Real Estate Appraiser: Local Expert Opinion Multi-Family Apartm.

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Real Estate Appraiser: Local Submarket Expert Opinion Survey for Multi-Family Apartment Capitalization Rate of Return Sale & Rent Study. Ventura County, Santa Paula, Regionally & Surrounding Cities

As a service to you, I’ve included a recently provided summary of a completed Real Estate Valuation project findings: Ventura county, residential Multi-Family Apartment Market Level Opinion Survey and Sale & Rent Study. Useful, real time information that is directly market participant derived, verified and compiled. The most up-to-date, detailed Rent Comparables and Capitalization Rate of Return Sales for investment properties to help a Tenant or Landlord, Investor, Owner, Seller or Buyer solidly understand and wrap their arms around a specific subject property and dynamic area nuances for lease, sale or purchase consideration: Present snapshot in time or prospective mid to long term state of the market conditions, trends and leasing & sales activity. This extremely difficult and time-consuming findings collection process is based upon numerous, confirmation discussions directly with primary parties to each individual, successfully closed transaction. The methodology absolutely yields the most recently transacted and accurate type of highly reliable & well supported, strictly market driven data that is not easily obtained.

To ensure even more solid, market level reinforcement that is credible and highly support for Fair Market Rent or Fair Market Value, several comments and opinions are secured from local leasing & sale expert specialists for an arm’s length and objective, neutral third party pulse of a locational submarket. Contacts are made to various sources such as property owners, developers, property managers, real estate appraisers, asset managers & real estate brokers in the specific subject property immediate area to obtain, explain and compare and contrast micro and macro market dynamics & differences. This reinforcing, solidifying combination gels and enables clients to have an even higher level of confidence as an insurance policy to better make educated peace of mind decisions, resulting in the best & most profitable final move forward investment decisions. Initially, there are many unknown possible option scenarios that are at first wide open and unclear.

VENTURA COUNTY, SANTA PAULA FAIR MARKET RENT & FAIR MARKET VALUE - REAL ESTATE VALUATION STUDY & APPRAISAL ADVISORY PROJECT:

• General Real Property Use(s): Apartment
• Specific Use(s): Residential units and bedroom / bathroom spaces for Tenants, Multi-Family leased Investment buildings for Investors
• Location(s): Fillmore, Oxnard

Opinion of the Subject Property’s Market Level Pricing in 2015:

o Actual Capitalization Rate of Return or Investor Required Rate of Return: As Low as Low to Mid 5%
o Actual Gross Income Multiplier Sale Price as a Value Indicator: As High as Low to Mid 11.0 x
o Sale Price / Unit for an Investor Buyer: Up to a Low to Mid $125,000 / bed

General Market Trends for 2016:

o Sale prices increasing, buyers need places to land money

o Sale prices level until interest rates go up, market is stable, will continue.

o Market inventory is tight and will continue upward

o Huge buyer demand, next year is similar if all things remain the same, there should be significant # of sales

o Flat to slightly increasing

Was Buyer Purchase Decision Based Upon the Gross Income Multiplier or Capitalization Rate or Return as the Primary Value Indicator?:

o Actual capitalization rate, Seller’s real estate agent only pays attention to cap rates

o GIM and also looked at market rents

o Capitalization rate vs. financing he could get

o All value indicators looked at equally, buyer was in a 1031 upleg purchase exchange

o Actual capitalization rate

Base Rent Range on a Modified Gross basis: Up to Low to Mid $1.00 per month + $0 NNN's or CAM's per Net Operating Income or NOI cash flow
• Landlord Provided Concessions or Discount Incentives to Tenants to construct building improvements:
o Free Rent Range: Not Available base rent discount or abatement as an enticement to Tenant to lease
o Tenant Improvement Range: N/Avl $ / sf Landlord contribution towards improvement work build out of a unit
• Additional NNN or CAM Operating Expense Pass Throughs: Not Applicable $ / sf /month that Tenant also pays to Landlord as reimbursement payment for proportionate or pro rata share of Common Area Maintenance Expenses or CAM's for Property Taxes, Insurance, etc. Can also include extra expense pay back of separately and directly metered Utilities, including but not limited to water, gas, electricity, sewer / trash removal, lighting, landscaping, security, etc.

Additional Parking Cost: None for a tenant to lease a space
• Lease Up Absorption or On the Market Period(s): Not Available for a tenant to rent a room in a building

• Opinion Survey Estimate of the Subject Property's Market Level MG Rent Leased to a Tenant: N/Avl $ / sf / month

• Actual Capitalization Rate of Return Sale Range for Leased Investments Sold: As Low as Low to Mid 4% overall for 100% Tenant Occupied buildings for Investor Return on Investment or ROI.
• Pro Forma Capitalization Rate of Return Sale Range for Leased Investments Sold: As Low as Low to Mid 4% overall for future full occupancy potential return with 0% vacancy with lease up of vacant units, minor cosmetic work or major capital improvement expenditure to raise rents by re-leasing or re-tenanting currently month to month tenants for upside and value added re-positioning of the asset.

Actual Gross Income Multiplier Sale Price Unit of Comparison Range for Leased Investments Sold: As High as Low to Mid 12.0 times Gross Rent with Laundry Income or other sources of revenue currently received to value the sale price of an investment asset at full occupancy.

• Sell Out Absorption or On the Market Sale Period(s): Up to 6 months for a buyer to open escrow and purchase a property

* Conclusion: Total $ / sf NOI Rent Range - Including Base Rent + Additional CAM Expenses: Up to Low to Mid $1.00 / sf / month. No % difference exists end of the day Total Rent that is paid, not yet taking into consideration yearly rate increase calculations and implementation that are fixed, stepped or inflation based upon the CPI or Consumer Price Index or for new or existing renewal tenant concessions or discounts for monthly, 6 month or 12 month terms

Surprisingly, huge net effective rent discrepancies can exist over a lease term. Even though a majority of the completed comparable transactions are in close proximity from the subject property, properties next door or even across the street are unique and not similar or alike.

Dissimilar physical characteristics vastly exist, due to general and specific location(s), specific use(s), year built, quality and condition of improvements build out. These are just some of the major important items that substantially affect rent obtained or paid. The length of the leases were not provided.

Depending on which polar end of the spectrum you are and your strategic goals, a Landlord seeks to obtain maximum rent, conversely, a Tenant strives to achieve maximum cost containment. A large amount of money can unnecessarily be lost or saved over a fairly short time period of year over year.

If interested, I’m more than happy to discuss the other facets of this study and opinion survey in more detail.

Looking forward to working with you and your clients.

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