July 2015 Through June 2016 Performance

These performance returns are calculated as follows:

We start with the actual income received from each included property (e.g., rent) starting from the fourth month after acquisition;

We subtract all associated operating expenses for the relevant period (excluding loan interest or principal payments); and 

We divide the remainder by the total all cash acquisition cost without considering financing, including without limitation, the purchase price, closing costs, and rehabilitation expenses. This gives us the Net Operating Income (NOI).

All the income including rents, other income and the expenses are based on actuals except for the taxes and insurance expenses, which are based on accruals.

Each property’s return during the stabilized period is annualized by weighting with the time period, and the aggregate of such returns is divided by the total all cash acquisition cost to arrive at the annualized NOI.

The financed yield is calculated by taking the NOI as calculated above and assuming a 60% to 70% loan to cost, 4.25% to 4.50% interest rate, and interest only loan for simplicity of calculation.

But, please note these important limitations:

The returns are only for properties in our “Stabilized Portfolio”, which means that we exclude all income (or losses) in the first three months following the acquisition of a real estate asset. Please note that in general the investments we make in properties during the first three months greatly exceed any income received in that period; see “Important Information” below for more detailed description: therefore:

This only reflects the performance of properties that were owned for more than three months during the relevant period, except for one 81 unit property that was fully stabilized at the time of acquisition;

This performance is based only on cash-flow and current income with no consideration of changes in the value of the underlying assets (therefore, it is possible that a property with a declining value can still reflect positive returns);

These figures are not audited and have not been confirmed by any third party; and

The geographic areas in which we operate are limited and our experiences in new markets may differ.

 

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IMPORTANT INFORMATION

In order to calculate the yield of a Stabilized Portfolio, we subtracted all operating expenses excluding loan interest and principal during the relevant period from the total rents (and any other income) yielded by the properties. The remainder of that equation was then divided by the total cost to acquire the properties all cash without considering financing to calculate the Net Operating Income (NOI). Each property’s return during the stabilized period is then annualized by weighting the time period and the aggregate of such returns is divided by the total investments made to arrive at the annualized NOI. Then we applied an assumed Loan to Cost of 70% and loan interest rate of 4.5% to calculate the financed yield under this assumed scenario. We assumed an interest-only loan calculation for simplicity. Please note that this calculation does not factor in any costs or expenses associated with the sale of the property (none of these properties have been sold) or any appreciation or depreciation in the value of the underlying properties; property sales (if any) would incur transaction costs related to items such as assessments and valuation fees, legal services, brokerage fees and transaction costs due to HomeUnion (or a HomeUnion affiliate) under existing or future service agreements (including, but not limited to, HomeUnion’s provision of brokerage services).

The “total all cash acquisition cost” includes the initial purchase price of the property, closing costs associated with the purchase of that property and the costs associated with the rehabilitation of the property. The “total asset value” is calculated based on the aggregate acquisition cost. In calculating performance, we only include income that is actually received, but expenses – on an item by item basis – can be considered on a cash or on an accrual basis (e.g., taxes and insurance are based on the accrued amount of those expenses).

The performance contained herein is a limited sample based on short term performance and should not be relied upon when making any investment. The short-term performance of any property may vary materially from the aggregate performance of properties in a Stabilized Portfolio. In addition, this limited sample does not reflect the possibility of future tenant turnover, which may result in increased expenses and gaps in income received from properties.

Any performance information shown is hypothetical insofar as the performance information is prepared on an aggregated basis, and does not reflect the performance of any particular client’s investments. These are not actual results of any specific client. These performance figures are based upon various assumptions and may not factor in all of the properties in a hypothetical Client’s portfolio. Because a Stabilized Portfolio does not reflect performance during the first three months of ownership, the performance of a Client’s overall investments would differ materially and is likely to be worse than what is stated herein. HomeUnion and its affiliates are not making any representation that a performance record similar to the returns shown herein will or is likely to be achieved by any client.

HomeUnion is not an investment adviser, is not advising on securities and is not utilizing this communication to provide investment or other advice, and no information or material available through this communication shall constitute investment advice. This communication shall not be used or considered as an offer to sell or a solicitation of any offer to buy securities of any product. Offers can only be made where lawful under, and in compliance with, applicable law. HomeUnion does not provide investment advisory, tax, legal or financial services, and recommends that you consult your own tax, legal, accounting and investment professionals to perform an independent analysis before making decisions regarding the purchase or sale of real estate.

HomeUnion and its affiliates offer (or may offer) several services to individuals engaged in the real estate investment process. Any rental management services offered by HomeUnion or any of its affiliated entities is wholly separate from brokerage services offered by HomeUnion or any of its affiliated entities. Clients are free to use any or all of such services. Any performance data presented is subject to significant assumptions. While HomeUnion believes the assumptions used to generate data present in this communication are reasonable, these assumptions are subjective in nature and other assumptions may also be reasonable. Different assumptions may result in materially different returns. Prospective clients should satisfy themselves that they understand the assumptions used and their effect on these figures. Clients should understand that they may lose some or all of their investment. The performance information set forth in these materials are provided to you on the understanding that you will understand and accept the inherent limitations of such results and will not rely on them in making any decision to invest in a property. The Risk Factors presented elsewhere on this website should be carefully reviewed. No representation is being made that a performance record similar to the aggregated returns shown herein will or is likely to be achieved. Further information is available upon request.