Perfect. Let's get this thing started. Tonight's presentation is in regards to our next investment opportunity, elims place, a 44 bed assisted living facility tailored to memory care and dementia care patients. Disclaimer, the info in this presentation is considered confidential. This presentation is a summary of the property and the terms of the potential investment. Please refer to the PPM, the private placement memorandum for more detailed info. And our team invest now capital, plus all of our team members. We make no representations and no warranties. This offering is under SEC regulation, D, 506, C, which means that it's tailored towards accredited investors. And before I forget, if anyone has any questions about anything that we go over this evening, feel free to throw it into the chat below. And at the end of this presentation, we'll have a frequently asked questions, and then a Q and A section. Okay, so I'm going to introduce our team members real quick, and then I'm going to give each of them 30 seconds to go ahead and speak up. Start with the women. We have Miss Faye and Miss Elsa Nguyen. We have Mr. Jonathan, Mr. Joshua, who will be representing invest capital. And then Mr. Andy Carey. And then, to finalize it out, I will introduce Nick Moore, our SEC attorney and myself. So go ahead, Miss Fay, give us 30 seconds of who you are and a little bit about your background. If you could.
Hi there, everyone. Thanks for giving me this opportunity. Garrison and Elsa. My name is Faye. I am a hospice registered nurse. I am among two toddlers, and I have been a registered nurse for over 12 years. And in 2020 I found myself falling in love with real estate, and putting those two together, being a registered nurse and being in real estate, I opened my own residential assisted living in 2020 which is still up and running. We are also currently purchasing a 25 bed facility here in California. We also have portfolios of short term rentals and midterm rentals, and also an LP for garrison and Elsa's multifamily deals. We're happy to be here. We're happy to share information. And yeah, thanks for having us.
Thank you. Faye, Mr. Jonathan, go ahead and take it away, my friend.
Hey everyone, thanks for giving me this opportunity as well. My name is John buhara. I'm a realtor investor. I primarily work on, you know, short term rental slips. I also am an LP in a previous venture with garrison and Elsa, which is doing really well. Um, yeah,
perfect. Appreciate it, Mister Jonathan. Joshua baldovino, take it. Take it away and introduce your team at invest capital, please.
Alright. Hey everyone. My name is Joshua baldovino, and I'm a partner at invest capital. You'll see my three other business partners down there, Jason, Ashley and Vinci. And collectively, we own and manage about 50 Airbnbs across the country. And most recently, we co sponsored 111 unit apartment complex in Dallas, pivoting over to assisted living, much like all of us on the call here. For me personally, I've been really interested in this space. Over the past two years, I've actually worked as a marketing consultant for about a dozen assisted living operators, as well as the CNA school, so I'm really excited to bring that expertise to the team, and then I'll also join the ownership side.
Thanks, Josh, Mr. Andy Carey, take it away, my friend. Hi there. I'm
Andy Carey.
I have a LP ownership with garrison and Elsa also at another, another property. I do have several long term real estate rentals throughout Southern California. And as well as I'm going to be bringing my the business side of my background to this deal. I'm a CFO and COO at a large trucking and warehouse company, and we deal with a lot of industrial real estate and and things of that nature. So happy to be here.
Thanks, Andy, Miss Elsa, Hi.
Good afternoon, everyone. Thank you for joining us tonight. I am a partner with garrison. We are a company called invest now capital. And every all of our CO GPS on the team here, we have carefully selected them to be to go on this journey with us, because they each bring a very particular skill to our team and to ensure that we have a successful the next five, seven years together. From myself, my background is. In I had a financial and human resources background for about 15 years before I got into real estate. And I've been doing real estate four times in 2016 what I bring to the team is financial experience as well as human resources experience. I'm the person kind of behind, just behind the door doing all the paperwork, make sure that the books are reconciled, rents are collected, bills are pay, and that we don't get in trouble with the SEC or anybody. So I'm kind of that person behind the door where garrison is on the front as you, as you know by now,
perfect. Thanks, Elsa and Mr. Nick Moore, who is not present this evening, he does all of our SEC paperwork on almost every syndication, almost every deal that we purchase. We talked to him very regularly. We were just on the phone with him yesterday. Very good gentleman, very well versed whenever it comes to syndication, sec and things of that sort. He makes sure that all of our T's are crossed, all of our eyes are dotted, and my name Garrison Gilbert. I am one of the partners with Elsa at invest now capital. I've been buying real estate full time for 22 years. I have never had a full time job. I don't know if that's a good thing or a bad thing, but I've never had a full time job. And I bought a couple 1000 properties over the last 20 years, you name it, I've been involved with it, from land deals to a lot of multifamily apartment complexes, a couple of assisted living projects, non performing real estate notes, beach houses up and down the East Coast, etc, etc, etc. And I'm very fortunate Elsa and myself have had the pleasure of speaking at some of the largest multifamily and commercial real estate conferences across the country. In a couple weeks, we're about to speak in front of a few 100 people in Los Angeles at the next Imn conference. And number one, I appreciate everybody taking time out of their Thursday evening to join us on this evening's call. I am pretty excited about this property, and we're going to start discussing a little bit about assisted living, and then we'll break down the details of this property specific. So what is our vision? Our vision is to create a future where anyone can invest and build wealth with real estate. We're committed to putting our investors first, and as you heard a minute ago, a lot of the individuals who are now on our team, they've invested with us in the past. They like how we do business. We're very hands on. We are very transparent, and we've decided to bring some of these