FREQUENTLY ASKED QUESTIONS

Risks

CAN I PULL MY MONEY OUT OF AN INVESTMENT AT ANY TIME?


No. By their nature, real estate investments have a longer term time horizon than that of liquid stocks or bonds.




WHAT KIND OF TAX IMPACT IS THERE?


Apartment syndications are tax efficient. The reason direct investing in syndications attract many savvy investors is the tax benefit of depreciation, meaning you will benefit from your portion of the investment's deductions for depreciation. This greatly reduces or even elimates any taxes you would owe from the cash flow distributions you receive. Depending on the size of the property, we also like to use a cost segregation strategy as well to accelerate depreciation since our holding period is typically 5-7 years. At the time of sale, the partnership gains are treated as long-term capital gains. NOTE: You should read the PPM for each property and consult with your own attorneys, accountants, and other professional advisors prior to making an investment.




IS NOW A BAD TIME TO INVEST WITH ALL THE NEW APARTMENTS THAT HAVE BEEN BUILT?


We are confident the Class B and C assets are insulated from the oversupply of Class A inventory. With the majority of the pipeline focused on new construction (Class A), there's little to no competiton from new Class B or C apartments. In addition, although cap rates have compressed considerably in the last couple of years, our underwriting accounts for it. Another way we mitigate the risk of a market correction is by focusing solely on underperforming properties that contain a value add component. By executing our business plan, we solve the problem, increase the net operating income, and thus, force appreciation of the asset.




WHAT ARE THE FINANCIAL RISKS?


Risks are outlined in the PPM for each particular property. Although we can't eliminate all risks associated with this type of investment, let's look at a few data points from the last recession. In 2009, at the bottom of the financial crisis, the delinquency rate on single family homes was 5% vs 1% on multifamily apartments. One feature of the multifamily asset class that prevented a bigger catastrophe is the safety of having multiple tenants.

Additionally, despite the widespread economic decline that affected every demographic, affordable apartments remained competitive due to the demand created from previous homeowners foreclosing on their homes. This is just two reasons why the vacancy rate in Class C and B (older properties where value-add syndicators play) remained steady at 8%.

Mitigating our downside is primarily accomplished during the underwriting phase. It is here we focus on buying conservatively by purchasing the asset at a breakeven occupancy rate that is much lower than average market occupancy rates. We further mitigate risk by targeting proven assets where the current owner is generating good cash flow when (our due diligence includes auditing the trailing 12-month financials, bank records and tax returns).




WHAT IF WE HAVE A DOWNTURN IN THE ECONOMY?


We don't want to sell in a down market. The goal would be to continue to cash flow and hold until the market is healthier to achieve a better price at sale. Class B/C value-add properties tend to hold up much better in downturns because folks need a place to stay and rents are more in line with the blue collar and retail demographic that is typically still employed in downturns versus the higher paid class A renters whose jobs are more at risk. To mitigate the good possibility that there is a market correction in the future, we strive to secure 7 or 10 year terms on our mortgages.




WHEN WILL I GET MY ORIGINAL INVESTMENT BACK AND WHAT IS THE HOLDING PERIOD?


We cannot guarantee a return on your investment. However, we typically target a 5 year hold on our deals. This provides ample time to execute our value-add plan and then cash flow for a few years while looking for an opportunistic sale. Some investor principal could be returned as early as year 2 from a refinancing event, or we may want to continue to cash flow till year 7 if the market is down in year 5.

NOTE: You should read the PPM for each property and consult with your own attorneys, accountants, and other professional advisors pior to making an investment.





Terminology

ACCREDITED INVESTOR


An easy way to remember the requirements of an accredited investor is the "1, 2, 3" Rule. An accredited investor meets one of the following income or net worth requirements: 1 - a net worth exceeding $1 million, excluding the value of their primary residence 2 - an annual income of $200,000 for the last two years with the expectation of earning the same or higher in the current year 3 - an annual income of $300,000 for joint income for the last two years with the expectation of earning the same or higher in the current year




K-1


A K-1 form is an accounting of the tax income for the year. Each investor receives one per investment. K-1 forms are most commonly used in partnerships and in real estate ownership.




ACQUISITION FEE


The upfront fee paid by the new buying partnership to the genral partner for finding, evaulating, financing, and closing the investment.




ASSET MANAGEMENT FEE


An ongoing annual fee from the property operations paid to the general partner for property oversight.




BAD DEBT


The amount of uncollected money owed by a tenant after move-out




BREAKEVEN OCCUPANCY


The occupancy rate required to cover all of the expenses of a property.




