Ashton Oaks Apartment Community

Transcription

1 Ashton Oaks Apartment Community 201,202, 301 Hackberry Clute, TX Good Location In Clute, TX. 20 Miles from Houston City Limits Good Upside Post Rehab & Stabilization Minutes from major Employment in the area 4 Phases can be sold together or separately The accredited Brazosport I.S.D. Services the area For Information Contact: Jim Hurd ~ Houston Income Properties, Inc. Tom Wilkinson ~ KET Enterprises Incorporated

2 HOUSTON INCOME PROPERTIES, INC. (713) (713) ,202, 301 Hackberry Clute, TX Key Map: 884R FINANCIAL INFORMATION PROPERTY INFORMATION Asking Price: Price / Unit: Price / SF: $3,500,000 $6,434 $9.35 Units: Avg Size: Date Built (Per BCAD): ,79,80 Seller's Equity: $3,500,000 "E" Mtr/"W" Mtr: Indiv / Mast. RUBS RECENT FORECLOSURE ~ Good Value Add Investment Opportunity Post Upgrades & Stabilization Roof: Land Area (Acres): Rentable Sq Ft: Pitched ,308 TOTAL COLLECTIONS (Occupancy is Approximately 42% as of ) Mth. Per P&L Nov 2010 $79,108 Property Highlights RECENT FORECLOSURE ~ Available "All Cash" ~ 1. Grade "C" Property in a "C" SubMarket 2. ~ Good Value Add Deal ~ No Owner Financing. Sold "as is, where is" There are 48 down units contained in two buildings which are completely boarded up. 3. Good Location in Clute, Tx. approx. 8 miles from the Gulf of Mexico. Located near major transportation arteries of the area allowing ease of access to the Dow Chemical Complex, the CIty of Houston, and all the surrounding towns in the brazosport area. 4. Good Upside Potential ~ A new owner should see upside in the occupancy and collections with interior upgrades and correction of moderate deferred maintenance on this property. 5. Built in 4 Phases 1976, 1979 and Please do not visit the property without an appointment made through the broker. Ashton Oaks Apts Recent Foreclosure ~ "C" Grade Property ~ Good Value Add Deal ~ with interior upgrades and the correction of minor deferred maintenance. Available All Cash ~ No Owner Financing. The property is being sold "as is", where is". The property is 42% occupied as of Approximately 89 tenants have left since take over most of those through eviction and approx. 28 more evictions will be needed to complete the clean up of tenants. Since take over they have 36 new leases of which 8 units were leased in the last 2 weeks of November. Ashton Oaks community is located just off main street in Clute, Texas. Clute is approximately 20 miles from the City Limits of Houston, the 4th largest city in the United States. It is home to the Dow chemical complex which is the major employer in the Clute area. Additionally, it is located approximately 17 miles from Galveston, one of the major tourist attractions of the Gulf Coast. UNIT MIX (Market Rents as of AUGUST, 2010) #Units Type Notes SF/Unit Total SF Rent Total Rent Rent Per SF ,500 $350 $21,000 $ ,200 $415 $39,840 $ ,812 $415 $71,380 $ ,072 $525 $33,600 $ ,000 $525 $21,000 $ ,600 $550 $41,800 $ ,020 $575 $11,500 $ WDC 1,069 17,104 $655 $10,480 $ total units 42% Occ ,308 $461 $250,600 avg sf total/sf avg rent total rent $0.670 avg$/sf FP = Fireplace, TH = Townhome, WDC = Washer and Dryer Connections Unit Mix Stats 60% 18% 31% 3% By Unit Type 18% 12% 7% 11% 3% 4% By Sq. Ft. 12% 14% 7% ,069 UNIT AMENITIES (Features vary by Individual Floor Plan) Directions from Houston Hobby Airport: Take South Sam Houston Parkway West, travel 4.9 miles, take the 288 exit, turn left onto 288, travel 23.3 miles, take the 288-BR S. exit, turn left onto TX-288 BR, travel 6.1 miles, turn left onto Oak Park Dr., travel 0.2 mile, turn right onto Hackberry Street, the property is on the left and right. Frost Free Refrigerator, Entertainment Serving Bar, Ceiling Fans, Free Cable TV, Separate Dining Room, 1, 2 and 3 bedroom floor plans, Large Walk In Closets, W/D Connections, Owner pays for gas to heat hot water, Owner pays for Water and bills back to tenant at discounted rate Page 2 of 16

