Q2DLPCapitalAdvisorsRecap
Q22017Recap
Q2wasthebestQuartertodateforDLPCapitalAdvisorsintermsofourcompanygrowth,beatingourpreviousrecordinQ12017bymorethan$1.5M.Someofthekeyhighlightsinclude:
· Anotherrecord-breakingquarterforDLPCapitalAdvisorswithover$14.5Minvestedfromexistingandnewinvestorsincluding34newinvestors.
· ThefirstacquisitionfortheEquityFundIIwascompletedinTitusville,Florida· Record-breakingloanfundingQuarterwith81loansFundedfortotalloanfundingsover
$10.99MillioninQ2.· SuccessfulAcquisitionofnearly500apartmentsacross3states&4markets.· KeyHires:JamesShearer,VPofMulti-Family;CarlosChirino,SeniorAcquisition,Renovation,
andMaintenanceProjectLeader;andMattJohnControllerQ2FundPerformance
• 13.95%annualizednetreturntoinvestorsintheDLPFixedFund • 13.09%annualizednetreturntoinvestorsintheDLPLendingFund • 12.56%annualizednetreturntoinvestorsintheDLPIncome&GrowthFund • 9%AnnualizedPreferredReturnfor2016achieved&distributedtoinvestorsintheDLPEquity
FundI,LP • FixedReturnspaidtoallinvestorsrangingfrom6.5%-12%
Q22017MarketReview
Q2of2017wasastrongmarketonmanyfronts.Therealestatemarketcontinuestobedrivenbysupply&demand,withsupplyinQ2atabout3monthsofhomesonthemarket.Thisismorethana30%declinethan1yearago;whichwasatthetime,analltimelow.Despitethelackofsupply,salesvolumestillmanagedtoincreaseby5.4%,slightlyexceedingtheexpectationwesetof3-5%.Homepricesgrewsignificantly–up5.7%fromQ2of2016,nearlyexactlythesamepricegrowthaQ1,withanannualyearoveryearsalespricegrowthof5.7%,onpacetobethelargesthomepricegrowthyearoveryearsince2005whichisrightinlinewithour4-7%projection.Homessoldata15%fasterrateinQ22017vs2016,withanaveragetimetosellofjust47days,andevenmoreimpressive–amediantimeonmarketof18days!
InLehighValley: 2017Q2 %Change YTD %Change Numberofhomesales 2341 +5.4% 3,800 +.4.36% Averagehomesaleprice $185,000 +5.7% $209,329 +5.7%Averagepersq.ft. $104.73 -4.12% $103.18 -.04%
Q2RehabFundingMarketRecap
Therehabmarketremainsverystrong.Renovatedhomesaresellingveryquicklyinmostmarkets,ofteninunder3weeks.Thevolumeofinvestorscontinuestogrowaswell,whichistypicalinastrongmarketliketoday.Theprimarychallengeofmostinvestorsisfindingopportunitiesordeals.Wecontinuetobuildmorestrongrelationshipswithborrowers;growingourpoolforpotentialloans.Ourprimarychallengeinourbusinessdevelopment&growtheffortsisthatmoreandmorelendersareenteringthebusiness&continuingtogetmoreaggressiveintermsofpricing,butevenmorecriticalintermsoftheirguidelines.Weareseeinglendersoffer100%ofpurchase&renovationcosts;loosencreditguidelinesorinsomecasesnearlyremovethem;removepersonalguaranteerequirementsetc.DLPisnotwillingtochasebusiness&lowerthequalityofourloansdespitethesemarketconditions;andwillcontinuetofocusit’seffortsonexperienced&liquidcashstronginvestors.
Q32017RealEstateMarketOutlook WeexpecttoseeacontinuedrecordlowinventoryavailablehomesintheLehighValley,aswellasmostmarketstheDLPInvestorsand/orlendsinthroughouttherestofthisyear.Wealsoexpecttoseesalesvolumecontinuetogrowbetween3-5%alongwithhomepricegrowthof4-7%Q3overQ3.Asfortherentalmarketweexpectrentstoincrease3-5%Q32017overQ32016.,alongwithcontinuedstrongoccupancylevels&rentaldemand.Lastly,weexpectinterestratestocontinuetocreepupslightly;betweena¼&½percentincreasefromtheendofQ2.Weareinaverystrongmarketonboththehomesaleaswellasrentalmarkets.Supplyanddemandisverymuchworkingininvestorsfavoronboththesales&rentalfronts.
OverallMarketExpectationsComparedtoQ1
Sale
Volume Supply Prices Interest
Rates RentalOccupancy Rent
Price
Q3DLPCapitalAdvisorsOutlook
Q2issettobeanotherrecord-breakingquarterforDLPCapitalAdvisors.
DLPCapitalAdvisorsisraisingcapitalandgrowingtheDLPLendingFund;theDLPIncome&GrowthFund;andthenewDLPEquityFundII,LLC.Inaddition,theDLPIncome&GrowthFundNoteinvestmentwillprovideinvestorswithadditionalopportunitiesforfixedreturnsbetween6.5and10%.
