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Breaking Down Pineridge Farms in Payson, Utah

project updates utah utah county webinars Jun 18, 2020

Today we took an inside look at Utah, Utah County, the City of Payson, and it's neighborhood. We also dove into project details for Pineridge Farms (Location, Proforma, Plat map, Floor plans, Timing, etc.)

More Info about Pineridge Farms:

Transcription of the Webinar:

We were happy to have you join us on this webinar where we talk a little bit about one of FIG's projects that we've just started opening up for reservations.

The project is called Pineridge Farms. And it's in Payson, Utah.

We love it when we can get more dirt more land, more apartments to develop in the state of Utah because it's been so good to us. And it's home base here. It really is where we operate. In fact, this project's about 12 minutes from the front door of our office. We're excited to have it and we're excited for you to join us. And I know many of you have spoken to us before.

Many of you have been following us via emails and various campaigns we've done on Facebook and whatever. So if this is the first time that you've joined us on a big webinar, welcome. If you've talked to us already before some of this will be a light review, but really what it's intended to do is number one, give you an introduction into who we are What what our mission is what we're doing?

Who are these people behind the scenes? Number two, we're going to give you a good look at the inside of Utah County and paste and specifically a number three, let's drill down into the actual development, the actual subdivision, and what you could potentially be investing in with FIG. And then we'll just kind of let you know what to do next. If it's something that you're, you're curious to hear more about.

As always, we got to do this right to many lawyers today. And if you're a lawyer, you're probably the least offended by that you're used to, to me bagging on lawyers on these webinars. So fig, we're not a company. We're a marketing platform. And we're comprised of a few different companies, all with common ownership, and we'll discuss that momentarily. The information that I tell you about today, you should take steps to independently verify it. This is the stuff that we cannot guarantee it's subject to the open market out there. So we'll give you what we think. Please verify it to the best, best way that you can get with your tax advisors, attorneys, and Any other relevant professionals to verify it as well, that's a good place to start.

We're going to record it. In fact, we already are. So we will send you a copy of this recording automatically. And the reason I bring that up is we've got a lot of slides, lots of data and information coming at you today. You don't need to copy it down furiously, you will have access to it later. So here we go. Let's talk about Pineridge Farms and paste in Utah.

But first, we can drill into who is FIG, who's the FIG team. I know everybody always asked questions about that. And it starts with us the people that you're going to meet today. Well, maybe today. We'll see if you meet all of us. I'm Steve Olson. I'm the Director of Sales here at FIG. And I run point on all things investor-related here. Specifically, I carry licensing and a couple of other states and I've got to get a few more at too many real estate licenses, but you gotta do it.

So if you've been working on anything with us in the state of Texas or Utah, you've probably heard for me and I have a Host of my own clients have invested with FIG and Idaho Chase is here. He's going to join us in a few minutes. And he works specifically on Utah and Idaho. And she's actually our first licensee in Arizona, which will probably do a webinar on that one in a few weeks because it'll be our, our first foray into that market, which we're, we're excited about, but we won't be the only people that you interact with along the way.

On the construction side you got three key players, Mike Miller is the first one he's one of the original founders of FIG and one of the principles of the company that in business and construction developed for a long, long time, and we like to credit him he's the one that dreamed up this idea of building townhouses or condos but planning them is for plexes of getting outside of that normal fourplex stigma of the two up two down kind of run-down part of town right. That's what most fourplexes are.

That's what you think about when you think about fourplexes, so he had a great idea. We have run with it like crazy ever since then. And Jacob Erickson is the one that does the real actual work. Mike would agree with me on that. But Jacob is dealing with all the subcontractors and budgets and actually building these things and going through that process. He's built a lot of doors with us and a lot with other builders in the past and has a great level of experience. You can wind Jacob up and he'll talk about building code until the cows come home. He knows a lot about it. And Brian Schnell is our Director of Operations. He really ties all this together because he has extensive experience with multifamily builders in the northwestern United States, and ties all this together to help operate all sides of the company. So you'll hear from him when you invest with FIG. Towards the end of the process. He kind of help put a bow on it for us.

None of this really has any point without a property manager though. Corey Bonner runs max property management there that in house manager for FIG, they're technically a Separate NC we'd be crazy not to run it that way. But they're located here in the office with us. If my door was open, I could see right down into their offices. And so he's helping spearhead hiring and keeping all of the moving parts functioning on the property management side because if that site is taking care of itself, all these other things really come together nicely. But that's not the only side of it too.

If you've worked with us in the past, you know, lane Aldrich at first colony mortgage, he is fixed preferred lender and take steps to really prepare your loan packages if you're going to use financing on the front end and get that into the appropriate construction lender. You can't just go walk into Wells Fargo and say I want a new construction four Plex. They're not going to do it. They're going to look at you like you're crazy, right? So lane is the one that can build these relationships with the local banks that are actually willing to use that kind of financing products. And, in the end, do your final refinance for you. You're not obligated to us lane. But you'd be crazy not to. We all feel very strongly about that. In fact, I'm finishing a refinance myself, we always say we eat our own cooking here we all own these units to and lanes, just about to finish up a refinance for me in the state of Texas.

So this is not our first rodeo. This is just a mix. And I know we've got investors on the call today that have properties and some of these developments. But you see in the top right, I won't spend a lot of time here but SteepleChase is the very first project that we ever did back in 20. I think it was 2011. So far back in real estate years ago, we had a picture of it guys, we got to get a picture will chase. We got the old rendering there and then we kept expanding. You see, we've got Idaho on here, Texas on here, a variety of other projects.

