South Park Apartments 2.3M

16
Joe Lumbley 214 941 3417 joe@lumbley.com Dallas, Tx 75208  Southpark Apartments 2411-2 417 E. Park Row, Arli ngt on, Tx 76010 Prepar ed for Prospective Buyer  Presented by JP Lumbley & Associates, LLC 819 N. Bishop  

Transcript of South Park Apartments 2.3M

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Joe Lumbley

214 941 3417

[email protected] Dallas, Tx 75208

 

Southpark Apartments

2411-2417 E. Park Row, Arlington, Tx 76010

Prepared for

Prospective Buyer

 

Presented by

JP Lumbley & Associates, LLC

819 N. Bishop

 

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Potential Rental Income 430,200$ Purchase/Asking Price 2,300,000$ Property Type Apartments

Other Income 11,830 Improvements - No. of Units 76

Total Vacancy and Credits (21,510) Other - Price Per Unit 30,2$

Operating Expenses (244,961)$ Closing Costs - Total Sq Ft 51,9

Annual Reserves: $ Finance Points - Price Per Sq Ft 44$

Net Operating Income (NOI) 175,559$ Income per Unit 5,8$MIP Payments $ Total Acquisition Cost 2,300,000$ Expenses per Unit (3,22$

Annual Reserves: $

Debt Service: (114,306)$Mortgage (s) 1,725,000$

Cash Flow Before Taxes 61,253$

(9,539) Down Payment / Investment 575,000$

Cash Flow After Taxes 51,714$

% of Asking % of Cost

Rental Growth Rate: 5.00% Down Payment: 575,000$ 25.00% 25.00%Expense Growth Rate: 5.00% Initial Loan Balance: 1,725,000$ 75.00% 75.00%

Appreciation Rate 5.00%

Marginal Tax Rate: 33.00% Loan Amount Interest Rate Term Payment

Capital Gain Tax Rate: 15.00% 1,725,000$ 5.25% 30 $9,526

$ 5.00% 30 $0

$ 4.00% 30 $0

Year 1 Year 3 Year 7

Debt Coverage Ratio (DCR) 1.54 1.73 2.17 

Loan-to-Value Ratio (LVR) 70.4% 61.9% 47.1%

Capitalization Rate Based on Cost 7.63% 8.58% 10.78%

Capitalization Rate Based on Resale Price 7.27% 7.41% 7.66%

Gross Rent Multiplier 5.35 5.61 5.61 

4.00% 31,420 383,972 1,142,554

3.00% 19,740 305,522 944,181

Cash on Cash Return - Before Taxes 10.65% 14.43% 23.24%

Cash on Cash Return - After Taxes 8.99% 11.97% 17.51%

Internal Rate of Return - Before Taxes 25.01% 25.56%

Internal Rate of Return - After Taxes 19.94% 21.45%

23.26% 21.45%

18.72% 18.34%

Loan InformationAssumptions

Income Taxes: Benefit (Expense) @ 33%

Financial Measurements Notes / Discussion

The information, calculations and data presented in this report are believed to be accurate but are not guaranteed. The information contained in this report shall not be considered as a subs titution for leaccounting or other professional advice. Please s eek proper legal and tax advice as appropriate before making investments.

Modified Internal Rate of Return - Before Taxes

Modified Internal Rate of Return - After Taxes

Net Present Value (NPV) - B/ Taxes

Net Present Value (NPV) - A/Taxes

Disclaimer: All information presented is believed to be accurate.

