Offering Memorandum
The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB's or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS. M0040084
SECTION 1 - Investment Summary SECTION 2 - Pricing & Financial Analysis SECTION 3 - Property Description SECTION 4 - Recent Sales SECTION 5 - Rent Comparables SECTION 6 - Demographic Analysis M0040084
INVESTMENT SUMMARY
Investment Highlights Well Established Property Lots Of Upside Lack of Housing in This Market 12.2% Cash On Cash Return The subject properties are 2 manufactured housing communities located less than 1/2 mile from each other operated as one community. Park number 2 is located at 1707 Stewart Road. The properties are situated on apprixomately 20.21 acres cumulatively and have 119 spaces. Also included in the sale are approximately 58 mobile homes that are being leased. The homes are mostly 1970's models, but there are 1980's and 1990's models in the mix. The properties feature asphalt and gravel roads, with some curbs, city water and sewer, lots of trees, signed entrances, perimeter fencing, childrens play area and picnic area, onsite office, a 25'x52' work shed, mail kiosks and lots that average 40'x100' in size. The interior water system was replaced in it's entirety in 1999 and 2000, and the roof of the work shed was replaced in spring of 2004. Shopping and schools are very close to the subject property. Due to a large increase in retail development and population, there is a shortage of housing in Brownwood, which should be a boone for the subject properties. Currently, the subject property is 67% occupied and is bringing in over $20,000 per month in income. By a continued marketing effort, the occupancy should continue to rise. The opportunity here is to increase occupancy through marketing which will increase the existing 12% cash on cash return. M0040084 1
SUMMARY Price $1,225,000 Down Payment $306,250 Price per Space $10,294 Vacant Spaces 119 Number of Rentals 57 Year Built 1975 Lot Size 20.21 Acres FINANCING Loan Amount $918,750 Loan Type Proposed New Interest Rate 7.0% Amortization Term 20 Years 20 Years Loan to Value 75% Debt Coverage 1.25 VITAL DATA Current CAP Rate 10.02% Current GRM 3.14 Current Net Operating Income $122,697 Current Net Cash Flow After Debt Service 12.2% $37,220 Current Total Return 19.3% $59,077 Pro Forma CAP Rate 13.96% Pro Forma GRM 3.09 Pro Forma Net Operating Income $171,046 Pro Forma Net Cash Flow After Debt Service 27.9% $85,569 Pro Forma Total Return 35.1% $107,426 M0040084 2
PRICING &FINANCIAL ANALYSIS
No. of Spaces Space Type Current Rents Monthly Income Pro Forma Rents Monthly Income 56 Single Wide $180 $10,080 $190 $10,640 6 RV $240 $1,440 $240 $1,440 57 Park Owned Coach $310 - $650 $20,770 $20,770 $20,770 119 TOTAL $32,290 $32,850 Space Mix Space Rent $390 $360 $330 $300 $270 $240 POC: 48% SW: 47% Rent $210 $180 $150 $120 $90 $60 $30 RV: 5% $0 SW RV POC Single Wide (SW) Double Wide (DW) Triple Wide (TW) Recreational Vehicle (RV) Park Owned Coach (POC) Travel Trailer (TT) Other (O) M0040084 4
Single Wide Space Type No. of Spaces Current Rent/Space Monthly GPI Single Wide 56 $180 $10,080 Total/Wtd. Average 56 $180 $10,080 RV Space Type No. of Spaces Current Rent/Space Monthly GPI RV 6 $240 $1,440 Total/Wtd. Average 6 $240 $1,440 Park Owned Coach Space Type No. of Spaces Current Rent/Space Monthly GPI Park Owned Coach 57 $310 - $650 $20,770 Total/Wtd. Average 57 $364 $20,770 M0040084 5
Total Number of Spaces: 119 INCOME Per Per Current Space Space Pro Forma GROSS POTENTIAL RENT $387,480 $3,256 $3,313 $394,200 Other Income Late Fees 2,500 21 21 2,500 Total Other Income $2,500 $21 $21 $2,500 GROSS POTENTIAL INCOME $389,980 $3,277 $3,334 $396,700 Vacancy/Collection Allow. (% GPR) (37.1%) 143,890 1,209 833 (25.2%) 99,175 EFFECTIVE GROSS INCOME $246,090 $2,068 $2,500 $297,525 Note: Income is actually on the rise due to new leases and rent increases. Rental Activities are on the rise as the growth in the area is moving up. M0040084 6
