Before Tax Cash Flow Projection
Apartment Development


Time		 Investment
and Sale		 Effective
Income		 Operating
Expense		 Cash Flow
Before Debt		 Debt
Service		 Cash Flow
Before Tax
Buy 0 0 0 0 0 0
2003 (5,688,200) 29,003 (42,894) (5,702,091) 3,969,281 (1,732,810)
2004 0 656,962 (100,266) 556,695 (639,664) (82,969)
2005 0 985,068 (130,670) 854,398 (426,504) 427,894
2006 0 1,011,866 (133,975) 877,891 (426,504) 451,387
2007 0 1,039,413 (137,367) 902,046 (426,504) 475,542
2008 0 1,067,730 (140,848) 926,882 (426,504) 500,378
2009 0 1,096,839 (144,421) 952,418 (426,504) 525,914
2010 0 1,126,764 (148,088) 978,675 (426,504) 552,171
2011 0 1,157,526 (151,852) 1,005,674 (426,504) 579,170
2012 0 1,189,150 (155,715) 1,033,435 (426,504) 606,931
Sell 8,831,206 0 0 8,831,206 (3,738,194) 5,093,012
Total 3,143,006 9,360,321 (1,286,098) 11,217,229 (3,820,609) 7,396,620


Rate of Return Before Debt (IRR) 16.6%
Rate of Return Before Tax (IRR) 24.9%


     


Source and Use of Proceeds --- Apartment Development
Source and Use of Proceeds
Apartment Development


Time		 Working
Capital		 Interest
Income		 Members'
Investment		 Cash Flow
Before Tax		 Distributed
To Members		 Distributed
To Manager
Buy 0 0 1,850,000 0 0 0
2003 267,120 34,269 115,661 (1,732,810) 0 0
2004 210,426 4,524 21,750 (82,969) 0 0
2005 437,289 10,758 0 427,894 (169,431) (42,358)
2006 459,283 12,157 0 451,387 (353,240) (88,310)
2007 481,896 12,714 0 475,542 (372,514) (93,129)
2008 505,147 13,288 0 500,378 (392,332) (98,083)
2009 529,054 13,878 0 525,914 (412,708) (103,177)
2010 553,636 14,484 0 552,171 (433,659) (108,415)
2011 578,912 15,107 0 579,170 (455,201) (113,800)
2012 604,901 15,748 0 606,931 (477,352) (119,338)
Sell 604,901 0 0 5,093,012 (4,955,813) (742,100)
Total 0 146,928 1,987,411 7,396,620 (8,022,249) (1,508,710)





     


Group Taxable Income Projection --- Apartment Development
Group Taxable Income Projection
Apartment Development


Time		 Taxable
Revenue		 Interest
Income		 Taxable
Expense		 Interest
Expense		 Depre-
ciation		 Ordinary
Income
Buy 0 0 0 0 0 0
2003 29,003 34,269 (42,894) 0 (22,984) (2,606)
2004 656,962 4,524 (100,266) (403,991) (110,323) 46,906
2005 985,068 10,758 (130,670) (401,633) (110,323) 353,200
2006 1,011,866 12,157 (133,975) (399,029) (110,323) 380,696
2007 1,039,413 12,714 (137,367) (396,152) (110,323) 408,285
2008 1,067,730 13,288 (140,848) (392,974) (110,323) 436,873
2009 1,096,839 13,878 (144,421) (389,463) (110,323) 466,510
2010 1,126,764 14,484 (148,088) (385,584) (110,323) 497,253
2011 1,157,526 15,107 (151,852) (381,299) (110,323) 529,159
2012 1,189,150 15,748 (155,715) (376,566) (105,726) 566,892
Sell 0 0 0 0 0 0
Total 9,360,321 146,928 (1,286,098) (3,526,690) (1,011,292) 3,683,169





     


Group Member Projection (per Unit) --- Apartment Development
Group Member Projection (per Unit)
Apartment Development


Time		 Distributed
Cash		 Ordinary
Income		 Capital
Gains		 Taxable
Income
Taxes		 Cash Flow
After Tax
Buy (10,000) 0 0 0 0 (10,000)
2003 (625) (11) 0 57 (22) (648)
2004 (118) 203 0 135 (53) (171)
2005 916 1,527 0 1,527 (605) 311
2006 1,909 1,646 0 1,646 (652) 1,257
2007 2,014 1,766 0 1,766 (699) 1,314
2008 2,121 1,889 0 1,889 (748) 1,373
2009 2,231 2,017 0 2,017 (799) 1,432
2010 2,344 2,150 0 2,150 (852) 1,493
2011 2,461 2,288 0 2,288 (906) 1,554
2012 2,580 2,451 0 2,451 (971) 1,610
Sell 26,788 0 16,694 16,694 (3,557) 23,231
Total 32,621 15,927 16,694 32,621 (9,865) 22,756


