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Simcoe Ventures Investment Prospectus

Simcoe Ventures Investment Prospectus
Simcoe Ventures Investment Prospectus
Simcoe Ventures Investment Prospectus
Simcoe Ventures Investment Prospectus

Page 2

TABLE OF CONTENTS

1. EXECUTIVE SUMMARY

3

2. TEAM

 

4

1. Jim Simcoe-principal

4

2. Kevin Gaynor-principal

4

3. THE GREEN VISION

 

5

1.

Positive Green Impacts

5

4. GREEN MULTIFAMILY OPPORTUNITY

7

1. Green Opportunity

7

2. Multifamily Benefits

9

 

1. Cash Flow

9

2. Demand

10

3.

Leverage

10

5. MARKET SELECTION

11

1. Rental Market Strength

11

2. Competition

 

12

6. CONSULTING CHANNEL REVENUE

13

7. INVESTOR OPPORTUNITY

14

1. Debt Investors

 

14

2. Equity Investor

14

3. Investment Strategy

14

8. INSPIRED PHILANTHROPY

15

1. Benefit to the Non-profit

15

2. Benefit to our Investors

15

9. INVESTMENT

SNAPSHOT

16

1. Property

Specifics

16

2. Property Overview

16

3. Housing Market

 

16

4. Economic and Market Overview

16

10. FINANCIAL SUMMARY - Multi Family Unit

17

11. PROPERTY PROJECTIONS

18

12. INVESTMENT GRAPHS

19

1. NOI (Net Operating Investment

19

2. Cash Flow (Pre-Tax)

19

3. ROI (Return on Investment)

20

4. COC (Cash on Cash Return)

18

on Investment) 20 4. COC (Cash on Cash Return) 18 Simcoe Green Homes Investment Agreement 187

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc

Page 3

EXECUTIVE SUMMARY

We offer an investment in green multifamily properties. Our team has been active in the green multifamily industry for the several years and is now positioned to capitalize on it with a select group of investors.

Green multifamily represents the single highest performing real estate investment in the next ten years. Green multifamily investments offer the following:

1. Opportunity to substantially increase profitability through green retrofits.

2. Risk mitigation – Green multifamily excels in any economic climate.

3. Demand far exceeds supply for green multifamily.

4. Rebate and Incentive funds offered to offset any green retrofit expenses.

5. Accelerated appraisal value.

Currently there is a wealth of opportunity for green multifamily created by three disparate, yet related factors:

1. As consumers grow increasingly more educated about green living they are demanding more from their prospective landlords. As this consumer education continues to increase, the demand for green apartments will only continue to rise.

2. Demand for green multifamily continues to outpace supply. There are very few green multifamily properties in the US. Our properties will have little, if any, competition.

3. Current market prices for multifamily projects is at an all-time low. We are able to purchase properties through a variety of sources (banks, REO companies, bulk sales, etc.) and gain very favorable lending terms. These favorable market conditions are forecasted to last another 12-18 months.

We work with investors in two ways: as debt investors (guaranteed return) or equity investment partners (projected return, equity position in the project). We are looking for a small, select group of investors who are interested in being involved in our green real estate projects.

in being involved in our green real estate projects. Simcoe Green Homes Investment Agreement 187 Calle

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc

Page 4

TEAM

JIM SIMCOE

Page 4 TEAM JIM SIMCOE Jim Simcoe is green real estate investment consultant, sustainability speaker and

Jim Simcoe is green real estate investment consultant, sustainability speaker and author. He develops green multifamily strategies for real estate investment companies throughout North America. Jim has been featured on NBC, Fox, SmartMoney.com, San Diego Insider TV, etc.

Jim writes for Personal Real Estate Investor Magazine, BiggerPockets.com (the #1 real estate investing website in the US), EcoHome, San Diego Business Journal, GreenRealEstateInvestingsNews.com, RIS Media, etc. He is the co- author of the “Go Green, Bank Green” study published by Personal Real Estate Investor Magazine in March 2010.

Jim is the President of the Board of Directors of the New World Leadership School, the first sustainable pre-school in San Diego County. Jim is a Certified Green Building Professional, EcoBroker and Real Estate Broker.

He lives with his wife, two daughters and two very spoiled dogs in Cardiff-By-The-Sea, California.

KEVIN GAYNOR

Kevin Gaynor is a Building Performance Institute (BPI) Certified Building Analyst, Envelope and Multifamily Building Analyst and Civil/Environmental Engineer specializing in the areas of Land Development and Site Design. He has managed projects including single family homes, commercial properties, 200+ multi-unit developments, hundred acre residential subdivisions and numerous condo conversions.

residential subdivisions and numerous condo conversions. Kevin’s environmental consulting work consisted primarily

Kevin’s environmental consulting work consisted primarily of preparing environmental studies, waste management design, and overseeing construction projects. He has developed multi-million dollar cost and quantity estimates for client projects. He has designed strategies for effectiveStorm Water Management, Storm Water Prevention & Pollution and Low-Impact Development.

