Lakeside LLC Pre Due Diligence Investor

7/27/2019 Lakeside LLC Pre Due Diligence Investor

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LAKESIDE, LLC

2410 LAKESIDE DR IOWA CITY, IA 52240 PHONE 319-558-9766 [email protected]

LAKESIDE, LLCPRESENTSLAKESIDE CONDOS

3/8/11

INVESTMENT SUMMARY12 UNITS

I. Investment Summary Statement

The purpose of this Investment Summary is to obtain an indication of interestin an investment in Lakeside, LLC (the "LLC"). This Summary does notconstitute an offer to sell or solicitation of an offer to buy any security. Anoffer to sell can be made only by a Confidential Private PlacementMemorandum (the "Memorandum"). An investment in the LLC is speculativeinvestment subject to significant risks that are set forth in the Memorandum.

Risks: An investment in the LLC will be a speculative investment and subjectto significant risks that are discussed more completely in theMemorandum. The risks include, among others, the following factors,which are not exhaustive but are merely illustrative:

The Units will not be registered under the federal Securities Act of 1933 or under any state securities laws, and there will berestrictions on their transferability.

The LLC will be a new business and has no operating history.

The multi-family housing industry in the area is extremelycompetitive and cyclical. The LLC will be subject to competitionfrom other apartment projects in the vicinity of the project as wellas elsewhere.

Conflicts of interest may exist between the LLC and the ManagingMember and affiliates thereof.

There can be no assurance that financing will be available for theproject.

I. Name of LLC

Lakeside, LLC

Investment Summary March


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II. Purpose of LLC

The purpose of the LLC is to acquire and improve the property located at2410 Lakeside Dr. Iowa City, IA for a long term hold of 5 to 10 years. The

ultimate goal is to maximize cash flow, return the initial investment, plus apreferred return and profit to the investor.

IV. Description of Property

Lakeside, LLC is a 12 unit, three story apartment building, built in 1994. All12 Units are 2 bedroom one bath furnished with refrigerator, stove/oven,dishwasher & disposal with separate utilities. The property belongs to anassociation that handles lawn care, snow removal, trash and property

insurance. The building has been well maintained receiving a new roof in2005, new exterior doors and security locks in 2009, along with replacementof carpets, appliances, and fixtures as needed.

Amenities:1. 12-car carport with more off street parking2. Each Unit comes with a storage unit located in car port3. 2 coin washers and dryers4. Washer and Dryer hook ups in each unit5. Secured entry with keypad

Near by amenities: Short walk from Grantwood Elementary School Numerous employers with in .5 mile One mile from Sycamore Mall Many grocery stores, gas stations, and dining options close Two miles from Kirkwood Community College Bus stop located in front of property


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VI. Due Diligence

Due Diligence

The basis for the business plan has been derived over the last 60 days

through the due diligence performed. The following will be completed beforea final offer is made by a certified appraisers, seasoned property manager,contractor, and other certified inspectors:

Walking all 12 units detailing all issues of the interiors Review of all tenant files

o File audit rent roll to flush out inconsistencieso Evaluation of resident stability

Facilitation of outside contractors to review and bid for work onroofs, parking lot, sub-floors, stairwells, etc.

Inspection of heating and cooling units, termite/pest inspection

Completed Due Diligence

Review of prior 36 months financial statements Thorough market analysis to establish our market rents and

vacancy projections Review of all service contracts as they pertain to the operating

statements Initial viewing

Through this comprehensive analysis we will arrive at a mutually acceptablepurchase price that will allow for successful operation of the property. Inaddition, we assembled a detailed business plan for maximizing investorreturns through income growth and operational and capital cost savings.


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VII. Market Overview

We are very excited for the opportunity to acquire this 12 unit apartmentbuilding.

Iowa City is a unique community offering various amenities and is located ontwo major interstates attracting business growth. Iowa City is home to theUniversity of Iowa which drives thousands of new renters every year to comeand further their education. The universities sports provide greatentertainment year round and attract many visitors to the area. The townalso hosts a remote site for Kirkwood Community College offering educationalestablishments to the public. Residents enjoy a well established biking awalking trail system with many local and near by recreational areas. The cityhas many cultural events offered to the public with minimum or no charge.

These distinctions make the city a popular year round destination and a

community many choose to live in.

Iowa City is located on two major interstates Interstate 380 and Interstate 80which divides The United States in half from the North and South stretchingfrom East Coast to West Coast. Iowa City is also just 100 miles from Interstate35 which divides The United States in half from the East and West coast. Thisunique geographical location makes Iowa City a great place for business tolocate looking to serve the entire United States. Between Iowa City's greatlocation for business and amenities for its residents we should see thepopulation continue to grow. In turn this will raise the demand for housingincreasing home prices making it more affordable for residents to rent

instead of own. The current median price for a single-family home in IowaCity is $177,200.

We believe the increasing demand for housing and growing population willstrengthen our 12 unit apartment status as an affordable alternative to homeownership. Currently the rents are among the lowest in the city and there issignificant upside in income potential.

Iowa City Highlights:

Population

Iowa City has a population of 67,514 that has grown at 7.98% since2000 and 18% recorded last year for Johnson County by USA Today.

Iowa City home to the University of Iowa has a student population of 28,000 which continues to grow.

Employment

The university serves as the citys major employer employing over

16,000 people.


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The unemployment rate in Iowa City is 3.20 percent (U.S. avg. is10.20%). Recent job growth is Positive and Iowa City's jobs haveincreased by 1.53 percent.

Other major employers include University Hospitals, Iowa CityCommunity Schools, Act, Mercy Hospital, Pearson EducationalMeasurement, VA Iowa City Health Care System, and Rockwell Collins.