BRIDGE LOAN


A mortgage loan used until a borrower secures permanent financing. Bridge loans are short-term (typically six months to three years with the option to purchase an additional six months to two years), generally having higher interest rates and are almost exclusively interest only. The loan is ideal for repositioning an apartment community that doesn't qualify for permanent financing. Also referred to as: interim financing, gap financing, or swing loans




CAPITAL EXPENDITURES (CapEx)


The funds used by a company to acquire, upgrade and maintain a property. An expense is considered CapEx when it improves the useful life of a property and is capitalized - spreading the cost of the expenditure over the useful life of the asset. CapEx can pertain to both interior and exterior renovations (replacing laminate flooring, replacing roof).




CAPITALIZATION RATE (Cap Rate)


The rate of return based on the income that the property is expected to generate. The cap rate is calculated by dividing the net operating income by the current market value of a property. Cap = NOI/Property Value




CASH FLOW


The revenue remaining after paying all expenses. Cash flow is calculated by subtracting the operating expense and debt service from collected revenue. CF = Collected Revenue - Operating Expenses - Debt Service




CASH-ON-CASH RETURN (CoC Return)


The rate of return based on the cash flow and the equity investment. CoC return is calculated by dividing the cash flow by the initial equity investment. CoC = CF/Equity Invested




CLOSING COSTS


The expenses, over and above the purchase price of the property, that buyers and sellers normall incur to complete a real estate transaction. Costs include: origination fees, application fees, recording fees, attorney fees, underwriting fees, due diligence fees and credit search fees




CONCESSIONS


The credits given to offset rent, application fees, move-in fees and any other cost incurred by the tenant, which are generally given at move-in to entice tenants into signing a lease




DEBT SERVICE


The annual mortgage amount paid to the lender, which includes principal and interest.




DEBT SERVICE COVERAGE RATIO (DSCR)


The ratio that is a measure of the cash flow available to pay the debt obligation. THE DSCR is calculated by dividing the net operating income by the total annual debt service. A DSCR of 1.0 means that there is enough net operating income to cover 100% of the debt service. Ideally, the DSCR is 1.25 or higher. DSCR = NOI/Annual Debt Service




DISTRIBUTIONS


The limited partner's portion of the profits, which are sent on a monthly, quarterly or annual basis, at refinance and/or at sale.




DUE DILIGENCE


The process of confirming that a property is as represented by the seller and is not subject to environmental, structural or other problems. For apartment syndications, the general partner will perform due diligence to confirm their underwriting assumptions and business plan.




EARNEST MONEY


A payment by the buyers that is a portion of the purchase price to indicate to the seller their intention and ability to carry out sales contract.




ECONOMIC OCCUPANCY RATE


The rate of paying tenants based on the total possible revenue and the actual revenue collected. The economic occupancy is calculated by dividing the actual revenue collected by the gross potential income. Economic Occupancy = Actual Revenue Collected/Gross Potential Income




EFFECTIVE GROSS INCOME (EGI)


The actual revenue before operating expenses. EGI is calculated by subtracting the revenue lost due to vacancy, loss-to-lease, concessions, employee units, model units and bad debt from the gross potential income (GPI).




EMPLOYEE UNIT


An apartment unit rented to an employee at a discount or for free




EQUITY INVESTMENT


The upfront costs for purchasing a property. For apartment syndications, these costs include: down payment for the mortgage loan, closing costs, financing fees, operating account funding, and the fees paid to the general partnership for putting the deal together. Also called: initial cash outlay or down payment




EQUITY MULTIPLE (EM)


The rate of return based on the total net profit and the equity investment. The EM is calculated by dividing the sum of the total net profit (cash flow + sales proceeds) and the equity investment by the equity investment. EM = (Total Net Profit + Equity Investment) / Equity Investment




EXIT STRATEGY


The general partner's plan of action for selling the apartment community at the conclusion of the business plan.




FINANCING FEES


The one-time, upfront fees charged by the lender for providing the debt service. Also referred to as finance charges




GENERAL PARTNER (GP)


An owner of a partnership who has unlimited liability. A GP is usually a managing partner and is active in the day-to-day operations of the business. In apartment syndications, the GP is also referred to as the sponsor or syndicator and is responsbile for managing the entire apartment project.




