The team at our affiliated broker-dealer, RM Securities, conducts diligence on of the issuer, including detailed background checks, criminal checks, bad actor checks, and reference checks on sponsors. In addition to screening for any criminal background, we may also turn down sponsors due to poor reference checks, even if the background and criminal checks are satisfactory.
We require unaffiliated sponsors to use an unaffiliated third-party escrow agent.* When an investor makes an investment with such sponsors using the RealtyMogul platform, the investor’s money is transferred directly into a third-party escrow account. All closing conditions in connection with a sponsor’s contingency offering need to be met before the third-party escrow agent will approve releasing investor funds to the issuer or general partner. For example, if an issuer or general partner plans to use funds for a real estate acquisition that does not ultimately transact, the third-party escrow agent will not transfer investor funds to the issuer or general partner, and funds will be returned to investors.
* Unless otherwise disclosed, escrow accounts are not required for some investments that accommodate 1031 investments where the property is already acquired.
Our processes typically includes visiting certain properties (or a subset of properties if it's a fund) to confirm the real estate is what and where the real estate is supposed to be. For certain properties that accommodate 1031 exchange investments, the team will review third-party prepared due diligence reports in lieu of a site visit.
We have formalized processes and checklists for every private placement deal listed on the platform.
Visio Financial Services
Visio Financial Services Inc. (“VFS”) is an asset-based mortgage lender to investors purchasing single-family residences (“SFR”). Its mission is to provide fast, simple and dependable mortgage finance to investors seeking to convert SFR into quality affordable housing. Since early 2009, VFS has originated more than 2,000 loans for over $30 million to investors with a low default rate. As of March 31, 2014, VFS’ outstanding loan portfolio had an unpaid balance of approximately $20 million.
VFS offers mortgage loans both to purchase and refinance SFR. On purchase loans, VFS generally requires a minimum 35% cash down payment. On refinance loans, VFS will lend up to 50% of the value of the SFR. VFS typically finances the points and fees, so the initial LTV is an estimated 50-55%.
VFS is well-positioned to originate these asset-based loans because it was founded and is led by the leadership team of Econohomes GP LLC (“Econohomes”). Econohomes purchases foreclosed SFR from financial institutions and subsequently resells these properties primarily to local investors. Econohomes has bought and resold nearly 10,000 homes since inception, including more than 2,000 in each of 2011 and 2012, and more than 1,900 in 2013. Econohomes, and now VFS, have developed significant intellectual property around the valuation and marketing of this property type, including a highly targeted proprietary contact database in excess of 300,000 people.
https://www.visiolending.com/At A Glance
Investment Structure: | Credit facility aimed at facilitating single family investor loans |
Term : | Two (2) years (balloon payment at end of term) |
Property Type: | Single-family residential (1-4 units) |
Use of Proceeds: | Finance first mortgage loans to be originated by VFS or an affiliate and secured by first priority liens |
Collateral: |
A first priority security interest in the underlying assets, including:
|
Investment Details
Realty Mogul 17, LLC will be providing VFS V a credit facility to originate single family investor loans. Investors will hold interests in Realty Mogul 17, LLC.
VFS makes asset-based mortgage loans in 34 states to investors in homes valued at $200,000 or less. The loans are made to finance the investment purchase of a home for physical rehabilitation and resale or conversion to a rental property or, in the case of refinance loans, to fund further rehabilitation or expansion capital for other investment properties. Purchase money loans are generally originated at loan-to-value ratios of 70-75%, and refinance loans are generally originated at loan-to-value ratios of approximately 55%. All loans are sized on an "as-is" basis, with no credit given for after-repaired value. Appraisals are performed by licensed appraisers engaged by or approved by VFS that meet VFS' appraisal requirements. VFS will only approve appraisals engaged by a national financial institution such as a national bank, HUD or FNMA. No appraisals are required with respect to loans originated on properties already in the VFS system.
Investors will receive interest payments of 9.5% annually*, paid monthly, with a final balloon payment at the end of the credit facility term.
The Fund will benefit from certain covenants in the credit agreement with VFS V regarding the nature of the collateral underlying the loan. These covenants require the following:
- Underlying debt service coverage ratio of the collateral be at least 1.2x
- Loans delinquent more than 120 days must be removed from the Fund's credit facility by replacing them with a performing loan or by fully paying off the unpaid principal balance of such delinquent loan
- Up to 75% of the VFS V portfolio can be refinance loans
- Up to 50% of the VFS V portfolio can be purchase loans
- Up to 50% of the VFS V portfolio can be property loans with terms of up to 15 years
Given the low loan-to-value ratios and related amortization, VFS expects the portfolio loan-to-value ratios of the Fund to begin at approximately 60% and to decrease throughout the investment period as the underlying loans amortize.
VFS requires hazard insurance for no less than the loan amount, and the insurance premiums must be escrowed as part of the monthly payment. Past years' property taxes must be paid in full and provision for future tax liability must be escrowed as part of the borrower's monthly payment. A lenders' title insurance policy is obtained for the amount of the loan. Flood insurance is required if applicable. VFS intends to lend to a variety of borrowers through VFS V including individuals, US citizens, foreign nationals and entities such as corporations, LLCs, limited partnerships and general partnerships. For loans to entities, personal guarantees are required.
