OfferingMemorandum

Mill Garden Apartments 13 Units | $2,537,28435 SW McKinley Ave., Bend, Oregon

Dan Kemp, Broker | Jay Lyons, SIOR, CCIM Grant Schultz, Broker600 SW Columbia St., Ste. 6100 | Bend, OR 97702541.383.2444 | www.compasscommercial.com

NEWLY RENOVATED!

54% LEASED

FULL RENOVATION DETAILS AVAILABLE ON PAGES #4–5

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Table of

Contents

SECTIONS PAGE

Property Overview ..........................3Opportunity Details & Aerial ...............................3Executive Summary ................................................4Renovation Photos ..................................................5

Financial Information ......................6Rent Roll ....................................................................6Annual Property Operating Data .......................7

Regional Overview ...........................8Aerial Map ..................................................................8Bend, Oregon Profile ..............................................9Central Oregon Profile .........................................10

Notices ............................................. 11

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Mill Garden Apartments

Property

Overview

Opportunity Details

Site Address: 35 SW McKinley Ave. Bend, Oregon

Tax Lot: 181205DA05500

Zoning: Residential Medium Density (RM)

Site Area: 0.67 Acre Total

Bldg. Size: 10,840 Gross SF

Built: Between 1979 and 1999

Renovated: 2019

Buildings: 3 fourplexes, 1 detached house

Units: 13

Unit Mix: (12) 2 bed/1 bath units (1) 2 bed/1 bath detached house

Cap Rate: 5.25%

Price: $2,537,284 ($195,176/unit)

Property Overview

Opportunity Details & Aerial

Property Aerial

*The price per unit is high due to the value of the single family home. This is also supported by the Income Approach to value with higher rental income on the home and lower repair and maintenance costs of the entire project due to the recent full scale renovation.

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Property

Overview

Executive Summary

The PropertyThe Mill Garden Apartments (formerly Rose Garden Apartments) consists of 13 rental units comprised of three fourplexes and one single-family home. Each fourplex has four identical two-bedroom, one-bathroom apartments with a shared laundry room on the second floor. The single-family detached house features two-bedrooms, one-bathroom, its own laundry room and four mini storage units accessible from the exterior of the building.

LocationThe property’s central location provides easy access to the Old Mill District, Downtown Bend, OSU-Cascades and Highway 97 via Reed Market Road. The Mill Garden Apartments are just a few blocks east of the Shops at the Old Mill and are surrounded by a neighborhood of multifamily and single-family residential uses.

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Recent RenovationPacific Construction and Development (www.pacific-cd.com) recently completed a full remodel of all 13 units. The renovation included the following new upgrades in all units:

• Vinyl plank flooring

• Interior paint

• Quartz kitchen counter tops

• Refurbished upper and lower cabinets

• Stainless steel appliances

• Stainless steel hood with new venting to the exterior of the building

• PTAC Unit for heating and AC in the living room

• Cadet heaters in the kitchen and bathroom

• Energy efficient base board heaters in each bedroom

• Panasonic whisper fans in the bathrooms

• Refurbished bath tubs

• Fresh new bathroom fixtures and hardware

• New bathroom counter tops

• Upgraded electrical circuits

• Modern lighting fixtures

Executive Summary

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Property

OverviewRenovation Photos

Renovation Photos

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Financial

Information

#Unit Size

Status Rent/Mo. Rent/Yr.

1 2X1 Leased $1,275 $15,300

2 2X1 Leased $1,275 $15,300

3 2X1 Leased $1,275 $15,300

4 2X1 Leased $1,275 $15,300

5 2X1 Leased $1,275 $15,300

6 2X1 Leased $1,275 $15,300

7 2X1 Available $1,275 $15,300

8 2X1 Available $1,275 $15,300

9 2X1 Ready 4.05.2019 $1,275 $15,300

10 2X1 Ready 4.05.2019 $1,275 $15,300

11 2X1 Ready 4.05.2019 $1,275 $15,300

12 2X1 Ready 4.05.2019 $1,275 $15,300

HOUSE 2X1 Leased $1,400 $16,800

$16,700 $200,400

Actuals

Financial Information

Rent Roll

The renovation was completed one fourplex at a time. The first fourplex and single-family home were completed on March 1st and all five units have been leased. The second fourplex was completed on March 25th and two of the four units have been leased.

