HomeStore Home ownership for America’s working families

A BUSINESS CONCEPT SUMMARY

Proprietary and Confidential © Home Store 2006 July 13, 2006

Detroit thought the route to success was

building bigger and bigger SUVs.

Toyota, on the other hand, came out

with the Prius. Isn’t it about time that

someone came up with the Prius of

affordable housing?

Challenge

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The Problem

$41,340: national median income. $381,250: median King County home price -

growing faster than salaries. High energy, gasoline, and housing prices drive

demand for housing alternatives. Affordable housing options drive longer commutes,

impacting quality of life. Families with limited incomes trade commute time for

safety and security, increasing traffic and environmental impacts.

Concept

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Home Store is a profitable business

model for affordable, healthy, and

sustainable residential communities

in both urban infill and suburban

green field developments.

Proprietary and Confidential © Home Store 2006 July 13, 2006

The Home Store Concept

COMMUNITY

Panelized construction

systems

Next Home design

Resident driven

development

Seller financed property

acquisition

CONSTRUCTIONDESIGN

LAND ACQUISITION

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Next Home design

Flexible and sustainable Adapts to diverse cultural and life-cycle needs Adapts to both infill and large-scale land use

applications Reduces construction costs, eliminating 40% of

materials waste through design Energy efficient

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Panelized Construction Systems

High quality, high efficiency Ensure high quality, consistency, and reliability

through production quality control systems Reduce construction costs, by up to 25% Shorten construction timelines Minimize financing costs Eliminate waste

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Resident driven development

Builds healthy, safe, self-sustaining, communities

Sites woven into fabric of larger community Clustered design balances privacy and community Pre-selling reduces financing costs, and builds community

based on relationships, promoting neighborhood safety and social well-being

Participatory design process teaches homeowners to effectively manage features and budgetary constraints, teaching financial literacy, home design, and maintenance

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Seller financed property acquisition

Target market Small real estate investors Community organizations Minority real estate investors

Seller financed loans Subordinated mortgages Installment contracts Option agreements

Engage seller as partner Reduces up-front costs Yields higher ROI to seller over property market value

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Scenario

720 sf

720 sf

720 sf

1440 sf

720 sf

720 sf

1440 sf

2160 sf

720 sf

720 sf

720 sf

1440 sf

720 sf

720 sf

1440 sf

2160 sf

720 sf

720 sf

720 sf

1440 sf

720 sf

720 sf

1440 sf

2160 sf

1/2 to 1 acre of land Twelve “stacks” of one to three units each

$350,000$125,000$225,000

$240,000 $110,000

$125,000$115,000 $110,000

$350,000$125,000$225,000

$240,000 $110,000

$125,000$115,000 $110,000

$125,000$115,000 $110,000

$240,000 $110,000

$125,000$225,000

$350,000

Proprietary and Confidential © Home Store 2006 July 13, 2006

Scenario economicsQTY UNIT COST EXPENSE

Land 1.00 $200,000.00 $200,000.00Real estate commission 1.00 $10,000.00 $10,000.00Site work 1.00 $300,000.00 $300,000.00Construction 12.00 $216,000.00 $2,592,000.00Permits, Inspections, Environmental, etc. 1.00 $50,000.00 $50,000.00

Marketing, Design, Engineering, Sales, Community-building, Project management, Operations 1.00 $500,000.00 $500,000.00Financing costs 1.00 $250,000.00 $250,000.00Contingency 1.00 $150,000.00 $150,000.00TOTAL EXPENSE $4,052,000.00

QTY UNIT COST REVENUEUnit pre-sales 12.00 $350,000.00 $4,200,000.00TOTAL REVENUE $4,200,000.00

NET PROFIT $148,000.00

Market Strategy

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Pricing Strategy

Based on Median Area Incomes

(MAI) customers can afford these

purchase prices, and are pre-

qualified at 30% of income.

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Target market: studio/1 bedroom

Single women, young couples, older adults (single and couples) aging in place

600 square feet $110,000 purchase price $912 Monthly mortgage payment Affordable by individuals and couples at 70% or

higher of King County MAI

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Target market: two bedroom

Families of 3-4 1200 square feet $240,000 purchase price $1989 Monthly mortgage payment Affordable by families of 3-4 at 100-120% or

higher of King County MAI

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Target market: four+ bedroom

Large and extended families 2160 square feet townhouse $350,000 purchase price $3000 Monthly mortgage payment Affordable by families with at least 3 working

adults at 80-120% or higher of King County MAI

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Target market: 1 bedroom + workspace

Couples and small families with home-based business

1200 square feet studio/1 bedroom unit $225,000 purchase price $1869 Monthly mortgage payment Affordable by couples and families of 3 at 120%

or higher of King County MAI

Long range vision

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The Home Store long range vision

Panelized construction

systems

Next Home design

Resident driven

development

Seller financed property

acquisition

HOUSING FACTORY

HOMEOWNER LITERACY

WORKSHOPS

RETAIL STORE

SELLER OUTREACH STRATEGIES

Next Steps

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Objectives

Develop pilot business plan Identify partners Develop pilot site totaling 12-30 housing

units in South Seattle/White Center Evaluate lessons learned Develop rollout business plan