Economy

Forbes 2009 named Iowa City #9 Best small metro areas for business

Iowa City was said to be Among the best places to expand a businessby Expansion Management Magazine

The Associated Presss Economic Stress Index a formula that combinesthe effect of unemployment rates, bankruptcies and foreclosuresnamed Johnson County as the 14th least economically stressedcounty in the nation with a population of 25,000 or greater.

Iowa City's stable economy is due in part to the University of Iowa andUniversity of Iowa Hospitals and Clinics. The economy is unique here inthat it has one enormous and very stable employer.

Future job growth is said to be 27.9% according to Sperlings.

Iowa City Apartment Market Highlights:

Homeownership rate in Iowa City is about 46.6%

Median gross rent in 2010: $734 study done by Onboard Informatics.

Rental growth is strong for the Iowa City area as population continuesto grow and is expected to raise steady in the coming years.

Based of historical operations, the occupancy for this 12 unit building is100% for the last 6 years.

The increase in campus enrollment has drove the student population toexceed the capacity of current on campus housing forcing students tolook for apartments off-campus.

Lakeside is located along Hwy 6 and is approximately a mile from oneof the largest retail centers in the city.


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VIII. Business Plan

A. Operational Changes

Income

We expect to see a positive cash flow in the first year of acquiring theLakeside property. These positive cash flows will be distributed toinvestors and held for replacement reserves.

Analysis of comparable properties in the area indicates that currentlyour rents fall in the median, with competitors with higher rentsapproximately $30.00 more. Our goal is to maintain current unit rentsfor the first year, thereafter we will be raising rents as marketconditions permit. We have conservatively estimated these raises at 3-4%.

A comprehensive cost analysis has been completed and we will bedeprecating the value of the property in order to minimize the taxliabilities for the property. Estimated tax deferment will be $23,000 inthe first year.

We will be improving units and curb appeal for the property. Theseimprovements will enable us to command higher rents and improve ouroverall exposure in the market.

Currently 4 units have been leased through 7/31/12 with 2 additionalunits expected to renew their leases before the date of closing. Theremainder 6 units have been leased through 7/31/11.

Expenses

Adjusted property taxes which are expected to increase due to sale.

Operating expenses will remain steady and increase at normal annualexpectations.

Capital

Our thorough due diligence is expected to uncover needed capitalimprovements that will increase the propertys competitive advantage inthe market. Funds for the capital improvements will be either completedby current owners or deducted from the purchase price and will be fundedthrough the initial equity raise. All improvements are stated to becompleted in the first year of ownership.

B. Pro-forma Analysis

The following pro-forma analysis income and expense projections areconsidered an estimate based on the historical operating statements andinformation discovered during due diligence. Actual performance will vary

based on external market conditions and actual property performance.2011 Estimated to be 13.61% cash on cash return*2012 Estimated to be 14.68% cash on cash return2013 Estimated to be 15.75% cash on cash return2014 Estimated to be 16.82% cash on cash return

Estimated returns do not include any tax benefits derived fromdepreciation, or appreciation in the property from value added by marketconditions and the successful implementation of the business plan.

*Estimated cash on cash return based on a closing of [4/30]


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C. Term Sheet

General Terms

Investors return is calculated to be from 6-8% and is negotiable basedon actual investment amount and ability to guaranty bank financing.Investors can reclaim their initial investment when refinancing isavailable to claim equity generated from the property; this will greatlybe determined by investment amount and current property cash flow.Investors are expected to see their initial investment redistributed tothem in 5-10 years based on the performance of the property.

Pro Forma Statement

The following pro forma is directly correlated with current and historicalproperty performance.

Income Monthly Yearly Actual Property Value 669775

Rents $625.00 $7,500.00$90,000.0

0 Cap Rate 8.00%

Washer/Dryer $150.00 $1,800.00

Total $7,650.00$91,800.0

0 Actual Purchase Price$

600,000.00

Down PaymentPercentage 25%

Expenses Down Payment$

150,000.00

Association Fees $500.00 $6,000.00 Loan Amount$

450,000.00

Advertising $166.67 $2,000.00 Interest Rate 5.50%

Cleaning $166.67 $2,000.00 Debt Coverage Ratio 1.616

Mortgage $2,763.39$33,160.7

2

Repairs $500.00 $6,000.00 Investor Funds

Replacement Reserves $500.00 $6,000.00 InvestedReturn Yearly Month

Taxes $1,251.50$15,018.0

0 $150,000.00 8.00% $12,000.00 $1,000.00


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IX. Exhibits

A. Property Photographs

B. Floor Plans & Site Map

Exhibit A Photographs

I. Investment Summary Statement

II. Name of LLC

III. Purpose of LLC

IV. Description of Property

V. Acquisition of Property

VI. Due Diligence

VII. Market Overview

VIII. Business Plan

a. Operational Changes

Condo style living at apartment style pricing

Table of Contents

Exhibit B - Site Map

PLACE LOG

2410 LAKESIDE DR IOWA CITY, IA 52240 PHONE 319-558-9766 [email protected]

X. Conclusion

Lakeside is a well-maintained asset at an affordable price in a prime locationto take advantage of the thriving rental market and the student housingshortage. With rents currently at market average, the asset is positioned toprovide solid returns. Additionally, the rising cost of housing and student on-campus rents bodes well for the Iowa City apartment market and theproperty. Rents rose 6.1% in 2010 and are expected to continue risingsteady. We believe these dynamics bode well for the long term.

For further information regarding this investment opportunity pleasecontact:

Tyson [email protected]

LAKESIDE, LLC

Documents

Lakeside LLC Pre Due Diligence Investor