Joe Lumbley

JP Lumbley & Associates, LLC

214 941 3417

Property Overview

Southpark Apartments

2411-2417 E. Park Row, Arlington, Tx 76010

 

Income, Expenses & Cash Flow

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South Park

Apartments 76Units

Regency

Apartments 70Units

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Southpark Apartments

2411-2417 E. Park Row, Arlington, Tx 76010

 

Potential Rental Income 430,200$ 451,710$ 474,296$ 498,010$ 522,911$

Other Income 11,830 12,422 13,043 13,695 14,379 

Less: Vacancy & Credit Losses (21,510) (22,586) (23,715) (24,901) (26,146) Less: Operating Expenses (244,961) (255,392) (266,327) (277,791) (289,809) 

Net Operating Income (NOI) 175,559$ 186,154$ 197,296$ 209,014$ 221,336$

Less: Annual Debt Service (114,306) (114,306) (114,306) (114,306) (114,306)

CASH FLOW Before Taxes 61,253$ 71,848$ 82,990$ 94,708$ 107,030$

Income Taxes: Benefit (Expense) @ 33% (9,539) (10,051) (14,181) (18,525) (23,095) 

CASH FLOW After Taxes 51,714$ 61,796$ 68,809$ 76,182$ 83,935$

Projected Sales Price 2,415,000$ 2,535,750$ 2,662,538$ 2,795,664$ 2,935,448$Less: Selling Expenses (144,900) (152,145) (159,752) (167,740) (176,127) 

Adjusted Projecte d Sales Price 2,270,100$ 2,383,605$ 2,502,785$ 2,627,925$ 2,759,321$

Less: Mortgage(s) Balance Payoff (1,700,677) (1,675,045) (1,648,035) (1,619,572) (1,589,579) 

SALE PROCEEDS Before Taxes 569,423$ 708,560$ 854,750$ 1,008,352$ 1,169,742$

(8,555) (45,298) (79,903) (115,401) (151,838) 

SALE PROCEEDS After Taxes 560,868$ 663,262$ 774,848$ 892,951$ 1,017,904$

Cash Generated in Current Year 51,714$ 61,796$ 68,809$ 76,182$ 83,935$

Cash Generated in Previous Years n/a 51,714 113,511 182,319 258,502

Cash Generated from Property Sale 560,868 663,262 774,848 892,951 1,017,904

Original Initial Investment (575,000) (575,000) (575,000) (575,000) (575,000)

37,583$ 201,772$ 382,167$ 576,453$ 785,341$

Debt Coverage Ratio (DCR) 1.54 1.63 1.73 1.83 1.94 

Loan-to-Value Ratio (LVR) 70.4% 66.1% 61.9% 57.9% 54.2%

Capitalization Rate Based on Cost 7.63% 8.09% 8.58% 9.09% 9.62%

Capitalization Rate Based on Resale Price 7.27% 7.34% 7.41% 7.48% 7.54%

Gross Rent Monthly Multiplier (GRM) 64.16 67.36 67.36 67.36 67.36 

Gross Rent Yearly Multiplier (GRM) 5.35 5.61 5.61 5.61 5.61 

Value of Property Using this GRM 5.35  2,300,000 2,415,000 2,535,750 2,662,538 2,795,664 

Net Present Value (NPV) - After Taxes 3.00% 19,740 158,645 305,522 457,490 614,570 

Cash-on-Cash Return with Equity 6.54% 29.27% 27.20% 25.07% 23.39%Cash-on-Cash Return - Before Taxes 10.65% 12.50% 14.43% 16.47% 18.61%

Cash-on-Cash Return - After Taxes 8.99% 10.75% 11.97% 13.25% 14.60%

Internal Rate-of-Return (IRR) - Before Taxes 9.68% 21.95% 25.01% 25.87% 26.00%

Internal Rate-of-Return (IRR) - After Taxes 6.54% 16.88% 19.94% 21.05% 21.44%

Modified Internal Rate-of-Return (MIRR) - Before Taxe 9.68% 21.12% 23.26% 23.36% 22.86%

Modified Internal Rate-of-Return (MIRR) - After Taxes 6.54% 16.34% 18.72% 19.23% 19.12%