individuals on because they had good experiences. We've had good experiences, and their skill sets match what we're trying to accomplish. We're committed to putting our investors first and delivering outstanding investment opportunities with integrity and transparency. A little bit about us. This slide says we have 35 plus years of combined real estate experience. It's probably more 6070, years or so. Our current real estate portfolio consists of multi family land development, assisted living facilities. Our leadership team has experiences in acquisition, asset management, financial management and disposition, and we have a track record of multiple successful exits. And we're actually getting ready to exit a 70 unit apartment complex in South Carolina that we are about to go full cycle on. So our investment strategies, number one, we're looking for properties that have a strong value add potential. This particular property that we're talking about, something that's sexy about this property compared to a lot of other properties, is there is a huge value add aspect to this property, but it's not what most people think. It doesn't involve contractors and handymen and repairs and upgrades. It is more of an economic value add, meaning the current property is operated at approximately 70% occupancy. We're going to increase that occupancy to 90% which number one increases the cash flow. And number two, as the current residents start to phase themselves out, we're going to increase the price per bed and bring it up closer to what market rent is. And then we're going to install an alw program, which is a government funded program government assistance for elderly people who need help paying for assisted living. And for lack of a better analogy, it's similar to Section Eight, without being similar to Section Eight, meaning section eight pays a little bit higher than market rent, and a lot of people are familiar with Section eight. The difference is, well, the similarity is, a LW program does the same thing. It pays a little bit higher than market rent. But the difference is, Section Eight tends to be a lower, I don't want to say a lower quality tenant, but you get what I'm trying to say, where the Al W program, a lot of individuals, whether you have money or don't have money, qualify for that program, and this particular property qualifies for cash flow. First, this asset throws off cash flow on day one, before we even start to increase occupancy, and before we raise the price per bed, and we have a very hands on GP team. I am actually sitting at an assisted living facility right now that we own that is located approximately 16 minutes from the asset that we're discussing. I'm very hands on, because over the years, I've learned that nobody's going to look after your money, and nobody's going to look after your properties the same way that you do. And we have a very strict selection criteria, meaning we get a lot of deals thrown our way, and we get a lot of deals thrown our way, but we don't say yes to very many at all, and I hate to use the words that we have conservative underwriting. Everybody says that, but with us, it's very simple. It's either a slam dunk deal or it's not number one. And number two, the numbers either make sense or they don't. We're never, quote, unquote, trying to make the numbers work. So why invest in assisted living? Number one, it's a higher ROI than other commercial real estate investments. Generally speaking, you got about an 11% return versus a 6% return. There's a growing demand. 20% of the US population is 65 years or older by 2030, every day, 10,000 baby boomers turn 65 think about that every day, 10,000 baby boomers turn 65 and seven out of 10 of those, 70% of those, excuse me, will require long term care sometime in their lifetime. Here's a the next slide. Is a graphic representation of kind of some things that we just discussed in the year 2000 you can see here that 35 point 1 million people were aged 65 and older. Fast forward 20 years, and that number went up to 56.1 20 million more people in 2020, than 2020. Than 2000 are 65 or older. Fast forward another 10 years, 2030, we have 73 point 1 million people who are 65 years and older. And of those individuals, 10,000 baby boomers every day, 70% of those are going to need some type of assisted living facility or some type of help. Moving forward. So why invest in assisted living? Let's see here. I got some stats that I want to throw out at you here. In a second. Number one, there's a huge growth opportunity. This is a needs based property. It's not a luxury property. It's not a want, it's not a desire. This is a needs based property. People move into assisted living whenever they need to move into assisted living. Number three, it is recession resistant. When inflation occurs, the price of everything goes up. What else happens? The price of rent goes up. So therefore you're hedging yourself against recession, and once again, this being a needs based property, a lot of individuals just don't have the luxury of either going back home or going to live with family. So it's not necessarily something that they have a choice or not a choice. It's just something that you got to do. As you get older and you move through the process called life, a couple stats I'm going to throw out. Let me grab this. No, I'm
Hold on one second. Missing the one page I'm looking for. Here we go. Demand for seasons, excuse me, the demand for senior housing is expected to grow substantially over the past several decades, as well as the next few decades, alongside with increased life expectancy, according to the National Investment Center for senior housing and care the NIC, there's a need of 156,000 additional beds by 2025 think about that. We need 156,000 beds by 2025 and researchers say that the number of people 85 and plus will triple by 2060 the solution for ensuring that they have access to comfortable housing and affordable housing. It's not simple, but it presents an unprecedented opportunity for the business community. The world's population is aging at a faster rate than ever before, and people are living longer than ever before. With the swelling number of older adults, the country will see greater demands for health care in home care. Living and assisted living facilities. And there are six types of senior housing. Number one, independent living, number two, assisted living. Number three, nursing homes. Number four, memory care, which is the facility that we're talking about here this evening. Number five, retirement communities and number six hospice facilities, and the average age of individuals who live in assisted living facilities, about 50% of them are 85 years or older. 