q1 dlp capital advisors recap · 2017-04-18 · q1 2017 market review q1 of 2017 was a very strong...

Q1DLPCapitalAdvisorsRecap

Q12017Recap

Q1wasthebestQuartertodateforDLPCapitalAdvisorsinjustabouteverymetricyoucouldwanttoevaluatesuccessupon.Someofthekeyhighlightsinclude:

· ExceedingReturnTargetsforallofDLPCapital’sFundsincludebreakingthebestQuarterinFundhistoryfortheDLPFixedFundI

· TheLaunchoftheDLPEquityFundII,LLC&over$1,300,000raisedinthelastfewweeksoftheQuarter.

· RecordbreakingloanfundingQuarterwith62loansFundedforover$13,000,000.· FirstNorthCarolinapropertyacquired-128Unit“Cardinal”apartmentcommunity· BarryDeGroot–GeneralCouncilforDLPbecameapartneratDLPCapitalAdvisors· DLPCapitalAdvisorssuccessfullytookoverFundAdministrationfortheDLPLendingFund

LLC· KeyHires:CarlosChirino,SeniorAcquisition&ProjectLeader;FredSlayton,InvestorSuccess

Manager-DirectLendingPartner;FundingSpecialistsBrentParker,BertWatson,CraigYarnell,andBrionYarnell;SeniorUnderwriterMattPetraglia

· Nearly$13,000,000ofcapitalinvestedintotheDLPFundsby37newinvestorsand30repeatinvestors.ThiswasthebiggestcapitalraisingQuarterinDLPCapital’sHistory.

Q1FundPerformance

• 15.56%annualizednetreturntoinvestorsintheDLPFixedFund • 14.93%annualizednetreturntoinvestorsintheDLPLendingFund • 12.28%annualizednetreturntoinvestorsintheDLPIncome&GrowthFund • 9%AnnualizedPreferredReturnfor2016achieved&distributedtoinvestorsintheDLPEquity

FundI,LP • FixedReturnspaidtoallinvestorsrangingfrom6.5%-12%

Q12017MarketReview

Q1of2017wasaverystrongmarketonmanyfronts.Firstofall,realestateisamarketlikemostdrivenbysupplyanddemand.ThesupplyinQ1wasabout2.5monthsofhomesonthemarket.Thisis40%+lessthan1yearago,whichwasatthetime,thelowestinrecordedLehighValleyhistory!Thislackofsupplyhaslimitedhomessalestoremainnearlyflatwith2016intermsofnumberofhomessold(1430in2017vs1420in2016).Homepricesgrewsignificantly–up5.78%fromQ1of2016.Homepricegrowthbasedonsquarefootagethoughwasnearlyflatwith206.Inaddition,thepaceofsalescontinuestobeverystrong.Homessoldata17%fasterrateinQ12017vs2016,withanaveragetimetosellofjust64days.

InLehighValley: 2017Q1 %Change YTD %Change Numberofhomesales 1,430 +.01% 1,430 +.01% Averagehomesaleprice $197,492 +5.78% $197,492 +5.78% Averagepersq.ft. $101.48 +.005% $101.48 +.005%

Q4RehabFundingMarketRecap

Therehabmarketisverystrong.Tampa;Jacksonville;andOrlandoarerankedas3ofthetop10marketsinthecountryforrenovations,andare3ofthemarketsDirectLendingPartner/DLPCapitalactivelyisfundingloans.ThroughoutthemarketsDLPCapitalislendinginthevolumeofinvestmenttransactionsbeingdoneareverystrong,anditremainsamarketstillfilledwithopportunity,despitecontinuedvolumeofcompetitionamongsthomeflippers.Withthestrengthofmosthomemarkets&thespeedhomesaresellingin(oftenwithin3-5weeks),itremainsanexcellenttimetosellrenovatedhomesandminimizeriskofholdingontothepropertyforlongerthantargetedtimeframes.