Kevin graduated from University of Massachusetts-Amherst with a degree in Civil and Environmental Engineering in 1999. He lives in San Diego, California with his wife, Karin.

He lives in San Diego, California with his wife, Karin. Simcoe Green Homes Investment Agreement 187

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc

Page 5

THE GREEN VISION

POSITIVE GREEN IMPACTS

We are in business to not only generate revenue but to also fundamentally change how the real estate market operates. We’re creating homes that are healthy, thriving environments that cost less to operate. In doing so our business will create positive ‘green’ impacts in eight areas.

They are:

Investors

1.

Higher returns through higher cash flow, decreased expenses, reduced

vacancy expenses

2. Reduction in capital expenses as rehab expenses can be funded through a

variety of energy efficiency grants/incentives/rebates.

3. Increased appraisal values.

4. Safer investment as properties enjoy greater demand and stability.

5. Pride of ‘Action’. Investors are directly to contributing to improving our

environment, creating jobs and improving the lives of the residents.

Community

1. Healthier residents resulting in decreased public health-care expenses.

2. Economic growth through job creation, tax revenue, etc.

3. Increased home values. Green properties appraise higher and thus raise

median home prices in their neighborhoods.

4.

Neighborhood beautification potentially contributing to lower crime rates.

Residents

1.

Lower monthly utility bills, more disposable income.

2.

Healthier lives (potentially lower health-care expenses, etc).

3.

Healthier children (potentially lower incidences of childhood asthma, etc).

(potentially lower incidences of childhood asthma, etc). Simcoe Green Homes Investment Agreement 187 Calle Magdalana,

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc

Page 6

GREEN VISION con’t

Workforce

1. New ‘green’ jobs are created throughout the US.

2. Unemployment is reduced as laid off workers are re-trained.

3. Green companies can leverage ‘green’ employment grant subsidies to

increase employee size.

Housing Industry

1. Improve home values nationally.

2. Homes are more affordable for more people to own and operate.

3. Take bank-owned properties off the market.

4. Reduce vacancies potentially resulting in crime rate declines.

Environmental

1. Lower CO2 emissions.

2. Less energy consumed.

3. Reduction in landfill waste.

4. Recycle materials that were targeted for waste stream.

Non-Profits

1. They can focus on their core mission, not fund-raising.

2. Increased cash flow on a regular basis.

3. Opportunity to increase fundraising dollars through real estate offerings.

Green Suppliers

4. More suppliers in marketplace.

5. New products enter the market faster.

6. Larger selection of products more readily available.

6. Larger selection of products more readily available. Simcoe Green Homes Investment Agreement 187 Calle Magdalana,

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc

Page 7

GREEN MULTIFAMILY OPPORTUNITY

GREEN OPPORTUNITY

High-performance ‘green’ multifamily properties represent the single greatest opportunity for real estate investors nationwide. They offer higher profits, greater appreciation, more favorable lending parameters, rebates and incentive money, etc.

For our business a multifamily property must conform to the following criteria to be considered ‘green’:

1. Create a healthier (re: non-toxic) living environment for residents.

2. Offer significant utility expense savings to all residents.

3. Cost less (than comparable properties) for us to operate.

4. Create a smaller environmental footprint.

Our business model is geared to capitalize on the wealth of opportunity for green multifamily properties. Currently three trends work in our favor:

• Renters are increasingly demanding green features in prospective apartments.

• Green retrofits result in lower short and long term expenses for multifamily owners.

• Rebate and incentive money offered to multifamily owners is at an all-time high.

money offered to multifamily owners is at an all-time high. 86% of renters would prefer a

86% of renters would prefer a green home

86%

all-time high. 86% of renters would prefer a green home 86 % Simcoe Green Homes Investment
all-time high. 86% of renters would prefer a green home 86 % Simcoe Green Homes Investment

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc

Page 8

GREEN MULTIFAMILY OPPORTUNITY con’t

Renters are driven to green apartments because green apartments offer cost savings and a healthier living environment. The environmental benefits are largely a fringe benefit for renters and NOT the main reason they chose to rent green apartments.

Regardless of economic conditions, a majority of renters are interested in saving money and living in a safer, less toxic apartment. Our properties offer prospective renters a unique opportunity to both save money and live healthier.

All multifamily investments are designed to realize profits through three core methods:

1. Increased occupancies

2. Increased rents

3. Decreased expenses

Our green apartments will maximize profits in all three areas. Occupancies and rents increase because we offer a highly desired product that isn’t available anywhere else. Renters save money on utility bills and enjoy healthier living environments.

For example, assume rents are $1000 and utility bills are $200 a month for a
For example, assume rents are $1000 and utility bills are $200 a month for a
typical apartment in Phoenix, AZ. If our utility bills are only $100/month, then
prospective renters who spend an additional $50 per month in rent actually save
money because their TOTAL monthly expense is lower with our property.

