The analysis of Eden Fund, LLC may include certain statements and projections of the anticipated performance of

certain assets. Such statements and projections reflect the opinion of Eden Fund, LLC regarding anticipated results and
are subject to economic uncertainties. The information contained within has been prepared solely for informational
purposes.

This presentation is not a recommendation or solicitation to buy or sell any securities.
DISCLAIMER
Page 1 | Eden Fund, LLC
There has been a once-in-a-lifetime housing bust in the United
States that has destroyed misguided notions that home prices rise
year after year. Bullish sentiment that lasted for generations has
disappeared without a trace. Gone are the days of the zero down,
negative amortizing, adjustable-rate mortgage. Now it is time to get
back to reality.

The operative word right now is panic: Foreclosures are rising;
banks have tightened lending standards; and unemployment is
elevated. It appears there is no worse time to buy a home.

So why am I now turning bullish on
Las Vegas real estate?

Simply put, Las Vegas real estate is too cheap on a relative basis.
There is a time and place for every market.

I believe it is Las Vegas' time.




WHY WE LI KE L AS VEGAS
REAL ESTATE
Each market has its own dynamics based on variables like I
nventory levels, employment prospects, migration trends, and
property taxes. This chart shows the variation in median home
prices across various markets. As you can see, the magnitude of
the housing bubble was far from uniform nationwide.


Page 2 | Eden Fund, LLC
The Las Vegas real estate market has been hit especially hard by
this housing crisis, which makes sense if you think about it. As a hub
of discretionary spending, the Las Vegas real estate market will
tend to be procyclical. In other words, it will rise more than other
markets in times of economic expansion, and it will fall more than
other markets in times of economic contraction. In a sense, it is the
ultimate leveraged play on real estate.

It is important to understand that Las Vegas real estate is no longer
a bubble; in fact, it is at pre-bubble levels. Distressed sale prices
are converging with conventional sale prices, which is a positive for
buyers. Prices continue to fall as short sales, foreclosures, and REO
sales rise.

Buyers are hesitant to step in right now because they think another
major dip in home prices is coming. I personally think the worst of
the housing crisis in this particular cycle is over, and I'll explain why.
But first I want to take some to time to explain how real estate
works as an investment.




L AS VEGAS REAL ESTATE
MARKET
Page 3 | Eden Fund, LLC
The most important thing to understand about real estate is that it
is an investment that depends on leverage. The implementation of
the 30-year mortgage helped support home prices during the Great
Depression by allowing the average person to bring 30 years of
earnings forward. Once the 30-year mortgage was in place, home
prices rose more or less in line with inflation.

It was only after the introduction of leverage via securitized prod-
ucts that housing expanded way beyond the rate of inflation. Now
that these securitized products have blown up, it is reasonable to
believe that housing will rise in line with inflation.

Loan-to-value ratios represent the leverage in an investment. While
loan-to-value ratios have fallen considerably from their peak, they
are still very attractive. A standard 20% down payment still
represents 5 to 1 leverage. You will be hard-pressed to find this
kind of leverage in any other mainstream investment. The upside
potential in these kind of leverage plays is tremendous.




UNDERSTANDI NG
REAL ESTATE
Page 4 | Eden Fund, LLC
Real estate should not be bought as a speculative purchase; it
should be bought when the cash flow from rents exceeds the cost
of carry. With a positive cash flow position, one can ride out cycles
in real estate while building equity through loan amortization.

This presents a very cookie cutter, "safe" return in most
economic environments. However, by catching the right cycle, one
can return many multiples on invested equity.

Here's a very simple example of the potential returns in real
estate with the following assumptions.
CASH F LOW VS CAPI TAL GAI NS
MONTHLY REVENUES AND EXPENSES
ASSUMPTIONS
Price $85,000 ($ on monthly basis)

Home Price Appreciation 0.0% Rent $950.0
Down Payment on Property 20.0% Cost of Carry $506.7
Mortgage Rate 5.0%
Mortgage Pay-
ments $365.0
Closing Costs 2.0%
Selling Fees 5.0%
Property Taxes 1.5%
Maintenance & Insurance 2.0% Down Payment $17,000.0
Income Tax Rate 25.0% Closing Costs $1,700.0

Total Initial
Costs $18,700.0

SOURCES USES / COSTS
Yr Home Price
Monthly
Rent
Monthly
Mort-
gage
Monthly
Mainte-
nance
Total
Monthl
y
Costs
Monthly
Net
Income

