nelson@scc1031.com 01409860 Tim Swanston Senior Associate 916-541-3630 swanston@scc1031.com 01844618 24 Units with Room to Raise Rents 100% occupied Professionally Maintained grounds & Landscaping Managed By Same Owner For the Last 18 years Phone: (619) 226-6011 Fax: (866) 861-7803 3405 Kenyon St #411 San Diego, CA 92110 www.scc1031.com
Table of Contents Real Estate Investment Details... 3 Property Description... 4 Property Photos... 5 Executive Summary... 6 Resale Report... 7 Internal Rate of Return Analysis... 8 Cash Flow Analysis... 9 Financial Indicators... 11 Cumulative Analysis... 13 Detailed General Expenses... 15 Annual Property Operating Data... 17 Loan Analysis... 19 Cash In Cash Out... 21 Property Resale Analysis... 25 Unit Mix Base Rent Report... 27 Property Equity Analysis... 29 Gross Income Vs. Operating Expenses... 30 Equity vs. Debt... 31 Cumulative Wealth Analysis... 32 Vista Comps... 33
Real Estate Investment Details ANALYSIS Analysis Date July 2014 PROPERTY Property Property Address Year Built 1973 Las Casistas PURCHASE INFORMATION Property Type MultiFamily Purchase Price $2,350,000 Fair Market Value $2,309,000 Units 24 Total Rentable Sq. Ft. 9,792 Resale Valuation 3.0% (annual appreciation) Resale Expenses 1.0% FINANCIAL INFORMATION Down Payment $689,700 Closing Costs $8,000 LT Capital Gain 15.00% Federal Tax Rate 35.0% State Tax Rate 10.0% Discount Rate 5.00% LOANS Debt Term Amortization Rate Payment LO Costs Fixed $1,609,300 30 years 30 years 4.25% $7,917 INCOME & EXPENSES Gross Operating Income $209,520 Monthly GOI $17,460 Total Annual Expenses ($71,237) Monthly Expenses ($5,936) CONTACT INFORMATION nelson@scc1031.com 01409860 Tim Swanston 916-541-3630 swanston@scc1031.com 01844618 Kevin Hemstreet 619-309-9296 hemstreet@scc1031.com 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 3 of 46
Property Description The las Casistas Apartment Community is a 24 unit complex which consists of all studios. The complex is made up of 3 identical buildings, each containing 8 units which are approximately 408 Sq. ft each. This building is 100% occupied with a waiting list for any vacancies that occasionally pop up. The property has been managed by the same owner for the last 18 years. The property is in great condition and is easily maintained.. There is room for rent raises and there is already cash flow in place. page 4 of 46
Property Photos page 5 of 46
Executive Summary ACQUISITION COSTS Purchase Price, Points and Closing Costs $2,358,000 Investment - Cash $697,700 First Loan $1,609,300 INVESTMENT INFORMATION Purchase Price $2,350,000 Price per Unit $97,917 Price per Sq. Ft. $239.99 Income per Unit $9,000 Expenses per Unit ($2,968) INCOME, EXPENSES & CASH FLOW Gross Scheduled Income $216,000 Total Vacancy and Credits ($6,480) Operating Expenses ($71,237) Net Operating Income $138,283 Debt Service ($95,001) Cash Flow Before Taxes $43,282 Total Interest (Debt Service) ($67,871) Depreciation and Amortization ($61,178) Taxable Income (Loss) $9,235 Tax Savings (Costs) ($4,156) Cash Flow After Taxes $39,126 FINANCIAL INDICATORS Cash on Cash Return Before Taxes 6.20% Optimal Internal Rate of Return (yr 2) 14.71% Debt Coverage Ratio 1.46 Capitalization Rate 5.88% Gross Rent Multiplier 10.88 Gross Income / Square Feet $22.06 Gross Expenses / Square Feet ($7.28) Operating Expense Ratio 34.00% page 6 of 46
Resale Report NET PROCEEDS FROM SALE Adjusted Basis Basis At Acquisition $2,358,000 -Depreciation $1,271,603 Adjusted Basis at Sale $1,086,397 Capital Gain Sale Price $4,170,311 -Sale Expenses ($41,703) -Adjusted Basis at Sale $1,086,397 Gain or (Loss) $3,042,211 -Depreciation (limited to gain) $1,271,603 Capital Gain from Appreciation $1,770,608 Sales Proceeds After Tax Sale Price $4,170,311 -Sale Expenses $41,703 -Mortgage Balance $772,841 Sale Proceeds Before Tax $3,355,767 -Tax On Depreciation $317,901 -Tax On Capital Gain $265,591 Sale Proceeds After Tax $2,772,275 page 7 of 46
Internal Rate of Return Analysis BEFORE TAX IRR Time Future Cash Flows Initial Investment ($697,700) End of Year 1 $43,282 End of Year 11 $115,339 End of Year 2 $49,567 End of Year 12 $123,786 End of Year 3 $56,041 End of Year 13 $132,487 End of Year 4 $62,710 End of Year 14 $141,449 End of Year 5 $69,578 End of Year 15 $150,679 End of Year 6 $76,653 End of Year 16 $160,187 End of Year 7 $83,939 End of Year 17 $169,980 End of Year 8 $91,445 End of Year 18 $180,066 End of Year 9 $99,175 End of Year 19 $190,455 End of Year 10 $107,138 End of Year 20* $3,556,923 IRR = 15.28% * ($201,156 + $3,355,767) AFTER TAX IRR Time Future Cash Flows Initial Investment ($697,700) End of Year 1 $39,126 End of Year 11 $73,507 End of Year 2 $43,255 End of Year 12 $77,344 End of Year 3 $46,264 End of Year 13 $81,286 End of Year 4 $49,355 End of Year 14 $85,335 End of Year 5 $52,532 End of Year 15 $89,493 End of Year 6 $55,796 End of Year 16 $93,764 End of Year 7 $59,150 End of Year 17 $98,150 End of Year 8 $62,595 End of Year 18 $102,655 End of Year 9 $66,135 End of Year 19 $107,280 End of Year 10 $69,771 End of Year 20* $2,883,108 IRR = 12.49% * ($110,833 + $2,772,275) page 8 of 46
