To whom it may concern:

I am Al Lee, manager of Tortoise I, LP. Recently we have begun building houses designed for rental, mostly for Section 8 rental, and selling them to investors. Initially we only sold to members of the Tortoise Club, a club I started in 2002 to aid investors nationwide in acquiring rental properties in the Dallas/Fort Worth metro area. Soon we began offering properties to other investors who were not members of the club.

When selling only to club members who were already familiar with me it was not necessary to reassure them of my personal integrity or reputation. Now that we are dealing with new people it has become apparent that I should introduce myself and offer evidence that I can be trusted, particularly with the deposits paid to acquire new-construction houses.

First, let me describe how those deposits work and why we do it that way. Every house we build is pre-sold to a qualified buyer before we even purchase the lot on which the house will be built. The buyer must have been pre-qualified by our lender and the lender must have issued a “take-out letter” to our bank attesting that the buyer meets the lending requirements to obtain the necessary financing to buy the house.

Our bank requires this in order for them to approve more favorable terms for the construction financing. The bank does not want us to build houses “on speculation”, hoping to be able to sell them afterwards. The take-out letter proves to the bank that each house is sold to a buyer whose loan will not be rejected by the mortgage lender.

Next, we require that each buyer of each house submit a non-refundable deposit of 20% of the purchase price at the time of signing the contract. The deposit applies toward the price. It is used by us to acquire the land and to do whatever lot preparation is needed in order to place a foundation for the house on it. The price of a lot and the cost of preparation varys from house to house, but we are currently able to acquire lots at a price that is approximately 20% of the ultimate price of the house, so it works out well.

The deposit is not placed in escrow, it is used to purchase the land and prepare it for building. Therefore, it is not refundable. In a few cases so far we have had buyers who needed, for whatever reasons, to back out of their purchases. We have, in every case, found a back up buyer willing to take over the contract and the original buyer has received 100% of his/her money refunded very promptly. I can not guarantee this outcome, but because of the way we do these deals we are able to contain costs and deliver the houses at a very good price and it is usually not difficult to find another investor willing to assume your purchase at the same terms you had.

Two of the factors that go into the cost of building houses are land and interest costs on the construction money. Because of our methods we are buying lots at very favorable prices and are saving thousands of dollars per house on interest costs. If the deposit money were in escrow, we would have to borrow the money to acquire the lots. We would incur the interest cost of that money, plus our interest rates would be much higher because we would not have any equity in the project. The valuable lots are considered our equity in the project to our bank and therefore we get better rates. If we did things differently we would have to add thousands of dollars to each house’s price. Since we are focused on building houses that will produce positive cash flow, adding to the price of the house would make it less attractive.

Now, how do you know that I will not just take off with your money and never even build a house? That is the issue that has been a stumbling block to some new investors.

To help you to understand that I am actually a reliable person with whom you can feel comfortable doing business, I will tell you that I have been an investor in real estate for well over 30 years and have an excellent reputation and near-perfect credit rating. I have been doing business with the same banker for over 30 years as well. He has dealt with me in a number of different businesses, as well as real estate, and is willing to give a personal recommendation to you if you call him. He can also confirm the business arrangement I described above, designed to produce houses at reduced cost. His name is Dennis VanFossen. He is CEO of Sterling Bank, Richardson Branch. If you are a serious buyer, you may call Dennis at his office (214.678.8630) during business hours. Please do not call unless you are serious, but do not hesitate to call if you are.

Sincerely,