1. Texas Tax Sales – June 2014 Auctions Prepared for: Peloton Commercial Real Estate By: Blythe Chambers

2. Chronology of Contents U.S. Map of Tax Lien, Tax Deed, and Redemption Deed States Texas State Tax Sales & County Map Typical Due Diligence Process Tax Sale List Information Commercial Property Tax Sale Examples – Harris Co. June 03, 2014 Auction Example Preliminary Due Diligence Per Property

3. United States Tax Sale Designations Deed Redemption States Both Lien & Deed States Tax Lien States Tax Deed States

4. Texas is a Tax Deed Redemption State Oral auction sheriff/constable sale format, no online bidding First Tuesday, each month, at courthouse steps Highest bid wins auction Purchasing the deed to the property Given a Sheriff’s Deed shortly after auction Can occupy, charge rent, evict tenants, treat as own immediately 6 month redemption on non-homestead 25% interest earned on total bid amount, if redeemed Every county has its own rules!

5. Due Diligence Step 9: Attend Auction & Bid Step 8: Secure Cash or Cashier’s Checks Step 7: Register & Determine Max Bid Step 6: Check Lists Daily and Update Step 5: Research – County records, owners, property history, photos, title search, demographics Step 4: Organize Data Step 3: Obtain Lists, Review in Depth, Cherry Pick Step 2: Determine Strategy Step 1: Obtain and Submit Proper Documentation

6. The Lists County lists can vary widely Some lists don’t include addresses, rarely are there photos Lists change daily and are not sortable The list on auction day will almost always be different than the final online list Sifting through takes time, patience, and keen data organization There are two other types of lists: Resale & OTC While there are clues, lists do not distinguish commercial from residential, easements, drainage ditches, zoning, or buildings from lots – only research does

7. Commercial Tax Sale Examples Prepared for Peloton Commercial Real Estate Harris County Auction – June 03, 2014

8. Current Tax Sale Examples – Harris County, TX Auction Date: June 3, 2014 Data has been hand picked off multiple lists containing hundreds of properties Cherry picked data has been organized in an Excel spreadsheet and bid:value ratios calculated Additional due diligence data not on lists has been sourced and entered for evaluation This results in 7 potential commercial tax sale properties: Three office properties, one industrial, one for car sales, and one for auto racing mechanics One mixed-use retail property featuring gas station and convenience store One pharmacy One commercial lot adjacent to tax sale property office of same ownership One church/school/community center – easy conversion

9. 10526 Tanner Road, Houston, TX 77041 Occupied & DBA: “Zippy’s Auto Sales”

10. Preliminary Property Data 10526 Tanner Road Market Value Estimate$280,036 Adjudged Value$271,159 ValuationNear market Sqft. Building7,800 Lot Size0.65 acre Occupant:Zippy’s Auto Sales Owner or Tenant:TBD OwnershipDonway, LTD fka Dorway LTD Ownership Notes Last Sold01/02/1988 Selling PriceTBD Title Notes/Other LiensTBD 2014 Tax AssessmentTBD Delinquent Tax YearsTBD Minimum Bid$1,575.96 Bid:Value0.58%

11. 8902 Airport Blvd., Houston, TX 77041 Occupied & DBA: “Exxon Mobil” or “Gulf”

12. 8902 Airport Blvd. Preliminary Property Data 8902 Airport Blvd. Market Value Estimate$612,831 Adjudged Value$556,470 ValuationUndervalued Sqft. Building7,000 Lot Size0.68 acre Occupant:Exxon Mobil or Gulf Owner or Tenant:TBD OwnershipStephen Truong’s Enterprise, Inc. Ownership NotesDissolved in 2002 Last Sold03/23/2007 Selling Price$1,447,040.00 Title Notes/Other LiensTBD 2014 Tax AssessmentUnknown – Missing County Data Delinquent Tax YearsUnknown – Missing County Data Minimum Bid$97,507.51 Bid:Value17.52%

13. 10805 Market Street Road, Houston, TX 77029 Occupied & DBA: “Jacinto Pharmacy”

14. 10805 Market Street Rd. Preliminary Property Data 10805 Market Street Rd. Market Value Estimate$98,598 Adjudged Value$89,000 ValuationUndervalued Sqft. Building3,243 Lot Size0.23 acres Occupant:Jacinto Pharmacy Owner or Tenant:Owner OwnershipMcGinty & Muldrow Corporation Ownership NotesMay own another pharmacy location Last SoldTBD Selling Price$75,594 Title Notes/Other LiensTBD 2014 Tax AssessmentTBD Delinquent Tax YearsTBD Minimum Bid$13,147.51 Bid:Value14.77%

15. 5101 Navigation Blvd., Houston, TX 77011 Vacant

16. Adjacent lot at 5115 Navigation Blvd., same ownership, also up for tax sale. See next listing. 5101 Navigation Blvd. Preliminary Property Data 5101 Navigation Blvd. Market Value Estimate$289,244 Adjudged Value$87,613 ValuationUndervalued Sqft. Building9,464 Lot Size0.23 acres Occupant:Vacant Owner or Tenant:N/A – prior was tenant OwnershipPrajna Investments, Inc. Ownership NotesMultiple properties at auction Last SoldTBD Selling Price$319,200 Title Notes/Other LiensTBD 2014 Tax AssessmentTBD Delinquent TaxesTBD Minimum Bid$12,560.57 Bid:Value14.34%

17. 5115 Navigation Blvd., Houston, TX 77011 Business parking lot adjacent to 5101 Navigation

18. This is the business parking lot adjacent to 5101 Navigation and with same ownership. 5115 Navigation Blvd. Preliminary Property Data 5115 Navigation Blvd. Market Value Estimate$20,000 Adjudged Value$20,000 ValuationMarket Rate Sqft. Building0 Lot Size5,000 sqft Occupant:None Owner or Tenant:N/A – formerly used by tenant OwnershipPrajna Investments, Inc. Ownership NotesLot adjacent to 5101 Navigation Bl. Last SoldTBD Selling PriceTBD Title Notes/Other LiensTBD 2014 Tax AssessmentTBD Delinquent Tax YearsTBD Minimum Bid$1,461.51 Bid:Value7.31%

19. 14120 Stuebner Airline Rd., Houston, TX 77088 Occupied & DBA: “Empire Autosports”

20. 14120 Stuebner Airline Rd. Preliminary Property Data 14120 Stuebner Airline Rd. Market Value Estimate$226,248 Adjudged Value$227,000 ValuationMarket Sqft. Building4,000 Lot Size0.6888 acre Occupant:Empire Autosports Owner or Tenant:TBD OwnershipKenneth Narinesingh etal Ownership NotesTBD Last SoldTBD Selling Price Title Notes/Other LiensTBD 2014 Tax AssessmentTBD Delinquent Tax YearsTBD Minimum Bid$33,058.76 Bid:Value14.56%

21. 5208 Noble St., Houston, TX 77020 Vacant: Church/School/Community Center

22. 5208 Noble Street Preliminary Property Data 5208 Noble Street Market Value Estimate$267,305 Adjudged Value$264,127 ValuationMarket Sqft. Building7,200 Lot SizeTBD Occupant:Vacant Owner or Tenant:Former tenant – was bank owned OwnershipB. Brothers Homes, Inc. Ownership NotesPossible foreclosure purchase Last SoldTBD Selling PriceTBD Title Notes/Other LiensTBD 2014 Tax AssessmentTBD Delinquent Tax YearsTBD Minimum Bid$36,799.56 Bid:Value13.93%