Realty Mogul 17, LLC will hold a UCC-1 perfected security interest in the Collateral. A Collateral Agent will hold the original mortgage notes with allonges as well as recorded assignments and mortgages. The Collateral agent for this investment will be US Bank. The underlying borrower loans will be serviced by Halo Asset Management, LLC, a licensed third-party servicer, or a servicer mutually approved by VFS and Realty Mogul.
Investment Highlights
- Diversified Fund: VFS intends to make numerous single family secured loans through the credit facility being provided by the Fund which should allow for diversification across properties for investors.
- Experienced Sponsor: VFS thrives on real estate. The team has bought, sold or financed over $250 million of homes nationwide and understands the unique needs of residential investors. VFS currently operates in 34 states.
- Distributions to Investors Planned to Begin Immediately After Close: Given the structure of the Fund as a credit facility to VFS V, investors should expect monthly distributions to begin after the first full month of Fund operations.
Risks**
- 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.
- Illiquid Investment - Transfer Restrictions & No Public Market: The transferability of membership interests in Realty Mogul 17, LLC 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. 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.
- Management Risk: Investors will be relying solely on VFS V for the execution of its business plan.
- General Economic and Market Risks: The real estate market is affected by many factors, such as general economic conditions, the availability of financing, interest rates and other factors, including supply and demand for real estate investments, all of which are beyond the control of the manager of Realty Mogul 17, LLC or VFS V.
Risk Mitigation**
- VFS' loans are recourse, and personal guarantees are required when the borrower is an entity.
- Loan covenants made as part of the Fund's credit facility call for the removal from the Fund's portfolio of any loans delinquent for more than 120 days.
- The security interest for the underlying borrower loans are first lien deeds of trust or mortgages on the property.
- The underlying borrower loans are protected by hazard and title insurance.
- Investor returns are not contingent on the appreciation (or depreciation) of the property values and investor returns do not increase (or decrease) based on any resale price. The underlying borrowers are still obligated to repay the corresponding borrower loan.
*Returns to the Fund are dependent on payments that VFS receives on the underlying borrower loans. The Fund is secured by its interest in the mortgage documents that are assigned to it as part of the credit agreement with VFS V.
**The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Investor Document Package for a discussion of additional risks.
VFS makes its asset-based mortgage loans in 34 states to investors in single-family homes (1-4 units) valued at $200,000 or less. VFS believes that this market is currently underserved, for a number of reasons:
- Banks can sometimes be uncomfortable with the loan size, nature of collateral, and/or the borrower's financials
- Local hard money lenders are often geographically restricted and limited to certain property types
- Consumer finance companies can be unfamiliar with the asset class
- Use of a borrower's own money (or from friends and family) is typically a less attractive way to finance a project
VFS believes that its lending process is relatively fast, simple, and dependable. VFS also believes that its focus on investment properties enables it to participate in the ongoing rebuilding of the country's housing market by facilitating credit to an underserved sector.
VFS has to date originated more than 2,000 loans across the country with a total loan value exceeding $30 million. VFS has also raised over $60 million of debt capital to date to finance its lending platform. VFS believes that it has developed a highly efficient origination system on top of a proven asset disposition model that reduces the risk of loan losses.
VFS V will only be lending on single family homes. VFS V will not be lending to (and the Fund will not be financing) investors in manufactured homes, mobile homes, log homes, condominiums, multi-family (5+ units), commercial, industrial, agricultural, land or ground leases.
VFS lends in 34 states across the country. This market includes Alabama, Arkansas, Colorado, Connecticut, Florida, Georgia, Iowa, Illinois, Indiana, Kentucky, Louisiana, Maryland, Maine, Michigan, Missouri, Montana, North Carolina, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin, West Virginia, and Wyoming.
RM Securities, LLC, its registered representatives, affiliates, associated persons, and personnel of its affiliates who may also be associated with it, including our associated persons and personnel of our affiliates who are also be associated with RM Securities, LLC (it (“RM Securities,” “we,” “our,” or “us”) will receive fees, expense reimbursements, and other compensation (“Fees”) from the issuer of this investment offering, its sponsor, or an affiliate thereof (“Sponsor”), or otherwise in connection with Sponsor’s offering. The Fees paid to us are in addition to other fees you will pay to Sponsor or in connection with Sponsor’s investment offering. You will pay Fees to Sponsor, either directly or indirectly as an investor in the Sponsor’s offering. Sponsor will use the Fees you pay, as well as funds you invest in the relevant offering, to compensate us. The Fees paid to us will directly or indirectly be borne by you as the investor (typically, but not always, in the form of an expense of the Sponsor’s offering in which you invest) because such Fees will reduce the proceeds available for distribution to you and reduce the amount you earn over time.
For more information on the Fees paid to us, or any other Fees you will pay in connection with Sponsor’s offering, please carefully review the Sponsor’s Investment Documents. Please also carefully review RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.