Per Per Current Space Space Pro Forma EXPENSES Taxes Homes & Real Estate $15,637 $131 $131 $15,637 Home & Park Insurance 6,576 55 55 6,576 On-Site Management 12,000 101 101 12,000 Off-Site Management 14,765 124 150 17,851 Utilities: Electric 3,340 28 28 3,340 Water 33,297 280 280 33,297 Total Utilities $36,637 $308 $308 $36,637 Repairs & Maintenance 30,000 252 252 30,000 Marketing & Promotion 1,028 9 9 1,028 General & Administrative 6,750 57 57 6,750 Total Expenses $123,393 $1,037 $1,063 $126,479 Expenses % of EGI Per SF 50.1% 42.5% NET OPERATING INCOME (NOI) $122,697 $1,031 $1,437 $171,046 NET OPERATING INCOME RETURN NOI / Sales Price 10.02% CAP 13.96% CAP Sales Price / GPI 3.14 GRM 3.09 GRM Note: By increasing occupancy from 63% to 75%, which is very attainable with the activity that is happening in the community, the Net Operating Income moves from $122,697 to $171,046! M0040084 7
SUMMARY Price $1,225,000 Down Payment 25.0% $306,250 Number of Spaces 119 Price/Space $10,294 Current CAP Rate 10.02% LOCATION 3310 Stephen F Austin Dr. 76801 FINANCING SUMMARY Buyer to procure a new 1st Lien of $918,750 on a 20 Year Amortization with a 5-7 year call at 7% Interest. Pro Forma CAP Rate 13.96% Current GRM 3.14 Pro Forma GRM 3.09 Current Net Cash Flow After Debt Service 12.2% $37,220 As loan information is time sensitive and subject to market fluctuations, we recommend that you verify quoted terms by contacting our local Marcus & Millichap Capital Corp. representative,john Nolan 713-626-3040. Pro Forma Net Cash Flow After Debt Service 27.9% $85,569 Year Built 1975 Lot Size 20.21 Acres Spaces/Acre 5.88 ANNUALIZED OPERATING DATA INCOME Current Pro Forma ANNUALIZED EXPENSES EXPENSES Current Pro Forma Gross Potential Rent $387,480 $394,200 Other Income 2,500 2,500 Gross Potential Income $389,980 $396,700 Vacancy 37.1% 143,890 25.2% 99,175 Effective Gross Income $246,090 $297,525 Less: Expenses 123,393 126,479 Net Operating Income $122,697 $171,046 Debt Service 85,477 85,477 Net Cash Flow After Debt Service 12.2% $37,220 27.9% $85,569 Principal Reduction 21,857 21,857 Total Return 19.3% $59,077 35.1% $107,426 SCHEDULED INCOME Taxes Homes & Real $15,637 $15,637 Estate Home & Park Insurance 6,576 6,576 On-Site Management 12,000 12,000 Off-Site Management 14,765 17,851 Total Utilities 36,637 36,637 Repairs & Maintenance 30,000 30,000 Marketing & Promotion 1,028 1,028 General & Administrative 6,750 6,750 TOTAL EXPENSES $123,393 $126,479 EXPENSES/SPACE $1,037 $1,063 EXPENSES/SF % of EGI 50.1% 42.5% # Spaces Space Type Current Pro Forma 56 Single Wide $10,080 $10,640 6 RV 1,440 1,440 57 Park Owned Coach 20,770 20,770 119 Monthly Totals $32,290 $32,850 M0040084 8
PROPERTY DESCRIPTION
The subject properties are located in southeast Brownwood, in Brown County. Brown county is located in the geographic center of Texas is approximately 135 miles north of Austin and 120 miles south of Forth Worth. Brownwood is a regional hub and draws its labor pool from a 70 mile radius. Major employers include 3M, Kohler, Brownwood Regional Medical Center and Wal- Mart Super Center. The arrival of Wal-Mart Super Center as well as an growth initiative from the City of Brownwood has spurred exciting new developments including the new arrival of Home Depot, a retail center anchored by Blockbuster; a new Starbucks, and Wendy s. Location Highlights Across from Schools, Close to Shopping Lots of Upside Additionally, a volunteer revitalization of downtown has seen business return to that area. In addition, there are plans to construct a new regional mall. Numerous Employers in Area M0040084 10
THE OFFERING Property CAMP BOWIE MHP Property Address 3310 Stephen F Austin Dr. 76801 Type of Park All ages Rental Agreement Month to Month Space Size Breakdown Current Home Size All sizes + RV's Rent Raise History Due in October 2005 Rent Control None SITE DESCRIPTION Number of Spaces 119 Vacant Spaces 119 Number of Rentals 57 Year Built 1975 Lot Size 20.21 Acres Density Streets Resident Off Street Parking Guest Parking RV Storage Flood Plain Landscaping Topography Roads/Drainage 5.9/Acre Asphalt & Gravel Yes Street None No Yes Level Ample UTILITIES PAID BY METER OTHER Water Landlord Electric Tenant Gas Landlord Sewer Landlord Trash Landlord Cable TV Tenant Positive Coliform Reading Past Three Years No Cathodic Protection No M0040084 11