This isn't everything. Right. There's a lot more that we built and developed among this but this is to show you kind of the variety that comes through investing in the FIG channel. So what we're going to do now is Do you have kind of a 10,000-foot view on how we operate? Chase, you're probably going to want to unmute yourself now because you're almost up to bat. I use up to bat because Chase likes baseball. If I say it another way, he doesn't know what I'm talking about. So he's going to give us a little insight into our great home state of Utah. I hear you see a beautiful shot of it's got to be Zion National Park or somewhere down there. But Chase, take it away and tell us what's going on in Utah specifically, and we'll drill down a little bit into Utah County to with you. What do you think why should investors care about investing here?

Yeah, Steve, thanks for giving me a minute here. As you can see in front of you there, we're looking at a couple of different colors up there and orange is going to be the Utah section. We'll talk about that for a little bit and then down below that Utah County, and when people think of Utah and when it comes to real estate, there's a lot of excitement because there's been a ton of growth here. especially over the last five to 10 years, it's been a very hot market. And we like to talk about not only Utah, but we'd like this to narrow down on Utah County. And that's where this project is currently at.

And we're going to be talking about a little bit later on further. Without driving you guys too much crazy about going over these numbers. There's a couple of key numbers I do want to point out, you can see the population growth thereof 16% for the state of Utah, but if you look below that there you also see 177% for growth for Utah County.

So that's telling us there that you talk county is one of the main counties in Utah, where we're going to see a lot of growth within the state will see some down in St. George, Southern Utah, but really, there's a lot of great lands available here in Utah County, and we're going to see that should be over the next 10 to 20 years, and where that's going to happen. That's going to move out towards west towards Eagle Mountain and Saratoga Springs, or it's going to go down south towards pacing, which we're going to talk about a little bit further in the presentation. The media were very young, which is awesome to see.

That just means that we have a very young and vibrant economy. And that's contributing to the growth that we're seeing here. The next one there, that's what I want to point out is the median household income is around 75,000. It's very affordable to be able to live within this market here if you want to purchase or even if you want to rent a property to and we're going to get into those numbers a little bit later on. a number of employees, very strong employment within Utah County. And I want to point those numbers out because I think they're very important, especially that percentage of 5.3. If you were to look into the national employment growth rate, it's a little over 1%. So 1.2 and if you look at different markets to invest in You're seeing a 2% or higher, that's good. And if you're seeing 3% that's really good or even 4%. So to be above that 5% for employment growth is really unheard of. And if you've been looking at real estate or different markets, you're going to know what I'm talking about as you dive into the dumb numbers a little bit further. So keep that in mind, as we discussed numbers are talking about Utah County. A little bit more, but that was something I want to point out.

Can I add something there? Chase?

Yeah, go ahead.

I really think the observation that you made about going west and going south is true. I mostly grew up in Utah County in Orem, which is right next to Provo. And when I was a little kid, I remember we had cousins that lived in Sandy Utah. Now Sandy's like 30 minutes or so north, along with I 15. And when we would leave our house to go down Center Street and get on I 15 within about Five minutes north of I 15. You were in like farmland. There was nothing going on, especially as you looked West, there was nothing happening.

And even in South Salt Lake County, there was that's where the prison is, right? There's nothing going on. And now when we look at that any of you that have come to visit us here, that's all filled in. Right? And so now there literally is no choice, but to go south, and West. And when you have a growing population, and look at that median age, right, you talk county is the youngest county in the youngest state. It means people are here. They're making babies. We're having families, we need housing. So I just wanted to add that observation to

very true. Yes, thanks for chiming in there. And then this next slide here, is, is pretty awesome. It's just the rankings. And it shows us how highly ranked Utah is across the board. Whether we're talking about just the economy, employment, health care, or even education We're going to be in the top 10 over a lot of these rankings, which is pretty awesome to see. With employment. I want to dive into that just a little bit further because it's really important. We have something here in Lehi, which is called the silicon slopes. And if you're from here, you're going to know what that means. And I think a lot of people out of state probably knows what that means by now.

There's been a lot of growth, especially along the I 15. corridor, anywhere between Provo up to South Salt Lake City, and this is where a lot of these major tech jobs are coming in. And it's been huge for the growth in the area because it provides great jobs and employment for those that want to live here have a good cost of living and also have a great job at, same time. Some of those companies that you're going to hear about if you haven't already, or like Vivian Qualtrics, inside sales, and the list goes on and that's anywhere between Lehi Provo all the way up to it 15 corridors, and you might hear something called the Wasatch Front. Those are the Wasatch Mountains that run anywhere from Ogden down to Provo or even Spanish fork and even in the pacing, that's the Wasatch Front. And so when you hear that, or if you hear the silicon slopes, then now you know we're talking about there.

Yeah. Yeah, that's good. We'll talk a little bit more about the I 15. corridor in a minute, and what that means and why it's important.

The one thing that I'll touch on it, if I didn't in the last slide, I'll touch on it here because it's going to be the same thing as the high quality of education. There are three major universities Brigham Young University, Utah Valley, and the University of Utah. We have two of those your universities really close by our project not too far away. We're talking about a 15 to 20-minute commute, which isn't that bad at all, especially if you're talking with someone that's familiar with that California commute.

So if someone wants to live a little bit further south and get lower rents and be able to commute to school or some of those tech jobs that I was telling you about, they're really not that far away. And the education there is just really taken off, especially BYU and UVU. UVU is now past BYU, with the number of students at 37,000. And they're expected to be I think, close to 50,000 in the next couple years. So the education system and the schools are growing. We've talked about new employers to improve transportation. It's kind of a headache right now, especially in Lehi, Silicon

Valley, you know what I'm talking about? I live there. Yeah, that's all pain.

