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Completed Equity
Multifamily
Barberry Village
Portland, OR
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
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100% funded
Offered By Cooper Street Capital
17.0%* TARGET IRR 16.0%-18.0%
5.6%* TARGET AVG CASH ON CASH
1.59x* TARGET EQUITY MULTIPLE
Estimated Hold Period 3 years
Estimated First Distribution 7/2019
Minimum Investment 40000
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Project Summary
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Overview
Value-add acquisition of a multifamily asset with locally-experienced sponsorship and management.
Basis

 The Property is being acquired at a basis of $119,444 per unit, which compares favorably to recent comparables trading upwards of $160,000 per unit.

 

Value-Add

Per CoStar, current rents present a 21% discount to submarket averages and appear to offer a compelling mark-to-market opportunity as evidenced by the competitive set.  

Location

 The Property is well-located, situated 13 miles East of the Portland CBD, and within three miles of a Boeing factory (1,600 employees), an Amazon fulfillment center (1,500 employees), a 100-bed medical center, as well as downtown Gresham. The Property is also across the street from the MAX train station, offering affordable and convenient access throughout the Portland MSA. 

Property at a glance
Year Built 1974
# of Units 180
# of Buildings 21
Current Occupancy 92.5% as of September 2019
Parking Ratio 1.36 per unit
Acquisition Price

$21,500,000

Amenities

Resort-style pool, laundry facilities and a playground.

Investment Highlights
The Real Estate Company is purchasing the Property for $119,444 per unit, which represents a going-in cap rate of 5.46% on estimated year one net operating income
The Real Estate Company has budgeted $8,341 per unit for interior unit renovations, and $754,799 for exterior improvements
The exit strategy is to sell the Property in three years at an expected cap rate of 5.50%
Management
Cumulative Distributions

Cooper Street Capital

Cooper Street Capital (the "Real Estate Company" or "CSC") is a private equity real estate company that applies targeted acquisition strategies and active asset management to provide consistent risk-adjusted returns for investors. By structuring each investment as an individual partnership, Cooper Street Capital allows partners to invest directly. The company is headquartered in Aspen, Colorado and also has an office in San Francisco, California.

CSC’s team is committed to sourcing commercial real estate investment opportunities from across the western United States that have demonstrated strong financial performance in the past or that exhibit the potential for gains in the future. In either case, potential acquisitions must be supported by strong market fundamentals. CSC currently oversees $665 million in assets under management throughout Texas, New Mexico, Colorado, and Oregon.

https://www.cooperstreetcapital.com/
  • Brandon Cooper
    Managing Partner
  • Matt Cooper
    Director of Acquisitions
Brandon Cooper
Managing Partner

Brandon Cooper has spearheaded the acquisition of over $450 million worth of real estate assets in the last five years, which includes more than 4,000 multifamily units across the United States. Prior to founding Cooper Street Capital, he was the co-founder of two other real estate investment firms, Maroon Peak Partners and I-95 Ventures. Before his ventures in real estate, Brandon worked for Merrill Lynch and previous to that, The Center for Middle East Peace in Washington, D.C. He graduated Magna Cum Laude from Bates College and was on the cross-country skiing team. 

Matt Cooper
Director of Acquisitions

Prior to joining Cooper Street Capital, Matt Cooper worked with the US Delegation to the World Trade Organization (WTO) in Geneva, Switzerland and the Organisation for Economic Co-operation and Development (OECD) in Paris, France. As an economist, Matt executed several large research projects related to the international trade system and the economics of corporate governance frameworks. Matt holds a Bachelor of Arts in Political Science and French Language from the University of Virginia and a Masters of Science in the International Political Economy from the London School of Economics. 

Track Record

Cooper Street Capital currently oversees $426 million in assets under management throughout Texas, New Mexico, Colorado, and Oregon and has sold $289 million in assets since inception.