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RECENT SALES
The subject property is located in Brownwood, Texas, constructed in the mid 1970's, and offered at $1,225,000, which breaks down to $10,294 per space. The most comparable sales in the area is Green Oaks Mobile Home park, which sold in 2002 for $11,029 per space and is the most comparable in location, spaces and amenities to the subject property. Average CAP/GRM CAP 10.0 8.0 6.0 4.0 2.0 0.0 Avg CAP 10.5% CAMP BOWIE MHP 1 Avg GRM 0.0 3.2 2.8 2.4 2.0 1.6 1.2 0.8 0.4 0.0 GRM CAP GRM Average Price Per Space $12,000 $11,000 $10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 CAMP BOWIE MHP 1 Avg $11,029 M0040084 17
Subject CAMP BOWIE MHP 3310 Stephen F Austin Dr., 76801 # of Spaces: 119 Price/Space: $10,294 Closing Date: On Market CAP Rate: 10.02% Year Built: 1975 GRM: 3.14 Sale Price: $1,225,000 Other: 1 Green Oaks Mobile Home Park 3201 Stephen F Austin, 78601 # of Spaces: 34 Price/Space: $11,029 Closing Date: 2002 CAP Rate: 10.50% Year Built: GRM: Sale Price: $375,000 M0040084 18
Subject Property 1) Green Oaks Mobile Home Park M0040084 19
RENT COMPARABLES
Currently, the subject property has an occupancy of approximately 67 percent. Concessions are not being given because of the increased activity in the market. Average Occupancy 100 90 80 70 60 50 40 30 20 10 0 CAMP BOWIE MHP 2 Avg 92% Average Rents $400 $360 $320 $280 $240 $200 $160 $120 $80 $40 $0 CAMP BOWIE MHP 2 3 Park Owned Coach Avg $376 Single Wide Avg $180 Single Wide RV Park Owned Coach M0040084 21
Subject CAMP BOWIE MHP 3310 Stephen F Austin Dr. 76801 Total Spaces: 119 Vacant Spaces: 119 Year Built: 1975 SpaceType # Rent Monthly Income Single Wide 56 $180 $10,080 RV 6 $240 $1,440 Park Owned Coach 57 $310 - $650 $20,770 Total 119 $32,290 1 Southside Village 2801 4th Street 78601 Total Spaces: 104 Vacant Spaces: SpaceType # Rent Monthly Income 1 Bedroom $407-$447 2 Bedroom $520-$571 3 Bedroom $634-$696 Comments/Terms: Year Built: Total This is an apartment project near the subject property. As one can see, the rents for the apartments is far above the average park owned home rent. 2 Green Oaks Mobile 3201 Stephen F Austin 78601 Total Spaces: 34 Vacant Spaces: 3 SpaceType # Rent Monthly Income Single Wide 5 $180-$180 Park Owned Coach 29 $310-$450 Comments/Terms: Year Built: 1973 Total 34 This property is across from the subject and is inferior to the subject property. 3 Northline Mobile Home 111 Northline Early, TX 78602 SpaceType # Rent Monthly Income Park Owned Coach $360-$385 Total M0040084 22
Subject Property 1) Southside Village Apartments 2) Green Oaks Mobile Home Park 3) Northline Mobile Home Park M0040084 23
DEMOGRAPHIC ANALYSIS
Demographic data 2003 by Experian/Applied Geographic Solutions. Number of people living in a given area per square mile. M0040084 25
Demographic data 2003 by Experian/Applied Geographic Solutions. The number of people employed in a given area per square mile. M0040084 26
Demographic data 2003 by Experian/Applied Geographic Solutions. Average income of all the people 15 years and older occupying a single housing unit. M0040084 27
Traffic Count data 2003 by GDT. All rights reserved. Two-way, average daily traffic volumes. M0040084 28
Geography: 5 Miles Population In 2004, the population in your selected geography is 22,464. The population has changed by -1.03% since 2000. It is estimated that the population in your area will be 22,230 five years from now, which represents a change of -1.04% from the current year. The current population is 49.03% male and 50.97% female. The median age of the population in your area is 33.6, compare this to the US average which is 36.2. The population density in your area is 286.02 people per square mile. Households There are currently 8,223 households in your selected geography. The number of households has changed by -0.78% since 2000. It is estimated that the number of households in your area will be 8,166 five years from now, which represents a change of -0.70% from the current year. The average