Staff Menu (IO ID#: 1335521):
Toluca Lake Apartments
Los Angeles, CA
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100% funded
Offered By GSB Toluca Apts, LLC
17.8%* TARGET IRR 17.8%-%
Estimated Hold Period 27 Months
Estimated First Distribution 6/2022
Minimum Investment 35000
*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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Development and lease-up of a highly amenitized 57-unit multifamily asset in Los Angeles, CA.

The Real Estate Company is highly experienced, with a strong financial sponsor and a fee developer who has completed over 35 projects in the Los Angeles Metro.


According to Axiometrics, the submarket has enjoyed average annual rent growth of 4.5% and an average occupancy of 96.4% over the past five years. Per CoStar, the median home value within one mile of the Property is $975,328 and the  population grew 6.9% over the past 10 years within the same radius. 

Asset Quality

The Property will be a newly developed, Class A apartment building with a robust amenities package.

Property at a glance
Year Built 2022 (proposed)
# of Units 57 units (proposed)
Rentable Square Feet 38,433 (proposed)
Parking Ratio 1.21 spaces per unit
# of Buildings 1
Cost Basis

$22,863,658 (including development fee)

Investment Highlights
The Real Estate Company purchased the land for $4,775,000 in Q2 2019.
The Real Estate Company has budgeted $12.5 million ($219k per unit) for hard costs and $2.7 million ($47k per unit) for soft costs and the development fee.
The Real Estate Company is highly experienced and intends to hire a local, experienced property manager.
The exit strategy is to sell the Property in 27 months at an expected cap rate of 4.00%.

GSB Toluca Apts, LLC

The Real Estate Company is collectively defined as Steve Bram as the financial sponsor and Gary Schaffel as a fee developer. Mr. Schaffel has 55 years of experience in the construction industry, having completed over 10,000 apartment units as Head of Construction for Goldrich & Kest Industries and Schaffel Development Company. He has built 25 similar buildings in the last 15 years throughout Los Angeles as a Principal. Mr. Schaffel has also developed several condominium buildings near the Property, which were built to higher specifications than typical apartment buildings. Mr. Bram has been in the real estate investment business for 37 years and is currently a Co-Manager on over 15 commercial assets. He also manages George Smith Partners, which arranges $4 billion in commercial real estate financing annually. Mr. Bram and Mr. Schaffel have worked together for 13 years. Mr. Bram initially provided real estate investment banking services to Mr. Schaffel and currently serves as Mr. Schaffel's primary financial partner. Mr. Bram will provide 10% of the required cash equity on the subject transaction. The Property will be Mr. Bram and Mr. Schaffel's seventh overall development project that they have completed, reviewed, or have worked on together. The Real Estate Company recently completed a 36-unit project in Tujunga on time and on budget.

  • Steve Bram
    President and Co-Founder, George Smith Partners (Sponsor and Financial Partner)
  • Gary Schaffel
    President, Schaffel Development Company (Fee Developer)
Steve Bram
President and Co-Founder, George Smith Partners (Sponsor and Financial Partner)

Steve Bram is the President and co-Founder of George Smith Partners, Inc. ("GSP"). During his 37 years at GSP, Mr. Bram arranged over $4.5 billion in financing for over 300 projects, including construction, bridge, and permanent financing for commercial and residential projects. Although working at GSP full-time and supervising his team of deal managers, he also spends a substantial portion of his time in his partnership with Gary Schaffel of Schaffel Development Company. Together, they develop apartment projects, with Mr. Bram primarily coming in as the financial partner, and Mr. Schaffel serving as the developer partner. Mr. Bram graduated number one in the class when pursuing his Bachelor's Degree from Cornell University's School of Hotel Administration; he also received an MBA from The Wharton School of Finance in 1984.

Gary Schaffel
President, Schaffel Development Company (Fee Developer)

Gary Schaffel is the President of Schaffel Development Company, which he founded in 1977, and will serve as a fee-developer on the proposed development. Over the past 43 years, Mr. Schaffel has developed nearly 40 projects and 1,300+ apartment, condominium, and single-family residential units throughout Southern California. Prior to starting Schaffel Development Company, Mr. Schaffel was the Construction Manager at Goldrich and Kest Industries, the leading builder and developer of multifamily housing in Southern California at the time. During his five years at Goldrich and Kest, Mr. Schaffel was involved in the construction of over 10,000 housing units, as well as numerous board and care facilities. Mr. Schaffel received a Bachelor’s Degree (1967) and Master’s Degree (1969) in Building Construction from the University of Florida.

