2012 NAHB RCMC Presentation

A product of The

UNIVERSITY OF NORTH TEXASConstruction Engineering

4yr program

BY

Brad TatumFahad Bin-RashidNathan WoodDavid OlsenNikhil MannanDavid Keane

Technology Driven

Rich historical roots

Southern traditionAdapt to the changing

society

Rated 17st best city for doing business by Forbes (2011)

Rated12th best city job growth by Forbes (2011)

Evolution of HuntsvilleUNIVERSITY OF NORTH TEXAS4yr program

Housing Market ForecastUNIVERSITY OF NORTH TEXAS

4yr program

Homes spend an average of 120 days on market

Median housing prices increases 2.64%

High Construction Earning

Forecasted DemandPopulation 223034Population 2015 250053New Citizens 27019Vacant Houses 5507Houses in Demand 7720New Houses in Demand 2213Home # by Denco 32Percent Market Share 1.45%Avg. Household Size 3.5

8.7 14.5

Land DevelopmentUNIVERSITY OF NORTH TEXAS4yr program

Land DevelopmentUNIVERSITY OF NORTH TEXAS4yr program

Land DevelopmentUNIVERSITY OF NORTH TEXAS4yr program

Analyzing Our Target MarketUNIVERSITY OF NORTH TEXAS4yr program

Double Income No

Kids

Married with Older

Children

Married with Younger Children

MarriedAge 30-45

Expected Salary Range Low High

Double Income No Kids $120,000 $160,000Married with Younger Children $110,000 $150,000Married with Older Children $120,000 $170,000

70% Homeowners

60% Married25% High Wage

Earners

Population Makeup

Matching Model to MarketUNIVERSITY OF NORTH TEXAS4yr program

Lafayette

Belmont

HuntingtonFairfield

Mattison

Double Income No Kids

Married WithYounger Children

Married WithOlder

Children

Huntington

Mattison

Belmont

FairfieldLafayette

Meadowbrook Home ModelsUNIVERSITY OF NORTH TEXAS4yr program

Lafayette

Belmont

Huntington

Fairfield

MattisonDenco Models

Lowest HighestSquare Footage 1950 3750Sales Price $388,530 $538,388

1. Home tour

Denco ProcessUNIVERSITY OF NORTH TEXAS4yr program

2. Design and create your floor plan

3. Budgeting and cost evaluation

4. 3-dimensional rendering5. Financing6. Completing the

paperwork7. Construction8. Move-

in

MarketingUNIVERSITY OF NORTH TEXAS4yr program

Total Budget: $83,650

Local Magazines and Newspapers

Design Consultant

Rural Lifestyle

Price ComparisonUNIVERSITY OF NORTH TEXAS4yr program

Competitor PricingName Low Cost High Cost

Denco Homes $388,530 $537,388

Steve Steele $300,000 $580,000

Pearson Homes $230,000 $340,000

Heritage Homes $190,000 $550,000

Mick Harris Homes $150,000 $375,000

Project ManagementUNIVERSITY OF NORTH TEXAS4yr program

Weekly Meetings

Online Monitoring

Design Consultant

Safety on the Jobsite

Benefits of Green BuildingUNIVERSITY OF NORTH TEXAS4yr program

Benefits of Green BuildingUNIVERSITY OF NORTH TEXAS4yr program

Lower Operating Costs

Quality Product

Marketability

Tax Incentives

Achieving the Gold StandardUNIVERSITY OF NORTH TEXAS4yr program

Green Building Cost per Square FootUNIVERSITY OF NORTH TEXAS4yr program

$0/GSF $100/GSF $200/GSF

$300/GSF

Cost per Green Square Foot of All Buildings

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 $(2,500,000.00)

$(2,000,000.00)

$(1,500,000.00)

$(1,000,000.00)

$(500,000.00)

$-

$500,000.00

$1,000,000.00 Conservative Net Income

PHASE II PHASE III

4 Months

5 Months

7 Months

PHASE I PHASE IV

Financial AnalysisUNIVERSITY OF NORTH TEXAS4yr program

8 Months

Phase I: Investment borne by owner ($3,663,000) Phase II: Future expenses for Phase II paid for by revenues made from this phase and 36% of Initial Investment Paid Phase III: Land Development Creates Additional Expense Phase IV: Final 7 months pay remaining 64% + Denco Home Fee + Return on Investment

$(4,000,000)

$(3,000,000)

$(2,000,000)

$(1,000,000)

$-

$1,000,000

$2,000,000 Conservative Cash Flow Analysis

• Positive Cash Flow 21 Months

• Return for Investor: $915,750

• Percent for ROI: 25%

Financial Analysis ContinuedUNIVERSITY OF NORTH TEXAS4yr program

Months

$(4,000,000)

$(3,000,000)

$(2,000,000)

$(1,000,000)

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000 Best: Cumulative Revenues (-) Expenses

Positive Cash Flow Month 19

ROI: 35%

ROI for Investor: $ 1,282,000

$(4,000,000)

$(3,500,000)

$(3,000,000)

$(2,500,000)

$(2,000,000)

$(1,500,000)

$(1,000,000)

$(500,000)

$-

$500,000

$1,000,000

Ultra Conservative: Cumulative Rev-enues (-) Expenses

Alternative Cash Flow ScenariosUNIVERSITY OF NORTH TEXAS4yr program

Positive Cash Flow Month 23

ROI: 18%

ROI for Investor: $ 672,000 Months

Months

Investing with DencoUNIVERSITY OF NORTH TEXAS4yr program

Investment Requires $3,663,000

Establishment of Denco Meadowbrook

Start Date April, 2012