AVALON VILLAS APARTMENTS 301 Ashley Wilson Rd Sweeney, Texas Units 593 S.F. Average Asking: $2,100,000 $43,750 / Unit $73.

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1 AVALON VILLAS APARTMENTS 301 Ashley Wilson Rd Sweeney, Texas Units 593 S.F. Average Asking: $2,100,000 $43,750 / Unit $73.81 / SF Phone: License # hipapt.com Page 1 of 16

2 301 E Ashley Wilson Rd Sweeney, TX OFFERED ON ASSUMPTION jhurd@houstonincomeproperties.com ASKING PRICE - Assumption Asking Price Price / Unit: Price / SF: Est. Existing Loan: Est. Buyer's Down Pmt: PROPERTY INFORMATION $2,100,000 No. Units: 48 $43,750 Avg Sq. Ft. Size: 621 $70.47 Date Built (Per BCAD): 1977 $1,337,000 "E" Mtr/"W" Mtr: Indiv / RUBS $763,000 Roof: Pitched Percent of Ask Price Down 36% Land (Acres) per CAD: Rentable Sq Ft: 29,800 Estimated Total Collections~ (Occupancy is {85.42%} as of RR) Mth. Coll. Jun 2018 T-3 Avg. $26,370 Jun-2018 $25,532 May-2018 $27,359 Apr-2018 $26,218 42% Unit UNIT Mix MIX Stats 42% By Unit Type By Sq. Ft. 58% 58% The Apartments are being offered on an "Assumption of the Existing Loan" basis. The Loan is a below market interest rate loan and according to the seller is potentially re sizable to a qualified buyer (see loan information on page 8). In addition, the Avana Villas Apartments (less than a mile away on the same street) are being offered as well by the same owner without financing in place. For economy of scale, a buyer may want to consider purchasing both properties. is located in a quiet residential neighborhood of Sweeny, Texas. It is located across from Sweeny High School and Sweeny Jr High, and it is only 1/2 mile to Sweeny Elementary. In addition, the property is also located close to Backyard Park, Sweeny Community Library and CIty Hall. Next door to the community is a grocery store and several restaurants. is minutes from Lake Jackson, Freeport, Bay City and West Columbia. Major employers near the property are Phillips 66 Sweeny Refinery 2.3 miles, Chevron Phillips Chemical Plant 3milesanditisashort commute to the Dow Chemical Plant in the Lake Jackson/Freeport area. The property is approximately 38 miles from the city limits of Houston, Texas. #Units Type Notes SF Total SF Rent Total Rent ,600 $ ,200 $ total units UNIT MIX - Market Rents Rent Roll - Please Verify 85.42% 621 Occ. avg sf 29, Rent Per SF $12, $20, ,660 $1.10 total/sf avg rent total rent avg$/sf Page 2 of 16

3 301 E Ashley Wilson Rd Sweeney, TX jhurd@houstonincomeproperties.com Age: Elec Meter: A/C Type: Water Meter: Hot Water: Roof: PROPERTY TAX INFOR. BCAD ID NO , Taxing Authority City of Sweeney West Braz. Cty Drainage #11 Emergency Dis #2 Brazoria Cty & Road -Bridge Sweeney Hosp. Dist. Port Freeport Sweeney ISD 2017 Tax Rate 2018 Assmt Rate/$ $818,020 Approx. Total Tax $24,955 CONSTRUCTION 1977 Paving: Asphaltic Concrete Individual Individual Master / RUBS Materials: # of Stories: Parking: Brick & Siding 2 Open Spaces Boilers # Buildings: 5 Pitched Units/Acre: Apartments AMENITIES (Features vary by Individual Floor Plan ) Unit Features Faux Wood Floors, Carpet, Updated Lighting Pkg., All Electric, Fully Equipped Kitchens Property Amenities On site Laundry Facility, Lush Landscaping, High Speed Internet, Near High School and Jr High, next to local grocery store DEMOGRAPHICS - Geography - 1 & 3 Mile Radius Picture Here Estimated Population Mile Radius - 2,564 3 Mile Radius - 5,332 Black, 18.60% Asian, 0.50% Other, 6.50% Multi Race, 1.70% Ethnicity within a 1 Mile Radius White, 72.70% 2017 Demographics 1 Mile Radius of Property Total Housing Units: 1,120 Occupied: 1,027 Owner Occupied: 729 Renter Occupied: 298 Vacant Units: Est. Avg. Income 1 Mile Radius Avg HH Income 1 Mile Radius - $67,520 Avg HH Income - Sweeny - $70,874 Not Of 2017 Ethnicity Hispanic Of Hispanic Ethnicity Ethnicity 66.9% 33.1% Page 3 of 16

