2015 8-25 EAC Community Weekly Newsletter

EXECUTIVE PARTNERS

Kevin Yoo, CEO

Buying an asset and making it perform to the highest and best use is what every investor should do. Buying a rental property and making it perform typically means fixing it up and renting it out for the highest rent to the best tenant. Having a tenant that pays faithfully for as long as possible is the most desired outcome.

We at EAC, however, are looking at non-traditional ways to create the highest and best use of our rentals. In South Bend, Indiana we are trying the rent-by-room method which still has to be fully set up and prove its value. Today, we want to present the Vacation-Rental-By-Owner model by introducing to EAC Community Gary Ennis and his properties in Austin, Texas. He has turned his long-term rentals into short-term rentals and has seen his cash flow increase upwards of 600%. The EAC team had an epiphany that this was a way for EAC Community to get into higher priced markets and own A class properties which is a goal of ours to take advantage of the appreciation ROI in these hot markets as well as diversify our holdings which are currently predominantly B and C class properties.

Please listen in on Gary’s presentation and ask lots of questions. We have plans of buying some properties in Austin, Texas with Gary and his wife.

John Hostetler, COO

I began the process of applying for our second tranche of refinancing with B2R late last week. This time around I am going through their in-house team rather than an outside broker, and expect improved communication as a result. B2R is running a promotion that gives us 50% off the appraisals and 1/4% off of origination fees if signed by thiscoming Friday, so that is an incentive to get it done.

Olga and I have been working to integrate Appfolio with our Quickbooks accounting software. There are many decisions to make which affect our efficiency and ability to report financial data accurately and timely. Ultimately, we do not want to enter data twice, so we will continue to learn more about Appfolio’s capabilities to ensure that we utilize it to its fullest.

Olga Levin-Diaz, CFO

No updates.

MANAGING PARTNERS

Vilson Nikollaj, Managing Partner

San Diego – RBD

• 2420 Upas: still awaiting approval of latest plans from city. Anticipate end of this week/early next

St Louis – Chad Little/Mary Krummenacher

• Unable to purchase any homes at auction. Majority of homes on our short-list had liens paid prior to auction. Also, more competition and new buyers emotionally bidding up properties.
• Next auction in October. Largest auction typically.
• Currently assessing property from John Skaggs. 3434 Illinois (Duplex)

Isaac Guzman, Managing Partner

• Brittany Moreland has since opted to bring us fix and flip opportunities as she may have a production company very interested in producing a house flipping show with her. She has since brought 4 flips our way but we are currently working on getting all items on the GP checklist verified.
• Kevin Rizzo – We have gone through a few revisions of the JV agreement and hopefully will have it executed this week to move forward. After much back and forth and consideration, this newly revised document may be a good template moving forward, as it provides more clarity as to the GP’s role and limitations and fulfillments of the JV agreement.

Chad Urbshott, Managing Partner

No updates.

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

• I have three projects that are scheduled for completion this week – Cleveland Fourplex, Cleveland Duplex and Dennis SFR. A hectic week to say the least.
• Closed on my next two projects yesterday, 8/24/15 – Berkley SFR flip in South Bend, and Broadway a RBR in Mishawaka.

Frank Veliz, Ground Partner from Orlando, Florida

Awaiting updates.

Giovanni Gracias, Ground Partner from San Diego, California

4748 College Ave:

• We are at week 7 of the project and we had a small delay last week. The city inspector asked for 3 changes to be made related to the electrical & foundation plans. Changes have been made by the architect and submitted to the city we are waiting approval and final inspection.
• EXTERIOR: Fence in the backyard was redone, landscaping, building of shed to house water heater and washer/dryer will be completed this week.
• INTERIOR: closing of walls in rooms where the inspections will take place , install of furnace, final details.

2672 Escala Circle:

• First phase of painting was completed. Final details to follow cabinet and flooring refinishing.
• Cabinets, handrails, and hardwood floors will be refinished and completed bysaturday.
• Appliances have been inspected by a repair person and all are now working properly
• This was an FHA short sale and there is a 90 day resale restriction. Pre marketing of the property began last week and we have a preview showing on sunday.

12081 Calle de Medio:

• The project is 85% completed. After letting go of the original contractor I have had to sub contract additional trades. This approach does keep cost down but can be more hands on and time consuming.
• All tile has been completed
• Carpet and flooring being finalized
• Finish details will also be started this week along with finish of kitchen cabinet install.
• Staging company coming by this week to give us a bid.
• Comps are strong and we anticipate listing this property in the $325K range.

George Flint, Ground Partner from San Diego, California

Muirlands update:

Plans are still with the city. We are working on the refi to a construction loan. Much higher leverage thus providing a higher annul

John Allen, Ground Partner from San Diego, California

We are moving forward smoothly with 4336 53rd Street.

• Civil engineer is looking over the grading plan and designing the retaining walls. We should be ready to submit for grading plan check within 2 weeks.
• We were able to reduce the retaining wall height in the rear yard, which frees up an exception if we end up needing another one when we submit to plan check. This is nice in case something unexpected comes up.
• Landscape architect and engineer in charge of storm water are working together to create the basin sizes for landscaping, and figure out the drainage calculations for storm water management. These will be done in the next couple weeks as well, in time for submittal of the grading plan.
• Electrical plans are finished.
• Site sections are finished.
• SDGE provided me with a will-serve letter to submit with our construction drawings, so the design and engineering of the underground utilities will not hold us up when we submit for approvals.
• I made updates of the marketing package and uploaded it to dropbox. They just show the updated design drawings
• We have 3 potential buyers circling. I just responded to an email full of questions from one potential buyer today, and he said that he hopes he can submit an offer soon. There are two others that are also serious, and I have a land broker approaching a big-time investor today who specializes in value-add apartments, but could be interested in this project as well.
• Underwriting these projects is a very complex undertaking, and new construction has a lot of moving parts so any buyer/builder has to do A LOT of due diligence to figure out a project. We are still ahead, but I will be ready to list this project if we don’t receive an offer or letter of intent in the next 2 weeks.