Investment Webinar: Winston Apartments

All right. Welcome to our latest investment opportunity, Winston Apartments. We are excited to share about this investment and why we like the deal. We have already had a few weeks of investments already through the 506B portion. We've now switched it over to 506C. Of the few weeks that we had the 506B open, we're already about 25% subscribed. And so I expect on the CR partner side we will be subscribed with the 506C in the next couple days. We just completed an opportunity 10 minutes away from this property called Stratton Park Apartments and that oversubscribed in a few days. So I'm really grateful and appreciative of yalls time. Many of y' all have invested in one or more deals with us and it just really means a lot. So want to first start the evening just sharing that this is not a solicitation to purchase securities. The only document or time that a security is being offered is through our private placement memorandum which is available through our portal. But any investment advice, projections or anything of that nature, this is our view of the deal and so highly recommend definitely asking questions not only to us but to your attorneys, financial techs and other professional advisors as we go along in the presentation. There is a QR code at the bottom. Right now the offering is open to investments so you can go in and do a soft commitment and then look at the deal. It's one of those opportunities where you can, you know, show your interest and put your, your place in line in essence as you're looking at the deal. And then we can, you know, do follow up questions and, and dig in a little further as as time allows with your schedule. But that QR code does take you to the portal. So there's a few reasons I really like the deal. One, this property is already outperforming the submarket. This is day one cash flow on a property that is already achieving market rents. This is not a property where we are intending to go in and do a major deep value add or even a heavy value add. It's there is value add and we'll share share the the business plan. But this is a property that has already been taking, been taken care of really well by an owner manager who's owned the asset over 15 years. What I like about that is there's less risk for stabilization and pushing business plan because the property is already doing extremely well on expense control and revenue growth. When I also am looking at deals, I'm also trying to find Opportunities where we're already day one less than the tax appraised value. And the reason is, is because it's been really easy for us. And we've done this on several deals over the last couple of years where we take the purchase sale agreement and we go to the appraisal district and day one we're shaving off 60 to 80,000 plus annual real estate tax. And that drives day one the value of the property but also the cash flow of the asset. So in this case it's about $750,000 less than the Bexar county appraisal. And we're going to go through those financials later on in the presentation. Another reason why I love this deal, it's being purchased in a highly desirable neighborhood of Walker Ranch Park. When we look at San Antonio, we're really heavily looking at like if you look, imagine a clock 10pm or 10am to 2pm sort of that range or that cone of opportunities. And even within that range we're looking north of the 410 loop. And so it's right in our zone but also 10 minutes from a, a property that we just recently purchased. So we're going to have, you know, quite a bit of scale and opportunities to share expenses with the other property even though we're not underwriting that way. But there's a lot of opportunities to do that. The other thing I love about it, it's near the airport. A lot of properties, areas that we look at being near the airport is not desirable, that is not San Antonio. These areas near the airport are extremely desirable. And so it's all about location, location, location. And we, we feel like the location is really fantastic for the San Antonio market where we're buying. And then the last one is cash flows. I mean everybody on this call, including myself, wants cash flow. We want tax depreciation. We are getting fixed rate debt at 5.1%. This is a Fannie Mae loan. And if for those that are not familiar with Fannie Mae, they are extremely conservative with their underwriting and they are hard to get to the table to say yes. So not only are we underwriting the deal, but you also have, you know, Fannie Mae underwriting looking at the deal and being extremely conservative on their underwriting and in doing so it's like harder to get the loan, but we can get incredible interest rate, in this case 5.1% fixed rate debt. We're going to go through the cash flow and what it looks like later in the presentation, but you know, really love that with it already being stabilized and doing extremely well in the submarket, that this cash flows really well for our investors. So as we go into the presentation, I see a lot of non familiar faces, I see a lot of familiar faces but not, you know, there's a good group of people that may not know why to invest in multifamily. I look at different classes of real estate And I say 80% of our portfolio is multifamily, 20% is retail and storage, but 80% is the bulk of our portfolio. And the reason is, is because at the end of the day, everybody needs a place to live. I've been in commercial real estate over 17 years, heavy in office and retail and I've seen when times are good, times are good, but when times are bad, people, you know, middle of night move their office stuff out and but they don't do that at their home, you know, they stay at home. And so from a risk