​December 2016 EAC Community Monthly Newsletter

EXECUTIVE PARTNERS

Kevin Yoo, CEO

As EAC goes forward into 2017, we will be changing up our investment offerings some more. Over the past four years, we have paid out more than $1M dollars in interest to our Investor Partners. We paid out above market rates initially to attract capital. However, our problem today is that we have more capital than deal flow. In addition, as we grow and our overhead increases, we will need to retain more of the earnings to keep EAC on firm financial grounds as we expand. We had recently toyed with the idea of offering a fund that would allow our IPs to invest with a lot of flexibility and to be paid 8% from our income generating properties. We will keep pursuing this into the future but at this moment the cost associated with this is prohibitively expensive such that we are going to very slowly in this direction.

For now, we have decided to simply offer long-term promissory notes with similar flexibilities. EAC will have all non-Preferred Investor Partners invest first in a long-term promissory note made against a rental property in our portfolio for a fixed 8% rate of return amortized fully for 30 years for at least one year prior to investing in any of our other higher yielding deals. The amount of investment an Investor Partner can also make will be limited to the amount of notes that the IP owns in EAC. After one year, the IP can sell part or all of their note and invest in other EAC projects as they become available or simply have the money returned to them. Although EAC cannot guarantee this can happen, we will make all efforts to sell the note to another IP or purchase it back ourselves if funds permit. If money is kept in EAC, the IP can move back into another once their non-note investment is finished and if there are any notes available to purchase. If the money is taken out of EAC, any future note purchase must also abide by the one year rule before that money can be moved. With this in mind, if you plan to continue to invest in EAC projects, please be prepared to invest for at least one year as much as you want to invest in EAC in our long-term promissory notes for at least a year. Our goal in doing this is for the benefit for both EAC and our IPs. It will help EAC to finance some of our properties we are having trouble getting long-term financing and it will help us keep loyal money in EAC. It will help IPs continue to keep their money invested with consistent returns with flexibility to move the money as they wish.

John Hostetler, CFO

Updates to come.

Vil Nikollaj, COO

BNF – George Flint
Due to slow-down in the market, our expectation is EAC will not be able to sell either of the La Jolla homes per the original pro-forma. Main factor for this are: delays in construction, increased rehab costs and additional capital/interest costs and our inability to list properties prior to start of school. Our main goal is to return our initial capital and we think there is sufficient profitability to obtain a single-digit return.

6645 Avenida De Las Pescas, La Jolla (SFR High-End Flip)
Schedule: Open houses weekly and home continues to receive foot traffic. No written offers yet.
List price: Pricing strategy to reduce $10k/week to keep listing at top. $2.99M to $3.54M.
Listing Link: http://bit.ly/2dTE5t4 or http://www.6645laspescas.com/

1222 Muirlands Vista Way, La Jolla (SFR High-End Flip)
Schedule: Additional $80k spent to complete project. Delays due to Right-of-way permit. Expect to receive final permit/Certificate of Occupancy on Wed 12/21. Staging will go in after and full marketing will begin. Received offer $3.8M, countered and never received counter/acceptance back. Another buyer interested in offer, but nothing in writing at this time.
List Price: Pricing strategy to reduce $10k/week to keep listing at top. $3.99M to $4.58M.
Listing: http://bit.ly/2djFOny or http://1222muirlands.com/

MANAGING PARTNERS

Lou Ellis, Managing Partner

Updates to come.

Chad Urbshott, Managing Partner

325 Cedar:
The first monthly payment should be on Jan 1 and I’ll talk to a performing note buyer in early March once that payment has been made.

3539 Judy:
One of the letters that had been sent from Peak to the borrowers was found to have a mistake in it and has been resent. This will slow down the progress of the forfeiture since that letter needs 30 days to expire before they can continue. Expected completion should be late January or early Feb at which point we can list the house for sale.

2275 Union Ave:
In reviewing the case this week the attorney discovered that the contract had already been cancelled by the previous note holder so I have my realtor checking out the house and we should have it listed next week.

510 High Grove Ave:
The sale of the loan has been held up because we are missing a signature from the borrowers. The paperwork has been resent to them and they are getting it signed and sent back however the mothers health has not been well and leaving the house has been difficult. They will return the docs with signatures asap and we can continue with the sale. It should close early January.

4113 Huston Ave:
The forfeiture has been delayed because the attorney that had picked up the case in October has decided that he doesn’t want to handle these kinds of cases. Not that there is anything weird about this one he just doesn’t want to deal with land contract cancellations. We have a new attorney and are starting over again. The process should be done by late February or early March at which point we’ll list the house for sale.

Other updates:
The houses in Ohio have been winterized in preparation for winter.

Antonio Cerqueira, Managing Partner

2502 Ingersoll:
About the deal: Fix and flip deal in up and coming Philadelphia neighborhood.
Duration: May-September 2016
Completed work: Demo, rough plumbing and electric, tiling, drywall, stairs
Remaining work: compound, Finish plumbing, electric, flooring
Pictures: https://goo.gl/jSXDrq (updated today)
Note: Finally permits aproved on Thursday 15th December and ground partner placing his best crew there starting on Monday

2520 Ingersoll:
About the deal: Fix and flip deal in up and coming Philadelphia neighborhood.
Duration: May-September 2016
Completed work: Demo, rough plumbing and electric, some drywall
Remaining work: Finish drywall, compound, tilling, Finish plumbing, electric, flooring
Pictures: https://goo.gl/jjAfBu
Note: Finally permits aproved on Thursday 15th December and ground partner placing his best crew there starting on Monday

2167 66th Ave:
About the deal: Fix and flip deal in Philadelphia
Duration: May-September 2016
Completed work: Unit 1 already renovated Unit 2 renovation finished
Remaining work: Both units already renovated, ABC’s own inspection done, came just with minor things We expect this deal to close in about 4 weeks.
Pictures: https://goo.gl/tXE88J
Note: Both units are rented now. Cash buyer did not close yet. Considering other cash buyers