30% are between the ages of 75 and 84 13% are younger than 65 whenever we go around and we mystery shop these properties, I'm very surprised at the number of 50 and 60 year olds that we see in these facilities. Typical residents live in assisted living facilities approximately two to three years, and then they either move to a skilled nursing facility, or they move back home with family members, or they're required to stay in a long term Hospital, which is very, expensive compared to the assisted living model, and four in 10 will be diagnosed with Alzheimer's or dementia. Another reason to invest into assisted living is it's cheaper than a lot of the other alternatives. A lot of people think that home care, bringing a nurse into your house is going to be less expensive. It actually becomes a little bit more expensive when you think about it. You have to pay for that nurse, that caregiver, whether she's awake, whether she's asleep. You have to provide food, and on top of that, you still have to pay your mortgage. You have to pay your rent, you have to pay your utility bills, your electric, your heat, your light, your sewer, your water, everything that goes with owning a property, as well as the upkeep of that property. Versus you move into an assisted living facility. Everything is taken care for you. You move into, hopefully, a facility. And what we try to strive for in all of our facilities is you move into a facility where it feels like home. You don't walk into something that feels like a hospital. You don't walk into something that smells of urine. And whenever we will gone out and mystery shopped a lot of properties, you see that across the board, and it's a very unfortunate situation. So our goal is to not only build a profitable business, but it's to provide a place for seniors to live, a place that we would want to call home, a place that we would have no problem putting our parents or our loved ones into so what is assisted living? Assisted living communities serve individuals who typically need help with everyday activities and some healthcare services but do not require 24 hour skilled nursing care. These communities offer a unique mix of companionship, independence, privacy and security in a home like setting. The philosophy of assisted living is built on the concept of delivering person centered care and services to each individual resident. What are some of the typical services that we offer at assisted living facilities? Number 124, hours, supervision and assistance, exercise, healthcare and wellness programs, housekeeping and maintenance, breakfast, lunch and dinner, medication management, which is a big issue as a lot of individuals start to become of elder personal care services, such as activities of daily living, activities such as, every time I visited this facility, people were putting puzzles together, people were playing cards. People were playing board games. They were coloring with coloring books. They were communicating, hanging out with one another. Friends and family were visiting. You don't want to create an environment where an elderly person sits in the room hunched over in a chair in the corner watching television all day, all night. So just from the community aspect of it, assisted living is a great, great, great business model. And on top of that, we arrange for transportation to and from doctor's appointments, dentist appointments, hair appointments, things of that sort. What are some of the common conditions that we see on residents of assisted living facilities? And one of these stats kind of throws me for a loop a little bit. I thought it would be a lot higher. 48% of the residents have high blood pressure. 42% have Alzheimer's disease or dementia, the specific facility that we're discussing today. 100% of the occupants are of Alzheimer's or dementia, and 31% have heart disease. 29 depression and the last one is the one that throws me for a loop a little bit, but I guess that's because it's a secondary condition. But 17% have diabetes. My opinion is, as people start to get older and Americans start to get fatter, unfortunately, that number is going to skyrocket. So I'm guessing in the future, you're going to see a lot more individuals. Put into care facilities such as this because, specifically of diabetes and things that go along with that. So go ahead. Miss Elsa, take it away. You can start talking about California. Why California versus the nation?
Okay, thank you. And just so you know, the facility that we are buying right now is the dementia facility, and as you can see out here, for our 10 people who would check in into a assisted living facility have this condition, so that that tell us, you know, we're actually targeting a high demand population. And then my next slide is, so just give you an a high level idea of assisted living facility in general, nationwide is we have, again, this number is a little bit outdated, probably in 2020 is what I remember. There's only 30,600 total communities out there. There's not a whole lot of communities out there that serve the needs. And of that 30,601 point 2,000,001 point 2 million licensed units, that mean like 1.2 million beds are being served. And if you remember the number that Garrison mentioned earlier, there's about 70 million people over the age of 65 so that's a big population out there for very little communities to serve them all. And of those communities, 13,000 of them, almost half of them is here in California. This is another reason why we chose this market, because we know that there are a lot of folks just love to retire over here. It's a great market. And as you can see that 243,000 beds, our 1.2 million, about 30% of them is here in California. It's a great market for us to get in property overview. Do you want to talk about this? So you want me to keep going? Garrison? Yeah, I
