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| |
 Why
sit on the sidelines waiting for the exact bottom of the market? Why not
participate in smaller carefully selected projects with smaller amounts of money
now while waiting for the market to come back to live. Keep your skills sharp,
keep your money working for you, stay inside the market. This program was
designed for small investors who want to spread their risk among several
carefully selected projects. Don't put all your eggs in one basket, manage the
risk with more projects and smaller incrimental investments.
| Location of the projects: |
 | Mostly Southern California |
| Major Metropolitan markets: San Diego, Orange County, Los Angeles |
|
| Types of projects: |
| Minor and Major rehabs |
| REO Purchases and resales |
| Spec Home Construction |
| Short-term trust deeds (1st position only to 60% LTV) |
|
| Forms of Title Ownership: |
| LLC with membership interest based on investment amount |
| Joint ventures with land owners or project owners |
| Joint tenants in individual names if elected by investors (not
preferred model for short-term projects due to higher taxation and on-sale
CA Withholding)
|
|
| Exit strategy: |
| Sale after repairs |
| Purchase by one of the participating investors for his/her own use
based on market value |
| Refi and Hold by investors as a rental property or lease to own |
| Buy out at cost and 100% return of initial investment by project
manager, if everything else fails |
|
| Time Frame of a Typical Project |
4-8 months |
| Min. Investment Amount: |
$25,000 |
| IRA / 401(k) OK? |
Yes |
Typical project summary:
A purchase of a property in Vista from a bank with a cracked slab. The
purchase price was negotiated down due to a fast "as is" sale. Neighborhood
is a middle class neighborhood with established values, relatively fast turn
around of finished properties and relatively easy FHA, VA or conventional
financing due to value of home falling well into affordable confroming loan
limits. Alternatively, homes in the area rent well due to larger families of
Hispanic renters, typical 3 bedroom home renting in excess of $2,000 per
month.
|
Purchase price |
$ 180,000 |
|
|
Market Value AFTER Repairs |
|
$ 350,000 |
|
Foundation repairs |
$ 16,000 |
|
|
Interior remodel |
$ 45,000 |
|
|
Outside repairs, landscaping |
$ 18,000 |
|
|
Total cost of repairs |
|
$ 79,000 |
|
Remodeling loan based on 60% of ARV |
|
$ 210,000 |
|
Loan costs (5 points average) |
$ 10,500 |
|
|
Interest reserves - 5 months |
$ 10,500 |
|
|
Purchase Closing costs |
$ 4,000 |
|
|
Costs of Sale (6% of ARV) |
$ 21,000 |
|
|
TOTAL COST OF THE PROJECT |
|
$ 305,000 |
|
Profit |
|
$ 45,000 |
| |
|
|
|
Private investor capital |
$ 114,000 |
|
|
Project manager fee (5% of net profit) |
$ 2,250 |
|
|
Net Return on invesment |
38% |
|
|
Annualized ROI based on 6 months return |
75% |
|
|
New projects (as of February 22, 2009):
| REO Purchase in Oceanside, Cracked slab, interior work. Purchase price -
$190,000. ARV - $430,000 |
| REO Purchase in Vista, Cracked slab, interior work. Purchase price -
$150,000. ARV - $380,000 |
| Spec Home Construction on vacant entitled lot in Rancho Bernardo, 2800
sq.ft. home. Purchase price $260,000. Finished value - $795,000 |
| Four Unit construction in Mission Valley, plans avaialble and approved.
Purchase price - $350,000. ARV - $1.1 mln |
To request more info or to participate in the program, please contact
Alex Lisnevsky, Broker, Mercury
Capital Group Inc.
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