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Seeking angel investor and or venture capital.

  • USA USA  
  • Last Updated:
    Posted on: 03 Mar 2021

  • Destination Port: Kalamazoo, MI United States

RFQ Details

Real estate investment company seeking angel investors and venture capital for my start up. I have Executive summary and Business plan with a very high rate of return on investment exit strategy. If you are an investor or venture capitalist please contact me.

I am looking for 2 million investment and have an exit stratedy to buy out my investor after 2 yrs for 3.2 million.

Serious inquires only please. Please read my executive summary below.

Executive Summary

Community Development Resource Center, Inc. or CDRC is a real estate investment company that specializes in selling homes on land contract. Community Development Resource Center will buy and sell 88 homes our first year. CDRC is specifically looking for homes in the $30, 000 - $60, 000 range that are REO and pre-foreclosure. We want to negotiate multiple properties for larger discounts to increase profits on sale and reduce risk to company and investors. We are looking for homes that are in need of repairs and allow us to purchase for far less than market value. CDRC will make the necessary repairs and sell them to prequalified individuals buyers. First year revenues are estimated at $805, 728 with revenues of $1, 483, 896 in year three.

The management teams of Donald Stevens and Fabian Banuelos are experienced in property management and mortgage financing.

CDRC is looking for investors to invest $2, 000, 000 in real estate. The funds will be used to purchase and remodel properties. The funds will be repaid through cash flow from land contract income and the sale of properties.

Company Analysis

Name

The company's name is Community Development Resource Center, Incorporated which is descriptive in what the company does. It is specifically inconspicuous due to financial institution requests.

Company History/Current Situation

CDRC originally started when the principals Donald Stevens and Fabian Banuelos met.

CDRC is incorporated as an S-Corporation in the business of buying discounted real estate and selling the properties to working class families. CDRC will buy homes in need of repair below market value, and CDRC will bring them to market conditions and sell on land contract.

CDRC is currently in the process of arranging financing through a network of investors to allow for the purchase of eighty eight homes the first year. The money will be used to purchase homes and buildings that are 'good buys'. CDRC estimates that sixty to ninety days will be the holding time while a contractor is hired, materials purchased, and job completed. The money will be used to pay the acquisition costs, fund materials, pay contractors, and for general cash flow such as overhead expenses.

CDRC's goal is to buy and sell single family homes. CDRC will be concentrating on two types of properties, those that can be fixed and sold, and those that are currently ready for sale. CDRC is particularly interested in buildings that are structurally sound; however need light to moderate work to make them habitable. These buildings can usually be found at low prices, and with modest expenditures, can be rehabilitated into nice, sturdy, homes. CDRC estimates buying eight properties per month for the first calendar year 2009. This will depend on the properties that are available. To mitigate CDRC's risk, initially they plan on pursuing homes that require less work and lower profits. This will allow for quick sales of properties.





Copyright 2008 Community Development Resource Center, Inc.
Goals

Within three years, CDRC will have bought and rehabilitated one hundred and ninety six properties with an annual net income of $550, 000 - $670, 000.

Company Location and facilities

CDRC is being operated out of an office in downtown Kalamazoo. They have established an office where they manage the paperwork and daily operations. The office is complete with computer, phone, printer, desk, and staff.

Legal Form of Ownership/Profile of the Management Team

Community Development Resource Center, Inc. has been organized as an S-Corporation with Donald Stevens and Fabian Banuelos splitting ownership 50/50. Donald Stevens will be President and Fabian Banuelos will be Vice-President. Donald Stevens will be primarily responsible for the finances and administration. The S-Corporation was chose in order to protect the owners from liability.

Insurance

CDRC currently has business owners' insurance with CNA.

Market Analysis

Product

The basic need that CDRC is providing is a clean, sturdy, habitable home for people who are currently renters or investors. The owners have a very strong ethical conviction that every individual deserves a decent home at a fair price. CDRC will concentrate on buildings that are of 'reasonable' quality and structurally sound. All properties will be repaired/rehabilitated/remodeled as needed, however, each home will feature a minimum of an updated kitchen and bathroom. Through market research, CDRC has determined that kitchens and baths are the two most important areas in a home. If these two are updated with fresh paint, cabinets, appliances, and floor, the house has a very good chance to sell/rent quickly. Other updates include; new paint, flooring, fixtures (lighting, window coverings, etc.), windows, doors, roof, and exterior landscaping for curb appeal.

CDRC will concentrate on lower middle and middle class properties with less than 2, 000 finished square feet, medium sized lot. At a minimum each property must have a sound foundation and structure, otherwise CDRC will not acquire the property.

Most homes will use similar colors and materials so CDRC can purchase in bulk. Paints will be purchased in large quantities so they can take advantage of the suppliers' discounts.

The land contract properties will use the 'thirty percent rule', which states that 30% of the family monthly income is the amount of the mortgage payment. This will be a general rule that CDRC will use to determine who qualifies for purchase under a land contract. They will also require a minimum of 10% down on the purchase of a home.