GROSS POTENTIAL RENT (GPR)


The hypothetical amount of revenue if the apartment community was 100% leased year-round at market rental rates. Also referred to as GPR




GROSS RENT MULTIPLIER (GRM)


The number of years it would take for a property to pay for itself based on the gross potential rent. The GRM is calculated by dividing the purchase price by the annual gross potential rent. GRM = Purchase Price / Annual GPR




GUARANTY FEE


A fee paid to a loan guarantor at closing for signing for and guaranteeing the loan




INCOME APPROACH


A method of calculating an apartment's value based on the capitalization rate and the net operating income. Value = NOI / Cap Rate




INTEREST-ONLY PAYMENT


The monthly payment for a mortgage loan where the lender only requires the borrower to only pay the interest on the principal.




INTERNAL RATE OF RETURN (IRR)


The rate needed to convert the sum of all future uneven cash flow (cash flow, sales proceeds and principal paydown on the mortgage loan) to equal the equity investment. Also referred to as IRR




LETTER OF INTENT (LOI)


A non-binding agreement created by a buyer with their proposed purchase terms. Also referred to as the LOI




LIMITED PARTNER (LP)


A limited partner is a passive investor in the deal whose liability is limited. This means their risk is limited only to the amount they invest in the deal. Ultimately, this prevents them from the possibility of being sued and relieves them from the responsibility of having to actively perform when acquiring an asset. Also referred to as LP




LONDON INTERBANK OFFERED RATE (LIBOR)


A benchmark rate that some of the world's leading banks charge each other for short-term loans. The LIBOR serves as the first step to calculating interest rates on various loans, including commercial loans, throughout the world. Also referred to as LIBOR




LOAN-TO-COST RATIO (LTC)


The ratio of the value of the total project costs (loan amount + capital expenditure costs) divided by the apartment's appraised value. LTC = Total Project Costs / Appraised Value




LOAN-TO-VALUE RATIO (LTV)


The ratio of the value of the loan amount divided by the apartment's appraised value. LTV = Loan amount / Appraised Value




LOSS-TO-LEASE (LtL)


The revenue lost based on the market rent and the actual rent. The LtL is calculated by dividing the gross potential rent (GPR) minus the actual rent collected by the gross potential rent. Also referred to as LtL




MARKET RENT


The rent amount a willing landlord might reasonable expect to receive and a willing tenant might reasonable expect to pay for tenancy, which is based on the rent charged at similar apartment communities in the area. The market rent is typically calculated by conducting a rent comparable anaylsis.




METROPOLITAN STATISTICAL AREA (MSA)


A geographical region containing a substantial population nucleus, together with adjacent communities having a high degree of economic and social integration with that core. MSAs are determined by the United States Office of Management and Budget. Also referred to as MSA




MODEL UNIT


A representative apartment unit used as a sales tool to show prospective tenants how the actual unit will appear once occupied.




NET OPERATING INCOME (NOI)


All the revenue from the property minus the operating expenses. Also referred to as the NOI




OPERATING ACCOUNT FUNDING


A reserves fund, over and above the purchase price of an apartment. These reserves cover things such as unexpected dips in occupancy, lump sum insurance or tax payments or higher than expected capital expenditures. The operating account funding is typically created by raising extra capital from the limited partners.




OPERATING AGREEMENT


A document that outlines the responsibilities and ownership percentages for the general and limited partners in an apartment syndication.




OPERATING EXPENSES


The costs of running and maintaining the property and its grounds. For apartment syndications, the operating expenses are usually broken into the following categories: payroll, maintenance and repairs, contract services, make ready, advertising/marketing, administrative, utilities, management fees, taxes, insurance and reserves.




PASSIVE INVESTING


Placing one's capital into an apartment syndication that is managed in its entirety by a general partner.




PERMANENT AGENCY LOAN


A long-term mortgage loan secured from Fannie Mae or Freddie Mac. Typical loan term lengths are 3, 5, 7, 10, 12 or more years amortized over up to 30 years.




PHYSICAL OCCUPANCY RATE


The rate of occupied units. The physical occupancy rate is calculated by dividing the total number of occupied units by the total number of units at the property. Physical Occupancy Rate = # Occupied Units / Total # Units




PREFERRED RETURN


The threshold return that limited partners are offered PRIOR to the general partners receiving payment.




PREPAYMENT PENALTY


A clause in a mortgage contract stating that a penalty will be assessed if the mortgage is paid down or paid off within a certain period.




