4 units on Ross Ross Circle San Jose, CA List Price $925,000

Transcription

1 For more information contact: Apartment / Investment Broker michael@svmultifamily.com Lic Erik Nielsen Apartment Agent erik@svmultifamily.com Lic List Price $925,000 Easy to Rent, Highly Desirable Unit Mix: (4) 2BR/1BA units Well Maintained Fourplex. Market Financials: 5.55% Cap Rate; 11.7 GRM Current Financials: 4.32% Cap Rate; 13.8 GRM UPSIDE RENT POTENTIAL! Carports, On-site Laundry, Large Units, Double-Paned Windows. Close to shopping and commuter routes Phone: Fax: E. Hamilton Ave., Suite 100 Campbell, CA

2 Table of Contents SECTION 1 - PROPERTY OVERVIEW SECTION 2 - FINANCIAL ANALYSIS SECTION 3 - COMPARABLES SECTION 4 - DEMOGRAPHICS

3 Property Overview

4 Real Estate Investment Details ANALYSIS Analysis Date: September 2013 PROPERTY Property: Property Address: Year Built: units on Ross PURCHASE INFORMATION Property Type: MultiFamily Purchase Price: $925,000 Fair Market Value: $925,000 Units: 4 Total Rentable Sq. Ft.: 3,674 Resale Valuation 3.0% (annual appreciation) Resale Expenses: 6.0% FINANCIAL INFORMATION Down Payment: $399,420 Closing Costs: $2,500 LT Capital Gain: 20.00% Federal Tax Rate: 34.0% State Tax Rate: 9.4% Passive Loss Rules: Yes Discount Rate: 3.00% LOANS Debt Term Amortization Rate Payment LO Costs Fixed $525, years 30 years 4.5% $2,663 $5,256 INCOME & EXPENSES Gross Operating Income: $65,147 Monthly GOI: $5,429 Total Annual Expenses: ($25,201) Monthly Expenses: ($2,100) CONTACT INFORMATION michael@svmultifamily.com Lic Erik Nielsen erik@svmultifamily.com Lic The calculations and data presented are deemed to be accurate, but not guaranteed. They are intended for the purpose of illustrative projections and analysis. The information provided is not intended to replace or serve as substitute for any legal, accounting, investment, real estate, tax or other professional advice, consultation or service. The user of this software should consult with a professional in the respective legal, accounting, tax or other professional area before making any decisions. page 4 of 31

5 Executive Summary ACQUISITION COSTS Purchase Price, Points and Closing Costs $932,756 Investment - Cash $407,176 First Loan $525,580 INVESTMENT INFORMATION Purchase Price $925,000 Price per Unit $231,250 Price per Sq. Ft. $ Income per Unit $16,770 Expenses per Unit ($6,300) INCOME, EXPENSES & CASH FLOW Gross Scheduled Income $67,080 Total Vacancy and Credits ($1,933) Operating Expenses ($25,201) Net Operating Income $39,946 Debt Service ($31,956) Cash Flow Before Taxes $7,989 Total Interest (Debt Service) ($23,478) Depreciation and Amortization ($13,847) Taxable Income (Loss) $2,621 Tax Savings (Costs) ($1,138) Cash Flow After Taxes $6,851 FINANCIAL INDICATORS Cash on Cash Return Before Taxes 1.96% Optimal Internal Rate of Return (yr 10) 6.96% Debt Coverage Ratio 1.25 Capitalization Rate 4.32% Gross Rent Multiplier Gross Income / Square Feet $18.26 Gross Expenses / Square Feet ($6.86) Operating Expense Ratio 38.68% page 5 of 31

6 Property Description Well Maintained Fourplex in West San Jose Desirable Units: Four Large, 2 bed / 1 bath Units This investment property is a well maintained, two-story four-unit apartment building located in West San Jose. All units are two-bedroom, onebath units (approx 850 sf/ea), are fully rented. Current Annual Income is $67,080. The two upstairs units have been renovated with new kitchens including cabinets, granite counter tops & appliances. The bathrooms have also been remodeled. The opportunity exists for rents to be raised to market levels (Note: San Jose has rent control allowing landlords to raise rents by 8% annually or 21% if not raised in the last two years). The building is 3,674 sf on a 8,100 sf lot. The property has a four-stall carport with two uncovered spaces and ample street parking. There is large hot water heater which serves all the units. The building has been well maintained with some recent upgrades, including newer paint and composite roofing. The building consists of a wood frame structure with a stucco exterior, concrete perimeter foundation, asphalt driveway, and flat roof in good condition. Tenants pay individual utilities including gas heating, electric, phone & cable. Owner pays maintenance, trash removal, water & sewer, common area lighting and gas for hot water. The Home Owners Association fee is $222/month and pays for the maintenance of the park-like area in the center of Ross Circle and additional police patrols to ensure resident safety. The HOA governs only CC&R's and does not manage any of the buildings on Ross Circle. This fourplex is located in a highly desirable rental area of San Jose due to its proximity employment, shopping, and entertainment. The property is located in residential area of San Jose on a street of comparable, well maintained fourplexes. Values and rents for fourplexes in this area tend to remain strong due to its location. This area is considered to be a robust rental market. Rents are currently rising due to the strength of the Silicon Valley economy and strong employment market. page 6 of 31

