In today's market it is very difficult to find reasonably priced properties, especially before they have been listed by Selling Brokers at unrealistically high prices. Our concept is to find the "needles in the haystack" - that is, unlisted properties at below market pricing. The work is tedious, but it can be very profitable to the client when a property is identified.

It has been our experience that an uninformed property owner may be willing to sell his property based on his actual operating results (which he feels is indicative of his efficient operation), that, in realty, is operating well below market. Subsequent to the closing, and after our value-added recommendations have been implemented, our clients have reaped significant rewards do to dramatic improvements in the net operating income. Through effective marketing, the setting of rents at appropriate levels within the property's sub-market, the repositioning of the properties through economically sound renovations and improvements, and employing effective cost conscience property management, the neglected properties have been turned into strong performing assets.

The following are some of the strategies that we have developed to identify underperforming properties before they are listed. Our last five acquisitions were delivered at 16.05% below market on a per unit basis, and 13.26 % below market on a square foot basis. These five transactions totaled 1,958 units. The properties ranged from "A" quality to "C" quality:

• Use our database to identify underperforming assets (with special attention to assets self-managed by out-of-state owners or by ineffective third party managers). These situations historically reflect below market income and much higher expenses than superior local management can deliver.
• Use our database to identify properties which may be generating negative cash flow with particular emphasis on properties with pre-payable debt. Use our database to scrutinize and monitor properties which were refinanced or purchased in 1999 - 2000 with conduit debt. These loans typically can not be prepaid and have an interest rate which is above today's interest rate. However, if these properties become non-performing or REO, they could be perfect candidates for our program. We are not aware of any foreclosures of properties financed with conduit debt; however, several are experiencing negative cash flow.
• Use our database to identify property owners who were sellers in the last twenty four months. These individuals maybe interested in selling another property at this point of time.
• Use our market knowledge to quickly eliminate properties held by owners who are known to us to be long term holders. Our time and our clients' time are limited. We focus only properties which have a reasonable probability of being deliverable.
• Monitor various foreclosure reports to identify owners who may be in a particularly weak position and who may be willing to sell quickly at a below market price.
• Present unsolicited offers to property owners identified by these techniques. It has been our experience that an owner's expectations rise sharply when his property becomes listed by a Selling Broker.