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INVEST IN THE FUTURE OF RESIDENTIAL REAL ESTATE: Build-to-Rent (B2R) homes © 2019 ERC Homebuilders, Inc., A Development Company
INVEST IN THE FUTURE OF RESIDENTIAL REAL ESTATE:
Build-to-Rent (B2R) homes
© 2019 ERC Homebuilders, Inc., A Development Company
THE PROBLEM: 95 MILLION MILLENNIALS ARE ENTERING THEIR PRIME HOMEOWNERSHIP YEARS… BUT THEY’RE NOT BUYING HOMES
92%
43%
92% of millennials believe that purchasing
a home is a good investment…
But 43% have saved less than $3,000
for a down payment
Sources: Business Insider: 15 Facts About Millennials and the Economy that Everyone in Business Should Know, Andy Kiersz, May 19, 2014 https://www.businessinsider.com/millennial-facts-2014-5.
Unision Survey: 1 in 5 Home Buyers Would Give Up the Right to Vote – for a Down Payment, Benjamin Feldman, May 9, 2018 (full survey). https://www.unison.com/blog/unison-home-buyer-survey-2018/
2© 2019 ERC Homebuilders, Inc., A Development Company
WHAT IS STOPPING MILLENNIALS FROM BUYING HOMES?
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Millennials face significant barriers to homeownership; they state some of their top reasons as:
Cost of down payment 49%
Credit score is too low 37%
The cost of the monthly payment 31%
A lack of overall savings 31%
Source: Unison/OneCall Home Ownership Survey, May 9 2018. https://www.unison.com/blog/unison-home-buyer-survey-2018/
© 2019 ERC Homebuilders, Inc., A Development Company
MILLENNIAL HOMEOWNERSHIP RATES ARE BELOW OTHER GENERATIONS
Sources: 1990 and 2000 Decennial Censuses and the 2015 American Community Survey.
Source: The Urban Institute “State of Millennial Home Ownership” 2018. https://www.urban.org/urban-wire/state-millennial-homeownership
Generation Years Born Age Population
Current
Homeownership (%)
Homeownership
at Age 25-34 (%)
Millennials 1981-97 18-34 75,170,263 32.2% 37.0%
Gen Xers 1965-80 35-50 66,441,487 60.4% 45.4%
Baby Boomers 1946-64 51-69 74,649,971 75.0% 45.0%
Homeownership among Baby Boomers, Gen Xers, and Millennials in 2015
4© 2019 ERC Homebuilders, Inc., A Development Company
YET, DESPITE FINANCIAL BARRIERS, MILLENNIALS UNDERSTAND THE VALUE OF SINGLE-FAMILY LIVING
Demand is strong. If only there was an affordable alternative.
What would millennials give up to buy a home?
A dream car: 44%
Vacationing for the next five years: 36%
Going out to eat for the next five years: 34%
The right to vote: 26%
Their driver’s license: 12%
Source: Unison/OneCall Home Ownership Survey, May 9, 2018. https://www.unison.com/blog/unison-home-buyer-survey-2018/
Millennials want to live in
single-family homes—
especially as they begin to start
families.
In fact, nearly half of them
would give up having a dream
car to save for a down payment,
and over a third would give up
vacationing or going out to eat
if they could finance a home.
5© 2019 ERC Homebuilders, Inc., A Development Company
SINGLE-FAMILY HOME RENTALS WILL FILL THE GAP
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Source: America’s Rental Housing 2017, The Harvard Joint Center for Housing Centers.
Since the financial crisis,
many households have
turned to renting homes
rather than buying
High hurdles have prevented many
millennials for mortgage approvals.
As their financial status improves, many
have remained turned off to the mortgage
approval process
Student loans are still haunting many
millennials, placing a drag on their savings,
making renting the logical choice
© 2019 ERC Homebuilders, Inc., A Development Company
EVEN HIGHER INCOME FAMILIES ARE RENTING INSTEAD OF BUYING
• Even wealthier families are renting more
than they used to, creating a demand for
larger, higher quality rental properties,
like build-to-rent homes
• In fact, families with incomes over $100,000
saw the strongest growth in share of renters
between 2006 and 2016 of any income level
Source: America’s Rental Housing 2017, The Harvard Joint Center for Housing Centers.
7© 2019 ERC Homebuilders, Inc., A Development Company
SINGLE-FAMILY HOMES NOW ACCOUNT FOR MORE THAN A THIRD OF ALL RENTAL UNITS
Source: America’s Rental Housing 2017, The Harvard Joint Center for Housing Centers.
