Residential Impact. Educational Presentation

Transcription

1 Residential Impact Educational Presentation

2 What Makes a Good Investment? 2 What Should You Look for When Choosing an Investment Financial Good Social Good

3 3 4MM homes in the US are bank owned REO or in foreclosure Source: CNN.com January 2012

4 4 Make a Real Residential Impact These distressed homes need to be purchased, renovated and provided to families of low and moderate income Content copyright Landsmith. All rights reserved.

5 5 Make a Real Residential Impact We may not be saving the world, but we believe that these types of investments can help do moderate, but meaningful good for a lot of families and communities

6 We Need More Rental Homes 6 Currently there is transition to a society more focused on rentership Several factors have led to this state Foreclosures Difficulty Acquiring Credit

7 Helping Renters in the Short-term and Building Ownership for the Long-term 7 Our strategy is to focus primarily on a rent-to-own program called House-to-Home TM. How does this work? NPO identifies homes for the fund to purchase NPO provides renters NPO provides credit counseling Fund sells home at end of lease Through this process, we ll be able to make a lot more affordable homes available to low and moderate income families The fund buys and renovates these homes Renters sign house-to-home contract NPO assists with financing This will help build ties between families and their neighborhoods

8 Strong Target Returns 8 This investment strategy has the potential to do social good But it also makes sense for you from a financial perspective Target for Preferred Return Target for Internal Rate of Return Average Current Yield on Homes in the Last 6 months Occupancy Loan to Value Ratio, a Conservative Leverage Yield, occupancy, and LTV figures obtained from Landsmith s prior fund. Target IRR is at the property level. There can be no assurance that the Company will earn this or any positive level of return on investment. Content copyright Landsmith. All rights reserved.

9 Diversify Your Portfolio 9 5 % correlation between single family rentals and the S&P 500 since 1990 Single Family Rentals Stocks Bonds Source: Morgan Stanley Research, 2011 based on annualized comparisons since According to the study, the S&P 500 had average annualized volatility of 15.1% vs 3.2% for single family rentals. In terms of inflation hedging, rents have been a large part of the CPI calculation, and total housing-related costs make up of roughly 40% of CPI.

10 Very Low Volatility and Inflation Hedge 10 Single family rentals have had only 20% of the volatility of the S&P 500 Additionally, the single family asset class has been a superior inflation hedge, resulting from rents increasing over time. Not Volatile like Stocks Not Hurt by Inflation Source: Morgan Stanley Research, 2011 based on annualized comparisons since According to the study, the S&P 500 had average annualized volatility of 15.1% vs 3.2% for single family rentals. In terms of inflation hedging, rents have been a large part of the CPI calculation, and total housing-related costs make up of roughly 40% of CPI.

11 Market Traction is Growing Significantly Thousand Single family homes Warren Buffett says he would buy now if practical to do so If held for a long period of time and purchased at low rates, houses are currently even better than stocks. -Told by Warren Buffett to CNBC s Squawk Box on February 27, 2012 $ 1 Billion Anticipated acquisitions by GI Partners through the end of 2012 Recent moves by other respected voices demonstrate that single family property has tremendous investment potential

12 12 Our Strategy Makes Sense for Investment Advisors In response to volatile financial markets, many investment advisors are offering nontraditional alternative investments to their clients, including real estate. While this is good, it may not be enough. Increasingly, investors are also choosing funds that can achieve a level of social good. Many advisors have found that investments that combine good investment potential with a strong social contribution will best enhance client satisfaction. That s why we believe our House-to-Home TM strategy for residential real estate is a strong choice for you to offer your clients.

13 13 The Right Strategy Buy 3br/2ba homes for under $150,000 in areas with current distress, but strong economic fundamentals Partner with NPOs to locate renters & create buyers through credit counseling and grants Rent to tenants for 10% net annual income (e.g., ~$1,000/month rent on $50,000 home) Exit through sale to tenant, individuals or roll-up into public REIT

14 14 House to Home Landsmith bought this 3br/2ba home at 4225 W Tuckey Lane in Phoenix from a bank for $37,000. We did $18,000 of renovations. It rents for $922 per month with $100 credited to the tenant each month towards purchase. At the end of the lease term, they are eligible to receive a matching down payment grant from a NPO. It turns out our tenant, Patrick Rodriguez, grew up in this home in the 1960s. "We are thrilled to be able to move in and eventually buy it. It's home. My mom's huge roses are gone but I'm replanting them.

15 15 We ve Identified the Right Locations California Nevada Arizona Florida

16 16 Interesting Market: Detroit Acquisition Price: $34,000 including rehab Existing tenant comes with home 3 BR/1 BA home built in ,350 SF Actual rent: $750/month Net cap rate: 15.9%

17 Dollars in Thousands Target Market Example 17 Housing Valuation Patterns Experts say the Phoenix housing market is significantly underpriced Homes are grossly undervalued based on prices relative to household incomes Greatest affordability for buyers in 20 years Historic/Projected Median Home Price Source: Real Estate Economics Supportable Median Home Price

18 18 Perform Inspections We ve Established the Right Process Locate Homes Analyze Geographic Markets Select Buy Targets NPO Provides Credit Assistance Exit to Existing Tenants, New Owners or a Public REIT Acquire Properties Cosmetic Improvements NPO Partner Provides Pre-Approved Tenants

19 19 The Right Property Management National property manager provides cosmetic improvements, leasing, property maintenance, and collections: 20+ years in business 200+ offices in US and Canada Manage 20,000+ properties Specialized NPO acquires tenants.

20 It s Time to Make a Move 20 Funding the development of single-family House-to-Home TM housing can have a residential impact. vacant homes have been rented to families as a result of our program It can make a meaningful difference for communities with foreclosed homes and help low-to-moderate income families rent and own affordable housing.

21 21 Testimonials Landsmith is making a positive social impact Non-Profit Organization Landsmith has a deep understanding of residential real estate. Investment Advisor Landsmith has come up with a unique idea that could provide yield, diversification, and inflation hedge while doing social good." Family Office Advisor Names provided upon request. Testimonial providers were not paid and other investors results may differ from those in the testimonial.

22 Landsmith will donate 5% of its fees to housing related charities. Thank You

23 23 The Legal Particulars This presentation is provided for informational and discussion purposes only and should not be relied upon or otherwise used in any manner by the recipient. This presentation is not part of, and should not be construed as part of, any offer to sell or any solicitation of an offer to buy any limited partnership or other interest in any fund. Such an offer can only be made through the delivery of a private placement memorandum for the fund when and as such private placement memorandum may be furnished after one has completed a suitability questionnaire. This presentation is solely for educational purposes. No warranty is given as to the completeness or accuracy of the information contained herein and the views and opinions herein are subject to change without notice. In furnishing this presentation, the sponsor reserves the right to supplement, amend or replace the information contained in this document at any time, but has no obligation to provide the recipient with any supplemental, amended, replacement or additional information. The contents of this presentation are confidential and are not to be reproduced, copied, transferred, or communicated to any third party, without the prior written consent of the sponsor.

24 Contact Us 24 Landsmith 201 Spear Street, Suite 1050 San Francisco, CA (650)