No Approval, Opinion or Representation, or Warranty by RM Securities, LLCSponsor has provided, approved, and is solely responsible in all aspects for the information on this webpage (“Page”), including Sponsor’s offering documentation, which may include without limitation the Private Placement Memorandum, Operating or Limited Partnership Agreement, Subscription Agreement, the Project Summary and all exhibits and other documents attached thereto or referenced therein (collectively, the “Investment Documents”). The Investment Documents linked on this page have been prepared and posted by Sponsor, and not by RM Securities. We did not assist in preparing, do not adopt or endorse, and we are not otherwise responsible for, the Sponsor’s Investment Documents. We make no representations or warranties as to the accuracy of information on this Page or in the Sponsor’s Investment Documents and we accept no liability therefor. No part of the information on this Page or in the Sponsor’s Investment Documents is intended to be binding on us.
Sponsor’s Information Qualified by Investment DocumentsThe information on this Page is qualified in its entirety by reference to the more complete information about the offering contained in the Sponsor’s Investment Documents. The information on this Page is not complete and subject to change at the Sponsor’s discretion at any time up to the closing date. The Sponsor’s Investment Documents and supplements thereto contain important information about the Sponsor’s offering including relevant investment objectives, the business plan, risks, charges, expenses, and other information, which you should consider carefully before investing. The information on this Page should not be used as a basis for an investor’s decision to invest.
Risk of InvestmentThis investment is speculative, highly illiquid, and involves substantial risk. There can be no assurances that all or any of Sponsor’s assumptions, expectations, estimates, goals, hypothetical illustrations, or other aspects of Sponsor’s business plans (“Assumptions”) will be true or that actual performance will bear any relation to Sponsor’s Assumptions, and no guarantee or representation is made that Sponsor’s Assumptions will be achieved. If Sponsor does not achieve its Assumptions, your investment could be materially and adversely affected. A loss of part or all of the principal value of your investment may occur. You should not invest unless you can readily bear the consequences of such loss. Sponsor’s Assumptions should not be relied upon as the primary basis for your decision to invest.
No Reliance on Forward-Looking Statements; Sponsor AssumptionsSponsor is solely responsible for statements made concerning forward-looking statements and Assumptions, which apply only as of the date made, are preliminary and subject to change, and are expressly qualified in their entirety by the disclosures and cautionary statements included in Sponsor’s Investment Documents, which you should carefully review. Neither RM Securities nor Sponsor are obligated to update or revise such forward-looking statements or Assumptions to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Sponsor’s forward-looking statements and Assumptions are hypothetical, not based on actual investment achievements or events, and are presented solely for purposes of providing insight into the Sponsor’s investment objectives, detailing Sponsor’s anticipated risk and reward characteristics, and establishing a benchmark for future evaluation of actual results; therefore, they are not a predictor, projection, or guarantee of future results. You should not rely on Sponsor’s forward-looking statements as a basis to invest.
Importantly, we do not adopt, endorse, or provide any assurance of returns or as to the accuracy or reasonableness of Sponsor’s Assumptions or forward-looking statements.
No Reliance on Past PerformanceAny description of past performance is not a reliable indicator of future performance and should not be relied upon as the primary basis to invest.
Sponsor’s Use of DebtA substantial portion of the total cost of the real estate asset acquired by the Sponsor with investor funds (“Property”) will be paid with borrowed funds, i.e., debt. Sponsor’s estimated rates and terms of the debt financing are subject to lender approval, and there is no assurance that the Sponsor will secure debt at the rates and terms presented on this Page or in the Sponsor’s Investment Documents, or at all. The use of borrowed money to acquire real estate is referred to as leveraging, which can amplify losses and could result in lender foreclosure. In addition, if the debt includes a variable (or “floating”) interest rate, the total amount of interest paid over the term of the debt will fluctuate and can increase. As a result, Sponsor’s use of debt can result in a loss of some or all of your investment.
Sponsor’s Offering is Not RegisteredSponsor’s securities offering will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemptions from registration pursuant to Rule 506(c) of Regulation D as promulgated under the Securities Act (“Private Placement”). In addition, the offering will not be registered under any state securities laws in reliance on exemptions from state registration. Such securities (your ownership interests) are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable state and federal securities laws pursuant to registration or an available exemption. All Private Placements on the Platform are intended solely for “Accredited Investors,” as that term is defined in Rule 501(a) under the Securities Act.
No Investment AdviceNothing on this Page should be regarded as investment advice (either with respect to a particular security or regarding an overall investment strategy), a recommendation, an offer to sell, or a solicitation of or an offer to buy any security. Advice from a securities professional is strongly advised to understand and assess the risks associated with real estate or private placement investments. For additional information on RM Securities’ involvement in this offering, please carefully review the Sponsor’s Investment Documents, and RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.
1031 Exchange RiskInternal Revenue Code Section 1031 (“Section 1031”) contains complex tax concepts and certain tax consequences may vary depending on the individual circumstances of each investor. RM Securities and its affiliates make no representation or warranty of any kind with respect to the tax consequences of your investment or that the IRS will not challenge any such treatment. You should consult with and rely on your own tax advisor about the tax aspects with respect to your particular circumstances.