resilience, basic human need is shelter. And so that's one big reason why I've stuck with multifamily. The other is it's when you look at office, retail, multifamily, hotels, they multifamily has the best risk adjusted returns among other asset classes. So when we're diversifying in commercial real estate, think of it like a stock market. Even within those there's different sectors and multifamily has always led the pack on risk adjusted returns. Love that there's cash flow, there's equity appreciation, tax benefits. These are all things that I'm looking for and our investors are looking for when we look at multifamily. So in this given market, when we look at stability during market volatility, I'm not having to worry about what's going on overseas, what's going on on social media, what's going on geopolitically. It's very local to the submarket. And when people are seeing these fluctuations with their stocks, etc. You know, for us, for me personally, majority, if not all, I mean there is a small percentage in stocks and other investments, but heavily our wealth is through real estate. And so I don't have the ups and downs, the market volatility because of that. And so that is one big reason why I push and educate on multifamily investing in particular is because it's stable, it provides that cash flow. People still pay rent on the 1st and what we saw during COVID when people weren't paying rent because of job conditions, the government came in to play to help. You know, we didn't see that much in other industries within, you know, business, much less commercial real estate. But we saw that in multifamily. The other thing we we're looking for is inflation hedge. So as inflation and hopefully inflation continues to go on the downward side but if inflation does creep back up, real estate is a hedge against inflation. We look at local performance, not global panic. Demand grows both during market instability and stability. So that's. These are all these reasons why we invest heavily in multifamily in particular. So just briefly about myself, I'm Wayne Kage III. We've got about $60 million of properties assets under management that we are the lead sponsor on. We me personally, I've got over 17 years managing and oper operating commercial real estate. A big chunk of that was while I was working bre but I started our company in 2019 and went all in full time in 2023 when our assets were large enough where I just couldn't do both. And so myself and I'll introduce another slide our team but we are full time at this. We are not syndicating deals and going back to our day job. It it's really an important aspect for us to be full time focused on these assets that we are not only raising capital for that we're we're purchasing on behalf of our investors. My background education is MBA from University of North Carolina. I have a master's in Economics from University of Oklahoma. We have a multifamily meetup the fourth Monday of every month. We have this podcast podcast Untold Stories of Real Estate Investing. And we just recently started another podcast called Building Passive Income and we've got other Facebook Texas Multifamily Passive Active Investor Group. I am a former Marine Eagle Scout and a member of the Rotary Club of Bryan. We have grown over the last year and a half where we've added team members. Shelby is our chief of staff. Many of you on this call have spoken with Shelby. She has been an incredible resource to our investors and building that hospitality experience and and having somebody, not only myself going to myself but also having somebody who can assist with the investor portal or ask questions on the updates of the property or if there's tax document questions. She is that go to and that resource that we have at the at our company and has really been setting our company apart from other companies out there. We've also added a senior portfolio manager which is an asset manager. So as we grow I found that it's just extremely important that we invest in the company and we bring on people who are as experienced as Will, who is running our asset management for our properties. So with Shelby, myself and Will, we are the point of these, these properties that we are acquiring, we have, we just added a property last week called Stratton Park Apartments so that through that property we've pushed over 60 million assets under management. But Ivy at the Galleria, Candle Ridge Park Apartments, Majestic Apartments, we've got a 20 by 50 storage. We have two 20 by 50 storages, one in Bryan, one Huntsville, Alabama. We've got a Build to Rent community, a multifamily development in Bryant and then also our retail center. And again, we just added 128 units last week with Stratton Park Apartments in San Antonio. So these are the guys that are also with me. They, you know, it's a team sport and Raj bio and Ann and I have been on multiple deals together. We know the strengths of each other and when things get tough because that's our job as general partners to get through ups and downs. We've worked extremely well together on multiple deals and multiple times. So we, so I'm very grateful for them. Their background is incredible when it comes to real estate. Two of them are, you know, doctors, but are heavily invested in real estate, not only as a passive investor, but as an active investor. And Ann is based out of New York with $30 million of assets under management and someone who like the others join every single week on these property management calls to go execute the investment plan. All right, so let's get into the market. So San Antonio is the largest city by population in the state of Texas. It is the seventh in the US from a population standpoint. In 2023 it was the