7 1715 Ross Ave Market: San Jose Metro Submarket: Ross Village County: Santa Clara APN: Location Highlights West San Jose Significant Rent Growth in 2011 & 2012 Robust Rent Growth Project by economists Low Vacancy Rate due to Strong Rental Demand Location Overview CADILLAC APARTMENTS I. PROPERTY INFORMATION The property is located in the City of San Jose, known as the "Capital of Silicon Valley." San Jose is the largest city in the San Francisco Bay Area and boasts a robust economy with employment growth that is among the strongest in the Country. San Jose is located in Santa Clara County, the largest county within the Bay Area with more than 34% of the region's total employment. Over the coming years, population is expected to grow by 6.3%, and employment is expected to grow by 13.6% in a variety of fields including professional and business services (notably high technology), education services and health care services. Silicon Valley also has one of highest concentrations of highand microprocessor companies in the world, resulting in strong employment in high paying fields with the highest average salary per worker ($98,430) in the state. Moreover, personal income in the county technology, engineering, computer, is also expected to grow by 22.7%. Silicon Valley also receives 50% - 60% of all Venture Capital funding nationwide. This is due in large part to a favorable business climate for start-ups, the availability of skilled labor, and an excellent secondary educational system. Area schools such as the University of California, Berkeley, Stanford University, San Jose State University, Santa Clara University, San Francisco State University, University of California, Santa Cruz, and California State University, East Bay pump thousandss of engineering and computer science graduates into the locall labor market every year. The multifamily rental market in Silicon Valley is expected to experience significant growth over the coming years due to robust job growth, a young, mobile workforce, extraordinarily high single family housing prices, a chronic shortage of a affordable housing, and a chronically low development pro le due to cost, permitting and land availability. These factors have caused rents to rise dramatically in 2011, with significant rent increases projected by local and national economists over the next five years. Moreover, institutional investors for large multifamily properties consisting of 100 or more units have re- entered the market in high numbers and are reinvesting at an extremely aggressive rate, paying on average a 5.4% cap rate one of the lowest rates for multifamily properties nationwide. page 7 of 31

8 Property Photos Property Photos 1 page 8 of 31

9 Property Photos 2 Two-Bedroom One-Bath Units Spacious living areas Some renovated kitchens with new cabinets Some renovated bathrooms with new tub enclosures Some New Appliances page 9 of 31 New Granite Countertops

10 Unit Mix Report UNIT MIXES Units Type Approx. SqFt Avg. Rents Monthly Mkt Rents Monthly 1 Two Bed / One Bath 850 $1,295 $1,295 $1,600 $1,600 1 Two Bed / One Bath 850 $1,295 $1,295 $1,600 $1,600 1 Two Bed / One Bath 850 $1,400 $1,400 $1,600 $1,600 1 Two Bed / One Bath 850 $1,380 $1,380 $1,600 $1, ,400 $5,370 $6,400 UNIT MIX UNIT MIX SQUARE FEET UNIT MIX INCOME UNIT MIX MARKET INCOME page 10 of 31

