For more information contact: Commercial Investment Broker michael@svmultifamily.com BRE 01327546 Offering Price: $1,550,000 Unit Mix: (1) 3BR / 2BA, (1) 2BR / 1BA, (2) 1BR / 1BA 2 Parking Spaces per unit Strong Rental Location Close Proximity to Campbell Schools & City College Garage for 3/2 Unit; Carports for other units Patios/Balconies Below Market Rents -- Upside Rent Potential (Subject to San Jose Rent Control) Phone: Fax: 866-354-7420 401 Alberto Way, Suite 3 Los Gatos, CA 95032 www.siliconvalleymultifamily.com
Table of Contents Property Overview... 3 Executive Summary... 4 Real Estate Investment Details... 5 Property Description... 6 Unit Mix Report... 7 Property Photos... 8 Property Photos... 9 Maps and Aerials... 10 Financial Analysis... 12 Annual Property Operating Data... 13 Cash Flow Analysis... 15 Financial Indicators... 17 Pro Forma Summary... 19 Comparables... 20 Sales Comparables... 21 Demographics... 25 Executive Summary... 26 Disclaimer... 28
Property Overview
Executive Summary ACQUISITION COSTS Purchase Price, Points and Closing Costs $1,555,000 Investment - Cash $1,012,500 First Loan $542,500 INVESTMENT INFORMATION Purchase Price $1,550,000 Price per Unit $387,500 Price per Sq. Ft. $402.60 Income per Unit $16,392 Expenses per Unit ($10,655) INCOME, EXPENSES & CASH FLOW Gross Scheduled Income $65,568 Total Vacancy and Credits $0 Operating Expenses ($42,619) Net Operating Income $22,949 Debt Service ($31,080) Cash Flow Before Taxes ($8,131) Total Interest (Debt Service) ($21,526) Depreciation and Amortization ($28,681) Taxable Income (Loss) ($27,258) Tax Savings (Costs) $8,995 Cash Flow After Taxes $864 FINANCIAL INDICATORS Cash on Cash Return Before Taxes -0.80% Optimal Internal Rate of Return (yr 20) 4.84% Debt Coverage Ratio 0.74 Capitalization Rate 1.48% Gross Rent Multiplier 23.64 Gross Income / Square Feet $17.03 Gross Expenses / Square Feet ($11.07) Operating Expense Ratio 65.00% page 4 of 29
Real Estate Investment Details Analysis Analysis Date May 2017 Property Property Property Address Year Built 1965 Di Fiore Fourplex Purchase Information Property Type MultiFamily Purchase Price $1,550,000 Fair Market Value $1,555,000 Units 4 Total Rentable Sq. Ft. 3,850 Resale Valuation 3.0% (annual appreciation) Resale Expenses 6.0% Financial Information Down Payment $1,007,500 Closing Costs $5,000 LT Capital Gain 20.00% Federal Tax Rate 33.0% Discount Rate 3.00% Loans Type Debt Term Amortization Rate Payment LO Costs Fixed $542,500 30 years 30 years 4.0% $2,590 Income & Expenses Gross Operating Income $65,568 Monthly GOI $5,464 Total Annual Expenses ($42,619) Monthly Expenses ($3,552) Contact Information michael@svmultifamily.com BRE 01327546 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 5 of 29
Property Description Central San Jose Fourplex Units (1) 3/2, (1)2/1, (2) 1/1 Ideal first time investment property or owner occupied. This fourplex has an excellent unit mix with large units, is well located in a strong rental market, and is in very good condition. The property has one three bedroom-two bath unit, one two bedroom-one bath unit, and two one bedroom-one bath units. The three bedroom unit has two parking spaces: one in an attached, private garage, and another in the driveway, a private patio and a fireplace. The unit is approximately 1,500 SqFt. The two bedroom unit is approx. 