fastest growing city by population according to the US Census and is expected to have a population over three and a half million. This is a city that I was really wanting to buy about five years ago, but I couldn't because every time I underwrote a deal I would always get out beat by somebody who was willing to pay a million dollars more. Well, these properties, I've come to a point where we, we are now going in and buying not only distressed properties, but properties that are of good value. This property is the furthest from a distressed value property, which I like. However, like buying into like San Antonio and being in central Texas and being close to the Austin submarket, there's a lot of growth and a lot of opportunities as well. And I'll share some of the accolades. But when you, you know, San Antonio, when you think of San Antonio, you may not compare it to like Tampa, Charlotte, Dallas, Orlando, Raleigh, Jacksonville, but it is in that group of cities that over the last 10 years the numbers of population is leaps and bounds more than a lot of these other major markets. So this slide, you know, it's from the JLL research, Oxford Economics, but if you, you know, comparing the employment growth and the population growth, I mean it is surpassing a lot of cities and in the hunt with these other top cities, which is good because when we're buying multifamily we want to be in markets that are growing. You know, I like Houston, you know we, we buy a lot in Houston. So Houston, San Antonio, that is all in the, the path of growth and which is why we buy so some of the accolades for the city market. So as I mentioned, the fastest growing city In Texas in 2023, it's the second biggest city in Texas with a metro size twice the size of Chicago, A larger population than the entire state of New Mexico. It's a diverse economy not only with the tech, healthcare, the military, the energy, the family, amusement, the entertainment. Just a really great place to live for a family. It's home to five time NBA champion the San Antonio spurs, two major amusement parks. In 2023 it added over 36000 jobs. From a tourism standpoint, over 40 million people visit there annually, including my family. Like we go there quite a bit and then we are, and then a massive, massive military. The Air Force boot camp as an example is in San Antonio. Multiple bases and you know, just a lot of diversification within the city. It also has a major global presence with over 580 million exports in 2024. There's been 11 million passengers handled by the San Antonio airport over the last 12 months. Toyota has expanded with a $531 million expansion, adding 400 jobs, multiple consulates, home to six Fortune 500 companies. There's 47 non stop flights to the U.S. mexico and Canada and home to 400 plus companies with global operations. So in short it's, it is a, it's a massive growing city. It's expected to see robust growth over the next five years, outperforming the national average. Again, San Antonio is in line with Charlotte, Phoenix, Nashville, you see Dallas there, Vegas. So again it's in the right quadrant for growth over the next five years. So let's look at the regional map for Winston Apartments. Again as I mentioned earlier in the presentation, I like that 10 to 2 quadrant. So this is right up north, just a couple of miles from the airport. So there's a lot of restaurants, a lot, I mean a lot of times people are like, based on location, location, location, like where's the nearest Starbucks, where's the nearest in Texas, the H E B? All that's within a mile of this location. So there's a lot of restaurants, a lot of, you know, high end stores, et cetera in the area. They're great. Proximity to Highway 281 and W Block Parkway. You're 10 minutes from the San Antonio International Airport, 25 minutes to downtown San Antonio, 20 minutes to Six Flags via Texas. So there's, there's a lot nearby that's easy driving distance. What I like about this slide is it shows the one mile from Winston Apartments and when we look at it, there's over 29,000 employees within one mile. People want to live near where they work. There's over 2800 companies within the one mile radius. There's 34% of the population with college degree or higher. There's a strong rental of 49% of occupied households that are renters. And then we also look at the supply and what, you know, what is the forecast of supply over the next few years. And there's only 350 units of multifamily expected that's coming online this year with no new starts. And so another reason why we're bullish on buying multifamily is that there's just not a lot of permits going out right now to develop. And so there's going to be this supply crunch over the next few years as the demand in these growing cities continues to grow, grow. People are going to need a place to live and the supply is going to get, you know, taken and there's not any new supply to catch up. So there will be a housing shortage over the next few years. There already is a housing shortage. It's just going to really get worse because of the, the permits. The other thing we're looking at is the median income. You know, can we grow rents and still have renters that have strong enough income? Which is in this case the answer is yes. Over $48,000 of median income, we see a 7.4% growth according to CoStar between 2024, 2029 and then the population 1 mile will continue growing as we see in the market. The other thing to look at is the submarket occupancy rate is north of 85%. So this is a 112 unit community. It's mixed between 721 bedrooms, 162 bed and 24, 2 bed, 2 baths. This property is in incredible condition. I have not, and I'm not just saying this because we're doing an investment web part. Like