guaranteed by the borrower(s). The Company has the use of a $2 MM warehouse line of credit through Bridgewell Capital LLC, the loan servicer. We intend to secure our own warehouse line of credit, initially in the amount of $5 MM, to facilitate the purchase of loans and maximize fund returns.

Competition

We face a high degree of competition in all areas of our business. These areas include attracting and retaining investor funds, purchasing loans, and purchasing real estate at a competitive price. Competition for investor funds comes from other uninsured products such as mutual funds provided by insurance companies and brokerage firms. Our competition for mortgage loans comes from commercial banks and other private lenders, including some rather large well-organized companies. Our competition for real estate purchases is varied, but includes professional investors, large real estate investment companies, financial institutions, REIT’s, life insurance companies and the like. Our ability to grow and manage our portfolio of loans and real estate depends on the ability of our Manager to navigate the competitive landscape of these industries. We believe our Manager has the extensive experience, knowledge and relationships to effectively compete in our areas of investment.

4

Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations

Overview

BridgeWell Preferred Income LP (the “Company”) was formed on January 25, 2016 for the purposes of investing in a diversified portfolio of first and second mortgage loans that are secured by a deed of trust or mortgage. We focus on purchasing loans in the following states: Florida, Georgia, Tennessee, South Carolina, North Carolina, Indiana, however the Company holds loans throughout the United States. The Company also invests in real estate and real estate trusts in select locations with the goal of selling them for retail market value or holding them for appreciation and/or income generation.

As of December 31, 2018, the Company sold Class “A” 8,881 Limited Partnership Interests (Units) to Investors ($8.881 million).

As of December 31, 2018, the Company was invested in $7.515 million in secured mortgage loan notes, $1.466 million in real estate investments, and $160,726 was being held in cash at a depository insured bank. At December 31, 2017, there was $43 being held in cash at a depository insured bank, and $144,833 in deferred syndication costs related to capital raise expenses.

During the year ended December 31, 2018, the Company generated $285,984 in investment income from mortgage loans receivable that amounted to $7.515 MM at year end. The Company also generated a $1,166 gain on the sale of $230,251 in real estate assets. The Company had servicing fees of $57,148 to provide monthly servicing to the existing portfolio of mortgage loan receivable, as well as $12,400 in management fees to management the Company assets throughout the year. For the year ended December 31, 2018, interest expense from the related party warehouse line of credit amounted to $9,065, and general and administrative expenses primarily comprised of advertising costs amounted to $14,253. Net investment income was $194,284 for the year ended December 31, 2018.

During the year ended December 31, 2017, the Company did not generate revenues or expenses because it was in the process of obtaining regulatory approval to issue limited partnership interests.

We are not aware of any unusual events or transactions, or any new developments, that are expected to materially affect the operations of the Company, except that the Company continues to improve its operating efficiency and business practices.

Liquidity and Capital Resources

The Company is seeking to raise up to $50 million by selling Limited Partnership Interests (Units) to Investors. We expect to deploy most of the capital we raise in secured mortgage notes and income-producing and/or appreciating real estate.

During the year ended December 31, 2018, the Company raised $8.881 million in investor contributions to commence operations. The Company also had access to a $2MM related party line of credit for investment purposes, of which $392,513 was utilized during the year. At December 31, 2018, the Company is committed to providing an additional $2,636 MM in cash advances to existing rehabilitation loan borrowers to complete their projects.

During the year ended December 31, 2017, The Company obtained $50,000 in contributions, and $88,592 in operating capital from the manager to finance syndication expenses related to the offering.

The Company does not currently have any capital commitments. Should we need more liquid capital, we have established institutional buyers for the type of secured mortgage loans that we hold.

5

Trend Information

We are closely monitoring the impact of rising interest rates and rates of return on the type of secured mortgage loan notes that the Company purchases. During the reporting period ending December 31, 2018, we have not noticed a material change substantial enough to prevent the Company from acquiring investment inventory at sufficient rates to provide Limited Partner preferred returns.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies

We have identified the policies outlined in the Offering Circular and attachments as critical to our business operations and an understanding of our results of operations. Those policies outlined are not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management’s judgment in their application. The impact and any associated risks related to these policies on our business operations is discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of Operation where such policies affect our reported and expected financial results. Note that our preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of our consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates.

