2015 07-28 EAC Community Weekly Newsletter

July 28, 2015

EXECUTIVE PARTNERS

Kevin Yoo, CEO

One of the key elements for successful real estate investing is immediate access to capital for acquisitions. Our current structure of raising funds for each individual property is time consuming and often makes it difficult for us to perform. For this reason EAC, GP will be starting a EAC Community Fund. The EAC Executive and Management Team have been debating the following main features of this fund and are still developing the idea.

1. No minimum or maximum investment.
2. Minimum guaranteed return of 9% annualized with interest paid quarterly.
3. All profits over this will be distributed annually.
4. Profits that can be distributed will be calculated in following way. Gross Income – (9% guaranteed interest + reserves needed for rentals + expenses for running the fund) = Net Income. EAC, GP will then be paid a portion of the Net Income as management fee only if there is any Net Income. What remains after management fee is paid out, will be distributed annually as net profit to Investor Partners.
5. Funds can be redeemed at any time. EAC, GP will honor the redemption request within 4 to 8 weeks. We will have redemption windows that will allow pulling out funds without a penalty. Requesting to pull out funds outside of these windows will result in forfeiting the annual bonus distribution. The redeemed funds will still earn the 9% annualized payment for the period of time the funds remained the EAC Community Fund.
6. Corporate guarantee on all principal invested.

EAC, GP will manage this fund and invest in the same deals we are doing now. Our current Investor Partners will not need to choose a deal to invest. Their money will effectively be fully invested all the time. Any current Investor Partners that want to continue to invest into individual deals can do so, but the availability of these projects will be subordinate to the EAC Community Fund. We will also allow new Investor Partners to invest in individual deals with a personal guarantee from me for two projects if they desire this path to ultimately invest in EAC Community Fund, or to become a Preferred Investor Partner with a separate LLC. Please contact me directly with any questions.

John Hostetler, COO

B2R reached out to us with the closing package (20 files!) for review, which I have just completed. We are trying to schedule our signing for today or tomorrow with a close date of Thrusday and funding by Monday of next week. Even so, with 17 properties over five states there is much to coordinate. Kevin is on vacation with his family and will try to sign by tomorrow. Our property managers must sign and return a Management assignment document. And we have one property in the package which must be signed for by a third party. It is my job to make sure this all happens as soon as possible so that we can get our investors paid back in full and move forward to our next loan package. I will keep everyone involved updated as often as possible.

3311 Wisconsin flip - We had a problem with the flooring on this property which was caused when the A/C failed. We are having the new A/C installed presently and the flooring will be fixed this week as well. Even with these problems, we have a potential buyer who is very interested in putting forward an offer. They are prequalified for our original ARV of $175k, but Mary Krummenacher is trying to work with the buyer's agent to find a bit more through another lender. We will keep you posted.

Olga Levin-Diaz, CFO

Last week for Appfolio import and implementation. We will start using this program next week as rents start coming in. It will probably take a couple of weeks to iron out any wrinkles.

Continuing to work on a financial analysis and creating systems.

MANAGING PARTNERS

Vil Nikollaj, Managing Partner

San Diego - RBD Ventures

• Upas
  • Architect is saying permit complete this week
  • RBD at property Monday with contractors
  • Plan to start demo and rehab as soon as the permit hits which again hope is this week

St. Louis - Mary Krummenacher

• 3441 Shenandoah (Dr. Yoo's 401k plan purchase)
  • Demo is done but fell behind on framing which will be completed this week
  • Planning to be under budget, so GC bringing back HVAC contractors to see if central air may be an option again
• Evaluating new prospects and plan to submit offer on at least one property

Isaac Guzman, Managing Partner

I have established communication with Kevin Rizzo of Creative Real Estate investments, LLC in Connecticut. We are currently reviewing two fix and flip deals. First is 87 Mueller Avenue, Hamden Ct. 06514. This looks to be a great deal for Investors, Partners and EAC as a whole with a 24% ROI for Investors and a net profit of $65,443 split between EAC and GP (41.88% CoC return for EAC). The second is 35 Allene Drive, Hamden, Ct. This one is less of a 'homerun' and still has a few questions to be answered. Information can be found in the Dropbox folder labeled 'Kevin Rizzo' for both flips. In addition, he has reviewed our JV agreement and fix and flip partnership documents and has responded with a few questions and suggested changes which have been submitted to EAC executive team at this time.

