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.
Real Property Associates
Owned and operated by Gordon Stephenson and Jay Young, the same team who founded the company in 1991, Real Property Associates (RPA) offers an unbeatable blend of knowledge, experience and commitment — both to the community it serves and to a vision of excellent service and innovative solutions.
Backed by its strong, professional staff, RPA has grown steadily over the past 21 years, building on its solid reputation for high ethical standards, sound business practices and proven track record in brokering residential, multi-family, commercial and raw-land real estate.
Located in Seattle, RPA has 43 associate brokers and agents serving clients throughout the Puget Sound Region. In 2011 RPA was named the 2nd largest independent real estate company, and 11th largest residential brokerage in the state, by the Puget Sound Business Journal. In 2010, RPA’s brokerage business consisted of 354 residential and commercial sales transactions which represented over $170 million in gross sales.
RPA looks forward to playing an ongoing part in the region’s growth and continuing to create opportunities for the people who call Seattle home.
RPA also specializes in property management in residential properties and suburban commercial property rentals in the Puget Sound area. Through a state-of-the-art process, they have streamlined property management services, ensuring a more prompt rent collection procedure, a fully electronic payment remittance system, and e-mail reporting of monthly financial information. RPA currently employs over 20 full time property managers, bookkeepers, admins and maintenance personnel. These employees oversee and are responsible for the operations of managing over 1,500 residential and commercial rental units. The combined market value of this portfolio is over $200 million.
Real Property Funding Group, LLC, has operated as a subsidiary of RPA since 1991. It performs mortgage brokerage and other financing services, and since 2010, has acted as a principal, in cooperation with a group of investors, in purchasing, rehabbing, and reselling single family homes and condominiums in the greater Seattle area.
The advantage Real Property Funding Group has is the depth of their market knowledge in the Greater Seattle area. Gordon and Jay have both been active brokers in the Seattle market since the 80’s, and have represented thousands of buyers and sellers during their careers. They personally preview each property that is purchased and directly oversee the rehab process. Upon completion of the work, they have a team of brokers who help with staging, marketing and resell of each home. The average time on market for these transactions is well under 30 days.
In short, the Company provides a vertically integrated approach to investing in this property type – from finding the deal, to closing the purchase, then administering just the right amount of work to ensure the dollars added in the project create incrementally more value to the property, and overseeing a quick sale and closing on the resale, their experience has created a successful model which works well in this current real estate environment.
http://www.seattlehouses.com/At A Glance
Property Type: | Residential, Single-Family |
Investment Type: | Rehab |
Estimated Rate of Return: | 8% annualized |
Estimated Hold Period: | 3-6 months |
Region: | Everett, WA |
Purchase Price & Improvements: | $92,000 + $23,000 = $115,000 |
Loan Value: | $80,000 |
Loan to Cost: | 69% |
Est. Value After Repair: | $200,000 |
Est. LTV After Repair: | 40% |
Est. Protective Equity After Repair: | $120,000 |
Summary
Investors in this opportunity will pool their money to make a loan to a real estate investor, Real Property Associates, for the purpose of a rehab. Real Property Associates is performing renovations on the property and will look to sell as quickly as possible at a higher price than the purchase price. Upon completion, the property will look like other renovations Real Property Associates has executed.
Investor will receive interest payments of 8%, with a final, balloon payment at the end of the loan term. The loan is secured by the property, in first position.
Risk Mitigation
- Real Property Associates is a real estate investor with a history and a track record of success.
- The loan is secured by a deed of trust.
- 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.
The property is located in the Evergreen Way / Madison St neighborhood of Everett, WA, an urban neighborhood. Beverly Lake is less than half a mile from the property.
Major retail establishments including Safeway, Starbucks and Wells Fargo are within one mile from the property. The nearest schools are Evergreen Middle School and Cascade High School.
According to Zillow, this home is priced 26.2% less per square foot than median homes in the area. Zillow predicts Evergreen home values will increase 4.8% next year.
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.