Currently Under Management:

Property Location Asset Type Date Acquired Units Purchase Price Current Value / Sale Price
Cedar 31 Austin, TX Multifamily Apr-17 14 $2,310,000 $3,100,000
1515 Clermont Denver, CO Multifamily Jul-17 36 $5,500,000 $7,435,000
Gallery Park/Westfal Portland, OR Multifamily Jan-19 93 $18,200,000 $22,730,000
Mueller Rose Austin, TX Multifamily Mar-19 181 $18,825,000 $22,000,000
CSC Spanish Trails Austin, TX Multifamily Mar-19 40 $6,238,000 $6,450,000
CSC Ravens Portfolio Houston, TX Multifamily Apr-19 75 $13,000,000 $14,000,000
Barton Ridge Austin, TX Multifamily May-19 37 $6,025,000 $6,850,000
Pyramid Portfolio Albuquerque, NM Multifamily Jun-19 34 $1,905,000 $2,300,000
Bannister Place Austin, TX Multifamily Jul-19 20 $3,300,000 $3,435,000
The French Quarter Albuquerque, NM Multifamily Jul-19 84 $3,400,000 $4,730,000
The Zeno Apartments Portland, OR Multifamily Aug-19 22 $4,250,000 $5,000,000
305 Flats Austin, TX Multifamily Aug-19 32 $4,200,000 $4,500,000
Cascade Apartments Austin, TX Multifamily Sep-19 198 $31,500,000 $32,000,000
Villas Esperanza Albuquerque, NM Multifamily Sep-19 188 $12,250,000 $12,250,000
Miller Square Austin, TX Multifamily Sep-19 51 $8,640,000 $8,640,000
305 Flats Austin, TX Multifamily Nov-19 32 $4,200,000 $4,200,000
Chestnut Park San Antonio, TX Multifamily Dec-19 145 $12,000,000 $12,000,000
Arbors and Courtyards Albuquerque, NM Multifamily Dec-19 529 $38,000,000 $41,000,000
Barberry Village Portland, OR Multifamily Jan-20 180 $21,500,000 $28,000,000
Longhorns Portfolio Austin, TX Multifamily Mar-20 84 $11,000,000 $11,000,000
Amber Hill San Antonio, TX Multifamily Mar-20 244 $16,750,000 $20,700,000
Blue Vine Apartments San Antonio, TX Multifamily Apr-20 111 $10,050,000 $10,050,000
The Lexington Place Albuquerque, NM Multifamily Aug-20 156 $11,750,000 $11,750,000
River Park Apartments New Braunfels, TX Multifamily Sep-20 100 $7,800,000 $10,000,000
Mesa/Mountain El Paso, TX Multifamily Sep-20 541 $29,000,000 $29,000,000
Vista Grande Albuquerque, NM Multifamily Oct-20 168 $11,000,000 $11,000,000
Mountaindale El Paso, TX Multifamily Nov-20 88 $5,100,000 $5,100,000
Creeks Edge Apartments Austin, TX Multifamily Jan-21 200 $23,000,000 $23,000,000
Netherwood Village Albuquerque, NM Multifamily Jan-21 220 $18,500,000 $18,500,000
Raintree Village El Paso, TX Multifamily Mar-21 275 $15,750,000 $15,750,000
Evergreen Apartments Santa Fe, NM Multifamily Under contract 70 $6,300,000 $6,300,000
Alexis Apartments Las Cruces, NM Multifamily Under contract 170 $13,235,000 $13,235,000
Totals       4,418 $394,478,000 $426,005,000

Previously Owned Assets:

