Real Estate Operations

9 Months Ended

Sep. 30, 2015

Note - 5

Real Estate Operations

In connection with the Company’s program to purchase residential properties for purposes of renovation or construction and resale, as of September 30, 2015, the Company had purchased for an aggregate original price of approximately $29.9 million, and continued to own, through two indirect wholly-owned subsidiaries, twelve residential properties in Miami-Dade County, Florida and one residential property in East Hampton, New York. The Company is currently in the process of renovating two homes for resale. The Company is also in the process of obtaining permits for the construction of homes on three of its properties.

The company incurred $45,628 in real estate expenses for the nine months ended September 30, 2015, consisting of utilities, maintenance and other operating costs and expenses with respect to properties acquired.

Real estate held for development is recorded at cost. The cost of residential property includes the purchase price of the property, legal fees and other acquisition costs (e.g. recording, title search, survey, lien and permit searches, and inspection costs). Costs directly related to planning, developing and constructing a property are capitalized and classified as real estate held for development in the consolidated balance sheets. Capitalized development costs include interest, property taxes, insurance, and other direct project costs incurred during the period of development.

After acquisition, real estate held for development is analyzed periodically for changes in fair values and any subsequent write down is charged to operating expenses. The Company did not have such a write down during the nine months ended September 30, 2015.