Q12017RealEstateMarketOutlook

WeexpecttoseeacontinuedrecordlowinventoryavailablehomesintheLehighValley,aswellasmostmarketstheDLPInvestorsand/orlendsin.Inaddition,weexpecttoseeQ22017overQ22016salesgrowthof3-5%alongwithhomepricegrowthof4-7%Q1overQ1.Overallfor2017weareexpectingrecordsettingsalesvolume(3-5%over2016)and4-6%increaseinhomevaluesthroughtheLehighValley.Asfortherentalmarketweexpectrentstoincrease3-5%Q22017overQ22016.,alongwithcontinuedstrongoccupancylevels&rentaldemand.Lastly,weexpectinterestratestostayclosetowheretheyaretoday(High4stolow5s).Weareinaverystrongmarketonboththehomesaleaswellasrentalmarkets.Supplyanddemandisverymuchworkingininvestorsfavoronboththesales&rentalfronts.

OverallMarketExpectationsComparedtoQ1

Sale Supply Prices Interest RentalOccupancy Rent

Volume Rates Price Q2DLPCapitalAdvisorsOutlook

Q2issettobeanotherverystrongquarterforDLPCapitalAdvisors.

DLPCapitalAdvisorsisraisingcapitalandgrowingtheDLPLendingFund;theDLPIncome&GrowthFund;andthenewDLPEquityFundII,LLC.Inaddition,theDLPFixedFundIILLC,anoteonlyofferingwillbeliveduringQ2aswell

DLPCapitalexpectstoachieveourtargetedreturnsinallfiveofourFundsinQ2:

• LendingFund(11+%) • FixedFund(11+%) • Income&GrowthFund(11+%) • EquityFundI(22-25%annualaverageoverthe5-7yearFund) • EquityFundII(17%annualaverageoverthe8-10yearFundw/8-9%distributedannually,paid

quarterly)

DLPCapitalexpectstoraiseabout$12,500,000innewcapital,including$5,000,000intotheNewDLPEquityFundII&$2,500,000intothenewDLPFixedFundII,LLC

DLPexpectstoacquireover500apartmentunitsandhomesinQ1aswellasoriginatemorethan25LinesofCreditand75Loanstorealestateinvestors.Thisisexpectedtobethebiggestquartertodateforbothacquisitionsandlending.

Lastly,DLPCapitalwillberollinganewinvestorportalwithdrasticallyimprovedininvestorreporting;portfolioanalysis;andtheabilitytoseeallofyourDLPInvestmentsinonelogin.Thiswillbeincrediblypowerful,andwillalsoallowforanewautomatedinvestmentprocess,wereinvestorscaninvestthroughthesystematanytimeontheirown.

CommonlyAskedQuestions

WhydopeoplecometoDLPCapitalAdvisorsforloansinsteadofbanks?Manyreasons,threeofthebiggestreasonsare:First,banksarelimitedonlendingon“speculative”realestateIE.realestatenotleased..Second,regulationsmaketheprocessofborrowingthroughabankextremelyslow,itcancommonlytake12-15weekstocloseacommercialloan..Third,webringagreatdealofvaluetoborrowersthroughourextensiveexperience,knowledge;andresources.Weteachthem,guidethem,andprovideresourcesthatabanksimplycan’toffer

Youcharge12-15%interestrates.Doesthatmeantheloansyoufundarehighrisk?

Weunderwriteourborrowerssimilarlytothatofmostbanks,butwithevendeeperanalysisontheasset&theabilitytonothavetogetdistracted&worryabout“redtape”orsillyregulations.Inunderwritingourborrowers,weusebackgroundchecks,creditchecks,bankstatements,taxreturnscashflowanalysis,andwhatwebelievetobe“commonsense.”Inadditionweinspecteveryproperty;hire3rdpartyappraisers;doourowninternalevaluationonthevalue;evaluatethescopeofwork;thebudget;etc.Ouraverageborrowerhasanetworthofmorethan$1million,over$100,000inthebank,andovera650creditscore.

WhatarethetaxbenefitsofEquityFundII?

DLPEquityFundIIhassomegreattaxshelters.Forexample,ifyouinvested$250,000intheFundandreceivedan8%annualreturnof$20,000,mostofthat$20,000wouldbeshelteredfromtax.Weestimatethat,atmost,you’llbetaxedon$2000-$4000ofthatamountbecauseofdepreciation.AttheendoftheFundwhenwesellofftheproperties,you’llbetaxedatlongtermcapitalgains,whichiscurrentlyroughlyhalfofwhatmarginaltaxbracketsareformostinvestors.Plus,youwereearningreturnsforeachofthoseyears.

DoestheminimuminvestmentamounthavetobewithinasingleFund?