3 201,202, 301 Hackberry Clute, TX Physical Information Financial Information Estimated New Loan Parameters Operating Information Number of Units 544 Asking Price $3,500,000 Lender To Be Determined Curr Mkt Rent { Jun 10} $250,600 Avg Unit Size (SF) 688 Est. Per Unit Price $6,434 Est. Interest Rate 6.50% Rents Used on Pro Forma $250,600 Net Rentable Area 374,308 Est. Per SF Price $9.35 Est. New Loan Amount: $3,079,200 Coll. Avg {Nov 2010} $79,108 Land Area {Acres} Est. Rehab/Upgrades/Unit $3,000 Est. P & I : $20,791 Current Mth Coll. {Nov 2010} $79,108 Units per Acre 22.7 Total Est. Rehab $1,632,000 Amortizing (months) : 300 Est Phy. Occ. { } 42% Date Built 1976,79,80 Asking Price + Rehab $5,132,000 Term: 10 Years Est. Ins per Unit per Yr $450 e Meter Individual EST. BUYER'S EQUITY REQUIREMENTS Est. Reserve/Unit : $300 Property Tax Information w Meter Master Down Pmt. On Ask Price 40% $1,400,000 Est. Loan Constant: 8.10% 2009 Rate / $100 of Value: Roof Style Pitched Down Pmt. With Rehab 40% $2,052, Tax Assmt: $6,077,500 HVAC System Individual Pro Forma Tax Assmt. Is Est. at $3,500,000 Estimated Loan is with the Estimated Hot Water - Gas Boiler: Master Mtr. {100%} of the Asking Price. Rehab Dollars Included INCOME Current Market Rent with a {%} Rent Increase which equates to an avg rent of {$461}/U or {.67}/SF 3,007,200 $250,600 / Mo Loss to Lease {1.0% } of Total Street Rent Estimated (30,072) 1.0% Estimated Gross Potential Income 2,977, % Vacancy Estimated at {13.0%} (390,936) 13.0% Credit/Concess/Admin/Other Rental Losses Estimated at {4.0%} (120,288) 4.0% Total Rental Income {Estimated} 2,465,904 82% Economic Other Income {Includes Laundry, Misc.} 136,000 $250 / Unit / Yr 949,296 2,601,904 Total Income $79,108 / Mo $216,825 / Mo EXPENSE Actuals (except where noted) Estimated Fixed Expenses Fixed Expenses Fixed Expenses Taxes $160,639 $295 per Unit 2010 Assmt & 2009 Rate $92,511 $170 per Unit Pro Forma Assmt. and the 2009 Rate Insurance $244,800 $450 per Unit Estimated $244,800 $450 per Unit Estimated Total Fixed Expense 405,439 $745 / U 337,311 $620 / U Utilities Electricity $32,182 Utilities $59 per Unit Estimated Utilities $54,400 $100 per Unit Water/Sewer Gas $213,521 $393 per Unit $109,465 $201 per Unit $217,600 $400 per Unit $111,520 $205 per Unit Total Utilities 355,168 $653 / U 383,520 $705 / U Other Expenses Other Expenses Estimated Other Expenses General & Admin Advertising/Marketing $59,155 $29,960 $109 per Unit $55 per Unit $54,400 $100 per Unit $40,800 $75 per Unit Repairs & Maintenance Cable $82,614 $54,104 $152 per Unit $99 per Unit $231,200 $425 per Unit $54,400 $100 per Unit ` Labor Costs (Inc. Insur.) $273,864 $503 per Unit $435,200 $800 per Unit Contract Services $56,519 $104 per Unit $68,000 $125 per Unit Management Fees $13, % $26 per U Estimated $91, % $167 per U Total Other Expense 570,170 $1,048 / U 975,067 $1,792 / U Total Operating Expense Reserve for Replacement Estimated 1,330,777 $2,446 / U 1,695,898 $3,117 / U 163,200 $300 / U 163,200 $300 / U Total Expense 1,493,977 $2,746 / U 1,859,098 $3,417 / U Net Operating Income (544,681) $1,001 / U 742,806 $1,365 / U Asking Price / Asking Price + Rehab Cap Rate Estimated New Debt Equity Debt Service Cash Flow Cash on Cash ACTUALS (As described below) Income is Nov 2010 Annualized Expenses are 2009 Actuals Except where noted NOTES ON ACTUALS: Income is Nov 2010 Annualized, Expenses are 2009 Actuals, Taxes are 2010 Assmt & 2009 Rate. Good Value Add Potential STABILIZED PRO FORMA Income is Estimated Expenses are Estimated Except where noted 3,500,000 without rehab 5,132,000 with rehab 15.56% 14.47% 3,079,200 with rehab 2,052,800 (249,492) 493, % NOTES ON PRO FORMA: Income is Estimated, Expenses are Estimated Based on the 2009 Actuals, Taxes are at the Pro Forma Assmt. and the 2009 Rate. The Pro Forma Tax Assmt. Is Est. at {100%} of the Asking Price. DISCLAIMER: The information contained in this Memorandum reflects material from sources deemed to be reliable, including data such as operating statements, rent rolls, etc provided by the Owner. Notwithstanding, Houston Income Properties, Inc. does not make any warranties about the information contained in this marketing package. Every prospective purchaser should verify the information and rely on his accountants or attorneys for tax and legal advice. This offering is "As-Is, Where-Is" and subject to prior withdrawal without notice. Answers to specific inquiries will have to be supplied by the Owner and are available upon request. Rates of return on this apartment investment vary daily. No representations are made concerning environmental issues, if any. Information about Brokerage Services has been provided with this offering memorandum. Page 3 of 16

