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Presentation to Investor Case Study Main Street Capital Housing Real Estate Investment Trust REIT LL

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Case Study - Main Street Capital Housing Real Estate Investment Trust (REIT) LLC. ... REITs offer investors income and capital appreciation from rented ... – PowerPoint PPT presentation

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Title: Presentation to Investor Case Study Main Street Capital Housing Real Estate Investment Trust REIT LL


1
Presentation to InvestorCase Study - Main Street
Capital Housing Real Estate Investment Trust
(REIT) LLC.
  • Paul Clark
  • Director, CIO

2
Retail
Cover
  • Dear Investors,
  • This is a short introduction to the Main
    Street Capital Housing Real Estate Investment
    Trust (REIT) LLC,. its principals, investment
    objectives, and qualifying criteria. This should
    answer many of your questions, but if it doesnt
    we are available to meet with you in person to
    answer any other questions you may have. Thanks
    for reviewing our offering and we look forward to
    working with you soon.
  • Sincerely,
  • Paul Clark
  • Director - CIO

3
Retail
About Us
  • We all intuitively know that there are currently
    amazing real estate deals available. Most of our
    clients and investors are busy leading their
    professional and personal lives and dont have
    the opportunity to dedicate full time to real
    estate investing. At Main Street Capital Housing
    we offer our professional services to you so you
    can take advantage of the opportunities you know
    now exist using our
  • Experience
  • Contacts
  • Management Team
  • Financing Resources
  • General Contracting License
  • Renovation Construction Crews
  • We hope to give you a general understanding of
    the unique combination of skills and knowledge
    the principals of Main Street Capital Housing
    Corporation L.L.C. have in this brief PowerPoint
    presentation. Our complete offering memorandum
    includes resumes and previous investment
    experience of the principals and is available
    when you contact us for more information.

4
Retail
Investment Strategy
The Fund will focus on investments that are
under 150,000 per unit. This offers the best
ratio of rental income to cost which produces the
greatest operating dividends.
These investments will be single
family homes, condominiums, and apartments.
Ideally we will purchase multiple units in larger
projects to be more costs effective in completing
the renovations, lease up and day-to-day
management of the units. There are many great
opportunities in this distressed real estate
market. Our focus is to purchase deals that can
be leased at break even or better cash flow which
provides the best hedge in case a longer holding
period is required. Although units above
150,000 can appear as bargains the investors
buying these higher priced units must rely on
appreciation as their exit strategy since these
units will have significant negative cash flows
during the holding period.
5
Retail
REIT
  • REITs are a quoted companies that own and manage
    income-
  • producing property
  • At least 90 of taxable income is distributed to
    shareholders
  • through dividends
  • Companies are largely exempt from corporation tax
    and capital gains tax
  • REITs offer investors income and capital
    appreciation from rented
  • property assets in a tax-efficient way
  • Shares in a REIT will be liquid. Direct property
    holdings and units in an open-ended property fund
    can be illiquid

6
Investment Strategy
  • The following chart illustrates the rent a
    typical owner would receive at various unit
    prices in the Michigan Market

ARGUS DISTRESSED REAL ESTATE FUND I, LLC 3825
Henderson Blvd., Suite 101 Tampa, Florida
33629 813-287-0667
  • As you can see a 100,000 property has a rental
    multiple of 1 (1000) and it steadily declines
    until you are achieving only a .5 rental
    multiple on a 1 Million Dollar Property. In this
    current rental market we believe the multiple
    declines even faster than historic data shows.

7
Retail
Our Advantage
  • The Fund intends to focus its work geographically
    in the State of Michigan, where the real estate
    markets have been particularly hard hit and where
    recovery is not expected any time soon. The
    Principals of the Fund have extensive real estate
    experience/knowledge in the State of Michigan.
  • The Fund intends to address the needs of smaller
    local/regional lenders who are struggling with
    defaulted mortgages and construction loans on
    their balance sheets, but whose portfolios of bad
    loans may not be large enough to attract the
    interest of the large national players.
  • The Fund will focus its work, whenever possible,
    in the mid to lower end of the real estate
    market, meaning loans with a face value of under
    150,000 per unit.
  • Unlike the larger national players, the Fund has
    prepared its business plan for a longer holding
    period before liquidating its assets.

8
Retail
Investors Income
  • Investors and Principles in the Fund Receive
    their income as follows
  • 100 of funds available until all invested
    capital is recovered.
  • 100 of funds available until receipt of return
    of 8 per year, cumulative but not compounded.
  • 75 of funds available until receipt of return of
    15 per year, cumulative but not compounded.
    Manager
  • 50 of funds available until receipt of return of
    20 per year, cumulative but not compounded.
  • Manager earns any remaining funds still
    available.

9
Retail
Investment Example
  • Purchased October 2003
  • Purchase Price 100,000
  • Sold July 2008
  • Sale Price 175,00
  • Return On Equity X
  • Based on purchase/sale prices. Actual return
    greater based on operating cash flows
  • About this deal Our group came across this
    property through Tax Sales, foreclosures,
    distressed property rehabilitations in
    Michigan, At the time of our purchase the
    property had average rents of 320 and vacancy
    above 70. We renovated the 14 units to include
    wall to wall ceramic tile, new kitchens, new
    bathrooms, and improved the appearance of the
    grounds. As of this writing in March 2008 we have
    raised the rents to 525 and the property
    consistently stays 97 full.
  • Our Plan We intended to hold this property for
    five to seven years. In April 2008 (just under
    five year hold) a buyer was found looking to
    complete a 1031 exchange. Even in this currently
    depressed real estate market we were able to sell
    the property for premium pricing.
  • What we learned By buying the property in a
    distressed state we were able to pay 30 less
    then the market value and repair it to our
    specifications. This results in reduced operating
    expenses and turn costs between tenants. By
    having wall to wall ceramic tile we dont have
    the headache and cost of replacing carpet between
    tenants. The Michigan market also seems to have a
    tenant preference towards tile. Going forward we
    will use the skills learned in renovating this
    project to be more efficient in our renovation
    decisions on future deals.

10
Retail
Conclusion
  • We believe Main Street Capital Housing offers the
    best investment option for investing between
    50,000 and 150,000 because
  • We are focused on properties priced at or below
    150,000 per unit offering the highest rental
    multiplier (this is important to create
    operational income to pay preferred equity return
    during the holding period)
  • The principals of the fund have the experience,
    contacts, and expertise to execute the funds
    business plan and give investors the best chance
    to take advantage of current market opportunities
    without interfering with their daily lives.

11
  • Experienced Management Team

12
Retail
Questions
  • Thank you for reviewing our PowerPoint on the
    Main Street Capital Housing Investments. Please
    contact us with any questions or to request the
    complete offering memorandum.
  • Sincerely,
  • Paul Clark
  • Director - CIO,
  • Contact Information
  • Cell 517-763-4519
  • Office 866 931-4202Email pclark_at_mainstreetcapit
    al.org
  • Linkedin www.linkedin.com/in/pauljamesclark
  • Website mainstreetcapital.org
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