1 $85,000.0 $950.0 $365.0 $141.7 $506.7 $443.3
2 $85,000.0 $950.0 $365.0 $141.7 $506.7 $443.3
3 $85,000.0 $950.0 $365.0 $141.7 $506.7 $443.3
4 $85,000.0 $950.0 $365.0 $141.7 $506.7 $443.3
5 $85,000.0 $950.0 $365.0 $141.7 $506.7 $443.3
6 $85,000.0 $950.0 $365.0 $141.7 $506.7 $443.3
7 $85,000.0 $950.0 $365.0 $141.7 $506.7 $443.3
8 $85,000.0 $950.0 $365.0 $141.7 $506.7 $443.3
9 $85,000.0 $950.0 $365.0 $141.7 $506.7 $443.3
10 $85,000.0 $950.0 $365.0 $141.7 $506.7 $443.3

Page 5 | Eden Fund, LLC
ANNUAL REVENUES AND EXPENSES
As you can see, buying real estate when it provides positive cash
flow results in returns even with no home appreciation. Buying
when the costs of carry are covered by rents defines your
downside to an extent. This is your margin of safety. The
optionality of real estate is derived from capital gains.
ANNUAL
Net Income
(Pre-tax)
Property
Taxes
Net Income
(Post-tax)

$5,319.5 $1,275.0 $4,044.5
$5,319.5 $1,275.0 $4,044.5
$5,319.5 $1,275.0 $4,044.5
$5,319.5 $1,275.0 $4,044.5
$5,319.5 $1,275.0 $4,044.5
$5,319.5 $1,275.0 $4,044.5
$5,319.5 $1,275.0 $4,044.5
$5,319.5 $1,275.0 $4,044.5
$5,319.5 $1,275.0 $4,044.5
$5,319.5 $1,275.0 $4,044.5

IRR

17.2%

Page 6 | Eden Fund, LLC
When thinking about real estate, its important to distinguish be-
tween nominal and real prices. Nominal prices, or prices not ad-
justed for inflation, are what most people focus on.

However, the savvier investor focuses on real home prices. As Ive
demonstrated before, home prices nationally have more or less
tracked inflation for generations.

Currently, the real price of homes nationally is slightly above the long
-term trend in inflation.
However, in Las Vegas, not only have nominal prices
collapsed, but real prices have as well. In fact, real prices are
currently below 1987 levels, which was before the initial
resurgence in Las Vegas courtesy of Steve Wynn. Prices in
Las Vegas have overshot to the downside, and it is reasonable to
expect the pre-bubble trend in real prices to reappear.

No matter how bearish you are on housing or the economy in gen-
eral, you must understand that every asset has a price in which the
expected return justifies an investment. This is a situation that is
developing in Las Vegas.
I NF L ATI ON- ADJ USTED HOME PRI CES
Page 7 | Eden Fund, LLC
There are three key factors that affect the affordability of homes:
mortgage rates, household income, and home prices. While U.S.
median income has stayed relatively stable, mortgage rates and
home prices have fallen off considerably from their peak.

Normally you would expect home prices to move inversely with
interest rates; however, home prices have fallen along with interest
rates in this particular cycle. This is a positive scenario for potential
homebuyers.
30 YEAR MORTGAGE RATE
HOME AFFORDABI L I TY
U.S. MEDIAN INCOME
Page 8 | Eden Fund, LLC
One metric used to calculate whether real estate is overvalued,
undervalued, or trading at fair value is the median home price to
median income ratio. Historically, the national ratio is 3.5, which is
just about where we are trading at now.

In comparison, the ratio in Las Vegas is currently 2.5. In other
words, homes are very cheap in Las Vegas relative to the income of
its residents. This phenomenon will work to support prices moving
forward.
MEDI AN PRI CE/ I NCOME RATI O
NATIONAL MEDIAN HOME PRICE TO MEDIAN INCOME
Page 9 | Eden Fund, LLC
LAS VEGAS MEDIAN HOME PRICE TO MEDIAN INCOME
AVERAGE MONTHLY MORTGAGE PAYMENT AS % OF
MEDIAN INCOME
Another way of determining home affordability is to measure the
portion of income that goes towards housing. Due to the curious
situation of mortgage rates falling with home prices, mortgage
payments have actually fallen as a percent of income, even during
the recession.

