EXECUTIVE SUMMARY

Capital Plus I, Ltd. (“Capital Plus”, “CPI” or the “Company”) is a real estate investment firm and mortgage lender specializing in the single family residential market of the Dallas/Fort Worth, Houston, and San Antonio areas. The Company was founded by seasoned real estate investor, Robert McKinney, in 1992 and is headquarted in Bedford, Texas.


Capital Plus purchases distressed single family properties for well below market prices. The Company then rehabilitates and modernizes the properties for resale at appraised values 20%-30% greater than its overall cost. CPI’s typical customer is a low to moderate income family. CPI also provides financing to qualified buyers to facilitate the sale process and generate an additional income stream. As of November 2011, the Company owns and manages loans secured by over 352 owner-occupied properties.


Portfolio Summary

The figures below present the Portfolio as stratified by city:

Portfolio by city

Business Strategy

Capital Plus generates revenue and income from the sale of newly rennovated homes and its loan portfoilio orginated by loans made to the buyers of its homes. CPI has developed a proven methodolgy for sourcing, acquiring, and underwriting undervalued properties. CPI currently focuses on high growth areas within the Dallas, Harris, Bexar, and Tarrant counties of Texas. Targeted homes are 900 to 1,400 sq. ft., 2-3 bedrooms, and range from $70,000 to $95,000 in After Repaired Value (“ARV”).

The ideal property features the following characteristics:

  • High differential between current selling price and potential selling price;
  • Aesthetically neglected, but located in a buyer preferred area;
  • Located in a resurging community;
  • Expedited negotiation period; and
  • Opportunity for a profit margin of 20%-30%
House Before

House After
Recent Project Before & After

CPI mainly attracts buyers through direct mail, Internet marketing, and property site advertising. Its customers are also acquired through infomercials, signs, flyers, referrals, brochures, local Hispanic video advertisements and websites such as Craigslist.com. CPI’s current and target customers are predominantly Hispanic clients between 20 to 40 years old. The Company also utilizes a prospect referral discount with its current customers, which is applied to the customer’s first or next immediate mortgage payment. The vast majority of CPI’s homes are in Hispanic neighborhoods, therefore the Company primarily targets this community to identify buyers and generate additional income streams. The Company maintains a detailed log of all previous clientele and distributes marketing materials to improve visibility and “top of mind” awareness for its housing portfolio. CPI has already achieved considerable success generating referral sales using these methods and management plans to augment its existing efforts by purchasing a robust customer relationship software solution.



Growth Strategy

The Company is pursuing numerous organic growth initiatives. These opportunities offer the potential to drive revenue growth and profitability, diversify its revenue streams, and expand its brand recognition. A summary of near-term expansion opportunities the management team has identified and is pursuing include:

  • Find additional lending sources/financial backing;
  • Expand throughout the Texas market;
  • Increase the rate of property acquisition;
  • Expand vertically into higher value ($100,000 – $150,000 homes) markets;
  • Optimize the remodeling segment of the business; and
  • Develop referral business as a consistent, high margin revenue stream.

Shareholder Intentions

The Shareholders are seeking a strategic or financial partner with the ability to leverage the Company’s excellent reputation in the market, and proven methodology to rapidly accelerate its growth into new verticals and geographic markets. The Company believes that the best way to accelerate growth is to gain access to cheaper financing by combining its resources with a larger Company that has superior access to capital markets.

The Shareholders are not seeking to exit the business and are willing to help a new owner drive the future growth of the business. The team’s operating experience and market expertise will benefit a potential buyer.

Financial Summary

With revenue and EBITDA projected to be $14.7 million (19% year-over-year (YOY) growth) and $1.9 million (34% YOY growth), respectively, in 2011, the Company has proven successful in leveraging its business model to achieve exceptional growth in a difficult housing market.

Revenue Breakdown (USD millions)

Revenue Breakdown (USD millions)

EBITDA and Margin % (USD millions)

EBITDA and Margin % (USD millions)

 

 

Property Purchasing Staff

Dallas/Ft. Worth Metro

Greater Houston/San Antonio

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Who We Are

For almost 25 years, Capital Group has been a leader in owner financing single family residences to low to moderate income families throughout the State of Texas. Our homes are completely restored to bring pride of ownership to our customers. We also offer loan processing and servicing to investors and banks throughout the state.