Track Record

Fee Developer's Representative Transactions

Address City in California Asset Type Units Estimated Completion Date
11240 Commerce Ave. Sun Valley/ Tujunga Multifamily 36 Jul-20
706 N. Alvarado St. Echo Park Multifamily 34 May-20
3500 Chesapeake Ave. Los Angeles Multifamily 22 Oct-20
3524 Chesapeake Ave. Los Angeles Multifamily 27 Oct-20
1249 W. 39th Pl. Los Angeles Multifamily 41 Feb-21
7354 Woodman Ave. Los Angeles Multifamily 86 May-19
6908 Knowlton Pl. Westchester Multifamily 18 Mar-19
5762 Morley St. Westchester Multifamily 31 Aug-17
11430 Burbank Blvd. North Hollywood Multifamily 125 May-17
11120 Huston St. North Hollywood Multifamily 34 May-16
12345 Chandler Blvd. Sherman Oaks Multifamily 23 Jan-16
12005 Albers Valley Village Multifamily 121 Apr-14
15222 Ventura Blvd. Sherman Oaks Multifamily 50 Mar-14
5700 Laurel Canyon Blvd. Valley Village Multifamily 40 May-05
12047 Califa St. Valley Village Multifamily 24 Mar-05
5235 Newcastle Ave. Encino Multifamily 130 Apr-04
5716 Whitsett Ave. Valley Village Multifamily 16 Jul-03
1720 N Taft. Ave. Los Angeles Multifamily 32 Nov-99
433 Casanova St. Los Angeles Multifamily 27 Dec-98
11041 Hesby St. North Hollywood Multifamily 36 Feb-91
749 N. Hudson Ave. Los Angeles Multifamily 8 Apr-90
11251 Osborne Pl. Lakeview Terrace Multifamily 62 Sep-89
1252 Formosa Ave. West Los Angeles Multifamily 5 Mar-89
14218 Victory Blvd. Van Nuys Multifamily 8 Jul-88
14230 Victory Blvd. Van Nuys Multifamily 16 Jul-88
14801 Delano St. Van Nuys Multifamily 10 Oct-86
14200 Victory Blvd. Van Nuys Multifamily 40 Aug-86
442 S. Virgil St. Koreatown Condos 74 Jun-16
4424 Whitsett Ave. Studio City Condos 41 Jul-09
13200 Moorpark Ave. Sherman Oaks Condos 27 Mar-09
4237 Longridge Ave. Studio City Condos 22 Mar-08
14242 Burbank Blvd. Sherman Oaks Condos 26 Sep-07
5101 Whitsett Ave. Valley Village Condos 11 Feb-07
15206 Burbank Blvd. Sherman Oaks Condos 42 Jan-07
4202 Whitsett Ave. Studio City Condos 14 Apr-06
13935 Burbank Blvd. Valley Glen Condos 15 Apr-06
14343 Burbank Blvd. Van Nuys Condos 15 Dec-05
4601 Coldwater Canyon Ave. Studio City Condos 24 Dec-04
2319 Ocean Front Walk Venice Condos 2 Oct-91
2225 N. Beachwood Dr. Hollywood Condos 12 May-85
365 W. Alameda Ave. Burbank Condos 26 Jun-82
441 E. San Jose Burbank Condos 35 Jan-82
11848 Erwin St. North Hollywood Condos 11 Apr-79
Total   43 projects 1,499 units  

The bio and track record were provided by the Real Estate Company and has not been verified by RealtyMogul or its affiliates.

Business Plan

In this transaction, RealtyMogul investors are to invest in GSB Toluca Apartments, LLC ("The Target"), a limited liability company that will directly own interest in the Property. The Real Estate Company purchased three parcels for land in Q2 2019 for $4.8 million ($84k per unit) or $6.2 million when including the land closing costs, carrying costs, and return on pre-development equity. The total project cost is expected to be $23.1 million when including development fee ($405k per unit). 

