Track Record:
SAFARI PARTNERS IV LLC:
Building #1: Purchased 12/15/07. “The Wilmington Inn” 903 N. Fries, Wilmington CA 90744. Price: $1,245,000, Down payment $237,000 (19%), $245,000 including closing costs and working capital. Return on cash: 8.0%, plus 3.5% loan principal reduction=11.5%. First Year Financial Projection on a one Unit $5,000 investment: First year cash dividend of $412 and principal reduction $158.00. As you are aware, in an LLC both profit and loss flow thru to individual investors, so the depreciation is a benefit to you. Depreciation of $549.00 shelters 95% of cash flow and principal reduction. Assume a 6% annual inflation rate and / or rent increase, times a 7 gross rent multiplier, and you will also experience a $1,022 increase in your equity.
Building #2: 230 & 250 Calaveras Street in Fresno, Ca: Purchased 9/12/07. A twenty unit two story walkup apartment building built in 1963. Located on two individual 11,325 Sq.Ft. parcels. Individual electric and gas meters. The 13,006 Sq.Ft. building consists of: 2 Studios, 12 One bedroom one bath, 4 Two bedroom one bath and 2 Four bedroom 2 bath units. ALL units are renting below section 8 guidelines. If we increased all rents to section 8 rates we could be grossing an additional $11,000per year. This is something that could be realized over the next 12 to 18 months. Calaveras Street is located in Downtown Fresno, near the Regional Community Medical Center, the IRS Compliance Center and theFederal Court house=JOBS! The building grosses $133,000 per year. Price $1,075,000. The $82.00 Per Sq.Ft. price is well below replacement cost. Price per unit $53,750. Annual Gross Multiplier 8.0, Cap Rate 8.0. We will make a 25% down payment ($268,750). Using a 40% expense ratio, we should expect a 5% cash return on our down payment, plus 3% loan principal reduction = 8% first year return before tax advantages and appreciation. The unit mix is good, and the location great, for our category of renter.
Building #3: 222 North Effie fresno, CA. Purchased 3/14/08.
We purchased Effie using a combination of:
1. A $300,000 hard money 1st T.D. at 12% interest, 3.5 point origination fee and no pre-payment penalty. We will utilize this loan for approximately 8-9 months.
2. A $125,000 second T.D the sellers are carrying @9% interest for 18 months or until we re-finance.
3. A $25,000 down payment from Safari Partners plus another $20,000 or so in fix up and carrying costs.
The Plan: On Effie we are paying $40,909 per door, a good deal on units in the downtown Fresno area is $50,000 to $53,000 per door We will invest an additional $20,000 in fix up costs consisting of new water heaters, landscaping and the negative cash flow during the rent-up phase, bringing our cost per door to $43,000, an $8,000 profit per unit. We are having Effie managed by Tylar, our management company on Calaveras. Mel feels we can fill up the vacancies over the next two to three months. In order to obtain a conventional bank loan, the bank looks for 6 months of stable occupancy, so the re-finance clock starts after we are 95% full. We are budgeted to lose a few hundred dollars a month until we re-finance, at which point we should look for an approximate $550,000 value, a new 6.5%, $425,000 conventional loan, an 8% annual dividend return on our $45,000 investment, and $80,000 in equity. Congratulations. When said and done this should increase our current equity by approximately 18%.
Safari Partners #1:
Sold
725-729 Sanford Ave.Wilmington CA, 90744Purchased this 20 unit “fixer” for $360,000 in 2001. Three partners contributed $18,500 each, and Steve Nauert contributed his $9,000 commission. Using a professional management company, “Sanford” began to throw off $2,000 per month in spendable income, which we received for 90% of our holding period. We re-financed in 2003, took out $80,000 and split 4 ways. We sold Sanford 11/30/04 for $1,040,000. Each partner made $139,826.17 on sale, plus previous $20,000 in re-finance proceeds, plus dividends.
Safari Partners #2:
Closed to new funding.
1619 N. Avalon Blvd. Wilmington Ca 90744. Purchased this 4 unit building in 2001 for $339,000. Three partners contributed $15,000 each; Steve Nauert contributed his $8,475 commission. Moved out tenants and replaced with section #8’ tenants. Increased annual rental income from $33,000 to $52,000. Sold on 6/05/03 for $461,000. Entered into a 1031 Tax deferred exchange. Used profit of $117,000 and 2nd T.D. of $52,000 to purchase 14 units at 1253 E. 64th Street in L.A. for $550,000. Building is currently in escrow for $965,000.
Safari Partners #3:
Closed to new funding.
842 Wilmington Blvd.Wilmington CA 90744
Purchased 4 Units in 2003 for $225,000. Three partners invested $8,500 each; Steve Nauert contributed his commission of $5,625. Building was grossing $23,000 per year. Turned over all units and increased annual income to $48,000. Sold on 2/18/05 for $664,000. Entered into a 1031 Tax deferred exchange and purchased 10 units on 1109 N. Wilmington Blvd for $1,040,000. This building grosses $105,000 per year. We used our equity of $372,000 for a down payment, borrowed $675,000 to complete purchase. Partners will hold building and receive dividends until next exchange.