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 $216,000 $222,480 $229,154 $236,029 $243,110 $250,403 $257,915 $265,653 $273,622 $281,831 Turnover Vacancy ($6,480) ($6,674) ($6,875) ($7,081) ($7,293) ($7,512) ($7,737) ($7,970) ($8,209) ($8,455) Total Operating Expenses ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) NET OPERATING INCOME $138,283 $144,569 $151,043 $157,711 $164,580 $171,654 $178,941 $186,446 $194,177 $202,139 Loan Payment ($95,001) ($95,001) ($95,001) ($95,001) ($95,001) ($95,001) ($95,001) ($95,001) ($95,001) ($95,001) NET CASH FLOW (b/t) $43,282 $49,567 $56,041 $62,710 $69,578 $76,653 $83,939 $91,445 $99,175 $107,138 Cash On Cash Return b/t 6.20% 7.10% 8.03% 8.99% 9.97% 10.99% 12.03% 13.11% 14.21% 15.36% NET OPERATING INCOME $138,283 $144,569 $151,043 $157,711 $164,580 $171,654 $178,941 $186,446 $194,177 $202,139 Depreciation ($61,178) ($63,847) ($63,847) ($63,847) ($63,847) ($63,847) ($63,847) ($63,847) ($63,847) ($63,847) Loan Interest ($67,871) ($66,695) ($65,468) ($64,188) ($62,853) ($61,460) ($60,006) ($58,490) ($56,907) ($55,256) TAXABLE INCOME (LOSS) $9,235 $14,027 $21,728 $29,676 $37,880 $46,348 $55,088 $64,110 $73,423 $83,036 Income Taxes ($4,156) ($6,312) ($9,778) ($13,354) ($17,046) ($20,856) ($24,790) ($28,850) ($33,040) ($37,366) CASH FLOW (a/t) $39,126 $43,255 $46,264 $49,355 $52,532 $55,796 $59,150 $62,595 $66,135 $69,771 Cash On Cash Return a/t 5.61% 6.20% 6.63% 7.07% 7.53% 8.00% 8.48% 8.97% 9.48% 10.00% Footnotes: b/t = before taxes;a/t = after taxes page 9 of 46
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 $290,286 $298,995 $307,964 $317,203 $326,719 $336,521 $346,617 $357,015 $367,726 $378,757 Turnover Vacancy ($8,709) ($8,970) ($9,239) ($9,516) ($9,802) ($10,096) ($10,398) ($10,710) ($11,032) ($11,363) Total Operating Expenses ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) NET OPERATING INCOME $210,340 $218,788 $227,488 $236,450 $245,681 $255,188 $264,981 $275,068 $285,457 $296,158 Loan Payment ($95,001) ($95,001) ($95,001) ($95,001) ($95,001) ($95,001) ($95,001) ($95,001) ($95,001) ($95,001) NET CASH FLOW (b/t) $115,339 $123,786 $132,487 $141,449 $150,679 $160,187 $169,980 $180,066 $190,455 $201,156 Cash On Cash Return b/t 16.53% 17.74% 18.99% 20.27% 21.60% 22.96% 24.36% 25.81% 27.30% 28.83% NET OPERATING INCOME $210,340 $218,788 $227,488 $236,450 $245,681 $255,188 $264,981 $275,068 $285,457 $296,158 Depreciation ($63,847) ($63,847) ($63,847) ($63,847) ($63,847) ($63,847) ($63,847) ($63,847) ($63,847) ($61,187) Loan Interest ($53,534) ($51,737) ($49,862) ($47,905) ($45,864) ($43,735) ($41,513) ($39,195) ($36,777) ($34,253) TAXABLE INCOME (LOSS) $92,960 $103,204 $113,780 $124,698 $135,970 $147,607 $159,621 $172,026 $184,834 $200,718 Income Taxes ($41,832) ($46,442) ($51,201) ($56,114) ($61,186) ($66,423) ($71,830) ($77,412) ($83,175) ($90,323) CASH FLOW (a/t) $73,507 $77,344 $81,286 $85,335 $89,493 $93,764 $98,150 $102,655 $107,280 $110,833 Cash On Cash Return a/t 10.54% 11.09% 11.65% 12.23% 12.83% 13.44% 14.07% 14.71% 15.38% 15.89% Footnotes: b/t = before taxes;a/t = after taxes page 10 of 46
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 11.01 11.01 11.01 11.01 11.01 11.01 11.01 11.01 11.01 11.01 Capitalization Rate 5.88% 6.15% 6.43% 6.71% 7.00% 7.30% 7.61% 7.93% 8.26% 8.60% Cash On Cash Return b/t 6.20% 7.10% 8.03% 8.99% 9.97% 10.99% 12.03% 13.11% 14.21% 15.36% Cash On Cash Return a/t 5.61% 6.20% 6.63% 7.07% 7.53% 8.00% 8.48% 8.97% 9.48% 10.00% Debt Coverage Ratio 1.46 1.52 1.59 1.66 1.73 1.81 1.88 1.96 2.04 2.13 Gross Income per Sq. Ft. $22.06 $22.72 $23.40 $24.10 $24.83 $25.57 $26.34 $27.13 $27.94 $28.78 Expenses per Sq. Ft. ($7.28) ($7.28) ($7.28) ($7.28) ($7.28) ($7.28) ($7.28) ($7.28) ($7.28) ($7.28) Net Income Multiplier 17.20 16.94 16.70 16.48 16.26 16.06 15.87 15.69 15.52 15.35 Operating Expense Ratio 34.00% 33.01% 32.05% 31.11% 30.21% 29.33% 28.47% 27.65% 26.84% 26.06% Loan To Value Ratio 66.53% 63.43% 60.41% 57.47% 54.59% 51.79% 49.05% 46.37% 43.76% 41.20% Footnotes: b/t = before taxes; a/t = after taxes page 11 of 46
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 11.01 11.01 11.01 11.01 11.01 11.01 11.01 11.01 11.01 11.01 Capitalization Rate 8.95% 9.31% 9.68% 10.06% 10.45% 10.86% 11.28% 11.71% 12.15% 12.60% Cash On Cash Return b/t 16.53% 17.74% 18.99% 20.27% 21.60% 22.96% 24.36% 25.81% 27.30% 28.83% Cash On Cash Return a/t 10.54% 11.09% 11.65% 12.23% 12.83% 13.44% 14.07% 14.71% 15.38% 15.89% Debt Coverage Ratio 2.21 2.30 2.39 2.49 2.59 2.69 2.79 2.90 3.00 3.12 Gross Income per Sq. Ft. $29.65 $30.53 $31.45 $32.39 $33.37 $34.37 $35.40 $36.46 $37.55 $38.68 Expenses per Sq. Ft. ($7.28) ($7.28) ($7.28) ($7.28) ($7.28) ($7.28) ($7.28) ($7.28) ($7.28) ($7.28) Net Income Multiplier 15.20 15.05 14.91 14.77 14.64 14.52 14.40 14.29 14.18 14.08 Operating Expense Ratio 25.30% 24.56% 23.85% 23.15% 22.48% 21.82% 21.19% 20.57% 19.97% 19.39% Loan To Value Ratio 38.70% 36.26% 33.87% 31.54% 29.25% 27.02% 24.83% 22.69% 20.59% 18.53% Footnotes: b/t = before taxes; a/t = after taxes page 12 of 46
Cumulative Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Equity (appreciation) $28,270 $99,618 $173,107 $248,800 $326,764 $407,067 $489,779 $574,972 $662,721 $753,103 Equity (loan reduction) $27,131 $55,437 $84,970 $115,783 $147,932 $181,473 $216,469 $252,981 $291,075 $330,820 CASH FLOW (a/t) $39,126 $82,381 $128,645 $178,000 $230,532 $286,328 $345,478 $408,073 $474,208 $543,980 Totals - To Date $94,527 $237,436 $386,722 $542,583 $705,228 $874,869 $1,051,726 $1,236,026 $1,428,005 $1,627,903 Invested Capital ($697,700) ($697,700) ($697,700) ($697,700) ($697,700) ($697,700) ($697,700) ($697,700) ($697,700) ($697,700) ROIC - To Date 13.55% 34.03% 55.43% 77.77% 101.08% 125.39% 150.74% 177.16% 204.67% 233.32% Footnotes: a/t = after taxes; ROIC = Return On Invested Capital page 13 of 46
Cumulative Analysis Description Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Equity (appreciation) $846,196 $942,082 $1,040,844 $1,142,570 $1,247,347 $1,355,267 $1,466,425 $1,580,918 $1,698,845 $1,820,311 Equity (loan reduction) $372,288 $415,552 $460,692 $507,788 $556,925 $608,192 $661,680 $717,486 $775,711 $836,459 CASH FLOW (a/t) $617,487 $694,831 $776,117 $861,451 $950,944 $1,044,708 $1,142,858 $1,245,513 $1,352,793 $1,463,626 Totals - To Date $1,835,970 $2,052,465 $2,277,653 $2,511,809 $2,755,216 $3,008,167 $3,270,963 $3,543,917 $3,827,350 $4,120,396 Invested Capital ($697,700) ($697,700) ($697,700) ($697,700) ($697,700) ($697,700) ($697,700) ($697,700) ($697,700) ($697,700) ROIC - To Date 263.15% 294.18% 326.45% 360.01% 394.90% 431.15% 468.82% 507.94% 548.57% 590.57% Footnotes: a/t = after taxes; ROIC = Return On Invested Capital page 14 of 46