Post acquisition, the Real Estate Company plans to spend approximately $12.5 million in hard costs, $2.7 million in soft costs, and $1.7 million in financing costs. The soft cost estimate includes a 4.75% developer fee paid to the Real Estate Company. While the development fee is typically paid monthly during the construction period, the Real Estate Company has agreed to subordinate its developer fee to the investor's return of capital. In recognition of this reinvestment, the Real Estate Company will receive an 8% return pari passu with investors, however it will collect no additional return beyond that amount on its deferred development fee.

The Real Estate Company plans to close on the transaction in January 2021, start construction immediately after closing, and have an 20-month construction period through September 2022. The proposed development includes demolition of all existing structures on acquired land, site work, creation of exterior structure, building infrastructure and systems, units and amenities, landscaping, and a 69-space garage. Post completion, the Real Estate Company has assumed a six-month lease-up period and one-month stabilization through April 2023. The Real Estate Company will seek a 30-month interest only construction loan. The business plan calls for a 27-month hold, at which point the Property is to be sold at a 4.00% exit cap for $27.4 million ($480k per unit).

Below is a summary of the development's hard and soft costs:

Project Costs Total Per Unit
Hard Costs    
Hard Costs (on-site) $10,728,560 $188,220
Hard Costs (off-site) $71,000 $1,246
Contractor's Fee $593,976 $10,421
Bank Hard Cost Contingency $539,978 $9,473
Sponsor Hard Cost Contingency $539,978 $9,473
Subtotal - Hard Costs $12,473,492 $218,833
Soft Costs    
Design Fees $346,540 $6,080
Entitlement Costs $110,618 $1,941
Relocation Fees $248,411 $4,358
Permits & Fees $500,000 $8,772
Real Estate Taxes $119,372 $2,094
Insurance (Wrap - 24 Months) $300,000 $5,263
Development Fee* $854,460 $14,991
Acquisition Fee $71,625 $1,257
Miscellaneous Fees (Bank Fees, Accounting, LLC) $12,000 $211
Soft Cost Contingency $91,937 $1,613
Subtotal - Soft Costs $2,654,963 $46,578
Total Hard and Soft Costs $15,128,455 $265,411

*The development fee will be paid at sale and accrued at a 8% preferred return.

These amounts are subject to change at the discretion of the Real Estate Company.

Property Details

Toluca Lake Apartments (the “Property”) is the development of a Class A multifamily building with 57 units. The Property is located at 4366-4376 Cahuenga Blvd in the Toluca Lake neighborhood of Los Angeles, CA. The Property will feature a mix of one studio unit (359 sf), 45 one-bedroom units (613 sf), and 11 two-bedroom units (954 sf). The property used the California Density Bonus Ordinance which provided certain incentives in return for providing additional affordable units. Six units will be designated affordable and four units will provide right of return/replacement rent levels to tenants. The Property will have high-end finishes and state-of-the-art appliance packages throughout all units. Most upper units will have balconies, while ground-floor units will have private patios with direct access to Cahuenga Boulevard and Bloomfield Street. The Property will be fully-amenitized with a 69-car secured subterranean garage, a recreation room, a gym, coworking spaces on each floor, a 15-seat theater, and 25 storage units. The Property will also include two landscaped rooftop courtyards with views of Santa Monica and the San Gabriel Mountains. The Property is within walking distance of NBC Universal, Universal Studios, Warner Brothers Lot, the Metro Red Line (to Downtown LA), and the Toluca Lake Shopping district, which has a Trader Joe’s and numerous boutique restaurants. The Property also has easy access to the 134, 170, and 101 Freeways.