4 Property Information Number of Units: 544 Approximate Net Rentable Area: 374,308 Date of Construction: 1976,79,80 Average Unit Size: 688 Roofs: Pitched Current Monthly Market Rent: $250,600 $461 / Unit $.67 / SF Post Rehab Stabilized Rents Used: $250,600 $461 / Unit $.67 / SF HVAC System: Individual Est. Rehab Needed : $1,632,000 $3,000 / Unit Metering: Electric Individual 2009 Rate / $100 of Value: Water Master 2010 Tax Assmt: $6,077,500 Est. Current Occupancy: 42% Post Sale Assessment Used: $3,500,000 STABILIZED PRO FORMA Income Current Market Rent with an approximate {0%} Rent Increase 3,007, ,600 Gain/(Loss) to Lease (30,072) 1% Vacancy, Credit and other Losses (390,936) 13% Credit/Concess/Admin/Other Rental Losses Estimated at {4.0%} (120,288) 4% Total Rental Income 2,465,904 82% Total Other Income Total Estimated Gross Annual Income 136,000 $250 / Unit 2,601,904 $216,825 / Mth Expenses Fixed Expenses Property Taxes (taxes are at 2009 Rate and pro forma assessment) 92,511 Pro Forma $170 / Unit Insurance 244,800 Est. $450 / Unit Total Fixed Expenses 337,311 $620 / Unit Management Fee is Estimated at { 3% } of the Estimated Gross Annual Income 91,067 $167 / Unit Payroll plus Burden 435,200 $800 / Unit Utilities (Water, Gas, and Electricity) 383,520 $705 / Unit Cable 54,400 $100 / Unit Repairs, Maintenance and Make Ready 231,200 $425 / Unit Marketing 40,800 $75 / Unit Contract Services (Landscaping, Pest Control, Refuse Removal, Courtesy Patrol) 68,000 $125 / Unit General and Administrative Costs 54,400 $100 / Unit Estimated Reserve for Replacement 163,200 $300 / Unit Total Expenses ~ (average Unit size is {688} Sq. Ft.) 1,859,098 $3,417 / Unit $4.97 / SF Estimated Stabilized Net Operating Income $742,806 Potential Value ~ Post Upgrades and Stabilization Estimated Potential Value Based on a Stabilized NOI of $742,806 Pro Forma Tax Assmt. Is Est. at {100%} of the Asking Price. Cap Rate 9.25% 9.50% 9.75% Value Generated $8,030,340 $14,762 / U $21.45 / SF $7,819,015 $14,373 / U $20.89 / SF $7,618,527 $14,005 / U $20.35 / SF Page 4 of 16

