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.
Inception Investors
Inception Investors is a private real estate investment and operating company that was founded in 2012. The company is headquartered in New York City and has offices in Brooklyn and Manhattan.
The Sponsor’s investment strategy is to acquire properties with attractive growth potential through either a combination of active property and asset management and market growth. They generally target cash flowing Class-B multifamily and give key consideration to the following criteria:
- Gentrifying Tri-state area markets with high population density and strong market fundamentals.
- Capitalize on shifts in demographic trends and property investments that include an increased preference for urban living by baby boomers, millennials, and young professionals as well as assets that are in close proximity to transit or places of employment.
The Sponsor is an affiliated entity to The Clairmont Group – the same sponsor who transacted on the 23-Unit New Jersey Multifamily deal with RealtyMogul.com in March 2016. Two of the three principals with Inception are also principals of the Clairmont Group. The two companies share asset management, accounting, and back office operations and invest together as principals, so it truly is one company at this time. They have maintained their respective names due to legacy and relationship reasons.
Sponsor Track Record (includes transactions the management team completed as Principals of other firms prior to joining Clairmont and Inception Investors)
http://www.inceptioninvestors.com-
Ryan Colbert, Managing Partner -
Chesky Engel, Managing Partner -
David Lubin, Managing Partner
Mr. Colbert has over a decade of institutional real estate equity investment experience in both domestic & international markets and has acquired over $1 billion worth of commercial real estate. His experience includes investments in distressed real estate & note purchases, recapitalizations, JV partner buy-outs and direct secondary investing across all major asset classes.
Mr. Colbert was a Director at Madison Marquette and formerly a Vice President at the Lightstone Group, one of the nation’s largest real estate investment firms. While at Madison Marquette, he closed over $400 million of multifamily, office and retailacquisitions. While at the Lightstone Group, he was responsible for rebuilding the firm’s hospitality portfolio as well as expanding its existing multifamily portfolio, closing over $100 million of acquisitions during his tenure. Prior to joining Lightstone Group, Mr. Colbert was a member of the investment team at Madison International Realty, a real estate private equity firm focused on the acquisition of direct secondary’s and structured equity investments. While at Madison International Realty he was involved in the recapitalization of over $200 million of real estate.
Mr. Colbert holds a Series 7 & 63 license and completed his dual-undergraduate degree in Political Science & Finance with minors in German Studies & Law at Cornell University.
Mr. Engel is Co-Founder & Managing Member of Inception Investors with primary responsibility for operational excellence, transaction sourcing, construction and development. Mr. Engel is responsible for daily operations, transaction sourcing, construction and development of Inception Investor's transactions in the Tri-state area. Mr. Engel brings 20 year's investing experience in New York City real estate and is a Brooklyn native. Mr. Engel has been involved in numerous high-profile re-development and re-positioning projects which have been featured in the Real Deal, Brownstoner, and Crain's New York Business. Mr. Engel has also completed over $1 billion of transactions in the New York City area including investments in distressed real estate & note purchases, recapitalizations and JV partner buy-outs across all asset classes. Mr. Engel holds a Bachelor's Degree from Gateshead Talmudical College in Gateshead, United Kingdom.
David Lubin has over decade of real estate private equity, investment banking and strategy consulting experience. He has closed over 50 transactions valued in excess of $2.0 billion.
David has worked at large institutional investment companies such as MetLife, Allianz, AREA Property Partners (formally Apollo Management) and C-III Capital Partners. His experience includes investments in core, value-add, opportunistic, distressed real estate, note purchases, development, fund investments, and coinvestments across all major asset classes including: multifamily, hospitality, office, industrial, retail, senior living and real estate operating companies. At C-III Capital Partners, he oversaw investments in multifamily and hospitality.
Additionally, David has worked as a real estate investment banker at BMO Capital Markets. At BMO, he was involved in over $3.6 billion in capital raising and advisory engagements including a $1.6 billion IPO of Douglass Emmett REIT (DEI).
David started his career at Accenture in the Corporate Strategy and M&A group. At Accenture he advised large fortune 500 companies on new market entry strategies, shareholder value analysis, and operational efficiencies.