Proposed Unit Mix:

Unit Type (Market)                                       # of Units % of Total Unit Size (square feet) Avg. Market Rent*        
Studio 1 2% 359 $2,100
1 Bed, 1 Bath 37 65% 615 $2,653
2 Bed, 2 Bath 9 16% 957 $3,370
Subtotal/Averages 47 82% 675 $2,778
Unit Type (Affordable)                                 # of Units % of Total Unit Size (square feet) Avg. Affordable Rent* 
1 Bed, 1 Bath** 5 9% 608 $379
2 Bed, 2 Bath 1 2% 937 $890
Subtotal/Averages 6 11% 663 $464
Unit Type (Right of Return/ Replacement) # of Units % of Total Unit Size (square feet) Avg. Affordable Rent* 
1 Bed, 1 Bath 3 5% 597 $1,777
2 Bed, 2 Bath 1 2% 937 $2,546
Subtotal/Averages 4 7% 682 $1,969
Total/Averages 57 100% 674 $2,478

*All rents are net effective

**Includes manager's unit at free rent


Lease Comparables

  Windsor Lofts at Universal City L'Estancia Talaria Burbank NOHO5500 Avalon Studio 4121 NVE Apartments Total/Averages Subject
CoStar Class A A A A A A   A (as developed)
Units 138 160 241 84 149 82 142 57
Year Built 2007 1995 2019 2018 2009 2017 2011 2022 (projected)
Average Square Feet 952 900 1,183 721 786 834 896 675
Average Rental Rate $2,682 $2,697 $4,243 $2,653 $2,839 $2838 $2,992 $2,778*
Distance from Subject  0.5 miles 1.0 mile 1.9 miles 2.4 miles 2.6 miles 2.9 miles 1.6 miles  

Sales Comparables

  The Weddington Metropolitan at Larchmont Village Chateau Toluca Apartments Riverside Arts Apartments NVE Apartments Vues on Gordon Total/Averages Subject
Date Jan-2020 Jun-2019 Apr-2019 Mar-2019 Dec-2018 Apr-2018    
Costar Rating A B B B A A   A (as developed)
Units 329 34 40 51 82 47 97 57
Year Built 2019 2017 1991 1986 2017 2018 2008 2022 (projected)
Purchase Price $169,200,000 $19,000,000 $16,425,000 $15,350,000 $34,350,000 $23,500,000 $46,304,167 $23,078,522**
$/Unit $514,286 $558,824 $410,625 $300,980 $418,902 $500,000 $476,544 $404,886
Cap Rate 4.50% 3.91% 4.02% 3.42% 3.50% 4.20% 3.93% 4.75%***
Distance from Subject  1.8 miles 6.2 miles 0.1 mile 1.5 miles 2.9 miles 5.3 miles 2.7 miles  

* Reflects market-rate units only

** Total development costs

*** Stabilized return on capital

Sale and lease comps were obtained from the Real Estate Company using CoStar, Axiometrics and/or other sources. Leasing activities at above comps may fluctuate due to the COVID-19 pandemic and/or the above rents may reflect pre-pandemic rent levels due to the development transaction and projected lease-up starting in 2022.


Market Overview*

According to CoStar, the economic upheaval caused from the COVID-19 pandemic has disrupted otherwise stable apartment markets, and the Los Angeles metro is not immune from that effect. Vacancies have exceeded the highs from the last recession and are expected to continue to rise as apartment demand declines. However, a notoriously limited supply and a large 50% renter ratio have kept the metro's vacancies fairly low in favor of landlords and owners. As is the case in various markets throughout the US, apartment demand and vacancies will continue to suffer until a public health and economic recovery takes hold.

Per Axiometrics, effective rent decreased 2.1% from $2,322 in 1Q20 to $2,284 in 2Q20, and annual effective rent growth was 2.6% in 2019. Annual effective rent growth is forecasted to average 0.2% from 4Q20 to 4Q22, and 5.6% in 2023. Annual effective rent growth has averaged 3.9% since 1Q97, which was above the national average of 2.7% over the same period. The market's occupancy rate decreased from 96.2% in 1Q20 to 95.4% in 2Q20, and has averaged 96.3% since 1Q15. The market's occupancy rate is expected to average 96.7% during the projected lease-up period in 2022. The market's occupancy rate has averaged 95.9% since 1Q97.