5 Cash Equity ($2,052,800) $0 $0 $0 $0 $0 Annual Cash Flow $0 $442,474 $466,249 $490,612 $515,571 $541,136 Net Proceeds from Sale (96% of the Sales Proceeds) $ $5,576,142 Total Cash Flow (Includes Amortization) ($2,052,800) $442,474 $466,249 $490,612 $515,571 $6,117,278 Total Discounted Cash In-flow {Rate Used is 9%} $405,939 $392,433 $378,842 $365,244 $3,975,811 5TH YEAR SALE ~ LEVERAGED INTERNAL RATE OF RETURN IS {39.12%} UNLEVERAGED Cash Equity ($5,132,000) $0 $0 $0 $0 $0 Annual Cash Flow (Without Debt Service) $0 $742,806 $769,987 $797,982 $826,818 $856,518 Net Proceeds from Sale (96% of the Sales Proceeds) $ $8,655,342 Total Cash Flow ($5,132,000) $742,806 $769,987 $797,982 $826,818 $9,511,860 Total Discounted Cash In-flow {Rate Used is 9%} $681,474 $648,082 $616,189 $585,738 $6,182,056 5TH YEAR SALE ~ UNLEVERAGED INTERNAL RATE OF RETURN IS {23.88%} Internal Rate of Return Analysis UNITS 544 SQ FT 374,308 Avg Unit Size 688 There is a {0%} Original Sales Price (At Asking Price) $ 3,500,000 rent increase year {$3,000} a Unit $ 1,632,000 1 "All In" Cost $ 5,132,000 MONTHLY INCOME Year 1 Year 1 Year 2 Year 3 Year 4 Year 5 Potential Income $250,600 $3,007,200 $3,097,416 $3,190,338 $3,286,049 $3,384,630 Other Income $11,333 $136,000 $140,080 $144,282 $148,611 $153,069 GROSS INCOME $261,933 $3,143,200 $3,237,496 $3,334,621 $3,434,660 $3,537,699 VAC./OTHER LOSSES ($541,296) ($557,535) ($574,261) ($591,489) ($609,233) Rate Used for Vacancy/Other Losses 18% 18% 18% 18% 18% EFFECTIVE GROSS INCOME $2,601,904 $2,679,961 $2,760,360 $2,843,171 $2,928,466 EXPENSES Operating Expenses ($1,695,898) ($1,746,775) ($1,799,178) ($1,853,153) ($1,908,748) Expenses/Unit $3,117 $3,211 $3,307 $3,407 $3,509 Reserve for {$300} per unit ($163,200) ($163,200) ($163,200) ($163,200) ($163,200) TOTAL EXPENSES ($1,859,098) ($1,909,975) ($1,962,378) ($2,016,353) ($2,071,948) Total Expenses/Unit $3,417 $3,511 $3,607 $3,707 $3,809 NET OPERATING INCOME $742,806 $769,987 $797,982 $826,818 $856,518 DEBT SERVICE $ (249,492) $ (249,492) $ (249,492) $ (249,492) $ (249,492) Amort Amort Amort Amort Amort ANNUAL CASH FLOW $493,315 $520,495 $548,490 $577,326 $607,026 Estimated Amortization $50,841 $54,246 $57,878 $61,755 $65,891 ANNUAL CASH FLOW INCLUDING AMORTIZATION $442,474 $466,249 $490,612 $515,571 $541,136 Debt Service Assumptions Used "All In" Cost $ 5,132,000 % Down of "All In" Cost 40% Est. Origianl Loan Amount $3,079,200 CASH EQUITY $ 2,052,800 Perm Financing rate 6.50% Annual Debt Service ($249,492) CASH ON CASH RETURN (Includes Amortization) 21.55% 22.71% 23.90% 25.12% 26.36% Assumptions taken for this Analysis are; Income was increased at 3% per year from year one and Expenses were increased at 3% per year from year one. Debt Service was calculated using the information in the Debt Service box above. INVESTMENT AND INTERNAL RATE OF RETURN SUMMARY Future Sales Price Cap 5th Year NOI $9,015, % $856,518 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 LEVERAGED Discount Rate Used is {9%} Yr. 5 Sales Summary Total Discounted Cash Flow (LEVERAGED) $5,518,269 Cash Equity Sales Proceeds 5th Yr Cash Flow IRR Original Investment $2,052,800 Leveraged $2,052,800 $5,576,142 $541, % Total Discounted Cash Flow (UNLEVERAGED) $8,713,540 Unleveraged $5,132,000 $8,655,342 $856, % Original Investment $5,132,000 Page 5 of 16

