2016 05-17 EAC Community Weekly Newsletter

EXECUTIVE PARTNERS

Kevin Yoo, CEO

Currently, we have several fix and flip deals with one of our Ground Partners in San Diego that have been going longer than expected. This GP has been faced with some difficult issues which EAC has been actively following and assisting in any manner we can. This Ground Partner has been a Partner that has performed multiple deals with us successfully. The notes for these projects will come due in July and EAC is making plans now to execute one of several options of completing our investments and recouping our investments.

One of our Investor Partners have asked to exit his investment early in one of these projects due to what is happening. We have paid him back the majority of his principal at his request. EAC will pay this IP the rest of his principal and the interest promised him. We will honor his early redemption request and pay all promised interest. We will do the same for all the other IPs invested in the projects of this GP. From this day forward, however, EAC will follow the policy below with regard to early redemptions. The following is in our EAC Community Prospectus.

REDEMPTION POLICY: This policy is available only for Beginning Investor Partners and Individual Investor Partners. The principal portion of the investment can be redeemed at any time within short time of notification.However, the penalty for early redemption will be loss of the returns of the project. If the EAC Team elects to offer this same project to the EAC Community, all the returns that were to be paid to the original IP will be offered to the new IP that will take the place of the IP making the redemption. And if any single or multiple redemptions by an IP is deemed to be frivolous by EAC, the IP will no longer be allowed to invest in EAC projects.

We have always paid back every IP all of their principals and interest in every project. However, from this moment going forward, we will not pay the interest on a project if an early redemption is made. Moreover, if the EAC Team deems that an early redemption is made without good reason, we will no longer accept that IP into our Community. We have always taken care of our IPs removing 100% of the risk in our investments. In exchange for this, we ask that you place complete faith in the EAC Team. If you cannot, then this Community is not for you and you must invest elsewhere. My goal is to make every Partner in the Community financially free. But this is if and only if you commit to us completely and stay with us through thick and thin.

John Hostetler, COO

St. Louis update – I am on my way back from St. Louis and can report good progress on the projects going on there. Lou, Chad Little, and I also attended the tax sale on Tuesday and picked up 6 properties at good prices, most of which we will wholesale to other investors. We are evaluating this week if we want to keep one or two for either long-term rental or flip purposes. What was especially evident to me was the strong activity from bidders whenever a property in Benton Park West came up on the auction block. It is clear that this is a hot area for investors, and we feel we picked up some good addresses along this corridor, whether we wholesale them or develop them ourselves.

Wyoming flip – This home is ahead of schedule. The sheetrock is completely installed and the mudding was finishing up. Because of the cool, wet weather this week, it will take a few days before ready for sanding and painting, but despite this Lou feels that we could be on the market within 30 days, which is remarkable. If this happens, that is 90 days from start to finish on a gut rehab of a 3,200sf home – very impressive.

Jefferson flip – This home is in the middle of re-framing. Most of the existing floors have needed extensive repairs, but the crew is about 50% done. Once finished the mechanicals will begin and Lou thinks this one could take approximately 120 days total.

Oregon buy/hold – The 3-bedroom townhouse is completed and we have a tenant viewing on Thursday. The one bedroom units are painted and ready for flooring, cabinets and finish work. We are pushing to finish this within 10 days.

Broadway buy/hold – Framing is completed and mechanicals will begin within a week. We expect this to move quickly now that it is underway. Should be rent-readywithin 60 days.

Winnebago – This project is behind schedule, mainly due to a GC who has proved to be less than skilled at hiring quality carpenters and subs. The mechanicals are in on this project, but plumbing has still not passed inspection. There is also a minor framing issue on the laundry room, which has been redone several times. No one was present when we arrived, which was the final straw. Lou plans to fire the GC and put the company doing Wyoming, Jefferson, Broadway and Oregon on this job to get it back on track.

Cherokee buy/hold – We looked at this property and are still evaluating the best configuration to maximize rents and minimize our construction costs. Once we determine this the demo and framing will begin.

Texas townhomes flip – Lou and Mary will meet with our architect within a few days to begin the layout of both townhomes.

I also met with another potential lender, Central Bank, during my trip. They are another good sized regional bank that actively loans in St. Louis. Although I still plan to move forward with Great Southern Bank for Oregon, Broadway, and Winnebago, it is always good to have another source for financing of these types of long-term rentals.

Olga Levin-Diaz, CFO

Working on our FL properties with a potential buyer for Emma and making sure repairs are done to the empty unit in Ave L. We decided to keep Ave L for now as it will cash flow well after we place another tenant in.

We are working out the final details on our partnership in Chicago. Justin and Willem have been very helpful in answering all the questions. We have a deal in the works that has been funded and once all the paperwork is done we will be ready to move forward at a higher speed of acquisition with them.

I have also been working with Ally, our bookkeeper and teaching her the ropes of rental portfolio oversight. She should be able to take over this task in June.

This will be my last conference call for a while as I will start maternity leave in June.

MANAGING PARTNERS

Vil Nikollaj, Managing Partner

BNF – George Flint

La Jolla Market Update:
– Sale price, # sales both up year-over-year and from March to April
– https://www.dropbox.com/s/by4qlnxrkpbqwv6/Apr2016_LaJolla92037.pdf?dl=0
– Expect updated schedules this week
– Will do another walk-thru this Fri (5/20)

Muirlands
– Foundation did pass on 5/16. http://opendsd.sandiego.gov/web/Approvals/Details/1531439
– Schedule:
o Pro forma 14 mo total: Aug 2016
o Overall behind 1 month if we can close upon completion of construction
o Updated schedule depicts another month behind schedule, but schedule the is based on hitting milestones. Plan to continue hitting milestones to be back on schedule.