I'm happy to show, like we. And we have video, Facebook video that we can send. This property is clean. It has astroturf river. And there's other photos. The pool, the generator or the, the boiler room, supply closets. The roofs look incredible. Like this property has been owned, like it's been managed by the, you know, a long term owner who has treated it like their baby. You know, if you look at these pictures, 78 of the 112 units have these types of cabinets. And they didn't just like do what we normally do and just, you know, if needed, replace the outer cabinet only like they went in and replaced the entire cabinets with, you know, wood cabinetry, granite countertops, wood floors. A lot of the units have washer dryers. Like this is this. These Pictures here represent 78 of the units. And so part of our value, as we'll talk about shortly, is renovating the remaining units to continue boosting income. But already a big chunk of our of the property already has been renovated. The community offers, you know, it's fully gated, has laundry facilities, has one pool, has a community, several community grill seating areas, there is a workout room, there is a business center on site management. And everything is, you know, really how we would want to do it if we were taking over a property. Just an example on this one, this next slide, we typically add a gazebo and grill area into our properties that we buy. This, this gazebo grow area is fantastic. And that surrounding that is all AstroTurf. And in San Antonio, water is expensive and it doesn't rain as much as other parts of Texas. So when we look at the landscaping and how much of a hardscape it is, it's incredible because we don't, we are the beneficiaries of buying a property that has already had a lot of this work done. Example, like if I go in and I put a bunch of this money into gazebos and all, it's good for the amenities and it'll draw certain people to the community. It may not necessarily push rents as high as I need them to offset the cost. So but the pool area, the gazebo, as you see on the, in the right picture, a lot of the, I mean all the landscaping is hardscaped. But let's talk about the value add, like what are we planning on doing? So we typically push rents 3 to 5% even in this market. And we do that primarily through rental bumps. So say if a resident has a thousand dollar rent there, we would go out with a $50 rent increase and then we would negotiate typically to about 35, 30, $35. So in essence they would have a three or three and a half percent rental increase. And we wouldn't have to do this without doing much because likely they're already below market. So unless they went to another property and found like an opportunity to move, that's fine, but then they're going to possibly more likely pay a higher rent. Then they have to pay a security deposit, then they also have to pay moving charges. So there's the cost to move is a lot more expensive than taking on the 30 or 50amonth rental bump. So we've been really successful in that. And so that is low hanging fruit we'll continue doing. But we're also, as I mentioned earlier, there's 78 units already renovated. The remaining units are below market and we can renovate those units, not even to a level that they're currently in, but just do modest upgrades and still get an 80 to 100 rent increase per unit on those. So, so that's a big part of it. We're also going to be driving other income because this owner who's been a great owner has done mostly Excel spreadsheet type financials, which is nothing wrong with it other than like when it comes to like reimbursed utility or ratio utility billings. You know, those billings, typically we see 85% of water being billed back to residents at this property, only 50%. And so they're not maximizing and optimizing the operations the best way they can. And that's okay because that's an opportunity for us to go in and professionally manage the property and push income to where we can achieve and still be market. We do that through a company that we have in San Antonio called Implicity Management. They have over 1700 doors that they manage as CRI partners. We always hire third party management companies for our multifamily and there's several reasons for that happen to go through one on one on it. But really, you know, having 16 properties in Texas and a majority of those units are in San Antonio, we have scale, we have opportunity. If something happens or someone's sick or anything, vacation, we've got coverage and a lot of leadership through Implicity Management. So they will be pushing the revenue generation, the expense reduction and property renovations. So other things we're going to be planning on doing from an exterior standpoint is Possibly adding a playground. We're going to survey right now, they don't allow dogs at the property. They allow cats, but not dogs. Instead of just saying, okay, let's go, we're going to do dogs and just get that income. What we want to do is be mindful of the current residents and do a survey and get feedback from them. Would do they want a dog park, do they want a playground? Are they. How do they feel about having dogs as an example? So those are things that we'll do is survey. But the physical property, we've bought properties where we had to replace the roofs, replace H Vacs, replace, do a resurfacing of the pool. We spend $1 million on renovations that don't drive the revenue line item because people already expect to have a roof that doesn't leak. They expect in Texas not to have, you know, non working H Vac. They expect to have a working H Vac. So in this case, we're not having to do that. However, we're going to keep reserves in case something happens. But the