Typical multifamily operational expenses (utilities, water, sewer, etc.) will be dramatically reduced through our green retrofit strategies. Further, we’ll pursue grants, rebates, incentives and Stimulus money to offset the cost of these retrofits. We will only pursue retrofits that have an aggressive return on investment. We will not pursue green methods unless they have a definite payback period.

green methods unless they have a definite payback period. Simcoe Green Homes Investment Agreement 187 Calle

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc

Page 9

GREEN MULTIFAMILY OPPORTUNITY con’t

Another key benefit of our green multifamily properties is that we’re able to accelerate the appreciation in appraisal values much faster than comparable properties. Multifamily appraisals are largely based on the net operating income (NOI) generated by the property. Our NOI will be higher due to increased rents and decreased expenses. That is the first step in increasing our properties appraisal values.

The second step involves using the Energy Star Guidelines which state that the increased annual savings in utility expense in a commercial property will increase the appraised value of that property. The formula is as follows:

Net Annual Energy Savings / Capitalization Rate = Increased appraisal value (in dollars)
Net Annual Energy Savings / Capitalization Rate = Increased appraisal value (in dollars)
For example, on a $1,500,000 property assume you save $30,000/year in a market where cap
For example, on a $1,500,000 property assume you save $30,000/year
in a market where cap rates are 6%. Using the formula:
$30,000 / .06 = $500,000. Your $1.5M property is now worth $2M.

MULTIFAMILY BENEFITS

We’ve chosen multifamily as the asset class to pursue for several reasons. Multifamily offers the greatest return coupled with the lowest risk. Multi- family investments also allow us to positively impact the greatest number of families through healthier living and lower expenses.

The three key benefits of green multifamily investments are: Cash Flow, Demand, and Leverage.

CASH FLOW

Cash flow is defined as the Net Operating Income - Mortgage. Net Operating Income is the total income from the property minus the expenses. In essence, when you increase income and/or lower expenses, cash flow increases. We consistently increase cash flow by executing a sound property management plan that maximizes rents and decreases

property management plan that maximizes rents and decreases Simcoe Green Homes Investment Agreement 187 Calle Magdalana,

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc

Page 10

GREEN MULTIFAMILY OPPORTUNITY con’t

expenses. Additionally, our expertise in multifamily rebates and incentives will further reduce our expenses and thus increase our cash flows.

Net Operating Income (income - expenses) – Mortgage = Cash Flow
Net Operating Income (income - expenses) – Mortgage = Cash Flow

DEMAND

The demand for rental housing in the US continues to increase due to population growth, housing affordability, etc. For example, the Echo Boomer generation (children of the Baby Boomers) are 80 million strong, represent 1/3 of total US population and comprise a huge percentage of the next decade’s rental population. According to a study done by Harvard University Joint Center for Housing Studies, 80% of households where people are under 25 years old are renters. 65% of households where people are 25-29 are renters. That offers tremendous potential for our investors.

80% of households of under 25 year olds are renters

80% of households of under 25 year olds are renters 80 % LEVERAGE 6 o o

80%

LEVERAGE

6

o o
o
o

Multifamily investments offer the ability to utilize leverage to dramatically enhance the value of our investments. Typically we put down no more than 30-40% for any property we purchase. Upon closing we own/control an asset that is worth considerably more than our investment in it. At the same time, cash flows, appraised value and appreciation rates are based on the property’s total value, NOT just the money we have in the deal. Real estate represents one of the only investments where what you purchase is immediately worth more than you invested. If you invest $400,000 in mutual funds, you’d have $400,000 worth of mutual funds. If you invest $400,000 in a multifamily deal, you’ll own an asset worth approximately $1,000,000.

deal, you’ll own an asset worth approximately $1,000,000. Simcoe Green Homes Investment Agreement 187 Calle Magdalana,

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc

Page 11

MARKET SELECTION

Although we are market agnostic there are two key components a market must meet for us to pursue investing in that market. We define ‘market’ as the metro area of a city. For example, the San Diego market would encompass any city within the San Diego County area. The two key components we consider are:

1. Rental Market Strength

2. Competition

RENTAL MARKET STRENGTH

We determine rental market strength using three core benchmarks: job growth, affordable housing, and supply. These three indicators have shown to most accurately forecast the success rate of multifamily investments throughout the US.

Job growth in a market is calculated by the percentage increase in jobs per capita over a given period of time. We look for markets that have a strong employer base and a pro-business political environment. Markets that have a significantly higher percentage of blue collar workers are very attractive to us as those workers are our target renters.

Our approach to affordable housing is contrarian, meaning that we look for markets where there is a lack of affordable single family homes. In markets where home sales prices are above the national average more people rent. In essence, the higher the average home sales price, the higher percentage of renters.

