Investment Prospectus

May 20
th
2013
Minnesott Landing
Mobile Home Park
Minnesott Beach, N. C.
McNiel Enterprises, LLC
5119 Holly Lane Morehead City, NC 28557
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Minnesott Landing Mobile Home Park
Nestled in the shade between the Country Club, gated communities and the broad blue
Neuse River, this mobile home park presents a rare investment opportunity. It has 34 lots
(30 currently occupied) on 10.6 acres. There are no park-owned homes. The current lot
rent is $200. Most oI the homes are vacation homes where the owners can get away Irom
busy liIe, enjoy the views and mosey over to the Country Club Ior golI, the pool or just a
cool reIreshment.
The park Ieatures a private beach with a dock, and a Iive minute walk to the country
club. Check out the country club at: www. minnesottgolI.com. Clubhouse open to public.
Country Club Rd. Minnesott Beach, NC
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Minnesott
Landing
Park
McNiel Enterprises, LLC
McNiel Enterprises (the Company) is Iocused on purchasing, developing and
managing mobile home parks and other similar real estate in eastern North Carolina.
We have been in business since 2008 and have developed expertise in assessing and
pricing deals, park improvement and park management.
Our team currently manages nearly 100 lots and has the tools and personnel to
double that without signiIicant additional expense. We have existing systems Ior
handling matters with experience and eIIiciency; anything Irom negotiating local
political relationships to the details oI landscaping and legal pursuit oI rents.
Our Management Team consists oI:
Paul McNiel, CEO
T.J. Jackson, Manager
Harvey Mabe, Technician
In addition, we have a network oI contractors in the area who can provide specialized
services when needed.
Park Management
The Minnesott Landing park will be managed by the Company. The Park will not
require continuous onsite management presence because: 1) there are no park-owned
homes, 2) many tenants are part-time and 3) the neighborhood is oI the highest
quality, so there is less need Ior security.
Management requirements will include: collecting/enIorcing rent payments, regular
park inspection, addressing occasional inIrastructural problems (water leaks, septic
tanks pumped, road maintenance requests) and landscaping.
These management tasks can easily be absorbed by The Company`s existing
Management Team.
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Proposed Improvements and New Rent Schedule
There are currently 4 unoccupied lots. Our plan is to Iill those lots within the Iirst
six months. For modeling purposes we assume a 5 vacancy rate. We are
budgeting $5,000 in initial improvements to help justiIy rent increases. In
addition, we have budgeted $10,000 out oI the Iirst year`s proIits to oIIset costs
associated with Iilling lots, etc.
Lot rent is currently $200. Based on area comps oI similar waterIront parks,
we believe the market will bear an increase to $235 aIter one year, the 3 average
rent increases aIter that. Many oI the tenants` Iriends and socioeconomic peers are
neighbors who are paying much more than that just in taxes Ior their homes.
Most oI the homes are well cared Ior older homes and many have built on
additions. We expect all the tenants will stay with the new rates. II a Iew decide it
is too high, the most likely option Ior them is to sell their trailer. Moving an older
trailer is expensive, and to where would they move it?
The Park has a low expense ratio Ior several reasons. Primarily, it is a land-
lease park; home maintenance is not a part oI the budget. Homes that come into
Park ownership will be sold and any improvements recaptured in that sale.
The Iact that many oI the homes are 'vacation homes reduces the park costs
because oI the inIrequent use oI services.
Most above expenses can be signiIicantly reduced. We have already negotiated
a competing trash service bid at a nearly 30 discount. In addition, trash
service may be done more eIIiciently by scaling back to bi-weekly in the winter
months.
The water bill is currently manageable, but aIter the second year Lots will be
sub-metered and usage will be billed back to tenants.
The Company`s Management team is will absorb most oI the landscaping costs
at little expense, Ior an average 50 saving. These savings will be applied to a
capital reserve account oI $2000/year and a $350/ year General Liability
Insurance policy. We have budgeted $500/mo to cover marginal expenses.
Expenses
eeeeeee 2222 sessssesssse
County Real Estate Taxes $3,720.11 Fixed Ior next 8 years
Waste Disposal $2610.00 We have negotiated cheaper service.
Water $1712.17 Eventual sub-metering
Electricity $664.00 Area Lights
Landscaping/Tree Care $3400.00 50 savings by using our Team
TOTAL 12,106.28 Just over $1000/month
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Company Plan and Financials:
The Company has a contract to purchase the park Ior $525,000. An additional
$5,000 will be set aside Ior capital improvements. The project will be Iinanced
with a 80 LTV loan at a 5 interest rate and 15 year amortization schedule,
which has been provisionally approved by BB&T.
While this is an excellent cash-Ilow
investment, we have included below the
return on selling the park under likely
market conditions anytime in the next 8
years. The Iigures shown are Ior selling
with a Iuture sale price calculated based on
a 10 cap (Priced Ior 10 Net Annual
Return). We believe that a 10 cap is a cheap
valuation Ior waterIront property zoned
MultiIamily in an upscale area.
Rents will be increased at the start oI the
second year to $235. They will be
subsequently increased an annual 3 rate.
Operating expenses are estimated at
$19,000/yr ($13,000 $6,000 buIIer),
growing at 5 aIter the second year.
6
15 yrs Loan Duration
5% nterest Rate
$420,000 nitial Debt
$110,000 nitial Total Cash Outlay
$5000 nitial Capital Expenses
5% Operating Exp. Growth
$19,000 nitial Operating Exp.
$39,856 Debt Service
5% Budgeted Vacancy
34 Number of Lots
3% Annual Rent ncrease
$235 Rent, Year 2
$200 Rent, Year 1
$525,000 Purchase Price
Investment Opportunity:
We are oIIering investors the opportunity to buy into the deal in increments oI $12K, Ior
which they will receive a 6 equity stake. This is a rare opportunity to get in on an
immediate cash Ilow business secured by waterIront property, with high upside and low risk.
As the graph below shows, the investor will get a very high dividend that grows each year. II
the Park is sold aIter the second year the investor will double their money.
This partnership will be structured as an LLC. All investors will be members, with McNiel
Enterprises, LLC as the managing member. Investors will receive their proportional share oI
annual distributions Irom operations cash Ilow as well as their share oI Iinal net sale
proceeds. The schedule below estimates these cash Ilows. The top section is Ior ongoing
operation, the bottom includes selling the park.
Explaining the Numbers
1. The Investor Distribution is the cash dividend: the amount the investor is projected to receive in each
given year per $12K invested under normal Park operation.
2. The Cumulative Cash Distributions simply adds up all cash dividends. For example: by the end oI year 7,
the investor will have received more than their initial investment amount back already.
3. The Distribution Yield is the annual percentage yield on your investment. By comparison, a 5yr CD at a
bank with a 1.1 APY will, in year 5, yield 1.1. ssss investment should yield over 18 by then.
4. The Cumulative Cash Distribution here is the total amount the investor will have received iI the Park is
sold, including dividends up to that point. The amount assumes a 10 Cap sale price.
5. The Total Return is the percentage return on money invested iI sold in that year.
6. The Internal Rate oI Return is the annual compounded interest equivalent. By example: a sale in year 4
would return the same total cash as iI the investment had a near 30 yield and the investor had reinvested
the interest Ior Iour years.
Exit Option
The investor may request an early Iinal distribution aIter year two and will be entitled to their principle plus
a 10 annualized compounded return.
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Presentation prepared Ior:
McNiel Enterprises, LLC
5119 Holly Ln. Morehead City, NC 28557
Point oI Contact: Paul McNiel
Phone: 252.375.4569
Email: mcniel6yahoo.com
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