900 SqFt and also has two parking spaces, one covered carport and another uncovered in the rear parking lot, as well as a balcony. The one bedroom units are approx. 725 SqFt have either a balcony or a patio, one covered parking space, and another on-site parking space. The property is in good condition with minimal deferred maintenance. The units are fully rented with longterm tenants. There is upside rent potential (subject to San Jose Rent control). The property has a concrete perimeter foundation, an asphalt driveway, composition shingle roof, and is stucco over wood frame construction. The property is located on cul-de-sac close to San Jose City College, near Campbell District schools, shopping malls, and hospitals. It is located close to commuter routes, Highway 280 and Highway 17, to allow easy access to nearby tech companies. page 6 of 29
Unit Mix Report UNIT MIXES Units Type Approx. SqFt Avg. Rents Monthly Mkt Rents Monthly 1 3BR/2BA 1500 $1,816 $1,816 $3,000 $3,000 1 1BR/1BA 725 $1,105 $1,105 $1,700 $1,700 1 1BR/1BA 725 $1,105 $1,105 $1,700 $1,700 1 2 BR / 1 BA 900 $1,438 $1,438 $2,000 $2,000 4 3,850 $5,464 $8,400 UNIT MIX UNIT MIX SQUARE FEET 3BR/2BA 1BR/1BA 1BR/1BA 2 BR / 1 BA 3BR/2BA 1BR/1BA 1BR/1BA 2 BR / 1 BA UNIT MIX INCOME UNIT MIX MARKET INCOME 3BR/2BA 1BR/1BA 1BR/1BA 2 BR / 1 BA 3BR/2BA 1BR/1BA 1BR/1BA 2 BR / 1 BA page 7 of 29
Property Photos Property Photos Front View Front View Side View Rear View Car Ports Side View page 8 of 29
Property Photographs Kitchen Kitchen Living Room/Dining Room Living Room Bathroom Bathroom page 9 of 29
Maps and Aerials Local Map Regional Map page 10 of 29
Maps and Aerials Aerial View Parcel Map page 11 of 29
Financial Analysis
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 $65,568 $68,846 $72,289 $75,903 $79,698 $83,683 $87,867 $92,261 $96,874 $101,717 GROSS SCHEDULED INCOME $65,568 $68,846 $72,289 $75,903 $79,698 $83,683 $87,867 $92,261 $96,874 $101,717 GROSS OPERATING INCOME $65,568 $68,846 $72,289 $75,903 $79,698 $83,683 $87,867 $92,261 $96,874 $101,717 Expenses Property Taxes ($18,603) ($18,789) ($18,977) ($19,167) ($19,358) ($19,552) ($19,747) ($19,945) ($20,144) ($20,346) Special Assessments ($1,686) ($1,686) ($1,686) ($1,686) ($1,686) ($1,686) ($1,686) ($1,686) ($1,686) ($1,686) Building Insurance ($1,656) ($1,706) ($1,757) ($1,810) ($1,864) ($1,920) ($1,977) ($2,037) ($2,098) ($2,161) Repairs ($7,328) ($7,548) ($7,774) ($8,008) ($8,248) ($8,495) ($8,750) ($9,013) ($9,283) ($9,561) Cleaning & maintenance ($3,000) ($3,090) ($3,183) ($3,278) ($3,377) ($3,478) ($3,582) ($3,690) ($3,800) ($3,914) Supplies & Misc ($4,005) ($4,125) ($4,249) ($4,376) ($4,508) ($4,643) ($4,782) ($4,926) ($5,073) ($5,226) Utilities ($6,341) ($6,531) ($6,727) ($6,929) ($7,137) ($7,351) ($7,571) ($7,799) ($8,033) ($8,274) TOTAL OPERATING EXPENSES ($42,619) ($43,475) ($44,353) ($45,253) ($46,177) ($47,125) ($48,097) ($49,094) ($50,117) ($51,167) NET OPERATING INCOME $22,949 $25,371 $27,936 $30,650 $33,521 $36,559 $39,771 $43,167 $46,756 $50,550 page 13 of 29