PRICE PER UNIT


The cost per unit of purchasing a property. The price per unit is calculated by dividing the purchase price of the property by the total number of units. Price Per Unit = Purchase Price / # Units




PRIVATE PLACEMENT MEMORANDUM (PPM)


A lengthy document (typically around 100pgs) prepared by an SEC attorney that outlines the terms of the investment and the primary risk factors involved with making the investment. The PPM typically has four main sections: - Introductions (a brief summary of the offering) - Basic Disclosures (general partner information, asset description and risk factors) - Legal Agreement - Subscription Agreement




PRO-FORMA


The projected budget with itemized line items for the revenue and expenses for the next 12 months and five years.




PROFIT AND LOSS STATMENT (T-12)


A document or spreadsheet containing detailed information about the revenue and expenses of a property over the last 12 months. Also referred to as a Trailing 12-month profit and loss statment or a T-12




PROPERTY AND NEIGHBORHOOD CLASSES


A ranking system of A, B, C or D assigned to a property and a neighborhood based on a variety of factors. For property classes, these factors include date of construction, condition of the property and the amenities offered. For neighborhood classes, these factors include demographics, median income and median home values, crime rates and school district ratings.




PROPERTY MANAGEMENT FEE


An ongoing monthly fee paid to the property management company for managing the day-to-day operations of the property.




RATION UTILITY BILLING SYSTEM (RUBS)


A method of calculating a tenant's utility usage based on occupancy, unit square footage or a combination of both. Once calculated, the amount is billed back to the tenant.




RECOURSE


The right of the lender to go after personal assets above and beyond the collateral if the borrower defaults on the loan.




REFINANCE


The replacing of an existing debt obligation with another debt obligation with different terms.




REFINANCING FEE


A fee paid to the general partner for the work required to refinance an apartment.




RENT COMPARABLE ANALYSIS (Rent Comps)


The process of analyzing the rental rates of similar properties in the area to determine the market rents of the units at the subject property.




RENT PREMIUM


The increase in rent demanded after performing renovations to the interior and/or exterior of an apartment community.




RENT ROLL


A document or spreadsheet containing detailed information on each of the units at the apartment community. The rent roll typically includes: the unit number, unit type, square footage, tenant name, market rent, actual rent, deposit amount, move-in date, lease-start and lease-end date and the tenant balance




SALES COMPARISON APPROACH


A method of calculating an apartment's value based on similar apartments recently sold.




SALES PROCEEDS


The profit collected at the sale of the apartment community.




SOPHISTICATED INVESTOR


A person who is deemed to have sufficient investing experience and knowledge to weigh the risks and merits of an investment opportunity.




SUBMARKET


A geographic subdivision of a market.




SUBSCRIPTION AGREEMENT


A document that is a promise by the LLC that owns the property to sell a specific number of shares to a limited partner at a specified price, and a promise by the limited partner to pay that price.




UNDERWRITING


The process of financially evaluating an apartment community to determine the projected returns and an offer price.




VACANCY LOSS


The amount of revenue lost due to unoccupied units.




VACANCY RATE


The rate of unoccupied units. The vacancy rate is calculated by dividing the total number of unoccupied units by the total number of units. Vacancy = # Unoccupied Units / # Total Units




VALUE-ADD PROPERTY


A stabilized apartment community with an economic occupancy above 85% and has an opportunity to be improved by adding value, which means making improvements to the operations and the physical property through exterior and interior renovations in order to increase the income and/or decrease the expenses.




YIELD MAINTENANCE


A penalty paid by the borrower on a loan when the principal is paid off early.




ABSORPTION RATE


The rate at which available rentable units are leased in a specific real estate market during a given time period.




APARTMENT SYNDICATION


The pooling of resources for the purpose of handling a large apartment transaction that would be hard or impossible for the entities involved to handle individually. In regards to apartments, a syndication is typically a partnership between general partners (i.e. the syndicator) and limited partners (i.e. the passive investors) to acquire, manage and sell an apartment community while sharing in the profits.




APPRECIATION


An increase in the value of an asset over time. The two main types of appreciation that are relevant to apartment syndications are natural and forced appreciation. Natural Appreciation - occurs when the market cap rate naturally decreases over time, which isn't always a given. Forced Appreciation - occurs when the net operating income (NOI) is increased by either increasing the revenue or decreasing the expenses. Forced appreciation typically occurs by adding value to the apartment through renovations and/or operational improvements.





Investing

HOW CAN I INVEST IN AN OFFERING?


Funds can be wired directly into the subscription account of the fund, or sent by check.




WHAT IS THE MINIMUM AND MAXIMUM INVESTMENT?