Member's Rate of Return Before Tax (IRR) 19.5%
Member's Rate of Return After Tax (IRR) 14.8%


     


Managing Member Cash Flow Projection --- Apartment Development
Managing Member Cash Flow Projection
Apartment Development


Time		 Manager
Fees		 Distributed
Cash		 Total
Cash Flow		 Taxable
Income
Taxes		 Cash Flow
After Tax
Buy 0 0 0 0 0 0
2003 0 0 0 (521) 162 162
2004 0 0 0 9,381 (2,908) (2,908)
2005 0 42,358 42,358 70,640 (21,898) 20,459
2006 0 88,310 88,310 76,139 (23,603) 64,707
2007 0 93,129 93,129 81,657 (25,314) 67,815
2008 0 98,083 98,083 87,375 (27,086) 70,997
2009 0 103,177 103,177 93,302 (28,924) 74,253
2010 0 108,415 108,415 99,451 (30,830) 77,585
2011 0 113,800 113,800 105,832 (32,808) 80,992
2012 0 119,338 119,338 113,378 (35,147) 84,191
Sell 0 742,100 742,100 772,076 (154,415) 587,685
Total 0 1,508,710 1,508,710 1,508,710 (382,772) 1,125,938


Managing Member's Present Value Before Tax @10% 727,793
Managing Member's Present Value After Tax @10% 540,054


     


Sensitivity Analysis
Apartment Development

Sitework Development Cost
versus
Member's Rate of Return After Tax

Assumption IRR
$680,000.00 15.4%
$748,000.00 15.2%
$816,000.00 15.0%
$884,000.00 14.7%
$952,000.00 14.5%


     


Sensitivity Analysis
Apartment Development

2 Bedroom 2 Bath Revenue Period
versus
Member's Rate of Return After Tax

Assumption IRR
.25 Years 15.4%
.5 Years 15.2%
.75 Years 15.1%
1 Year 15.0%
1.25 Years 14.8%
1.5 Years 14.7%
1.75 Years 14.6%
2 Years 14.5%
2.25 Years 14.4%


     


Sensitivity Analysis
Apartment Development

Net Capitalization Rate at Sale
versus
Member's Rate of Return After Tax

Assumption IRR
8% Net Cap Rate 18.2%
8.5% Net Cap Rate 17.5%
9% Net Cap Rate 17.0%
9.5% Net Cap Rate 16.4%
10% Net Cap Rate 15.8%
10.5% Net Cap Rate 15.3%
11% Net Cap Rate 14.8%
11.5% Net Cap Rate 14.4%
12% Net Cap Rate 13.9%


     


Risk Analysis
Apartment Development

Risk Analysis Assumption Lowest Likely Highest
  Structure Development Cost $200,000.00 $266,000.00 $300,000.00
  Building Skin Development Cost $400,000.00 $461,600.00 $600,000.00
  Roof Systems Development Cost $170,000.00 $206,400.00 $250,000.00
  One Bedroom Revenue Period .5 Years 1 Year 2 Years
  2 Bedroom 1 Bath Revenue Period .25 Years 1.25 Years 2.25 Years
  2 Bedroom 2 Bath Revenue Period .25 Years 1.25 Years 2.25 Years
  Net Capitalization Rate at Sale 8% Net Cap Rate 10% Net Cap Rate 12% Net Cap Rate


Average IRR 15.9%   Lowest IRR 13.2%
Standard Deviation 1.1%   Highest IRR 18.7%
     


Analysis Assumptions Report
Apartment Development

Investment Assumptions
Price of Property   None
Date of Acquisition   1 January 2003
Holding Period   10 Years
Inflation Rate   3% per Year
Sale Price Method   11% Capitalization of Last Year's NOI
Selling Costs   6%
     
Group Member's Assumptions
General Vacancy & Credit Loss   Zero
Tax Rate - First Year   39.6%
Tax Rate - Following Years   39.6%
Capital Gain Rate   20%
Cost Recovery Recapture Rate   25% - Losses Carried Forward
Present Value Discount Rate Before Debt   10% per Year
Present Value Discount Rate Before Tax   10% per Year
Present Value Discount Rate After Tax   10% per Year
     