11 Maps and Aerials Location Maps Regional Map Neighborhood Map page 11 of 31

12 Maps and Aerials Aerial & Parcel Maps Aerial Map Parcel Map page 12 of 31

13 Financial Analysis

14 Annual Property Operating Data Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Rental Income $64,440 $66,373 $68,364 $70,415 $72,528 $74,704 $76,945 $79,253 $81,631 $84,080 Miscellaneous Income $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 GROSS SCHEDULED INCOME $67,080 $69,013 $71,004 $73,055 $75,168 $77,344 $79,585 $81,893 $84,271 $86,720 Turnover Vacancy ($1,933) ($1,991) ($2,051) ($2,112) ($2,176) ($2,241) ($2,308) ($2,378) ($2,449) ($2,522) GROSS OPERATING INCOME $65,147 $67,022 $68,953 $70,943 $72,992 $75,103 $77,276 $79,515 $81,822 $84,197 Expenses Property Taxes ($11,563) ($11,679) ($11,795) ($11,913) ($12,033) ($12,153) ($12,274) ($12,397) ($12,521) ($12,646) Insurance ($1,642) ($1,691) ($1,742) ($1,794) ($1,848) ($1,904) ($1,961) ($2,019) ($2,080) ($2,142) Utilities - Gas & Electric ($969) ($998) ($1,028) ($1,059) ($1,090) ($1,123) ($1,157) ($1,191) ($1,227) ($1,264) Utilities - Water & Sewer ($2,159) ($2,224) ($2,291) ($2,359) ($2,430) ($2,503) ($2,578) ($2,656) ($2,735) ($2,817) Trash Removal ($1,664) ($1,714) ($1,765) ($1,818) ($1,873) ($1,929) ($1,987) ($2,046) ($2,108) ($2,171) Landscaping & Pest Control ($1,644) ($1,693) ($1,744) ($1,796) ($1,850) ($1,906) ($1,963) ($2,022) ($2,083) ($2,145) Maintenance & Repairs ($1,716) ($1,768) ($1,821) ($1,875) ($1,932) ($1,989) ($2,049) ($2,111) ($2,174) ($2,239) Cleaning and Misc. ($748) ($770) ($794) ($817) ($842) ($867) ($893) ($920) ($948) ($976) Homeowners Association ($2,664) ($2,744) ($2,826) ($2,911) ($2,998) ($3,088) ($3,181) ($3,276) ($3,375) ($3,476) License / Permits ($236) ($243) ($251) ($258) ($266) ($274) ($282) ($291) ($299) ($308) Fire Extinguisher Certification ($196) ($196) ($196) ($196) ($196) ($196) ($196) ($196) ($196) ($196) TOTAL OPERATING EXPENSES ($25,201) ($25,720) ($26,252) ($26,798) ($27,358) ($27,932) ($28,521) ($29,125) ($29,745) ($30,381) page 14 of 31

15 Annual Property Operating Data Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 NET OPERATING INCOME $39,946 $41,302 $42,701 $44,145 $45,634 $47,170 $48,755 $50,390 $52,076 $53,816 page 15 of 31

16 Cash Flow Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 GROSS SCHEDULED INCOME $67,080 $69,013 $71,004 $73,055 $75,168 $77,344 $79,585 $81,893 $84,271 $86,720 Turnover Vacancy ($1,933) ($1,991) ($2,051) ($2,112) ($2,176) ($2,241) ($2,308) ($2,378) ($2,449) ($2,522) Total Operating Expenses ($25,201) ($25,720) ($26,252) ($26,798) ($27,358) ($27,932) ($28,521) ($29,125) ($29,745) ($30,381) NET OPERATING INCOME $39,946 $41,302 $42,701 $44,145 $45,634 $47,170 $48,755 $50,390 $52,076 $53,816 Loan Payment ($31,956) ($31,956) ($31,956) ($31,956) ($31,956) ($31,956) ($31,956) ($31,956) ($31,956) ($31,956) NET CASH FLOW (b/t) $7,989 $9,345 $10,745 $12,188 $13,678 $15,214 $16,799 $18,434 $20,120 $21,859 Cash On Cash Return b/t 1.96% 2.30% 2.64% 2.99% 3.36% 3.74% 4.13% 4.53% 4.94% 5.37% NET OPERATING INCOME $39,946 $41,302 $42,701 $44,145 $45,634 $47,170 $48,755 $50,390 $52,076 $53,816 Depreciation ($13,671) ($14,268) ($14,268) ($14,268) ($14,268) ($14,268) ($14,268) ($14,268) ($14,268) ($13,673) Amortization ($175) ($175) ($175) ($175) ($175) ($175) ($175) ($175) ($175) ($175) Loan Interest ($23,478) ($23,088) ($22,681) ($22,255) ($21,809) ($21,343) ($20,855) ($20,345) ($19,812) ($19,254) TAXABLE INCOME (LOSS) $2,621 $3,771 $5,577 $7,447 $9,382 $11,385 $13,457 $15,602 $17,822 $20,714 Income Taxes ($1,138) ($1,636) ($2,421) ($3,232) ($4,072) ($4,941) ($5,840) ($6,771) ($7,735) ($8,990) CASH FLOW (a/t) $6,851 $7,709 $8,324 $8,956 $9,606 $10,273 $10,958 $11,662 $12,385 $12,870 Cash On Cash Return a/t 1.68% 1.89% 2.04% 2.20% 2.36% 2.52% 2.69% 2.86% 3.04% 3.16% Footnotes: b/t = before taxes;a/t = after taxes page 16 of 31