business plan here is not to spend money, just to spend money. It's actually to be really tight with money. Have the reserves and cash flow the asset. So other renovation plans add washer and dryers. That's not a capital expense. We work with a local washer dryer company where we lease those units and then we upcharge. And so we're able to get that additional revenue without having to spend the capital investments. And then we're going to continue renovating modest upgrades to the 34 of the 112 units. As I mentioned, minor upgrades, vinyl flooring, new carpet, paint. The setup is sort of like volleyball too. Like you're setting up the ball and you're waiting for the next owner too to come in and have meat on the bone to. To do their value add. So with us already having 78 units renovated, we're going to do modest upgrades and allow the opportunity for the next seller to also continue those upgrades their whole period. Other things we looked at is the FEMA flood map. If our property is in or touching a flood map, we are, you know, flood zone. We walk away. We don't even further look at the deal. So I like to always put this out there, that this property is not in a flood zone. From a risk meter crime report, it's middle of the road. We had another property that was the only property that I had seen that was like in the green, which is fantastic. A lot of times they're like in the red or orange or dark red. So I feel very comfortable about the crime report being middle of the road. I mean with multifamily and housing communities, there's crime, there's crime everywhere. But I am glad you know that it's not in a dark red or you know, the 100 crime index. Right. So yellow or orange, you know, I can get comfortable with once we get and the darker reds we, we stay away from. So most of the multifamily we see are on the yellow. As I mentioned, our property management third party management company who's doing the boots on the ground operating the day to day deal is implicitly management. It's a woman owned multifamily property management company based in San Antonio. What I like about them is they remind me a lot of our Houston property management companies that they're boutique, they're small and so you feel like, you know, you aren't just a number like they. We have weekly calls with them. We're able to communicate, communicate directly with the owner and really provide a lot of feedback. Both them providing us feedback and vice versa. And as I mentioned, Will on our team runs heavily on that asset management piece. So every week we're in calls with our property management on every single property. And again we do that with implicitity management. So here's some rent comparables what I want us to focus on on this one. And there's, you know, not very many slides left and we'll open up to Q A. But on the rent comparables, the total per square foot is typically what I look at. I don't really look at the $944 or 1232 because every property will have a different square footage. And so if we, you know, equalize it to a per square foot basis is what I like. What you'll see is this already at the peak of the market. So our business plan isn't to go in and keep pushing the rents, it's to get the existing rents to market. You know, those that are already living as a property. But we're really going to push heavily on other income. And I'll go through that pro forma. But what I want to show here is like a $57 for Winston. We go into other properties nearby. $47 a square foot, $41, 29, $1.51. And so if we look at the subject property Winston, it's about $1.57 and the comps averaging $1.42. And I would say like a few years ago, I would be like where's the value add? You know, we got to push rents. But having seen what's going on in multifamily these days, like if we can buy a property that already has extremely low collections, has great tenant base that is, you know, clean property that we're not having to go change out the tenants, like the risk just gets smaller and smaller. And if we were to just to do a 3% bump on all of our units every year, we would be adding about 700,000 in value just off modest bumps. And so you know what I've always preached out there, it's like we don't have to do a home run on every deal and make a lot of money. It's like let's do some base hits, have cash flow, get tax depreciation, and then over a 5 year period we can still 2x our money without having to go through a major business plan where we have to re tenant. I've gone through those and they're very stressful. Um, so I'm liking that this property already is supporting the peak of the market and where we can come into play is professionally manage the asset, reduce expenses where necessary, and really focus in on other income, which is what I'll go into next. So if I look at our five year Performa, we underwrite our deal separately from the property management company and we don't share, you know, unless they watch this webinar, they're not seeing our numbers. And so when we do our initial underwriting, we want to see where our net operating income lands. And then we look at the property management company and we see where they're. So there's a checks and balances. They don't know what we're doing on our underwriting and we don't know what they're projecting. So there's that checks and balances. And I also mentioned Fannie Mae being the lender, they also have their underwriting. And so you have these three different groups that are, you know, working separately. But for us having the visibility as owners, we're able to like just compare and make sure we're, you know, we're being conservative and making sure we have enough monies, you know, for, for repairs and maintenance, et cetera. So when we