This opportunity is to acquire a residential portfolio in Merced with tenants in place and property management available. The portfolio consists of six houses and one duplex. That were during the California Central Velley real estate collapse from 2007 thru 2011. The timeline diagram below diagram covers my personal thirty-year experience as an investor and real estate broker in the Merced / Atwater market. Read it from left to right, and top to bottom. Across the top are the rents for a one bedroom apartment. Sales prices in Merced have been on a roller coaster since the 1980s, are now trending up, and still below replacement cost, with a growing population. Big near term negative, long term positive. President Clinton closed Castle Air Force base in the 1990s an action that devastated the local real estate market. Residential landlords went from full occupancy of military tenants to a poor leftover. Numerous commercial, industrial, warehouse buildings from the Air Force Base became available to the public at the same time. Tremendous vacancy across the market, driving rents lower into a vicious cycle for landlords. Massive positive future direction of the Merced community established when the State of California selected Merced as the next University of California campus from ~90 applicants. The UC Merced campus, student enrollment and economic benefits continue to increase daily. Very positive impact on the community. Current rental market is functionally full, and each new tenant rents at a higher rate.. Page 1 of 7 Mark Yandow, Broker BRE #00594950 (805) 550-7388
The following transactions identified in the above diagram have been isolated for easier visibility. This list are sales of fourplexes in the same subdivision and same block. The properties are functionally the same. 1986 $ 120,000 (2890 Determine) 2005 $ 447,000 (1140 Swaps) 2009 $ 91,000 (1140 Swaps) Oct 2017 $ 259,000 (1141 Swaps) During this time single family was on the same roller coaster. There were approximately sixty (60) subdivisions in process at the peak of the market in Merced - - this dropped to zero along with all the extended employment of a construction industry. Prices fell by approximately 80% from the peak in 2005-2006 until late 2010. Houses that sold for $250,000 dropped to $50,000. Houses from $ 600,000 dropped to $ 250,000. The available portfolio of property was acquired from 2008 to 2010 all through the foreclosure process. After acquisition, each property went through a similar remodel: Exterior paint Interior paint Flooring (carpet, ceramic tile) Window coverings Appliances The objective during the holding period was full occupancy, steady income and not maximization of rent. All rents are below current market rents and are month to month. It should be planned that all properties will need paint, floor coverings and window coverings upon a tenant replacement. The following table identifies the individual property and the information reflected in the property profiles that are available online. Property Address Location Acquired Bd BA Sq Ft Lot Price Est 2008 Peak $$ 1099 Barney Merced CA 2010 3 1 878 8,276 160,000 250,000 1111 Barney Merced CA 2009 3 1 806 8,276 160,000 250,000 1680 Cypress Merced CA 2009 2 1 773 6,098 165,000 250,000 2324 Q Street Merced CA 2010 2 2 1,250 5,001 200,000 350,000 1580 Ronnie Merced CA Jun-05 3 1 1,500 5,027 175,000 250,000 1701 Rose Merced CA 2009 2 1 790 7,405 170,000 250,000 1731 Rose Merced CA 2009 3 1 1,000 1,000 170,000 250,000 18 8 6,997 41,083 1,200,000 1,850,000 Page 2 of 7 Mark Yandow, Broker BRE #00594950 (805) 550-7388
All properties are located within 5 minutes of each other, except for the duplex on Q Street which is about ten minutes. Our property management office is located at the Merced Park Apartments. 1580 Ronnie Street, Merced, CA 95340 Rent $ 850 Two story Downstairs: Living Room, Kitchen, Bathroom Upstairs: 2 bedrooms, lots of closets Worst house on the block of track homes (3/2 or 4/2) 1680 Cypress Street, Merced, CA 95340 Rent $ 850 Single story 2 bedroom, 1 bath Old detached garage 1701 Rose Rent $ 950 3 bedroom, 1 bath, single story No garage Remodel: in & out; carpet; ceramic tile Tenant moved in 2009 Page 3 of 7 Mark Yandow, Broker BRE #00594950 (805) 550-7388
1731 Rose, Merced, CA 95340 Rent $850 3 bedroom, 1 bath, single story, 1099 Barney, Merced, CA 95340 Rent $ 850 Single story 2 bd, 1 ba, 1111 Barney, Merced, CA 95340 Rent $ 850 Single story 3 bedroom, 1 bath 2324 Q, Merced, CA 95340 Rent-A $ 585 Single story units Rent-B $ 625 Living space on second floor 1 bd, 1 ba, stall shower, gas heat, wall AC Common utility room, garages + carports Two garages and 4 carport slots Page 4 of 7 Mark Yandow, Broker BRE #00594950 (805) 550-7388
Income collected in 2017 $ 75,889 The following report shows the income collected for the portfolio properties in 2017. The first four digits of the unit number is the street address. (i.e. 1701 = 1701 Rose) Income collected in 2016 $ 71,118 Income collected in 2015 $ 68,512 Page 5 of 7 Mark Yandow, Broker BRE #00594950 (805) 550-7388
Projected Property Cash Flow Current Rents The following table reflects current income and recurring expenses. Purchase Scenario The portfolio is available for $ 1,200,000. Using the above cash flow this would reflect a cap rate around 4% for property in a growing city below replacement cost and at ~70 percent of previous peak pricing in 2005-2006. Merced is one of the very few cities in California that has not fully to returned to peak pricing. These houses and duplex are basic entry level homes with minimum of amenities. The portfolio was selected for their locations near neighborhood resources, public transit and a good rental pool. Four properties are in an IRA and can be closed at anytime, three need to go into a 1031 Property owner is a licensed real estate broker in California Please call with any questions. All offers will be: Subject to inspection of interior condition within one week Subject to proof of funds in hand Sale will be in as is condition. Take all the above info into consideration as part of your decision process. Mark S Yandow Page 6 of 7 Mark Yandow, Broker BRE #00594950 (805) 550-7388
Merced MLS Pending and Comps Zip Code: 95340, 2 bedrooms, 1 bath, under 1,000 sq ft The above search was run January 10th. Page 7 of 7 Mark Yandow, Broker BRE #00594950 (805) 550-7388