InvestmentsacrossmultipleFundsand/ormultipleaccounts(forspouses,familymembers,etc.)arecountedcollectivelytowardtheminimuminvestment.

Howdoyouverifythatyouareanaccreditedinvestor?

Fourways:1)aletterfromanadvisor(attorney;Accountant;FinancialAdvisor)statingthatyouareaccredited;2)acopyofyourtaxreturnshowingtherequiredAdjustedGrossIncome(AGI)of$200,000foranindividualor$300,000foramarriedcouple;3)Brokerage/Accountantstatementsshowingtherequiredassets;or4)filloutapersonalfinancialstatement.

DLPCapitalAdvisorsEquityInvestmentCaseStudy:

Property:VillagesatRankin,aDreamLiveProsperCommunity

Location:Greensboro,NC

Units:128Units

InvestmentDescription:VillagesatRankinis128-unitCardinalcommunityof1storyapartmenthomes.Thepropertywascapitalstarved&poorlymanagedoverthepastnumberofyears.TheoperatingpartnerpassedawayleavingaCaliforniacapitalpartnerlefttomanagethepropertyfromafar.DLPnegotiatedgreattermsonthepurchase&hasexpectationsofmaximizingtheinvestment&drasticallyimprovingcashflow&creatingsignificantequityinthepropertyviastrongleasing&effectivemanagementalongwithcapitalimprovementsincludingrenovatingasignificantnumberoftheunitsinadditiontoexteriorrepairs&cleanup.ThepropertyislocatedthecityofGreensboro,NorthCarolina.Greensboroisagrowingareathatisreinventingitselffromthetextileandfurnituremanufacturingdaysofthepast.Newcompaniesaremovingintothearea,suchasRalphLauren,HondaAircraft,TIMCO,andmanyothertransportation,logistic,aviation,andhightechcompanies.

PurchasePrice:$5,050,000

TotalCosts:$6,050,000

CapitalInvestment:$2,767,500

UnitBreakdown:

FinancialOverview:

CashonCashReturn(Year1):10.38%,nettoinvestors

TotalSevenYearProjectReturn:40.20%AnnualizedIRR

*Thesenumbersareestimatedandsimplifiedforexamplepurposes.

DLPCapitalAdvisorsLoanInvestmentCaseStudy:

LoanAmount:$68,000

Value:$140,000

LoantoValue:48.57%

LoantoCost:76.16%

BorrowerCreditScore:728

BorrowerExperienceLevel:TheBorrowerisanexperiencedrealestateinvestorthathascompletedmultiplesuccessfulflipswithDLPinthepast2years

BorrowerNetWorth:$450,000

InterestRate:13.20%

LengthofLoan:6months

ResultofLoan:TheBorrowerwasabletosuccessfullycompletetherenovationstothepropertyandlistitforsale.Fourmonthsafterclosingtheloan,theBorrowersoldthepropertyforthe$140,000appraisedARVoftheproperty.

BEFORE AFTER

CurrentOfferings:

DLPCapitalAdvisorsiscurrentlyacceptinginvestorsintotheDLPLendingFund,LLC,DLPIncome&GrowthFundI,LLC,andDLPEquityFundIILLCaswellasNoteHolders.

ThetargetedreturnsforequityinvestorsintheDLPLendingFund&DLPIncome&GrowthFundare11+%.

ThetargetedoverallreturnintheDLPEquityFundII,LLCis17%,with8-9%annualreturngeneratedduringoperationsfromrent;andtheremainingprofitsdistributeduponthesaleoftheproperties.

TheFIXEDreturnstonoteholdersare6.5-10%.

DLPEquityFundII,LLC

ThisisforAccreditedInvestorsonly*.

DLPEquityFundIIisdesignedtoprovideinvestorswithapassive,limitedpartnershipinthecoreofDLPCapitalAdvisors’directinvestmentactivities.TheFundfocusesoninvestingprimarilyintostabilizedandvalueaddmulti-familyproperties,primarily50-300unitapartmentcommunities.Inaddition,theFundinvestsintosinglefamilyrentalsandotherincomeproducingrealestate.TheFundleveragesDLP’sinhousepropertymanagementandconstruction/maintenancedivisionstomaximizethevalueandcashflowoftheassetsundermanagement.TheFundhasa10yearinvestingperspective,focusedongeneratingdoubledigitassetlevelcashflow,increasingassetvalueandprovidingataxsheltertoinvestors.