look at annual rent growth, we're looking at about a 3% annual rent growth year over year. And we can do this, as I mentioned, majority through people that are already living in the property that are not up to market. Other income growth is 1%. So we're being extremely conservative that we we feel like we can do more there, but we're going to stay at 1%. And the way our operating expense growth is is 2%. We in the past have underwritten this more at 1% because every year we're going out to bid but with inflation we have doubled that. We've done 2%. But pest control, pool services, landscaping, all that's bid every single year. And you know, we're, we're really tight on operational expenses. If you look on this side here, this is the T12. They have not. They're at 99 occupied. We went there last Saturday and only one unit was vacant and in the process of being leased. So they have not had a lot of vacancy. And so they have. That's why they have zero here. Rent concessions, zero, bad debt, zero. Again, it's just been a really well maintained property. However, we feel like when we're going to buy a property we're going to be professionally managing and taking care of the asset. However we want to be. We want to be conservative, right? And so we've got a 1% loss, gained a lease, 7% vacancy, 1% bad debt. And we do this year over year and we're not declining it or you know, reducing it, you know, over the years. Year five we do because we're really in sale mode. So we're going to be pushing consent. We will drive occupancy up as high as we can for sale in year five. So but years one through four we keep this all pretty conservative. Where we see where we can grow is other income. So there's not a lot. I mean look at from net rental income 1,000,383. We're actually expecting a, a smaller net rental income mostly because you know, we're, we're being conservative, adding vacancy, etc. But our rubs, which is utility building billing, we know we can go and be more aggressive with this and we can do that through a third party company that takes it and follows, you know, Texas law and how we can bill back water to our, to our residents. Other income. We can really drive this. I think they have just because they've been and I. There's been a lot of mom and pop owners that just not sophisticated. I don't believe that that is the case for this one. But they definitely focused heavily on keeping heads in beds and not pushing the envelope. And part of that envelope is, you know, other income. Whether that's parking, pushing washer and dryer income, maybe adding dogs, doing you know, market application fees, et cetera. You know, Trash an amenity fee. I mean there's, there's different things that the market supports but they have not done. And so these are the two that we can really drive income. But one thing you may notice is like our effective gross income is in line with their prior year. So we're staying conservative year one and then we've got modest year over year growth for our income. If we look at our expenses, they sort of are what they are. 3% management fee. That's what implicitly would take GNA. This is how we would manage the asset. They, they're high in a lot of these expenses and that's just because they're not professionally managing the asset. It's the wife is the owner's or the manager is the owner's wife. So you know, we look at like repairs and maintenance. They don't capitalize their expenses. They're putting it all in operations. And so we would capitalize certain items. But this is, you know, what we would typically see for 112 units in our experience. Insurance, we've, we do have this quoted out and you know, we feel like we'll be about 832A unit. Real estate taxes, the real estate taxes, you know, when we underwrite it's 100% of the purchase price times the mail rate. So you know, we're being conservative here, which you know, I think is important. And utilities just keeping that flat over year over year other than, you know, the, the, the growth in the future years. But keep in year one in line with prior. So we look at net operating income at 701,000. Debt service is only 371,000. So what that leaves us is about 300,000 of net cash flow that's distributable to investors. For those that are looking at like a debt service coverage ratio, typically what you want to see is typically a 1.25, which means for every dollar of debt service there's about 25 cents left over for other expenses. That's typically the minimum DSCR that you know, like Fannie Mae or Freddie Mac would approve to do the loan. On this case we're at 1.89 DSCR. Our debt yield is 9.6. Debt constant is six and a half and our economic occupancy is 71%. So these numbers pretty much staying in line even though, you know we're going to push revenue and do everything we can. But even if we just kept it very similar to what is going on now, like we are doing extremely well on, on the asset from that standpoint. So let's talk about the returns. So this, this investment class is already filled, but we do offer this every time we, we do a deal. And it's a 10 preferred return, no upside. It's an equity side. It's not a higher in the stack, but it's for those people that want that, you know, higher cash on cash or that 10% preferred return, but they don't get the upside. And so again, this is limited to 500, excuse me, 600,000. And this investment class has been filled. So what we have remaining is class B and class C returns, which is for class B, it's $100,000 minimum investment. This is split as an 80, 20, 80% going to the limited partner, 20% going to the general partner with an 8% preferred return. And so if we look on cash, on cash for year one, we're anticipating 5.32%. So for $100,000 