Property Location Asset Type Date Acquired Units Purchase Price Current Value / Sale Price Sale Date
Highland Park Albuquerque, NM Multifamily Feb-13 80 $5,125,000 $6,400,000 Feb-16
MP Netherwood Albuquerque, NM Multifamily Aug-13 220 $13,975,000 $18,500,000 Jan-21
Citadel Apartments Albuquerque, NM Multifamily Mar-14 233 $9,719,000 $14,792,000 Nov-17
I-95 Portfolio Portland, ME Multifamily Jul-14 54 $6,550,000 $9,500,000 Oct-17
Bowdoin Realty Portland, ME Multifamily Dec-14 41 $5,630,000 $9,900,000 Oct-17
94-96 Winter Portland, ME Multifamily Feb-15 10 $900,000 $1,400,000 Oct-17
Bricklight Capital Portland, ME Multifamily Jul-15 45 $4,900,000 $7,100,000 Oct-17
East End Portland, ME Multifamily Sep-15 37 $4,300,000 $5,800,000 Oct-17
Bricklight, II Portland, ME Multifamily Sep-15 24 $2,730,000 $3,250,000 Jul-16
773 Congress Portland, ME Multifamily Sep-15 5 $390,000 $420,000 Aug-16
59 Bramhall Portland, ME Multifamily Aug-15 9 $625,000 $750,000 Jul-16
CSC Bear Creek Albuquerque, NM Multifamily Jun-16 84 $2,820,000 $3,400,000 Jul-19
Bannister Apartments Austin, TX Multifamily May-17 34 $2,485,000 $3,300,000 Jul-19
The Goose Nest Portland, OR Multifamily Aug-17 22 $3,075,000 $4,260,000 Aug-19
Villas De La Luz Austin, TX Multifamily Jan-18 240 $20,500,000 $25,225,000 Jan-19
Courtyards and Arbors Albuquerque, NM Multifamily Feb-18 529 $31,100,000 $38,000,000 Dec-19
English Aire/Lafayette Austin, TX Multifamily Aug-18 397 $38,750,000 $45,000,000 Mar-20
Sage Canyon Albuquerque, NM Multifamily Aug-18 105 $8,790,000 $10,260,000 Jan-20
CSC North Austin Austin, TX Multifamily Jan-19 523 $56,000,000 $62,350,000 Jan-21
Rock Creek Albuquerque, NM Multifamily Jun-19 121 $6,875,000 $8,000,000 Sep-20
Lexington Realty Capital Albuquerque, NM Multifamily Aug-19 156 $7,400,000 $11,750,000 Aug-20
Totals       2,969 $232,639,000 $289,357,000  

The above bios and track record were provided by Cooper Street Capital and have not been independently verified by RealtyMogul.

Business Plan

In this transaction, RealtyMogul investors are to invest in Realty Mogul 143, LLC ("The Company"), which is to subsequently invest in CSC Barberry Village Realty Capital, LLC ("The Target"), a limited liability company that will hold title to the Property. Cooper Street Capital (the "Real Estate Company") is under contract to purchase the Property for approximately $21.5 million ($119,444 per unit) and the total project cost is expected to be approximately $25.1 million ($139,333 per unit).

The Real Estate Company plans to implement a value-add strategy. This strategy assumes a $2.4 million capital improvement budget tailored to address interior and exterior renovations over three years, resulting in a target renovation premium of $196 per unit (~20% above in-place). 

The exterior renovations, budgeted at $754,799, include adding a clubhouse, pool upgrades, landscaping, exterior painting, balcony updates and a signage package. The Real Estate Company plans to spend approximately $1.3 million ($8,341 per unit) on interior renovations for 160 units, including flooring upgrades, cabinet replacements, new black appliances, washer-dryers, bathroom renovations and painting. This budget also includes a 10.0% contingency and a 5.0% construction management fee. The business plan calls for a three-year hold, at which point the Property is expected to sell at a 5.5% cap rate for $30.2 million ($167,966 per unit).