Submarket Overview*

Per CoStar, the Studio City/ North Hollywood submarket has been a focal point for residential development over the past decade; however, demand for new product has been strong and the submarket has therefore avoided a supply-driven vacancy increase outside of COVID-19. Depending on when a vaccine is introduced and the status of the current development pipeline, rents are expected to decline until there is an economic recovery. The submarket's desirable location and affordability relative to other centrally located submarkets should help the area bounce back whenever conditions improve. Additionally, the planned $1 billion redevelopment of land surrounding the North Hollywood Metro Stop will further shape the submarket over the coming years.

Per Axiometrics, effective rent decreased 3.3% from $2,378 in 1Q20 to $2,300 in 2Q20, and annual effective rent growth was 3.2% in 2019. Annual effective rent growth is forecasted to average 0% from 4Q20 to 4Q22, and 6.1% in 2023. Annual effective rent growth has averaged 3.6% since 1Q97. The submarket's occupancy rate decreased from 96.5% in 1Q20 to 96.0% in 2Q20, and has averaged 96.7% since 1Q15. The submarket's occupancy rate is expected to average 96.7% during the projected lease-up period in 2022. The submarket's occupancy rate has averaged 96.0% since 1Q97.

*The above market and submarket overviews reflect current forecasts. The actual market and submarket performance may vary due to the uncertainty of economic and health conditions caused from COVID-19. 

Demographic Information (2020) 1 Mile 3 Miles 5 Miles
Population 29,404 196,544 637,768
Population Projection (2025) 29,639 197,845 641,971
Average Age 40 40 40
Median Household Income $79,861 $78,936 $70,442
Average Household Size 1.9 2.2 2.3
Median Home Value $975,938 $888,877 $859,484
Population Growth 2020-2025 0.80% 0.66% 0.66%

Demographic information above was obtained from CoStar

Sources & Uses

Total Capitalization
Sources of Funds Amount
Debt $16,500,000
Equity $5,724,062
Total Sources of Funds (1) $22,224,062
Uses of Funds Amount
Land Purchase Price $4,775,000
Land Closing Costs, Carrying Costs, and Return on Predevelopment Equity $1,472,529
Real Estate Company Acquisition Fee $71,625
Loan Fees $144,375
Hard Costs $12,473,492
Soft Costs $1,728,878
Real Estate Company Development Fee(1) $854,460
Financing Fees and Closing Costs (2) $592,912
Interest Reserve $965,250
Total Uses of Funds(1) $22,224,062

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. Additionally, the numbers represented above can change prior to closing depending on final loan proceeds, property condition assessments, appraisals, final closing costs, and other lender-mandated expenses.

(1) Development fee to be paid at sale of Property, is not escrowed upfront, and is therefore excluded from the "Total Sources of Funds" and "Total Uses of Funds" figures.

(2) RM Technologies operates the RealtyMogul platform. RM Technologies charges a fixed, non-percentage-based fee for real estate companies to use the marketplace. An estimate of this fee is included in the Financing Fees and Closing Costs and is intented to be capitalized into the transaction at the discretion of the Manager.

Debt Assumptions

The expected terms of the debt financing are as follows:

  • Estimated Proceeds: $16,500,000
  • Initial Funding: $2,692,727
  • Future Funding: $13,807,273
  • Estimated Rate (Floating): 4.625%
  • Term: 30 months
  • Interest Only: 30 months
  • Extension Options: 5-year miniperm
  • Prepayment Penalty (During Extension Period): Swap breakage fee

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.


The Target intends to make distributions to investors (RealtyMogul investors and the Real Estate Company collectively defined as "Members") as follows: 

  1. To the Members, pari passu, all excess operating cash flows to an 8.0% IRR to the Members;
  2. 70% / 30% (70% to Members / 30% to Promote) of excess cash flow to an 18.0% IRR; 
  3. Real Estate Company "catch-up" up to $1,000,000 for land value lift;
  4. 50% / 50% (50% to Members / 50% to Promote) of excess cash flow and appreciation thereafter.  

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

Distributions are expected to start in Q2 2023 and are projected to continue on a quarterly basis thereafter (as applicable). These distributions are at the discretion of the Real Estate Company, who may decide to delay distributions for any reason, including maintenance or capital reserves. 

