AZRES FUND ONE, LLC
EXECUTIVE SUMMARY
The purpose of the AZRES Fund One is to purchase homes in the greater Phoenix area
either at bank foreclosure sale auctions or directly from banks, rent and hold homes for
future sale when the market improves.
The Greater Phoenix area housing market was one of the worst hit housing markets in
2007-2008 in terms of price declines.
Based on our experience in the market, we have identified those houses that meet certain
basic criteria, ie minimum 3 or 4 bedrooms, 2 bathrooms, community location where the
market has stabilized, age of community, demographics of the community, current
market comps, and current market rental rates. We will use our local knowledge of the
market to determine the best opportunities for the fund.
We have also established relationships with professionals that will drive each home the
morning of the auction, provide pictures inside and out, pull current market comps for
each property based on comparable distressed sales in that specific community, provide
title reports and give us the background information we need to successfully acquire the
homes that meet our criteria.
Our mission is to realize a final purchase price which will be approximately 15% below
market for similar distressed comps in the area after closing costs, and improvement
costs, ie paint, carpet, and appliances, if required. The goal is to own the houses ready to
rent, with our basis after all expenses and costs that is approximately 15% below the
current market value, giving the investors approximately 15% equity from the outset.
This may vary depending upon the desirability of the property and community.
We are familiar with the rental market, rental rates and terms. For the communities that
we have designated, the rental rates are in the $850-$950/month range, and homes rent
quickly, often within 2 weeks. We will pre-qualify each tenant prior to leasing, and
manage the rental property.
Our typical target communities are the communities that have been constructed since
2000 in good neighborhoods, where the buyers were caught in the upswing in the real
estate market and now walked away from their homes and their mortgages. Many of
those people have jobs and want to rent homes and stay in their communities where the
children have attended schools and the families are familiar with the neighborhood.
Our team has more than 30 years of experience in residential real estate experience, as
residential land developers, and residential rental managers.
The recent decline of the residential real estate market and the strong home rental market
has created the opportunity to purchase homes the Phoenix area, in our own backyard.
We anticipate that this is a short window of opportunity that will last at least through the
first half of 2011 and possibly longer. All indications are that the Phoenix area residential
real estate market will rise in the latter part 2011.
Today, based upon our model, we can buy homes at auction that are 15% below current
market value, at approximately 35% of their market high value, up to 50% less than their
replacement costs, and rent them within a matter of weeks from closing. The average cost
per square foot of the houses that we have targeted range from $45- $50 per square foot,
which includes the land price.
Anticipated return on investor funds should be from 12% to 18% per annum or more,
depending upon the market correction at time of sale.