Additional Company Matters

The Company has not filed for bankruptcy protection nor has it ever been involved in receivership or similar proceedings. The Company is not presently involved in any legal proceedings material to the business or financial condition of the Company. The Company does not anticipate any material reclassification, merger, consolidation, or purchase or sale of a significant proportion of assets (not in the ordinary course of business) during the next 12 months.

PIM has decided to pursue the opportunity to diversify real-estate-related income, from 100% dependency on secured mortgage notes, to a percentage as yet to be determined of the income being derived from income-producing and/or appreciating properties owned by the Company. Therefore, three properties were purchased in 2018.for a total of $1.65 MM. The first two properties were single-family residential (SFR) purchased in March and April. One of these sold in December for a net gain of $1,166. In early September 2018, when an undeveloped parcel of land known as 501 Franklin became available, the Company purchased 100% ownership in this property. Preliminary analysis determined that completion of development of this property would likely result in an ongoing 10%+ annual cash-on-cash return. The property has been in engineering and entitlement since late 2015. It is located in an extremely fast-growing area on the western edge of Ocoee, at the intersection of Highway 429 and 436. This particular property is in an exceptionally prime location and is considered a ‘Gateway’ property to the City of Ocoee. It has been approved by the City of Ocoee for an 88,000 square foot mixed-use retail and office center comprising four 2-story buildings on a total of 5.77 acres. The value of the property is increasing substantially due to large new development in the immediate area, the completion of Highway 417 (the western Orlando beltway) and from other rapid development in the surrounding cities of Winter Garden and Ocoee. Property value has also increased significantly subsequent to acquisition by the Company, as full entitlement for the development of 88,000 square feet was finalized post-acquisition. Entitlement is the legal process of obtaining approvals for a specific development plan. The property was acquired by the purchase of 100% of the beneficial interest in the titled owner of the property, 501 Franklin Land Trust LLC, in an affiliated party transaction.

According to the Fund Offering Circular section titled, Policies with Respect to Certain Transactions, affiliated party transactions are authorized. Therefore it is noted that an affiliated party transaction was conducted in compliance with the Fund Offering Circular section titled, Policies with Respect to Certain Transactions, whereby a mortgage note was executed between the Fund, as the mortgagee, and an affiliated party, Cherry Gap LLC, the mortgagor.

6

Item 3. Directors and Officers

Name	Age	Title
John Parrett	64	Manager of Preferred Income Manager LLC

Biographical information regarding the above individual can be found in our offering circular.

Item 4. Security Ownership of Certain Beneficial Owners and Management

Name of Beneficial Owner	General Partnership Interests			Percent Before Offering			Percent After  Offering
Preferred Income Manager LLC		100	%		100	%		100	%
TOTAL		100	%		100	%		100	%

“Beneficial ownership” means the sole or shared power to vote or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e. the power to dispose of or to direct the disposition of a security), In addition, for the purpose of this table, a person is deemed, as of any date, to have “beneficial ownership” of any security that such person has the right to acquire within 60 days from the date of the Offering.

Item 5. Interest of Management and Others in Certain Transactions

See Additional Company Matters in Item 2 above.

Item 6. Other Information

None.

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Item 7. Financial Statements

Bridgewell Preferred Income LP

December 31, 2018 and 2017

Audited Financial Statements

8

BridgeWell Preferred Income LP

Table of Contents

December 31, 2018 and 2017

	Page
Independent Auditors’ Report	F-2-F-3
Balance Sheets	F-4
Statements of Investments	F-5
Statements of Income	F-6
Statements of Changes in Partners’ Capital	F-7
Statements of Cash Flows	F-8
Notes to Financial Statements	F-9-F-18
Supplemental Schedule - Loan Concentrations and Characteristics

F-1

F-2

F-3

BridgeWell Preferred Income LP
Balance Sheets
	December 31,
	2018		2017
ASSETS
Assets:
Cash	$	160,726	$	43
Mortgage Loans Receivable (Cost $7,514,870)		7,514,870		-
Real Estate Investments (Cost $1,465,934)		1,465,934		-
Deferred Syndication Expenses		-		144,833
Prepaid Expenses and Other Receivables		80,633		-
Total Assets	$	9,222,163	$	144,876
LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
Accounts Payable and Accrued Liabilities	$	-	$	6,284
Deferred Origination Fees		0		-
Line of Credit		392,513		-
Related Party Payable		144,522		88,592
Total Liabilities		537,035		94,876
Partners’ Capital		8,685,128		50,000
Total Liabilities and Partners’ Capital	$	9,222,163	$	144,876