17 Financial Indicators Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Gross Rent Multiplier Capitalization Rate 4.32% 4.47% 4.62% 4.77% 4.93% 5.10% 5.27% 5.45% 5.63% 5.82% Cash On Cash Return b/t 1.96% 2.30% 2.64% 2.99% 3.36% 3.74% 4.13% 4.53% 4.94% 5.37% Cash On Cash Return a/t 1.68% 1.89% 2.04% 2.20% 2.36% 2.52% 2.69% 2.86% 3.04% 3.16% Debt Coverage Ratio Gross Income per Sq. Ft. $18.26 $18.78 $19.33 $19.88 $20.46 $21.05 $21.66 $22.29 $22.94 $23.60 Expenses per Sq. Ft. ($6.86) ($7.00) ($7.15) ($7.29) ($7.45) ($7.60) ($7.76) ($7.93) ($8.10) ($8.27) Net Income Multiplier Operating Expense Ratio 38.68% 38.38% 38.07% 37.77% 37.48% 37.19% 36.91% 36.63% 36.35% 36.08% Loan To Value Ratio 54.27% 51.79% 49.36% 46.99% 44.68% 42.42% 40.21% 38.04% 35.93% 33.86% Footnotes: b/t = before taxes; a/t = after taxes page 17 of 31

18 Loan Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 LOAN 1 Debt Service Analysis Principal Payments $8,479 $8,868 $9,276 $9,702 $10,148 $10,614 $11,101 $11,611 $12,145 $12,703 Interest Payments $23,478 $23,088 $22,681 $22,255 $21,809 $21,343 $20,855 $20,345 $19,812 $19,254 Total Debt Service $31,956 $31,956 $31,956 $31,956 $31,956 $31,956 $31,956 $31,956 $31,956 $31,956 Principal Balance Analysis Beginning Principal Balance $525,580 $517,101 $508,233 $498,957 $489,255 $479,108 $468,494 $457,393 $445,781 $433,637 Principal Reductions $8,479 $8,868 $9,276 $9,702 $10,148 $10,614 $11,101 $11,611 $12,145 $12,703 Ending Principal Balance $517,101 $508,233 $498,957 $489,255 $479,108 $468,494 $457,393 $445,781 $433,637 $420,934 page 18 of 31

19 Pro Forma Summary INCOME Actual Per Unit Market Per Unit Gross Potential Rent $64,440 $16,110 $76,800 $19,200 Less: Vacancy ($1,933) ($483) ($2,304) ($576) Misc. Income $2,640 $660 $2,052 $513 Effective Gross Income $65,147 $16,287 $76,548 $19,137 OPERATING EXPENSES Actual Per Unit Market Per Unit Property Taxes $11,563 $2,891 $11,563 $2,891 Insurance $1,642 $411 $1,642 $411 Utilities - Gas & Electric $969 $242 $969 $242 Utilities - Water & Sewer $2,159 $540 $2,159 $540 Trash Removal $1,664 $416 $1,665 $416 Landscaping & Pest Control $1,644 $411 $1,644 $411 Maintenance & Repairs $1,716 $429 $1,716 $429 Cleaning and Misc. $748 $187 $748 $187 Homeowners Association Dues $2,664 $666 $2,664 $666 License / Permits $236 $59 $236 $59 Fire Extinguisher Certification $196 $49 $196 $49 Total Expenses ($25,201) ($6,300) ($25,202) ($6,301) Net Operating Income $39,946 $9,986 $51,346 $12,836 page 19 of 31

20 Pro Forma Summary UNIT MIX & ANNUAL SCHEDULED INCOME Type Units Actual Total Market Total Two Bed / One Bath 1 $15,540 $15,540 $19,200 $19,200 Two Bed / One Bath 1 $15,540 $15,540 $19,200 $19,200 Two Bed / One Bath 1 $16,800 $16,800 $19,200 $19,200 Two Bed / One Bath 1 $16,560 $16,560 $19,200 $19,200 TOTALS 4 $64,440 $76,800 INVESTMENT SUMMARY Price: $925,000 Year Built: 1963 Units: 4 Price/Unit: $231,250 RSF: 3,674 Price/RSF: $ Lot Size: 8,100 sf Floors: 2 ANNUALIZED INCOME Actual Market Gross Potential Rent $64,440 $76,800 Less: Vacancy ($1,933) ($2,304) Misc. Income $2,640 $2,052 Effective Gross Income $65,147 $76,548 Less: Expenses ($25,201) ($25,202) Net Operating Income $39,946 $51,346 Debt Service ($31,956) ($31,956) Net Cash Flow after Debt Service $7,989 $19,389 Principal Reduction $8,479 $8,479 Total Return $16,468 $27,868 Parking Spaces: 1.5/unit APN: Cap Rate: 4.32% Market Cap Rate: 5.55% GRM: 13.8 Market GRM: 11.7 FINANCING SUMMARY Loan Amount: $525,580 Down Payment: $399,420 Loan Type: Fixed Interest Rate: 4.5% Term: 30 years Monthly Payment: $2,663 DCR: 1.25 ANNUALIZED EXPENSES Actual Market Property Taxes $11,563 $11,563 Insurance $1,642 $1,642 Utilities - Gas & Electric $969 $969 Utilities - Water & Sewer $2,159 $2,159 Trash Removal $1,664 $1,665 Landscaping & Pest Control $1,644 $1,644 Maintenance & Repairs $1,716 $1,716 Cleaning and Misc. $748 $748 Homeowners Association Dues $2,664 $2,664 License / Permits $236 $236 Fire Extinguisher Certification $196 $196 Total Expenses $25,201 $25,202 Expenses Per RSF $6.86 $6.86 Expenses Per Unit $6,300 $6,301 page 20 of 31