Group Assumptions
Total Initial Investment   $1,850,000.00
Working Capital Minimum   $35,000.00
Working Capital Maximum   $35,000.00
Working Capital Interest Rate   5% per Year
Managing Member Loan Interest Rate   Members are Assessed
Managing Member Tax Rate   31% per Year
Number of Units Issued   185
Cash Distribution Pattern   Yearly in January
     
Distribution Assumptions
Cash Distribution Start Date   1 January 2004
Preferred Return to Members   None
Cash to Members   80%
Net Taxable Income to Members   80%
Investment Return to Members   100% of Investment
Sale Proceeds to Members   80%
Capital Gain to Members   80%
     
Land Development Spending Assumptions
Development Cost   $2,850,000.00
Depreciable Life   Non-Depreciable Asset
Depreciation Method   Straight Line
Include in Draws   50%
Expenditure Start   1 March 2003
Depreciation Start Date   1 October 2003
Expenditure Months   1 Month
     
Sitework Development Spending Assumptions
Development Cost   $855,000.00
Depreciable Life   27.5 Years
Depreciation Method   Straight Line
Include in Draws   100%
Expenditure Start   1 March 2003
Depreciation Start Date   1 October 2003
Expenditure Months   1 Month
     
Foundations & Floor Slab Development Spending Assumptions
Development Cost   $389,200.00
Depreciable Life   27.5 Years
Depreciation Method   Straight Line
Include in Draws   100%
Expenditure Start   1 March 2003
Depreciation Start Date   1 October 2003
Expenditure Months   1 Month
     
Structure Development Spending Assumptions
Development Cost   $266,000.00
Depreciable Life   27.5 Years
Depreciation Method   Straight Line
Include in Draws   100%
Expenditure Start   1 April 2003
Depreciation Start Date   1 October 2003
Expenditure Months   1 Month
     
Building Skin Development Spending Assumptions
Development Cost   $461,600.00
Depreciable Life   27.5 Years
Depreciation Method   Straight Line
Include in Draws   100%
Expenditure Start   1 May 2003
Depreciation Start Date   1 October 2003
Expenditure Months   1 Month
     
Doors, Balconies Development Spending Assumptions
Development Cost   $258,800.00
Depreciable Life   27.5 Years
Depreciation Method   Straight Line
Include in Draws   100%
Expenditure Start   1 May 2003
Depreciation Start Date   1 October 2003
Expenditure Months   1 Month
     
Roof Systems Development Spending Assumptions
Development Cost   $206,400.00
Depreciable Life   27.5 Years
Depreciation Method   Straight Line
Include in Draws   100%
Expenditure Start   1 June 2003
Depreciation Start Date   1 October 2003
Expenditure Months   1 Month
     
Electrical Development Spending Assumptions
Development Cost   $33,600.00
Depreciable Life   27.5 Years
Depreciation Method   Straight Line
Include in Draws   100%
Expenditure Start   1 July 2003
Depreciation Start Date   1 October 2003
Expenditure Months   1 Month
     
Exterior Contingency Development Spending Assumptions
Development Cost   $79,200.00
Depreciable Life   27.5 Years
Depreciation Method   Straight Line
Include in Draws   100%
Expenditure Start   1 May 2003
Depreciation Start Date   1 October 2003
Expenditure Months   1 Month
     
Pool Development Spending Assumptions
Development Cost   $150,000.00
Depreciable Life   27.5 Years
Depreciation Method   Straight Line
Include in Draws   100%
Expenditure Start   1 May 2003
Depreciation Start Date   1 October 2003
Expenditure Months   1 Month
     
Landscaping Development Spending Assumptions
Development Cost   $110,400.00
Depreciable Life   27.5 Years
Depreciation Method   Straight Line
Include in Draws   100%
Expenditure Start   1 August 2003
Depreciation Start Date   1 October 2003
Expenditure Months   1 Month
     
Permits Development Spending Assumptions
Development Cost   $10,000.00
Depreciable Life   27.5 Years
Depreciation Method   Straight Line
Include in Draws   100%
Expenditure Start   1 February 2003
Depreciation Start Date   1 October 2003
Expenditure Months   1 Month
     
