Gatefold Brochure

M P O

UTUAL

■ Mutual Ownership of Quality Properties.

A group of investors collectively own multiple properties, increasing diversification and reducing risk.

■ A profit-oriented investment.

An important goal of the business is to produce cash flow for investors from rental income and the sale of appreciated property.

■ Professional management.

Properties are purchased, sold and managed by experienced business/real estate professionals.

This brochure is intended to provide some general guidelines as to how a business utilizing the MPO concept operates. This is not an offer to invest in any particular business or sell any security. MPO investments can only be offered to suitable investors with the appropriate legal documents. Every potential investor should always review all information with their legal and financial advisors when considering any investment.

Presented by:

Kenwood Properties

57 South Main St. #340, Neptune, NJ. 07753 Tel. 732-775-1930 www.kenwoodproperties.net

■ Investor-friendly business structure.

Properties are purchased/sold without markups or hidden fees. Manager(s) invest their own money in the business and are paid for their services with performance based incentives, aligning their interests with those of the investors.

About the author…

■ Flexible, stress-free vacation time.

Owners enjoy vacations in their own properties on dates of their choice, with most of the pleasures and far less expense and/or responsibility for property management than owning a vacation home themselves.

H. Robb Levinsky is the creator of the MPO concept for shared ownership of resort real estate. A Magna Cum Laude graduate of Boston University, a former elected public official, and named in the 1983 publication of ʻOutstanding Young Men of Americaʼ, he is the founder of many successful companies. A prolific writer and public speaker, he has been extensively profiled by local and national television, radio, and print media and has served on the board of directors of a number of civic and cultural organizations, including the Sonoma Land Trust and the Cultural Arts Council of Sonoma County, Ca., where he lived from 1990 – 2001.

ROPERTY WNERSHIP

D

ear Investor;

For a lot of people, owning a second home in a desirable location is a very appealing way to invest in real estate.

You can enjoy vacations in a beautiful area, collect rental income when you are not using the property yourself, and take advantage of the appreciation quality homes and condominiums have enjoyed in many resort destinations.

At the same time, owning property hundreds or thousands of miles from your primary residence has its drawbacks. A lot of people find they prefer to vacation in more then one place, and only make use of their second home a few days or weeks each year. Of course there are real estate taxes, utilities, insurance, a mortgage and frequently condo fees to be paid, along with the cost and hassle of maintenance and repairs. If you decide to rent out your home to offset some of these expenses, you need to either find and pay a capable property manager, or handle the property management yourself from a distance. Some people decide full ownership of another home is more trouble than it’s worth and buy a timeshare, only to discover that they paid a very dear price for the convenience; trading the appreciation of home ownership for an overpriced block of vacation time that sells for considerably less than what it cost.

I’ve always thought there had to be a better model then dealing with the hassle of owning a second home yourself, throwing away money on timeshares, or just keeping the cash in the bank and missing out on all the benefits that owning vacation property offers. Everyone I spoke with wanted the same things; appreciation and rental income from a true equity real estate investment, the convenience of professional property management, and the ability to enjoy a vacation in more than one desirable location. After a lot of research, I realized there simply wasn’t any investment out there that met all of those needs. So I sat down, flexed my mental muscles, did some careful thinking, and invented one. It’s called MPO, Mutual Property Ownership, and it’s changing the way a lot of people think about owning vacation real estate.

Sincerely, H. Robb Levinsky Kenwood Properties

What is MPO and how does it work?

Mutual Property Ownership (MPO) is a unique concept that allows a group of people to pool their money and collectively own a portfolio of high-quality vacation homes in a variety of attractive locations worldwide.

Properties are purchased and managed to produce positive cash flow from rental income while the properties appreciate in value and the owners make use of beautiful homes in a variety of appealing resort destinations for their vacations. MPO is not a timeshare!

MPO generally begins with the formation of a Limited Liability Company (LLC), a legal structure that provides a number of important benefits and liability protections for the investors (members). Investors purchase shares (units) of the LLC, with at least one of the investors being an experienced real estate professional who serves as the companyʼs business manager. Since the manager is an investor in the company, they have a personal stake in its success. Rather than receiving a set management fee, the manager(s) receive payment for their services via performance based incentives, such as a share of rental income and/or of proceeds when properties are profitably sold, further aligning the managerʼs interests with those of the other investors.