$50,000 in increments of $5,000. The maximum amount of money we will likely allow you to invest is typically 19% of the total equity investment. Anything greater than 19% requires the passive investor be underwritten by the lender, adding more headache than it's worth to our investors.




CAN I INVEST USING A RETIREMENT ACCOUNT SUCH AS MY IRA OR SOLO 401K?


YES! You can invest in real estate with certain retirement accounts. To learn more about this opportunity and/or sign up, Click Here!




IF I WANT TO INVEST WHAT ARE THE NEXT STEPS?


1. SIGN UP to answer the questions so that we can understand your investment goals and determine if we are a good match to partner on a future deal. 2. After completing the form, someone will reach out to you via phone or email. 3. Once qualified, we will add you to our private email list, where you will receive regular updates. 4. When a deal is identified and put under contract, we will email you with an investment summary that highlights the market, the deal, and the team. 5. After giving you and other investors time to dissect the deal, we will set up a conference call/webinar where we will dive deeper into the details, and provide you with a chance at the end for live Q&A to get your questions answered. (if your're unable to attend, we will have a recording emailed out to you) 6. Once questions are answered, investors can begin to reserve their spots to invest. Once the PPM is finalized by our SEC Attorneys, it will be made available to you to lock in your investment.





Distributions & Communications

HOW OFTEN SHOULD DISTRIBUTIONS BE EXPECTED?


An investor can expect quarterly distributions. White Real Estate also distributes capital to investors when properties are sold or refinanced.




HOW WILL THE PROGRESS OF MY INVESTMENT BE COMMUNICATED?


Investors will receive asset management updates via email on each investment and a detailed investor report every quarter. We will also provide all important documents (such as the T12, Rent Roll and/or Due Diligence Documents) in a shared folder such as DropBox. Some of the details that may be included in the quarterly update include: * Occupancy rates * Updates on the number of renovated units with pictures * Details on our rent premiums and how they compare to our projections * Capital expenditure updates * Relevant updates on the market * Resident events. Our goal is to be thorough but also provide you with simplicity. We achieve this by providing you with a comparison between the proforma numbers we estimated at acquisition against the actuals so you have a concise way of measuring the investment against our projections. You will also receive a K-1 statement from us in March of each year for your tax filing.





Investment Strategy

DO YOU GUARANTEE A RETURN?


No. Although we have carefully selected our market, the deal, and the team executing the business plan, no amount of risk mitigation can eliminate all the uncertainties that come with investing in anything. Any return offered, such as a preferred return, is a projection, not a promise.




WHAT HAPPENS IF YOU CAN'T MAKE THE PROJECTED CASH FLOW?


Ideally, the general partners projected returns exceed the preferred return offered. That way, if they don’t achieve the projected returns, they still distribute the full preferred return. If the actual returns end up being lower than the preferred return, the process is that which was agreed to in the PPM. Generally, the preferred return will accrue until it can be paid with the sales proceeds.




DO I HAVE TO SUBMIT MY FINANCIALS TO ANYONE?


White Real Estate typically raises capital through a 506b offering, meaning you won't need to submit your financials.




HOW DO YOU MAKE MONEY?


Generally, the general partner (GP) will make money via:

* Acquisition fee (one time)

* Asset management fee (ongoing)

* Equity ownership in the deal

All of the fees they charge should be listed in the PPM.




DO YOU INVEST IN YOUR DEALS?


To create an extra level of alignment of interests, we (the GP) invest in all of our deals.




HOW DO TAXES WORK WITH THIS INVESTMENT?


On all tax related questions, always consult with your accountant. However, passive investors are generally attracted to real estate because of depreciation. Most likely, the depreciation will be greater than the distributions paid out each year, which can greatly reduce or eliminate your tax bill until you receive your profits from the sale proceeds at sale.




HOW ARE YOU FINDING DEALS?


There are two ways we find apartment deals, on-market and off-market. The majority of our on-market deals come from cultivating quality relationships with commercial brokers and other real estate professionals. However, we also source off-market deals by utilizing our proprietary database of owners. Although they're less common, we've found that off-market deals are less competitive with more opportunity for negotiation.




WHAT TYPE OF RESERVES ARE TYPICALLY ESTABLISHED WITH EACH PROPERTY TO PROTECT THE INVESTORS FROM ANY POTENTIAL CAPITAL CALLS?