We are still waiting for the banks response on the short sale with Brittany Moreland.

Chad Urbshott, Managing Partner

IIP:

Ingleside : rented, Sec 8 inspection scheduled last week.
Garfield: rehab completion this week and marketed for rent.
Libby: estimates pending for concrete and minor interior, bid to be awarded.

Nathan Turner:

BPO came back on the note he narrowed down to be way less than Seller’s indication, so we walked. All the others from the original tape have sold. Nathan received a new list the other day, and will filter out some options for us.

Erby Beauvais (Jacksonville, FL):

I met with Erby in person while I was up in Jax last week. He is keen on doing a deal with EAC, and will continue to send us potential properties. I looked at a few while I was there, but the rehab costs were too high versus the asking prices.

Linda Lin, Managing Partner

Awaiting updates.

GROUND PARTNERS

Lou Ellis, Ground Partner from Jacksonville, North Carolina

Awaiting updates.

Anthony Mwangi, Ground Partner from South Bend, Indiana

• Cleveland Fourplex - Basement clean out and masonry repair on walls and floor in progress. Furnaces will be installed this week in the basement. Concrete pouring and finishing on exterior porches and front sidewalk scheduled tomorrow. Trying to schedule rough in inspections by the end of this week or early next week after which we will be ready to hang drywall on LL. UL interior/exterior framing and windows scheduled for next week.
• Cleveland Duplex - Major framing, drywall hanging, mudding and taping on LL and UL complete. Some sanding and repairs remaining. We are scheduled to start painting by Wednesday this week.
• Dennis SFR - Drywall finishing and repairs underway and getting ready for painting. Windows getting wrapped with aluminum. Prepping to install flooring (ceramic in kitchen and bath and luxury vinyl plank everywhere else).

Frank Veliz, Ground Partner from Orlando, Florida

Avenue L – We have completed rehab. We have rented one of the units @ 650.00. I have an investor interested in buying property @ 85k. Pictures are available on the projects section: http://eacinvestments.com/our-partners/ground-partners/frank-veliz-ongoing-projects/

Giovanni Gracias, Ground Partner from San Diego, California

4748 College Ave:

• Week are entering week 4 of the project and all is moving according to the timeline and scope of work
• We have framed the new addition, added rough plumbing and electrical and partially drywalled. We have the 1st city inspection happening tomorrow. If we pass then we will move to finishing drywall and to the finis stage of the project. This includes flooring install, kitchen cabinet refinishing, granite and appliance install.
• Other milestones completed include: exterior paint, relocation of water heater, foundation completely repaired, relocation of existing window, upgraded electrical and plumbing. 2672

Escala Circle:

• Easy cosmetic fixer
• Started the 1st phase of this project last week
• Demo, and drywall patch and paint started and being completed this week
• Next week floors will be refinished to fix tear & wear and give a new appearance
• Kitchen & bathroom cabinets will be refinished and painted white to give an upgraded look Appliances will be inspected and serviced
• This was an FHA short sale and there is a 90 day resale restriction. Our goal is to have it on the market the week of 8/17 .

12081 Calle de Medio:

• The project is 80% completed but unfortunately I made the call last Thursday to fire my contractor. There were simply to many delays, excuses and the final straw came when he promised to have 3 guys completing the project last week. I dropped in thursday and no one was there and no process had been made since the previous week.
• My contractor handling the College Ave project will be taking over effective today and we will be wrapping up the project as soon as possible. .

George Flint, Ground Partner from San Diego, California

We had a site meeting with structural engineer, framing sub, concrete sub & GC. We discovered a few value engineering ideas, which is a huge plus. We are on schedule to submit construction docs to the city on or by August 5th.

John Allen, Ground Partner from San Diego, California

We have made quite a bit of progress since the close of escrow last week:

• We moved ahead with RFP's for SDGE engineering work to go underground, landscape architecture, and storm water management.
• While waiting to hear back with bids on the work, we have begun work on the construction drawings and consulted with a civil engineer.
• I have nearly completed the marketing package, the only task remaining is to input the architectural rendering into the package.
• The rendering has been hired out, and is nearly complete. We have decided on a viewpoint that we like and they are adding the details now.

Once the marketing package is complete, I will begin circulating it to everyone I have made contact with regarding the purchase of this project. I will also provide it to the EAC Community for circulation to any potentially interested parties, so that we can avoid listing it to the MLS and save ourselves some of the commission.