21 Investment Return Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Cash Flow - To Date $6,851 $14,560 $22,885 $31,841 $41,447 $51,720 $62,678 $74,340 $86,726 $99,595 Net Resale Proceeds $380,689 $410,626 $438,145 $467,007 $496,998 $528,161 $560,537 $594,170 $629,107 $665,543 Invested Capital ($407,176) ($407,176) ($407,176) ($407,176) ($407,176) ($407,176) ($407,176) ($407,176) ($407,176) ($407,176) Net Return on Investment ($19,636) $18,010 $53,854 $91,672 $131,269 $172,705 $216,039 $261,335 $308,657 $357,963 Internal Rate of Return N/A 2.21% 4.30% 5.34% 5.94% 6.31% 6.57% 6.74% 6.87% 6.96% Modified IRR -4.82% 2.21% 4.28% 5.28% 5.84% 6.18% 6.40% 6.54% 6.63% 6.69% NPV (cash flow + reversion) ($29,819) ($3,556) $20,187 $44,981 $70,565 $96,918 $124,018 $151,846 $180,381 $209,715 PV (NOI + reversion) $908,282 $947,213 $986,291 $1,025,513 $1,064,877 $1,104,382 $1,144,024 $1,183,803 $1,223,715 $1,263,759 Footnotes: a/t = after taxes; Modified IRR = Modified Internal Rate of Return; PV = Present Value; NPV = Net Present Value; NOI = Net Operating Income Reversion = Amount received from the resale; Net Return on Investment = Cash Flow (a/t To Date) + Net Proceeds from Resale - Invested Capital. page 21 of 31

22 Comparables

23 Sales Comparables 8% Cap Rate 16.0 Gross Rent Multiplier 7% 6% Avg % 4% Avg % 6.0 2% 4.0 1% 2.0 Subject Subject $240,000 $210,000 Price per Unit Avg. $216,171 $264 $231 Price per Sq. Ft. Avg. $ $180,000 $198 $150,000 $165 $120,000 $132 $90,000 $99 $60,000 $66 $30,000 $33 Subject Subject page 23 of 31

24 Sales Comparables S 4 units on Ross NOTES Desireable 4-plex located in a quiet, sheltered neighborhood community. Immediate to retail centers including a Safeway anchor and Hwy 85 access. Four 2-bedroom 1-bath units fully rented with upside rent potential. Sale Price $925,000 Units 4 Price/Unit $231,250 Price/SqFt $ Cap Rate 4.32% Year Built 1963 GRM # Units Unit Type 1 Two Bed / One Bath 1 Two Bed / One Bath 1 Two Bed / One Bath 1 Two Bed / One Bath 1 Ross Fourplex 1733 Ross Circle Sale Date 1/29/2013 Sale Price $930,000 Units 4 Price/Unit $232,500 Price/SqFt $ Cap Rate 5.09% Year Built 1963 GRM 13.6 # Units Unit Type 4 Two Bedroom One Bath NOTES Listing Agent Notes: Great remodeled w/new cabinets, wood floors (easy to clean, low maintenance, tenants love them), great Cambrian school, close 2 shop, hwy, school. Single family home environment/park in middle & maple tree lined. More parking due corner lot. Double pane windows, Newer paint in/out. Central heating. Good enough to live in and have tenant pay your mortgage. 2 Ross Fourplex 1744 Ross Circle Sale Date 2/3/2013 Sale Price $853,733 Units 4 Price/Unit $213,433 Price/SqFt $ Cap Rate 5.31% Year Built 1963 GRM 13.0 # Units Unit Type 4 Two Bedroom One Bath NOTES Listing Agent Notes: Great four unit complex in Cambrian area. Close to shops, schools, and freeway. Easy to rent. New landscape and sprinkler systems. page 24 of 31