DLPLendingFund,LLCEquityOffering

ThisisforAccreditedInvestorsonly*.TheDLPLendingFundlendsshort-term,highyieldcapitaltorealestateinvestors,thusprovidingstrong,consistent,andpredictablereturns.Thefunddoesnotownrealestatedirectly,butinsteadlendscapitaltorealestateinvestors.ThisFundisahybridfund,havingbothEquityandDebtinvestmentoptions.Theunderwriting,funding,andloanmanagementisperformedandmanagedthroughDirectLendingPartnerLLC.DirectLendingPartnerhasathoroughunderwritingprocesstomakesureloansareonlymadetoborrowersthathaveahighprobabilityofsuccesswiththeproject/propertyandtheabilitytorefinancethepropertyifneeded.LoanservicingisperformedbyFCILoanServicing.

DLPIncome&GrowthFundI,LLC

ThisisforAccreditedInvestorsonly*.

TheDLPIncome&GrowthFundI,LLCisanOpportunityFundthatinvestsintoarangeofrealestatebackedinvestmentopportunitiesincludingrehab/privateloanstorealestateinvestors;loanstoaffiliatesofDLPCapitalAdvisors;investmentsintotheDLPFixedandLendingFunds;preferredequityinvestmentsandpartnerships;nonperformingnotes;andinvestmentsintootherrealestatebackedinvestmentfundsandopportunities.ThefocusoftheFundistoproducesuperiorreturnsbyhavingtheflexibilitytocapitalizeonmarketopportunitiesandinefficiencies,whilemitigatingriskthroughdiversificationandstrongassetandborrowerunderwriting.

DLPNoteOfferings

Accreditedinvestorsonly*DLPoffersnote(debt)investmentoptionswithineachoftheDLPFundsinadditionaltoonaseparatelymanagedaccountbasis.Thesenotesoffer7-10%fixedreturnsw/alowLTV.Primarily,thefund’sassetsarefirstpositionrealestateloans.Thenoteinvestorsareinthe“firsttobepaid”position&ineffectareinthelowestriskpositionofalltheDLPinvestmentofferings.

Update Rate Schedule

Past performance is not a guarantee of future performance.

* Accredited Investor Definition: For an individual to be considered an accredited investor, he or she must have a net worth of at least one million US dollars, not including the value of one’s primary residence or have income at least $200,000 each year for the last two years (or $300,000 together with his or her spouse if married) and have the expectation to make the same amount this year.

DreamLiveProsperNews

DLPRealtyhasBestQ1Ever!

Historically,DLPRealtyhasbestrecordedQ1everhavingsuccessfullyclosed238homesasopposedtoclosing204homesin2016.

DLPCapitalAdvisorsExplodes!

DLPCapitalhitsnewhighseachmonthincludingraisingover$5.9millioninMarchalone,makingthatourbestmonthever!

DLPCapitalWelcomesNewInvestors!

DLPwelcomed37newinvestorsinQ1.Over$12,900,000wasinvestedfromnewandexistinginvestors.

DirectLendingPartnerhasBestQuarterinHistory!

DirectLendingpartnerclosed62loansand17linesofcreditduringthe1stquarter,markingitsbestquarterever!

DLPPropertyManagementHittingAll-TimeHighs

Withover94%effectiveoccupancy,DLPPropertyManagementhadtheirbestmontheverinMarch!WealsoanticipateexplosivegrowthyettocomeinQ2includingpurchasingadditionalrentalunitsinSouthCarolina,Georgia,FloridaandPennsylvania.DLPCapitalContinuesitsExpansionAddingSouthCarolinatotheList!

DuringMarch,DLPsuccessfullycompletedtheacquisitionoftheVillageatGlenhaven,aDreamLiveProsperCommunity.TheVillagesisa201-unit“Cardinal”communitylocatedinGreenwood,SouthCarolina.

DLPEquityFundIIisNowLive!

TheDLPEquityFundIIisnowliveandacceptingcommitments.Wehavealreadyaccepted$1.2Millionintothefundwithanother$1Millionincommitmentssofar!

DLPEquityFundIIisdesignedtoprovideinvestorswithapassive,limitedpartnershipinthecoreofDLPCapitalAdvisors'directinvestmentactivities.TheFundfocusesoninvestingprimarilyintostabilizedandaddvaluetomulti-familyproperties,primarily10-300unitapartmentcommunities.