There are no hidden charges and no markups on the purchase of properties. If the investors are not happy with the managerʼs performance, they can collectively replace him/her. This investor-friendly model is the heart of the MPO structure.

With MPO, property is frequently purchased on an all cash basis, reducing or eliminating mortgages, points, and acquisition fees and allowing a larger percentage of the cash flow from rental income to be paid to the investors, while the business itself and not the individual investors are responsible for the property taxes, condo fees, utilities, repairs etc. This leaves the investors free to enjoy vacations in a different (or the same) location every year, on dates of their choosing, with most of the pleasures and few of the worries or expenses associated with home ownership. The initial investment is generally a small fraction (typically 10-25%) of the cost of purchasing a second home. This buys a share of a group of high-quality homes and condominiums in a variety of locations, a far more diversified investment then putting all your eggs in one basket by owning a single vacation home yourself.

Q uestions about MPO How much does it cost?

Typically 20-30 individual investors might own one or more units priced from $50,000 - $150,000 per unit.

This provides sufficient capital to purchase high-quality properties in several different locations, giving the investors a diverse portfolio of real estate while keeping the ownership group reasonably compact.

What do investors actually get when they purchase a unit?

A share of all of the assets (real estate and cash) the company owns.

If there are 20 units outstanding and you own 2 units, you own 10% of the company. Each unit holder receives their share of cash distributions from rental income or property sales and the right to vacation at the properties, typically for one week per year at no charge, and additional week(s) at a 50% discount from the lowest rental rates.

Can people sell their units?

With the MPO structure as long as the business has sufficient cash reserves, the company itself will generally purchase units from investors interested in selling at a price based on the fair market value of the real estate. Usually, an investor must have owned their unit for a couple of years to take advantage of this option. Investors may also sell their units to a buyer they obtain themselves, as long as the sale meets the terms specified in the LLC operating agreement.

What’s the difference between MPO and a Timeshare?

There are HUGE differences between the two! With a timeshare, you are essentially purchasing vacation time in a hotel room or small condominium (almost always at an inflated price compared to the actual value of the

property), with the seller/developer reaping the profit.

Frequently, a timeshare is difficult to get rid of and sells for considerably less than you paid for it. With MPO, you enjoy the pleasures and economic benefits of owning part of a diverse portfolio of beautiful homes and luxury condominiums in a variety of premier resort locations.

Is MPO a kind of Fractional Ownership or Vacation Home Co-Ownership?

Fractional and/or Vacation Home CoOwnerships are designed primarily as vacation getaways that usually either involve self-managed property(s) owned by a few friends, or a group of people brought together by a management company. In the first case, you usually operate without a professional manager to handle important decisions like property selection, sales, management and rentals. In the second case, shares in the properties are generally sold at a substantial premium compared to their actual value, with the manager(s) building in upfront fees and property markups and the investors are generally ʻstuckʼ with the company who formed the partnership, even if they are dissatisfied with the managerʼs performance.

MPO offers investors the property appreciation and rental income of a true equity real estate investment, combined with the convenience of professional management and the

ability to enjoy vacations in beautiful homes in several desirable locations. The properties are managed by skilled professionals who invest their own money in the company and are compensated via performance based incentives.

How can I be sure of getting the dates/property I want for my free vacation time?

With multiple properties spread among a limited group of owners, there is usually enough time available to accommodate most peopleʼs requests. For example, an LLC with five properties available 52 weeks a year has over 250 weeks of time to be shared between a typical group of 20-30 owners. All properties are booked on a first-come, first served basis, so if you have your heart set on a specific property for a particular date, it makes sense to reserve early.

Who is this kind of investment suitable for?

It is certainly not for everyone. There are very specific legal requirements as to who is ʻqualifiedʼ for the company to admit as a new member (investor) that vary from state to state. Investing in real estate can be highly profitable but there is a considerable amount of risk involved, so you need to have sufficient annual income and net worth to be able to lose money without it impacting your lifestyle. If you want to decorate, rent and manage a home according to your own particular taste, or the idea of shared ownership with someone else calling the shots as manager makes you uncomfortable, you need to look elsewhere.

Sounds interesting! Where can I get more information?

Kenwood Properties was the first company to utilize the MPO concept for investing in resort properties.

Kenwoodʼs founder, H. Robb Levinsky, created MPO and is happy to talk with people interested in learning more about it. We have literature available with more detailed answers to the above questions than space allows us to provide here. Our contact information is on the back of this brochure.