F-4

BridgeWell Preferred Income LP
Statements of Investments
	December 31, 2018				December 31, 2017
	Cost		Fair Value		Cost		Fair Value
Mortgage Loans
Receivable	$	7,514,870	$	7,514,870	$	-	$	-
Total Mortgage
Loans Receivable	$	7,514,870	$	7,514,870	$	-	$	-
	December 31, 2018				December 31, 2017
	Cost		Fair Value		Cost		Fair Value
Real Estate Investments:
501 Franklin	$	1,305,745	$	-	$	-	$	-
2509 Shannon		160,189
Total Real Estate
Investments	$	1,465,934	$	-	$	-	$	-

F-5

BridgeWell Preferred Income LP
Statements of Income
	Years Ended December 31,
	2018		2017
Income:
Interest Income	$	285,984	$	-
Gain on Sale of Real Estate Investment		1,166		-
Total Revenue		287,150		-
Expenses:
Servicing Fees		57,148		-
Management Fees		12,400		-
Warehouse Line of Credit Interest Expense		9,065		-
General and Administrative Expenses		14,253		-
Total Expenses		92,866		-
Income Before Income Taxes		194,284		-
Provision for Income Taxes				-
Net Investment Income	$	194,284	$	-

F-6

BridgeWell Preferred Income LP
Statements of Changes in Partners’ Capital
	Partners
	Series A			Series B			Syndication Fees			Total
Balance at January 1, 2017	$	-		$	-		$	-		$	-
Contributions		-			50,000			-			50,000
Balance at December 31, 2017		-			50,000			-			50,000
Contributions		8,880,566			1,600			-			8,882,166
Distributions and Withdrawals		(192,684	)		(1,600	)		-			(194,284	)
Syndication Fees		-			-			(247,038	)		(247,038	)
Net Investment Income		192,684			1,600			-			194,284
Balance at December 31, 2018	$	8,880,566		$	51,600		$	(247,038	)	$	8,685,128

F-7

BridgeWell Preferred Income LP
Statements of Cash Flows
	Years Ended December 31,
	2018			2017
Cash Flows From Operating Activities:
Net Investment Income	$	194,284		$	-
Adjustments to Reconcile Net Income to Net
Cash From Operating Activities:
Amortization of Deferred Origination Fees
Gain on Sale of Real Estate Investment		1,166			-
Change in Operating Assets and Liabilities:
Mortgage Loans Receivable		(7,514,870	)		-
Prepaid Expenses and Other Receivables		(80,633	)		-
Accounts Payable and Accrued Liabilities		(6,284	)		6,284
Deferred Origination Fees		-			-
Net Cash (Used) Provided by Operating Activities		(7,406,337	)		6,284
Cash Flows From Investing Activities:
Purchase of Real Estate Investments		(1,697,351	)		-
Sale of Real Estate Investment		230,251			-
Net Cash Used by Investing Activities		(1,467,100	)		-
Cash Flows From Financing Activities:
Proceeds from Line of Credit		392,513			-
Proceeds from Related Party Payable		55,930			88,592
Syndication Fees		(102,205	)		(144,833	)
Contributions		8,880,566			50,000
Withdrawals and Distributions		(192,684	)		-
Net Cash Provided by Financing Activities:		9,034,120			(6,241	)
Net Increase in Cash		160,683			43
Cash - Beginning of Year		43			-
Cash - End of Year	$	160,726		$	43
Supplemental Disclosure of Cash Flow Information:
Cash Paid for Taxes	$	-		$	-
Cash Paid for Interest	$	-		$	-
Non-Cash Transactions:
Transfer of Syndication Costs to Partners’ Capital	$	144,833		$	-

F-8

NOTE 1 - SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization

BridgeWell Preferred Income LP (the “Company”) is a Florida limited partnership formed on January 25, 2016. The general partner is the Preferred Income Manager LLC (“PIM”, “General Partner” or the “Manager”). The Company invests primarily in mortgage loans secured by first mortgages issued to home remodelers, landlords, builders, developers, private and commercial real estate investors who purchase or refinance residential real estate properties that they intend to hold as rental property or for resale. Operations are conducted throughout the United States, but primarily in Florida. Mortgage loans acquired by the Company will primarily be originated by Bridgewell Capital LLC, an affiliated company to the Manager, pursuant to a set of underwriting guidelines approved by management. Bridgewell Capital LLC will also service the loans pursuant to a Master Note Servicing Agreement.

The Company also invests in commercial real estate or land that management intends to renovate and sell or hold for appreciation and/or income production.