All three of us live in Lehigh are in that area. And they're improving the I 15. And a lot of roads there, which will be nice. At some point in the next couple of years. They're expanding and making that wider just because you toss specifically You talk county is growing so fast. Yeah. And the other thing I'll add there too is you got the airport that's not too far away in Salt Lake and there's also an airport in Provo that flies to quite a few close destinations if you need to get some faster.

Yeah, I read an op-ed kind of along lines of education. You hit on the higher education. And I remember, years ago, Utah Valley University was actually just a local community college and hardly anybody went there. And now it's a university with an enrollment of 30,000 plus, which is crazy, which is, is just evident when you go past that exit off I 15. It's a madhouse, it's busy. There's a lot of people a lot of transacting a business happening. And so that's been great, but the opposite I read, I think it was the Wall Street Journal will probably have pressed and see if he can hunt it down. But no state gets more money out of its public education dollars than Utah. Meaning for every dollar that we spend On a student in the public, you know, K through 12 education, nobody gets better test results. So the state has been very efficient with what it's been spending there and getting just getting a lot out of that.

So what do you think Chase, you want to go on to the next one here, everybody, by the way, I'm controlling the slides. So

yeah, the apartment rental rate and trying to think the thing that we wanted to point out here is just the growth that we've had over the last 10 years. You can see those percentages there are 83%. And specifically here in Utah counties. That's what it's increased to, its really rose quite a bit. And so there's just been a lot of growth. And so that's the whole purpose of this slide here is just to point out the staggering numbers that we've seen in Utah, Utah County when it comes to rental rates. talks about The rate of growth is even stronger in Utah County. And it increased by 59% with an average annual growth rate of 6%.

Yeah, the bottom line is Salt Lake County has had staggering numbers. But Utah County has been even better in that case. And By the way, for the record, we develop in both counties and they're both awesome, but Utah County clearly has been an excellent investment for our clients.

And the last thing that I'll touch on real quick, is the rate or the average rent for an apartment in Salt Lake County. I know we've been bouncing back and forth between counties and just if you don't know Salt Lake County, just north of Utah County, they are pretty much connected and very close to each other. And the average rent is a little over 1200. And that's expected to happen this year and that's what we're seeing.

We're seeing a lot of our rental units we have a little bit of we have two different product types we'll get into a little bit later we have the stack multi-units, which is going to be more than partner and Phil and so it's good to know that number. And then we have them side by side, which is more of the townhome Phil. And we're actually getting probably about what you say one to two, maybe $300 more per unit per month than what that apartment average is for Salt Lake County. So it's good to understand where the rents are at. And we'll talk those a little bit deeper with this project as we go further in the presentation. Okay, okay,

great. Tell us just kind of give us your quick version of what's happening job growth-wise, because in my mind, like trying to put myself in the shoes of the investor, which I am but I'd be thinking, how Why do you need to keep building? Right? Why would we want to do that? And to me, it's well jobs, more jobs, there are more people. So tell us a little bit about that.

Exactly. This slide is very important because you can see how many new jobs are going to be added to Utah County and that's projected from now until about 2015. So over the next 20 to 30 years, over 500,000 new jobs. That's a lot of new jobs. And so every one in every three jobs is going to be created there in Utah County. And that's why I talked about it earlier about the silicon slopes and how important that is.


Excellent. Let's go to the next one then. So what we're doing here, Chase, you can put your feet up on your desk, take five for a minute. So we, Yeah, we've hit on Utah County, what we have some other interesting stats that we want to want to look at with charity here. So in addition to this to the overall state, which consistently is in like the top three, what about the county itself and that population growth that I had alluded to?

Yeah, absolutely. So as you look at Utah County by 2065 28% of the state's population will be in Utah County, which is pretty amazing. I think that the number one thing I also wanted to touch on is the fact that one of the largest contributors to our population is obviously natural growth. As Chase mentioned, we're a really young state with young families. And then right behind it is the net in-migration. So there are just a few things, you know, in regards to population growth.

Yeah, and that's all those statistics are from the chem Gardner Institute at the University of Utah. He's a demographer. And you know, we're not making that stuff up. That's all publicly available, information that you can verify if you choose to. So, tell us a little bit about pacing itself within Utah County and kind of what that means is, is this in the boonies? You know, why would anyone want to live there?

Yeah. Great thing. Okay. So really quick, you look at this map, you're going to see that highlighted in red is the city of pace in itself. We have a little pointer right there that just kind of points out some different destinations here. So we felt that some of these destinations were things that people would be curious about wanting to know drive times like Steve said, Hey, we're in the boonies or how close are we to thing So, obviously like Steven mentioned we're right off of I 15 took them a minute or two to get to the freeway from the project. The closest city right north of it's going to be Spanish fork and then to Provo, you know about an 8.6-mile drive kind of BYU area. I know Steven mentioned you know, he jumped in his car left this project and it took him from the project to our office in downtown Provo took him 12 minutes. And so problem arm there's going to be a lot of stuff going on in there. And Chase Leavitt had made mention of silicon slopes. So you're 30 minutes away from kind of the south end of that which is located in Lehigh. And then we put in here downtown Salt Lake now we get there's a lot in between, you know, here in downtown Salt Lake but just to kind of give somebody an idea if they were working downtown, you know, it's a 58-mile drive.

So good. My opinion is somebody that works downtown, they're not going to live in pace and they're going to work somewhere in Utah County or maybe South Salt Lake County but you wouldn't live in pace and if you work in downtown Salt Like that you're you agree?