got it. So a little bit about this particular property. It's called elams place. It's a 44 bed assisted living facility. It's located in Sanger, California. It was built approximately 1955 and it was remodeled in 2000 and then updated again in 2223 and 24 and then we'll show some pictures here in a minute. Total building square footage is just under 10,000 square feet, and total lot size is just under half an acre. So let's take a look at some of these photos. This community is exactly what we look for whenever we mystery shop, and whenever we purchase and whenever we go on and we make offers on assisted living facilities. It has a home like feel. It's the type of place that we would want to call home. It's the type of place that we would have no problem putting our loved ones into this community. Has a great first impression with the historic brick facade on a tree lined residential street located in a residential area, but yet it's convenient to downtown. It's convenient for shopping, and it has access to Route 180 the town of Sanger is located approximately 10 minutes east of Fresno, California, and it's approximately 16 minutes from a 30 bed facility that we currently own, which will help us create economies of scale whenever it comes to staffing, supplies, vendors, things of that sort. This community is a secure setting for those with dementia and other cognitive impairments. Current residents are in good care. The community for plan, provides opportunity for residents who are active and or pay slash, walk the community non stop, which is common, they receive physical stimulation, remain safer under frequent supervision, and the community has long term and stable employees, and this facility offers specialized programs meeting a need from all the surrounding communities. There's not a lot of competition offering the exact same services as this facility. There's a good reason to continue operating this community as it currently is in the niche that it's in. You know, it's serving the more advanced stages of dementia. This provides direct referral sources from multiple sources and geographical areas that surround Sanger Elim place has a current contracts with Kaiser well being pace and Central Valley Regional Center, who all pay market rates whenever it comes to placing their individuals in this facility, while the current operator did not have a comprehensive competitive analysis other memory care programs and those who do not typically manage this quite are quite this advanced stages are between seven to eight. $1,000 per bed per month. This property is rented out at approximately 5200 something like that, per month. And there's a huge value add opportunity, because what we found with a lot of assisted living facilities versus other asset classes is a lot of these facilities are run by people with nursing backgrounds. Nothing against that, but it's not the typical business person that you would expect. So there's a lot of inefficiencies, and there's a lot of ways to improve value by some of the things that we discussed earlier, such as increasing occupancy, increasing the price per bed. For example, this particular facility has zero online presence. There's not a website, there's no social media, they do no marketing, they do no advertising. They're remaining at 70% occupancy because the same family has owned this thing for decades. It's second generation. The daughter inherited it whenever her father passed away, and her comfort level is just, hey, I won 3332 people in here. This is what we like. This is easy for us. It's still very profitable. I'm very hands on. This is what works. We come in and we increase the efficiencies, we raise the prices a little bit, we install some government programs, and we increase the value on this asset, approximately $4 million so let's start with the top photo on the left that is the front door whenever you first walk in, right inside that door is a small 15 foot by 15 foot for your area or so. The bottom left photo is the side of the property that has a gated in outdoor sitting area. And something that's really unique, and something I like a lot about this property, as I mentioned earlier, where it's shaped like an O, meaning the inside of this is hollow. There's an outdoor sitting area in the middle of the facility. But whenever you walk in that front door, you walk in 15 feet, and then you can either hang a left or you can hang a right. No matter which way you go, if you continue to walk, you continue to walk, you continue to walk, you end up back in the exact same spot, meaning it creates efficiency for the caregivers to walk around and check on all the residents number one. But number two, it creates a place for the residents to pace back, without saying, pace back and forth. They just continue walking all day long. It gives them exercise. It gives them a little bit of a change of scenery. They get to intermingle with a lot of other individuals throughout the facility. Good looking property, bright, cheery. It has a real good vibe whenever you pull up to the property, and has a real good vibe whenever you walk inside of the property. On the next slide, you can see a couple photos of what a typical bedroom looks like. You can see the new floor, and you can see the new baseboards. You can see a mural that was painted on the wall. There's a couple different murals around the facility, and on the bottom left corner is the four year area the entrance. Whenever you do walk in that front door like I just described, good looking property, good condition recently, had a new roof put on it, had a couple new AC units. Had a lot of interior work done. Cute place, a great place, a place that I would have no problem calling home. The next slide has this is probably my favorite part of the facility. This is the community area. On the front part of this community area, you see several dining tables. And on the backside of that, you can see, and I'll show you on the next slide as well, you can see the sofas in the television area. What I really like about this facility is a mystery shop this thing several times prior to them knowing that we had it under contract, every time we mystery shopped it, I've never seen this area look this sparse with individuals. There has always been a large group of individuals who congregate in this area playing games, playing board games, playing cards, socializing, eating snacks. If you look on the top right corner, there's a door to the left, the white door you can see, and that's the kitchen area that you see in the bottom right hand corner. So very good layout. This property was initially designed to be the local hospital. It down grew their current needs, and the hospital moved to a different location, and then this property was then turned into assisted living. But great property, great layout and great activity center. On the next slide on the top left, you will see that center common area that I discuss. This is in the middle of the property, bright, airy, open, sunny, a place that you can easily get outside, sit, lounge around on the outdoor furniture, get a little bit of a wait time and just get some sunlight on. The bottom left hand corner is a second Community Room, which consists of a library. Bottom right hand corner is the TV room sofas, a place where a lot of individuals were lounging around and. Gossiping, chattering, etc. And that top right hand corner is the front for your area whenever you walk into the property. And on the next slide, I'm going to have Elsa talk about why we love this deal.