6 HOUSTON INCOME PROPERTIES, INC. (713) (713) ,202, 301 Hackberry Clute, TX Key Map: 884R Creekside Estates ~ Not Stabilized at sale ~ Average SF: 762 Sold Date: Jun-10 Sales Price: $2,976,000 Price Per Unit: Price Per SF: $14,171 $15.75 Remington ~ Not Stabilized at sale ~ Average SF: 789 Sold Date: Sales Price: Price Per Unit: Price Per SF: Oct-09 $2,433,333 $16,009 $20.37 Palms of Lake Jackson ~ Almost Stabilized at sale ~ Average SF: 1073 Sold Date: Sales Price: Price Per Unit: Price Per SF: Jan-10 $3,450,000 $18,750 $17.47 Fisherman's Wharf ~ Stabilized at sale ~ <> Average SF: 772 Sold Date: Sales Price: Dec-10 $10,500,000 Price Per Unit: $29,167 Price Per SF: $37.77 Apartment Sales Comparables Property Number Sold Total SF Avg/SF Creekside Estates Not Stabilized Jun ,928 Remington Not Stabilized Oct , Palms of Lake Jackson Almost Stabilized Jan ,440 Fisherman's Wharf Stabilized Price 762 $2,976,000 $18,750 $15.75 Dec , $10,500,000 $29,167 $37.77 Blt. $2,433,333 $16,009 $ ,073 $3,450,000 Pr./U $14,171 Pr./SF 1973 #/U $ Average Comps Only 195, ,839,833 $19,524 $ , Ashton Oaks Apartments I, II, III, 374, $3,500,000 $6,434 $ ,80 Page 6 of 16

7 HOUSTON INCOME PROPERTIES, INC. (713) (713) O'Connor & Associates Occupancy and Rent Survey - {Rent Comps) Competitive Properties within a 2 mile radius Custom Market Area, Sept Project Address Dist From Subj. Yr. Built Units SF/Unit Rent/Unit Rent/SF Occ.. Brighton Manor 401 Lakeview, Clute, TX $560 $ % Creekside Estates 200 Timbercreek Dr, Clute, TX $494 $ % Creekwood Landing 400 Timbercreek Dr. Clute, TX $589 $ % Fisherman's Wharf 200 Brazoswood, Clute, TX $517 $ % Royal Wildewood Manor 201 Dixie Dr, Clute, TX $538 $ % Sherwood Forest 100 Lakeview, Clute, TX $613 $ % Vanderbilt 101 Hackberry Dr, Clute, TX $381 $ % Rent Comp Averages 1, $527 $ % 1976,79, $461 $ % Submarket Averages "C" Properties 3, $524 $ % Houston "C" Market Averages 137, $584 $ % Houston "C" Market Subject's "C" Market Rent Comp Averages Sherwood Forest Creekwood Landing Brighton Manor Royal Wildewood Manor Fisherman's Wharf Creekside Estates Ashton Oaks Apartments Vanderbilt SUBJECT $381 $524 $527 $584 $613 $589 $560 $538 Rent/Unit $517 $494 $461 Rent Comparison Chart {Rent / Unit} $0 $100 $200 $300 $400 $500 $600 $700 SUBJECT Houston "C" Market Subject's "C" Market Rent Comp Averages Creekwood Landing Sherwood Forest Royal Wildewood Manor Fisherman's Wharf Ashton Oaks Brighton Manor Creekside Estates Vanderbilt SUBJECT $0.53 $0.72 $0.67 $0.67 $0.80 $0.73 $0.68 $0.68 $0.67 $0.66 $0.65 Rent/SF Rent Comparison Chart {Rent / SF} $.00 $.10 $.20 $.30 $.40 $.50 $.60 $.70 $.80 $.90 $1.00 Page 7 of 16