4 PROPERTY AERIAL & LOCATION MAP Page 4 of 16

5 OFFERED ON ASSUMPTION Property Information Number of Units: 48 Approximate Net Rentable Area: 29,800 Date of Construction-Per CAD: 1977 Average Unit Size: 621 Roofs: Pitched Current Monthly Market Rent: $32,660 $680 / Uni$1.096 / SF Hot Water: HVAC System: Boiler Individual Stabilized Rents Used: $32,660 $680 / Uni$1.096 / SF Metering: Electric Individual Water Master / RUBS Est. Current Occupancy: 85.42% as of RR 2017 Tax Rate % Current Collections: Jun-18 $25, Assmt $818,020 Trailing Collections: Jun 2018 T-3 Avg. $26,370 Pro Forma Assmt Used: $1,279, Pro Forma Assmt. is {65%} of the Ask Price Income is Jun 2018 Trailing 3 months Income Annualized Expenses are Mar 2018 T-12 Actual Except Where Noted Pro forma Expenses and Revenue are Estimated Except Where Noted Revenue and Collections Current Market Rent with an approximate {0%} Rent Decrease 391,920 32,660 Gain/(Loss) to Lease (3,919) 1% Vacancy (19,596) 5% Emp. Units.Model,Storage and Utility Units Office and Maintenance Use up 2 of the units (11,758) 3% Allowances, Concessions and other Rental Losses (11,758) 3% Total Rental Income {Actual is (70%) Ecc. Occ., Pro Forma is (88%) Ecc. Occ. on Pro Forma Rents} 272, ,890 { 88.0% } Total Other Revenue Includes Utility Rubs 43,448 $905 / Unit 43,200 $900 / Unit Total Gross Annual Revenue {Actual is (81%) Ecc. Income, Pro Forma is (99%) Ecc. Income} 316,436 $26,370 / Mth 388,090 $32,341 / Mth Expenses and Reserves Fixed Expenses Taxes 24,955 $520 / Unit 2018 Assmt and 2017 Rate 39,024 Pro Forma $813 / Unit Franchise Tax Fee 0 $ / Unit 0 $ / Unit Insurance 19,976 $416 / Unit Per Owner Stmt. 19,976 Estimated $416 / Unit Total Fixed Expenses 44,931 59,000 $1,229 / Unit Management Fee Actual is { 5.15%}, Pro Forma is { 4.00% } 16,310 $340 / Unit based on above incom 15,524 $323 / Unit Payroll plus Burden 51,560 $1,074 / Unit 52,800 $1,100 / Unit Utilities (Water, Electric, Gas) 44,157 $920 / Unit 43,200 $900 / Unit Repairs, Maintenance and Make Ready 15,093 $314 / Unit 16,800 $350 / Unit Marketing 3,359 $70 / Unit 2,400 $50 / Unit Contract Services- (Pest Control and Waste Removal, Landscaping) 12,363 $258 / Unit 12,000 $250 / Unit General Admin 6,702 $140 / Unit 7,200 $150 / Unit Reserve for Replacement Per Existing Loan Agreement 11,500 $240 / Unit 11,500 $240 / Unit Total Expenses ~ (average Unit size is {621} Sq. Ft.) 205,975 $4,291 / Unit 220,423 $4,592 / Unit $6.91 / SF $7.40 / SF Net Operating Revenue 110, ,667 Asking Price $1,968,000 $41,000 / Unit $1,968,000 $41,000 / Unit $66.04 / SF $66.04 / SF Est (Actual Cap Rate) and (Market Cap Rate) 5.61% As Is 8.52% Stabilized Existing Debt Service $80,455 P & I $80,455 P & I Cash Flow after Debt Service $30, $87, Estimated Buyer's Equity on Assumption 32% $631,000 $631,000 Cash on Cash Return 4.76% 13.82% Estimated Existing Loan Parameters Asking Price LTC Estimated Loan Balance at sale Interest Rate Term Existing P & I $1,968,000 68% $1,337, % 20 Years $6,705 Page 5 of 16