As you can see, the data simply does not support the notion that
home prices are overvalued. Real estate is a market dominated by
irrational fear. At tops, everyone is exuberant; at bottoms,
everyone is fearful. This is just how markets operate.
Page 10 | Eden Fund, LLC

All cash flow projections go out the door if there are no renters.
This is why you should have a huge margin of safety when you
Invest in real estate. Based on conservative projections, we can
calculate our breakeven vacancy rate using the projections from
Page 5.

Keep in mind that even in this somewhat drastic scenario, we are
still paying off the mortgage with other peoples money- hence in a
flat market, we are still making a return.
WHO WI L L RENT?
AREN T VACANCI ES HI GH?
Yr

Annual Net Income Breakeven Vacancy Rate


1 $4,044.50 35.50%
2 $4,044.50 35.50%
3 $4,044.50 35.50%
4 $4,044.50 35.50%
5 $4,044.50 35.50%
6 $4,044.50 35.50%
7 $4,044.50 35.50%
8 $4,044.50 35.50%
9 $4,044.50 35.50%
10 $4,044.50 35.50%
Page 11 | Eden Fund, LLC
ECHO GENERATION, ANYONE?
Demographics play a huge role in any real estate market. Most peo-
ple know about Baby Boomers and the effect they will have on our
economy. However, fewer people know about the Echo
Generation, which is composed of people born between the mid
1970s and the early 2000s.

The Echo Generation represents another Baby Boom
generation, albeit smaller in scale. The average person in the U.S.
now buys a home when they are 38. In other words, the majority of
the Echo Generation is still renting. Shortage of renters?
Page 12 | Eden Fund, LLC
HOME OWNERSHIP RATE
The home ownership rate in America gives us an idea of the
number of renters there are at any given time. A lower home own-
ership rate means there are more renters, which favors those who
own rental properties. According to the Census Bureau, the
homeownership rate has fallen, and with rising foreclosures, it will
likely continue to fall.
Each percentage point drop in the home ownership rate is
equivalent to about 2 million people becoming renters.
Everyone talks about foreclosures, underwater homeowners, and
distressed sales as if it were a bad thing for owners of rental prop-
erties. But these seemingly negative housing indicators actually
increase the supply of renters and put upward pressure on rents.
From the following chart from rentbits.com, it appears rents have
stabilized even while home prices continue to fall. This is very
bullish for owners of rental properties.
Page 13 | Eden Fund, LLC
BABY BOOMERS
One of the most important things to consider is the
migration pattern of Baby Boomers. The two things on the top of
Boomers wish lists for housing are:

1) low costs of living
2) favorable climates

Las Vegas scores high on both counts.

Baby Boomers who planned on using their home equity to
retire are now in trouble. While a rising market benefited the net
worth of Boomers, it didn't necessarily improve their cash flow
situation. Many Boomers are now finding that they are sitting on
a liability with rising property taxes and energy costs. This is
leading to the next big trend for Boomers: Trading down.

The majority of the wealth in the country is concentrated in the
Baby Boomer demographic. By extension, the most
expensive markets are dominated by Baby Boomers.
We believe you will see a converging of real estate prices
between the overvalued markets (NYC, Los Angeles, etc.) and the
undervalued/distressed markets (Las Vegas, Miami, etc.) as
domestic Baby Boomer migration trends emerge.

While the Echo Generation will determine rental income, the
Baby Boom generation will determine home appreciation. Boom-
ers by and large are not affected by recessions; they are affected
by interest rates. They are the only demographic that has the
ability to spend in a downturn. In other words, Boomers will
provide liquidity to the housing market.
Page 14 | Eden Fund, LLC
After the bursting of the real estate bubble, housing has become a relatively shunned investment. There is no better time to invest than
when an asset as a whole is hated, especially when objective metrics suggest huge undervaluation. No one is rushing to buy Las Vegas
real estate, which means we can slowly build a position and capitalize on the eventual appreciation.

Considering the macroeconomic backdrop, mortgage rates, and prices, we believe 20% annualized compounded returns are a very
conservative forecast. In our opinion, a bottom in real estate is going to come sometime between late 2011 and late 2012. The
countertrend recovery cycle in real estate should last 3-5 years, and Las Vegas should be one of the prime beneficiaries.

It is just time to invest in Las Vegas real estate.
CONCLUSI ON
Page 15 | Eden Fund, LLC
CONTACT US
Moses Kim & Victor Yun
Managing Partners
Eden Fund LLC
edenfundllc@gmail.com
expectedreturnsblog.com

Page 16 | Eden Fund, LLC