Income Taxes: ReSale: Benefit (Expense) @ 15%

Joe Lumbley

214 941 3417

Financial Measurements

Year 4 Year 5

Cash Position

Rental Activity Analysis

Total Potential CASH Generate d

Property Resale Analysis

Year 1 Year 2 Year 3

1/10/2013 12:51 PM © 1993 - 2012 Cash Flow Analyzer® RentalSoftware.com

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Southpark Apartments

2411-2417 E. Park Row, Arlington, Tx 76010

Per unit Total Percent of Annual Rent Monthly Annua

Sq Ft Sq Ft Total Rev/ Sq Ft Per Unit Rent Rent

Efficiency 1 8 320 2,560 4.93% 14.060 375$ 3,000$ 36,$

1-1 32 605 19,360 37.25% 8.430 425$ 13,600$ 163,$

2-1 22 825 18,150 34.92% 7.640 525$ 11,550$ 138,$

2-1.5 14 850 11,900 22.90% 7.760 550$ 7,700$ 92,$

0 0 0 0 0.00% 0.000 $ $ $

Totals 76 2,600 51,970 100.0% 8.278 1,875 35,850$ 430,$

Joe Lu

214 941

Unit Description

Number of

Units

Unit Mix

11%

42%

29%

18%

Efficiency 1

1-1

2-1

2-1.5

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Southpark Apartments

2411-2417 E. Park Row, Arlington, Tx 76010

 

Per Unit Total

Sq. Ft. Sq. Ft.

986$ 13.0$ 0.38 0.02 

Totals 986$ 13.0$ 0.38 0.02 

Joe Lumbley

214 941 3417

Description

Laundry/Soda

Per UnitMonthly

Amount

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Southpark Apartments

2411-2417 E. Park Row, Arlington, Tx 76010

 

% of % of

Expenses Revenue

400  5.0% 5.26 0.01 0.2% 0.1%

1,296  5.0% 17.05 0.02 0.5% 0.3%

300  5.0% 3.95 0.01 0.1% 0.1%

16,331  5.0% 214.88 0.31 6.7% 3.9%

500  5.0% 6.58 0.01 0.2% 0.1%

45,413  1.0% 597.54 0.87 18.5% 10.8%

26,522  348.97 0.51 10.8% 6.3%

10,493  5.0% 138.07 0.20 4.3% 2.5%

62,186  5.0% 818.24 1.20 25.4% 14.8%

37,337  5.0% 491.28 0.72 15.2% 8.9%

9,436  5.0% 124.16 0.18 3.9% 2.2%

6,004  5.0% 79.00 0.12 2.5% 1.4%

1,424  5.0% 18.74 0.03 0.6% 0.3%

27,319  5.0% 359.46 0.53 11.2% 6.5%

244,961$ 3,223$ 51,970 100.0% 58.3%

Electricity

Per Unit

Water

Expense Description

Telephone

Total Annual Operating Expenses

Trash Removal

Maintenance

Legal

Property Taxes

Payroll

Office and General

Management Fee

Annual

Increase

Accounting

Insurance

Joe Lumbley

214 941 3417

Per Sq Ft

Advertising

Association Fees

Annual

Amount

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 Annual Property Operating DataSouthpark Apartments

2411-2417 E. Park Row, Arlington, Tx 76010

 

Year 1 Sq Ft Pe r Unit Year 2 Sq Ft Pe r Unit Year 3 Sq Ft Per Unit Year 4

Potential Rental Income 430,200$ 8.28 471.71 451,710$ 8.69 495.30 474,296$ 9.13 520.06 498,0$

Less: Vacancy & Credit Losses (21,510) -0.41 -23.59 (22,586) -0.43 -24.76 (23,715) -0.46 -26.00 (24,90