6 Internal Rate of Return Analysis UNITS 48 Year 1 has a {0%} rent Increase - see pro forma page 3 SQ FT 29,800 Avg Unit Size 621 Original Sales Price $ 1,968,000 {$} a Unit $ - "All In" Cost $ 1,968,000 INCOME MONTHLY Year 1 12 Mths 24 Mths 36 Mths 48 Mths 60 Mths Annual Market Rent Growth Rates Used 3.0% 3.0% 3.0% 3.0% Potential Income $32,660 $391,920 $403,678 $415,788 $428,262 $441,109 Other Income $3,600 $43,200 $44,496 $45,831 $47,206 $48,622 Gross Income $36,260 $435,120 $448,174 $461,619 $475,467 $489,731 Vacancy / Other Losses ($47,030) ($48,441) ($49,895) ($51,391) ($52,933) Economic Loss % 12% 12% 12% 12% 12% EFFECTIVE GROSS INCOME $388,090 $399,732 $411,724 $424,076 $436,798 Annual Operating Expense Growth Rates Used 3.00% 3.00% 3.00% 3.00% EXPENSES Operating Expenses ($208,923) ($215,191) ($221,647) ($228,296) ($235,145) Expenses/Unit $4,353 $4,483 $4,618 $4,756 $4,899 Reserve for {$240} per unit Existing Loan Reserve ($11,500) ($11,500) ($11,500) ($11,500) ($11,500) TOTAL EXPENSES ($220,423) ($226,691) ($233,146) ($239,796) ($246,645) Total Expenses/Unit $4,592 $4,723 $4,857 $4,996 $5,138 NET OPERATING INCOME $167,667 $173,042 $178,578 $184,280 $190,154 NOI Growth Rate 3.2% 3.2% 3.2% 3.2% DEBT SERVICE (80,455) (80,455) (80,455) (80,455) (80,455) ANNUAL CASH FLOW $87,212 $92,587 $98,123 $103,825 $109,699 Debt Service Assumptions Used "All In" Cost $1,968,000 % Down of "All In" Cost 32% Est. Existing Loan Balance $1,337,000 CASH EQUITY $631,000 Current Financing rate 4.33% Annual Debt Service ($80,455) P & I CASH ON CASH RETURN 13.82% 14.67% 15.55% 16.45% 17.38% The assumptions taken for this analysis for income and expense projections are shown above. Debt service was calculated using the information shown in the debt service assumptions used box above. INVESTMENT AND INTERNAL RATE OF RETURN SUMMARY Future Sales Price Cap 5th Year NOI Est. Loan Balance at Sale $2,716, % $190,154 $1,212, Mths 24 Mths 36 Mths 48 Mths 60 Mths LEVERAGED Cash Equity ($631,000) $0 $0 $0 $0 $0 Annual Cash Flow $0 $87,212 $92,587 $98,123 $103,825 $109,699 Net Proceeds from Sale (96% of the Sales Proceeds $ $1,395,820 Total Cash Flow ($631,000) $87,212 $92,587 $98,123 $103,825 $1,505,518 Total Discounted Cash In-flow {Rate Used is 9%} $80,011 $77,928 $75,769 $73,552 $978,484 5TH YEAR SALE ~ LEVERAGED INTERNAL RATE OF RETURN IS {28.84%} UNLEVERAGED Cash Equity ($1,968,000) $0 $0 $0 $0 $0 Annual Cash Flow (Without Debt Service) $0 $167,667 $173,042 $178,578 $184,280 $190,154 Net Proceeds from Sale (96% of the Sales Proceeds $ $2,607,820 Total Cash Flow ($1,968,000) $167,667 $173,042 $178,578 $184,280 $2,797,973 Total Discounted Cash In-flow {Rate Used is 9%} $153,823 $145,646 $137,895 $130,549 $1,818,491 5TH YEAR SALE ~ UNLEVERAGED INTERNAL RATE OF RETURN IS {13.93%} Discount Rate Used is {9%} Yr. 5 Sales Summary Total Discounted Cash Flow (LEVERAGED) $1,285,744 Cash Equity Sales Proceeds 5th Yr Cash Flow IRR Original Investment $631,000 Leveraged $631,000 $1,395,820 $109, % Total Discounted Cash Flow (UNLEVERAGED) $2,386,402 Unleveraged $1,968,000 $2,607,820 $190, % Original Investment $1,968,000 Page 6 of 16

