2. Executive Summary:
The Waller Group is a full service residential brokerage and
property management company with Preferred Investor
Services focusing on the acquisition, repair/renovation, pre-
leasing, lease up, and property management for TX
residential investment properties.
3. We’ll Cover the Following:
1. Why single family homes as an investment vehicle?
2. Why our focus is on the Texas market?
3. Suggested portfolio mix and property criteria?
4. How Waller Group Preferred Investor Services work
4. • Shadow overhang of single family REO properties in the market
• Rents projected to continue to increase due to lack of owner occupant
financing for first time home buyers.
• Increased emphasis on short sales for distressed homeowners
• REITS pay an average of 3.5% yield, through increased reporting,
management fees, accounting fees, SEC regulation REITS are less
and less attractive. Less opportunity in commercial sector due to
sellers modifying their commercial loans. Through lack of employment
single family loan modifications have a higher failure rate.
5. Consumer Confidence Improves
Index, 3MMA
160
140
West South Central
120
100
88.9
80
U.S.
60 67.8
40
20
1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
NOTE: Shaded bars represent U.S. recessions
6. Dallas Fed Surveys Suggest Positive Outlook for
U.S. Business Conditions
(Texas Business Outlook Surveys)
Index, SA
60
TMOS TSSOS TROS
40
20
Mar-12
0
-20
-40
-60
2007 2008 2009 2010 2011 2012
7. Texas Leading Index Edges Up
Suggesting Faster Growth
Index,
Oct 1971= 100
130
Texas Leading
Index
125
122.8
120
115
110
105
100
1996 1998 2000 2002 2004 2006 2008 2010 2012
NOTE: Shaded areas represent Texas recessions.
8. Construction at Low Levels
(Contract Values)
Real $,
5MMA, SA
8000
7000
6000
5000
4000
3000 Total Contract
Total
2000 Residential
1000
Private Nonresidential
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
9. Drivers of Texas Commercial
Demand Rising
Index, January 2000 = 100
230
210 Real Exports
190
170
150
Real Retail
Sales
130
110
Office Using
Employment
90
70
50
2000 2002 2004 2006 2008 2010 2012
10. Real Estate Conditions Improving
Nonresidential leasing and occupancy up
Drivers of demand for space are rising
Investment sales are improving
Apartment demand is very strong
Construction expected to increase in 2012
Housing sector on the mend
Modest gains in home sales
Decline in inventories
No improvement in house prices, yet
11.
12. Dallas Facts:
1. Dallas/ Ft. Worth metropolitan population is more than 6.3 million.
2. 3rd fastest growing metropolitan 2000 to 2010 in the United States.
3. 9th largest city and 4th largest metropolitan area in the United States.
4. Seventh busiest airport in the World.
5. Third highest concentration of Fortune 500 companies headquarters in the
US, including Exxon Mobil, AT&T, Kimberley Clark, Texas Instruments.
6. Low vacancy rate of 6.47% against the national average of 10.5%.
7. Per capita income of $26,440 against the national average of $27,041.
8. Ranked number 6 in the USA for job growth 2010 to 2014.
9. 4 th highest ranking job growth metropolitan area for Q1 2012
(Sources: U.S. Census Bureau, Airports Council International,
Fortune 500, Moody’s Economy.com, Sperlings)
13. Why Single Family Homes?
The typical price range of homes purchased
by our investors is $40,000-$90,000.
The repairs needed range from $7,500-$35,000.
Upon completion the after repaired value of
the property is between $75,000-$140,000.
14. 1. Our analytics recommend 3 bedroom, 1-2 bath homes, in Dallas,
Austin, and Houston to fill the gap between demand for single family
housing and the existing financing for first time home buyers in the
marketplace. 52% of all first time home buyers are Hispanic. The
influx of Hispanic household formation for Texas is one of the fastest
growing segments of the country. It is also forecasted to be the largest
echo boom generation also purchasing over the next 10 years.
a) As multifamily construction increases throughout the US,
apartment rents could become more competitive.
b) Focusing on a single family home targeting to the Hispanic
Latino community reduces downside risk. Single family
homes in desirable locations near transportation will be far
more attractive and marketable than apartments.
15. d) Single family home construction will not be able to
compete with the distressed market until the inventory is
disposed by the banks. Fannie Mae and Freddie Mac are
suggesting 2-4 years to clear the existing and shadow
inventory of REO properties.
e) As owner occupant financing becomes more available and
the distressed/REO inventory declines over the next 5
years these homes will be very attractive to sell to existing
tenants. It also allows adequate time for the Waller Group
to assist the tenant in building their credit and
establishing payment history which makes the tenant a
good prospective borrower.