25 Sales Comparables 3 Ross Fourplex 1719 Ross Circle san jose, CA Sale Date 10/26/2012 Sale Price $840,000 Units 4 Price/Unit $210,000 Price/SqFt $ Cap Rate 4.98% Year Built 1963 GRM 13.0 # Units Unit Type 4 Two Bedroom One Bath NOTES Listing Agent Notes: Great Cambrian Fourplex, Fully occupied with stable tenants. Great location close to shopping, dining, and 1 minute freeway access. 4 units with 2 bedroom and one bath and 4 carports (1 per unit). Good interior and exterior condition. Building is located across from green area. Carports and laundry are in the back Merrill Dr Sale Date 3/30/2013 Sale Price $835,000 Units 4 Price/Unit $208,750 Price/SqFt $ Cap Rate 3.76% Year Built 1963 GRM 15.0 # Units Unit Type 4 Two Bedroom One Bath NOTES Listing agent notes: Fourplex in Cambrian with great schools. Rents are currently under market. All units 2bd/1ba. Fenced common patio area. Close to Hwy 85 and walking distance to shopping. page 25 of 31

26 Sales Comparables S, ($925,000) Ross Circle, ($930,000) Ross Circle, ($853,733) Ross Circle, san jose, CA ($840,000) Merrill Dr, ($835,000) page 26 of 31

27 Demographics

28 Population Executive Summary 1715 Ross Cir, San Jose, CA, Prepared by Michael Shields Ring: 0.5 mile radius Latitude: Longitude: miles 1 mile 2 miles 2000 Population 5,682 24,239 86, Population 5,652 24,124 87, Population 5,721 24,620 88, Population 5,922 25,843 92, Annual Rate -0.05% -0.05% 0.09% Annual Rate 0.54% 0.91% 0.69% Annual Rate 0.69% 0.97% 0.80% 2012 Male Population 50.2% 50.1% 49.4% 2012 Female Population 49.8% 49.9% 50.6% 2012 Median Age In the identified area, the current year population is 88,515. In 2010, the Census count in the area was 87,155. The rate of change since 2010 was 0.69% annually. The five-year projection for the population in the area is 92,134 representing a change of 0.80% annually from 2012 to Currently, the population is 49.4% male and 50.6% female. Median Age The median age in this area is 39.8, compared to U.S. median age of Race and Ethnicity 2012 White Alone 68.7% 69.1% 70.3% 2012 Black Alone 2.2% 2.0% 1.9% 2012 American Indian/Alaska Native Alone 0.7% 0.7% 0.7% 2012 Asian Alone 15.4% 13.5% 13.7% 2012 Pacific Islander Alone 0.3% 0.3% 0.3% 2012 Other Race 6.4% 8.0% 7.2% 2012 Two or More Races 6.2% 6.3% 5.9% 2012 Hispanic Origin (Any Race) 18.9% 21.2% 20.2% Persons of Hispanic origin represent 20.2% of the population in the identified area compared to 16.9% of the U.S. population. Persons of Hispanic Origin may be of any race. The Diversity Index, which measures the probability that two people from the same area will be from different race/ethnic groups, is 65.2 in the identified area, compared to 61.4 for the U.S. as a whole. Households 2000 Households 1,918 8,533 30, Households 1,912 8,480 31, Total Households 1,933 8,651 31, Total Households 2,011 9,129 33, Annual Rate -0.03% -0.06% 0.09% Annual Rate 0.49% 0.89% 0.64% Annual Rate 0.79% 1.08% 0.90% 2012 Average Household Size The household count in this area has changed from 31,215 in 2010 to 31,667 in the current year, a change of 0.64% annually. The five-year projection of households is 33,118, a change of 0.90% annually from the current year total. Average household size is currently 2.78, compared to 2.77 in the year The number of families in the current year is 23,208 in the specified area. Data Note: Income is expressed in current dollars Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2012 and Esri converted Census 2000 data into 2010 geography. August 29, Esri Page 1 of 2