The Company’s commercial investment operations commenced upon receiving authority to issue Class A units as discussed below.

General Company Provisions

The Company is managed by PIM, the Company’s General Partner. The rights, duties and powers of the Manager are governed by the Company limited partnership agreement.

PIM acting alone has the power and authority to act for and bind the Company.

Term and Offering of the Company

The Company will continue in perpetuity unless PIM chooses to dissolve it.

Class A Units

On February 1, 2018, the Company received authority from the U.S. Securities and Exchange Commission to issue Class A units under Regulation A, Conditional Small Issues Exemption, for a period of 12 months. Under the terms of the Company’s offering, it is able to issue up to 50,000 Class A limited partnership units (“Class A units”) at a price of $1,000 per unit. The Class A units will bear a preferred return of 7.00%. Limited partners holding more than 75% of the cumulative Class A units can vote to dissolve the Company.

F-9

NOTE 1 - SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Class B Units

The Company issued Class B units to PIM, the General Partner. Class B units are voting units and give the General Partner the sole discretion to operate the Company. Class B units are entitled to 100% of profits after the payment of Company expenses and the 7.00% preferred return to the limited partners.

Liquidity and Withdrawals

There is no public market for units of the Company and none is expected to develop in the foreseeable future. The Company does have a redemption program; however, no Class A unit holder may request a redemption until 90 days after the units were purchased. Any redemption is not subject to penalty. The Company will only redeem Class A units up to 10% of the value of assets under management per quarter.

Profits and Losses

Subject to performance of the Company and after paying Company expenses, management fees and interest on the line of credit, profits and losses are allocated in the following order:

· Losses are allocated pro-rata to limited partners

· Profits are allocated pro-rata to limited partners to the extent of prior losses; then to pay for cumulative preferred returns; thereafter 100% to the General Partner.

Distributions

The Company distributes or reinvests amounts equal to the limited partners’ 7.00% non-compounded preferred return on their proportionate units based on the Company’s excess distributable cash each month. PIM will distribute funds only to the extent that funds are available.

Management and Related Party Fees

The Manager and/or its affiliates are entitled to receive certain fees, compensation and expense reimbursements from the Company.

PIM is entitled to receive an asset management fee of 1.00% per annum on assets under management.

F-10

NOTE 1 - SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Management and Related Party Fees (Continued)

Bridgewell Capital LLC services the loans and collects a servicing fee of up to 3.00% of the principal balance.

The Company receives certain operating and administrative services from PIM, some of which may not be reimbursed to PIM. The Company’s financial position and results of operations would likely be different without this relationship with the Manager.

Basis of Accounting and Use of Estimates

The Company’s financial statements are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. The Company is an investment company that follows the specialized accounting and reporting guidance of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946, Financial Services - Investment Companies. The accrual basis of accounting requires the use of estimates and assumptions that affect the assets, liabilities, revenues and expenses reported in the financial statements, as well as amounts included in the notes thereto, including discussion and disclosure of contingent liabilities. Although the Company uses its best estimates and judgments, actual results could differ from these estimates as future confirming events occur.

Mortgage Loans Receivable

Mortgage loans receivable are recorded at their outstanding principal balance with interest thereon being accrued as earned. Company loans will have varying terms at the discretion of the Manager. Most Company loans will generally have a term of 12 months and provide for monthly payments of interest with a “balloon payment” at the end of the term. The Company will not recognize interest income on loans once they are determined to be impaired until the interest is collected in cash. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the underlying collateral.

F-11

NOTE 1 - SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Allowance for Loan Losses

The allowance for loan losses has been established for future potential loan losses. Loan losses will be charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, will be credited to income. The allowance for loan loss is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the types and dollar amounts of loans in the portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

Real Estate Investments

The Company invests in real estate and real estate trusts in select locations, redevelops them with the goal of selling them for retail market value or holding them for appreciation and/or income generation, providing investor attractive returns. Investments in real estate are carried at fair value. Real investments are comprised of commercial properties or raw land that is initially recorded at the purchase price plus closing costs when acquired. Improvements and development costs are capitalized as a component of the cost. Real estate investments are accounted for in accordance with FASB Topic 946, which requires investments be initially measured at their transaction price and subsequently measured at fair value when the real estate investment is close to completion or completed and management is able to make an assessment of fair value. The fair value of each real estate investment is based on the price that would be received to sell an asset in an orderly transaction between marketplace participants at the measurement date. Unrealized net gains or loss are recorded in the statements of income.