Alright, thank you, Garrison. I think he, Garrison already mentioned a lot of this previously, but just to reemphasize the facts, this is a very strong cash flow deal. And I don't know if you guys know what cap rate means, but in general, when we purchase a piece of real estate, we always try to determine what is the cap rate. And cap rate is basically the net income of the property divided by the purchase price. So if the net income is high, then the cap rate is high. So we want to purchase at a higher cap rate, the better. Typically, with multi family apartments, you buy them at five 6% cap rate. Whereas assisted living, most of them trade around 10 to 12% we able to negotiate this deal from $5.5 million down to 4.7 that really pushed our cap rate up to 13% and they are at 70% occupancy right now. So that means if we're able to increase this to 90% and increase the annual revenue from $1.1 million who, I'm sorry, if we able to increase the revenue from 1.1 million to $4 million in value creation by increasing the occupancy 70% to 90% and increase the current rent from $5,232 to $6,400 through the Al W program, which is a Medi Cal pay program for people who are eligible for Medi Cal and this program, as far as I understand, is only in California. They have set aside about $8,000,000,000.08 something billion dollars for this program, just to help those folks who needs it again. So I love this property because we have the opportunity to increase the values of this property from $4.7 million to approximately ten million by the time we sell it. Another reason why I love we love this opportunity because it is a very established community. This thing was built years ago, I think 1955 people knows this place. The current owner doesn't even do any marketing, and they still at 70% occupancy, and she prefer to keep it that way, is what she say. She doesn't want to hire more staff. She's just very happy making $650,000 a year, and she doesn't feel the need of increasing it. And while her losses are again, and I'm happy to bring you know into our team, Joshua team, who is very strong marketing, as well as Andy, who is strong with operation, and Fay, who is an a very experienced experience, operator, nursing background, to help us take this property from where we are right now to a ten million property again, some of the some of the items that we love is that we really don't need to do anything. There's new roof. We got new flooring, as you can see it. They get new HVAC. I think there's a couple effect that needs to be replaced in a couple, maybe in a in a year or two, we did very intensive inspection during the due diligence process to so to know what needs to be done or not. So we set aside, we are going to set aside about $150,000 but I think that more than enough for what we're going to be that we what we're going to be needing for this property. Again, this is from the this number right here is actually from the appraisal report. And I just copy and paste this over in this, in this MSA, basically in the Fresno MSA, there's only two existing two memory care facility. The subject one, that's ours. It has 44 beds. And then there's one about 10 miles away, called Carmel Village at Clovis, has 48 bed. So this is why the there is no, almost no competition for us, very limited supply. They we are at 70% occupancy. But as you can see, Carmel village is 95% occupancy, and their average rent is around $5,600 or it's only 5232 right now. So even if we don't work with the. A LW program for any reason, I believe we still can increase our rent based on the numbers that been shown here and increase our occupancy relatively easy. So let's dive into the numbers. And so I'm going to move this thing down a little bit so you can see here key investment highlights. Most of this has already been touched on. But as you can see here again, this is a 22 units, 44 beds facility, one single building. The strategy value at that means we go in, we increase occupancy, we increase the rent. And current rent is $5,232 per bed. We are going to increase that to $6,400 per bed per month. And because these are dementia people, dementia normally with a LW program, assisted living waiver programs sponsored by Medi Cal, they have five different tiers, tier one to four. They're tier 123, they pay very little, but those are for people who are still very independent and take care of themselves. Once you are Dementia Care, you're in a different category. Now you move into tier four and tier five. Medical pays 6000 a month for tier four, 7500 a month for tier five, the patient that we are, the client that we serve, will be in tier four and tier five and 6400 is basically a combination of 30% tier 30% here five and 70% here, four. So that's how I came up with 6400 a month. We are going to increase 70 from the current 70% to 90% that's our goal, even though my numbers, that which I will show you later, I show stabilize at 86% just to be conservative, whole year supposed to be seven. I put 10, just in case it does take some time to sell a an assisted living facility. So let's say we can put it up for sales in year seven. It may take a year to sell, I don't know, but we just want to be we just want to make sure we put the number out there. We are going to refinance this property in year number three. It will take us about three years to go from where we are today to 100% a LW clients, and by the end of year three, our projection is that we will have 100% of AOW clients in our facility. That mean we are going to collect at least 6400, a month per resident, and we should have plenty of revenue by then to refinance and cash out to pay back the old loan as well and pay back the all the investment from the from the limited partners on this deal. So year three, refinance, pay back 100% of the capital and and then the investors to stay on the deal until we sell the property. And they still getting money every month coming in, because they do have equity on the deal, and I'll go more into that later, but the plan is that by year three, all of you will get all your money back. Okay, some of the numbers out there purchase cap rate is 13% stabilized. Cap rates is 23% we are getting we are doing an SBA loan, and we are getting about 76 77% I put 80, and I just routed up. Basically they've given us about $3.6 million for this loan. We are going to, we are going to have about $550,000 for capex and operating reserve, and most likely, this money will just be sitting in reserve. We probably use a little bit for capex, but for the most part, this money, if we don't use it, will go back to the investors. Later. The interest rate SBA loan goes does not have a set interest rate is always prime, whatever the prime is plus 2%