Cash Flow Summary
  Year 1 Year 2 Year 3 (partial)
Effective Gross Revenue $0 $266,517 $421,896
Total Operating Expenses $0 $214,315 $162,591
Net Operating Income $0 $52,201 $259,306
GSB Toluca Apts, LLC Cash Flows
  Year 0 2020 2021 2022 2023
Distributions to GSB Toluca Apts, LLC Investors ($5,151,656) $0 $0 $0 $7,435,204
Net Earnings to Investor
- Hypothetical $50,000 Investment
($50,000) $0 $0 $0 $72,163

Certain fees and compensation will be paid over the life of the transaction; please refer to the Real Estate Company's materials for details. The following fees and compensation will be paid(1)(2)(3):

One-Time Fees
Type of Fee Amount of Fee Received By Paid From Notes
Acquisition Fee $71,625 Real Estate Company  Capitalized Equity Contribution 1.5% of the land purchase price in transaction
Developer Fee $854,460 Real Estate Company  Paid at Sale 4.75% of development hard costs and soft costs plus 8% accrued return
Debt Placement Fee $82,500 Real Estate Company or its Affiliate Capitalized Equity Contribution 0.5% of the loan amount


Recurring Fees
Type of Fee Amount of Fee Received By Paid From
Administrative Services Fee 1.0% of amount invested into GSB Toluca Apts, LLC RM Admin(3) Distributable Cash or Capitalized Equity Contribution

(1) Fees may be deferred to reduce impact to investor distributions

(2) RM Technologies operates the RealtyMogul platform. RM Technologies charges a fixed, non-percentage-based fee for real estate companies to use the marketplace. An estimate of this fee is included in the Closing Costs and is intented to be capitalized into the transaction at the discretion of the Manager.

(3) RM Admin will be providing the following services:(a) responding to inbound investor inquiries regarding how to subscribe to the Project, (b) distribution of all annual tax forms (after receipt of same from Project Sponsor), (c) processing distributions that are payable from GSB Toluca Apts, LLC to Investors, however, RM Admin will not be deemed to have custody of client funds, (d) distribution of all quarterly reports (after receipt of same from Project Sponsor) and (e) summarizing sponsor information on property performance, responding to investor inquiries regarding sponsor performance information as well as the real estate market generally.


The content on this detail page was provided by the Sponsor or an affiliate thereof. The Sponsor is under no obligation to update this detail page. None of the opinions expressed on this detail page are the opinions of RealtyMogul and they are not endorsed by RealtyMogul. Assumptions and projections included in this detail page are not reflective of the position of RealtyMogul or any other person or entity other than the Target (“Investment Entity” or "Company") or its affiliates.

The preceding summary of principal terms of the offering is qualified in its entirety by reference to the more complete information about the offering contained in the offering documents, including, without limitation, the Equity Presentation, Private Placement Memorandum, Operating Agreement, Subscription Agreement and all exhibits and other documents attached thereto or referenced therein (collectively, the "Investment Documents"). This summary is not complete, and each prospective investor should carefully read all of the Investment Documents and any supplements thereto, copies of which are available by clicking the links above or upon request, before deciding whether to make an investment. In the event of an inconsistency between the preceding summary and the Investment Documents, investors should rely on the content of the Investment Documents.

There can be no assurance that the methodology used for calculating targeted IRR is appropriate or adequate. Target IRR is presented solely for the purpose of providing insight into the Investment Entity’s investment objectives, detailing its anticipated risk and reward characteristics and for establishing a benchmark for future evaluation of the Investment Entity’s performance. Targeted IRR is not a predictor, projection or guarantee of future performance. There can be no assurance that the Investment Entity’s targets will be met or that the Investment Entity will be successful in identifying and investing in investment opportunities that would allow the Investment Entity to meet these return parameters. Target returns should not be used as a primary basis for an investor’s decision to invest in the Investment Entity. Please see the applicable Investment Documents for disclosure relating to forward-looking statements.

All forward–looking statements attributable to the Sponsor or persons acting on its behalf apply only as of the date of the offering and are expressly qualified in their entirety by the cautionary statements included elsewhere in this summary and the Investment Documents. Any financial projections are preliminary and subject to change; the Sponsor undertakes no obligation to update or revise these forward–looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Inevitably, some assumptions will not materialize, and unanticipated events and circumstances may affect the ultimate financial results. Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks, and the assumptions underlying the projections may be inaccurate in any material respect. Therefore, the actual results achieved may vary significantly from the forecasts, and the variations may be material.