408,690$ 7.86 448.13 429,125$ 8.26 470.53 450,581$ 8.67 494.06 473,1$

420,520$ 8.09 461.10 441,546$ 8.50 484.15 463,623$ 8.92 508.36 486,8$

Accounting 400 0.01 0.44 420 0.01 0.46 441 0.01 0.48 4

Advertising 1,296 0.02 1.42 1,361 0.03 1.49 1,429 0.03 1.57 1,5

Association Fees 300 0.01 0.33 315 0.01 0.35 331 0.01 0.36 3

Cleaning - 0.00 0.00 - 0.00 0.00 - 0.00 0.00 -

Insurance 16,331 0.31 17.91 17,148 0.33 18.80 18,005 0.35 19.74 18,9

Landscaping - 0.00 0.00 - 0.00 0.00 - 0.00 0.00 -

Legal 500 0.01 0.55 525 0.01 0.58 551 0.01 0.60 5

Maintenance 45,413 0.87 49.79 45,867 0.88 50.29 46,326 0.89 50.80 46,7

Management Fee 26,522 0.51 29.08 27,848 0.54 30.53 29,240 0.56 32.06 30,7

Office and General 10,493 0.20 11.51 11,018 0.21 12.08 11,569 0.22 12.68 12,14

Payroll 62,186 1.20 68.19 65,295 1.26 71.60 68,560 1.32 75.18 71,9

Pest Control - 0.00 0.00 - 0.00 0.00 - 0.00 0.00 -

Professional Fees - 0.00 0.00 - 0.00 0.00 - 0.00 0.00 -

Property Taxes 37,337 0.72 40.94 39,204 0.75 42.99 41,164 0.79 45.14 43,22

Total Utilities - 0.00 0.00 - 0.00 0.00 - 0.00 0.00 -

244,961$ 4.71 268.60 255,392$ 4.91 280.04 266,327$ 5.12 292.03 277,7$

175,559$ 3.38 192.50 186,154$ 3.58 204.12 197,296$ 3.80 216.33 209,0$

Less: Annual Debt Service (114,306) -2.20 -125.34 (114,306) -2.20 -125.34 (114,306) -2.20 -125.34 (114,30

Cash Flow Before Taxes 61,253$ 1.18 67.16 71,848$ 1.38 78.78 82,990$ 1.60 91.00 94,7$

Net Operating Income (NOI)

Total Operating Expenses

Operating Expenses

Effective Rental Income

Gross Operating Income

© 19

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Southpark Apartments

Joe Lumb

214 941 3

Time Net Operating Debt Cash Flow Incomes Cash Flow  

Period Income Service Before Tax Taxes After Tax  

Int Investment (575,000)$ (575,000)$

Year 1 175,559 - (114,306) 61,253 (9,539) 51,714 

Year 2 186,154 - (114,306) 71,848 (10,051) 61,796 

Year 3 197,296 - (114,306) 82,990 (14,181) 68,809 

Year 4 209,014 - (114,306) 94,708 (18,525) 76,182 

Year 5 221,336 - (114,306) 107,030 (23,095) 83,935 

2411-2417 E. Park Row, Arlington

Reserves & MIP Payments 

$

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

1 2 3 4 5

Cash Flow After Taxes

Cash Flow Before Taxes

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Southpark Apartments

2411-2417 E. Park Row, Arlington, Tx 76010

 Joe Lumb

214 941 3

Time Initial Investment Cash Flow Cash on Cash Income Cash Flow Cash on Cash  

Period Adj for Refinance Before Taxes Before Taxes Taxes After Taxes After Taxes  

Year 1 575,000$ 61,253$ 10.65% (9,539)$ 51,714$ 8.99%Year 2 575,000 71,848 12.50% (10,051) 61,796 10.75%

Year 3 575,000 82,990 14.43% (14,181) 68,809 11.97%

Year 4 575,000 94,708 16.47% (18,525) 76,182 13.25%

Year 5 575,000 107,030 18.61% (23,095) 83,935 14.60%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