The third and final fourplex was recently completed at the beginning of April, leaving a total of six vacant units. Bend’s peak rental market is April to July, and we estimate the property will be fully stabilized before closing.

Trailhead Property Management is handling the leasing and recently increased the asking rents on the final six vacant units from $1,275/mo. to $1,350/mo., basing the decision on the quick lease up of the first seven units.

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Financial Information

Annual Property Operating Data

Financial

Information

Per Unit

Scheduled Base Rental Revenue $200,400 $15,415.38Laundry $700 $53.85POTENTIAL GROSS REVENUE $201,100 $15,469.23 - Vacancy ($10,055) 5.00% ($773.46)EFFECTIVE GROSS INCOME $191,045 $14,695.77

Management $15,227.60 8.00% $1,171Cleaning, Maintenance & Landscaping $7,500.00 3.93% $577Repairs $5,731.35 3.00% $441Utilities $12,000 6.28% $923.08Insurance $2,387 1.25% $183.62Property Taxes $13,081 6.85% $1,006.24Reserves $1,910 1.00% $146.96TOTAL OPERATING EXPENSES $57,838 30.27% $4,449

OPERATING EXPENSE RATIO 30%

NET OPERATING INCOME $133,207 $10,246.73

Pro Forma Value:

Cap Rate:# Units

Value Per Unit

5.25%

13

$195,176

Income

INCOME

EXPENSES

VALUATION

$2,537,284

Below is the valuation for the property with a standard 5% vacancy factor. Lower than standard numbers were used for repairs and maintenance (3% is used, 7% is typical) and replacement reserves (1% is used, 2% is typical) to account for the full remodel which has returned the property to like-new condition. An expense ratio of 30% is more achievable with fully remodeled apartment units that will not require the same amount of repairs and maintenance as older, non-remodeled units.

Sewer and water are not currently being billed back to the tenants. Doing so represents upside to the new buyer. If the remaining six units are leased at the advertised rate of $1,350, the cap rate increases from 5.25% up to 5.43%. If sewer and water are billed back to the tenants, the utilities would be decrease from $12,000 to roughly $6,000 resulting in a cap rate of 5.66%.

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Regional

OverviewRegional Overview

Aerial Map

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Unlike resort communities such as Aspen or Jackson Hole, Bend’s lifestyle and quality workforce is a draw for many successful companies in the aviation, manufacturing, renewable energy, high-tech, healthcare and recreation equipment sectors. Many of Bend’s companies are owner-operated and in the small to midsize range, typically with 10 to 50 employees. Companies like Breedlove Guitars, G5 Search Marketing, Deschutes Brewery, Hydro Flask and Bend Research provide solid employment and bring in vital traded-sector dollars to Bend’s economy.

SOURCE: http://www.edcoinfo.com/communities/bend-profile/

Bend, Oregon Profile

Situated on the eastern edge of the Cascade Range along the Deschutes River, Bend joins forested mountain highlands and high desert plateaus, offering a diverse range of scenery and outdoor activities. The largest city in Central Oregon, Bend is the commercial, recreation and social center of the tri-county region and also serves as the county seat of Deschutes County. It covers 32 square miles and sits at an elevation of 3,625 feet. Bend is noted for its scenic setting and year-round recreational activities.