investment, we expect year one to be about a $5,000 return. And it grows every year as we're pushing the business plan. Year three, notice the drop, and that's because principal, so it's interest only with the loan for two years. And then the principal kicks in year three. So you see a drop, but then you see an uptick in year four as we continue pushing the business plan. And then in year five, we sell. So when you add up all the, all the cash flow, again, this is a day one cash flow deal. So first quarter will well Send distributions year 1, 2, 3, 4, and 5 with cash flow. And then we sell year 5. And so for $100,000 investment, we anticipate you getting 196,000 in return. So the 100,000 initial investment plus approximately 96,000 in return. So in all, in all, it's about a 15.4% internal rate of return. Average annual return on this is 19.20. And again an equity multiple of 1.96. So that's class B for the class C, this is a $50,000 investment. It's a 7% preferred return with a 75, 25 split. So on this, the average annual return is 17.6. Again, it takes the cash flow from year one to five. And then when we sell year five, when we take all those, you average about a 17.6 average annual return. Class C investor equity multiples 1.88. And the class C investor IR is 14.54%. Cash on cash is still very strong. 5.32, 5.75. It dips because of paying principal on the loan. And then we, we come back year four and five. So our projections are based on a, you know, a 5.6 cap rate. And where we base our cap rate is really through COSTAR analytics. And we, we pay good money to have access to that, their data. But it is one of those like crystal ball, like no one knows where cap rates are going to be. So for me as an operator, as someone underwrites, I use the data that's most respected in the commercial real estate market with CoStar and put that, you know, cap rate in right. But who knows where it will be. It could be four and a half percent which drives 21 IR. But if it goes to 6%, you know, we're still at a 12.3% IR and it's still like, you know, good return over a five year period at a 12%, 6.25, you know, 11%. So these are the ranges of, you know, what the internal rate of the return in the equity multiple looks like depending on different cap rates. So you know, definitely happy to talk through our projections and why we, you know, how we come up with our data but always like to show sort of just how other cap rates do affect returns. And so you know that that is part of the risk of real estate investing. So let's talk about the deal breakdown. Sources of funds. So the total loan is 7.2 million. It's about 65% loan value. So conservative loan we're not over leveraging. The Investor's equity is 5.2 and this is where the use of funds go into play. So 11 million 250 for the asset capital expenditures and reserves is 625,000. Of that 625,000 there's about 200,000. That's in for unit interior renovations and the rest there's really, it's not really earmarked anything. It's just reserves in case, you know, we have something that needs to be replaced or repaired. So having cash and being conservative on spend is important. And so a big chunk of this is our reserves acquisition fee is here, loan fees and closing costs. So title costs and other closing expenses are in the loan fees and closing costs. So this is how the sources of funds will be used. A lot of this is also going to be in the private placement memorandum. Price per door is about 100,000. That is about a 6.4 cap rate. So you know, very good basis for buying, you know, 1981 asset. And as I mentioned it's the 30 year fixed rate, 5.1% interest rate loan to value 65% interest only is three years. And then our loan amount is 7.2 million. So on this one it shows the schedule. Right now we just finished our 506B, so now we're in our 506C stage. And so we will be raising capital between now and July 31st because we're going to be closing on August 8th. I know this says Stratton park up here. This slide was used from the prior. I apologize for that. But Stratton park, when we did our raise, it filled in 48 hours. Like it, it went really quick. So even though the funding is through July 31, it's really probably over the next couple of weeks if that if for investments. So use this QR code or email me so I can just get you on the list. So as you're looking at the deal, you can say yes or no, but at least put your, you know, your spot. But we would need funding no later than July 31, so that's an important date. And then we will tentatively close on August 8th. We're looking to sell in a five year hold period. So August 23rd to August 2032. So this is a 506C deal. We finished our 506B portion, so that's closed. But our 506C is for accredited investors only. So now we're able to go out and advertise and share this to the general population of investors. And so this, what does that mean? So from an accredited investor, it's based on income or net worth. So if you have a individual, if you're not married, but your individual income is north of 200,000, you're considered accredited investor. If you're married and have income, it's over 300,000, you're considered an accredited investor. Or if you have a net worth of $1,000,000 excluding your primary residence, then you are an accredited investor. And that's defined by the Security Exchange Commission, not by CREI Partners. So all we would need, and most of our investors use verifyinvestor.com if you've already invested in a deal with us over the last five years, which a lot of you on the call has have, we do not need another credit investor. All we would do is like Shelby would email you and say, please confirm nothing has changed since this previous letter. And you would just respond