CRANE APARTMENTS 5525 Crane Street, Houston, TX 77026 EXCLUSIVE OFFERING river oaks equity partners 1 contents Disclaimers ...........................................................................3 Investment Overview ..........................................................4 Exterior Pictures ..............................................................5-6 Interior Pictures ...................................................................7 Maps + Aerial View .............................................................8 Property Summary ..............................................................9 Valuation + Returns Summary ....................................... 10 Financing, Sources + Uses ............................................... 11 Unit Mix............................................................................. 12 Current Economics .....................................................13-14 Pro Forma .....................................................................15-16 Recent Sale Comparable .................................................. 17 Rental Analysis + Data ...............................................18-20 Plat Map ............................................................................. 21 Submarket Data ................................................................ 22 Major Area Employers ..................................................... 23 Employment Drivers ...................................................24-29 Disclosures ........................................................................ 30 Contact Information ........................................................ 31 river oaks equity partners 2 disclaimers Real estate investment sales offered through River Oaks Equity Partners, L.L.C. (“Broker”). Texas Real Estate License 9007513 The information contained in the following executive summary is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Broker and should not be made available to any other person or entity without the written consent of Broker. This executive summary has been prepared to provide summary to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Broker has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this executive summary has been obtained from sources the company believes to be reliable; however, Broker has not verified any of the information contained herein, nor has Broker conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. Market intelligence provided by Yardi® Matrix. river oaks equity partners 3 investment overview iver Oaks Equity Partners proudly presents Crane Apartments in Houston, Texas. This exclusive INVESTMENT HIGHLIGHTS R offering allows an investor the opportunity to acquire a 14-unit, newly renovated apartment community in n Offering Priced at $1,295,000 the sought after Inner Loop. This property is ideally situated in a residential neighborhood with proximity to n 7.0 Cap Rate on Current NOI Lockwood Drive, Cavalcade Street, and I-610 North. In addition to the nearby interstate and major streets, this n Turnkey Offering offering is a short 3.5 mile drive to Downtown Houston. n Inner Loop Asset n Intensive Renovation in 2018 n Gated Community Subject Property n Near Major Thoroughfares PROPERTY UPGRADES (2018) n Water Heaters 3.5 MILES n Electrical Temper Resistant Outlets n Kitchen Appliances Downtown Houston Major Employers n Kitchen Cabinets n Sinks and Tubs n Doors n Ceiling Fans n Window Blinds n Tile Flooring n Electrical Meter Breaker Boxes n Interior Plumbing + Electrical Fixtures n New Roofs (2017-2018) n Fencing river oaks equity partners 4 exterior river oaks equity partners 5 exterior river oaks equity partners 6 interior river oaks equity partners 7 maps + aerial view Subject Property Subject Property Subject Property Subject Property river oaks equity partners 8 property summary SITE LOCATION APPRAISAL DISTRICT Property Address 5525 Crane Street County Harris Houston, Texas 77026 Tax Rate 2.530443 Account(s) 0651260400887 SITE DESCRIPTION Number of Units 14 Year(s) of Construction 1963 UTILITIES Buildings 7 Electric Resident Responsible Stories 1 Water Resident Responsible Lot Size 28,796 SF Gas Resident Responsible Tenant Parking Spots 28 Tenant Parking Ratio 2.0 Visitor Parking Spots 4 Roofs Pitched SCHOOL DISTRICT Houston ISD Chiller No Water Heater(s) Yes-14 HVAC