DirectLendingPartnerExpandstoCovertheEastCoast

DirectLendingPartnerhasjustundergonemassiveexpansion.InadditiontoPennsylvania,NewJerseyandFlorida,wearenowalsolendingtorealestateinvestorsinConnecticut,Delaware,Maryland,Virginia,NorthCarolina,SouthCarolina,Georgia,andWashingtonDC!

DLPRunNews

Markyourcalendars!ThedatehasalreadybeensettoholdourannualDLPRunonSunday,November12th,2017.AllproceedsgototheValleyYouthHouseorganization.Visitwww.DLPRace.comtoday!

TeamMemberSpotlight

Samantha Bruno Fund Accountant

WhendidyoustartworkingatDLP?May2016WhatdoyoufindmostchallengingatDLP?Keepingupwithourastoundinggrowth!WhatisyourfavoritepartaboutworkingatDLP?Yourroleisconstantlyshiftingandchanging.Youtakeonnewresponsibilitiesandfacenewchallengeseveryday-itnevergetsboring,andthat'ssayingsomethingwhenitcomestoaccounting!WhatadvicedoyouhaveforfutureDLPemployeecandidates?Askquestions.Thereisnoshortageofpeoplewillingtoteachyou-youhavetheopportunitytogrowthere.

--OnamorePersonalNote--

Whatisyourfavoritequotethatyouliveby?"Noonecanmakeyoufeelinferiorwithoutyourconsent."Whatarethe3topitemsonyour"BucketList"?Visiteverycontinent,runamarathon,andlearntosail.Whathobbiesand/orsportsareyouinvolvedin?Running,yoga,andpainting.Whathavebeenthetop(3)highlightsofyourlife?Sofar:Adoptingmydogfromtheshelter,spendingayearlivinginAustralia,andthedayImetmyboyfriend,Matt.Tellus(1)randomfactaboutyourself.Ihaveneverknownlifewithoutadog.MyparentshaddogsbeforeIwasborn,andgrowingupwealwayshadtwo.WhenIgrewup,Igotmyown.Ican'timaginenotcominghomeandbeingknockedoverwithkissesatthedoor!

InvestorSpotlight

Dave Froehlich WhenandhowdidyoufirstbecomeinvolvedwithDLP?IheardaboutDLPontheradioon790WAEBforquitesometime;mycuriositypeakedandIfirststoppedinaroundNovemberof2015andspokedirectlywithDonaboutmyoptions. HowhasinvestingwithDLPchangedyouroverallfinancialpicture?It’sbeenagreatpartnershipwithDLP;Ihavemoreflexibilityininvestingratherthangoingintorealestatedirectly,sotherearenoheadachesandI’mdiversified.Idon’twantallofmyeggsinonebasket,soit’sbeenanicealternativetothestockmarket. WhatwouldyousaytosomeoneconsideringinvestingwithDLPbutisstill“onthefence”?ReachouttoDonorLarry-bothareveryaccessibleandthey’llhelpyoulearnabouttheirinvestmenttypesandyourspecificoptions.Also,talktootherinvestors;attendtheinvestordinnersandrubshoulderswithfolksthathavebeenwithDLPlongerthanIhave.TheypassalongtheirexperiencewithDLPtootherpeopletohelpyoufeelmorecomfortable.IwouldhighlyrecommendpeoplefindingoutmoreaboutDLP-they’refullyaccreditedandRIAapproved,andthere’snoreasonwhypeopleshouldn’tatleastlookatit.Idon’tknowofanyotherinvestmentswiththegreatreturnsandsafetyDLPprovides. WhataresomeofyourfinalthoughtsaboutyourexperiencewithDLP?Ilikethatyoucanseemonthlyandquarterlyresultsandreturnsforyouraccountandforallofthefundsoverall.Also,I’mlookingforwardtolearningmoreaboutEquityFundII-itoffersdifferentopportunitiestoparticipateinDLP’srealestateinvestmentsandcanhelpescapesomeofthetaxburdenformanyindividuals.

Management

DLPCapitalAdvisors,LLC701W.BroadSt.,Suite203

Bethlehem,PA18018www.dlpcapitaladvisors.com

ContactInfo

DonWenner,CEOOffice:(610)488-2375Direct:(484)542-2868

don@dlpcapitaladvisors.com

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(610) 488-2375