Detailed General Expenses Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total Expenses ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) Supplies ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) Building Insurance ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) Pest control ($612) ($612) ($612) ($612) ($612) ($612) ($612) ($612) ($612) ($612) Maintenance ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) Management Fees ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) Misc ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) Repairs ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) Taxes - Real Estate ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) Trash Removal ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) Utilities ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) page 15 of 46
Detailed General Expenses Description Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Total Expenses ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) Supplies ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) Building Insurance ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) Pest control ($612) ($612) ($612) ($612) ($612) ($612) ($612) ($612) ($612) ($612) Maintenance ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) Management Fees ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) Misc ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) Repairs ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) Taxes - Real Estate ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) Trash Removal ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) Utilities ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) page 16 of 46
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 $216,000 $222,480 $229,154 $236,029 $243,110 $250,403 $257,915 $265,653 $273,622 $281,831 GROSS SCHEDULED INCOME $216,000 $222,480 $229,154 $236,029 $243,110 $250,403 $257,915 $265,653 $273,622 $281,831 Turnover Vacancy ($6,480) ($6,674) ($6,875) ($7,081) ($7,293) ($7,512) ($7,737) ($7,970) ($8,209) ($8,455) GROSS OPERATING INCOME $209,520 $215,806 $222,280 $228,948 $235,817 $242,891 $250,178 $257,683 $265,414 $273,376 Expenses Supplies ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) Building Insurance ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) Pest control ($612) ($612) ($612) ($612) ($612) ($612) ($612) ($612) ($612) ($612) Maintenance ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) Management Fees ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) Misc ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) Repairs ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) Taxes - Real Estate ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) Trash Removal ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) Utilities ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) TOTAL OPERATING EXPENSES ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) NET OPERATING INCOME $138,283 $144,569 $151,043 $157,711 $164,580 $171,654 $178,941 $186,446 $194,177 $202,139 page 17 of 46
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 $290,286 $298,995 $307,964 $317,203 $326,719 $336,521 $346,617 $357,015 $367,726 $378,757 GROSS SCHEDULED INCOME $290,286 $298,995 $307,964 $317,203 $326,719 $336,521 $346,617 $357,015 $367,726 $378,757 Turnover Vacancy ($8,709) ($8,970) ($9,239) ($9,516) ($9,802) ($10,096) ($10,398) ($10,710) ($11,032) ($11,363) GROSS OPERATING INCOME $281,577 $290,025 $298,725 $307,687 $316,918 $326,425 $336,218 $346,305 $356,694 $367,395 Expenses Supplies ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) Building Insurance ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) Pest control ($612) ($612) ($612) ($612) ($612) ($612) ($612) ($612) ($612) ($612) Maintenance ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) Management Fees ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) Misc ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) Repairs ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) Taxes - Real Estate ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) Trash Removal ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) Utilities ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) TOTAL OPERATING EXPENSES ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) NET OPERATING INCOME $210,340 $218,788 $227,488 $236,450 $245,681 $255,188 $264,981 $275,068 $285,457 $296,158 page 18 of 46
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 $27,131 $28,306 $29,533 $30,813 $32,148 $33,542 $34,995 $36,512 $38,094 $39,745 Interest Payments $67,871 $66,695 $65,468 $64,188 $62,853 $61,460 $60,006 $58,490 $56,907 $55,256 Total Debt Service $95,001 $95,001 $95,001 $95,001 $95,001 $95,001 $95,001 $95,001 $95,001 $95,001 Principal Balance Analysis Beginning Principal Balance $1,609,300 $1,582,169 $1,553,863 $1,524,330 $1,493,517 $1,461,368 $1,427,827 $1,392,831 $1,356,319 $1,318,225 Principal Reductions $27,131 $28,306 $29,533 $30,813 $32,148 $33,542 $34,995 $36,512 $38,094 $39,745 Ending Principal Balance $1,582,169 $1,553,863 $1,524,330 $1,493,517 $1,461,368 $1,427,827 $1,392,831 $1,356,319 $1,318,225 $1,278,480 page 19 of 46