29 Median Household Income Executive Summary 1715 Ross Cir, San Jose, CA, Prepared by Michael Shields Ring: 2 mile radius Latitude: Longitude: miles 1 mile 2 miles 2012 Median Household Income $94,132 $87,507 $89, Median Household Income $101,261 $96,962 $99, Annual Rate 1.47% 2.07% 2.14% Average Household Income 2012 Average Household Income $111,011 $104,608 $109, Average Household Income $127,295 $119,843 $127, Annual Rate 2.78% 2.76% 2.98% Per Capita Income 2012 Per Capita Income $37,772 $36,925 $39, Per Capita Income $43,517 $42,499 $46, Annual Rate 2.87% 2.85% 3.06% Households by Income Current median household income is $89,562 in the area, compared to $50,157 for all U.S. households. Median household income is projected to be $99,583 in five years, compared to $56,895 for all U.S. households Current average household income is $109,821 in this area, compared to $68,162 for all U.S households. Average household income is projected to be $127,219 in five years, compared to $77,137 for all U.S. households Current per capita income is $39,595 in the area, compared to the U.S. per capita income of $26,409. The per capita income is projected to be $46,039 in five years, compared to $29,882 for all U.S. households Housing 2000 Total Housing Units 1,934 8,555 31, Owner Occupied Housing Units 1,416 6,017 22, Owner Occupied Housing Units 501 2,516 8, Vacant Housing Units Total Housing Units 1,952 8,673 32, Owner Occupied Housing Units 1,454 6,033 22, Renter Occupied Housing Units 458 2,447 8, Vacant Housing Units Total Housing Units 1,970 8,811 32, Owner Occupied Housing Units 1,437 5,984 22, Renter Occupied Housing Units 496 2,667 9, Vacant Housing Units Total Housing Units 2,042 9,264 34, Owner Occupied Housing Units 1,511 6,372 23, Renter Occupied Housing Units 501 2,756 9, Vacant Housing Units Currently, 68.1% of the 32,548 housing units in the area are owner occupied; 29.2%, renter occupied; and 2.7% are vacant. Currently, in the U.S., 56.5% of the housing units in the area are owner occupied; 32.1% are renter occupied; and 11.4% are vacant. In 2010, there were 32,083 housing units in the area % owner occupied, 27.6% renter occupied, and 2.7% vacant. The annual rate of change in housing units since 2010 is 0.64%. Median home value in the area is $548,653, compared to a median home value of $167,749 for the U.S. In five years, median value is projected to change by 2.00% annually to $605,676. Data Note: Income is expressed in current dollars Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2012 and Esri converted Census 2000 data into 2010 geography. August 29, Esri Page 2 of 2

30 DISCLAIMER All materials and information received or derived from Silicon Valley Multifamily Group its directors, officers, agents, advisors, affiliates, and/or any third party sources are provided without representation or warranty as to completeness, veracity, or accuracy, condition of the property, compliance or lack of compliance with applicable governmental requirements, developability or suitability, financial performance of the property, projected financial performance of the property for any party s intended use or any and all other matters. Neither Silicon Valley Multifamily Group its directors, officers, agents, advisors, or affiliates makes any representation or warranty, express or implied, as to accuracy or completeness of the any materials or information provided, derived, or received. Materials and information from any source, whether written or verbal, that may be furnished for review are not a substitute for a party s active conduct of its own due diligence to determine these and other matters of significant chance to such party. Silicon Valley Multifamily Group will not investigate or verify any such matters or conduct due diligence for a party unless otherwise agreed in writing. Seller desires to sell the property in "its present as is condition" subject to inspection reports. EACH PARTY SHALL CONDUCT ITS OWN INDEPENDENT INVESTIGATION AND DUE DILIGENCE. Any party contemplating or under contract or in escrow for a transaction is urged to verify all information and to conduct their own inspections and investigations including through appropriate third party independent professionals selected by such party. All financial data should be verified by the party including by obtaining and reading applicable documents and reports and consulting appropriate independent professionals. Silicon Valley Multifamily Group makes no warranties and/or representations regarding the veracity, completeness, or relevance of any financial data or assumptions. Silicon Valley Multifamily Group does not serve as a financial advisor to any party regarding any proposed transaction. When analyzing this property buyer should use income, vacancy and expense levels that will accurately reflect the manner in which it plans to operate the property. Broker, Agent and Seller are making no representations or warranties as to the level of income or expenses Buyer will incur at the property. Building square footage, unit square footage and lot sizes are not guaranteed. Broker, Agent and Seller have not measured all units, lot or the building and are making NO representation as to the accuracy of square footage figures. Data source for building and lot size is FastWeb. Buyer should measure all units, lot and the building prior to purchase and should not rely on any square footage figures provided by Broker, Agent or Seller. All data and assumptions regarding financial performance, including that used for financial modeling purposes, may differ from actual data or performance. Any estimates of market rents and/or projected rents that may be provided to a party do not necessarily mean that rents can be established at or increased to that level. Parties must evaluate any applicable contractual and governmental limitations as well as market conditions, vacancy factors and other issues in order to determine rents from or for the property. Legal questions should be discussed by the party with an attorney. Tax questions should be discussed by the party with a certified public accountant or tax attorney. Title questions should be discussed by the party with a title officer or attorney. Questions regarding the condition of the property and whether the property complies with applicable governmental requirements should be discussed by the party with appropriate engineers, architects, contractors, other consultants and governmental agencies. Do Not Disturb -- Please respect the Seller's request that the tenants not be disturbed. All offers are to be written subject to inspection. The Seller will provide access for the Buyer to inspect the interiors of all units within a reasonable period following a fully executed purchase contract. Seller requests that all inspections be made on the same day. Representation -- This information is given with the understanding that all negotiations relating to the purchase of the property described herein shall be conducted through Silicon Valley Multifamily Group. All properties and services are marketed by Silicon Valley Multifamily Group in compliance with all applicable fair housing and equal opportunity laws. page 30 of 31