F-12

NOTE 1 - SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition

Mortgage interest income on performing loans is recognized as revenue when earned according to the contractual terms of the loan.

Gain or sale of real estate investment is recognized at the time of sale of the asset.

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company determines the fair values of its assets and liabilities based on a fair value hierarchy established under applicable accounting guidance which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are 3 levels of inputs that may be used to measure fair value. The 3 levels are defined as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 inputs are those other than quoted prices that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs reflect the Company’s own assumptions about the inferences that market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the Company’s own data.

Valuation Process and Techniques

The Company has various processes and controls in place to ensure that fair value is reasonably estimated. A model validation policy governs the use and control of valuation models used to estimate fair value. Periodic reassessments of the models are performed to ensure that they are continuing to perform as designed.

F-13

NOTE 1 - SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair Value Measurements (Continued)

Valuation Process and Techniques (Continued)

While the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

The following methods and assumptions were used to estimate the fair value of assets and liabilities:

Performing mortgage loans that management intends to hold to maturity are valued at historical cost. Non-performing and impaired mortgage loans are reported at the net realizable value of the underlying collateral based on an observable market price or a current appraised value. Mortgage loans are classified as Level 3.

Real estate investments are fair valued on a quarterly basis when the asset is close to completion and fair value is determinable. Management determines fair value using valuations from third parties, which use market and discount cash flow valuation models. Investments are classified as Level 3.

Income Taxes

The Company has elected to be a partnership under the Internal Revenue Code and a similar section of the state code. The members of a partnership are taxed on their proportionate share of the Company’s taxable income. Therefore, no provision or liability for federal income taxes has been included in these financial statements.

The Company has evaluated its current tax positions and has concluded that as of December 31, 2018, no significant uncertain tax positions exist for which a reserve would be necessary.

The Company’s income tax returns are subject to review and examination by federal, state and local governmental authorities. As of December 31, 2018 and 2017, there is 1 year open to examination by the Internal Revenue Service and various for state and local governmental authorities. To the extent penalties and interest are incurred through the examinations, they would be included in the accompanying statements of income.

F-14

NOTE 1 - SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recently Issued Accounting Pronouncements

Accounting Standards Issued but Not Yet Effective

Credit Losses - In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2016-13 Financial Instruments - Credit Losses (Topic 326). Prior to this pronouncement, generally accepted accounting principles required use of the incurred loss method for recognizing credit losses in the reserve. The incurred loss method recognizes a credit loss when it is probable that a loss has been incurred. The new guidance replaces the incurred loss method with one that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The effective date of this ASU was delayed by ASU 2018-19 Codification Improvements to Topic 326, Financial Instruments - Credit Losses until interim and annual periods beginning after December 15, 2021, with early adoption allowed one year earlier. Management is in the process of evaluating this guidance, but does not believe it will have a significant impact on the financial statements of the Company.

Fair Value Measurement – In August 2018, the FASB issued ASU 2018-13 Disclosure Framework (Topic 820) – Changes to the Disclosure Requirements for Fair Value Measurement. This guidance removes or modifies various disclosures relating to the activity or reconciliations of Level 1, 2 and 3 fair value measurements. It is effective for interim and annual periods beginning after December 15, 2019.

NOTE 2 - CASH CONCENTRATION

The Company maintains funds in a financial institution that is a member of the Federal Deposit Insurance Corporation. As such, funds are insured based on the Federal Reserve limit. The Company has not experienced any losses to date, and management believes it is not exposed to any significant credit risk on the current account balance. At times, cash balances may exceed insured amounts.

NOTE 3 - MORTGAGE LOANS RECEIVABLE

Mortgage loans receivable consists of notes to individuals and companies, secured by deeds of trust, bearing interest at 7.00% to 18.00% per annum with either a balloon payment due at maturity or periodic amortizing payments. These notes have maturity dates ranging from January 2019 to July 2047.

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NOTE 3 - MORTGAGE LOANS RECEIVABLE (CONTINUED)

At December 31, 2018, mortgage loans receivable mature as follows: $6,054,138 in 2019; $397,968 between 2020 and 2023; and $1,062,772 thereafter.

As of December 31, 2018, the Company has outstanding rehabilitation loans of $6,012,866, of which $3,377,308 is funded with a commitment to fund an additional $2,635,558. These commitments will be funded by a combination of collections of mortgage loans receivable and credit line advances.

No loans were modified for the year ended December 31, 2018 and no mortgage loans were in default.

