Real Estate Purchasing in Expanding Markets

Fourth Quarter 1996 Update


The purpose of this is to update you on some of the properties involved with our expanding markets project. As we mentioned in the proposal, our current target market is Kansas City, Missouri. We have two properties that I want to mention. I will also provide updates to you on a quarterly basis so that you can track the progress of our properties in the Kansas City area.

The first property is in an area known as Midtown. It is a house that has been converted to a 4-plex. When we first purchased the unit, one unit was empty, there was an estimated $6,000 worth of external repair that needed to be done to the property, and the one unoccupied unit needed some minor cosmetic rehabilitation. We are paying the heating costs on this building. The purchase price of the property was $51,250, 10% down and total closing costs were $3,885.54. Other costs for insurance, utilities deposits were $365.

Total initial investment was $9,373.04

Rents from the four units were $310, $275, $250 and $0.
First month's rents were: $835.00
First month's expenses were (including debt service): $692.57
First month's profit (loss): $142.43
First month's ROI: 1.5%
First year ROI based on initial month: 18.2%

The tenant in the 2 bedroom unit moved out on November 30, 1996. We have done some repairs and updates on this unit and the empty unit. On December 6, 1996 we re-rented this unit for $450 per month. The tenants moving in are paying for many of the improvements to the apartment themselves (since they want their choice of styles). We can approve or veto each improvement based on how we would like to see the unit. The empty unit has been renovated and should rent this month for $335.

Based on our current expenses and the new rents, the first year ROI could be as high as 40.5% (assuming an additional out of pocket expense of $6,000 for external repairs and improvements). Though, if we use the cash flow to pay for these expenses, our first year ROI will be 2.3%.

This Spring we expect to raise the rents in the other two units.

The second property is in an area known as Old Northeast. It is still part of the basic downtown area of Kansas City, Missouri, and is within a 5 minute driving distance of downtown on surface roads. Purchase price of this property was $58,000. Again, 10% down, and closing costs were $3,301.11. One unit is currently unoccupied. Rents in the other three units are $315, $415, and $225. There are no estimated repairs on this unit.

The fourth unit was rented November 1, 1996 (for $350) and as of November 5, 1996 we had only received a partial rent on one of the units, this tenant may be moving out and the amount short shows their deposit.

Total initial investment was $9,101.11

Rents from the four units were $350, $115, $315 and $225.
First month's rents were: $1005.00
First month's expenses were (including debt service): $842.50
First month's profit (loss): $162.50
First month's ROI: 1.8%
First year ROI based on initial month: 21.4%
First year ROI based on full rents: 57.0%

Rents on at least two units should go up this Spring.

Thank you for your time in reviewing this. If you have any questions or would like more information on Kaim Chigh, L.L.C. please call me at (888)323-1488 or (303)271-1288. You can also contact me at
info@kaimchigh.com. This information and more about the organization is available at our Web Site www.kaimchigh.com/expand.html. If you are not interested in receiving this information please contact myself or my associate Karen Best and we will remove you from our mailing list.

For a copy of the full proposal please E-Mail your name and address to us. Ask for the Purchasing Proposal.

or write:
Kaim Chigh, L.L.C.
PO Box 1417
Golden, CO 80402
or call:
(888)323-1488

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