household size in your area is 2.50 persons. Income In 2004, the median household income for your selected geography is $31,072, compare this to the US average which is currently $45,660. The median household income for your area has changed by 6.36% since 2000. It is estimated that the median household income in your area will be $33,847 five years from now, which represents a change of 8.93% from the current year. The current year per capita income in your area is $16,249, compare this to the US average, which is $23,504. The current year average household income in your area is $42,419, compare this to the US average which is $60,586. Race & Ethnicity The current year racial makeup of your selected area is as follows: 83.87% White, 5.38% Black, 0.58% Native American and 0.55% Asian/Pacific Islander. Compare these to US averages which are: 75.05% White, 12.29% Black, 0.89% Native American and 3.66% Asian/Pacific Islander. People of Hispanic origin are counted independently of race. People of Hispanic origin make up 22.47% of the current year population in your selected area. Compare this to the US average of 14.27%. Housing The median housing value in your area was $43,389 in 2000, compare this to the US average of $110,796 for the same year. In 2000, there were 5,347 owner occupied housing units in your area and there were 2,941 renter occupied housing units in your area. The median rent at the time was $351. Employment In 2004, there are 12,472 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 49.6% of employees are employed in white-collar occupations in this geography, and 50.4% are employed in bluecollar occupations. In 2004, unemployment in this area is 8.97%. In 2000, the median time traveled to work was 12.9 minutes. Demographic data 2003 by Experian/Applied Geographic Solutions. M0040084 29
1 Miles: 3 Miles: 5 Miles: Population 1990 Population 4,311 16,382 21,952 2000 Population 4,516 17,420 22,698 2004 Population 4,416 17,079 22,464 2009 Population 4,316 16,727 22,230 Households 1990 Households 1,711 6,146 8,220 2000 Households 1,908 6,336 8,288 2004 Households 1,874 6,224 8,223 2009 Households 1,842 6,111 8,166 2004 Average Households Size 2.15 2.50 2.50 Employment 2004 Daytime Population 2,597 7,497 12,472 Summary Housing Information 1990 Median Housing Value $47,752 $36,471 $35,346 2000 Median Housing Value $59,591 $45,794 $43,389 2000 Owner Occupied Housing Units 55.4% 56.3% 56.0% 2000 Renter Occupied Housing Units 35.0% 30.8% 30.8% 2000 Vacant 9.63% 12.91% 13.14% 2004 Owner Occupied Housing Units 55.2% 56.3% 56.1% 2004 Renter Occupied Housing Units 35.4% 31.0% 31.0% 2004 Vacant 9.46% 12.75% 12.97% 2009 Owner Occupied Housing Units 55.2% 56.5% 56.3% 2009 Renter Occupied Housing Units 35.8% 31.3% 31.2% 2009 Vacant 8.97% 12.25% 12.45% 2004 Households by Income $ 0 - $ 14,999 23.8% 24.3% 27.0% $ 15,000 - $24,999 15.3% 15.1% 14.7% $ 25,000 - $34,999 11.5% 13.4% 13.6% $ 35,000 - $49,999 18.6% 16.8% 16.1% $ 50,000 - $74,999 16.6% 16.9% 15.8% $ 75,000 - $99,999 8.0% 7.3% 6.7% $100,000 - $124,999 3.1% 3.2% 3.0% $125,000 - $149,999 1.6% 1.5% 1.4% $150,000 - $200,000 0.3% 0.4% 0.5% $200,000 to $249,999 0.1% 0.1% 0.1% $250,000 + 1.2% 1.0% 1.0% 2004 Income Median Households Income $34,476 $32,788 $31,072 Per Capita Income $18,799 $17,095 $16,249 Average Households Income $45,836 $44,273 $42,419 Demographic data 2003 by Experian/Applied Geographic Solutions. M0040084 30
Approved by the Texas Real Estate Commission for Voluntary Use Texas law requires all real estate licensees to give the following information about brokerage services to prospective buyers, tenants, sellers and landlords. Information About Brokerage Services Before working with a real estate broker, you should know that the duties of a broker depend on whom the broker represents. If you are a prospective seller or landlord (owner) or a prospective buyer or tenant (buyer), you should know that the broker who lists the property for sale or lease is the owner s agent. A broker who acts as a subagent represents the owner in cooperation with the listing broker. A broker who acts as a buyer s