Legal & Title Development Spending Assumptions
Development Cost   $18,000.00
Depreciable Life   27.5 Years
Depreciation Method   Straight Line
Include in Draws   100%
Expenditure Start   1 February 2003
Depreciation Start Date   1 October 2003
Expenditure Months   1 Month
     
Construction Draw Assumptions
Draw Percent   100%
Draw Rate   9% Annually
Draw Period   1 Month
Draw Treatment   Paid and Capitalized
Draw Limit   None
Draw Points   None
     
Permanent Loan Assumptions
Loan Amount   95% of Draw Loan Balance
Loan Interest Rate   10% Annually
Original Loan Period   30 Years
Loan Origination Date   1 January 2004
Loan Type   Monthly Payments, Amortizing
     
Studio Revenue Assumptions
Annual Revenue   $900.00
Revenue Start Date   1 October 2003
Revenue Period   1 Year
Revenue Growth Method   Ramp to $108,000.00
Vacancy Factor   5%
     
Studio Continued Revenue Assumptions
Annual Revenue   Continuation
Revenue Start Date   Continuation
Revenue Period   Until Projected Sale
Revenue Growth Method   Annual at the Inflation Rate
Vacancy Factor   10%
     
One Bedroom Revenue Assumptions
Annual Revenue   $1,250.00
Revenue Start Date   1 October 2003
Revenue Period   1 Year
Revenue Growth Method   Ramp to $225,000.00
Vacancy Factor   5%
     
One Bedroom Continued Revenue Assumptions
Annual Revenue   Continuation
Revenue Start Date   Continuation
Revenue Period   Until Projected Sale
Revenue Growth Method   Annual at the Inflation Rate
Vacancy Factor   10%
     
2 Bedroom 1 Bath Revenue Assumptions
Annual Revenue   $1,500.00
Revenue Start Date   1 October 2003
Revenue Period   1.25 Years
Revenue Growth Method   Ramp to $450,000.00
Vacancy Factor   5%
     
2 Bedroom 1 Bath Continued Revenue Assumptions
Annual Revenue   Continuation
Revenue Start Date   Continuation
Revenue Period   Until Projected Sale
Revenue Growth Method   Annual at the Inflation Rate
Vacancy Factor   10%
     
2 Bedroom 2 Bath Revenue Assumptions
Annual Revenue   $1,700.00
Revenue Start Date   1 October 2003
Revenue Period   1.25 Years
Revenue Growth Method   Ramp to $306,000.00
Vacancy Factor   5%
     
2 Bedroom 2 Bath Continued Revenue Assumptions
Annual Revenue   Continuation
Revenue Start Date   Continuation
Revenue Period   Until Projected Sale
Revenue Growth Method   Annual at 1% Under Inflation
Vacancy Factor   10%
     
Laundry Revenue Assumptions
Annual Revenue   $150.00
Revenue Start Date   1 October 2003
Revenue Period   1 Year
Revenue Growth Method   Ramp to $3,000.00
Vacancy Factor   75%
     
Laundry Continued Revenue Assumptions
Annual Revenue   Continuation
Revenue Start Date   Continuation
Revenue Period   Until Projected Sale
Revenue Growth Method   Annual at the Inflation Rate
Vacancy Factor   10%
     
Management Expense as % of EI Assumptions
Expense Percentage   5% of Effective Income
Expense Start Date   at Acquisition
Expense Period   Until Projected Sale
     
Utilities Expense as % of EI Assumptions
Expense Percentage   3% of Effective Income
Expense Start Date   at Acquisition
Expense Period   Until Projected Sale
     
Property Tax Expense Assumptions
Annual Expense   $35,284.00
Expense Start Date   at Acquisition
Expense Period   Until Projected Sale
Expense Growth Method   Annual at 2% Annually
     
Gardner Expense Assumptions
Annual Expense   $1,000.00
Expense Start Date   at Acquisition
Expense Period   Until Projected Sale
Expense Growth Method   Annual at the Inflation Rate
     
Insurance Expense Assumptions
Annual Expense   $3,000.00
Expense Start Date   at Acquisition
Expense Period   Until Projected Sale
Expense Growth Method   Annual at the Inflation Rate
     
Pool Expense Assumptions
Annual Expense   $1,000.00
Expense Start Date   at Acquisition
Expense Period   Until Projected Sale
Expense Growth Method   Annual at the Inflation Rate
     
Reserve Expense as % of EI Assumptions
Expense Percentage   1% of Effective Income
Expense Start Date   at Acquisition
Expense Period   Until Projected Sale