Absolutely. I think one of those things that the reason I like to point it out is that some people like to go to events in downtown Salt Lake so people are like, Hey, where if I'm going to go to where a lot of events are, where are those events or to get to the airport? Yeah, downtown Salt Lake.

Sure, sure but your day to day life, most of that's going to be in the core of Utah County if you live in pace in which we can kind of see what that means here. Tell us about let's get hyper-local, kind of sticking to Southern Utah County and the Provo Orem area and what kind of amenities and, and such that tenants would have access to it and just point out where the project is on the map there if you would?

Yep, absolutely. So if you can see that purple highlighted area, and then you see our FIG logo right to the side of it. That's actually where our project is where Pineridge Farms are located. And then you can see all of these other you know, employers or, you know, Costco, whatnot. You see a lot of these brand names that are out there. So there is there in close proximity to a lot of things that you and I use in our day to Today lives. So I don't know I think these are some great things. You've got the hospital over to the right. As I said, Costco, BYU, Utah Valley University is on there as well. So stuff and stuff is still growing as you can kind of see on that map. There's still some farmland and whatnot.

And the bottom line is a tenant can get in their car and go to the mall, go to university, go to the hospital, go shop, whatever they need to do.

Yep. Or they can Uber Eats McDonald's, Jim really quick. Yes. Why would they do McDonald's though? I mean, on the map, subway, subway, the subway, you look at that fine pace and cuisine, McDonald's and subway. Yeah, this world. Luckily, they can go five miles up the road and have some different options. Alright, so hey, that's a good segue when we talk about going up and down the road. Tell us what we're in for public transit wise and what's kind of expanding into southern Utah County?

Yeah, this hasn't been a huge thing in Utah. You know, a lot of people don't think or don't use that. Public transportation or haven't in the past, and this is becoming, you know more of a thing of what people want public transportation. So we have what's called front runner, they're actually putting a stop right out in front of our projects. So we're super excited about that because that is a key contributor to people wanting to, you know, being location-wise, they want to be close to this public mass transit. So we've got to tracks the frontrunner station right out in front of the project. And then off to the right, you see that picture of the bus. We have UTA huge our transit authority that has routes that kind of take people from, you know, down south up north, whatnot. So there are options there for people as people are worried about, you know, commuting and a lot of people commute just so that they cut time off or they can work on the train or whatnot. So

you talk county is changing. It's more density is coming in as you go up and down the I 15 corridor, and Utah County. Now you're seeing these new front runner stops, you see a picture of frontrunner on the left there. That's the pro station and it's a big Double Decker, you know, light rail and it goes it's called front runner because we're on the Wasatch Front. And the division of UTA, the Utah Transit Authority is that front runner will be operating from the very bottom of Utah County, which you're getting close to with pacing, and go all the way up to Box Elder County.

So you're going to be front running, right? going up and down the Wasatch Front. And anytime you're on a 15, you can see this frontrunner stops at these various cities. And what happens around those stops, apartments, retail tons and tons going on. Because we're changing. We're urbanizing. We're becoming a state where, you know, not everybody can afford nor does everybody want the quarter-acre lot with the big house. We're just having to adapt to density with how many jobs are coming in here. Yeah. So tell us a little bit more about what's going on. Then we're going to get into the specifics and the numbers, which is probably what everybody's wanting us to do. Anyway.

Yes, we just want to put this in here. Obviously, you tell we have four seasons just kind of show you obviously, you know, snow skiing right now skiing is great. You know, a few of us have hit the slopes lately, but golf parks, whatnot. Yes. Kind of give you an overview.

It's known for the outdoors. And we have beautiful, beautiful outdoors I. Here's the irony. I have a Nordic track treadmill where you can do these runs. Oh, and there's a big TV on it. And so they take you for a run. And I went for a run a new top today in my basement in Utah, but it was kind of nice, beautiful. Okay, so let's get into the specifics here. Will you tell us a little bit about what this project is going to look like? On a high-level number?

Yep. So I have a total of 96 doors in this project. They're all going to be fourplexes. And they're all four stories high. So we're doing a stacked fourplex the Miller floor plan. I'll jump into that and a few other slides a few slides later, but I just wanted to kinds of giving you an idea of that. We went through Chase and I encountered all these parking stalls. So there's plenty of parking, and then 49 garages. These will be held by the developer and monetize. So this is something that your tenants can take advantage of, but they're not being sold individually.

These units will all be two bedrooms, two bathrooms, which is an awesome mix of, you know, for those we know the project just ever saved that Steve had mentioned, they have one, two, and three bedrooms, we kind of wanted something a little different. We went with it just that all two bedrooms, the HOA on this $195 a month per door based pricing on this project is 7091 thing that we did include that I'm super excited about is the LVT flooring, the stainless steel appliances, the blinds and then all of them include balconies.

I know when we were talking a little earlier as a sales team, we were mentioning, you know why we like some of these upgrades. So for example, the LVT flooring, this is one that you know normal vinyl that we've been putting in the units before LBT has always been an upgrade. So now we're in including this one. But if a tenant happens to drag a chair across the kitchen floor and tear it, they have to replace the entire vinyl floor with the LBT. They can cut it out, it's in planks and they can replace that plank. So lot more durable, easier to repair, and maintain. So that's one thing that we are super excited about.

And then scheduled to go in the by the way everywhere in the unit's except for the bedrooms, two bedrooms will be carpeted, but your high traffic areas, hallways, kitchen, etc. will have that LVT The idea is that it's going to just limit your maintenance down the road.

Yeah, exactly. So then on this next slide we've got going is our the plat map of Pineridge Farms just kind of give you an idea.