The interests in the Investment Entity will not be registered under the Securities Act of 1933, as amended (the “Securities Act”) in reliance upon exemptions contained in Rule 506(b) or 506(c) of Regulation D as promulgated under the Securities Act. In addition, the interests will not be registered under any state securities laws in reliance on exemptions from registration. Such 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 investing activities risk the loss of capital. There can be no assurance that investors will not suffer significant losses. No guarantee or representation is made that investment objectives of the Investment Entity will be achieved. You should not subscribe to purchase interests in the Investment Entity unless you can readily bear the consequences of such loss.

Interests in the Investment Entity are listed on the RealtyMogul Platform. RealtyMogul receives fees from the Sponsor or the Investment Entity partially based on the number of investors investing in such Investment Entity through the RealtyMogul Platform. This arrangement could create a conflict of interest between RealtyMogul and investors.


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.

Lack of Operating History

The Company only has acquired the Property and has had limited operations with respect to the Property and construction of improvements thereon prior to this offering has been raised. The likelihood of success of the Company’s investment must be considered in light of the risks, expenses and difficulties frequently encountered in connection with the acquisition, ownership, development, construction of improvements on, and operation of real properties similar to the Property.

No Diversification in Company Investments

The Company intends invest solely in the Property and improvements to be constructed thereon.  As a result, investors will have a concentration of risk in a single asset class which has, by its nature, certain characteristics not present in other property types.  By only investing in the Property and its improvements, the Company will not have the opportunity to spread its investment risk across multiple property types or other asset classes.  Thus, should events occur which negatively impact the Property, the Company will have no ability to offset those events through investments in other assets or asset classes, and your investment would materially and adversely be affected.

Increased Construction of Similar Multifamily Construction and Development Projects 

The Property is located in an area that may experience increases in construction of properties that compete with the Property. This increased competition and construction could make it more difficult for to find residents to lease units in the multifamily construction and development project and/or force a decrease in rental rates in order to lease units in the Property, which could substantially reduce  revenues and could have a material adverse effect on the  Company. In addition, overbuilding of multifamily construction and development projects may occur.

Environmental Concerns

California is subject to frequent and sometimes debilitating natural disasters, including but not limited to severe drought, earthquakes, and fires. The Property may be located in an earthquake fault zone, and as such, there is increased risk of damage to, or total destruction of, the Property from an earthquake. There can be no assurance that  the Company will be  properly insured for any such damage caused to the Property or its business operations. As a result, the business and financial condition of the Company and its investors, may be materially advers

Development and Construction Risks

The business plan is to develop the Property as a multifamily construction and development project. These activities can include long planning and entitlement timelines and can involve complex and costly activities, including significant environmental remediation or construction work. These activities may be exposed to the following risks:


  • the development may be abandoned for a number of reasons, including changes in local market conditions or increases in construction or financing costs, and, as a result, we may fail to recover expenses already incurred in exploring the  development of the Property;
  • occupancy rates and rents at a community may fail to meet original expectations for a number of reasons, including changes in market and economic conditions beyond our control and the development by competitors of competing communities;
  • inability to obtain, or experience delays in obtaining, necessary zoning, occupancy, or other required governmental or third party permits and authorizations, which could result in increased costs or the delay or abandonment of development of the Property;
  • incurring costs that exceed original estimates due to increased material, labor or other costs;
  • the inability to obtain needed permits or approvals, or to complete construction and lease-up of improvements on schedule, resulting in increased construction and financing costs and a decrease in expected rental revenues;
  • the inability to obtain financing with favorable terms, or at all, for the proposed development of the Property, which may cause delay or abandonment of the development of the Property;
  • incurring liabilities to third parties during the development process, for example, in connection with managing existing improvements on the site prior to demolition (such as commercial space) or in connection with providing services to third parties (such as the construction of shared infrastructure or other improvements); and
  • incurring liability if the Property is not developed and operated in compliance with the accessibility provisions of the Americans with Disabilities Acts, the Fair Housing Act or other federal, state or local requirements. Noncompliance could result in imposition of fines, an award of damages to private litigants, and a requirement that we undertake structural modifications to remedy the noncompliance.