Supply is based on both the current multifamily inventory in a market and the amount of new multifamily construction. We look for markets where inventory is low and new construction is slight. With fewer available properties, rental demand increases for those properties in place. Thus, vacancy rates decrease while cash flow and profit increase.

There is a plethora of data we could consider in determining the viability of a market. We’ve chosen to stick with the three factors that have the strongest track record of success. An increasing job market, higher home sale prices and a lack of supply all indicate a strong market for our investments.

of supply all indicate a strong market for our investments. Simcoe Green Homes Investment Agreement 187

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc

Page 12

MARKET SELECTION con’t

COMPETITION

Our profit is driven by offering our target renters a compelling advantage that they cannot get anywhere else. Offering high performance apartments that create healthier (re: non-toxic) living while substantially reducing monthly utility bills, results in:

1. Higher occupancies

2. Higher rents

3. Longer tenant rental periods

4. Fewer rental concessions

5. Less maintenance

All of these factors contribute to higher profits, higher appraised values, lower expenses, etc. all of which contribute to our bottom line. Put simply, we offer an opportunity to renters that is uncommon and highly desired.

From a competitive standpoint we chose markets where we will be the only player in town. We seek markets where ‘green’ living is not en vogue and where there are few (if any) green multifamily projects.

This gives us first-to-market advantage. This advantage gives us:

1. Greater share of available rebates and incentive funds

2. Free, favorable PR

3. Better integration in the local community

Contrary to presumed logic, we actively seek markets that are not green focused. These markets give us the greatest opportunity to be a major player and set the standard for that market. All of which works to increase our profits dramatically.

All of which works to increase our profits dramatically. Simcoe Green Homes Investment Agreement 187 Calle

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc

Page 13

CONSULTING CHANNEL REVENUE

A key aspect of the plan is the ability to earn complementary revenue via consulting with multi-family property owners. The team, and Jim Simcoe specifically, has a demonstrated track record in this arena. Since 2006 Jim has:

1. Worked with multi-family owners, property managers, real estate investors throughout the US and Canada.

2. Provided green strategies for commercial owners, multi-family owners, businesses, non-profits, schools, etc.

3. Worked on multi-family projects as large as 480 units on 20+ acres of land.

As we are already the “brand” in the green retrofit apartment space, consulting revenue is a natural offshoot of our core business. To leverage our brand and time wisely we will hire 10 sustainability consulting franchisees to work as independent contractors for us nationwide. This will allow us to minimize costs, our time commitment and still gain revenue share in the consulting space.

Our 12-month revenue projections from this channel are as follows:

Q1 Q2 Q3 Q4 TOTALS MFU Consulting $25,000 $45,000 $65,000 $75,000 $210,000 Real Estate Investor
Q1
Q2
Q3
Q4
TOTALS
MFU Consulting
$25,000
$45,000
$65,000
$75,000
$210,000
Real Estate Investor
Coaching
$10,000
$25,000
$25,000
$25,000
$85,000
TOTALS
$35,000
$70,000
$90,000
$100,000
$295,000
TOTALS $35,000 $70,000 $90,000 $100,000 $295,000 Simcoe Green Homes Investment Agreement 187 Calle Magdalana,

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc

Page 14

INVESTOR OPPORTUNITY

Prospective investors are invited to participate in this opportunity in either of two ways:

as debt investors or equity investors. For our purposes they are defined as follows:

DEBT INVESTORS

EQUITY INVESTORS

Debt investors provide capital in exchange for guaranteed return on their money.

Equity investors provide capital in exchange for a projected return on their money.

Payments are made quarterly or annually.

Payments are made from the net profits from the project.

A balloon payment (initial investment + preferred return) will be returned within 2-4 years.

Payments are made quarterly or annually.

The loan is secured by the property.

A balloon payment (initial investment + profit) will be returned within 2-4 years.

Debt investors do not hold any equity in the property.

Equity investors hold equity in the property.

INVESTMENT STRATEGY

Our strategy for each project is as follows:

1. Once purchased, transform property into a high-performance green property.

2. Capture all available rebate/incentive money, stimulus and grant funds to offset the cost of the green retrofit.

3. Optimize all internal/external systems to reduce capital and operational expenses.

4. Launch marketing strategy positioning property as a ‘green’ property. Leverage lower utility bills and healthier living in all marketing materials, sales presentations.

5. Increase occupancy and rents resulting in NOI increases and higher appraisal value(utilizing Energy Star Guidelines to maximize appraisal value).

6. Refinance property within 2-4 years.

7. Upon re-finance, investors will have the option to be cashed out.

re-finance, investors will have the option to be cashed out. Simcoe Green Homes Investment Agreement 187

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc

Page 15

INSPIRED PHILANTHROPY

A core component of our business is supporting non-profit organizations. We offer a revolutionary way for targeted non-profits to receive donations from us. Rather than just receive an occasional donation check, each selected non-profit will receive a quarterly dispersement payment based on a percentage of the selected property’s net profits.

