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Mobile, Alabama

INVESTORS: IF you are seeking a secure cash flow with a cash out option, please consider the following proposal.  The investment is secured by real property and income is guaranteed by a low income residential housing program with payments being made by the state of Alabama.  Please review the attached presentation including a listing of the real properties to be purchased and rehabilitated by the investment and leased to tenants who will ultimately become the buyer at cash out using a program also supplemented by the state..

INVESTMENT PROPOSAL
THE PROPOSAL:  Will provide an opportunity for investors seeking long term and continuous cash flow from an initial investment in which the principal is secured by real property exceeding the value of the investment with title being held in the name of the investor.  This investment opportunity can be put into play with one or more investors providing the investment capital or the opportunity can be extended to a variety of individual investors through a public offering.  The proposal involves real estate rental property portfolio of 125 single family residential units that will be placed in a public housing pool with rental income guaranteed and paid by the state and local governments.
THE OPPORTUNITY: Currently There is a severe shortage of rental housing to meet the demand of state and local governments who have the responsibility of providing public assisted housing.  The Housing Authorities in this particular investment opportunity are authorized to pay up to one thousand dollars per month for a two and three bedroom single family detached resident.  Currently there is a waiting list of over six hundred applicants approved to receive this housing assistance.  A commitment has been secured from the state that every property made available as rentable that conforms to the inspection and occupancy guidelines can immediately be occupies and income realized upon occupancy.
AVAILABLE PROPERTIES: This investment opportunity has identified 125 single family detached properties that can be purchased for very modest prices.  Some will require major rehabilitation and some very minor rehabilitation before they can be made available for rental.  The properties identified all have three bedrooms which qualify for the higher rent rates of $750 to $1,000.00 per month.
THIS INVESTMENT MODEL:  Assumes that all of the 125 investment units will be capped at a uniform investment value of $40,000.00 per unit.  The properties this investment model are including have a purchase price that range from a low of $6,000.00 to a high of $30,000.00.   If a house cost $30,000.00 a rehabilitation amount of $10,000.00 would be invested to cap its initial purchase and rehabilitation investment at $40,000.  Conversely if a $6,000.00 property is selected for purchase a total of $34,000.00 would be available to be invested in rehabilitating it bringing its investment cap to $40,000.00.  Each unit will also incur an additional $8,000.00 for architectural plans for remodeling, permits, fees, administration, processing, recordation overhead and management for a total investment of $48,000.00 per unit.

THE DEAL:

                                                                                                 
Exit Strategy: A preliminary evaluation of the market suggest that these units will sell for a minimum of $65,000.00.  The Public Housing Authority has a program that will allow the renter to purchase the rental property with a 50% mortgage assistance plan from the state.  This investment proposal assumes cash out option after 10 years.  Over a 10 year period the investor will have recovered his initial investment with an annual return of over 8%.  When each property is sold after ten years at the minimum appraised value of $65,000.00 to the existing tenants that would bring an additional return of $8,125,000.00.     

Ten (10) year Unit reduction Plan:

INVESTMENT PROPOSAL – INDIVIDUAL INVESTORS
As an option to one large investor taking the complete deal of 125 rental income units,   there is another model that may be more attractive to smaller investors.  Taking this approach each rental unit can be sold to a single investor who would purchase one or more units or shares.  If this approach is taken that model would be structured as follows:
Investor purchases one unit for $50,000.00
Each investor would hold title to their investment and receive the following income distribution:

• Debt Service on $50,000.00 @ 6% for 30 years is $300.00 per month which will be paid directly to the investor as debt coverage on the initial $50,000.00 investment. After a period of 16 years the initial investment will have been recovered and the income will then increase to $700 per month for as long as the investor desires, or it can be cashed out at the anticipated fair market value of $65,000.00
• Monthly Return to Investor beyond the debt service allocation will be $400.00/month X 12 = $4,800.00 annually.
• After a period of sixteen years while the debt is being repaid to the investor a cash flow of $76, 800.00 will have been realized

DETAILS

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