16. “Financing will tighten even farther in the short term for first
time home buyers, immigrants, and those that need
financing most”
- David Stevens, President, and CEO of Mortgage Bankers Association
“Single family rental homes is a fantastic investment, depending
on how they are locally managed”
- Eric Belsky, Joint Center for Housing Studies, Harvard University
17. Key Qualifying facts for Waller Group Investment
Home Criteria:
Purchase price, typically the homes we contract are 50% REO, 30% short
sale and 20% equity sellers.
Repair costs, the cost to bring the property to average or good condition
for the neighborhood, which is required to maximize the value and
marketability of the home. Utilizing dedicated contractors generally saves
10-20% for repairs, also reduces the repair timeline.
Rental amount, generally easy to calculate based on average rents for the
size of the home, condition, and the neighborhood.
After Repaired Value, the value that the property appraises for after repairs
are complete. Generally this value is up to 80-90% higher than the
acquisition cost of the property.
If the above 4 factors fit within our pre-determined criteria, we then
submit to our preferred investor for final approval and funding.
18. Waller Group Preferred Investor Investment Package:
Typical Cap rates of 8-12%, Each investment will have $10,000+ in
equity within 30 days of property repairs and make ready.
Waller Group Preferred Investor Services
20. Waller Group Preferred Investor Services
“Attachment A”
Waller Group, LLC (“Waller Group”) will endeavor to complete the following enhanced
services for investor clients:
1. Source properties that are projected to yield a cash on cash return of 7% or more based
on the following assumptions:
I. Properties are unlevered. Levered properties will yield 14%-21%
II. The following expenses are factored: 5% vacancy factor, 10% monthly property
management fee, one month’s rent, lease listing fee, (10% of total cost of make
ready) management and make-ready fee, annual taxes, insurance and
maintenance
2. Properties will meet the following criteria:
I. Located within the DFW metroplex, brick, 3+ bedroom, no garage conversions
II. Minimum spread of $10,000 between basis (purchase price, carrying costs,
repairs) and estimated ARV (after repaired value)
III. Purchase price of no more than (optional): ______________
IV. Estimated repairs of no more than (optional): ____________
V. Additional property criteria (optional):
21. Waller Group will Provide the following
services:
Buyer brokerage Representation/ Property Sourcing Services
Make ready coordination and facilitation
Pre-lease services
Property lease listing and marketing services
Property lease up and property management
22. Upon execution of this agreement Client agrees to:
1. Authorize Waller Group to submit offers on behalf of client with
the above property criteria.
2. Utilize Waller Group for make ready services (fee: 10% of total
construction/make ready expenses).
3. Execute property management agreement retaining Waller Group
as manager (fee: 5-10% of rent collected).
4. Execute property listing lease agreement retaining Waller Group
as brokerage (Fee: one month’s rent).
5. Execute Buyer Representation Agreement (Fee: 3% of sales price,
paid by seller, promulgated Texas Real Estate Commission
document).
23. 1. Provide Proof of funds available to purchase properties with above
criteria (bank statement of proof of cash available to close, dated within
30 days and titled with entity that is purchasing property).
2. Complete phone consultation with Logan Waller upon submission of the
above.
3. Notify brokerage in writing at any time if client wishes to terminate or
change investment criteria or relationship. (fee: none charged, client has
the right to terminate agreement at any time and no fees will be
incurred).
Client: _______________ Waller Group, LLC: _____________
Date: _______________ Date: _______________________
24. Performance Incentive:
“We are so confident and committed to meeting our
pre-determined expectations…we’ll defer our fees if
necessary to ensure that YOU PROFIT FIRST”
Waller Group will NOT charge a lease listing side
marketing fee OR a make-ready fee if the appraised
value of the property after repairs are completed
(based upon an appraisal prepared by a mutually
acceptable appraiser) is less than $10,000 greater
than the purchase price + repair costs
+ make ready expenses.
25. Waller Group does not charge a property management fee while the
property is vacant. Property management fee payable will be reduced to
5% (with the balance of management fees deferred) during the time that
rental revenues are not sufficient to provide a cash flow return of 7% or
more annualized return. Deferred management fees will be due and
payable once 7% annual return threshold is met either through rental
activities or upon sale of property.
The above performance incentives apply only if investor opts to utilize all
of the above Waller Group services.
Client: ________________ Waller Group, LLC: _____________
Date: ________________ Date: _______________________