7 Number of Units: 48 Approximate Net Rentable Area: 29,800 Year Built: 1977 Average Unit Size: 621 Roofs: Pitched Proposed Monthly Market Rent at 60 Mths: $36,759 $766 / Unit$1.234 / SF HVAC System: Individual Metering: Electric Individual Water, Trash, Gas Master / RUBS Hot Water: Boiler Est. Occupancy at Stabilization : 95% Property Information Value Projection at 60 Months Projection is based on the stabilized year 1 pro forma with a 3% rent and a 3% expense growth rate for years 2 thru 5 Revenue and Collections STABILIZED PRO FORMA Projected at 60 Months Post Purchase and Income Stabilization % of Gross Potential Income Total Gross Rent Potential 441, % Vacancy / Other Rental Losses (52,933) {12%} of Gross Rent Potential Estimated Gross Potential Rental Income 388,176 88% Total Other Income Potential 48,622 Total Estimated Gross Annual Income 436,798 {113%} of Gross Potential Incom Expenses Total Expenses ~ (average Unit size is {621} Sq. Ft.) (246,645) $5,138 / Un$8.28 / SF Estimated Stabilized Net Operating Income (60 Mths) $190,154 Estimated Potential Value Based on a Stabilized NOI of $190,154 (60 mths out) Cap Rate Value Generated 6.75% $2,817,089 $58,689 / U, $94.53 / SF 7.00% $2,716,479 $56,593 / U, $91.16 / SF 7.25% $2,622,807 $54,642 / U, $88.01 / SF Page 7 of 16

8 Existing Assumable Loan Information is being offered on an Assumption of the existing Loan basis. The Loan is potentially Re sizable. All existing Loan information is either from the lender or information supplied by the Seller. Please ask the Broker for loan documentation to perform your own investigation into the current loan parameters before offering on this asset. Estimated Existing Loan Parameters are below (Please Verify); LOAN INFORMATION AFTER THE March 2018 payment: Lender: Loan Type: ARBOR AGENCY LENDING, LLC Freddie Mac Small Balance Loan Program Estimated Loan Origination Date: November 2016 Loan Maturity Date: 20 Years from Origination Estimated Current Loan Balance: $1,342,791 After Payment According to the Seller the current loan is potentially resizable. Please ask the Broker for the loan documentation to do your own investigation into the existing loan before offering on this asset. For additional information, please contact: Jim Hurd tel: Page 8 of 16

9 Sweeney Properties' Aerial Page 9 of 16

10 Bay City and Sweeny Properties' Aerial The Apartments arebeingofferedonan"assumption of the Existing Loan" basis. The Loan is a below market interest rate loan at 4.33%, and according to the seller the loan is potentially re sizable to a qualified buyer (see loan information on page 8 of this offering memorandum). Avalon Villas is part of a four property portfolio that is being offered for sale. Its sister property, Avana Villas Apartments, (less than a mile away on the same street) is one of the four properties in the portfolio. For economy of scale, a buyer may want to consider purchasing both of these properties or all four. The other two properties are located in nearby Bay City (Madrid Villas and Monterra Villas). For information on the additional three properties that are for sale, please see the offering memorandum on our website for each property. The other three properties are being offered without financing in place, therefore, a buyer would need to obtain new financing on the other three properties. Page 10 of 16