NOTE 4 - LINE OF CREDIT

The Company has access to a line of credit (“LOC”) agreement for $2,000,000 through the servicer Bridgewell Capital LLC (“BWC”). The LOC agreement has a variable rate of interest based on 1 year LIBOR plus 4.50% with a minimum interest rate of 7.50%. At December 31, 2018, the borrowing rate is 7.53%. The LOC is renewed annually, and is collateralized by the Company’s assets and is also personally guaranteed by the principal of BWC. The Company reimbursed BWC, the servicer for $9,065 in credit line interest and fees for the year ended December 31, 2018.

NOTE 5 - RELATED PARTY TRANSACTIONS

Management Fees

PIM earned $37,328 in management fees for the year ended December 31, 2018, included in related party payable, of which $24,928 is deferred and included in prepaid expenses and other receivable on the accompanying balance sheet at December 31, 2018. There were no management fees earned for the year ended December 31, 2017.

Servicing Fees

Bridgewell Capital LLC earned $57,148 in servicing fees for the year ended December 31, 2018, of which $36,723 is included in related party payable on the accompanying balance sheet at December 31, 2018. There were no service fees for the year ended December 31, 2017.

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NOTE 5 - RELATED PARTY TRANSACTIONS (CONTINUED)

Related Party Payable

For the year ended December 31, 2018 and December 31, 2017, Bridgewell Capital LLC provided $97,194, and $149,844 to the Company for Regulation A+ related syndication costs. At December 31, 2018 and 2017, $97,194 and $88,592, respectively, was included in related party payable on the accompany balance sheets.

Investments

The general partner’s investment in the Company was $51,600 and $50,000 at December 31, 2018 and 2017, respectively.

NOTE 6 - FAIR VALUE MEASUREMENTS

The following table represents the Company’s fair value hierarchy for its assets measured at fair value on a recurring basis as of December 31,

	2018
	Level 1		Level 2		Level 3
Mortgage Loans Receivable	$	-	$	-	$	7,514,870
Real Estate Investments		-		-		1,465,934
Total	$	-	$	-	$	8,980,804

For the year ended December 31, 2018, the Company had the following Level 3 assets:

	Mortgage Loans Receivable		Real Estate Investments
Beginning Balance	$	-	$	-
Purchases		7,516,150		1,695,019
Unrealized Fair Value Adjustment		-		-
Payoffs or Sales		1,280		229,085
Total	$	7,514,870	$	1,465,934

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NOTE 6 - FAIR VALUE MEASUREMENTS (CONTINUED)

Due to their short term nature, the carrying values of cash, deferred syndication expenses, accounts payable and accrued liabilities, related party line of credit and related party payable approximate their fair values at December 31, 2018 and 2017.

NOTE 7 - COMMITMENTS AND CONTINGENT LIABILITIES

In the normal course of business, the Company may become a party to litigation matters involving claims against it. At December 31, 2018, there are no current matters that would have a material effect on the Company’s financial position or results of operations.

NOTE 8 - SUBSEQUENT EVENTS

The Company has evaluated subsequent events through May 10, 2019, the date the financial statement was available to be issued, and there were no events to report.

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BridgeWell Preferred Income LP

Supplementary Schedule - Loan Concentrations and Characteristics

December 31, 2018

The loans are secured by recorded deeds of trust. Outstanding loan characteristics are as follows:

Number of Secured Loans Outstanding		132
Total Secured Loans Outstanding	$	7,514,870
Average Secured First Loan Outstanding	$	137,919
Average Secured Second Loan Outstanding	$	33,111
Average Secured Loan Outstanding	$	56,931
Average Secured Loan as Percent of Total Secured Loans		0.76
Average Secured Loan as Percent of Members’ Equity		0.66
Largest Secured Loan Outstanding	$	598,525
Largest Secured Loan as Percent of Total Secured Loans		7.96
Largest Secured Loan as Percent of Members’ Equity		6.89
Number of Counties Where Secured Loans are Located		60
The following categories of secured loans were held:
First Trust Deeds	$	4,137,562
Second Trust Deeds		3,377,308
Total	$	7,514,870
The following types of secured loans were held:
Single-Family Residential	$	7,514,870
Commercial	$	-
Total	$	7,514,870

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SIGNATURE

Pursuant to the requirements of Regulation A, the issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BridgeWell Preferred Income LP

/s/ John Parrett

John Parrett, Manager of BridgeWell

Preferred Manager LLC

Manager

June 11, 2020

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