Capital Expenditure Budget

Exterior Renovations    
Gates/Fencing $53,875  
Exterior Lighting $20,000  
Private Patios Enclosure (Ground Floor Units) $167,959  
Club House $40,000  
Landscaping $40,000  
Balcony Updates $30,000  
Signage Package $15,000  
Paint $150,000  
Siding $35,000  
Pool Upgrades $15,000  
Seal Coat/Striping $16,965  
Energy Efficient Windows $67,500  
Gazebo 12x16 Double Roof Aluminum $10,000  
Covered Grills $3,500  
Storage Space $40,000  
Miscellaneous Repairs/Green Updates $50,000  
Exterior Subtotal $754,799  
     
Interior Renovations   Per Unit
GE 24" Dishwasher $46,280 $356
Broan 30" White Range Hood $6,889 $53
GE 30" Electric Stove $74,945 $577
GE 15.5 Cubic Feet Top Mount Fridge $99,515 $766
Bathtub Resurface $27,840 $174
Bathroom Hardware Package $40,000 $250
Flooring $182,000 $1,400
Paint & Drywall Rehabilitation $24,000 $150
Kitchen Cabinet Paint/Hardware $20,000 $125
Washer/Dryer Hook-Ups Plumbing $562,230 $6,247
Washer/Dryer $135,045 $1,501
WAC Lighting Link 3 Light 27" Wide LED Bath $19,120 $120
Satco Blink Plus 15" W White 4000K LED $16,640 $104
Labor $80,000 $500
Interior Subtotal $1,334,504 $8,341
     
Construction Manager (5%) $100,465  
Contingency Reserve (10%) $200,930  
Marketing  $15,000  
     
Total Estimated Budget $2,405,698  

 

Property
Property Details

Barberry Village is a class-C garden-style multifamily property located in the Gresham submarket of Portland, OR. Built in 1974, the Property is comprised of one- (68 units) two- (104 unit) and three- (8 units) bedroom floor plans combining to 180 units. Amenities include a resort-style pool, community laundry facilities, and a playground. The Property is 92.5% occupied with in-place rents of $958, which reflects a 21% discount to submarket averages, per CoStar.

The Property is located 13 miles outside of Portland CBD, proximate to I-84 and I-205. Within three miles of the Property are a Boeing factory, an Amazon Fulfillment Center, Mt. Hood Medical Center, and downtown Gresham.

Unit Mix

 

Unit Type # of Units % of Total Unit Size (square feet) In-place Rent Post-reno Rent
1 Bed, 1 Bath 68 38% 610 $886 $1,030
2 Bed, 1 Bath 104 58% 826 $992 $1,220
3 Bed, 1 Bath 18 4% 917 $1,129 $1,350
Total/Averages 180 100% 748 $958 $1,154
Comparables

Lease Comparables - Post Renovation

 
Townfair
Village Court
Fieldstone 
Rockwood Station
Pine Square
Averages
Subject
Submarket Gresham Gresham Gresham Gresham Gresham   Gresham
Occupancy 97% 94% 94% 94% 97%   93%
Units 265 84 154 195 143 168 180
Year Built 1991 1950 1997 1990 1974 1980 1974
# Units (1x1) 132 23 42 78 52 65 68
Rent (1x1) $1,214 $1,115 $1,381 $1,225 $1,149 $1,217 $1,030
SF (1x1) 730 500 774 717 735 691 610
Rent/SF (1x1) $1.66 $2.23 $1.74 $1.71 $1.56 $1.78 $1.69
# Units (2x1) 67 18 49 117 88 68 104
Rent (2x1) $1,306 $1,262 $1,410 $1,439 $1,310 $1,345 $1,220
SF (2x1) 922 915 957 1010 875 936 826
Rent/SF (2x1) $1.42 $1.38 $1.45 $1.42 $1.50 $1.43 $1.48
# Units (3x1)     14     14 8
Rent (3x1)     $1,798     $1,798 $1,350
SF (3x1)     1,077     1,077 917
Rent/SF (3x1)     $1.67     $1.67 $1.47
Distance from Subject 1.5 miles 0.7 miles 1.3 miles 0.1 miles 0.6 miles 0.8 miles N/A