Annual Property Operating Data Description Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Rental Income $106,803 $112,144 $117,751 $123,638 $129,820 $136,311 $143,127 $150,283 $157,797 $165,687 GROSS SCHEDULED INCOME $106,803 $112,144 $117,751 $123,638 $129,820 $136,311 $143,127 $150,283 $157,797 $165,687 GROSS OPERATING INCOME $106,803 $112,144 $117,751 $123,638 $129,820 $136,311 $143,127 $150,283 $157,797 $165,687 Expenses Property Taxes ($20,549) ($20,755) ($20,962) ($21,172) ($21,384) ($21,598) ($21,813) ($22,032) ($22,252) ($22,474) Special Assessments ($1,686) ($1,686) ($1,686) ($1,686) ($1,686) ($1,686) ($1,686) ($1,686) ($1,686) ($1,686) Building Insurance ($2,226) ($2,292) ($2,361) ($2,432) ($2,505) ($2,580) ($2,657) ($2,737) ($2,819) ($2,904) Repairs ($9,848) ($10,144) ($10,448) ($10,761) ($11,084) ($11,417) ($11,759) ($12,112) ($12,475) ($12,850) Cleaning & maintenance ($4,032) ($4,153) ($4,277) ($4,406) ($4,538) ($4,674) ($4,814) ($4,959) ($5,107) ($5,261) Supplies & Misc ($5,382) ($5,544) ($5,710) ($5,881) ($6,058) ($6,240) ($6,427) ($6,620) ($6,818) ($7,023) Utilities ($8,522) ($8,777) ($9,041) ($9,312) ($9,591) ($9,879) ($10,175) ($10,481) ($10,795) ($11,119) TOTAL OPERATING EXPENSES ($52,245) ($53,351) ($54,486) ($55,650) ($56,846) ($58,073) ($59,333) ($60,626) ($61,953) ($63,316) NET OPERATING INCOME $54,558 $58,793 $63,265 $67,988 $72,974 $78,238 $83,794 $89,657 $95,844 $102,371 page 14 of 29
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 $65,568 $68,846 $72,289 $75,903 $79,698 $83,683 $87,867 $92,261 $96,874 $101,717 Total Operating Expenses ($42,619) ($43,475) ($44,353) ($45,253) ($46,177) ($47,125) ($48,097) ($49,094) ($50,117) ($51,167) NET OPERATING INCOME $22,949 $25,371 $27,936 $30,650 $33,521 $36,559 $39,771 $43,167 $46,756 $50,550 Loan Payment ($31,080) ($31,080) ($31,080) ($31,080) ($31,080) ($31,080) ($31,080) ($31,080) ($31,080) ($31,080) NET CASH FLOW (b/t) ($8,131) ($5,708) ($3,144) ($430) $2,442 $5,479 $8,691 $12,087 $15,677 $19,470 Cash On Cash Return b/t -0.80% -0.56% -0.31% -0.04% 0.24% 0.54% 0.86% 1.19% 1.55% 1.92% NET OPERATING INCOME $22,949 $25,371 $27,936 $30,650 $33,521 $36,559 $39,771 $43,167 $46,756 $50,550 Depreciation ($28,681) ($29,932) ($29,932) ($29,932) ($29,932) ($29,932) ($29,932) ($29,932) ($29,932) ($29,932) Loan Interest ($21,526) ($21,137) ($20,732) ($20,310) ($19,871) ($19,415) ($18,940) ($18,445) ($17,930) ($17,394) TAXABLE INCOME (LOSS) ($27,258) ($25,698) ($22,728) ($19,593) ($16,282) ($12,788) ($9,101) ($5,210) ($1,106) $3,223 Income Taxes $8,995 $8,480 $7,500 $6,466 $5,373 $4,220 $3,003 $1,719 $365 ($1,064) CASH FLOW (a/t) $864 $2,772 $4,356 $6,036 $7,815 $9,699 $11,694 $13,806 $16,042 $18,407 Cash On Cash Return a/t 0.09% 0.27% 0.43% 0.60% 0.77% 0.96% 1.15% 1.36% 1.58% 1.82% Footnotes: b/t = before taxes;a/t = after taxes page 15 of 29
Cash Flow Analysis Description Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 GROSS SCHEDULED INCOME $106,803 $112,144 $117,751 $123,638 $129,820 $136,311 $143,127 $150,283 $157,797 $165,687 Total Operating Expenses ($52,245) ($53,351) ($54,486) ($55,650) ($56,846) ($58,073) ($59,333) ($60,626) ($61,953) ($63,316) NET OPERATING INCOME $54,558 $58,793 $63,265 $67,988 $72,974 $78,238 $83,794 $89,657 $95,844 $102,371 Loan Payment ($31,080) ($31,080) ($31,080) ($31,080) ($31,080) ($31,080) ($31,080) ($31,080) ($31,080) ($31,080) NET CASH FLOW (b/t) $23,479 $27,713 $32,185 $36,908 $41,895 $47,159 $52,714 $58,578 $64,764 $71,291 Cash