20.00%

1 2 3 4 5

After Taxes

Before Taxes

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Southpark Apartments

2411-2417 E. Park Row, Arlington, Tx 76010

 Joe Lumb

214 941 3

Time Net Operating Cap Rate on Cost Resale  

Period Income (NOI)   2,300,000$ Value 

Year 1 175,559$ 7.63% 2,415,000$

Year 2 186,154 8.09% 2,535,750 

Year 3 197,296 8.58% 2,662,538 

Year 4 209,014 9.09% 2,795,664 

Year 5 221,336 9.62% 2,935,448 

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

1 2 3 4 5

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Southpark Apartments

2411-2417 E. Park Row, Arlington, Tx 76010

 Joe Lumb

214 941 3

Time Net Operating Mortgage Debt Coverage  

Period Income Payments Before Taxes  

Year 1 175,559$ (114,306)$ 1.54 

Year 2 186,154 (114,306) 1.63 

Year 3 197,296 (114,306) 1.73 

Year 4 209,014 (114,306) 1.83 

Year 5 221,336 (114,306) 1.94 

-

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

1 2 3 4 5

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Southpark Apartments

2411-2417 E. Park Row, Arlington, Tx 76010

 Joe Lumb

214 941 3

Before Taxes After Taxes 

Year 1 9.68% 6.54%

Year 2 21.95% 16.88%

Year 3 25.01% 19.94%

Year 4 25.87% 21.05%

Year 5 26.00% 21.44%

Internal Rate of Return (IRR) Time Period 

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

1 2 3 4 5

IRR After Tax

IRR Before Tax

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Southpark Apartments

2411-2417 E. Park Row, Arlington, Tx 76010

  Joe Lumb

214 941 3

Cash on Cash Time Period Potential Operating, Debt, Occupancy BreakEven Max Vacancy BreakEven Max Vacanc

Requirement Rental Income Reserve Expenses Rate (Existing) Occupancy Rate BreakEven Rate Occupancy Rate BreakEven Ra

6.00% w/ Cash on Cash w/ Cash on Ca

Year 1 442,030 (359,267) 95.00% 81.28% 18.72% 89.08% 10.92%

Year 2 464,132 (369,698) 95.00% 79.65% 20.35% 87.09% 12.91%

Year 3 487,338 (380,633) 95.00% 78.10% 21.90% 85.18% 14.82%

Year 4 511,705 (392,097) 95.00% 76.63% 23.37% 83.37% 16.63%

Year 5 537,290 (404,115) 95.00% 75.21% 24.79% 81.63% 18.37%

65.00%

70.00%

75.00%

80.00%

85.00%

90.00%

1 2 3 4 5

BreakEven Occupancy

BreakEven Occupancy with Cash on Cash Requirment

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 [email protected] 941 3417

Joe Lumbley

About Us

JP Lumbley & Associates, LLC819 N. Bishop

0Dallas, Tx 75208

Joe has been selling income properties in the DFW area for over 33 years. Over the past

few years, he and his firm have been responsible for the sale of almost 100 multifamily

properties in the Dallas/Fort Worth area. Many of the firm's sales have been in close-in,redeveloping areas such as North Oak Cliff. We have lots of experience in C and D level

properties as well as experience in rehabbing and upgrading these properties.

The firm has also managed multifamily properties all over the DFW area. We seek similar

experience in our sales agents. Our last two new hires have both owned multifamily

properties in the 50-100 unit range. We feel that there's no substitute for on-the-ground

experience in the industry.

Joe's overall approach to multifamily investing can best be described as "data driven". He

is a database guru, having written the best-selling Informix DBA Survival Guide.

It's the "Bible" of IBM database administration and has been used as a college textbook foradministration of large IBM database systems. His book has been referenced in many IT

doctoral dissertations as well as being the best-selling book ever written on the subject.

With that kind of background, it's no surprise that the JP Lumbley & Associates, LLC

corporate database contains features no other real estate firm in the area can match. We

have all multifamily properties in North Texas on our servers, and we can search and

analyze investment opportunities using a myriad of parameters. We also have a corporate

buyer database that enables us to remain in contact with the top buying principals who are

active in the area.

Joe's often said "We're not in the real estate business. We're in the information business.

We sell information and we sell streams of money." With that kind of philosophy you canexpect more than the typical sales pitch from a JPLA agent. You can expect actionable,

usable information about all of our listings. WE DON'T USE PROFORMA NUMBERS

unless specifically noted. All of our numbers come right off of the seller's financial

statements. Life's too short to deal with bogus numbers.

