® RESIDENTIAL PROPERTY MANAGEMENT AND RENTAL SERVICE CENTER

® Property Management & Rental Services Joe Amatangelo Vice President Residential Property Management /Rental Service Center Certified Public Accountant with more than 20 years experience as a Chief Operating Officer and Chief Financial Officer in Real Estate Development, Retail, Single Family and Multi-family Property Management Long & Foster Property Management has been an integral part of Long & Foster’s services for many years and currently manages properties in Washington DC, Maryland, Virginia, New Jersey and Pennsylvania. Long & Foster Property Management currently manages several thousand properties with an estimated market value of more than $1 billion.

® Assumptions Based on Trends Property management is the primary growth area in residential real estate and will be for the next several years Industry and media projections are for 5%-10% escalations in rent in many parts of the country as demand converges with and may exceed supply of quality rental units Fewer generation X and Y customers will take a traditional view of home ownership (American dream, rock solid investment, etc…) and opt instead for the flexibility of rental housing Conversely, more younger buyers will view property ownership as a tool and be more likely to convert to rental as they relocate, viewing the property as another piece of their investment portfolio rather than a sacred cow Tenants that want to rent a single family home rather than an apartment are more likely to buy a home sooner Property Management & Rental Services

® Facts The housing industry and real estate sales have undergone a period of extreme adjustment over the past several years after what some would define as a “bubble” driven by speculation and relaxed lending policies Foreclosure rates are high, driving many former homeowners into the rental market until they can repair their credit Potential buyers are not jumping into the market at the expected rate despite favorable mortgage rates, low prices, and high inventories The downward adjustment of home values has left millions owing more (much more) than their home is worth Property Management & Rental Services (CONT.)

® Predictions The sales market will recover ultimately to a more balanced state. Rentals will continue to comprise a significant segment of the market for people who would have traditionally been more likely to buy while confidence in ownership is restored Property Management & Rental Services (CONT.)

® Rental Facts and Strategy Most rental property in the U.S. is privately owned and managed. There is a need for professional management of those assets, mainly for liability issues Property management is a separate discipline from residential sales, making it more difficult (and risky) to become involved in the rental market without specialists on staff and a commitment to rental specific education Capturing and warehousing quality listings as rentals while owners wait out the down cycle in the market allows the homeowner to weather the storm and retain the opportunity to sell the listing when the market stabilizes Providing RSC service model allows an interface with landlords who wish to privately manage. Follow on marketing to solicit a management relationship increases capture rate of self-managed properties Property Management & Rental Services (CONT.)

® Rental Facts and Strategy (cont.) The RSC concept is well suited to smaller markets or those with a static population, as it generates revenue and forms relationships with owner/managers The PM concept relies on population concentration, a less static demographic, and enough inventory for management services to capture a meaningful volume of business With PM, the listing is attached to the company for future sale With RSC, the listing is (more likely) attached to the agent for future sale Property Management & Rental Services (CONT.)

® What We Do Provide full service property management including marketing services, showing and screening, leasing, and ongoing management RSC works in conjunction with select sales agents to provide exposure for owners who do not want full service management. Marketing and a lease contract are provided for a fee – no other services are provided RSC owners are provided opportunities to convert to the management program with favorable pricing and/or inducements Managed properties’ referring agents (aka: Agent of Record) are documented and protected should the landlord decide to list and sell the home Our sales associates work in conjunction with PM to market and show rental units – providing greater coverage than PMs alone and affording the sales associates an opportunity to earn commission dollars and volume apart from their sales activity Property Management & Rental Services (CONT.)

® Conclusion The current market is very conducive to building and/or growing rental business as a substantial part of a full service brokerage business Increasing rents provide greater opportunity to expand into markets where the return would not have justified it previously Capturing business with full service management leads to future sales Servicing landlords with a lease-only program forms relationships in smaller or less active markets Property Management & Rental Services (CONT.)