Corporate Structure by lonyoo

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									Avalon
Development Company




                 “ACQUISITION MEMO”
  Thank you for reviewing the Avalon Development Company Acquisition Memo.
  We are proud to introduce our latest & most effective leverage technique. Our goal is
  to create wealth using little or no out of pocket capital, and to provide a greater value
  to our clients than the capital they entrust to us. Once we identify individuals
  qualified for membership we look for good projects. Once both dynamics have been
  secured the following bullet points represent our acquisition strategy:

                        Capitalization & Membership
  1. The Company will raise $1m in equity to capitalize the acquisition pool.

  2. Membership shares are $1k/share, with a ten share minimum. Members can own
     more than ten shares; however, they must be purchased at ten share intervals.

  3. Upon agreement of terms each member will pledge a minimum of $100k of
     equity from one or more properties to be leveraged at 10% (+/-), or $10k in cash.

  4. Cash members can deposit funds directly into escrow.

  5. Should a member need to liquidate before the dissolution of the property he must
     extend to the Company a thirty day notice indicating the necessity to do so.
     At such time the Company will liquidate the member‟s interest and either re
     convey the member‟s property interest, refund the members capital, whichever is
     applicable. However, as a penalty for not completing any contractual obligation
     made to the Company, the member will agree to forfeit the application fee, and
     any accrued interest in any project in which the member‟s capital was used.

  6. All projects considered by the Company will be voted on by members of the LLC
     established to acquire and hold the property. There will be a vote on each project
     with a majority rule.

  7. The frequency of which each member can formally inquire as to the operating
     results and or audited financials of each project will be monthly provided there is
     a positive cash flow. Also, audited Profit & Loss, and Manager statements will be
     included with payments.

  8. Equity members must create an LLC to hold ownership of all pledged property,
     and then deed a partial interest of the property or LLC to The Corporation.


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Avalon
Development Company




  9. The equity pool will be leveraged through a line of credit (10%) which will be
     used to purchase a commercial property in Los Angeles County.

  10. Each member will be paid 50% interest on that portion of the credit line attributed
      to his portion of the investment pool. For example: Member 1 pledges a $100k
      ownership interest to the Company. If there are 9 other members who do the
      same, the „Equity Pool‟ would be $1m.

  11. The Company would then leverage 10% of the equity pool ($100k) to use as a
      down payment toward the purchase a commercial property. Since the amount
      leveraged is $100k, and this is divided between 10 equal partners, each partners‟
      actual liability comes to $10k. Therefore, each partner will be paid $5,000 for his
      participation when the property is sold to a pre qualified Investment Pool Buyer
      who only buys properties that we stabilize.

  12. Members will pay an application fee of $250 upon agreement, and an
      administration fee of one and a half points on any credit line extended to the
      Company or member generated LLC.


                               Property Acquisition
  13. We will take significant strides to acquire new construction projects with
      substantial upside, and or projects with existing improvements that are under
      performing, and whose NOI can be increased with stabilization.

  14. Once we determine a project fits our criteria we will draft a contract outlining
      terms & desired concessions.

  15. Commissions, discounts, bonuses, or other transactional fees will not be
      considered as partnership proceeds, and or member compensation. However,
      compensation to will be limited to three percent on the purchase, three percent on
      the sale, and two points on any loan facilitated by the Company. Any additional
      compensation will be considered profit, and will be distributed amongst members.

  16. Upon obtaining an accepted offer, we will put down up to $100k toward the
      purchase of a given project.

  17. We typically request no payments for three months.




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Avalon
Development Company



  18. Unless otherwise stipulated, a “Subject To Appraisal” clause will be included in
      every contract. If a property does not appraise at or above contract price we will
      counter the price at the appraised value, or cancel the transaction unless other
      mitigating circumstances make it profitable not to do so. We will also stipulate
      that final contract conditions are “Subject To” suitable financing being obtained.

  19. We will typically then establish an LLC under the name of our acquisition, i.e.
      123 Main Street, Los Angeles CA, will be named The 123 Main Street LLC,
      unless otherwise determined by one or both parties.

  20. Ownership of the property will be “Quit Claimed” to the LLC. The Seller will
      retain a Title Insured ownership interest in the LLC, until consideration for the
      property has been fully satisfied.

  21. Title Insurance will be taken on the property for protection of both parties. Seller
      may select the Title Company.

  22. The Seller will be specifically named in the LLC as the Managing Principal.

  23. The Buyer(s) will be named in the LLC as “Share Holders”. Buyers may also be
      referred to as the “Property Stabilizer”, and or “Property Operator”, in some or all
      of the articles of organization.

  24. The Managing Principal of the LLC (Seller) will resolve that the Share Holder(s)
      have the right to operate the property, and collect all income.

  25. Once the property has been transferred to the LLC, and authority granted to
      operate the property, the property will immediately be stabilized, and then be re-
      listed at the “stabilized” value.

         Example Project Income & Expenses: 10 Units, Rented at $1,150/Month

         $165,600   GROSS STABILIZED INCOME
         $ (8,280) VACANCIES @ 5%
         $157,320   GROSS OPERATING INCOME
         $ (41,400) EXPENSES @ 25%
         $115,920   NET OPERATION INCOME
         $ (93,348) DEBT
         $ 22,572   PTCF CASH FLOW
         $ 1,881    PTCF CASH FLOW/12 MONTHS Divided by 10
         SHAREHOLDERS = $188.10 per month PER SHAREHOLDER


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Avalon
Development Company



                                    Exit Strategy

  26. Based on the estimated pre tax cash flow, each member will be paid $188 per
      month until the property has been stabilized and sold.

  27. Once the property has been stabilized (3-6 months) we will sell it to one of our
      Pre-Arranged Investment Pool Buyers who „only‟ buy the projects we stabilize.

  28. The Original Seller will agree to only receive that proportion of the proceeds
      reflective of the original contract price relative to the LTV obtained by the
      Investment Pool Buyer. (Not the stabilized sales price of the property).

  29. For example, assuming a 70% LTV, if the original contract price is $1m,
      however, the Stabilizing Partner sells the property to the Investment Pool Buyer
      for $1.2m, the Original Seller will receive 70% of the original sales price, or
      $700k from the Investment Pool Buyer‟s loan proceeds, minus any down payment
      applied toward property. The Stabilizing Partner will receive the difference
      between 70% of the original sales price, and the actual loan obtained by the
      Investment Pool Buyers for services rendered stabilizing the property.

                  $840k - $700k = $140,000 to Stabilizing Partner (Us).

  30. Members will also be given the option to let profits roll over into a new project.
      This option provides a minimum monthly residual income from each completed
      project. Following the example above each member would receive a hundred and
      eighty eight dollars monthly. Assuming a similar project is secured the monthly
      amount would jump to three hundred and seventy six dollars, then five hundred
      sixty four and on without have to come up with any additional capital besides the
      roll over profits.

  31. Other considerations may come into play if the Investment Pool or any other
      buyer the Company sells the property to is not obtaining financing.




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Avalon
Development Company




Program Highlights:

Down Payment Assistance to preserve investment capital with little or no money down
Unlocks dormant equity
Title Insured protection
Excellent Rate of return
Monthly income
Value added opportunities
Pre established qualified buyers


Thank you for reviewing our “Acquisition Memo”. We look forward to working with
you on many excellent projects in the near future.


Curtis Wright
President




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