Apartment Complex Competition Risks

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 other apartment units that are available for rent, as well as new and existing apartment residences. 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.  Competitive apartment residences in a particular area could adversely affect the ability of Sponsor to sell the property, rent its units as necessary to maintain occupancy, and/or to increase or maintain unit rental rates.

Renovation Risk

The Sponsor intends to renovate the Property in order to be able to demand the significantly higher rents it is projecting to receive at the Property following such renovations. Such renovations are expected to cost approximately $6,455 per unit and are projected to take around 30 months to complete.  There can be no assurance that such renovations will be consummated on a timely basis or that such work will not materially adversely affect other aspects of the operation of the Property.  Any delays or adverse effects of such renovation work could adversely affect the Property’s financial results or business operations and thus the value of the Realty Mogul 62, LLC's investment.  

Following the renovations, the sponsor expects to be able to rent the apartment units at average rates that would represent an approximate 15% increase over the existing rental rates.  Although the Sponsor believes that comparable properties are currently achieving rental rates that are greater than the future rental rates expected from the Property, there can be no assurance that such increased rental rates will be achieved.  Failure to realize such increased rental rates could adversely affect the Property’s financial results or business operations and thus the value of the Realty Mogul 62, LLC’s investment.

Tenants' Loss of Revenues Could Reduce the Sponsor's Cash Flow

Tenants of the Property may encounter significant macroeconomic, governmental and competitive forces.  Adverse changes in consumer spending or consumer preferences for particular goods, services or store-based retailing could severely impact these tenants’ ability to pay rent.  The default, financial distress, bankruptcy or liquidation of one or more of the Property’s tenants could cause substantial vacancies, which would likely reduce the Sponsor’s revenues, increase property expenses and could decrease the value of the Property.  Upon the expiration of a lease, the tenant may choose not to renew the lease and/or the Sponsor may not be able to re-lease the vacant space at a comparable lease rate or without incurring additional expenditures in connection with such renewal or re-leasing.

Vacancies and Tenant Defaults May Reduce the Property's Revenues

A vacancy or default of a tenant on its rent will cause the Sponsor to lose the revenue from that unit and, if enough effective vacancies occur, it could cause the Sponsor to have to find an alternative source of revenue to meet any loan payments and other operating expenses for a particular property and it may not be possible to have to find a viable alternative source of revenue.  If the company managing the investment property does not employ sufficiently aggressive marketing campaigns and/or lease incentive programs, vacancies may increase and an investment in Realty Mogul 62, LLC may be adversely affected.

Ohio Tornado Risk

Dayton, Ohio lies in the western part of the state of Ohio, in an area which can be subject to frequent and sometimes destructive tornadoes.  If no tornado insurance is available at reasonable rates, or if no insurance is otherwise obtained, a tornado could have a material adverse impact on the Sponsor, and thus Realty Mogul 62, LLC.  Further, even if tornado insurance is obtained, there can be no assurance that a tornado will not cause significant damage to the Property or otherwise interrupt its operations in a manner not covered by the Property’s insurance, in which case the business and financial condition of the Sponsor may be adversely effected.

Percentage of Depreciation and Tax Losses

Depreciation and tax losses are generally passed through to the members of an entity on a pro rata basis.  For this transaction, Realty Mogul 62, LLC and the Sponsor have agreed that the depreciation and tax losses shall be allocated on the following basis: (i) seventy (70%) percent to the members, which includes Realty Mogul 62, LLC, and (ii) Thirty (30%) percent to those entities and/or individuals who are entitled to any promote, which currently includes RM Manager, LLC.  Any deprecation and/or tax losses that are passed through to RM Manager, LLC will not be passed along to 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

Illiquid Investment - Transfer Restrictions & No Public Market

The transferability of membership interests in Realty Mogul 62, 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.

Uncertainty Surrounding Future Sales Price

There is risk associated with the Sponsor being unable to sell the Property as projected.