Pescas
– All is going well.
– Schedule
o Pro forma 12 mo total: Sep 2016
o Target construction completion July 2016

Pics Muirlands: https://www.dropbox.com/s/ujdf45h23z1y6y3/1370%20Photos%2005-2-16.pdf?dl=0

Pics Pescas: https://www.dropbox.com/s/7ndd1xz6whvds6w/1371%20Photos%2005-2-16.pdf?dl=0

Southern California Youth Alliance – John Allen
4336 53rd
– Contingency extended to May 19 (Thur)
– Tentative Closing Date: 6/4/2016
– Backup investor with higher offer price as contingency

PPS – Giovanni Gracias
– Requested phone call, additional information and completion of tasks and nothing received.

4748 College
– Fell out of Escrow ($560k) due to inspection issue:
o Surface cracks on the foundation stem wall, which are typical of an older home and do not compromise the foundation.
o Property passed foundation inspection. http://opendsd.sandiego.gov/web/Approvals/Details/1517393
o The buyer requested ~$5,000 in repairs done by PPS. Could not agree.
– Back on market at reduced price $557k (originally $569k)
– 12 mo deadline: June 24

2672 Escala
– Supposed to be refinanced through another lender. No updates.
– 12 mo deadline: July 6

4184 33rd St Unit 3
– Offered to provide funding for material to complete project and no response.

Chad Urbshott, Managing Partner

Please refer to Nathan’s updates.

Tony Banawa, Managing Partner

Kevin and I had our intial introductory UBER call with Brian Adams. He is a multi family investor with a CPA background. Has completed successful deals with a syndicated investor format. We notified him of our interest as a JV format with a MF partner. We’ll be receiving further info from his current 240 unit deal they have already purchased to follow along and see how he operates his deals. This will give us some insight as to who we will potentially work with as a MF JV partner.

Willem Young, Managing Partner

1008 Braemer, Flossmore, IL 80% construction Complete In contract 5/10 to sell once leased for 160K

7718 Loomis Chicago, IL 40% Construction Complete In Verbal Purcahse Contract finalizing paperwork for sale at 185K

16920 Old Elm Country Club Hills, IL Closing on the acquisition at 3PM CST Today

Antonio Cerqueira, Managing Partner

2502 Ingersoll closed on Monday 16th
2520 Ingersoll expected to close later this week
2167 66th St expected to close next week. I am investing myself money on the deal.

For the ingersolls our ARV is $90,000 but I found comps of +$125,000 so we can hopefully sell for more than the expected amount.

GROUND PARTNERS

Lou Ellis, Ground Partner from Jacksonville, North Carolina

Awaiting updates.

Steve Shaffer, Ground Partner from South Bend, Indiana

226-228 Cleveland:
Drywall complete, second floor flooring installed, final electric, plumbing, HVAC moving forward

126 E Broadway:
Pending move in June 1, 2016

Giovanni Gracias, Ground Partner from San Diego, California

4748 College Ave:
The property unfortunately fell out of escrow last week. The buyer demanded repairs that totaled between $5,000-$6,000. The repairs that they demanded were for repairs that were deemed cosmetic. The repairs they requested had been signed off by the city if San Diego inspector, my licensed contractor and a licensed architect. I provided plans, copies of permits and sign off from the city. We did explore the possibility of just issuing them a credit but they were very clear that they did not want to go that direction.

The property is back on the market as of last week and held open houses this past weekend. From that open house, we have a party that is interested and coming back tonight to look at it again.

2672 Escala Circle:
The refinance process is still in the works with Presidio Mortgage locally in San Diego. The 2nd position lender is on board with coming in as well and we are going through details of the contract starting tomorrow. Once this is completed, I anticipate the refinance to take 10-14 days.

4184 33rd St:
The project is at approximately 70% of completion. Updated pictures have been uploaded to Dropbox.

George Flint, Ground Partner from San Diego, California

1222 Muirlands:
Concrete inspection should be passed today, thus allowing us to finish up framing. Framing should be done in 3 to 3.5 weeks.

Pescas:
Project moving quickly. Should have house completed in 9 weeks.

John Allen, Ground Partner from San Diego, California

4336 53rd Street:
– We are in plan check for the building plans, I expect to get the red line sets back in two weeks
– Buyer is still completing DD, getting bids for the work
– I will touch base with him today for a progress report
– I started the process of the underground dry utilities. Buyer will reimburse us if we incur any expenses for this work, but escrow should close by the time any money is due
– We have another interested party who wants to submit a backup offer. The number I’ve been told the offer came in at is $720k, 30 day DD, 60 day close. The broker told me that he informed the buyer that it’s too long, so he believes they will modify it and resubmit. At that time we can have a conversation in case Blue Centurion decides to back out.

Nathan Turner, Ground Partner from Ontario

325 Cedar:
I found out that the loan for 325 Cedar Cir is already terminated but people are still living in the house. Once I’ve had a chance to review what the people actually signed I’ll move ahead with whatever eviction provisions are in the paperwork.

3539 Judy:
I’ll be receiving collateral docs for Judy in the next week or so and will send out a breach of contract letter as soon as servicing transfers on May 20. That takes approx 30 days to expire at which point we can move ahead with cancelling the contract. If the borrower cooperates the contract can be cancelled within a month and if not the process will take 4-5 months at most