right now, I think we are at the peak of the interest rate, and their prime is a and a half percent. Plus 2% will be 10 and a half. But again, this is adjust every quarter. So if the Fed drops the interest rate in September, that number gonna come down. And once we and it's amortized over 25 years, in year three, when we refinance the property, that's the plan, we are going to refinance into a HUD loan. HUD loan is probably one of the cheapest loan that you can get. They have extremely low interest rate, probably half. Off of what you would pay for an SBA, they also have a longer amortization, so typically, they would amortize over 35 to 40 years. 40 years, excuse me, so our mortgage payment will probably be the same, even though the principal is higher once we do a cash out refi in general, our projected return cash on cash is around 11 to 12% 11.3 to 12.3% internal rate of returns roughly around 26 27% you are getting about 170 167,000% return back on your investment. So that mean, if you invest $100,000 by the time we exit the deal, you make an additional $167,000 okay, and that give us a 2.67 equity multiple. We have just two classes of of investment that you can invest in. One is they both are very similar. If you invest a minimum investment is $50,000 and with $50,000 you get an 8% return every every year we do quarterly distribution. And because this deal is already positive cash flow. That mean we already netting six, 700,000 a year after the mortgage payment of about 350,000 we have about 250,000 left to do the distribution. So you will get your distribution every quarter, from day one, you get 8% return. And then after that, we will split 5050 on the on the equity, on the profit that left after you get your return. So you always get your return first is think of prefer return as an interest payment. So we always pay that first, and then after that, whatever left, you get 50% and the management team get 50% we don't get paid until you get your preferred return. Papers, class two minimum investment is 200,000 with that, we actually able to give 10% preferred return instead of a and the equities is the same, 5050, now this is a just a number, high level number. We need to hold on. So if you were to invest, Oh, I'm so sorry. So this is for the class A investment of $50,000 for this particular deal, we are going to raise about $2 million 2,026,000 and I routed up to 2,000,050 you are going to get a for the first year your cash on cash return is 7.7% and then you get that mean you get The the investor will get $150,000 back the first year. The second year, they will receive about 172,000/3 year, they're getting 358,000 this is when we go for 100% AR, W, that's 17.7% return on their investment. We are going to refinance in year three, and the investor will receive all of their capital back. Remember, we raised about $2 million here. Once we refund, we do a cash out refund, you get all of that money back. And if there's extra money, this will also go to the investors. Now, year three, everybody got their money back. But look, because of that 5050, equity split investors still receive their money coming in every every year or every quarter until we sell the property in year seven, that $1.6 million is the profit share will make about $3 million when we sell this property, 3.2 50% of that go to the investors, about $1.6 million so as you can see on here, you invest $2 million the total return, the total money that you make, is about $3.4 million right here. So it's a big number. So that's $167,000 return on investment for $200,000 pretty much the same here, but you get a little bit more in the beginning, because you invest, you get a 10% return every year instead of 8% return. So for that reason, you are making a little bit more return on the total investment, also higher return on average. Right here. A lot of people ask, I have $50,000 to invest. What do I get for $50,000 so here's the number. You put in, 50,000 now you own two and a half. Percent in the company, your annual cash flow is $3,886 in year one. In year two, you get $4,256 in year two, 8800 in year three, you get all your money back in year three, when we refinance the property. And then every year after that, you get about 5700 you know, $6,000 until we sell the property. And when we sell the property, we are going to give you another $42,970 that's almost the same as the amount that you invest. So that's what you get for a $50,000 return. You put in 50,000 you make 80, roughly 84,000 right there for $200,000 investment. Again, that's your number is you get a little bit more, because you get a 10% return instead of 8% so you make it almost 15,500 the first year, and 17,005 the second year, so on and so forth. Overall, with $200,000 investment, you make a total of $341,000 $756,000 at the end, I'm gonna go, really, I'm not going deep into this number right here, but just give you an idea of how I came up with all these numbers. So as you can see right here, this is when. This is the year 12345, and that's year seven in year one. This is our at $5,232 a month. You multiply that 44 beds, you get $2.7 million we are at 28% vacancy right now because they are at about 72% occupancy. So you take that out, they have other income that comes from pre admission fee when you go in there. This is some fee that you need to pay to be in the facility. So the effective gross income for the first year about $2 million and this income, this is the gross income. And then down here we have all the expenses, labor is always the biggest number. And they normally, you know, hover right around 35 to 40% so that number came this number is actually a little bit higher than their current payroll right now. This is the prop, the new property tax that we're paying about 50 to $1,000 a year, insurance they're currently paying 56,000 a year, but I was able to get a quote for much lower than this, 22,500 just today. Food and kitchen, this is based on our management company provided us numbers based on the average study, about 220 $5 per resident per month. And that number, as you can see, is actually increased every year. So I don't have a static number for every year. Every number is like this, increase every year. So this, this number the operating expenses, is right around 1.4 about almost 70% that give us our net operating income in the first year of $628,000 that's our debt service. About 410 give us a cash flow of $218,000 for distribution to the investors. And this will probably in this entire amount will go back to the investor the first year, there will be not, there will not be anything extra for the GP. So basically, the first year management works for free. We only make some money after we pay the eight, 10% preferred return. Anything left. Then go to the GP and we split it 5050, with you guys. So as you can see on here, we really don't make money to to our year three forward, the first two years up, this entire amount will go to the investors. Year seven, our profit right now is one point over $1.1
million and if you take this and you divide it by 4.7 which is the purchase price, that how we come up with about 23 24% cap rate. So you, as you can see, we buy this thing at and this one, if you divide it by about 10% 11% that give us the purchase price of about 10 million if we were to sell this thing in year seven. Okay, so that's the seven year pro forma number. Can you can see how I came up with the return right here and how I did the distribution right there. So moving on to the next slide, sources and use we discloses to you, so you can have an idea of how we utilize the fund. Uh, the senior loan. We're getting a loan for $3.6 million the we are going to raise $2,050,000 from the LP, that limited partner. And so the total sources will be $5,650,000 and this is the breakdown of how we use the fund, so 4.7 for the total purchase price, capex reserve, 150 we're probably going to spend that over the course of the next seven year. Operating reserve, 410 this one will most likely go back to the investors. We will probably not tap into this unless something dramatically happened. We don't have resident in there that we need to tap into this. But I am expecting to return this money to the investors. We just keep it in the bank for reserve acquisition fee is 43% closing costs about $250,000 more than half of this is about half of this goes into the lender fees, so on and so forth, because SBA is a very expensive loan. So as you can see right here, total uses add up to the total sources, 5.650 and just a detail on the loan. Because, as you