11 BRAZORIA CAD MAP & FLOOD MAP Page 11 of 16

12 AREA INFORMATION Sweeny a city with pride is twenty miles southwest of Angleton in west central Brazoria County and is the westernmost incorporated city in Brazoria County. The area is commonly referred to as the West Brazos Area, and is situated along the Upper Gulf Coast of Texas between Matagorda County and Galveston County. Sweeny is only 20 miles from the Gulf of Mexico. It is nestled between two highways in the area south of Highway 35 and west of Highway 36. The land area of Sweeny is approximately 1.9 square miles. Sweeny is void of rivers and lakes, although the San Bernard River flows just one mile to the east of the city. The Sweeny Independent School District serves the City of Sweeny and the surrounding area. The school district operates three schools: Sweeny High School, Sweeny Junior High School, and Sweeny Elementary School. Sweeny ISD is a Class 4A school. The district is approximately square miles in size, and is one of eight (8) school districts in Brazoria County. There are 12 colleges within 50 miles of Sweeny. Sweeny Community Hospital has continued to grow and expand its services offered to the West of the Brazos Community, while keeping true to the traditions that helped to found the hospital district. Sweeny Community Hospital is a 24 hour critical access hospital providing both inpatient and outpatient healthcare services. Licensed for 20 inpatient beds, Sweeny Community Hospital serves as a Level IV Trauma Center, hosts The Fountains Assisted Living Center, has a dedicated surgical suite, and over a dozen outpatient clinical services. The Sweeny Hospital District has grown to approximately 190 employees at locations in Sweeny, Brazoria, and West Columbia. The current Board of Directors has elected to build a more modern facility to better provide for the growing population. Thesitethathasbeen chosen for the new location is on Main Street in Sweeny just west of the City Limits. The SCH campus will embody a vision of healthcare in which health services are delivered with efficiency, comprehensiveness, and careful attention to patient needs. Building the new facility will take approximately two years. The building gross square footage will be 89,668 with twenty medical and surgical beds. DEVELOPMENT *As part of Chevron Phillips Chemical Company s $6 billion expansion, the company built two new polyethylene plastics units in Old Ocean, Texas which takes ethylene and turns it into plastic resin that is shipped both domestically and internationally. Both units and a $5 billion petrochemical manufacturing plant in Sweeny were completed in Brazosport, in southern Brazoria County, is one of the largest and fastest growing petrochemical employment regions on the Gulf Coast. Currently there is over $23 billion of plant and office expansion and new construction work underway. Major industry leaders include Dow Chemical Company, Fluor Corporation and BASF Corporation. The Brazosport area includes the cities of Clute, Freeport, Lake Jackson, Richwood and Surfside Beach. It is located on the Texas Gulf Coast, a short freeway drive south of Houston. The Brazosport area is frequently listed as one of the most desirable places in the country to live because of the excellent school system; low cost of living, affordable housing and abundant job opportunities. The close proximity to Houston has solidified its economic base and spawned large growth in its manufacturing and retail businesses. Brazosport College Located on 156 acres of beautifully landscaped grounds in Lake Jackson, Texas, Brazosport College has served as the school of choice for students in southern Brazoria County since Brazosport College offers four year degree programs in Industrial Management and Health Services Management. BC also offers two year degree and certificate options in a variety of career fields, as well as courses in major fields of study, which will transfer to four year schools. The healthcare program at BC offers ADN and LVN opportunities. The Brazosport College campus has expanded in recent years. Additions include the BASF Center for Process Technology, the Dow Academic Center, the Byron & Sandra Sadler Health Professions/ Science Complex, a new Student Pavilion, a revitalized library, the Freeport LNG Crafts and, most recently, the BCPC Welding Technologies Laboratory. Academy and, most recently, the BCPC Welding Technologies Laboratory. Page 12 of 16

13 Photos Page 13 of 16

14 PHOTOS Page 14 of 16

15 PHOTOS Page 15 of 16

16 Brokerage Services Disclaimer: The information contained herein has either been given to us by the owner of the property or obtained from sources that we deem reliable. We have no reason to doubt its accuracy but we do not guarantee it. Vacancy factors used herein are an arbitrary percentage used only as an example. It does not necessarily relate to actual vacancy, if any. The value of the investment is dependent upon these estimates and assumptions made above, as well as the investment income, the tax bracket and other factors which your tax advisor and/or legal counsel should evaluate. THE PROSPECTIVE BUYER SHOULD CAREFULLY VERIFY EACH ITEM OF INCOME, EXPENSE, AND ALL OTHER INFORMATION CONTAINED HEREIN, and should also perform a detailed inspection of the property. We have not determined whether the property complies with city ordinances and recommend that you determine whether or not the property complies with deed restrictions and the City of Houston life safety ordinance, whether or not a certificate has been issued, and whether or not the property contains asbestos, lead paint and/or mold and whether or not the property lies within a flood plain. Page 16 of 16