31 OFFERING MEMORANDUM NOTES Gross Annual Scheduled Income & the Gross Rent Multiplier are based on current rents shown in the Rent Roll. These rent levels are current rent levels at the time this package was prepared and subject to change without notice. Buyer should review most recent rent roll prior to purchase. The laundry income was based on 2011 actual levels. Gross Annual Scheduled Income & Gross Income Multiplier (Market or Pro Forma) assumes the units are all rented at the rent levels shown in the Pro Form Summary. These rent levels are not guaranteed to be achievable by Seller, Broker or Agent. Buyer should use rent levels it thinks it can obtain for the subject property. The laundry income was based on the actual 2011 laundry income reported by the owner. Capitalization Rate is based on rents, expenses and vacancy figures shown in the Operating Statement. Pro Forma Capitalization Rate is based on rents, expenses and vacancy figures shown in the Pro-Forma Operating Statement Pro-Forma (Market) column. See Pro Forma Operating Statement Footnotes and Disclaimers in this section of the Offering Memorandum. Year Built: Data source is through Chicago Title Company. Seller, Broker and Agent are making no guarantee or representations as to when the improvements were built. Buyer should conduct its own investigation to determine age of improvements. UNIT MIX/SCHEDULED INCOME OVERVIEW FOOTNOTES Current Rent Column is based on current rents shown in the Rent Roll. These rent levels are current rent levels at the time this package was prepared and subject to change without notice. Buyer should review most recent rent roll prior to purchase. Pro Forma or Market Rents assumes the units are all rented at the estimated market rent levels shown in the rent roll. Please note that current rents are not at these levels. Pro Forma rent levels are not guaranteed to be achievable by Seller, Broker or Agent. Buyer should use rent levels it thinks it can obtain for the subject property. Purchase Information on page 4 including Fair Market Value, Resale Valuation and Resale Expenses are provided for illustrative purposes only and will vary depending on market conditions and other factors. Silicon Valley Multifamily Group, its Brokers and Agents can not be held accountable for these numbers. Buyer should use the numbers it thinks most appropriate. Financial Information on page 4 including Down Payment, Closing Costs, LT Capital Gain, Federal and State Tax Rates and the Discount Rate are provided for illustrative purposes only. Actual numbers may, and probably will, vary depending on the Buyer s individual situation. Loans on page 4. This information is provided for illustrative purposes only. Buyer should use the loan information it thinks attainable and realistic for the property. Annual Property Operating Data Notes and Disclaimers Rental Income is based on current rents shown in the Rent Roll Miscellaneous income is based upon information provided by the owner or manager. General Vacancy is estimated to be at current market levels or provided by owner. Taxes are estimated based on list price and based on 2011/2012 tax rate reported by Santa Clara County. Other Expenses All other expenses are as reported by owner or property manager. Loan Payment is based upon information provided in the LOANS section of page 4. Buyer should use the loan information it thinks attainable and realistic for the property. Income Taxes is based upon a 33% or greater tax rate and is provided for illustrative purposes only. Buyer should consult with a licensed tax professional in determining the most realistic and appropriate tax rate. NOTE: THE 10 YEAR PROJECTIONS ARE PROVIDED FOR ILLUSTRATIVE PURPOSES ONLY. BUYER SHOULD USE THE PROJECTIONS IT THINKS ARE REALISTIC AND ATTAINABLE. Rent Roll Notes General Notes: Rent levels, occupancy, deposit amounts and terms are subject to change without notice. Move-In dates are subject to change as units turnover. Buyer should obtain updated information and confirm all rent levels, lease terms, move-in dates, amount of last rental adjustment and deposit amounts prior to purchase. Market Rent column does not reflect current rent levels. These rent levels are not guaranteed to be achievable by Seller, Broker or Agents. Buyer should use rent levels it thinks it can obtain for the subject property. page 31 of 31