Individual Laundry Room(s) No* SCHOOLS Pool No Isaacs Elementary School Leasing Office No Fleming Middle School Gated Entry/Exit Yes Wheatley High School Camera System Yes *Washer and Dryer Connections in Each Unit river oaks equity partners 9 valuation + returns summary SALES PRICE $1,295,000 ESTIMATED CAPITAL INVESTMENT $297,146 CURRENT NOI + CAP RATE HOUSTON MSA MULTIFAMILY CAP RATES* T1 $90,594 7.0 LOW HIGH AVERAGE T3 $92,114 7.1 Class C Infill 5.50 6.00 5.75 T6 $92,988 7.2 Class C Suburban 6.25 6.75 6.50 Average $91,899 7.1 *Per CBRE Research Analysis (August 2019) PRICE PER UNIT $92,500 PRICE PER SQUARE FOOT (RENTABLE) $123.33 PRICE PER SQUARE FOOT (LAND) $44.97 NET CASH FLOW + CASH-ON-CASH RETURNS End of Year (EOY) 1 $46,011 15.5% End of Year (EOY) 2 $48,994 16.5% End of Year (EOY) 3 $52,066 17.5% End of Year (EOY) 4 $34,331 11.6% End of Year (EOY) 5 $37,590 12.7% IRR NOTES: End of Year (EOY) 6 $40,947 13.8% A. Calculated on a ten-year hold End of Year (EOY) 7 $44,405 14.9% B. 7.0 terminal cap rate End of Year (EOY) 8 $47,966 16.1% C. Title policy estimated at 55 basis points End of Year (EOY) 9 $51,634 17.4% D. 5.0 percent brokerage fee End of Year (EOY) 10 $55,413 18.6% E. Does not take into account rent or tax prorations SALE PROCEEDS $720,745 INTERNAL RATE OF RETURN (IRR) 20.6% river oaks equity partners 10 financing, sources + uses FINANCING Credit Source Agency Type Permanent - New Loan-to-Value 80.0% Interest Rate 4.75% Amortization (Months) 360 Maturity (Months) 120 Interest Only (Months) 36 SOURCES PERCENT PROCEEDS Debt 77.71% $1,036,000 Equity 22.29% $297,146 Total 100% $1,333,146 USES PERCENT PROCEEDS Purchase Price 97.14% $1,295,000 Replacement Reserve Escrow 0.49% $6,475 0.50% of Purchase Price Discretionary Yr. 1 Cap Ex 0.49% $6,475 0.50% of Purchase Price Third-Party Reports 0.55% $7,300 Legal & Document Preparation 0.49% $6,500 Lender Origination Fee(s) 0.85% $11,396 1.10% of Loan Amount Total 100% $1,333,146 river oaks equity partners 11 unit mix NUMBER % UNITS BED BATH FLOOR PLAN SQUARE CURRENT RENT PER MONTHLY PRO FORMA RENT PER MONTHLY OF UNITS FOOTAGE RATES SQ FT INCOME RATES SQ FT INCOME 6 42.9% 2 1 Flat 750 $850 $1.13 $5,100 $875 $1.17 $5,250 8 57.1% 2 1 Flat 750 $900 $1.20 $7,200 $925 $1.23 $7,400 TOTAL RENTABLE AVERAGE AVERAGE TOTAL AVERAGE AVERAGE TOTAL UNITS SQ FT RATE SQ FT MONTHLY RATE SQ FT MONTHLY 14 10,500 $879 $1.17 $12,300 $904 $1.20 $12,650 2 Bdr 1 Ba with yard (750 Sq Ft) 57.1% 2 Bdr 1 Ba (750 Sq Ft) 42.9% NOTES: A. Rates per rent roll dated March 14, 2019 B. All floor plans are the same, rent premium due to backyard river oaks equity partners 12 current economics T6 % T6 GPR T3 % T3 GPR T1 % GPR GROSS POTENTIAL RENT (GPR) $144,600 - $144,600 - $144,600 - Economic Vacancy ($5,280) 3.7% ($6,200) 4.3% ($7,800) 5.4% TOTAL RENTAL INCOME $139,320 96.3% $138,400 95.7% $136,800 94.6% T8 %T8 EGI T8 %T8 EGI T8 %T8 EGI Consolidated Other Income $3,548 2.5% $3,548 2.5% $3,548 2.5% TOTAL OTHER INCOME $3,548 2.5% $3,548 2.5% $3,548 2.5% EFFECTIVE GROSS INCOME (EGI) $142,868 $141,948 $140,348 T8 % T6 EGI T8 % T3 EGI T8 %T1 EGI PER UNIT PER SQ. FT. General and Administrative $2,694 1.9% $2,694 1.9% $2,694 1.9% $192 $0.26 Repairs and Maintenance $11,580 8.1% $11,580 8.2% $11,580 8.3% $827 $1.10 Contract Services $2,250 1.6% $2,250 1.6% $2,250 1.6% $161 $0.21 Marketing and Promotion $1,013 0.7% $1,013 0.7% $1,013 0.7% $72 $0.10 CONTROLLABLE EXPENSES $17,537 12.3% $17,537 12.4% $17,537 12.5% $1,253 $1.67 Real Estate Taxes $4,992 3.5% $4,992 3.5% $4,992 3.6% $357 $0.48 Insurance $15,000 10.5% $15,000 10.6% $15,000 10.7% $1,071 $1.43 Electric Utilities $1,496 1.0% $1,496 1.1% $1,496 1.1% $107 $0.14 Water Utilities $3,713 2.6% $3,713 2.6% $3,713 2.6% $265 $0.35 Gas Utilities $0 0.0% $0 0.0% $0 0.0% $0 $0.00 Management Fee $7,143 5.0% $7,097 5.0% $7,017 5.0% $529 $0.71 TOTAL OPERATING EXPENSES $49,879 34.9% $49,833 35.1% $49,753 35.5% $3,582 $4.78 NET OPERATING INCOME (NOI) $92,988 $92,114 $90,594 river oaks equity partners 13 current economics UNDERWRITING NOTES A. Underwriting based upon 2019 YTD operating statement ending August 2019 B. Real estate taxes underwritten with a 100 percent increase C. Management fee underwritten to 5.0 percent D. All other income and expenses are derived from Seller’s operating statement river oaks equity partners 14 pro forma EOY 1 EOY 2 EOY 3 EOY