On Cash Return b/t 2.32% 2.74% 3.18% 3.65% 4.14% 4.66% 5.21% 5.79% 6.40% 7.04% NET OPERATING INCOME $54,558 $58,793 $63,265 $67,988 $72,974 $78,238 $83,794 $89,657 $95,844 $102,371 Depreciation ($29,932) ($29,932) ($29,932) ($29,932) ($29,932) ($29,932) ($29,932) ($29,932) ($29,932) ($28,685) Loan Interest ($16,837) ($16,257) ($15,653) ($15,024) ($14,370) ($13,689) ($12,981) ($12,243) ($11,476) ($10,677) TAXABLE INCOME (LOSS) $7,789 $12,604 $17,680 $23,032 $28,672 $34,617 $40,881 $47,482 $54,436 $63,009 Income Taxes ($2,570) ($4,159) ($5,834) ($7,600) ($9,462) ($11,424) ($13,491) ($15,669) ($17,964) ($20,793) CASH FLOW (a/t) $20,908 $23,554 $26,351 $29,308 $32,433 $35,735 $39,224 $42,909 $46,800 $50,498 Cash On Cash Return a/t 2.07% 2.33% 2.60% 2.89% 3.20% 3.53% 3.87% 4.24% 4.62% 4.99% Footnotes: b/t = before taxes;a/t = after taxes page 16 of 29
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 24.43 23.96 23.51 23.06 22.62 22.19 21.77 21.35 20.94 20.55 Capitalization Rate 1.48% 1.64% 1.80% 1.98% 2.16% 2.36% 2.57% 2.78% 3.02% 3.26% Cash On Cash Return b/t -0.80% -0.56% -0.31% -0.04% 0.24% 0.54% 0.86% 1.19% 1.55% 1.92% Cash On Cash Return a/t 0.09% 0.27% 0.43% 0.60% 0.77% 0.96% 1.15% 1.36% 1.58% 1.82% Debt Coverage Ratio 0.74 0.82 0.90 0.99 1.08 1.18 1.28 1.39 1.50 1.63 Gross Income per Sq. Ft. $17.03 $17.88 $18.78 $19.72 $20.70 $21.74 $22.82 $23.96 $25.16 $26.42 Expenses per Sq. Ft. ($11.07) ($11.29) ($11.52) ($11.75) ($11.99) ($12.24) ($12.49) ($12.75) ($13.02) ($13.29) Net Income Multiplier 69.79 65.02 60.82 57.10 53.78 50.79 48.09 45.63 43.39 41.34 Operating Expense Ratio 65.00% 63.15% 61.36% 59.62% 57.94% 56.31% 54.74% 53.21% 51.73% 50.30% Loan To Value Ratio 33.27% 31.70% 30.17% 28.68% 27.22% 25.80% 24.41% 23.06% 21.74% 20.45% Footnotes: b/t = before taxes; a/t = after taxes page 17 of 29
Financial Indicators Description Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Gross Rent Multiplier 20.15 19.77 19.39 19.02 18.66 18.31 17.96 17.62 17.28 16.95 Capitalization Rate 3.52% 3.79% 4.08% 4.39% 4.71% 5.05% 5.41% 5.78% 6.18% 6.60% Cash On Cash Return b/t 2.32% 2.74% 3.18% 3.65% 4.14% 4.66% 5.21% 5.79% 6.40% 7.04% Cash On Cash Return a/t 2.07% 2.33% 2.60% 2.89% 3.20% 3.53% 3.87% 4.24% 4.62% 4.99% Debt Coverage Ratio 1.76 1.89 2.04 2.19 2.35 2.52 2.70 2.88 3.08 3.29 Gross Income per Sq. Ft. $27.74 $29.13 $30.58 $32.11 $33.72 $35.41 $37.18 $39.03 $40.99 $43.04 Expenses per Sq. Ft. ($13.57) ($13.86) ($14.15) ($14.45) ($14.77) ($15.08) ($15.41) ($15.75) ($16.09) ($16.45) Net Income Multiplier 39.45 37.71 36.10 34.60 33.20 31.89 30.67 29.53 28.45 27.43 Operating Expense Ratio 48.92% 47.57% 46.27% 45.01% 43.79% 42.60% 41.45% 40.34% 39.26% 38.21% Loan To Value Ratio 19.19% 17.97% 16.77% 15.60% 14.45% 13.34% 12.24% 11.17% 10.13% 9.11% Footnotes: b/t = before taxes; a/t = after taxes page 18 of 29