back, nothing's changed if that's the case, and we would put that in the file. So that is all we would need to do for that. So for now I'd like To see we have the QR code and then here's the website or y' all can email me for more information as well. But I always like to do live Q A. So if you were to go into the chat box of the Q and A feel free to ask any questions in there. And we're, you know, we're starting to get questions now. So one of the questions is do you accept self directed IRAs? So yes, we, so cash investments, self directed IRAs, solo 401ks are all acceptable. We use. If you don't have a custodian or someone who would that you have your IRA with. We've been doing a lot of work with Equity Trust. They've been really great to work with. So we've got a question is why the current owner is selling. Well, I mentioned the. It's a husband and wife. They've owned it for over 15 years. They're wanting to move to Minnesota. So the wife is ready to retire. And he, my understanding is he, I mean just looking at the property, he's got a lot of, you know, he works really hard and you know, so it'll be interesting to you know, see if what they do after. But my understanding is they're going to be moving to Minnesota. Let me caveat with that too is like the biggest risk I see in this deal and I see this and I'm working through it is when you have a seller like them who've really taken care of the asset. And that is not the case for a lot of properties. A lot of properties need a lot of work, but this property not needing a lot of work, the biggest risk is who do we replace the property manager with. And so I fully trust implicitly property management. But even then we got to find the right boots on the ground person. And so Will and I are going to be very heavily involved with finding somebody who can come in and provide a great atmosphere culture but also, you know, make sure that they can, you know, collect rents and all. So I would say, you know, that hasn't been asked in one of these questions but that is to me the biggest risk and that's the job of us at CRF Partners to make sure we, you know, partner with implicitly to find that right person. Is there a prepayment fee on the loan in five years? So there is not in a really great question because with Fannie Mae you can do a five, seven or ten year loan. And at first I was going to do a seven year loan but the thing with Fannie Mae is they have yield maintenance and it could eat quite a bit of your returns if you expect to sell year five and you still have two years left on the loan. So I, instead of going with a seven year loan, I decided to go with a five year loan. So what that means for us is that year five, there's no prepayment penalty. But if we sell year four, then there is, but it's pretty small because there's only 12 months remaining. And so what we will do is we will start marketing and looking to sell this asset at the end of year four. So we will have a full year of Runway to market and find the best value for the sale. That's a really great question. Other question I've received is, you know, how confident are you with real estate taxes? So with real estate taxes we are very, very confident because in Texas like they can't tax you more than what you purchased the asset for. And so typically, you know, prior years we were buying properties that were much the valuation was higher than the appraised value and that was normal because it took a while for the appraisal district to catch up. But now that the property values are resetting, we're going in every single deal. This would be our fourth deal that we go to the appraisal district in Harris County, Bexar county. They're all the same where you go and you show the purchase sale agreement. And then in future years we have a third party tax advisor who's paid only when they provide savings. And that's very normal in Texas. Every year you fight taxes and, and their contingent basis on what they've saved. So anyway, so we'll be aggressively fighting our taxes every single year. Another question here is, is insurance rereading this? So is insurance budgeted conservatively? It seems low. So yeah, we budgeted over for insurance. It was a 4% increase in San Antonio because it's not in, you know, hurricane area like Houston. Very bullish on Houston. I love Houston. But we do have to be more aggressive on rent or insurance growth because it's near the coast. San Antonio doesn't have that. You know, if there's a hurricane heading to San Antonio, then you know there's bigger problems. And so you don't, we don't see that. So what would be like 12 to 1300 a door in Houston? We can see 800 to 850 a door in San Antonio and that really helps the cash flow as well. They do get quite a bit of hail. But it seems like everywhere there's hail everywhere, so. But that's really one of the bigger risks in Central Texas, not so much the hurricane. Any other questions? All right, question is Winston park not showing up under Investment Opportunities and Cash Flow Manager. Will it be? Yeah, I will. Thank you for letting me know. I will go after this presentation and drop in into the portal because it should be active. We did have it as a 506B offering, and then we closed it for the 506C. So let me. I'll go in there and open that up. But the QR code, I did check there. It should be working. At least get you the website. So thank you for letting me know. All right, well, I am. And Shelby is as well available for any questions. You can email me directly@waynereipartners.com and or text me on my cell. 512-710-2500. We'll send out this recording as well, but if there's any questions or anything, you know, just please let me know. And excited to partner with y' all on this one.