In our underwriting, we typically budget a 10% contingency for renovations. In addition, we generally raise an additional 1% of the purchase price to cover any liquidity issues such as unexpected dips in occupancy, maintenance issues, lump sum tax or insurance payments, etc. Finally, we commonly budget $250-$300 per unit per year that is placed in a reserves account.




WHAT DOES MY MONEY GO TOWARDS?


The money you invest in the deal goes towards a variety of costs associated with purchasing an apartment. Besides the down payment for the loan, the money will also go towards financing fees, renovation costs, general partner fees associated with putting the deal together, contingency or operating account funds and costs associated with performing due diligence. Refer to the "Sources and Uses" section in the PPM for a more thorough outline of the uses of the equity investment.




HOW DOES THE PROCESS WORK AFTER YOU FIND AN INVESTMENT?


1. We will notify you of a new opportunity and invite you to a conference call/webinar in order to provide you with the specifics of the deal (if you are unable to attend, we always record the calls and send the audio/video file out shortly after) 2. After the call, if the deal meets your investing goals, you will verbally commit to the deal. 3. Then, you will be required to sign documents to finalize your commitment. The documents include: * Private Placement Memorandum (outlines structure of and the risks associated with the deal) * Operating Agreement (outlines the GP and limited partner responsibilities and ownership percentage) * Subscription Agreement (outlines the number of shares you own of the LLC that owns the apartment) * Accredited Investor Qualifier Form (where you state that you meet the accredited investor qualifications) 4. Once you've finalized your commitment, you wait for our team to close the deal.




IS EVERYONE NOTIFIED AT THE SAME TIME WHEN YOU HAVE A NEW OPPORTUNITY?


All investors are notified at the same time and commitments are taken on a "first-come, first-serve" basis to be fair to everyone.




WHAT ANNUAL GROWTH FACTOR IS BEING USED?


Although many markets have been experiencing 4-6% annual rent growth over the last few years, a conservative annual rent income growth factor is between 2% to 3% after stabilization.




WHAT ASSUMPTIONS ARE BEING USED TO CALCULATE THE ANNUAL TAXES?


First, it is important to know how taxes are reassessed. This can be verified by calling the county's tax auditor office and asking if a property is reassessed based on the sell of a property or on a set schedule. Once you know the timing, the tax assumption can be calculated by finding the tax rate (millage rate) and multiplying it by the projected purchase price.




WHAT IS THE DEBT STRUCTURE?


First and foremost, you want to know if the general partner has already secured debt financing or if they are still working on assumptions. If it is the latter, the projected returns may change once the debt is secured. Next, you want information on the interest rate. Is the loan fixed or floating (meaning it could change)? If it is the latter, did they purchase a cap on the interest rate? If the interest rate is floating and/or a cap wasn't purchased, an increase in interest rates will negatively impact the return projections. Finally, you want to know if it is a shor term loan or a permanent loan. If it is the former, ask them what refinance assumptions they used (i.e. interest rate, loan amount, etc) and why they made those assumptions. Also, determine the length of the short term loan and if they can purchase an extension.




WHAT ARE THE SALES ASSUMPTIONS?


These assumptions include the exit net operating income, exit cap rate (is it higher or lower than the purchase cap rate, with the former being the conservative approach), the closing costs and the remaining debt (principal paydown).





Market

HOW DO YOU QUALIFY A MARKET?


1. POPULATION SIZE - MSA > 100,000 2. POPULATION GROWTH (2010-Present) - MSA Pop Growth > National Average - Local Pop Growth (County/Zip Code) > State Average 3. JOB GROWTH (2010-Present) - MSA Total Employed Individuals > National Average - Local Total Employed Individuals (County/Zip Code) > State Average 4. DIVERSE ECONOMY - MSA: No 1 Industry/Employer with > 25% Employees - Local: Multiple Employers/Industries 5. SCHOOLS - Strong School District Compared to Local & State - Quality Schools = Good Residents (deciding factor for families) 6. ANCHORS - Universities, Regional Healthcare Hubs, etc that are Recession Resilient 7. CRIME - Low Crime Rates Compared to Local & State **1-4 : Good Market **1-4 + 5,6, and or 7 : Really Strong Market




WHAT IS THE HOUSEHOLD MEDIAN INCOME?


You want to know the median income of the area in order to determine if the demographic income levels support the rent projections. Generally, people spend 25% to 35% of their annual income on home expenses. Therefore, we confirm that: Median Household Income > 3-4x higher than the annual projected rent




WHAT IS THE MARKET VACANCY RATE?


We verify the market vacancy rate to ensure we stay conservative with our vacancy rate projections