Pro Forma Summary UNIT MIX & ANNUAL SCHEDULED INCOME Type Units Actual Total Market Total 3BR/2BA 1 $21,792 $21,792 $36,000 $36,000 1BR/1BA 1 $13,260 $13,260 $20,400 $20,400 1BR/1BA 1 $13,260 $13,260 $20,400 $20,400 2 BR / 1 BA 1 $17,256 $17,256 $24,000 $24,000 TOTALS 4 $65,568 $100,800 INVESTMENT SUMMARY Price: $1,550,000 Year Built: 1965 Units: 4 Price/Unit: $387,500 RSF: 3,850 Price/RSF: $402.60 Lot Size: 6,836 sf ANNUALIZED INCOME Actual Market Gross Potential Rent $65,568 $100,800 Less: Vacancy $0 $0 Effective Gross Income $65,568 $100,800 Less: Expenses ($42,619) ($39,614) Net Operating Income $22,949 $61,186 Debt Service ($31,080) ($31,080) Net Cash Flow after Debt Service ($8,131) $30,106 Principal Reduction $9,554 $9,554 Total Return $1,423 $39,660 Floors: 2 Parking Spaces: 2/unit APN: 282-40-018 Cap Rate: 1.48% Market Cap Rate: 3.95% GRM: 23.64 Market GRM: 15.38 FINANCING SUMMARY Loan Amount: $542,500 Down Payment: $1,007,500 Loan Type: Fixed Interest Rate: 4% Term: 30 years ANNUALIZED EXPENSES Actual Market Property Taxes $18,603 $18,603 Special Assessments $1,686 $1,686 Building Insurance $1,656 $1,656 Repairs $7,328 $7,328 Cleaning & maintenance $3,000 $3,000 Supplies & Misc $4,005 $1,000 Utilities $6,341 $6,341 Total Expenses $42,619 $39,614 Expenses Per RSF $11.07 $10.29 Expenses Per Unit $10,655 $9,904 Monthly Payment: $2,590 DCR:.74 page 19 of 29
Comparables
Sales Comparables 8% Cap Rate 24.0 Gross Rent Multiplier 7% 21.0 6% 5% 18.0 15.0 Avg. 17.0 4% 3% Avg. 3.55 12.0 9.0 2% 6.0 1% 3.0 Subject 1 2 3 Subject 1 2 3 $400,000 $350,000 Price per Unit Avg. $384,375 $456 $399 Price per Sq. Ft. Avg. $399.63 $300,000 $342 $250,000 $285 $200,000 $228 $150,000 $171 $100,000 $114 $50,000 $57 Subject 1 3 Subject 1 2 3 page 21 of 29
Sales Comparables S Di Fiore Fourplex Sale Price $1,550,000 Units 4 Price/Unit $387,500 Price/SqFt $402.60 Cap Rate 1.48% Year Built 1965 GRM 23.64 # Units Unit Type 1 3BR/2BA 1 1BR/1BA 1 1BR/1BA 1 2 BR / 1 BA 1 Sale Date 12/2/2016 Southwest Fourplex 1910 Southwest Expressway San Jose, CA 95126 Sale Price $1,575,000 Units 4 Price/Unit $393,750 Price/SqFt $338.78 Cap Rate 3.22% Year Built 1969 GRM 18.4 # Units Unit Type 1 Three Bedroom Two Bath 3 Two Bedroom One Bath 2 Sale Date 10/7/2016 Moorpark Fourplex 1539 Moorpark Avenue Sale Price $1,525,000 Units 0 Price/Unit N/A Price/SqFt $406.13 Cap Rate 3.35% Year Built N/A GRM 17.0 # Units Unit Type 1 Three Bedroom Two Bath 3 Two Bedroom One Bath page 22 of 29
Sales Comparables 3 Sale Date 1/2/2017 2469 Olive Ave Sale Price $1,500,000 Units 4 Price/Unit $375,000 Price/SqFt $454.00 Cap Rate 4.08% Year Built 1962 GRM 15.6 # Units Unit Type 4 Two Bedroom Two Bath page 23 of 29
Sales Comparables S San Jose, CA, 95128 $1,550,000 1 1910 Southwest Expressway San Jose, CA, 95126 $1,575,000 2 1539 Moorpark Avenue San Jose, CA, 95128 $1,525,000 3 2469 Olive Ave San Jose, CA, 95128 $1,500,000 page 24 of 29
Demographics
Population Executive Summary, San Jose, California, 95128 Prepared by Esri Rings: 1, 3, 5 mile radii Latitude: 37.31122 Longitude: -121.92430 1 mile 3 miles 5 miles 2000 Population 32,126 222,815 562,684 2010 Population 33,144 236,089 590,311 2016 Population 36,069 253,180 630,124 2021 Population 38,968 270,381 671,808 2000-2010 Annual Rate 0.31% 0.58% 0.48% 2010-2016 Annual Rate 1.36% 1.12% 1.05% 2016-2021 Annual Rate 1.56% 1.32% 1.29% 2016 Male Population 50.1% 50.7% 50.4% 2016 Female Population 49.9% 49.3% 49.6% 2016 Median Age 34.1 35.8 36.2 In the identified area, the current year population is 630,124. In 2010, the Census count in the area was 590,311. The rate of change since 2010 was 1.05% annually. The five-year projection for the population in the area is 671,808 representing a change of 1.29% annually