LIFESTYLE

Bend has a deserved reputation for attracting lifestyle migrants — urban dwellers who seek amenities typically associated with a larger metropolitan area, but yearn for the recreational pursuits of the great outdoors, a beautiful setting, and an accessible community feeling. As such, the city attracts families and entrepreneurs from all of the West Coast metro areas and some from other major population centers. Many residents remark that despite its population size of 82,000, Bend has retained its small town atmosphere and ‘feels’ smaller than its size would suggest. The city has been adopted as a gateway for many outdoor sports, including mountain biking, skiing and snowboarding, dog sled racing, fishing, hiking, rock climbing, white-water rafting and golf. There is also a sizable cluster of individuals drawn to Bend for artistic pursuits, ranging from photography to sculpture, from water color to metal working. Bend’s beer brewing industry and restaurant scene is also a draw for tourists and locals.

DEVELOPMENT

Economically, Bend started as a logging town, but began a transition to a more varied, sustainable economy in the 1980’s when it became apparent that the lumber mills would no longer be vital. Economic Development for Central Oregon (EDCO) was born in the dark days of the 1980’s, when many downtown businesses were boarded up.

Regional

Overview

Bend, Oregon Profile

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Regional

Overview

Central Oregon Profile

The cities and communities that comprise Central Oregon are Bend, Redmond, Sisters, Sunriver, Prineville, La Pine, Madras, and Warm Springs.

Central Oregon has led the state’s population growth over the last two decades; in fact, Deschutes County continues to be one of the fastest growing areas of the country. A lesser known fact is that our region has also topped the state in job growth over the past ten years, creating a region that’s characterized by dynamic small businesses and entrepreneurial activity. The region boasts strong clusters in high technology (software, hardware and energy), advanced manufacturing, biosciences, renewable energy, brewing & distilling, value-added food products, and recreation equipment.

For most new residents, Central Oregon is a lifestyle choice, offering a friendly environment, year-round recreation options, and world class amenities — all with a hassle-free, small town feel. From a ranch in Prineville to an upscale urban condo in Bend, the region presents a rare diversity of places to live.

The region is served by Roberts Field, a commercial airport offering service at Redmond Municipal Airport (RDM, www.flyrdm.com) provided by American Airlines, Alaska Airlines, Delta and United. These carriers offer approximately 21 commercial flights daily to and from San Francisco, Portland, Seattle, Los Angeles, Salt Lake City, Phoenix and Denver.

Six major public school districts serve over 32,000 students; there are also 30 private schools in the region. The region is also home to Central Oregon Community College (COCC) and Oregon State University – Cascades, a four-year university.

SOURCE: http://www.edcoinfo.com/communities/

Sisters Downtown

OSU Cascades in Bend

Redmond Airport

Bend Downtown and Mt. Bachelor

Central Oregon Profile

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NoticesNotices

DISCLAIMER: The information contained herein has been given to us by the owners of the property or obtained from sources that we deem reliable or are based on assumptions that are considered reasonable and accurate. Although the broker has used reasonable care in obtaining data and making estimates and the projections based upon this data, this material is submitted without representation or warranty.

This brochure has been prepared solely for informational purposes to assist a potential purchaser in determining if there is a desire to proceed with an in-depth investigation of the property. Neither the Sellers nor any of its officers, employees or representatives make any representation or warranty, expressed or implied, as to the accuracy or completeness of the information set forth in this Offering Package or any aspect of the property of improvements herein. Interested parties are expected to review, independently, all documents and other matters relating to the property and improvements in order to verify the accuracy and completeness of the information contained herein.

DAN KEMP, BROKER | dkemp@compasscommercial.com JAY LYONS, SIOR, CCIM | jlyons@compasscommercial.com

GRANT SCHULTZ, BROKER | gschultz@compasscommercial.com

Brokers are licensed in the state of Oregon

EXCLUSIVE: The property represented herein is exclusively listed for sale by Compass Commercial Real Estate Services. All negotiations for the purchase shall be conducted through Compass Commercial Real Estate Services.

Please do not disturb tenants or management.

Questions concerning this offering should be directed to:

www.compasscommercial.com

541.383.2444