This quarterly payment will continue for as long as we own the property. As net profits increase over time, so will the quarterly payments. If and when we sell the property, the non-profit will be given a percentage of the net profits of the sale in a lump sum payment.

For example:

Non-Profit Year Annual Net Profits Donation% Annual Non-Profit Donation Year 1 $140,000 5% $7,000 Year
Non-Profit
Year
Annual Net Profits
Donation%
Annual Non-Profit
Donation
Year 1
$140,000
5%
$7,000
Year 2
$180,000
5%
$9,000
Year 3
$230,000
5%
$11,500
Year 4
$260,000
5%
$13,000
Year 5
$305,000
5%
$15,250
TOTAL
$1,115,000
5%
$55,750

BENEFITS TO THE NON-PROFIT

1. Compounded interest- donation amounts continue to increase over time.

2. Regular donations received on a quarterly basis.

BENEFITS TO OUR INVESTORS

1. Opportunity to select the non-profit(s) to be supported.

2. Take advantage of all applicable tax write offs.

2. Take advantage of all applicable tax write offs. Simcoe Green Homes Investment Agreement 187 Calle

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc

Page 16

INVESTMENT SNAPSHOT

Page 16 INVESTMENT SNAPSHOT PROPERTY OVERVIEW PROPERTY SPECIFICS Location: Phoenix, AZ Property Type: 20 unit

PROPERTY OVERVIEW

PROPERTY SPECIFICS

Location:

Phoenix, AZ

Property Type:

20 unit Multi-Family

Market Value:

$650,000

Purchase Price:

$425,000

Estimated Equity:

63%

Cash Flow:

$62,000

Current Cap Rate:

9.4%

Return On Investment:

26.4%

Cash On Cash:

25.6%

• Stabilized property with strong occupancy history.

• 1986 construction with 100% two-bedroom floor plans.

• Close proximity to major highways, retail centers and jobs.

• Individually metered for electricity, swimming pool and on-site laundry facilities.

HOUSING MARKET

• Phoenix is now rated the 5th largest city in the United Sates.

• One bedroom apartments in Phoenix rent for $624 a month on average and two bedroom apartment rents average $816.

• Multi-family properties have come down in price, even as occupancies have gone up.

ECONOMIC AND MARKET OVERVIEW

• Phoenix is currently home to seven Fortune 1000 Companies.

• Employment/Job Growth is up 28.8% over the last year.

• With an average age of 34, greater Phoenix is the fifth youngest metro region in the country with a diverse, well-educated labor force of over 2 million people.

• Greater Phoenix has consistently outpaced the U.S. population growth over the last 18 years. Projections show the region is expected to grow by nearly 60 percent by 2030, bringing the population to more than 6 million people.

2030, bringing the population to more than 6 million people. Simcoe Green Homes Investment Agreement 187

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc

Page 17

FINANCIAL SUMMARY– Multi Family Unit

(

(

(

(

(

Current(Property(Profile

Assumptions(&(Savings(For(Calculations

Purchase(Information

( Type

MultiAFamily

Appraisal ( Value

$

((((((((((( ((650,000

Purchase ( Price

$

((((((((((( ((425,000

(

$

((((((((((( ((170,000

Buyer ( Credits ( ( Rebates

$

(((((((((((((((((((( ((=

( Rehab (

$

((((((((((((( ((75,000

( (

$

((((((((((( ((245,000

Income(Summary

Current ( (Annual ) Green ( (1st ( Year )

5th ( Yea r

( Rental (

$ ((((((((((( ((114,000 $ (((((((((( (131,957(

$

((((((((((( ((160,395

Other (

$ (((((((((((((((( ((5,702 $ (((((((((((((( ((6,557 $ (((((((((((((((( (7,970(

Vacancy ( & ( Credit (

$

(((((((((((((( (17,100(

$ (((((((((((((( ((6,270 $ (((((((((((((((( (7,621(

( ( e $ ((((((((((( ((102,602 $ (((((((((( (132,245(

$ ((((((((((( ((160,744

Expense(Summary

Utility(Informatio n

Current ( (Annual ) Green ( (1st ( Year )

 

5th ( Yea r

Electricity ( Bill

$

(((((((((((((((( (2,551(

$

(((((((((((((( (1,658(

$

(((((((((((((((( (1,546(

Gas ( Bill

$

(((((((((((((((( (4,251(

$

(((((((((((((( (2,763(

$

(((((((((((((((( (2,577(

Water ( Bill

$ (((((((((((((( (10,202(

$

(((((((((((((( (5,101(

$

(((((((((((((((( (6,184(

 

( ( s $ (((((((((((((( (17,004(

$ (((((((((((((( (9,522(

$ ((((((((((((( (10,307(

Operation(Information

Current ( (Annual ) Green ( (1st ( Year )

