Greg,

Here are my comments and questions on the cost estimates:

Cost per square foot seem too low for construction $33.30/sf (gross)/$36/sf
(rentable)

What do the cost for On-Site General Requirements ( $299,818) represent?

Will you review the builders profit and fees with me again? You mentioned 2%
overhead, 3 % ???, and 5% profit.

Why is profit only 4%?

Why are the architect fees up to $200K. I thought they would be $80K.

What is the $617K of profit allowance? Is that the developers profit to
boost loan amount but not a real cost?

Total Closing and Application costs of 350K? That seems very high? Who
receives the 2 points? How much will be sunk costs if FHA declines us?

Where is your 1%? Are you receiving one of the points on the loan?

What is the status on the operating pro forma? My back of the envelope puts
NOI at $877K assuming 625/1BR, 1300/3BR, 950/2BR, 5% vacancy, and 40%
expenses. After debt service that would only leave $122K. The coverage
would only be 1.16.

Talk to you this afternoon.

Phillip