Sales Comparables

 
The Binford
Mountain High
Halsey Station
Glendoveer Estates
Averages
Subject
Date Jul-18 Jan-18 Aug-19 Under Contract    
Year Built 1949 1995 1990 1973   1974
# of Units 182 112 124 79 124 180
Average SF/Unit 1,004 1,170 997 896 1,017 748
Purchase Price $30,729,309 $17,050,000 $20,800,000 $10,500,000 $19,769,827 $21,500,000
$/Unit $168,842 $152,232 $167,742 $132,911 $155,432 $119,444
Distance from Subject 6.1 miles  3.4 miles 2.2 miles 1.7 miles 3.3 miles N/A

Sale and Lease Comparable information provided by CoStar, Axiometrics, and the Real Estate Company.

 

Location

Market Overview 

Per Costar, with substantial inventory but limited development, the Gresham/Far East submarket boasts below-average rents and vacancies. Tenants often come here after getting priced out of more expensive urban core areas. The submarket was a hotbed of foreclosures during the housing crisis. Many residents were forced to rent apartments in the area, which has contributed to strong fundamentals. Cumulative rent growth has been rapid, but income restraints may make it difficult to sustain such an accelerated pace of growth.

Until recently, the submarket remained quiet during Portland’s building boom. No new inventory delivered for six consecutive years, but a steady trickle of units began coming on line in 2017. Though these smaller projects have not significantly affected fundamentals, several larger communities are now beginning to come on line. Benefiting from low prices and continued interest from a mix of local and institutional players, submarket sales volume has exceeded $100 million for each of the past five years.

Per Axiometrics, effective rent in the Portland MSA increased 1.7% from $1,401 in 2Q19 to $1,434 in 3Q19, which resulted in an annual growth rate of 2.9%. Annual effective rent growth has averaged 2.7% since 2Q96. The market's annual rent growth rate was below the national average of 3.0%. Out of the 150 markets ranked by RealPage nationally, Portland-Vancouver-Hillsboro, OR-WA was 32nd for quarterly effective rent growth, and 79th for annual effective rent growth for 3Q19.

The market's occupancy rate increased from 96.1% in 2Q19 to 96.3% in 3Q19, and was up from 96.2% a year ago. The market's occupancy rate was below the national average of 96.4% in 3Q19. The market's occupancy rate has averaged 95.0% since 2Q96.

Nearby Development - Rockwood Rising

The City of Gresham Redevelopment Commission is developing over 200,000 square feet of new commercial, office and retail space, including over 100 new apartment homes 0.1 miles from the Property. Rockwood Rising is expected to be a bustling center featuring a market hall, a public plaza, and “Innovation Hub” offering job hunting assistance, technical training, and space for small business owners. The project is expected to deliver in 2021.

Demographic Information

  1 Mile 3 Miles 5 Miles
Population (2019) 24,543 141,786 285,818
Population (2024) 25,695 148,519 299,957
Average Age 35 37 37
Median Household Income $44,252 $50,253 $54,060
Average Household Size 2.9 2.7 2.7
Median Home Value $226,697 $254,503 $269,102
Population Growth (2019-2024) 4.69% 4.75% 4.95%

Demographic information above was obtained from CoStar.

Photos
Financials
Sources & Uses

Total Capitalization
Sources of Funds Amount
Debt $17,880,000
Equity $7,200,000
Total Sources of Funds $25,080,000
Uses of Funds Amount
Purchase Price $21,500,000
CapEx Reserve $2,405,698
Real Estate Company Acquisition Fee $215,000
Broker Dealer Fee $160,000
Lender Origination Fee $178,800
Taxes and Insurance Reserve $99,879
Working Capital $50,000
Other Closing and Pursuit Costs $470,623
Total Uses of Funds $25,080,000