Loan Analysis Description Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 LOAN 1 Debt Service Analysis Principal Payments $41,468 $43,265 $45,140 $47,096 $49,137 $51,267 $53,488 $55,806 $58,225 $60,748 Interest Payments $53,534 $51,737 $49,862 $47,905 $45,864 $43,735 $41,513 $39,195 $36,777 $34,253 Total Debt Service $95,001 $95,001 $95,001 $95,001 $95,001 $95,001 $95,001 $95,001 $95,001 $95,001 Principal Balance Analysis Beginning Principal Balance $1,278,480 $1,237,012 $1,193,748 $1,148,608 $1,101,512 $1,052,375 $1,001,108 $947,620 $891,814 $833,589 Principal Reductions $41,468 $43,265 $45,140 $47,096 $49,137 $51,267 $53,488 $55,806 $58,225 $60,748 Ending Principal Balance $1,237,012 $1,193,748 $1,148,608 $1,101,512 $1,052,375 $1,001,108 $947,620 $891,814 $833,589 $772,841 page 20 of 46
Cash In Cash Out Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Rental Income $216,000 $222,480 $229,154 $236,029 $243,110 $250,403 $257,915 $265,653 $273,622 $281,831 GROSS SCHEDULED INCOME $216,000 $222,480 $229,154 $236,029 $243,110 $250,403 $257,915 $265,653 $273,622 $281,831 Turnover Vacancy ($6,480) ($6,674) ($6,875) ($7,081) ($7,293) ($7,512) ($7,737) ($7,970) ($8,209) ($8,455) GROSS OPERATING INCOME $209,520 $215,806 $222,280 $228,948 $235,817 $242,891 $250,178 $257,683 $265,414 $273,376 Expenses Supplies ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) Building Insurance ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) Pest control ($612) ($612) ($612) ($612) ($612) ($612) ($612) ($612) ($612) ($612) Maintenance ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) Management Fees ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) Misc ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) Repairs ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) Taxes - Real Estate ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) Trash Removal ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) Utilities ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) TOTAL OPERATING EXPENSES ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) NET OPERATING INCOME $138,283 $144,569 $151,043 $157,711 $164,580 $171,654 $178,941 $186,446 $194,177 $202,139 Footnotes: Cash Flow IRR based upon net cash flow and principal payments page 21 of 46
Cash In Cash Out Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Debt Service Loan Interest ($67,871) ($66,695) ($65,468) ($64,188) ($62,853) ($61,460) ($60,006) ($58,490) ($56,907) ($55,256) Principal Payments ($27,131) ($28,306) ($29,533) ($30,813) ($32,148) ($33,542) ($34,995) ($36,512) ($38,094) ($39,745) NET CASH FLOW (b/t) $43,282 $49,567 $56,041 $62,710 $69,578 $76,653 $83,939 $91,445 $99,175 $107,138 Cash Flow IRR N/A N/A N/A N/A N/A N/A N/A 2.48% 5.36% 7.57% Projected Property Value $2,378,270 $2,449,618 $2,523,107 $2,598,800 $2,676,764 $2,757,067 $2,839,779 $2,924,972 $3,012,721 $3,103,103 Resale Expenses ($23,783) ($24,496) ($25,231) ($25,988) ($26,768) ($27,571) ($28,398) ($29,250) ($30,127) ($31,031) Proceeds b/f Debt Payoff $2,354,487 $2,425,122 $2,497,876 $2,572,812 $2,649,996 $2,729,496 $2,811,381 $2,895,722 $2,982,594 $3,072,072 Loan Principal Balance ($1,582,169) ($1,553,863) ($1,524,330) ($1,493,517) ($1,461,368) ($1,427,827) ($1,392,831) ($1,356,319) ($1,318,225) ($1,278,480) Net Proceeds From Sale $772,318 $871,259 $973,546 $1,079,295 $1,188,628 $1,301,669 $1,418,550 $1,539,403 $1,664,369 $1,793,592 Net Resale IRR 16.90% 18.03% 18.07% 17.90% 17.66% 17.41% 17.17% 16.95% 16.74% 16.55% Footnotes: Cash Flow IRR based upon net cash flow and principal payments page 22 of 46
Cash In Cash Out Description Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Rental Income $290,286 $298,995 $307,964 $317,203 $326,719 $336,521 $346,617 $357,015 $367,726 $378,757 GROSS SCHEDULED INCOME $290,286 $298,995 $307,964 $317,203 $326,719 $336,521 $346,617 $357,015 $367,726 $378,757 Turnover Vacancy ($8,709) ($8,970) ($9,239) ($9,516) ($9,802) ($10,096) ($10,398) ($10,710) ($11,032) ($11,363) GROSS OPERATING INCOME $281,577 $290,025 $298,725 $307,687 $316,918 $326,425 $336,218 $346,305 $356,694 $367,395 Expenses Supplies ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) ($2,636) Building Insurance ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) ($9,732) Pest control ($612) ($612) ($612) ($612) ($612) ($612) ($612) ($612) ($612) ($612) Maintenance ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) ($4,255) Management Fees ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) ($8,700) Misc ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) Repairs ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) ($6,300) Taxes - Real Estate ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) ($22,037) Trash Removal ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) ($3,715) Utilities ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) ($10,850) TOTAL OPERATING EXPENSES ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) ($71,237) NET OPERATING INCOME $210,340 $218,788 $227,488 $236,450 $245,681 $255,188 $264,981 $275,068 $285,457 $296,158 Footnotes: Cash Flow IRR based upon net cash flow and principal payments page 23 of 46
Cash In Cash Out Description Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Debt Service Loan Interest ($53,534) ($51,737) ($49,862) ($47,905) ($45,864) ($43,735) ($41,513) ($39,195) ($36,777) ($34,253) Principal Payments ($41,468) ($43,265) ($45,140) ($47,096) ($49,137) ($51,267) ($53,488) ($55,806) ($58,225) ($60,748) NET CASH FLOW (b/t) $115,339 $123,786 $132,487 $141,449 $150,679 $160,187 $169,980 $180,066 $190,455 $201,156 Cash Flow IRR 9.31% 10.69% 11.80% 12.71% 13.45% 14.06% 14.57% 14.99% 15.35% 15.65% Projected Property Value $3,196,196 $3,292,082 $3,390,844 $3,492,570 $3,597,347 $3,705,267 $3,816,425 $3,930,918 $4,048,845 $4,170,311 Resale Expenses ($31,962) ($32,921) ($33,908) ($34,926) ($35,973) ($37,053) ($38,164) ($39,309) ($40,488) ($41,703) Proceeds b/f Debt Payoff $3,164,234 $3,259,161 $3,356,936 $3,457,644 $3,561,373 $3,668,214 $3,778,261 $3,891,609 $4,008,357 $4,128,608 Loan Principal Balance ($1,237,012) ($1,193,748) ($1,148,608) ($1,101,512) ($1,052,375) ($1,001,108) ($947,620) ($891,814) ($833,589) ($772,841) Net Proceeds From Sale $1,927,222 $2,065,413 $2,208,328 $2,356,132 $2,508,998 $2,667,106 $2,830,641 $2,999,795 $3,174,768 $3,355,767 Net Resale IRR 16.37% 16.20% 16.05% 15.91% 15.78% 15.67% 15.56% 15.46% 15.36% 15.28% Footnotes: Cash Flow IRR based upon net cash flow and principal payments page 24 of 46