DLPCapitalexpectstoachieveourtargetedreturnsinallfiveofourFundsinQ2:
• LendingFund(11+%) • FixedFund(11+%) • Income&GrowthFund(11+%) • EquityFundI(22-25%annualaverageoverthe5-7yearFund) • EquityFundII(17%annualaverageoverthe8-10yearFundw/8-9%distributedannually,paid
quarterly)
DLPCapitalexpectstoraiseatleast$15,000,000innewcapital,including$5,000,000intotheDLPEquityFundII.
DLPexpectstoacquireover500apartmentunitsandhomesinQ1aswellasoriginatemorethan$50,000,000innewLinesofCreditand90Loanstorealestateinvestors.Thisisexpectedtobethebiggestquartertodateforbothacquisitionsandlending.
Lastly,DLPCapitalwillberollinganewinvestorportalcalledDLPCrowd.comwithdrasticallyimprovedinvestorreporting;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,muchofthat$20,000wouldbeshelteredfromtax.AttheendoftheFundwhenwesellofftheproperties,you’llbetaxedatlong-termcapitalgains,whichiscurrentlyroughlyhalfofwhatmarginaltaxbrackets,areformostinvestors.Plus,youwereearningreturnsforeachofthoseyearsonthefundsthatyouwouldnormallypayintaxeseachyear.
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:$900,000
Value:$1,780,000
LoantoValue:50.56%
LoantoCost:79.07%
BorrowerCreditScore:719/738
BorrowerExperienceLevel:TheBorrowerisanexperiencedrealestateinvestorandlineofcreditBorrowerthathascompletedmultiplesuccessfulflipswithDLPinthepast2years
BorrowerNetWorth:$1,620,000
InterestRate:11.99%
LengthofLoan:6months
ResultofLoan:TheBorrowerwasabletosuccessfullycompletetherenovationstothepropertyandlistitforsale.Theloanhasbeenpaidoffinfull,andthepropertyiscurrentlyonthemarketforsale.
BEFORE
AFTER
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,theFundinvestsintosingle-familyrentalsandotherincomeproducingrealestate.TheFundleveragesDLP’sinhousepropertymanagementandconstruction/maintenancedivisionstomaximizethevalueandcashflowoftheassetsundermanagement.TheFundhasa10-yearinvestingperspective,focusedongeneratingdouble-digitassetlevelcashflow,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
DLPoffersnote(debt)investmentoptionswithineachoftheDLPFundsinadditionaltoonaseparatelymanagedaccountbasis.Thesenotesoffer7-10%fixedreturnsw/alowLTV.Primarily,thefund’sassetsarefirstpositionrealestateloans.Thenoteinvestorsareinthe“firsttobepaid”position&ineffectareinthelowestriskpositionofalltheDLPinvestmentofferings.
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
DLPRealtyonTargetforRecordSettingYear!
Settingouttohave1,250salesattheconclusionof2017,DLPRealtyisontracktohitthatgoalwithalreadyexecuting600saleshalfwaythroughtheyear.
"Q3ispoisedtobeourbiggestquartereverwithafocusongeneratingtoplinerevenueandprovidingcustomerswithWOWexperiences.Wewerealsorecognizedasbeingthe#9RealEstateteaminthecountrybytheWallStreetJournal."
-JonathanCampbellSalesManager,DLPRealtyDLPCapitalAdvisorsopensSt.AugustineBeachOffice
DLPCapitalopensanewofficejustoffthebeachlocatedonSA1AinSt.Augustine,Florida.
DLPCapitalWelcomesNewInvestors!
DLPwelcomed34newinvestorsinQ1.Over$14.5MMwasinvestedfromnewandexistinginvestors.
DLPBuildersSurpassestheirMid-YearGoal!
LarryGreenberg,VPofDLPBuildersreportshisteamhassurpassedtheirmidyeargoalof$7Mby$2M.Theyalsohitarecordvolumeofunitsrenovated,breaking200unitstotal.
DLPPropertyManagementHittingContinuedHeights
OurpropertymanagementdivisioncontinuestogrowasDLPacquiresmoreapartmentcommunitiesincludinggrowthintoGreenwood,SC,Brunswick,GA,Columbus,GA,Titusville,FL,andGreensboro,SC.Inaddition,DLPPMachievedthehighesteffectiveoccupancyeveracrosstheportfolio!DLPInteractiveMediaSigns1/2Million-DollarDeal!
Becomingathoughtandstrategyleaderintheprivatecapitalraisingspace,DLPInteractivesignedadealthispastJunewithaprivateinvestmentcompany.
Withproveninboundleadgenerationcompletedintargetedmarketing,DLPwillbeactivelydrivinggeneratedleadstothisprivatecompany'supcomingseminarsandevents.
New&ImprovedDLPCapitalInvestorPortalNowLive!
Atlonglast!DLPCapitalhasfinelytunedandtestedamuchimprovedandadvancedplatformfornotonlyourexistinginvestorstologinatanytimetoviewtheirinvestmentaccountactivity,butforourprospectiveinvestorstonavigatethrough&exploreinvestmentopportunitieswithDLP.
