Professional Documents
Culture Documents
Multi-Family
Investment
Prospectus
Inspired
VENTURES
Page 1
TABLE OF CONTENTS
1. EXECUTIVE SUMMARY............................................................................................ 2
2. TEAM .................................................................................................................. 4
1. Jim Simcoe-principal......................................................................................... 3
2. Kevin Gaynor-principal..................................................................................... 3
3. GREEN MULTIFAMILY OPPORTUNITY........................................................................ 4
1. Green Opportunity.......................................................................................... 4
2. Multifamily Benefits.......................................................................................... 6
1. Cash Flow................................................................................................ 7 ..
2. Demand................................................................................................... 7
3. Leverage.................................................................................................. 7
4. MARKET SELECTION.............................................................................................. 8
1. Rental Market Strength..................................................................................... 8
2. Competition................................................................................................... 9
5. INVESTOR OPPORTUNITY..................................................................................... 10
1. Debt Investors............................................................................................... 10
2. Equity Investor............................................................................................... 10
3. Investment Strategy........................................................................................ 10
6. INSPIRED PHILANTHROPY..................................................................................... 11
1. Benefit to the Non-profit.................................................................................. 11
2. Benefit to our Investors.................................................................................... 11
7. INVESTMENT SNAPSHOT.................................................................................... 12
1. Property Specifics.......................................................................................... 12
2. Property Overview......................................................................................... 12
3. Housing Market............................................................................................ 12
4. Economic and Market Overview...................................................................... 12
8. FINANCIAL SUMMARY - Multi Family Unit................................................................ 13
9. PROPERTY PROJECTIONS...................................................................................... 14
10. INVESTMENT GRAPHS....................................................................................... 15
1. NOI (Net Operating Investment....................................................................... 15
2. Cash Flow (Pre-Tax)....................................................................................... 15
3. ROI (Return on Investment) .............................................................................. 16
4. COC (Cash on Cash Return)........................................................................... 16
Inspired
VENTURES
Inspired Ventures, 491 Second Street, Suite 104
Encinitas, CA 92024 Copyright 2011 Simcoe Ventures
For further information call 760 -271-7128
Jim@jimsimcoe.com
Page 2
EXECUTIVE SUMMARY
We offer an investment in green multifamily properties. Our team has been active
in the green multifamily industry for the past 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 perfect storm 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 taking advantage
of this opportunity.
Inspired
VENTURES
Inspired Ventures, 491 Second Street, Suite 104
Encinitas, CA 92024 Copyright 2011 Simcoe Ventures
For further information call 760 -271-7128
Jim@jimsimcoe.com
Page 3
TEAM
JIM SIMCOE
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 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.
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 effective Storm 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.
Inspired
VENTURES
Inspired Ventures, 491 Second Street, Suite 104
Encinitas, CA 92024 Copyright 2011 Simcoe Ventures
For further information call 760 -271-7128
Jim@jimsimcoe.com
Page 4
Our business model is geared to capitalize on the perfect storm 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.
86%
to live in one
55%
Data from Rent.Com’s Feb 2010 survey
Inspired
VENTURES
Inspired Ventures, 491 Second Street, Suite 104
Encinitas, CA 92024 Copyright 2011 Simcoe Ventures
For further information call 760 -271-7128
Jim@jimsimcoe.com
Page 5
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 so they can afford to pay more in rent.
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 are more likely to spend an additional $50 per month in rent
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.
Inspired
VENTURES
Inspired Ventures, 491 Second Street, Suite 104
Encinitas, CA 92024 Copyright 2011 Simcoe Ventures
For further information call 760 -271-7128
Jim@jimsimcoe.com
Page 6
Net Annual Energy Savings / Capitalization Rate = Increased appraisal value (in dollars)
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. Additionally, the power to
increase cash flows (profit) and property values rests largely with us. In short, we
drive the results, not the market.
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
Inspired
VENTURES
Inspired Ventures, 491 Second Street, Suite 104
Encinitas, CA 92024 Copyright 2011 Simcoe Ventures
For further information call 760 -271-7128
Jim@jimsimcoe.com
Page 7
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 65% of households
of under 25 year of 25 – 29 year
olds are renters olds are renters
80% 65%
LEVERAGE
Multifamily investments offer the ability to utilize leverage to dramatically enhance the value of
our investments. Typically we put down no more than 20-40% 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.