Property Resale Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Projected Property Value $2,378,270 $2,449,618 $2,523,107 $2,598,800 $2,676,764 $2,757,067 $2,839,779 $2,924,972 $3,012,721 $3,103,103 Resale Expenses ($23,783) ($24,496) ($25,231) ($25,988) ($26,768) ($27,571) ($28,398) ($29,250) ($30,127) ($31,031) Proceeds b/f Debt Payoff $2,354,487 $2,425,122 $2,497,876 $2,572,812 $2,649,996 $2,729,496 $2,811,381 $2,895,722 $2,982,594 $3,072,072 Basis at Acquisition $2,358,000 $2,358,000 $2,358,000 $2,358,000 $2,358,000 $2,358,000 $2,358,000 $2,358,000 $2,358,000 $2,358,000 Depreciation ($61,178) ($125,024) ($188,871) ($252,717) ($316,564) ($380,411) ($444,257) ($508,104) ($571,950) ($635,797) Adjusted Tax Basis $2,296,822 $2,232,976 $2,169,129 $2,105,283 $2,041,436 $1,977,589 $1,913,743 $1,849,896 $1,786,050 $1,722,203 Resale Tax Gain (Loss) $57,665 $192,146 $328,746 $467,529 $608,560 $751,907 $897,638 $1,045,826 $1,196,545 $1,349,869 Resale Tax Benefit (Cost) ($14,416) ($41,324) ($68,199) ($95,401) ($122,940) ($150,827) ($179,071) ($207,684) ($236,677) ($266,060) Loan Principal Balance ($1,582,169) ($1,553,863) ($1,524,330) ($1,493,517) ($1,461,368) ($1,427,827) ($1,392,831) ($1,356,319) ($1,318,225) ($1,278,480) Net Resale Proceeds $757,902 $829,935 $905,347 $983,894 $1,065,688 $1,150,842 $1,239,478 $1,331,719 $1,427,692 $1,527,532 Footnotes: b/f = before page 25 of 46
Property Resale Analysis Description Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Projected Property Value $3,196,196 $3,292,082 $3,390,844 $3,492,570 $3,597,347 $3,705,267 $3,816,425 $3,930,918 $4,048,845 $4,170,311 Resale Expenses ($31,962) ($32,921) ($33,908) ($34,926) ($35,973) ($37,053) ($38,164) ($39,309) ($40,488) ($41,703) Proceeds b/f Debt Payoff $3,164,234 $3,259,161 $3,356,936 $3,457,644 $3,561,373 $3,668,214 $3,778,261 $3,891,609 $4,008,357 $4,128,608 Basis at Acquisition $2,358,000 $2,358,000 $2,358,000 $2,358,000 $2,358,000 $2,358,000 $2,358,000 $2,358,000 $2,358,000 $2,358,000 Depreciation ($699,644) ($763,490) ($827,337) ($891,184) ($955,030) ($1,018,877) ($1,082,723) ($1,146,570) ($1,210,417) ($1,271,603) Adjusted Tax Basis $1,658,356 $1,594,510 $1,530,663 $1,466,816 $1,402,970 $1,339,123 $1,275,277 $1,211,430 $1,147,583 $1,086,397 Resale Tax Gain (Loss) $1,505,878 $1,664,651 $1,826,273 $1,990,828 $2,158,403 $2,329,091 $2,502,984 $2,680,179 $2,860,774 $3,042,211 Resale Tax Benefit (Cost) ($295,846) ($326,047) ($356,675) ($387,742) ($419,264) ($451,251) ($483,720) ($516,684) ($550,158) ($583,492) Loan Principal Balance ($1,237,012) ($1,193,748) ($1,148,608) ($1,101,512) ($1,052,375) ($1,001,108) ($947,620) ($891,814) ($833,589) ($772,841) Net Resale Proceeds $1,631,376 $1,739,367 $1,851,653 $1,968,390 $2,089,735 $2,215,855 $2,346,921 $2,483,111 $2,624,611 $2,772,275 Footnotes: b/f = before page 26 of 46
Unit Mix Base Rent Report Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Studio 24 Units $750.00 per unit $216,000 $222,480 $229,154 $236,029 $243,110 $250,403 $257,915 $265,653 $273,622 $281,831 Total Income $216,000 $222,480 $229,154 $236,029 $243,110 $250,403 $257,915 $265,653 $273,622 $281,831 page 27 of 46
Unit Mix Base Rent Report Description Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Studio 24 Units $750.00 per unit $290,286 $298,995 $307,964 $317,203 $326,719 $336,521 $346,617 $357,015 $367,726 $378,757 Total Income $290,286 $298,995 $307,964 $317,203 $326,719 $336,521 $346,617 $357,015 $367,726 $378,757 page 28 of 46
Property Equity Analysis $3,400,000 $3,060,000 $2,720,000 $2,380,000 $2,040,000 $1,700,000 $1,360,000 $1,020,000 $680,000 $340,000 Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Legend Initial Equity Equity (loan reduction) Equity (appreciation) page 29 of 46
Gross Income Vs. Operating Expenses $380,000 $342,000 $304,000 $266,000 $228,000 $190,000 $152,000 $114,000 $76,000 $38,000 Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Legend GROSS SCHEDULED INCOME Total Operating Expenses page 30 of 46
Equity vs. Debt $3,400,000 $3,060,000 $2,720,000 $2,380,000 $2,040,000 $1,700,000 $1,360,000 $1,020,000 $680,000 $340,000 Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Legend Equity Loan Principal Balance page 31 of 46
Cumulative Wealth Analysis $4,200,000 $3,780,000 $3,360,000 $2,940,000 $2,520,000 $2,100,000 $1,680,000 $1,260,000 $840,000 $420,000 Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Legend Equity (loan reduction) Equity (appreciation) CASH FLOW (a/t) page 32 of 46
1 121 Azalea Dr Vista, CA 92083 Sale on 4/17/2013 for $1,200,000 ($150.00/SF; $120,000/Unit) - Research Complete 10 Unit, 8,000 SF Class C Apartments Building Built in 1986 SOLD Transaction Details ID: 2733770 Sale Date: Escrow Length: 04/17/2013 (5 days on market) - Sale Price: $1,200,000-Confirmed Asking Price: $1,300,000 Price/SF: $150.00 Price/AC Land Gross: $3,428,571.43 Sale Type: Bldg Type: Year Built/Age: RBA: Land Area: Investment Apartments Built in 1986 Age: 27 8,000 SF 0.35 AC (15,246 SF) Percent Leased: - GRM/GIM: 9.90/- Actual Cap Rate: 6.50% Transfer Tax: $1,293.60 - Financing: Down payment of $1,200,000.00 (100.0%) Percent Improved: 61.7% Total Value Assessed: Improved Value Assessed Land Value Assessed: $1,228,755 in 2012 $758,168 $470,587 Land Assessed/AC: $1,344,534 Legal Desc: Lot 11 blk F Charles Victor Hall Trt Unit 2 Parcel No: 217-082-13 Document No: 0261715 Sale History: Sold for $1,200,000 ($150.00/SF; $120,000/Unit) on 4/17/2013 Sold for $1,175,000 ($146.88/SF; $117,500/Unit) on 8/22/2007 Sold for $1,079,000 ($134.88/SF; $107,900/Unit) on 3/5/2004 Sold for $850,000 ($106.25/SF; $85,000/Unit) on 7/16/2002 # Units: 10 Price/Unit: Avg Unit Size: 800 SF Avg Rent/Unit/Mo: SF of all Units: 8,000 Avg Rent/SF/Mo: Unit Mix $120,000 $1,045 $1.31 no of units bed/bath avg unit size (sf) complex % month rent/low month rent/high 10 2/2.0-100.0 - - This copyrighted report contains research licensed to South Coast Commercial, Inc. - 437113. 10/22/2013 Page 1