Please note that the Real Estate Company's equity contribution may consist of friends and family equity and equity from funds controlled by the Real Estate Company.e

Debt Assumptions

The expected terms of the debt financing are as follows:

  • Estimated Proceeds: $17,880,000
  • Estimated Rate (Floating): 30-Day LIBOR + 275 basis points
  • Amortization: None
  • Interest Only: Full term 
  • Term: 2 years
  • Extension Options: Two (2) one-year options to extend (0.25% fee for each)
  • Exit Fee: 1.0%

There can be no assurance that a lender will provide debt on the rates and terms noted above, or at all. All rates and terms of the debt financing are subject to lender approval, including but not limited to possible increases in capital reserve requirements for funds to be held in a lender controlled capital reserve account.

Distributions

Barberry Village, LLC intends to make distributions to Realty Mogul 143, LLC as follows:

  1. To the Members, pari passu, all excess cash flows and appreciation to a 10.0% IRR to the Members,
  2. 70.0 / 30.0 (70.0% to the Members / 30.0% to Promote) of excess cash flows and appreciation thereafter

Note that these distributions will occur after the payment of the Company's liabilities (loan payments, operating expenses and other fees as set forth in the LLC agreement, in addition to any member loans or returns due on member loans).

Realty Mogul 143, LLC will distribute 100% of its share of excess cash flow (after expenses and fees) to the members of Realty Mogul 143, LLC (the RealtyMogul.com investors). 

Distributions are expected to start in December 2020 and are projected to continue on a quarterly basis thereafter. These distributions are at the discretion of the Sponsor, who may decide to delay distributions for any reason, including maintenance or capital reserves. 

Cash Flow Summary
  Year 1 Year 2 Year 3
Effective Gross Revenue $2,163,684 $2,349,551 $2,568,888
Total Operating Expenses $989,438 $1,012,425 $1,036,764
Net Operating Income $1,174,246 $1,337,126 $1,532,124
RealtyMogul 143, LLC Cash Flows
  Year 0 2020 2021 2022
Distributions to RealtyMogul 143, LLC Investors ($4,040,000) $149,239 $238,695 $6,028,176
Net Earnings to Investor
- Hypothetical $50,000 Investment
($50,000) $1,847 $2,954 $74,606
 
Fees

Certain fees and compensation will be paid over the life of the transaction. The following fees and compensation will be paid:

One-Time Fees
Type of Fee Amount of Fee Received By Paid From Notes
Acquisition Fee $215,000 Real Estate Company  Capitalized Equity Contribution 1.0% of the Property purchase price
Broker-Dealer Fee $160,000 North Capital (1) Capitalized Equity Contribution Greater of $50,000 or 4.0% of the equity raised by RealtyMogul 143, LLC
Construction Management Fee 5.0% of Capital Expenditure Budget Real Estate Company Capitalized Equity Contribution  
Recurring Fees
Type of Fee Amount of Fee Received By Paid From Notes
Management and Administrative Fee 1.0% of amount invested in RealtyMogul 143, LLC RM Manager, LLC Distributable Cash RM Manager, LLC is the Manager of RealtyMogul 143, LLC and a wholly-owned subsidiary of Realty Mogul, Co. (2)
Asset Management Fee 1.0% of Effective Gross Income Real Estate Company Distributable Cash  
Property Management Fee 3.0% of Effective Gross Income Real Estate Company Distributable Cash  

(1) North Capital Private Securities Corporation (“NCPS”), a registered broker-dealer who will act as placement agent for interests in the Company will be paid a fee as outlined above. NCPS will pay a referral fee to Mogul Securities, LLC (“MS”), an affiliate of the Manager and RealtyMogul, Co., for referring the transaction pursuant to a referral agreement between NCPS and MS.  Certain employees of Realty Mogul, Co., an affiliate of Manager are registered representatives of, and are paid commissions by, NCPS.

(2) Fees may be deferred to reduce impact to investor distributions.