Permitting and Construction Risk

The Company has received approval of entitlements from the Los Angeles Planning Commission to build the subject 57-unit multi-family apartment project. However, there have been numerous appeals by nearby neighbors and there can be no assurance that the Company will be able to successfully obtain the final entitlement approval or that the approval will be obtained in a timely manner. Any unplanned delays and/or the Company’s inability to obtain the final entitlement approval to complete the planned construction could materially and adversely affect the value of the Property and thus could materially and adversely affect the value of the Company’s investment.

Lease-Up Risks

The Company’s revenues from the Property will be dependent upon the creditworthiness of the Property’s tenants and would be adversely affected by the loss of, or default by, lessees.  Lease payment defaults by tenants could indirectly cause the Company to reduce the amount of distributions to the Members and force the Company to find an alternative source of revenue to pay any mortgage loan on the Property.

Risks Related to the Property’s Mortgage

While the Company has procured a construction loan commitment from Cathay Bank which, if funded as and in the amount currently contemplated by the Manager, would provide the net loan proceeds as indicated in the Project Economics at the rate and terms shown therein, there can be no assurance that Cathay Bank will actually fund its committed loan, or that the amount of the loan to which it has committed will not be reduced based on underwriting or other factors. As such, the final terms of the construction loan that the Manager is able to procure on behalf of the Company, and in connection with the Property may not be exactly as assumed and any material change in such terms could have a detrimental impact on the ability of the Company to achieve the projected returns.

COVID-19 Risk

On March 11, 2020, the World Health Organization declared the COVID-19 coronavirus outbreak a worldwide pandemic (the “Pandemic”).  On March 13, 2020, President Trump declared a national emergency in the United States.  Various cities and states have also declared emergencies.  The Pandemic and the reactions of various governments and citizens is causing (and any future outbreaks of the coronavirus disease may cause) massive disruptions in economies, financial markets, supply chains, businesses and daily life on a worldwide scale never seen in recent history.  Such disruption may continue for an extended period or indefinitely, may lead to a recession or depression in the United States and/or globally, and may adversely impact the Company.  As of August 2020, the Pandemic has caused a near total cessation of all non-essential economic activities in many U.S. cities and states.  Many businesses have temporarily suspended operations and laid off employees.  In the United States, persons have been diagnosed with COVID-19 in each of the 50 states.  While the Company may have a business continuity plan, it may be materially affected by the Pandemic.  The Pandemic and reactions by governments and citizens, and the impact of the Pandemic and such reactions on businesses and the economy, are creating and are likely to continue to create various issues for the economy that are impossible to fully predict or list here but all or many could, and are likely to be, material, with such likelihood of materiality increasing the longer the duration of the Pandemic (and whether or not there is a recurrence of coronavirus even after the current Pandemic improves).  The Pandemic may worsen substantially before it improves, and the entirety of the United States will continue to be impacted. There is little certainty as to when the Pandemic will abate, or to what extent the Unites States economy will recover from the disruption caused by the Pandemic.  In addition to the severe impact of the Pandemic on financial markets and economies, other things that may impact the Company in connection with the Pandemic include the closure of courts and state governments, which among other things, can directly affect the ability to complete or enforce evictions, and the lack of in-person walk-throughs of the Property (both for the Manager and appraisers).  The closure of certain businesses or limitations in the ability of certain businesses to function, as well as declarations of states of emergency, and “shelter at home” measures in certain areas, have and could affect the ability of the staff of the Manager and/or applicable property managers to function properly.  A reduction in liquidity and increase in volatility in financial markets could affect the valuation of real estate, the health of the Company’s financing partners or other persons necessary for the Company to implement its strategy and the ability to find third party financing.  Also, the Principals and staff members of the Manager could become infected with COVID-19, develop symptoms, and not be able to work, or not be able to work effectively. Of course, this crisis may also create opportunities for the Manager for targeted investments and the Company will endeavor to position itself well to take advantage of these opportunities and mitigate the risks above inasmuch as they can be mitigated.

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 Admin, LLC, The Target, 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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