Inspired
VENTURES
Inspired Ventures, 491 Second Street, Suite 104
Encinitas, CA 92024 Copyright 2011 Simcoe Ventures
For further information call 760 -271-7128
Jim@jimsimcoe.com
Page 8
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
Inspired
VENTURES
Inspired Ventures, 491 Second Street, Suite 104
Encinitas, CA 92024 Copyright 2011 Simcoe Ventures
For further information call 760 -271-7128
Jim@jimsimcoe.com
Page 9
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.
Inspired
VENTURES
Inspired Ventures, 491 Second Street, Suite 104
Encinitas, CA 92024 Copyright 2011 Simcoe Ventures
For further information call 760 -271-7128
Jim@jimsimcoe.com
Page 10
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:
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.
Inspired
VENTURES
Inspired Ventures, 491 Second Street, Suite 104
Encinitas, CA 92024 Copyright 2011 Simcoe Ventures
For further information call 760 -271-7128
Jim@jimsimcoe.com
Page 11
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:
Inspired
VENTURES
Inspired Ventures, 491 Second Street, Suite 104
Encinitas, CA 92024 Copyright 2011 Simcoe Ventures
For further information call 760 -271-7128
Jim@jimsimcoe.com
Page 12
INVESTMENT SNAPSHOT
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%
PROPERTY OVERVIEW
• 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.
Inspired
VENTURES
Inspired Ventures, 491 Second Street, Suite 104
Encinitas, CA 92024 Copyright 2011 Simcoe Ventures
For further information call 760 -271-7128
Jim@jimsimcoe.com
Page 13
Inspired
VENTURES
Inspired Ventures, 491 Second Street, Suite 104
Encinitas, CA 92024 Copyright 2011 Simcoe Ventures
For further information call 760 -271-7128
Jim@jimsimcoe.com
Page 14
PROPERTY PROJECTIONS
Phoenix, AZ
Mountain View Acres Apts (20 Units)
Current After Green Projected Year 1 Year 2 Year 3 Year 4 Year 5 Year 10
CASH-FLOW Upgrades Savings 1 2 3 4 5 10
Gross Scheduled Income $ 114,000 $ 131,957 $ 17,957 $ 131,957 $ 138,555 $ 145,483 $ 152,757 $ 160,395 $ 204,709
Other Income $ 5,702 $ 6,557.30 $ 855 $ 6,557 $ 6,885 $ 7,229 $ 7,591 $ 7,970 $ 10,173
Vacancy Allowance $ 17,100 $ 6,270 $ 10,830 $ 6,270 $ 6,583 $ 6,913 $ 7,258 $ 7,621 $ 9,727
Gross Operating Income (GOI) $ 102,602 $ 132,245 $ 29,643 $ 132,245 $ 138,857 $ 145,800 $ 153,090 $ 160,744 $ 205,155
Operational Expenses
Utility Expenses $ (17,004) $ (9,522) $ 7,482 $ (9,522) $ (9,713) $ (9,907) $ (10,105) $ (10,307) $ (11,380)
Property Management Fee $ (4,845) $ (6,284) $ (1,439) $ (6,284) $ (6,943) $ (7,290) $ (7,654) $ (8,037) $ (10,258)
Accounting/Legal $ - $ - $ - $ - $ - $ - $ - $ - $ -
Repairs/Mantainance/Supplies $ (10,000) $ (8,500) $ 1,500 $ (8,500) $ (8,670) $ (8,843) $ (9,020) $ (9,201) $ (10,158)
Property Taxes $ (10,669) $ (10,669) $ - $ (10,669) $ (10,776) $ (10,883) $ (10,992) $ (11,102) $ (11,669)
Insurance $ (3,500) $ (2,975) $ 525 $ (2,975) $ (3,005) $ (3,035) $ (3,065) $ (3,096) $ (3,254)
On-site Payroll $ (6,000) $ (5,100) $ 900 $ (5,100) $ (5,202) $ (5,254) $ (5,307) $ (5,360) $ (5,633)