5th ( Yea r

( ( Fee

$ (((((((((((((((( ((4,845 $ (((((((((((((( ((6,284 $ (((((((((((((((( (8,037(

$ (((((((((((((((((((( ((= $ ((((((((((((((((((( (=( $ (((((((((((((((((((( ((=

$

(((((((((((((( (10,000(

$ (((((((((((((( ((8,500 $ (((((((((((((((( (9,201(

( Taxes

$ (((((((((((((( (10,669( $ (((((((((((( ((10,669 $ ((((((((((((( ((11,102

Insurance

$ (((((((((((((((( ((3,500 $ (((((((((((((( ((2,975 $ (((((((((((((((( (3,096(

On = site (

$ (((((((((((((((( ((6,000 $ (((((((((((((( ((5,100 $ (((((((((((((((( (5,360(

(

$ (((((((((((((((( ((3,000 $ (((((((((((((( ((2,550 $ (((((((((((((((( (2,680(

$ (((((((((((((((( ((1,000 $ (((((((((((((((((( ((850 $ ((((((((((((((((((( ((893

General ( & (

$ (((((((((((((((( ((2,777 $ (((((((((((((( ((2,360 $ (((((((((((((((( (2,555(

Reserves ( & (

$ (((((((((((((((( ((4,000 $ (((((((((((((( ((3,400 $ (((((((((((((((( (3,680(

( ( s $ (((((((((((((( (62,795(

$ (((((((((((( ((52,211 $ ((((((((((((( ((56,911

Cash(Flow(Assumptions

Current ( (Annual ) Green ( (1st ( Year )

 

5th ( Yea r

Net ( (

$ (((((((((((((( (39,807(

$ (((((((((((( (80,034(

$

((((((((((( (103,833(

(

$ (((((((((((( ((17,374)(

$ ((((((((((( ((17,374)(

$

(((((((((((( ((17,374)(

Cash ( ( = Tax ( (CFBT )

$ (((((((((((((( (22,433(

$ (((((((((((( (62,659(

$ ((((((((((((( (86,459(

Financial(Performance

 

Green ( (1st ( Year )

 

5th ( Year

Cap ( Rate

9.4 %

10.4 %

 

10.7%

( Rent ( ( (GRM)

5.7 0

5.8 3

6.05

Cash ( ( Cash ( Return ( (COC)

25.6

%

35.3%

Internal ( Rate ( ( Return ( (IRR)

250.1

%

51.9%

Return

( ( ( (ROI)

26.4

%

156.0%

Equity ( (Wealth) ( %

 

63.5

%

75.7%

Equity ( (Wealth) ( $

$ (((((((((( (517,314(

$ ((((((((((( (734,918(

( $ $ (((((((((( (517,314( $ ((((((((((( (734,918( Simcoe Green Homes Investment Agreement 187 Calle Magdalana,

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

Projected(Green(Savings

Electric ( Bill

35%
35%

Gas ( Bill

35%
35%
50%
50%
0%
0%

Water ( Bill

Appraisal ( Increase

Rental ( Increase

10%
10%

Vacancy ( Rate

5%
5%

(

15%
15%

Rehab ( Material (

Rebates

5%
5%
10%
10%

Assumptions

( ( ( ( ( (if ( any)

$ ((((((( ((114,000
$
((((((( ((114,000
$ (((((((((((( ((5,702
$
(((((((((((( ((5,702

1st ( ( ( ( (Fixed)

30 ( yr
30
( yr

1st ( ( Interest ( Rate 1st ( ( Principal (

5.5% $ ((((((( ((255,000
5.5%
$
((((((( ((255,000
 

Private ( ( Insurance

$ (((((((((((((((( ((=
$
(((((((((((((((( ((=

Percent (

40%
40%
( Insurance $ (((((((((((((((( ((= Percent ( 40% ( taxes $ (((((((((( (10,669( Insurance $

( taxes

$ (((((((((( (10,669(
$
(((((((((( (10,669(

Insurance

$ (((((((((((( ((3,500
$
(((((((((((( ((3,500

Electric

$ (((((((((((( ((2,551
$
(((((((((((( ((2,551

Gas

$ (((((((((((( ((4,251
$
(((((((((((( ((4,251

Water

$ (((((((((( (10,202(
$
(((((((((( (10,202(

Maintenance

$ (((((((((( (10,000(
$
(((((((((( (10,000(
$ (((((((((( (10,202( Maintenance $ (((((((((( (10,000( ( Rate 6% ( ( Fee 5% Rental (

( Rate

6%
6%

( ( Fee

5%
5%

Rental ( ( Increase

5%
5%

( Tax ( Incease

1%
1%

Insurance ( Increase

1%
1%

( Increase

2%
2%

General ( Ops ( Increase

2%
2%

( Tax ( Rate

1%
1%

Percent ( Land ( Value

20%
20%

( ( (Purchase)

3%
3%

( (

5%
5%

*(A(Based(on(a(30Ayr(Fixed(Mortgage

NOTE:(The(values(and(data((are(to(be(used(for(

estimation(purposes(and(should(be(verified.