know, the last two years, there's a lot of there's a lot of syndicators that have issue with the loan. So full disclosure, this is how our loan look like. We don't have those high arm loan where the rates just move up and down, and we don't. We're not prepared for it. So the loan that we're getting, we're doing an SBA loan. We're getting $3.6 million loan to value 76% interest rate, again, a prime plus 2% the interest rate is variable and will be adjusted every calendar quarter. This is a 25 year fully amortized free payment penalty. If we pay back this loan before year number three, there will be prepayment penalty fighter event. Basically means that if we were to refinance immediately after we get the loan in year one, we pay a 5% prepayment penalty of the loan. So 5% of $3.6 million in year two, it dropped out to 3% in year three, it go down to 1% so by the end of year three, I'm gonna put up loan package together to refinance, and as soon as we hit year four, we should be able to refinance without having to pay any fee. And then this is the SBA guarantee fee, 98,000 this is part of the closing cost, plus the broker fee. As far as the fee structures, like I say, we the GP, the management team do not make any money until we fully pay the preferred return to investors. Any money left after that will split 5050, therefore we build in some fee in here, because we do put a lot of work into the acquisition fee, like garrison and myself, as well as the investor relation team and Andy who, who is the current or CO guarantor? We've been working on this loans in May of this year. So that's why we we built in every syndicator will be on an acquisition fee, and we charge a 3% acquisition fee. It's a one time fee. There is a disposition fee. If we were to sell the property, we're going to have to work really hard to either refinance or sell it. There is a disposition fee of 1% and there's some assets management fee of 2% for the management team to add to manage this asset, I'm going to hand it over to Garrison, who will touch on the Cost Segregation bonus depreciation for the property,
perfect. And before we jump into the frequently asked questions and Q and A, and if you do have any questions, drop them in. I know the chat is disabled, but drop them in the Q and A below, and we can read those and answer those for you, a major advantage. And the reason why a lot of investors invest into commercial real estate and commercial real estate projects is because cost segregation and bonus depreciation. What is cost segregation? What is bonus depreciation? Long story short, it's a tax tax planning strategy that allows property owners to accelerate the depreciation of an asset, and these tax savings are then passed along to the investors on the deal, which helps to improve cash flow while maximizing returns on investment. And approximately 50% of the Year One depreciation will be passed along to investors on this particular asset. And before we jump in to the next slide, which is frequently asked questions, a couple of things I want to mention real quick that I think mention real quick that I think we kind of glossed over. Is we did mention that our game plan is to buy this asset, stabilize this asset, increase revenue in this asset, refinance it. Year three, the investors get their capital back, and then it becomes an infinite return. After that, this asset. Is cash flowing on day one. But for us to go through that process of stabilizing rents, increasing revenue, and doing all of that stuff, we're bringing in an operations team that is very experienced. This is what they do. This is their specialty. Now it is our job to oversee them, make sure their T's are crossed and make sure their eyes are dotted, kind of like a property manager of sorts, but we will be bringing in that team, even though Faye is a licensed operator and Elsa is a licensed operator, if anything happens, we will take over operations. But our intent is to quote, unquote, babysit the babysitter right now, while being very hands on with weekly Asset Management calls and necessary. Necessary. Ko what word am I looking for here? Necessary precautions and just things that we put in place just to make sure that they're doing their job. So frequently asked questions, when are we expected to close? We put on here october 24 we're looking to close before the end of September. This is a 506 C offering. What is 506 C? It means that you need to be accredited investor. According to the SEC guidelines. What is an accredited investor? Long story short, you've either earned $200,000 for the last two years, or if you were investing jointly with your spouse, collectively, you guys have made $300,000 plus, or you have a net worth of $1 million plus, excluding your primary residence. What is the minimum investment $50,000 what is the total raise amount, $2,050,000 what is the projected hold time, refinance year three, sell approximately year seven or so. After year three, you either get a majority or all of your capital back. Chances are, on this particular asset, you will get a majority all of your capital back, and then it becomes an infinite return. Thereafter, can you invest using a self directed IRA or a solo 401, K? The answer is yes. Distributions are made Quarterly. We do that on all of our assets, and just like that, we also on all of our assets. We do monthly newsletters, and we're available by text message, email and phone support as needed, you will receive K ones for this investment. Our CPA will process K ones, and you'll get those before March 15, as we just described, cost segregation and bonus depreciation is available 50% of year one depreciation would be passed along to investors, but this is one of those disclaimers. Please consult with your CPA on how to use slash carry over that depreciation according to your specific tax guidelines. And what is a preferred return? A preferred return is a predetermined percentage that must be paid to the investor before the sponsor. So, long story short, you get paid before we get paid. On all distribution money upon a capital event such as a refinance or sale, the sponsor is not compensated until the investor's principal plus the preferred return is repaid to that investor. Next slide, how do you invest into this asset, Elsa? If you have that link readily available, you can do it in the chat below. But everyone who signed up for this call will be receiving an email from garrison at invest now capital with a link to sign up so that you can view all of our documents. You can sign up for the portal and you can verify your accredited investor credibility. And something else I want to mention here, September 15, we're looking to have all funds wired in by. September 30 is our closing date. We have this happen on all of our projects. It comes down to September 12. September 13, there's still a lot of people that say, Hey, we're going to invest. Hey, we're going to invest. And then it fills up. Long story short, it is first come first serve. We can't save spots, unfortunately. So first come first serve funds are due before September 15. Sooner you get them to us, the better. September 30 is our targeted closing date, even though we have until mid October, according to the contract at hand. Any questions after this presentation? Any questions if you're watching this recorded, feel free to reach out to Elsa or myself. Here's our cell phone numbers. You can text us. You can email us. We can hop on a zoom call. So with that being said, that is the end of our presentation. Let me see what questions we have, if any in the comments below. Elsa. Yeah, is asset management based on gross income?
