We run extensive background checks, criminal checks, bad actor checks, and reference checks on sponsors. In addition to never allowing a sponsor with a criminal history / any securities related issue to use the platform, we may also turn down sponsors due to poor reference checks even if background and criminal checks come back clear.
We require unaffiliated sponsors to use an unaffiliated third-party escrow agent. When an investor makes an investment with unaffiliated 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 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.
Our controls include visiting every property (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.
We have robust quality controls with detailed checklists and a review of third-party reports.
Senior Loan Originated by Starwood Mortgage Capital LLC ("Starwood")
The preferred equity investment will be subordinate to a senior loan originated by Starwood, which is anticipated for a Commercial Mortgage Backed Security (CMBS) execution
Historical Occupancy
Five of the six assets in the portfolio have been 100% leased since 2011 and portfolio occupancy is at 95% as of July 2017
Additional Equity Infusion
The Sponsor infused an additional $1.3 million into the transaction during the June 2017 refinance
AH Capital
AH Capital is a real estate investment company focused on taking advantage of opportunities in residential properties. They operate in Los Angeles, Raleigh-Durham and Atlanta and acquire single family homes and duplexes (REO's and foreclosures) that are in disrepair and then fix and sell them as fast as possible. These transactions average 6 to 12 months and have produced gross returns ranging from 9%-33%. Over the past three years, they have successfully deployed over $16M and have executed over 66 transactions. http://ah-cap.com/-
Daniel Alexander
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Yusef Alexander
At A Glance
Property Type: | Residential, Duplex |
Investment Type: | Fix-and-Flip |
Estimated Rate of Return: | 10% annualized |
Estimated Hold Period: | 6-9 months |
Region: | Los Angeles, CA |
Purchase Price: | $217,000 |
Loan Value: | $110,000 |
LTV (Loan-to-Value) Before Repair: | 51% |
Est. Value After Repair: | $350,000 |
Est. LTV After Repair: | 31% |
Summary
Investors in this opportunity will pool their money to purchase a loan that was made to a real estate investor, AH Capital, for the purpose of a fix-and-flip. AH Capital will perform renovations on the property and look to sell as quickly as possible at a higher price than the purchase price. Renovations will be top to bottom including new dry wall, new kitchen, bathrooms and flooring. Upon completion, the property will look like 30+ other renovations AH Capital has executed (see pictures above).
AH Capital has agreed to pay interest payments of 10% with a final, balloon payment at the end of the loan term. The loan is secured by the property, in first position.
Risk Mitigation
- AH Capital is a real estate investor with a history and a track record of success.
- The loan is secured by a deed of trust, filed with the County Recorder’s Office
- The loan is protected by title insurance
- Investor returns are not contingent on the appreciation of the home value and investor returns do not increase based on the final sale price. Even if the property does not sell for the projected sale price, the borrower is still obligated to repay the loan.
- In a worst case scenario, Realty Mogul will foreclose on the property. Upon acquisition of the property, Realty Mogul will facilitate the sale of the property and will distribute the proceeds to investors according to the percentage of the total investment opportunity they initially funded.
Distribution
Projected distributions allow for investors to earn a 10% annualized return.
The initial investment amount will be returned when AH Capital pays off the loan in full. Distributions will be provided as a written check mailed to the investor, or deposited directly into a bank account of their choosing.
90037 is a densely populated, urban zip code in Los Angeles, California. The population is racially diverse and evenly divided between singles and married couples. The average house value here is lower than in the Los Angeles-Long Beach-Santa Ana metro area as a whole. The 90037 zip code has an average elevation of 166 feet above sea level.