agent represents the buyer. A broker may act as an intermediary between the parties if the parties consent in writing. A broker can assist you in locating a property, preparing a contract or lease, or obtaining financing without representing you. A broker is obligated by law to treat you honestly. IF THE BROKER REPRESENTS THE OWNER: The broker becomes the owner s agent by entering into an agreement with the owner, usually through a written - listing agreement, or by agreeing to act as a subagent by accepting an offer of subagency from the listing broker. A subagent may work in a different real estate office. A listing broker or subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first. The buyer should not tell the owner s agent anything the buyer would not want the owner to know because an owner s agent must disclose to the owner any material information known to the agent. IF THE BROKER REPRESENTS THE BUYER: The broker becomes the buyer s agent by entering into an agreement to represent the buyer, usually through a written buyer representation agreement. A buyer s agent can assist the owner but does not represent the owner and must place the interests of the buyer first. The owner should not tell a buyer s agent anything the owner would not want the buyer to know because a buyer s agent must disclose to the buyer any material information known to the agent. IF THE BROKER ACTS AS AN INTERMEDIARY: A broker may act as an intermediary between the parties if the broker complies with The Texas Real Estate License Act. The broker must obtain the written consent of each party to the transaction to act as an intermediary. The written consent must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker s obligations as an intermediary. The broker is required to treat each party honestly and fairly and to comply with The Texas Real Estate License Act. A broker who acts as an intermediary in a transaction: (1) shall treat all parties honestly; (2) may not disclose that the owner will accept a price less than the asking price unless authorized in writing to do so by the owner; (3) may not disclose that the buyer will pay a price greater than the price submitted in a written offer unless authorized in writing to do so by the buyer; and (4) may not disclose any confidential information or any information that a party specifically instructs the broker in writing not to disclose unless authorized in writing to disclose the information or required to do so by The Texas Real Estate License Act or a court order or if the information materially relates to the condition of the property. With the parties consent, a broker acting as an intermediary between the parties may appoint a person who is licensed under The Texas Real Estate License Act and associated with the broker to communicate with and carry out instructions of one party and another person who is licensed under that Act and associated with the broker to communicate with and carry out instructions of the other party. If you choose to have a broker represent you, you should enter into a written agreement with the broker that clearly establishes the broker s obligations and your obligations. The agreement should state how and by whom the broker will be paid. You have the right to choose the type of representation, if any, you wish to receive. Your payment of a fee to a broker does not necessarily establish that the broker represents you. If you have any questions regarding the duties and responsibilities of the broker, you should resolve those questions before proceeding. Real estate licensee asks that you acknowledge receipt of this information about brokerage services for the licensee s records. Buyer, Seller, Landlord or Tenant Date Texas Real Estate Brokers and Salespersons are licensed and regulated by the Texas Real Estate Commission (TREC). If you have a complaint regarding a real estate licensee, you should contact TREC at P.O. Box 12188, Austin, Texas 78711-2188 or 512-465-3960. M0040084 31
Exclusively Listed By: Houston Office 777 Post Oak Boulevard Suite 900 Houston, TX 77056 Tel: (713) 626-3040 Fax: (713) 626-1304