2015 8-11 EAC Community Weekly Newsletter

August 11, 2015

EXECUTIVE PARTNERS

Kevin Yoo, CEO

I am currently in Peru on a medical mission but I wanted to still write a post for our EAC Community.

Couple of things . . . .

1. I speak with a lot of real estate investors all the time. The conversations are mostly about how these real estate investors can work with EAC Community and how we can bring them into our Community. I am going to invite the EAC Executive Team and the EAC Management Team to all of these teleconferences. If you would like to attend to these, please let Madel, EAC Virtual Assistant know and she will make sure you are invited.
2. Our website is developing nicely. We are starting to make an individual page for each project we are working on. If you are a GP, please update these pages every other week. If you are an IP, we will make sure you have access to these pages to see updates on projects you have invested in.
3. Every other week is a meeting just for EAC Executive and Management Team. And half of each of these meetings will be devoted to a market that we are currently invested in and talk about our portofolio, how our GP is doing, and how EAC Team could do better in that market. If you are a potential GP, I stronly encourage you to attend one of these meetings. If you are a IP invested heavily in one market, you are more than welcome to join us.

John Hosterler, COO

We finally closed on our refinance with B2R on Friday, July 31. The total loan ended up being $825,000, 10-years at a fixed rate of 6.5975%. With this loan we were able to pay our investors back $691,000 in principal on 13 different properties.

Much was learned from the entire process, and my hope is that our second round of refinancing will go much smoother as a result. Overall, although I was thrilled to close on the loan, I was quite unhappy with the level of service we received, especially in B2R’s lack of communication on a property that they dropped from the package without our knowledge. This property, 322 Cougar Lane in Jacksonville, NC, is on a private road and as such would have needed waivers signed by the other homeowners on the same road. Had B2R discovered this earlier in the process, we could have remedied this easily, but because it came up in their final review, they decided to drop the property and never informed us. I literally found out on the day of funding when I received the closing statement, which is unacceptable.

Still, the fact that we successfully closed on the loan is a big positive for our company, as it proves the rental property business model we began pursuing late last year. We showed that we can force significant equity when purchasing rental properties and rehabbing them properly, and kept our promise of paying back our investors from the proceeds of the loan. Having done so once, we can now evaluate B2R’s process and compare to their competitors.

Kevin, Olga and I spoke with one of those competitors last week, FirstKey Lending. I pursued FirstKey for our first loan but was frustrated with the lack of response on many specific questions I had. Thanks to an introduction from Davor Rom, we were able to speak to an executive at the company to discuss their products in depth. We specifically are interested in their 30-year fixed rate product, but unfortunately FirstKey currently requires 12 months’ seasoning on properties in order to loan based on appraised value rather than cost. Our contact did indicate that they are currently reviewing that policy and may change it in the coming weeks in order to remain competitive with B2R, but there are no guarantees it will change. Still, FirstKey offers their loans on individual properties as well as portfolios, so we will be looking to them for any properties which may not fit into the B2R model.

We will be speaking with Colony American later this week to update their current loan requirements, but if their 12 month seasoning requirement has not changed, we will likely start up the process with B2R again for our second tranche of properties. We have at least $1.6MM in property value that will be ready for refinance within the next 60 days, and with another successful refinance will be paying back our investors over $1 million of principal.

Olga Levin-Diaz, CFO

No updates.

MANAGING PARTNERS

Vilson Nikollaj, Managing Partner

San Diego

• RBD: Roger Faulkner
  • 2420 Upas: Awaiting update on progress

St. Louis, MO

• 3441 Shenandoah (Kevin’s 401k proof of concept)
  • Determining if central HVAC necessary
  • Awaiting updates on progress

• Tax Auctions: Chad Little & Mary Krummenacher
  • 5 auctions held/year for tax deliquent home owners
  • Opportunity to purchase Class B and C properties for ~5o% ARV in a market where it has been difficult to obtain 70% ARV
  • Chad will screen out undesirable prospects, then perform due diligence and provide recommendations
  • EAC will provide funding to third party (LemonsTree) to hold funds until auction sale, then provide to Chad to purchase
  • Attorney will clear sale with civil court and perform quiet title process to providec clear marketable title
  • Exit strategies: (1) Rehab/Rent/Hold, (2) Flip, (3) Cleanout and resell to other investors, (4) Rehab/Rent/Resell Turnkey Investors

Isaac Guzman, Managing Partner

• Brittany Moreland – We are still awaiting word from the bank on the short sale on 5 Grandview Terrace. In addition, she will be bringing us more fix and flip opportunities as they arise. She added 4 new flip projects for review just prior to this meeting.
• Kevin Rizzo – We are currently having a bit of back and forth on the JV structure to ensure Kevin is fairly represented in the dealings. We have two potential flips that will be presented once the JV agreement is in place.
• John Harrington – New GP who is active in Atlanta, GA, Birmingham, AL and Orlando, FL. We are in early stages with this partnership and working on the GP checklist items.

Chad Urbshott, Managing Partner

No updates this week.

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 4Plex – Currently working on UL – framing, installing windows, installing new sub-floors. Heating/Cooling contractor installing new hvac runs throughout LL and UL, furnace and a/c units this week due to delay last week. Exterior – Prepped approx bottom 3 feet of exterior siding to lay stone & ordered stone. Settled on a color for James Hardie Fiber Cement siding today and GC will have it ordered.
• Cleveland Duplex – Did not complete drywall finishing as planned last week since we were trying a new finisher. Drywall work and bathrooms should be complete this week. About 2 weeks of work left here to completion.
• Dennis SFR – About a week or two worth of work left. Temporarily moved crews to 4plex to expedite the work on the UL so both floors are ready for drywall hanging.
• *New Project* – Broadway – Closing scheduled for 8/24/15. This will be our third RBR project.
• *New Project* – Berkley SFR – Closing scheduled for 8/24/15. This will be a flip or a really nice B class SFR rental.

Frank Veliz, Ground Partner from Orlando, Florida

Awaiting updates.

Giovanni Gracias, Ground Partner from San Diego, California

Awaiting updates.

George Flint, Ground Partner from San Diego, California

• plans have been submitted to the city
• we should hear back in a couple weeks
• for now we are on hold till we hear back
• we are working on the refinance from an acquisition loan to a construction loan

John Allen, Ground Partner from San Diego, California

4336 53rd Street updates:

• We have signed a contract with a landscape architect named Julie Howard to provide the irrigation plan and planting plan. The fee schedule is based on the work completed, so there is no retainer. I have provided her with the site plan, grading plan and geotechnical report for her to get started. This work should be done in the next few weeks. I will post invoices when received.
• I have received a proposal from SDG&E to get the ball rolling on the plan for the underground utilities. SDG&E is terribly understaffed and backed up, so this will take longer than expected, but it shouldn’t affect our ability to submit construction drawings. In order to get them started, I needed to finish the electrical plan and hire an electrical engineer to do some load calculations, so we could submit the form with the proper information to SDG&E. I have submitted RFPs to a number of electrical engineers today. Once we get the information we need, we will get SDG&E going on the underground utility plan.
• I am still waiting for bids on the Storm Water Quality Management Plan. I have gotten a couple, but waiting on 2 or 3 more before I make that decision. This is something that shouldn’t take very long in any event.
• I had been notified late last week of no less than 4 people showing significant interest in this project, but have not received any phone calls yet. My representation on the purchase, Eddie Petil, notified me that a buyer may come to the table with an offer this week, so I will keep everyone posted.