So we have our crooked plat map.

Don't mind that but you can get plenty of parking down on the right-hand side. You can see the ones that are kind of boxed off. Those are where the garages are going to be but there's plenty of parking for each of the tenants.

Yeah, little clubhouse there in the middle. So to Typically, the HOA slash management will have a place to kind of land and coordinate their showings from usually put it us like a small gym or something like that in there so you can see this mostly goes in it's in a straight line this project is along the I 15 there.

Okay, so this next slide we are kind of showing you what the Floor Plan looks like. So like I mentioned before you're going to be stacked so this is just kind of one level just let's just say this is the main level just for fun. You're going for high so this is you would own a fourth of this. two bedrooms. One of the bedrooms, the master bedroom, you're going to have the walk-in bathroom and the walking closet with the bathroom, and then the other bathroom is going to be in the hallway so the bedroom can use that or your guests still have laundry closets, whatnot.

So great little setup, you can kind of be mocked up some furniture and whatnot in there. So a great floor plan. We're super excited about it. on that next slide, we have some renderings and we're loving the fact that we have balconies on here as a sales team kind of went to the builder and said, Hey, can we throw some balconies on here? We want to make these exteriors look amazing. And we feel like the balcony was the thing that was missing. And I love it. So everyone wants to share and walk out onto that balcony. And we can open a window. But it's also nice to kind of walkout and has a little space. So what they look like,

great. We'll keep going here. And we did have a question coming through the chat. Dan, how are you by the way? Well, we'll hit your question at the end here. So yeah, we're aware of that and just want to let you know. So you can see here and since I'm already jabber and share this is a rendering color rendering of the Miller floorplan building so you can see that, that stairwell in the middle right. Each on the right side of that stairwell is a fourplex, on the left side is a fourplex and it's just vertical.

The bottom floor is unit one, the second floor is unit two. We rolled this out, I think back in early December, and then we kind of pulled it back because when we got looking at those rents, We thought, let's get some balconies on there. We really think that that's going to be valuable to the tenants and that they're going to like those. So we're excited about that floor plan, good, clean looking kind of a craftsman style vibe to it. That's, so that's what littles will look like. I think we had me talking about this one. It was my turn.

Yep, you're up.

Alright. Alright, that sounds good. everybody's like, Oh, he's back again. So what you're looking at is a purchase price on this fourplex as of $709,000. And that's inclusive of the upgrades that was talking about just a few minutes ago. We love that price. We know you cannot get a new construction fourplex, in Utah County for $709,000 not going to happen. We know we look at the market every single day here. And if you find something for a lower cost, it's typically lower rents, lots of deferred maintenance. You can kind of see how some of those numbers pencil out with your down payment. The construction lenders require a 25% down payment.

As usual, on everything that we do, your buying costs were estimated to be $30,000. Some of you are well acquainted with this already, others are not what we're trying to do is give you an idea for your closing costs, and the costs associated with servicing your construction loan. That can be a little bit of a moving target, but we feel relatively confident at 30,000. For this one, just know that I, my guess is probably 18, or 19,000 of that 30 is one year's worth of prepaid interest on your construction loan. So that's just going to go into a reserve account at the bank. And as our builder draws on your loan every month, and builds the fourplex, the corresponding amount of interest is debited out of your interest reserve account. Something we've really been beating the drum on for the last six months and I'm sure some of our past investors are saying it's about time guys, right?

Is this initial improvements line item. We call it initial improvements because frankly, that's the only thing that our pro forma software lets us call it, in reality, it should be called stabilization costs. So $15,000 coupled with a couple of other techniques that we can use represents six full months of fixed costs on your fourplex without receiving any rental income. In layman's terms, you can pay your mortgage, your HOA, your taxes, and your insurance for six months with that figure. And the idea is if you keep you're not going to have to pay it necessarily, but we're saying, Hey, keep some powder dry, to get you through that initial lease-up period, because that's going to be more representative of ultimately what this would look like. I gotta move some boxes on my desktop so I can see my numbers over on the right side.

You can follow that through I'm not going to dwell on it too much other than down where it says interest rate. So the interest rate is 5%. Couple things I want to point out, this might be a review for some of you, but it's worth pointing it out to others. Number one, that might not be the interest rate that you get. But we're saying that we think that it could be that by the time you do your final refinance on these properties, remember, they're starting construction in March through May. So they're going to come online with you refinancing in March through May of next year. Right. And so, the interest rate could be different than right, we got a lot going on right now. Okay. So, we're saying though, right now, I know this because I'm refinancing a property myself. My rate is going to be like 4.375.

I think I can't remember your rates are in the low to mid fours right now. So we're trying to bake some uncertainty into the cake. most investors, and I, myself included are of the philosophy that with elections and some of the geopolitical stuff going on, we don't see a reason why those would, would skyrocket. So 5% is kind of being conservative. We're trying to be safe there. Your numbers might look a little bit better than this. If the rates stay where they are today or even drop, we don't have that crystal ball. So you can see some of your financials here. We're running a vacancy rate projection of 5%. One stabilizes, we used to be able to get away with 3%.

But what has happened is, you know, we're not the only ones building anymore. That's okay. It's probably a more healthy same market that way, but a stabilized vacancy rate of five. We're going to have our tech and amenity package on this and I'll show you kind of how that's handled in the industry in just a minute but the tenants will have access to some light amenities, nothing crazy in this project, but also these are going to be smart home units. So by smart home, that means that we'll have a smart lock and alarm panel, a Nest thermostat, and a doorbell cam. We also make some pet fees in there and $50 knowing that it's probably likely that one of the tenants is going to have a pet so You can look at your income projections here and your net performance based on a purchase.