from 2016 to 2021. Currently, the population is 50.4% male and 49.6% female. Median Age The median age in this area is 34.1, compared to U.S. median age of 38.0. Race and Ethnicity 2016 White Alone 49.8% 55.9% 49.5% 2016 Black Alone 5.2% 4.2% 3.2% 2016 American Indian/Alaska Native Alone 1.1% 0.9% 0.8% 2016 Asian Alone 15.1% 17.5% 26.6% 2016 Pacific Islander Alone 0.5% 0.4% 0.4% 2016 Other Race 21.9% 15.0% 13.8% 2016 Two or More Races 6.4% 6.1% 5.6% 2016 Hispanic Origin (Any Race) 44.0% 32.9% 30.6% Persons of Hispanic origin represent 30.6% of the population in the identified area compared to 17.9% 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 81.8 in the identified area, compared to 63.5 for the U.S. as a whole. Households 2000 Households 12,329 86,275 198,935 2010 Households 12,836 92,044 211,790 2016 Total Households 13,802 97,905 223,725 2021 Total Households 14,857 104,466 237,992 2000-2010 Annual Rate 0.40% 0.65% 0.63% 2010-2016 Annual Rate 1.17% 0.99% 0.88% 2016-2021 Annual Rate 1.48% 1.31% 1.24% 2016 Average Household Size 2.57 2.50 2.75 The household count in this area has changed from 211,790 in 2010 to 223,725 in the current year, a change of 0.88% annually. The fiveyear projection of households is 237,992, a change of 1.24% annually from the current year total. Average household size is currently 2.75, compared to 2.72 in the year 2010. The number of families in the current year is 145,373 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 2016 and 2021. Esri converted Census 2000 data into 2010 geography. April 18, 2017 2016 Esri Page 1 of 2
Median Household Income Executive Summary, San Jose, California, 95128 Prepared by Esri Rings: 1, 3, 5 mile radii Latitude: 37.31122 Longitude: -121.92430 1 mile 3 miles 5 miles 2016 Median Household Income $56,834 $74,102 $79,077 2021 Median Household Income $63,275 $82,661 $88,609 2016-2021 Annual Rate 2.17% 2.21% 2.30% Average Household Income 2016 Average Household Income $84,212 $102,847 $106,850 2021 Average Household Income $92,343 $111,940 $116,362 2016-2021 Annual Rate 1.86% 1.71% 1.72% Per Capita Income 2016 Per Capita Income $33,313 $40,714 $38,661 2021 Per Capita Income $36,267 $44,134 $41,907 2016-2021 Annual Rate 1.71% 1.63% 1.63% Households by Income Current median household income is $79,077 in the area, compared to $54,149 for all U.S. households. Median household income is projected to be $88,609 in five years, compared to $59,476 for all U.S. households Current average household income is $106,850 in this area, compared to $77,008 for all U.S. households. Average household income is projected to be $116,362 in five years, compared to $84,021 for all U.S. households Current per capita income is $38,661 in the area, compared to the U.S. per capita income of $29,472. The per capita income is projected to be $41,907 in five years, compared to $32,025 for all U.S. households Housing 2000 Total Housing Units 12,540 88,526 203,347 2000 Owner Occupied Housing Units 3,804 37,268 102,474 2000 Renter Occupied Housing Units 8,525 49,007 96,461 2000 Vacant Housing Units 211 2,251 4,412 2010 Total Housing Units 13,631 97,813 222,160 2010 Owner Occupied Housing Units 4,426 39,622 106,785 2010 Renter Occupied Housing Units 8,410 52,422 105,005 2010 Vacant Housing Units 795 5,769 