Multifamilies
with 2-4 Units
18%
Multifamilies
with 5-19
Units 22%
Multifamilies with
20 or More Units
21%
Single-Family
Homes 39%
Note: Stock estimates include renter-occupied units, vacant units for rent, and rented but unoccupied units.
Single-family homes include detached and attached units, mobile homes, and units such as FIV’s and boats.
Source: JCHS tabulations of US Census Bureau, 2016 American community Survey 1-Year Estimates
The combination of strong demand from
millennials and higher earning households
has created significant demand for
build-to-rent housing.
Today, 39% of all rental properties are
single-family homes.
Single-Family Homes Now Account for Well Over
One-Third of the Nation’s 47 Million Rental Units
Share of National Rental Stock
8© 2019 ERC Homebuilders, Inc., A Development Company
THE BUILD TO RENT MARKET IS LARGE AND GROWING
Source: US Census and National Rental Home Council (NRHC)
We believe the total
target market is
17.2 million home rental units
We expect a
9.2% increasein home rental units
from 2016-2020
3.9 million new rental units are
forecasted for 2016-
2020, of which
1.5 millionare expected
to be homes
Rentals make up just
over a third of total housing units
in the U.S. and of that
total approximately
15.7 million are homes
9© 2019 ERC Homebuilders, Inc., A Development Company
FLORIDA’S ECONOMY IS BOOMING
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• Florida has become the
17th largest economy in the world
• Since December 2010, Florida’s
private sector has created nearly
1.6 million jobs
• Florida has seen its population
increase from 18.8 million in 2010
to 21.3 million in 2018
• Job growth of up to 19% in
software developing jobs are
projected in the state through 2025
Source: Florida Trend, 2019. https://www.floridatrend.com/article/25677/floridas-booming-economy-has-real-momentumSource: Jim Saunders, The News Service of Florida, Fox 13 News, December 19, 2018. http://www.fox13news.com/news/florida-news/florida-s-population-climbs-to-213-million
Source: Sun Sentential, 2019. https://www.sun-sentinel.com/business/fl-bz-citrix-expansion-tech-talent-20180221-story.html
© 2019 ERC Homebuilders, Inc., A Development Company
STRONG ECONOMY FUELED BY INCUBATORS
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Source: Florida Trend, 2019. https://www.floridatrend.com/small-business/links
There are at least 79 business incubators
in Florida facilitating growth
© 2019 ERC Homebuilders, Inc., A Development Company
CATCH THE NEW WAVE OF RESIDENTIAL REAL ESTATE INVESTMENT
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Our outlook for build-to-rent housing is robust.
We see:
• Increasing demand
for B2R single-family
homes
• We are still at the
beginning of this
housing cycle
• A simultaneous
slowdown in
build-to-purchase
single-family
homes
• Over the next several years,
we plan to deploy optimum
combinations of equity and debt
to maximize development profit
potential and leave the door open
to investing in other similar
development projects
➔
© 2019 ERC Homebuilders, Inc., A Development Company
A DYNAMIC PLAYER IN BUILD-TO-RENT INVESTMENT
• Senior leadership team has over 100 combined years of
experience and has developed and/or managed over a billion
dollars in real estate properties
• Bundled approach, which develops 20+ build-to-rent homes
in contiguous areas, increases simplicity and redundancy,
and improves efficiency over piecemeal construction
• Presale of units to institutional investors reduces risk
• Geographic focus on Florida creates a favorable environment
of excellent weather, zero state taxes, high job growth and
relatively inexpensive, developable land
13© 2019 ERC Homebuilders, Inc., A Development Company
OUR PROCESS
• We plan to develop B2R homes that we aim to presell to
institutional investors (private equity and hedge funds)
before we break ground. This helps to mitigate risk and
aims to deliver solid investment returns
• In our building process, we place heavy importance on site
selection, design, construction and any other processes to
benefit all our constituents for a win-win scenario
• ERC Homebuilders seeks to build where there are schools,
and access to shopping, recreation and other amenities
desirable to both our institutional clients and their end clients
of home renters
14© 2019 ERC Homebuilders, Inc., A Development Company
OUR OFFERING
• Initial share price of $1.02 (only 20,000 shares are available at this opening price, on a first come,
first served basis)
• Minimum investment of $10,000 (at the discretion of the issuer)
• Annual dividend payments of 8% invested capital, paid monthly, and for many investors, this may
be tax-free for the first year*
• Overall return-on-equity (“ROE”) projected towards the mid-20% range**
• All the potential when investing in a firm in a growth industry
• Total offering of $30 million
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ERC Homebuilders, Inc. is offering preferred equity
investment opportunities to accredited investors under SEC
Regulation D (“Reg D”)
© 2019 ERC Homebuilders, Inc., A Development Company
*Since the tax treatment of any distributions may vary according to the financial performance of the company, as well as the particular circumstances of the investor, investors should consult their own tax advisers, and should not assume that the distributions will be subject to the same tax treatment from year to year. ERC HomeBuilders, Inc. will not generate revenues or profits until the company has built developments, and there is no guarantee that those developments will be profitable. The company will set aside a capital reserve as investments are received; dividend payments will initially be made from this reserve. There can be no guarantee of future profits. During the first year it is likely that dividend payments will be tax-free due to the likely treatment of dividends as a tax-free return of capital to investors and thereafter as capital gains income for a limited period. The dividend will only be payable to the extent there are legally available funds.** See important disclosures on the following page.