Contract Services $ (3,000) $ (2,550) $ 450 $ (2,550) $ (2,601) $ (2,627) $ (2,653) $ (2,680) $ (2,817)
Marketing $ (1,000) $ (850) $ 150 $ (850) $ (867) $ (876) $ (884) $ (893) $ (939)
General & Admin $ (2,777) $ (2,360) $ 417 $ (2,360) $ (2,408) $ (2,456) $ (2,505) $ (2,555) $ (2,821)
Reserves & replacement $ (4,000) $ (3,400) $ 600 $ (3,400) $ (3,468) $ (3,537) $ (3,608) $ (3,680) $ (4,063)
Total Operating Expenses $ (62,795) $ (52,211) $ 10,584 $ (52,211) $ (53,652) $ (54,708) $ (55,795) $ (56,911) $ (62,991)
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 Payment $ (17,374) $ (17,374) $ - $ (17,374) $ (17,374) $ (17,374) $ (17,374) $ (17,374) $ (17,374)
Total Debt Service $ (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 $ 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
Depreciation $ 12,364 $ 12,364 $ 12,364 $ 12,364 $ 12,364 $ 12,364 $ 12,364 $ 12,364
Mortgage Interest Paid $ 13,939 $ 13,939 $ 13,939 $ 13,939 $ 13,939 $ 13,939 $ 13,939 $ 13,939
Subtotal $ 26,303 $ 26,303 $ 26,303 $ 26,303 $ 26,303 $ 26,303 $ 26,303 $ 26,303
Taxable Income $ 13,504 $ 53,731 $ 53,731 $ 58,902 $ 64,788 $ 70,992 $ 77,530 $ 115,861
Tax Bracket Impact $ 3,376 $ 13,433 $ 13,433 $ 14,726 $ 16,197 $ 17,748 $ 19,383 $ 28,965
CASH-FLOW (After Tax) (CFAT) $ 19,057 $ 49,227 $ 30,170 $ 49,227 $ 53,105 $ 57,520 $ 62,173 $ 67,076 $ 95,824
Monthly $ 1,588 $ 4,102 $ 2,514 $ 4,102 $ 4,425 $ 4,793 $ 5,181 $ 5,590 $ 7,985
EQUITY ACCUMULATION
Property Value $ 650,000 $ 768,879 $ 118,879 $ 768,879 $ 815,012 $ 863,913 $ 915,747 $ 970,692 $ 1,299,005
minus Mortgage Balance $ 251,565 $ 251,565 $ 251,565 $ 247,936 $ 244,103 $ 240,053 $ 235,775 $ 210,480
EQUITY $ 398,435 $ 517,314 $ 118,879 $ 517,314 $ 567,076 $ 619,810 $ 675,695 $ 734,918 $ 1,088,526
Cash On Cash Return (COC) 25.6% 25.6% 27.7% 30.1% 32.6% 35.3% 50.9%
Internal Rate of Return (IRR) 250.1% 250.1% 106.4% 73.7% 59.6% 51.9% 38.7%
Return on Investment (ROI) 26.4% 26.4% 54.9% 86.0% 119.6% 156.0% 931.7%
Inspired
VENTURES
Inspired Ventures, 491 Second Street, Suite 104
Encinitas, CA 92024 Copyright 2011 Simcoe Ventures
For further information call 760 -271-7128
Jim@jimsimcoe.com
Page 15
$60,000
$40,227
$39,807
$40,000
$20,000
$0
Current After Green PROJECTED Year 1 Year 2 Year 3 Year 4 Year 5
Upgrades SAVINGS
CashFlow (Pre-Tax)
$124,790
120,000
100,000
$86,459
$79,921
80,000 $73,717
$67,831
$62,659 $62,659
60,000
$40,277
40,000
$22,433
20,000
0
Current After Green PROJECTED Year 1 Year 2 Year 3 Year 4 Year 5 Year 10
Upgrades SAVINGS
Inspired
VENTURES
Inspired Ventures, 491 Second Street, Suite 104
Encinitas, CA 92024 Copyright 2011 Simcoe Ventures
For further information call 760 -271-7128
Jim@jimsimcoe.com
Page 16
800%
600%
400%
200% 156.0%
119.6%
86.0%
54.9%
26.4%
0.0%
Year 1 Year 2 Year 3 Year 4 Year 5 Year 10
40%
35.3%
32.6%
30.1%
30% 27.7%
25.6%
20%
10%
0.0%
Year 1 Year 2 Year 3 Year 4 Year 5 Year 10
Inspired
VENTURES
Inspired Ventures, 491 Second Street, Suite 104
Encinitas, CA 92024 Copyright 2011 Simcoe Ventures
For further information call 760 -271-7128
Jim@jimsimcoe.com