10,370 2016 Total Housing Units 14,392 103,147 233,655 2016 Owner Occupied Housing Units 4,496 40,253 108,432 2016 Renter Occupied Housing Units 9,306 57,652 115,293 2016 Vacant Housing Units 590 5,242 9,930 2021 Total Housing Units 15,510 110,154 248,868 2021 Owner Occupied Housing Units 4,715 42,280 114,138 2021 Renter Occupied Housing Units 10,142 62,185 123,854 2021 Vacant Housing Units 653 5,688 10,876 Currently, 46.4% of the 233,655 housing units in the area are owner occupied; 49.3%, renter occupied; and 4.2% are vacant. Currently, in the U.S., 55.4% of the housing units in the area are owner occupied; 32.9% are renter occupied; and 11.7% are vacant. In 2010, there were 222,160 housing units in the area - 48.1% owner occupied, 47.3% renter occupied, and 4.7% vacant. The annual rate of change in housing units since 2010 is 2.27%. Median home value in the area is $670,556, compared to a median home value of $198,891 for the U.S. In five years, median value is projected to change by 0.69% annually to $693,953. Data Note: Income is expressed in current dollars Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2016 and 2021. Esri converted Census 2000 data into 2010 geography. April 18, 2017 2016 Esri Page 2 of 2
DISCLAIMER All materials and information received or derived from Silicon Valley Multifamily Group (SVMG) its directors, officers, agents, advisors, 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 SVMG its directors, officers, agents, 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. SVMG will not investigate or verify any such matters or conduct due diligence for a party unless otherwise agreed in writing. PLEASE NOTE: The Seller(s) desires to sell the property in "its present physical condition (as-is) subject to inspection and 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 those 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. SVMG makes no warranties and/or representations regarding the veracity, completeness, or relevance of any financial data or assumptions. SVMG 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 the units, lot or the building and are making NO representation as to the accuracy of square footage figures. Data source for building size and lot size is provided by an online resource such as that provided by Chicago Title Company. SVMG is not responsible for errors in the data. 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. Unless otherwise indicated, 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 SVMG. All properties and services are marketed by SVMG in compliance with all applicable fair housing and equal opportunity laws. page 28 of 29
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 either previous year actual levels or annualized current income. 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 Forma 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. 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 provided through the Chicago Title Company online resource. 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. SVMG, 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 current 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 reflects projected rents, not current rent levels. Projected 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 29 of 29