8 HOUSTON INCOME PROPERTIES, INC. (713) (713) ,202, 301 Hackberry Good Upside Potential Clute, TX with Stabilization Key Map: 884R PROPERTY TAX INFOR. BCAD NO , , , Taxing Authority Rate/$100 City of Clute Brazoria Cty & Rd Fund Velasco Drainage District Brazosport College Port Freeport Brazosport ISD 2009 Rate / $100 of Value: $ Tax Assmt: $6,077,500 Approx. Total Tax $160,639 CONSTRUCTION Hot Water - Gas Boiler: Elec Meter: HVAC: Master Mtr. Individual Individual Wiring: Materials: # of Stories:? Brick / Wood Siding 2 Water Meter: Master Parking: Open Spaces Access Gates: No # Buildings: 30 Roof: Pitched Units/Acre: AERIAL ~ PROPERTY AMENITIES Property Amenities ~ 24hr Emergency Maint, School Bus Pick up, Laundry Facilities, 3 Swimming Pools, Playground, Free Cable Television, AREA INFORMATION The Ashton Oaks Community is conveniently located off Hwy 32 and East Main. in Clute, Texas which lies in the Brazosport multi city community. The Brazosport community is located in south Texas in Brazoria County at the mouth of the Brazos and San Bernard rivers. The area is approximately 20 miles from the city limits of Houston, which is the fourth largest city in our nation. The Brazosport community includes the cities of Clute, Freeport, Brazoria, Jones Creek, Lake Jackson, Oyster Creek, Quintana, Richwood and Surfside Beach. Brazosport is the home of the largest basic chemical complex in the world, which includes chemical manufacturing, petro chemical processing, varied other manufacturing, offshore extraction support complexes, deep water port activities, airport, tourism, sports and commercial fishing, offering steady employment to a wide spectrum of workers. The Property s location to major employers in the area like the petrochemical complex and the deep water port facility and the property s close proximity to the city of Houston make this property a most desirable acquisition. The Brazosport Area ~ The Brazosport area is comprised of 270 sq. miles of City/Village area and 1,422 sq. miles of County area. Brazosport has long been recognized as the center of commerce for the Brazoria County area. The eight cities that make up the area are all located within a few minutes of each other north, south, east, and west. The area is located on the Texas Gulf Coast and is a short drive south of Houston. Recreation ~ Clute is virtually in the center of numerous recreational opportunities, including access to 23 miles of nearby public beach (Surfside, Bryan, and Quintana Beaches), over 72 acres of city parks, and numerous County/State/Federal parks or wildlife refuges. Situated only miles from the Gulf of Mexico and within 10 miles of the San Bernard and Brazos Rivers and on the banks of Oyster Creek, Clute, and the surrounding areas offers all imaginable water sports. In addition, only an hours drive up the Nolan Ryan Expressway (SH 288), Houston offers major league football, basketball, baseball and numerous other recreational opportunities. Club Creek Dr Black, 8.80% Asian, 3.00% Other, 11.10% Multi-Race, 2.30% 2009 DEMOGRAPHICS - Geography - 3 Mile Radius Estimated Population Mile Radius - 7,182 3 Mile Radius - 28,677 Population within a 3 mile radius White, 75.00% 2009 Housing Units Total Housing Units: 12,360 Occupied: 10,740 Owner Occupied: 6,105 Renter Occupied: 4,635 Vacant Units: 1,620 Estimated Average Income 1 Mile Radius Avg. Income Subject: $52,986 Avg. Income Clute: $52, Est. Hispanic Ethnicity-3 Mile Radius Of Hispanic Ethnicity 32% Not Hispanic 68% Page 8 of 16