IMPORTANT DISCLOSURES ABOUT FORWARD LOOKING STATEMENTS
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** Projected financial data is included in this document; projections are frequently inaccurate
This document includes projections. Those projected results will only be achieved if the assumptions they are based on are correct. There are many reasons why the assumptions could be inaccurate, including customer acceptance of the product or service we are intending to offer, competition, general economic conditions and our own inability to execute our plans. Potential investors should take the assumptions in consideration when reading those projections and consider whether they think they are reasonable. You should consider these projections only in conjunction with the risk factors set out in our Private Placement Memorandum dated April 29, 2019, which you should read carefully.
THIS DOCUMENT CONTAINS FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
© 2019 ERC Homebuilders, Inc., A Development Company
A SEASONED TEAM OF REAL ESTATE INVESTORS
Gerald Ellenburg
Gerald Ellenburg (“Jerry”) is the Chairman and
Chief Executive Officer of ERC since August 2011.
Jerry also serves as the Chairman and Chief Executive
Officer of KGEM Golf, Inc. since October 2018. Jerry has
a total of 35 years of experience in the following areas:
real estate ownership, management and the financing
of multifamily properties and management of over
$750 million in debt and equity financings.
Jerry graduated from the University of California, Berkeley
in 1971, and is a California-licensed CPA (inactive).
Ryan T. Koenig
Ryan T. Koenig is the President and Chief Operating Officer
of ERC Homebuilders, Inc., a position he has held since
December 2018. He is also Director and the Chief
Development Officer of KGEM since August 2016.
From March 2011 through the present, he has been the
Chief Operating Officer at eResidential and Commercial LLC
(ERC Homes). Ryan has over 20 years of experience in real
estate development and construction with the following
companies: Wood Partners Camden Properties, Turner
Construction and Zaremba Development. Ryan has
overseen approximately $500 million in completed
construction projects.
ERC’s two founding shareholders bring extensive experience in real estate development, management,
institutional equity and debt finance, land entitlement, design and construction management.
They are supported by a team, whose industry experience averages over 25 years.
17© 2019 ERC Homebuilders, Inc., A Development Company
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THE NEXT GREAT OPPORTUNITY IN RESIDENTIAL REAL ESTATE INVESTING
The accelerating demand for “build-to-rent” (B2R) homes
is being driven by the cultural wave of millennials who seek
single-family living, without the hurdles of ownership.
ERC Homebuilders pursues an innovative build-to-rent
strategy that develops quality, mid-priced, single-family
housing in Florida’s growing markets.
We offer investors monthly dividends of 8% annually, as well
as the potential for capital appreciation.
For more information on the risks and potential benefits of
this investment, qualified investors may request an offering
memorandum by contacting us here:
(813) 621-5000
ERC Homebuilders, Inc.
2738 Falkenburg Road S.
Riverview, FL 33578© 2019 ERC Homebuilders, Inc., A Development Company
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”), OR ANY STATE SECURITIES OR BLUE SKY LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND STATE SECURITIES OR BLUE SKY LAWS.
ACCORDINGLY, THE SECURITIES CANNOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE
ACT. IN ADDITION, THE SECURITIES CANNOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THE APPLICABLE STATE SECURITIES OR BLUE SKY LAWS. THE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE
ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE MERITS OF THIS OFFERING OR THE ADEQUACY OR
ACCURACY OF ANY OTHER MATERIALS OR INFORMATION MADE AVAILABLE TO SUBSCRIBER IN CONNECTION WITH
THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THE SECURITIES MAY ONLY BE PURCHASED BY PERSONS WHO ARE “ACCREDITED INVESTORS” (AS THAT TERM IS
DEFINED IN SECTION 501 OF REGULATION D PROMULGATED UNDER THE ACT).
THE OFFERING MATERIALS MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO,
AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-
LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY
AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,”
“PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS
REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND
UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE
MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING
STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF
UNANTICIPATED EVENTS.
19© 2019 ERC Homebuilders, Inc., A Development Company