Sorry, yes, assets management fee is based on revenue.
Elsa, how many LLCs are we setting up? In regards to this entity
we are setting up for LLC?
You want to describe those real quick or Now, sure,
yes. So usually this is a little bit more complicated, because we purchase in both real estate and business, and we don't want to put ourselves in a situation where, if anything happened to the tenant, you know, for you know, if something happened, they sue the they sue the business, and then the rules, they get affected. So I set up, we set up two LLC, one for the real estate, one for the business, the real estate company lease the property to the operating company to protect ourselves, so we will have a lease between the operating company and the real estate company. The real estate company and operating company are the subsidiaries of what we call a holding company, a parent company. So we have a parent company on the top that owns 100% of the up call, as well as the prop call. And then the management come. I mean, the holding company also have a management as the GP team. We also create a new LLC that is the manager for the parent company. So no. Story short, we have four LLCs just for the ultimate protection for our investors as well as our assets.
Here's a question. There's a bunch of chatter back and forth about trying to fix my technical difficulties. I apologize, uh, estimated annual Elsa. You may or may not know this question we and it's an anonymous attendee, so I'm not sure how we can reach out to this person. Maybe you know this answer. Maybe you don't estimated annual growth margin specifically on the business
estimated growth margin on the business. Well, if I understand, maybe you can elaborate a little bit. But hopefully the P and L, the projected p and l answer your question, we are, maybe I can go back to show you, and I probably need to do some math if you
can, if you don't know that answer off the top of your head, we can email that down. If somebody emails us at one of the email addresses that we provided.
Probably need a little bit more detail on what does it mean as growth margin. But if you can see, here we go in from $2 million to about 3.6 in a course of seven years. So if you're talking about road margin as the difference between you know what, 3.3 minus two divided by $2 million then you can do the math
Perfect. Let's see here, maybe
Andy knows the answer to that question. Or if you want to hang on your phone and elaborate on the question, hopefully we can have you answer it better.
Uh, what state is the holding company LLC based in
California? Um, sorry, Andy had his phone on. So Andy, did you have the answer to that question? Yeah,
maybe not quite the answer. But my my thought is that it's gross margin, not growth, G, R, o, s, s, gross margin, and it looks to be on your screen here, maybe about 30% 31% gross margin.
Thank you. So
hopefully that answers. Whoever answer asked that question. That's an anonymous question. Holding Company is in what state Elsa? Maybe you answered that? I'm not sure. No,
I did not. So the real estate company, that's the one that needs most protection. I do a Wyoming LLC for that, and then the operating company is California, and the holding company is California, and
we expect first distributions to be in q4 of 2024.
Correct
financial documents will be provided.
Go ahead. Elsa, oh, k1 will be we always had it done on time by March 15, but we will post our quarterly financial document on the because that's. And we also get the the reports from our management company. We'll post it on the InVEST next portal instead of emailing it out, so everyone will have that personal order once they sign up. And you should be able to go in there and view all the financial documents that we post, and that will be done quarterly,
and copies of the PPM and operating agreement will be available in the portal that we just mentioned. Other than that, there's a bunch of questions here, but I think we hit all of them. So with that being said, we are going to end tonight's presentation, I'm super appreciative everyone hopping in here. Her name is Elsa Nguyen. I'm Garrison Gilbert. This is our entire team, which consists of Faye Andy, Mr. Jonathan, Mr. Josh, and the whole invest team. We're super grateful for everyone who opt in. If you have any questions, feel free to reach out to any of us individually. We can hop on a call, we can hop on a zoom, or we can simply email back and forth, whatever is most convenient for you guys. With that being said, I appreciate everyone. It is 646 this presentation lasts a little bit longer than expected, but I appreciate everyone hanging in there. We had up to about 55 participants in tonight's event. Thank you guys.