121 Azalea Dr SOLD 10 Unit, 8,000 SF Class C Apartments Building Built in 1986 (con't) Transaction Notes Sales Price: The sales price of $1.2M was confirmed by the listing broker and buyer's broker. Occupancy: This building was 100% occupied at the time of sale. Income/Expense: The listing broker reported a GRM of 9.9 and a cap rate of 6.5% at the time of sale. Current Building Information ID: 1154358 Bldg Type: Apartments # Units: Avg Unit Size: Avg Vacancy: 10 800 SF 0.0% Bldg Vacant: 0 SF Owner Type: Developer/Owner-RGNL Zoning: RU29, Vista Land Area: 0.35 AC Bldg Status: Built in 1986 Bldg Size: Stories: 8,000 SF 2 Typical Floor Size: 4,000 SF Metering: Individually Metered Rent/SF/Yr: - Elevators: 0 Parking: Expenses: Site Amenities: 18 Surface Spaces are available; Ratio of 1.80/1,000 SF; 1.80/Unit 2012 Tax @ $1801.59/Unit; 2007 Ops @ $3034.80/Unit Balcony/Patio, Laundry Facilities Cross Street: Primrose Avenue Metro Market: Submarket: County: San Diego North County/Vista MF San Diego CBSA: San Diego-Carlsbad-San Marcos, CA DMA: San Diego, CA Map(Page): Thomas Bros. Guide 1108-C4 Location Information This copyrighted report contains research licensed to South Coast Commercial, Inc. - 437113. 10/22/2013 Page 2
2 663 Eucalyptus Ave Vista, CA 92084 Sale on 8/2/2013 for $1,465,000 ($183.13/SF; $104,643/Unit) - Research Complete 14 Unit, 8,000 SF Class C Apartments Building SOLD Transaction Details ID: 2815770 Sale Date: Escrow Length: 08/02/2013 (296 days on market) 75 days Sale Price: $1,465,000-Confirmed Asking Price: $1,500,000 Price/SF: $183.13 Price/AC Land Gross: $8,138,888.89 Sale Type: Bldg Type: Year Built/Age: RBA: Land Area: Investment Apartments - 8,000 SF 0.18 AC (7,841 SF) Percent Leased: - GRM/GIM: 11.00/- Actual Cap Rate: 5.75% Sale Conditions: 1031 Exchange Transfer Tax: $1,611.50 - Financing: $800,000.00 from Sterling Savings Bank Parcel No: 176-102-14, 176-102-15 Document No: 0487532 # Units: 14 Avg Unit Size: 435 SF SF of all Units: 6,100 Percent Improved: 77.8% Total Value Assessed: Improved Value Assessed Land Value Assessed: $373,328 in 2012 $290,594 $82,734 Land Assessed/AC: $459,633 Unit Mix Price/Unit: Avg Rent/Unit/Mo: Avg Rent/SF/Mo: $104,643 $810 $1.86 no of units bed/bath avg unit size (sf) complex % month rent/low month rent/high 12 1/1.0 375 85.7 $725 $800 2 2/1.0 800 14.3 $1,100 $1,100 This copyrighted report contains research licensed to South Coast Commercial, Inc. - 437113. 10/22/2013 Page 3
663 Eucalyptus Ave SOLD 14 Unit, 8,000 SF Class C Apartments Building (con't) Transaction Notes Sales Price: The sales price of $1.465M was confirmed by the listing broker and buyer's broker. Occupancy: There were no vacant units at the time of sale. Income/Expense: The buyer's broker reported a GRM of 11.00 and a cap rate of 5.75% on actual income and expenses at the time of sale. 1031 Exchange: This was the buyer's upleg and the seller's downleg in two separte and distinct 1031 exchanges. Income Expense Data Income Expenses Net Income Gross Scheduled Income + Other Income - Vacancy Allowance Effective Gross Income - Taxes - Operating Expenses Total Expenses Net Operating Income - Debt Service - Capital Expenditure Cash Flow Current Building Information $133,182 $5,766 $43,178 $48,944 $84,238 ID: 6555988 Bldg Type: Apartments # Units: Avg Unit Size: Avg Vacancy: 14 435 SF 0.0% Bldg Vacant: 0 SF Owner Type: Individual Zoning: - Land Area: 0.18 AC Bldg Status: Existing Bldg Size: Stories: 8,000 SF 2 Typical Floor Size: 3,817 SF Rent/SF/Yr: - Elevators: 0 Parking: Expenses: Metro Market: Submarket: County: CBSA: DMA: 6 free Surface Spaces are available; Ratio of 1.00/1,000 SF; 0.43/Unit 2013 Tax @ $411.87/Unit; 2013 Ops @ $3084.15/Unit Location Information San Diego North County/Vista MF San Diego San Diego-Carlsbad-San Marcos, CA San Diego, CA This copyrighted report contains research licensed to South Coast Commercial, Inc. - 437113. 10/22/2013 Page 4
3 326 Hillside Ter Vista, CA 92084 Sale on 4/2/2013 for $1,550,000 ($145.46/SF; $129,167/Unit) - Research Complete 12 Unit, 10,656 SF Class C Apartments Building Built in 1979 SOLD Transaction Details ID: 2793523 Sale Date: Escrow Length: 04/02/2013 (139 days on market) - Sale Price: $1,550,000-Confirmed Asking Price: - Price/SF: $145.46 Price/AC Land Gross: $2,870,370.37 Sale Type: Bldg Type: Year Built/Age: RBA: Land Area: Investment Apartments Built in 1979 Age: 34 10,656 SF 0.54 AC (23,522 SF) Percent Leased: - GRM/GIM: 10.30/- Actual Cap Rate: 5.40% - Financing: Down payment of $390,000.00 (25.2%) $1,160,000.00 from Jp Morgan Chase Bk Percent Improved: 51.7% Total Value Assessed: Improved Value Assessed Land Value Assessed: $1,200,000 in 2012 $620,000 $580,000 Land Assessed/AC: $1,074,074 Parcel No: 175-192-32 Document No: 0435185 Sale History: Sold for $1,550,000 ($145.46/SF; $129,167/Unit) on 4/2/2013 Sold for $1,670,000 ($156.72/SF; $139,167/Unit) on 2/28/2006 Sold for $1,050,000 ($98.54/SF; $87,500/Unit) on 11/15/2002 Sold for $760,000 ($71.32/SF; $63,333/Unit) on 11/27/1991 # Units: 12 Price/Unit: $129,167 Avg Unit Size: 888 SF Avg Rent/Unit/Mo: $1,025 Unit Mix no of units bed/bath avg unit size (sf) complex % month rent/low month rent/high 12 2/2.0 888 100.0 - - This copyrighted report contains research licensed to South Coast Commercial, Inc. - 437113. 10/22/2013 Page 5