All of that is meaningless without your expenses though, right? So we've got our expenses here penciling out, this is all on our performance. So you can go double-check this and kind of see what our operational expenses are, I'm not going to spend the time on their other than just know, if you're coming at this from a traditional view of rental property investing, like maybe you've been buying single-family homes or not in managed communities, some of these numbers are going to look too high, and some of them are going to look too low. For example, you're saying how could you possibly maintain that fourplex for $50 a month?

How could you insure it for $50 a month? That's ridiculous. Oh, and by the way that Hoa is expensive. Some of you are already figuring out that a lot of what would be normally baked into the cleaning and maintenance and insurance is actually in the HOA. They take care of the entire exterior of your property as well as the Master insurance policy, you're only maintaining and cleaning the inside of a brand new unit. But ask us about it, we can do a call with you on our pro forma, we do show over time, increasing maintenance, because this is not going to be new forever, right? And that needs to be taken into account.

So you can see your operational expenses here, we end up at about a 6.2 cap on this unit, and over a 10 year 10 based on assumptions increasing and expenses increasing over time, you're going to end up at a seven, six, we show projections of selling these at a five which is what the market would absorb. It's what it absorbs now so you'd have a really good solid market value in 10 years assuming you sold it at a five cap but those assumptions holding true.

And like I said, historically and taking a snapshot now, Chase would probably agree with me. We don't sell stabilized fourplexes at FIG for anything. Less than 850 and Utah County right now, granted those typically tend to be townhomes. But I'll let me give you some perspective here. We just moved to a triplex. I got an email during this webinar, a stabilized triplex, and Eastern Park which is one of our bigger developments for 630,000.

That's a triplex. Right. So values we expect them to be pretty strong going forward on that. You probably want to know a little bit about the comparables. So these are just some notes on a complex right next to us in pacing called ever sage. And when I say right next, I mean literally right next. So you can see that on their two-bedroom units, that your square footage little over 1000 square feet and this thing is about four years old now. They get 1250 to 1350.

I'll unpack what that means for you. 1350 is at least that you sign in July 1250 is one that you signed in January. Right, they got it to soften that up a little bit during the slow time of the year, I'm sure when you go research that online, and we're the same, right, this is kind of a gimmick that property managers do. They advertise a base rent, but they're going to charge income. On top of that base rent, you see some of these additional charges over to the right. So if you're analyzing one of our properties or any other property, make sure you take that into account, Chase and I had to take an appraiser to the woodshed a couple of weeks ago because he did a comparable on a commercial building for us and Magna, one of the 20 plexes that we did there. And he completely ignored all these other ancillary fees that these complexes were charging, most notable, you see down there on the bottom right of this slide.

If you want to live at the ever stage and have a detached garage, you're going to pay 100 bucks a month. And you're going to have a mandatory media package of 115 to $135 a month and that's just your internet. You know, access to Amenities everybody calls it. Something different media tech, I don't know development. I don't know. I've heard all kinds of things. And the tenants, they're going to pay all the rest of those fees on top of that so that 1252 1350 isn't representative of the entire cost of what a tenant at the average age is paying.

There are some newer apartments also probably five miles south in pace on I 15. We haven't looked at those. We felt the ever Sage was a lot more comparable for us. Right next door, they've got some two-bedroom plans. Because if you're going to live in Payson, it's pretty much this is those ones five miles south, unless you want to live in something kind of older, and more rundown which is the typical small multifamily in most of Utah County right now, if you're not looking at a big deal. So let's button this up. Chase would you just give us a simple walkthrough I got a little bit, click-happy there. So give us just a second Full walkthrough on the timing of this project specifically when an investor needs to do their $10,000 deposit their 10% when construction is starting, kind of walk through that for us if you would,

yeah, when we're talking over the phone with our investors and trying to run through this, we've done our best to make this make sense. But when doing new construction, it can be a little bit tricky with all the moving parts. And so we wanted to come up with a timeline or a graph for that you can look at and understand it. With most of our projects, it's going to be very similar to this as far as anywhere between a two to three year time period. And the first three sections there, I won't go into them in too much depth, because they've already happened or they're happening currently, it's the land acquisition market analysis in the zone. That's all done beforehand, but it's something that's very important. And for this project there and paste it looks like in 2019, as you can see there. They've already done some of those things. As far as the project launch, that's the fourth one there.

That's happened back in November, towards the end of the year, right before the holidays, we started to make reservations at that point, which we do have a good handful of people on the project. And that's what we're currently doing right now. final, final plat approval does not quite happen yet. But it's right around the corner. So if you're wanting to get into a project, and not have to wait very long, for plat approval or for construction to begin, it's going to be pretty quick considering our other projects. We've had other projects that we've launched before, and that we're currently launching, where we start to take reservations and it's just a long runway, where investors are waiting until that plat records and construction begins.

And with those two things I just talked about, let's talk about the deposits a little bit further, great when you make a reservation, and that's going to be the next slide on how to make a reservation. So I will go into depth there, but we make a reservation to 10,000. Or he has a $10,000 deposit. That's what's going to happen. It's refundable up until the plat Records, which is going to be ended the end of January 1 part of February. Once final plat approval happens. That's when a lot of the developers in ownerships land money goes nonrefundable. And we're committed to the property and building this project and things are moving forward. So at that point, we go back to our investors and we ask for them to come forth and paid 10% of the purchase price. And that's when it goes non-refundable at that point. So we're very close to that happening here, which is exciting for us. The next one there, the next one, there is going to be the horizontal development.