Interest Rate Risk

The Federal Reserve has methodically reduced the amount of stimulus it was earlier injecting into the U.S. economy, and has signaled that increases in the federal funds rate may be forthcoming. This could potentially lead to rising interest rates offered by other lenders and could have a negative effect on the future value of the Property (since higher loan interest rates might mean that potential buyers would face proportionately higher debt service expenses).

Mortgage Risk

The Sponsor has a signed term sheet with a lender to provide the debt financing for the acquisition of the Property, but there can be no assurance that the lender will complete financing on the rates and terms included in the underwriting being presented in the model for this investment opportunity. All rates and terms of the debt financing are subject to final lender committee approval, including but not limited to a modification in lender held capital reserve requirements that may result in a corresponding movement of certain funds currently projected as being held in a Sponsor controlled capital escrow account.

Management Risk

Investors will be relying solely on the Sponsor for the execution of its business plan. The Sponsor may in turn rely on other key personnel with relevant experience and knowledge, including contractors and consultants. Members of BH Chesapeake Indy, LLC (including Realty Mogul 62, LLC) will agree to indemnify the manager in certain circumstances, which may result in a financial burden if any litigation results from the execution of the business plan. While the Sponsor has significant operating experience, BH Chesapeake Indy, LLC is a newly formed company and has no operating history or record of performance. Realty Mogul 62, LLC is pursuing a venture capital strategy through its investment in BH Chesapeake Indy, LLC, and the manager of Realty Mogul 62, LLC is expected to be treated as an investment adviser exempt from federal or state registration under this strategy.

Manager of Realty Mogul 62, LLC Will Participate in Sponsors' Promote Interest

The manager of Realty Mogul 62, LLC will be entitled to a participation in the value of any excess distributable cash flow and any appreciation of the Property realized upon its sale. This could lead to a potential conflict of interest between the manager and Realty Mogul 62, LLC. Investors must recognize and agree to waive and bear the risk of this conflict of interest.

Uncertain Distributions

The Sponsor cannot offer any assurances that there will be sufficient cash available to make distributions to its members (including Realty Mogul 62, LLC) from either net cash from operations or proceeds from the sale or refinancing of the asset. Sponsor, in its discretion, may retain any portion of such funds for tenant improvements, tenant refurbishments and other lease-up costs or for working capital reserves. Sponsor has chosen to make distributions quarterly.

Risk of Interest Charges for Sponsor Capital Calls

The amount of capital that may be required by BH Chesapeake Indy, LLC from Realty Mogul 62, LLC is unknown, and although BH Chesapeake Indy, LLC does not require that its members contribute additional capital to it, it may from time to time request additional funds in the form of loans or additional capital. Realty Mogul 62, LLC does not intend to participate in a capital call if one is requested by BH Chesapeake Indy, LLC, and in such event the manager of BH Chesapeake Indy, LLC may accept additional contributions from other members of BH Chesapeake Indy, LLC.  Any member may make a loan to BH Chesapeake Indy, LLC under such terms and conditions as may be agreed to by the member and BH Chesapeake Indy, LLC.  Such loans will not be considered capital contributions and shall not have an interest rate of higher than 10%.  Amounts (other than member loans) that are contributed by existing or new members will be deemed to be additional capital contributions, in which case Realty Mogul 62, LLC's interest in BH Chesapeake Indy, LLC will suffer a proportionate amount of dilution.

Uncertain Exit Timing

Although it is anticipated that the Property will be sold at the end of the expected seven (7) year hold period, Realty Mogul 62, LLC will not have full control over the timing of the sale of the Property, and therefore we cannot offer assurances of when the exit will occur.  Sponsor’s decision to hold the Property for longer than seven (7) years will require a vote of a majority of the then current members of BH Chesapeake Indy, LLC.  

General Economic and Market Risks

While the Sponsor has conducted significant research to justify the intended rental rates and sales price relative to comparable properties in the market, its best efforts to forecast economic conditions cannot state for certain whether or not rental rates will be achieved or investor sentiment and the capital markets will be favorable to the Property at the intended disposition date. 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 Sponsor​​.

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 Sponsor and others. Realty Mogul, Co., RM Manager, LLC, and Realty Mogul 62, LLC, 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.