9 HOUSTON INCOME PROPERTIES, INC. (713) (713) ,202, 301 Hackberry Clute, TX Key Map: 884R Area and Regional Economic Information Houston and Its Economy: According to Forbes Magazine, Joel Kotkin, a distinguished presidential fellow in urban futures at Chapman University, states that, if you want to see successful 21st century urbanism, hop on down to Houston and the Lone Star State. Houston added 141,000 residents, more than any region in the U.S. save the city's similarly sprawling rival, Dallas Fort Worth. Over the past decade Houston's population has grown by 24% five times the rate of San Francisco, Boston and New York. In that time it has attracted 244,000 new residents from other parts of the U.S., while older cities experienced high rates of out migration. It is even catching up on foreign immigration, enjoying a rate comparable with New York's and roughly 50% higher than that of Boston or Chicago. So what does Houston have that these other cities lack? Opportunity. Between 2000 and 2009 Houston's employment grew by 260,000. Greater New York City with nearly three times the population of Houston has added only 96,000 jobs. The Chicago area has lost 258,000 jobs, San Francisco 217,000, Los Angeles 168,000 and Boston 100,004. Other large cities talk about jobs, but by keeping taxes, fees and regulatory barriers high they discourage the creation of jobs, atleastin the private sector. A business in San Francisco or Los Angeles never knows what bizarre new cost will be imposed by city hall. In New York or Boston you can thrive as a nonprofit executive, high end consultant or financier, but if you are the owner of a business that wants to grow you're out of luck but not in Houston and the state of Texas these barriers are reduced substatially in favor of small business. The Texas economy is smoking. Since the collapse of the housing bubble Houston has outperformed Sunbelt counterparts like Phoenix, Las Vegas and Los Angeles. A big factor has been that manufacturing, professional services, international trade and technology industries have been the primary drivers of the city's economic growth rather than construction and speculation. Ironically, this has increased home values. Since 2007 prices of homes in Houston have ticked slightly higher, while those in Las Vegas, Phoenix, Los Angeles and the Bay Area each are down by more than 35%. Houston has considerably expanded its white collar workforce. According to the Praxis Strategy Group, Houston's ranks of college educated residents grew 13% between 2005 and That's about on par with "creative class" capital Portland, Ore. and well more than twice the rate for New York, San Francisco or Los Angeles. Houston's biggest advantage is ambition. Texas urbanites are busy constructing new suburban town centers, reviving inner city neighborhoods and expanding museums, recreational areas and other amenities. In contrast with recession battered places like Phoenix, Houston remains remarkably open to legal America and abroad. migrants from the rest of TheAshtonOaksislocatedinClute,TexasintheBrazosport Submarket of Houston. Clute is a city in Brazoria County, Texas within the Houston Sugar Land Baytown Metropolitan Area. Clute residents know the value of quiet living near the largest city in Texas. Less than an hour south of Houston and even closer to Galveston, this community offers a lot of small town safety and geographical convenience. This market consists of mainly "B" and "C" grade apartment communities. The property's location is within 20 miles of the Houston city limits and approx. 8 miles of the Gulf of Mexico. The accredited Brazosport I.S.D. services the area. The resident profile is predominately blue collar, working class with a high hispanic make up. The property is in the Brazosport ISD and is within walking distance of area schools. The property should see upside in the rents and occupancy with a moderate rehab / upgrades and strong management. Page 9 of 16

10 HOUSTON INCOME PROPERTIES, INC. (713) (713) O'Connor & Associates Apartment Market Statistical Overview - Summary SubMarket of Houston: BRAZOSPORT Sep REAL market.research@poconnor.com SubMarket Information Property / Unit Information A B C D Overall Total # Projects Total # Units 720 3,845 3, ,310 Total # Units 0BR N/A 1.20% 0.60% N/A 1.80% Total # Units 1BR 4.20% 21.10% 17.50% 3.00% 45.70% Total # Units 2BR 3.40% 16.70% 20.40% 2.80% 43.50% Total # Units 3BR 0.10% 5.20% 3.00% 0.20% 8.50% Total # Units 4BR N/A 0.40% 0.20% N/A 0.60% Avg Units per Project Avg SF Total # Units Under Construction N/A 146 N/A N/A 146 Total # Units Proposed 60 N/A N/A N/A 60 Occupancy A B C D Overall Avg Physical Occupancy 93.12% 89.77% 84.92% 74.25% 86.58% Avg Pre-Leased Occupancy 95.29% 91.59% 86.15% 77.27% 88.29% Rental Rates A B C D Overall Avg Market Rent/SF $0.97 $0.80 $0.67 $0.59 $0.75 Avg Market Rent/SF 0BR N/A $1.07 $0.95 N/A $1.03 Avg Market Rent/SF 1BR $1.01 $0.86 $0.69 $0.59 $0.79 Avg Market Rent/SF 2BR $0.95 $0.76 $0.65 $0.58 $0.71 Avg Market Rent/SF 3BR $0.95 $0.70 $0.66 $0.53 $0.68 Avg Market Rent/SF 4BR N/A $0.64 $0.67 N/A $0.65 Avg Market Rent/Unit $877 $644 $524 $498 $602 Avg Market Rent/Unit 0BR N/A $488 $401 N/A $459 Avg Market Rent/Unit 1BR $758 $545 $436 $372 $511 Avg Market Rent/Unit 2BR $1,032 $718 $570 $503 $659 Avg Market Rent/Unit 3BR $1,170 $826 $740 $553 $793 Avg Market Rent/Unit 4BR N/A $909 $936 N/A $917 Absorption (In Units) C Overall Current Month-to-Date Current Quarter-to-Date Year-to-Date Page 10 of 16