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc

Page 18

PROPERTY PROJECTIONS

 

Current

After(Green(

Projected(

Year(1

Year(2

Year(3

Year(4

Year(5

Year(10

CASH%FLOW

Upgrades

Savings

1234

5

10

Gross(Scheduled(I ncome

Other(I ncome

 

$ 114,000

$((((( 5,702

$ 131,957

$ 6,557.30

$((( 17,957
$((( 17,957
$((((((((855
$((((((((855

$

$ 152,757

$((((( 6,557 $((((((6,885 $((((( 7,229 $((((( 7,591 $((((( 6,270 $((((((6,583 $((((( 6,913 $((((( 7,258

131,957 $((138,555

$ 145,483

$ 160,395

$((((( 7,970

$((( 204,709

$((((( 10,173

Vacancy(Allowance

 

$((( 17,100

$((((( 6,270

$((( 10,830
$((( 10,830

$((((( 7,621 $((((((( 9,727

Gross.Operating.Income.(GOI) $ 102,602 $ 132,245

$((( 29,643
$((( 29,643

$

132,245 $((138,857

$ 145,800

$ 153,090

$ 160,744

$((( 205,155

Operational.Expenses Utility(Expenses Property(Management(Fee Accounting/Legal Repairs/Mantainance/Supplies Property(Taxes I nsurance OnSsite(Payroll Contract(Services Marketing General(&(Admin Reserves(&(replacement

 
I nsurance OnSsite(Payroll Contract(Services Marketing General(&(Admin Reserves(&(replacement  
I nsurance OnSsite(Payroll Contract(Services Marketing General(&(Admin Reserves(&(replacement  
 

$

(17,004)

$((( (9,522)

$((((( 7,482
$((((( 7,482

$((( (9,522) $(((((9,713) $((( (9,907) $ (10,105) $ (10,307) $(((( (11,380) $((( (6,284) $(((((6,943) $((( (7,290) $((( (7,654) $((( (8,037) $(((( (10,258)

$((( (4,845)

$((( (6,284)

$((( (1,439)
$((( (1,439)

$(((((((( S

$(((((((( S

$(((((((( S
$(((((((( S

$(((((((( S

$(((((((((S

$(((((((( S

$(((((((( S

$(((((((( S

$(((((((((( S

$

(10,000)

$((( (8,500)

$((((( 1,500
$((((( 1,500

$((( (8,500) $(((((8,670) $((( (8,843) $((( (9,020) $((( (9,201) $(((( (10,158)

$ (10,669)

$ (10,669)

$(((((((( S
$(((((((( S

$

(10,669) $((((10,776) $ (10,883) $ (10,992) $ (11,102) $(((( (11,669)

$((( (3,500)

$((( (2,975)

$((((((((525
$((((((((525

$((( (2,975)

$(((((3,005)

$((( (3,035)

$((( (3,065)

$((( (3,096)

$((((( (3,254)

$((( (6,000)

$((( (5,100)

$((((((((900
$((((((((900

$((( (5,100)

$(((((5,202)

$((( (5,254)

$((( (5,307)

$((( (5,360)

$((((( (5,633)

$((( (3,000)

$((( (2,550)

$((((((((450
$((((((((450

$((( (2,550)

$(((((2,601)

$((( (2,627)

$((( (2,653)

$((( (2,680)

$((((( (2,817)

$((( (1,000)

$(((((( (850)

$((((((((150
$((((((((150

$(((((( (850)

$((((((((867)

$(((((( (876)

$(((((( (884)

$(((((( (893)

$(((((((( (939)

$((( (2,777)

$((( (2,360)

$((((((((417
$((((((((417

$((( (2,360)

$(((((2,408)

$((( (2,456)

$((( (2,505)

$((( (2,555)

$((((( (2,821)

$((( (4,000)

$((( (3,400)

$((((((((600
$((((((((600

$((( (3,400)

$(((((3,468)

$((( (3,537)

$((( (3,608)

$((( (3,680)

$((((( (4,063)

Total.Operating.Expenses $ (62,795) $ (52,211)

$((( 10,584
$((( 10,584

$

(52,211) $((((53,652) $ (54,708) $ (55,795) $ (56,911) $(((( (62,991)

$((((53,652) $ (54,708) $ (55,795) $ (56,911) $(((( (62,991) NET.OPERATING.INCOME.(NOI) $((( 39,807 $((( 80,034 $(((

NET.OPERATING.INCOME.(NOI) $((( 39,807 $((( 80,034 $((( 40,227 $((( 80,034 $((((85,205 $((( 91,091 $((( 97,295 $ 103,833 $((( 142,164

Mortgage.Expenses

 
Mortgage.Expenses  

Mortgage(Payment

 

$ (17,374) $ (17,374)