Copyright 2008 Community Development Resource Center, Inc.
Price

CDRC will concentrate on homes under $100, 000. The homes will be well under market value compared to comparable homes in the market, with an anticipated ROI greater than 40%. By concentrating on this market, CDRC will understand the market and make better buying decisions. The real key is finding rundown properties and understanding the repairs needed. Once the homes have been updated, they will sell for market value to their list of preapproved buyers.

A market analysis will be completed by their realtor and reflect the comp pricing. CDRC will rely on the realtor's judgment, public records of real estate transfers, and tax documents.

Distribution

The homes will be available for sale immediately following renovations. CDRC has will create a prequalified buyers list to which they will market and sell the homes. CDRC understands the time needed to market and sell a home, and commit extensive time and research to preparing a list of qualified buyers. This is a growth opportunity for CDRC and would add to the bottom line.

Homes will generally be located in, but no limited to, the east, north and midtown areas of Metropolitan Kalamazoo. These areas offer a variety of homes and at attractive prices.

Promotion/Advertising

All promotions will be outsourced, including selling the finished homes and finding new prospects. The best sales method will be to generate a list of qualified buyers through direct marketing and working with centers of influence. We are looking for families that are paying about $500-$700 a month in rent. They must also be able to deposit 10% at time of purchase. We feel that since most banks will not finance mortgages for $50, 000-$80, 000 we will be able to corner the market with our sales through land contract.

Industry History/Trends

The market is very attractive due to low cost of acquisition and high demand for low cost housing.

Target Market and Customer Base

CDRC's target market will consist of two groups; individual renters looking to own property and families looking to reduce mortgage payments by purchasing our low cost homes. The target market will be the Metropolitan area with demographics ranging from individual singles and families earning about $1600-$3000 a month.

Our customer base will be prequalified through our Home Buyer Program. Our Home Buyer Program will allow individuals to contribute to an escrow account on a monthly basis to accumulate the required 10% down payment for the purchase of a new home. We will also only allow individuals to purchase homes that have monthly mortgage payments not to exceed 30% of the family income. Because our land contracts are generally 10% interest, we will educate and encourage our buyers to qualify for FHA or traditional lending such as a credit union to purchase them home and complete the land contract. To help them qualify for traditional lending we will offer credit counseling services to help them obtain a lower interest rate.




Copyright 2008 Community Development Resource Center, Inc.
The buyers will be targeted in the lower middle to middle class. CDRC is interested in selling single-family homes in middle class areas. Typically, these individuals rent due to the difficulty of obtaining a loan, etc. These individuals are typically priced sensitive but willing to buy on looks and functionality. Each home will be 'packaged' to appeal to the decision influencer, not the decision-maker.

CDRC believes that the decision influencer, typically female, will 'fall in love' with the updated kitchen and bathroom to sway the decision-maker. The overall demographics of this market are families with combined household income of $20, 000 to $36, 000 and two kids.

Kalamazoo is currently offering four years paid college or university education to students who graduate from the Kalamazoo public school system. The Kalamazoo Promise is a perfect real estate investment community because it allows families to provide guaranteed education benefits to the children of the home owners. Average benefit per child is $100, 000 for a four year education.

Barriers to Entry

There are no barriers to entry within the real estate and housing industry. It is a very fragmented niche that almost any handyman can enter. As long as an individual has access to capital, he/she can purchase a home at a severe discount and fix it up for sale.

Growth Opportunities

CDRC has two opportunities for growth; real estate sales and remodel for hire. CDRC could increase annual revenues by executing real estate sales themselves. This would add an additional revenue source of 8-14% per house. CDRC also has the opportunity to expand into other house remodels and repairs.
Further investigation into this area is needed. This opportunity has the potential of adding $30, 000 to $50, 000 in annual revenue.

Trade Agreements

The key agreements CDRC will have are with a real estate attorney, Title Company, and building supply companies. As mentioned earlier, CDRC will work with a real estate attorney in selling each home. The exclusive agreement with the Real Estate attorney is the primary writer of contracts and pursuing or defending in litigation. We will also have agreements with tradesmen and suppliers, and have our own general maintenance person, along with an extensive list of buyers. The goal is that the CDRC will find the right buyer for the home that meets specific revenue goals.

CDRC will also locate foreclosed properties through various organizations; banks, SBA (Small Business Administration), Federal Deposit Insurance Corporation (FDIC), Housing and Urban Development (HUD), Veterans Administration (VA), Fannie Mae, Freddie Mac, General Service Administration (GSA), and Internal Revenue Service (IRS). Each of these organizations offers properties for sale that have been foreclosed.

Exit Strategy

The main exit strategy CDRC has is cash on hand and selling the notes on the land contracts for 70-80 cents on the dollar. By the end of year one we estimate the cash on hand to be $352, 548 and the notes value to be $5, 280, 000. By the end of year three the cash on hand is estimated at $2, 214, 376 and the note value will be $8, 040, 000. The program must be re-evaluated at the end of the third year to plan for the future real estate programs we will offer based on current market trends and lending programs that will be available at that time.


Copyright 2008 Community Development Resource Center, Inc.