326 Hillside Ter SOLD 12 Unit, 10,656 SF Class C Apartments Building Built in 1979 (con't) Transaction Notes The cap rate at time of sale was 5.4% and GRMwas 10.30 at time of sale. The buyer took out a loan to purchase the property with JP Morgan Chase Bank for $1,160,000.00. Current Building Information ID: 4737514 Bldg Type: Apartments # Units: # of Bldgs: 12 2 Avg Unit Size: 888 SF Units per AC: 22 Bldg Vacant: 0 SF Owner Type: Individual Zoning: TSP, Vista Land Area: 0.54 AC Bldg Status: Built in 1979 Bldg Size: Stories: 10,656 SF 2 Typical Floor Size: 5,328 SF Rent/SF/Yr: - Elevators: 0 Parking: Expenses: Site Amenities: 12 Covered Spaces are available; 12 Surface Spaces are available; Ratio of 2.00/1,000 SF; 2.00/Unit 2012 Tax @ $1559.93/Unit Balcony/Patio Metro Market: San Diego Submarket: North County/Vista MF County: San Diego CBSA: San Diego-Carlsbad-San Marcos, CA DMA: San Diego, CA Map(Page): Thomas Bros. Guide 1087-H6 Location Information This copyrighted report contains research licensed to South Coast Commercial, Inc. - 437113. 10/22/2013 Page 6
4 517 Massachusetts Ave Vista, CA 92084 Sale on 7/1/2013 for $620,000 ($193.63/SF; $124,000/Unit) - Research Complete 5 Unit, 3,202 SF Class C Apartments Building Built in 1960 SOLD Transaction Details ID: 2782481 Sale Date: Escrow Length: 07/01/2013 (82 days on market) 60 days Sale Price: $620,000-Confirmed Asking Price: $639,000 Price/SF: $193.63 Price/AC Land Gross: $3,600,464.58 Sale Type: Bldg Type: Year Built/Age: RBA: Land Area: Investment Apartments Built in 1960 Age: 53 3,202 SF 0.17 AC (7,501 SF) Percent Leased: - GRM/GIM: 11.20/- Actual Cap Rate: 5.90% - Financing: Down payment of $620,000.00 (100.0%) Percent Improved: 51.6% Total Value Assessed: Improved Value Assessed Land Value Assessed: $364,596 in 2012 $188,177 $176,419 Land Assessed/AC: $1,024,500 Parcel No: 175-113-14 Document No: 0412284 Sale History: Sold for $620,000 ($193.63/SF; $124,000/Unit) on 7/1/2013 Sold for $310,000 ($96.81/SF; $62,000/Unit) on 2/27/2002 # Units: 5 Price/Unit: Avg Unit Size: 640 SF Avg Rent/Unit/Mo: SF of all Units: 3,202 Avg Rent/SF/Mo: Unit Mix $124,000 $886 $1.38 no of units bed/bath avg unit size (sf) complex % month rent/low month rent/high 4 1/1.0 550 80.0 $795 $795 1 3/1.0 1,002 20.0 $1,250 $1,250 This copyrighted report contains research licensed to South Coast Commercial, Inc. - 437113. 10/22/2013 Page 7
517 Massachusetts Ave SOLD 5 Unit, 3,202 SF Class C Apartments Building Built in 1960 (con't) Transaction Notes Escrow length was approximately 60 days. Cap rate at time of sale was 5.9%and GRM was 11.20. This was an all cash transaction. There were no other sale conditions that affected the price of this transaction at time of sale. Income Expense Data Income Expenses Net Income Gross Scheduled Income + Other Income - Vacancy Allowance Effective Gross Income - Taxes - Operating Expenses Total Expenses Net Operating Income - Debt Service - Capital Expenditure Cash Flow Current Building Information $55,560 ($1,667) $6,317 $11,021 $17,338 $36,555 ID: 4380937 Bldg Type: Apartments # Units: # of Bldgs: 5 1 Avg Unit Size: 640 SF Units per AC: 29 Bldg Vacant: 0 SF Owner Type: Individual Zoning: R3, Vista Land Area: 0.17 AC Bldg Status: Built in 1960 Bldg Size: Stories: 3,202 SF 2 Typical Floor Size: 2,134 SF Rent/SF/Yr: - Elevators: 0 Expenses: 2013 Tax @ $1263.39/Unit; 2013 Ops @ $2204.21/Unit Metro Market: Submarket: County: San Diego North County/Vista MF San Diego CBSA: San Diego-Carlsbad-San Marcos, CA DMA: San Diego, CA Map(Page): Thomas Bros. Guide 1087-H5 Location Information This copyrighted report contains research licensed to South Coast Commercial, Inc. - 437113. 10/22/2013 Page 8
5 181 Pala Vista Dr - Vista Apartments Vista, CA 92083 Sale on 6/10/2013 for $720,000 ($136.05/SF; $144,000/Unit) - Research Complete 5 Unit, 5,292 SF Class C Apartments Building Built in 1985 SOLD Transaction Details ID: 2766993 Sale Date: Escrow Length: 06/10/2013 (73 days on market) 60 days Sale Price: $720,000-Confirmed Asking Price: $900,000 Price/SF: $136.05 Price/AC Land Gross: $3,031,578.95 Sale Type: Bldg Type: Year Built/Age: RBA: Land Area: Investment Apartments Built in 1985 Age: 28 5,292 SF 0.24 AC (10,346 SF) Percent Leased: - GRM/GIM: 11.20/- Actual Cap Rate: 5.10% - Financing: Percent Improved: 65.9% Total Value Assessed: Improved Value Assessed Land Value Assessed: $545,844 in 2012 $359,898 $185,946 Land Assessed/AC: $782,930 Down payment of $220,000.00 (30.6%) $500,000.00 from Private Individual Fas Fiancial Inc Parcel No: 179-121-08 Document No: 0362849 Sale History: Sold for $720,000 ($136.05/SF; $144,000/Unit) on 6/10/2013 Sold for $450,000 ($85.03/SF; $90,000/Unit) on 2/2/2001 # Units: 5 Price/Unit: Avg Unit Size: 970 SF SF of all Units: 4,850 Unit Mix $144,000 no of units bed/bath avg unit size (sf) complex % month rent/low month rent/high 4 2/2.0 900 80.0 - - 1 3/2.5 1,250 20.0 - - This copyrighted report contains research licensed to South Coast Commercial, Inc. - 437113. 10/22/2013 Page 9
181 Pala Vista Dr - Vista Apartments SOLD 5 Unit, 5,292 SF Class C Apartments Building Built in 1985 (con't) There was a $20,000 credit for deferred maintenance to the buyer. Escrow length was approximately 60 days. Transaction Notes Buyer took out a loan with Mission Federal to purchase the property. The loan was for the amount of $500,000.00 therefore, buyer's down payment was $220,000.00. The cap rate at time of sale was approximately 5.1%. There were no vacancies at this multi-family property time of purchase. Current Building Information ID: 4314660 Bldg Type: Apartments # Units: # of Bldgs: 5 2 Avg Unit Size: 970 SF Units per AC: 21 Bldg Vacant: 0 SF Owner Type: Other - Private Zoning: R3, Vista Land Area: 0.24 AC Bldg Status: Built in 1985 Bldg Size: Stories: 5,292 SF 2 Typical Floor Size: 2,646 SF Rent/SF/Yr: - Elevators: 0 Parking: Expenses: Site Amenities: 2 Surface Spaces are available; 4 Covered Spaces are available; Ratio of 1.60/1,000 SF; 1.20/Unit 2010 Tax @ $1581.58/Unit A/C, Balcony/Patio, Storage Units Metro Market: San Diego Submarket: North County/Vista MF County: San Diego CBSA: San Diego-Carlsbad-San Marcos, CA DMA: San Diego, CA Map(Page): Thomas Bros. Guide 1087-H7 Location Information This copyrighted report contains research licensed to South Coast Commercial, Inc. - 437113. 10/22/2013 Page 10