$(((((((( S
$(((((((( S

$ (17,374) $((((17,374) $ (17,374) $ (17,374) $ (17,374) $(((( (17,374)

 

Total.Debt.Service $ (17,374) $ (17,374)

$(((((((( S
$(((((((( S

$ (17,374) $((((17,374) $ (17,374) $ (17,374) $ (17,374) $(((( (17,374)

$((((17,374) $ (17,374) $ (17,374) $ (17,374) $(((( (17,374) CASH%FLOW (Before%Tax) (CFBT) $((( 22,433 $((( 62,659

CASH%FLOW (Before%Tax) (CFBT)

$((( 22,433

$((( 62,659

$((( 40,227

$((( 62,659 $((((67,831

$((( 73,717 $((( 79,921

$((( 86,459

$((( 124,790

Monthly $((((( 1,869 $((((( 5,222 $((((( 3,352 $((((( 5,222 $((((((5,653 $((((( 6,143 $((((( 6,660 $((((( 7,205 $((((( 10,399

Tax.Benefits

Tax.Benefits
Tax.Benefits

Depreciation

$((( 12,364

$((( 12,364

$((( 12,364

$((( 12,364

$((((12,364

$((( 12,364

$((( 12,364

$((( 12,364

$((((( 12,364

Mortgage(I nterest(Paid

$((( 13,939

$((( 13,939

$((( 13,939

$((( 13,939

$((((13,939

$((( 13,939

$((( 13,939

$((( 13,939

$((((( 13,939

Taxable(I ncome

Tax(Bracket(I mpact

Subtotal $((( 26,303 $((( 13,504 $((((( 3,376

$((( 26,303

$((( 26,303

$((( 26,303

$((((26,303

$((( 26,303

$((( 26,303

$((( 26,303

$((((( 26,303

$((( 53,731

$((( 53,731

$((( 53,731

$((((58,902

$((( 64,788

$((( 70,992

$((( 77,530

$((( 115,861

$((( 13,433

$((( 13,433

$((( 13,433

$((((14,726

$((( 16,197

$((( 17,748

$((( 19,383

$((((( 28,965

CASH%FLOW (After.Tax) (CFAT) Monthly

$((( 19,057

$((( 49,227 $((( 30,170 $((((( 4,102 $((((( 2,514

$((( 49,227 $((((53,105 $((( 57,520 $((( 62,173

$((( 67,076

$((((( 95,824

$((((( 1,588

$((((( 4,102

$((((((4,425 $((((( 4,793 $((((( 5,181 $((((( 5,590 $((((((( 7,985

 
 

EQUITY.ACCUMULATION

Property(Value

$ 650,000

$ 768,879

768,879$ 768,879 $((815,012 $ $ 863,913

$((815,012

$ $ 863,913

$ 915,747

$ 970,692

$ 1,299,005

minus(Mortgage(Balance

$ 251,565

$ 251,565

251,565 $((247,936$ 251,565 $ $ 244,103

$ $ 244,103

$ 240,053

$

235,775

$((( 210,480

EQUI TY

$ 398,435

$ 517,314

$ 118,879 $ 517,314 $((567,076

$ 619,810 $ 675,695

$ 734,918

$ 1,088,526

 
 

Cash(On(Cash(Return((COC) I nternal(Rate(of(Return((I RR) Return(on(I nvestment((ROI )

 

25.6%

25.6%

25.6%

27.7%

30.1%

32.6%

35.3%

50.9%

250.1%

250.1%

250.1%

106.4%

73.7%

59.6%

51.9%

38.7%

26.4%

26.4%

26.4%

54.9%

86.0%

119.6%

156.0%

931.7%

26.4% 26.4% 54.9% 86.0% 119.6% 156.0% 931.7% Simcoe Green Homes Investment Agreement 187 Calle Magdalana,

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc

Page 19

NOI and CASH FLOW PROJECTIONS

NOI(Net Operating Income)

19 NOI and CASH FLOW PROJECTIONS NOI (Net Operating Income) C a s h F l

CashFlow (Pre-Tax)

(Net Operating Income) C a s h F l o w (Pre-Tax) Simcoe Green Homes Investment

(Net Operating Income) C a s h F l o w (Pre-Tax) Simcoe Green Homes Investment

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc

Page 20

ROI and COC

ROI(Return on Investment)

Page 20 ROI and COC ROI (Return on Investment) COC (Cash on Cash Return) Simcoe Green

COC(Cash on Cash Return)

and COC ROI (Return on Investment) COC (Cash on Cash Return) Simcoe Green Homes Investment Agreement
and COC ROI (Return on Investment) COC (Cash on Cash Return) Simcoe Green Homes Investment Agreement

Simcoe Green Homes Investment Agreement 187 Calle Magdalana, Ste105 Encinitas, CA 92024

For further information call 760-271-7128

Jim@jimsimcoe.com

Copyright 2012 Simcoe Ventures, Inc