As I said, that's not too far away. We just put in when the phases start and for this project there it's going to be or excuse me, let me take a step back. I'm talking about vertical so horizontal developments, more of the emphasis structure for the utilities, and prepping the ground. So yeah, that's going to be January, February March, not too far away, and then jumped ahead of myself. But the vertical development begins right after that. We want to make sure all the infrastructure happens beforehand. And before we close you on your construction loan, so that we're ready to rock and roll in construction can move a lot faster that way. On that time period of there just depends on what phase you get into construction for this project done a pace in your anywhere between April and May. And I plan on about a 12 month build period.

That's what we tell our investors, sometimes it can be sooner, but it's always good to plan on that 12 month construction period, just in case if there are any delays with construction, which can happen. When it's constructions finished after that 12-month mark, then it's a simple refinance. If you're getting financing when construction starts, you're taking on a construction loan. When it's finished, it's a simple refinance into that 30 years fixed long term loan. And that's not expected to happen until 2021. Once that's done, the lease-up period can happen. The lease-up period for us starts right when it's finished. We have max PM, they're already going to start to market those properties while before it's finished, I'd say anywhere between about one to three months, just they're starting to get leads in traffic and get the word out. So these properties least up as soon as possible.

Also, if I miss anything so far that I need to touch on there. No, no, I think that's okay. I'll just add to it that you got your lease up there. I don't think it's going to take that long. It's a 96 store project. It's pretty small by our standards, and the bulk of it is going to be completed during the prime leasing season. So it won't be like when you complete units in late fall and you just there's a lot of things that happened when units get completed in late fall through the winter because it's just, you don't have as many people looking to move that time of year. But also landscaping can really be a challenge when you're dealing with that. So you're trying to get fewer people to move into something that doesn't look super desirable. And there are some things that we can do to kind of mask and work through it. But in the spring, landscaping is coming in the grass is getting green. I don't foresee this thing going through the end of the year. Now. Keep in mind investors, that's not me guaranteeing that that's going to be the case, right? Nobody knows everything there. But that would be my best guess.

You want me to do the reservation one chase?

Yeah, go for it. Okay.

All right. So if you want to do this, some of you are already aware of these steps. You're already kind of engaging with us and that's, that's fine. Reach out. Let's get the rest of your questions answered. But the first thing you're going to do is going to tell us which one you want and We can, we can send you the summary of the reservation map what's still available and, and such. So you're going to have three to five business days to make that official, you've got to get your pre-approval done with Lane Aldrich, and you're gonna have to get a deposit into Karen weeks.

That united West title will also help you with upgrades and give you some recommendations there. This one comes standard with many of them that we already recommend. I think probably if it were me, on this particular project, the only one I would consider above what's already included is granite countertops in the kitchen. Maybe the ceiling fans and candlelight. I don't know what chair to do you have an opinion that changed my own opinion on that.

I like the fans and cans and I like at least the granite in the kitchen. Yeah. So you could have that option of adding those as well and we could get your cost figures on doing that and I get asked this A lot because our next slide I think questions. So let me just address a question that I know you're going to have people asked all the time, what upgrades should I do, and what kind of return Am I going to get on? Well, we don't know for sure. We do know that everything that we've included standard on this one is not going to put you in any kind of a disadvantage in the initial lease-up.

That's what we're really looking at here is when we pump 100 units onto the market, over a 90 day period, you can't have 100 people waiting to sign lease applications right then and there. That doesn't happen.

Right? There is an absorption rate it takes time to get through those. But by you having the stainless and the and the good flooring and the blinds, nobody's looking at yours going I just want to go to the next one because we try to lease them out in the order which they are completed. That's not a perfect science, but that's what we try to do. So if you added granite, would your units fill up faster, calm, give you a good firm, maybe And that might give you a better rate of return on your money. Because if you have a lower initial vacancy rate, that's good, and will they least faster down the road will people stay longer, because it's brighter and they've got ceiling fans. I think there's a case that you could make for that.

We do see some gradual separation over time when you look at some of these projects that we did five years ago, that are now rented and they're running occupancy rates in the mid to high 90s. The units that have a little bit better upgrade, stay vacant for less time. And we kind of start to see a little bit of separation on what you can get for the rent, he might get 25 bucks more, or maybe even 50 in some cases. Some of that can have to do with other things. But that's a big conversation and we're happy to have it with you.

So then you'll review and you'll sign your purchase agreement with us. And then you're off and running. When it's time to start a construction lane. I'll circle back with you and there's a bunch of details on getting your loan done and your closing that will deal with but that's how you would Move forward from this point will help you take care of the details. The bottom line, we like it, it's located in southern Utah, and that's where the growth is headed, not southern Utah, Southern Utah County. That's where the growth is headed. And it's close to those employment centers that you see people can live and work and pace and they can live in peace and work in the rest of Utah County if they want to do as well. There's a lot of options. And it's going to be continued to become more accessible.

For that kind of millennial generation. The people that don't want to use cars, they want to have access to the mass transit. And if any of you ever visited us, or you're going to visit us soon, I would encourage you to come to Utah County. Look at you can see a lot of these front runner stops from the freeway or you can jump on Google and check it out. Look what's happening. Look what's expanding next to these front runner stops. And I remember we did a project in Vineyard called Tucker row and the locks these were done a couple of years apart from each other. And it looked kind of like it was in the Middle of Nowhere by the lake, right there's nothing going on there. When we did it and we said there is a front runner stop coming in because you could see tracks. And then people were nervous. They thought they're going to be cold tracks coming up and down here cold cars and, and big old, nasty noisy trains. No, it's FrontRunner. And it's an asset. It's an asset because the tenants have close proximity to mass transit to get up and down the Wasatch Front.