The above presentation is based upon information supplied by the Real Estate Company or others.  Realty Mogul, Co., RM Manager, LLC, and The Company, along with their respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein.  The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.

Documents
Disclaimers
Disclaimers

Forward-Looking Statements

Investors should not rely on any forward-looking statements made regarding this opportunity, because such statements are inherently uncertain and involve risks. We use words such as “anticipated”, “projected”, “forecasted”, “estimated”, “prospective”, “believes”, “expects”, “plans”, “future”, “intends”, “should”, “can”, “could”, “might”, “potential”, “continue”, “may”, “will” and similar expressions to identify these forward-looking statements.


Non-Transferability of Securities

The transferability of membership interests in The Company are restricted both by the operating agreement for that entity and by U.S. federal and state securities laws. In general, investors will not be able to sell or transfer their interests. There is also no public market for the investment interests and none is expected to be available in the future. Moreover, the estimated investment holding period described herein is only a projection, and there can be no assurance when or if an investment may be liquidated. Persons should not invest if they require any of their investment to be liquid. This is particularly important for persons of retirement age, who should plan carefully to assure that their assets last throughout retirement.


Escrow Contingency

All funds from investors will be held in a non-interest-bearing escrow account with Broker-Dealer as escrow agent for the benefit of the investors in accordance with Rule 15c2-4 under the Exchange Act. All investor funds will be transmitted directly by wire or electronic funds transfer via ACH to the escrow account maintained by the escrow agent per the instructions in the Subscription Agreement. Upon certification by Broker-Dealer and acceptance by the Company that all contingencies have been met, the investor’s funds will be promptly transmitted to the Company. If the contingencies fail to be satisfied during the offering period, we will instruct the Broker-Dealer to return all funds to the investors without interest, deduction, or setoff, and all of the obligations of the investor hereunder shall terminate.


Oregon Rent-Control Law (Senate Bill 608)

Oregon's new rent-control law passed in February 2019 may reduce Property revenues as it caps rent increases over a 12-month period to seven percent (7%) plus inflation throughout the state (based on the Consumer Price Index for Western states), which for the remainder of 2019 amounts to a rent increase cap of approximately 10.3 percent (10.3%).


Apartment Complex - Competition

Competition in the Property’s local market area is significant and may affect the Property’s occupancy levels, rental rates and operating expenses. The Property will compete with other residential alternatives to attract tenants, including but not limited to other apartment units that are currently available for rent, new apartments that are built and condominiums/houses that are for rent or sale. If development of apartment complexes by other operators were to increase, due to increases in availability of funds for investment or other reasons, then competition with the Property could intensify. If the Property is not able to successfully compete with the competitive residential alternatives in the local or regional area this could adversely affect the ability of Target Entity to sell the Property, rent its units as necessary to maintain occupancy, and/or to increase or maintain unit rental rates.


Finance Term

The loan being used to acquire the Property is expected to have an initial two (2) year term plus two one (1) year extensions. However, the Sponsor Entity anticipates the Investment Period to be approximately three (3) years. The Investment Period length potentially creates capital markets risk in the event that market conditions deteriorate over the next two (2) years impacting the Sponsor’s ability to sell the Property or obtain replacement financing. There can be no assurance that the Property would qualify for a loan extension or be refinanced after the acquisition or on the rate and terms anticipated. Any delays or adverse effects of a lack of suitable refinancing options could adversely affect the Property’s financial results or business operations and thus the value of the Company’s investment.


Interest-Only Loan Period

The loan being used to acquire the Property is expected to have an interest-only period during the first two (2) years of the loan term, which means that there will be no reduction in the principal balance during that interest-only period.


The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Issuer Document Package for a discussion of additional risks. The above presentation is based upon information supplied by the Real Estate Company and others. Realty Mogul, Co., RM Manager, LLC, and The Company, along with their respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein. The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.

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