11 HOUSTON INCOME PROPERTIES, INC. (713) (713) O'Connor & Associates Apartment Market Statistical Overview - Summary Market(s): Houston Sep REAL market.research@poconnor.com Houston Rental Market Property / Unit Information A B C D Overall Total # Projects 575 1, ,579 Total # Units 154, , ,880 20, ,108 Total # Units 0BR 0.20% 1.00% 0.70% 0.00% 1.80% Total # Units 1BR 14.20% 22.50% 12.40% 1.50% 50.60% Total # Units 2BR 10.30% 17.10% 11.10% 1.90% 40.30% Total # Units 3BR 1.30% 3.00% 1.90% 0.40% 6.60% Total # Units 4BR 0.00% 0.30% 0.10% 0.00% 0.40% Avg Units per Project Avg SF Total # Units Under Construction 3,590 2,040 N/A N/A 5,630 Total # Units Proposed 3,043 1, N/A 4,918 Occupancy A B C D Overall Avg Physical Occupancy 91.32% 87.01% 82.86% 83.44% 87.05% Avg Pre-Leased Occupancy 93.35% 88.71% 84.70% 84.97% 88.88% Rental Rates A B C D Overall Avg Market Rent/SF $1.17 $0.83 $0.72 $0.64 $0.89 Avg Market Rent/SF 0BR $1.53 $1.06 $0.93 $0.83 $1.05 Avg Market Rent/SF 1BR $1.22 $0.88 $0.75 $0.67 $0.94 Avg Market Rent/SF 2BR $1.11 $0.79 $0.69 $0.62 $0.83 Avg Market Rent/SF 3BR $1.05 $0.74 $0.66 $0.57 $0.77 Avg Market Rent/SF 4BR $0.98 $0.65 $0.69 $0.63 $0.67 Avg Market Rent/Unit $1,115 $681 $584 $558 $766 Avg Market Rent/Unit 0BR $849 $488 $429 $413 $494 Avg Market Rent/Unit 1BR $956 $595 $501 $469 $670 Avg Market Rent/Unit 2BR $1,273 $761 $646 $588 $852 Avg Market Rent/Unit 3BR $1,487 $881 $801 $727 $972 Avg Market Rent/Unit 4BR $1,739 $859 $931 $792 $897 Absorption (In Units) C Overall Current Month-to-Date Current Quarter-to-Date Year-to-Date Page 11 of 16

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13 HOUSTON INCOME PROPERTIES, INC. (713) (713) Three Bed, Two and Half Bath 1,069 Square Feet Two Bed, One and One Half Bath 795 Square Feet Two Bed, Two Bath 857 Square Feet Two Bed, One Bath 800 Square Feet Two Bed, Two Bath 850 Square Feet One Bed, One Bath 575 Square Feet One Bed, One Bath 620 Square Feet One Bed, One Bath 475 Square Feet 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, andshouldalsoperformadetailed 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 13 of 16

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15 HOUSTON INCOME PROPERTIES, INC. (713) (713) Disclaimer: While the floodplain data that is shown on the map is the same, this map is not an official effective FEMA Flood Insurance Rate Map (FIRM). This map is for informational purposes only. For an official flood zone determination please contact your insurance agent or floodplain administrator. Please visit the FEMA Map Store at to create a FIRMette which is an official FEMA FIRM. Page 15 of 16

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