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10-10-11

Before working with a real estate broker, you

should know that the duties of a brokerdepend on whom the broker represents. If you are a prospective seller or landlord

(owner) or a prospective buyer or tenant (buyer), youshould know that the broker who lists the property forsale or lease is the owner’s agent. A broker who actsas a subagent represents the owner in cooperationwith the listing broker. A broker who acts as a buyer’sagent represents the buyer. A broker may act as anintermediary between the parties if the partiesconsent in writing. A broker can assist you in locatinga property, preparing a contract or lease, or obtainingfinancing without representing you. A broker isobligated by law to treat you honestly.

I F THE BROKER REPRESENTS THE OWNER: The broker becomes the owner’s agent by enteringinto an agreement with the owner, usually through awritten - listing agreement, or by agreeing to act as asubagent by accepting an offer of subagency from thelisting broker. A subagent may work in a different realestate office. A listing broker or subagent can assistthe buyer but does not represent the buyer andmust place the interests of the owner first. The buyershould not tell the owner’s agent anything the buyerwould not want the owner to know because anowner’s agent must disclose to the owner any

material information known to the agent.

I F THE BROKER REPRESENTS THE BUYER: The broker becomes the buyer’s agent by enteringinto an agreement to represent the buyer, usuallythrough a written buyer representation agreement. Abuyer’s agent can assist the owner but does notrepresent the owner and must place the interests of the buyer first. The owner should not tell a buyer’sagent anything the owner would not want the buyerto know because a buyer’s agent must disclose to thebuyer any material information known to the agent.

I F THE BROKER ACTS AS AN I NTERMEDI ARY: A broker may act as an intermediary between theparties if the broker complies with The Texas RealEstate License Act. The broker must obtain the writtenconsent of each party to the transaction to act as an

Appro ved by th e Texas Rea l Es ta te Com m iss ion fo r Vo lun t a ry Use

Texas law requires all real estate licensees to give the following information about 

brokerage services to prospective buyers, tenants, sellers and landlords. 

Information About Brokerage Services

Real estate licensee asks that you acknowledge receipt of this information about brokerage services for the licensee’s records.

intermediary. The written consent must state who will

pay the broker and, in conspicuous bold or underlinedprint, set forth the broker’s obligations as anintermediary. The broker is required to treat eachparty honestly and fairly and to comply with TheTexas Real Estate License Act. A broker who acts asan intermediary in a transaction:

(1) shall treat all parties honestly;

(2) may not disclose that the owner will accept aprice less that the asking price unless authorized inwriting to do so by the owner;

(3) may not disclose that the buyer will pay aprice greater than the price submitted in a written offer

unless authorized in writing to do so by the buyer; and

(4) may not disclose any confidential information orany information that a party specifically instructs thebroker in writing not to disclose unless authorized inwriting to disclose the information or required to do so byThe Texas Real Estate License Act or a court order or if the information materially relates to the condition of theproperty.

With the parties’ consent, a broker acting as anintermediary between the parties may appoint a personwho is licensed under The Texas Real Estate LicenseAct and associated with the broker to communicate

with and carry out instructions of one party andanother person who is licensed under that Act andassociated with the broker to communicate with andcarry out instructions of the other party.

I f you choose to have a broker represent you,you should enter into a written agreement with thebroker that clearly establishes the broker’s obligationsand your obligations. The agreement should statehow and by whom the broker will be paid. You havethe right to choose the type of representation, if any,you wish to receive. Your payment of a fee to a brokerdoes not necessarily establish that the brokerrepresents you. If you have any questions regarding

the duties and responsibilities of the broker, youshould resolve those questions before proceeding.

Buyer, Seller, Landlord or Tenant Date

Texas Real Estate Brokers and Salespersons are licensed and regulated by the Texas Real Estate Commission (TREC). If you have a question or complaintregarding a real estate licensee, you should contact TREC at P.O. Box 12188, Austin, Texas 78711-2188 , 512-936-3000 (http://www.trec.texas.gov)