6 1135 S Santa Fe Ave Vista, CA 92083 Sale on 5/10/2013 for $759,000 ($253.00/SF; $94,875/Unit) - Research Complete 8 Unit, 3,000 SF Class C Apartments Building Built in 1945 SOLD Transaction Details ID: 2746393 Sale Date: Escrow Length: 05/10/2013 - Sale Price: $759,000-Full Value Asking Price: - Price/SF: $253.00 Price/AC Land Gross: $1,265,000.00 Sale Type: Bldg Type: Year Built/Age: RBA: Land Area: Investment Apartments Built in 1945 Age: 68 3,000 SF 0.60 AC (26,136 SF) Percent Leased: - GRM/GIM: -/- - Financing: Down payment of $289,000.00 (38.1%) $470,000.00 from Us Bk National Assn Percent Improved: 35.7% Total Value Assessed: Improved Value Assessed Land Value Assessed: $840,000 in 2012 $300,000 $540,000 Land Assessed/AC: $900,000 Legal Desc: POR LOT 33 Parcel No: 180-150-14 Document No: 0296932 Sale History: Sold for $759,000 ($253.00/SF; $94,875/Unit) on 5/10/2013 Sold for $290,000 ($96.67/SF; $36,250/Unit) on 7/31/1998 # Units: 8 Price/Unit: $94,875 Avg Unit Size: 375 SF Avg Rent/Unit/Mo: $890 Unit Mix no of units bed/bath avg unit size (sf) complex % month rent/low month rent/high 7 1/1.0-87.5 $790 $963 1 2/1.0-12.5 $995 $995 This copyrighted report contains research licensed to South Coast Commercial, Inc. - 437113. 10/22/2013 Page 11
1135 S Santa Fe Ave SOLD 8 Unit, 3,000 SF Class C Apartments Building Built in 1945 (con't) Transaction Notes We were unable to get a hold of the parties involved in this transaction. Please note that all of the information on this report is based on recorded public records. Current Building Information ID: 824877 Bldg Type: Apartments # Units: # of Bldgs: 8 1 Avg Unit Size: 375 SF Bldg Vacant: 0 SF Owner Type: Individual Zoning: C2, County Land Area: 0.60 AC Bldg Status: Built in 1945 Bldg Size: Stories: 3,000 SF 1 Typical Floor Size: 3,000 SF Rent/SF/Yr: - Elevators: 0 Parking: Expenses: Site Amenities: Metro Market: Submarket: County: CBSA: DMA: 17 Surface Spaces are available; Ratio of 1.00/1,000 SF; 2.13/Unit 2012 Tax @ $1630.23/Unit; 2010 Ops @ $2533.25/Unit, 2011 Est Ops @ $2173.65/Unit Laundry Facilities, Storage Units Location Information San Diego North County/Vista MF San Diego San Diego-Carlsbad-San Marcos, CA San Diego, CA This copyrighted report contains research licensed to South Coast Commercial, Inc. - 437113. 10/22/2013 Page 12
7 842 Sinkler Way - Palms Vista, CA 92083 Sale on 9/10/2013 for $1,040,000 ($128.11/SF; $130,000/Unit) - Research Complete 8 Unit, 8,118 SF Class C Apartments Building Built in 1979 SOLD Transaction Details ID: 2837104 Sale Date: Escrow Length: 09/10/2013 (85 days on market) 63 days Sale Price: $1,040,000-Confirmed Asking Price: $1,099,999 Price/SF: $128.11 Price/AC Land Gross: $2,039,215.69 Sale Type: Bldg Type: Year Built/Age: RBA: Land Area: Investment Apartments Built in 1979 Age: 34 8,118 SF 0.51 AC (22,216 SF) Percent Leased: - GRM/GIM: 9.70/- Actual Cap Rate: 5.70% - Financing: Down payment of $260,000.00 (25.0%) $780,000.00 from Mission Fed'l C.U. Percent Improved: 73.0% Total Value Assessed: Improved Value Assessed Land Value Assessed: $967,316 in 2012 $705,880 $261,436 Land Assessed/AC: $512,619 Parcel No: 179-124-34-00 Document No: 0559994 Sale History: Sold for $1,040,000 ($128.11/SF; $130,000/Unit) on 9/10/2013 Sold for $975,000 ($120.10/SF; $121,875/Unit) on 5/28/2008 Sold for $1,150,000 ($141.66/SF; $143,750/Unit) on 6/16/2005 Sold on 4/6/2005 Non-Arms Length Sold on 4/6/2005 Non-Arms Length Sold for $795,000 ($97.93/SF; $99,375/Unit) on 6/27/2002 Sold on 2/27/2002 Non-Arms Length Sold on 11/2/2001 Non-Arms Length Sold for $489,000 ($60.24/SF; $61,125/Unit) on 6/13/2001 Sold for $357,500 ($44.04/SF; $44,688/Unit) on 5/28/1998 Sold for $275,000 ($33.88/SF; $34,375/Unit) on 6/27/1997 # Units: 8 Price/Unit: Avg Unit Size: 997 SF Avg Rent/Unit/Mo: SF of all Units: 7,980 Avg Rent/SF/Mo: $130,000 $1,150 $1.15 This copyrighted report contains research licensed to South Coast Commercial, Inc. - 437113. 10/22/2013 Page 13
842 Sinkler Way - Palms SOLD 8 Unit, 8,118 SF Class C Apartments Building Built in 1979 (con't) Unit Mix no of units bed/bath avg unit size (sf) complex % month rent/low month rent/high 6 2/2.0 990 75.0 $1,100 $1,100 2 3/2.0 1,020 25.0 $1,300 $1,300 Transaction Notes 100% occupied at time of sale. Escrow length was approximately 63 days. No other sale conditions affected the sale price of this transaction. Current Building Information ID: 667584 Bldg Type: Apartments Bldg Status: Built in 1979 # Units: # of Bldgs: 8 1 Bldg Size: Stories: 8,118 SF 2 Avg Unit Size: 997 SF Typical Floor Size: 3,990 SF Bldg Vacant: 0 SF Const Type: Wood Frame, Owner Type: Individual Metering: Individually Metered Zoning: RM Rent/SF/Yr: - Land Area: 0.51 AC Elevators: 0 Parking: Expenses: Site Amenities: 8 Covered Spaces are available; 8 Surface Spaces are available; Ratio of 1.97/1,000 SF; 2.00/Unit 2010 Tax @ $1699.11/Unit; 2008 Ops @ $1985.88/Unit Balcony/Patio, Dishwasher, Laundry Facilities Metro Market: San Diego Submarket: North County/Vista MF County: San Diego CBSA: San Diego-Carlsbad-San Marcos, CA DMA: San Diego, CA Map(Page): Thomas Bros. Guide 1106-B2 Location Information This copyrighted report contains research licensed to South Coast Commercial, Inc. - 437113. 10/22/2013 Page 14