We're close to all the amenities that you need, right? It's going to be a hands-off low maintenance investment, right? You've got that builder warranty for the first year, where this can get broken in the maintenance requests can be handled through the builder, right. So all those partnerships are in place to give that good handoff. I don't think you're going to find a better cap rate. In fact, I think this beats the cap rate out there by at least a point on the majority of the inventory that's out there. I know this because I just listed another one.

That's done. This one's up and Heber. I listed it in Like a forecast and the phones ringing, investors are interested in that. So if you're an investor that's willing to take the risk to go through the build process and the stabilization process, you get that cherry on the top, you get some equity out of the chute, most likely. And we're close to the two major universities when schools in session are 60,000 kids here and what does that do for the economy? It's a huge benefit. So we had one question come in through the chat and then we had a couple that got emailed that people that you wanted to be addressed. So the the the parking I had a question about parking and how the garage space is going to work.

Um, this is going to be similar when it comes to the covered garage space that is owned and retained by the builder-developer team. The garages are, but those are given to max property management to rent out on a first come first serve basis. So you won't have an assigned, covered garage in your unit. Now, the city is allocating two and a quarter spots per unit, one of those covers. So we'll do some covered parking, and then some uncovered parking. So you have two and a quarter spot per unit typically is what we see here in Utah to answer that question. So I'm that was from Dan, who? We had a great lunch a couple of months ago back in San Francisco. Thanks again for that. Dan. I'll see you again soon. Then another question that we got emailed in. And we were going to take time for those but we don't have we're almost out of gas here. We'll do this last one, and then please reach out. We'll give you instruction instructions on that.

What happens when if the builder doesn't finish on time? What happens? Are we stuck here? What happens?

No. So what happens is if we go over the 12 months with the builder goes over the 12-month timeframe that's listed in the contract, they will pay you a prorated amount for the 30 days or whatever that amount is over, but for 30 days, it's $500. doors. So for a 4plex, you're looking at $2,000 for every 30 days that they go over, and that usually comes, it's a little bit delayed. But Brian Chanel, our Director of what is fresh out of operations is the one that will be sending out those checks out there. So yeah, you will be compensated for that. And it is written in the contract.

Chase, how do you handle the I mean, we've got 100 doors that are going to come online within a 90 day period. Right? How do investors know we got this question that we're not playing favorites, right, that we're not giving them the best units first to our favorite client or whatever, because apparently we have favorite clients.

So it depends on when the CFO certificate of occupancy is received with Max property management, and then once they get that building will start to lease up your unit, according to when it was received. If you're a building number a You received it for building number B, and they would lease-up at least one of your units before building number B, and then they'd go on to the next one, right over when a tenant comes in, and they'll be marketing for those 10s. And hopefully, they have a good database of potential clients for that, they'll start to show them those properties, they still have the option to go with whatever property that they would like. So that's why we talked about the upgrades a little bit, and how that can be a little bit tricky depend on what you decide to put in your unit.

Right? Right. So essentially, out of the units that have obtained CFO, certificate of occupancy, and that could be a quarter of the project, half of it, it could be all of it. The management is always rotating tenants through, right to make sure everybody goes around and gets a tenant. And then they come back around again and then this is out of the available units. So this can kind of ebb and flow, right? time of year, how many units are getting their CFO? It's a moving target. And I think it's a good way for investors to be prepared. It's a lot like we built an apartment complex, right? That we're going to fill them up. And typically we get multiple leases per week. And that's good. But you might not be feeling so good if one of them wasn't your units, right. So call us and talk to us about what the traction is on lease-up so you can know Okay, this is leasing up, we're going in the right direction and will tell you all about the marketing that's happening. To do that, I would just add it.

So let's say that you're in that first 25% batch of completed units. The management team is going to bring people to your units, hey, this one is available, right? And they try to do that in that round-robin method. However, there are some discrimination laws and things that they can't do. If somebody looks at your unit and they don't like it. Because you ignored our advice on upgrades or something hint, okay. But if they don't like it, There's nothing that prevents the manager from saying, Well, yeah, there's this other one too. Or if they point in, they say, Well, what about that one over there, that stuff can do happen. So we try to really do our best to optimize your ability to lease up as quickly as possible.

But also remember that the very beginning of this the initial improvements, the stabilization cost, if your budget for stabilization is going to be fine. You'd be able to carry yourself through that, that initial lease-up period. I think that's all the time we have for questions now. And I wish we could do more. But if you want to reach out and discuss Pineridge Farms, or anything else coming up from FIG, and right now we're mopping up some reservations in Laguna Farms in Nampa, Idaho. We're recording this webinar early in 2020. I can't believe it's 2020. But those, the availability for that is later I think mid-fall of 2020.

So there's I mean, most of that's gone. We have some units still available in the later phases of Starwood Farms in Cypress, Texas that should be starting construction within the next 60 to 90 days. So that could be a good 1031 option. If you're looking to do something quickly and so could this one Pineridge Farm start in March. So if you've got 1031 exchanges on the brain, this is an excellent project for you to keep in mind. And then of course, please stay tuned in the next two to three weeks I think will launch El Mirage, Arizona, our very first project down there in Arizona. So lots of other options too. We'd love to have you in this one because I think when you look at pace and Pineridge Farms and that area with FrontRunner and the expansion in three years, you won't even recognize it. It's going to be a completely different place and a lot of people living there and some great cash flow for the investor.

Enjoy your day. Enjoy your weekend and happy investing!

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