Viewallofouravailablefunddetails,previousquarter'sreporting,auditreports,investortestimonialsandmoreatinvest.dlpcapitaladvisors.comtoday!
DirectLendingPartnerContinuesRecordGrowth
DirectLendingPartnercontinueditstrendofrecordgrowth.TheLendingFundclosed75loansinQ2comparedto61loansclosedinQ1.The75loansclosedinQ2marksanewall-timerecordfortheLendingFund!
DLPRunNews
Markyourcalendars!OurannualDLPRunwillbeonSunday,November12th,2017.AllproceedsgototheValleyYouthHouseorganization.
Visitwww.DLPRace.comtoday!
TeamMemberSpotlight
Barry DeGroot General Counsel and Partner at DLP Capital Advisors
WhendidyoustartworkingatDLP?About31/2yearsagoWhatdoyoufindmostchallengingatDLP?Themostchallengingaspectformeisthefastpacedenvironment,whichisanintegralpartofthecompany'scontinuedgrowthandsuccess.Althoughitcanbechallenging,itisequallyrewarding.WhatisyourfavoritepartaboutworkingatDLP?MyfavoritepartofworkingatDLPisthecompanyculture.Everyoneinthecompanyisextremelysupportiveofoneanotherandsharethecompany'scorevaluesandgoals.It'sanenvironmentwhereeveryoneissuccessorientedandthrivestohelponeanotherandthecompanysucceed.WhatadvicedoyouhaveforfutureDLPemployeecandidates?Ifyouaretrulysuccessoriented,sharethecompany'scorevaluesandvisionandarewillingtoinvesttimeinyourpersonalandprofessionaldevelopment,acareerwithDLPwillofferincrediblerewards.
--OnamorePersonalNote--
Whatisyourfavoritequotethatyouliveby?"Youcan'tbuildareputationonwhatyouaregoingtodo."-HenryFordWhatarethe3topitemsonyour"BucketList"?AfamilyvacationinAmsterdamandtheNetherlands|Spendaweekwithoutmycellphoneorinternet|ProduceaCDofmymusiccompositionWhathobbiesand/orsportsareyouinvolvedin?Ienjoycomposingandplayingmusic(pianoandkeyboards)inmysparetime.Whathavebeenthetop(3)highlightsofyourlife?Thebirthofmyson,Blake|Myweddingdayandmarriagetomywife,Liz|JoiningDLP(andI'mnotjustsayingthisbecausethebossmightreadit)Tellus(1)randomfactaboutyourself.I'manightowl(butworkingonchangingthat)
InvestorSpotlight
Neal & Karen Nicholas Inthetimeyouhavebeenwithus,tellushowDLPhasimpactedyou?Mr.Nicholas:"Well,certainlytheinvestmentportionwasabigconcernforusandwatchingthedistributionscomebackwewereobviouslyveryconcernedwiththekindofreturnsweweregoingtoget,andweareverypleasedwiththewaythingshavepannedout.TheabilitytodiversifywithdifferentfundsthatareavailablethroughDLP,wehavebeenveryhappywithit." Inyourexperience,howdoesDLPdifferfromotherinvestmentopportunities?
Mr.Nicholas:"ThewholeDLPFamily,Don,hasbeenveryaccommodatingandhaveexplainedeverything,anyquestionswe’vehad.Ithasbeenverythorough.So,we’vebeenverypleasedwiththewaythingshaveprogressed.Ascomparedtoourinvolvementwithpastfinancialadvisors,wewereneverpleasedwiththeperformances(ofpastadvisors)andallthehiddenfeesthatcometothesurfacewhenyougetyourstatementsatyearend,attheendofthequarter,ormonthly.WehavebeenveryhappywiththewaythingshavebeenhandledatDLP."Mrs.Nicholas:"Forme,integrity,knowledge-base,trust...areallveryimportantandIfoundallthosethreethingswithallthepeoplethatwehavedealtwithatDLPandthathasmadeatremendousdifferenceforme." Thankyouforyourtime,doyouhaveonefinalthoughtyoumightsharewithusinregardstoyourexperiencewithDLP?
Mr.Nicholas:"Iwouldsay,tothosepeoplethatarethinkingaboutit,tohaveameetingwithLarryHickernellorDonWennerorsomeoneelseinvolvedwithDLPandjustsitdownandlistentothem,andseewhattheyhavetosay.Then,makeupyourmindforyourselfifitissomethingthatwouldworkforyou.Forus,wearenearingretirementandwewerelookingforsomethingthat’sgoingtohelpsupplementourretirementandthatiswhywebecameinvolvedwithDLP.Iwoulddefinitelyrecommendittootherpeople!"
Management
DLPCapitalAdvisors,LLC701W.BroadSt.,Suite203
Bethlehem,PA18018www.dlpcapitaladvisors.com
ContactInfo
DonWenner,CEOOffice:(610)488-2375Direct:(484)542-2868
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Saturday, October 28th | Pennsylvania
Register online at www.DLPCapitalEvent.com
or call(610) 488-2375