David Lubin holds a Master’s Degree in Real Estate Development from Columbia University and a Bachelor’s Degree from Cornell University. David also has a New York state real estate broker license and series 7 & 63.
| Inception Investors Track Record | |||||||||||
| Projected Investment Performance | |||||||||||
| April 1, 2016 | |||||||||||
| Investment | Date of Initial Investment |
Date of Liquidation |
Property Type | Property Location | Market Value (a) | Invested & Committed Capital (b) |
Actual / Forecasted Distributions(c) |
Actual / Forecasted Gross MOI (d)(e) |
Actual/ Forecasted Gross IRR (d)(e) |
Actual/ Forecasted Cash on Cash (d)(e) |
|
| Fairfield Inn | Jul-10 | TBD | Hotel | East Rutherford, NJ | $18,700,000 | $3,940,983 | $15,972,441 | 4.1x | 35.8% | 17.1% | |
| Everson Pointe(f) | Dec-10 | Jan-15 | Retail | Atlanta, GA | 9,000,000 | 4,664,000 | 7,360,784 | 1.6x | 13.0% | 8.1% | |
| TownePlace Suites | Jan-11 | TBD | Hotel | Metairie, LA | 15,300,000 | 6,055,449 | 11,539,613 | 1.9x | 16.3% | 12.1% | |
| Rego Park(f) | Mar-11 | TBD | Multifamily | Queens, NY | 19,000,000 | 15,132,500 | 21,653,125 | 1.4x | 17.9% | 17.9% | |
| Crowne Plaza Boston North Shore(f) | Mar-11 | TBD | Hotel | Danvers, MA | 27,000,000 | 23,590,184 | 39,653,850 | 1.7x | 17.6% | 16.6% | |
| Holiday Inn Express(f) | Jun-11 | TBD | Hotel | East Brunswick, NJ | 9,000,000 | 6,196,498 | 9,907,256 | 1.6x | 19.3% | 11.0% | |
| Crowe's Crossing | Oct-11 | TBD | Retail | Atlanta, GA | 12,000,000 | 2,069,210 | 3,981,828 | 1.9x | 15.2% | 9.1% | |
| Marriott Courtyard(f) | Nov-11 | TBD | Hotel | Parsippany, NJ | 10,000,000 | 11,925,000 | 20,369,819 | 1.7x | 22.2% | 13.7% | |
| DePaul Plaza Shopping Center | Nov-11 | TBD | Retail | St. Louis, MO | 20,000,000 | 8,745,154 | 14,350,297 | 1.6x | 14.5% | 7.6% | |
| Shasta Crossroads | Dec-11 | Dec-14 | Retail | Redding, CA | 9,000,000 | 6,954,373 | 22,040,445 | 3.2x | 79.2% | 5.7% | |
| Hampton Inn | Mar-12 | TBD | Hotel | Woodbridge, VA | 10,500,000 | 4,021,019 | 8,776,364 | 2.2x | 20.6% | 15.0% | |
| Meridian Village | Apr-12 | TBD | Retail | Bellingham, WA | 15,000,000 | 4,225,100 | 8,452,080 | 2.0x | 17.6% | 12.0% | |
| Washington Business Park | Sep-12 | Dec-12 | Office | Lanham, MD | 45,000,000 | 11,000,000 | 17,741,688 | 1.6x | 579.2% | 15.8% | |
| The Center Building | Dec-12 | Mar-15 | Office | Queens, NY | 84,500,000 | 18,947,840 | 70,142,157 | 3.7x | 82.6% | 9.7% | |
| Cotton Exchange Hotel | Mar-13 | Jun-13 | Hotel | New Orleans, LA | 30,000,000 | 13,600,130 | 17,774,073 | 1.3x | 199.0% | N/A | |
| 331 Carroll Street | Aug-13 | TBD | Multifamily | Orange, NJ | 1,250,000 | 725,000 | 1,667,500 | 2.3x | 25.0% | 10.0% | |
| 7000 Central Park | Sep-13 | TBD | Office | Atlanta, GA | 75,000,000 | 13,264,192 | 24,427,831 | 1.8x | 16.5% | 6.7% | |
| The Edge | Dec-13 | TBD | Retail | Brooklyn, NY | 45,500,000 | 19,445,772 | 53,519,412 | 2.8x | 13.0% | 9.0% | |
| Free Market Portfolio | Dec-13 | TBD | Multifamily | Brooklyn, NY | 5,000,000 | 916,187 | 4,116,143 | 4.5x | 52.9% | 14.4% | |
| Paces Village Apartments | Dec-13 | TBD | Multifamily | Greensboro, NC | 15,000,000 | 4,379,994 | 8,748,421 | 2.0x | 15.8% | 7.4% | |
| Marina Shores Apartments | Mar-14 | TBD | Multifamily | Virginia Beach, VA | 54,000,000 | 18,292,593 | 36,195,585 | 2.0x | 18.3% | 8.0% | |
| 23 Harvard Street | Jul-14 | TBD | Multifamily | East Orange, NJ | 1,000,000 | 500,000 | 1,500,000 | 3.0x | 25.0% | 15.0% | |
| Broad Street Apartments | Sep-14 | TBD | Multifamily | Richmond, VA | 11,000,000 | 3,144,136 | 6,421,681 | 2.0x | 17.5% | 10.4% | |
| BankNote Building | Sep-14 | TBD | Office | Bronx, NY | 120,000,000 | 28,204,512 | 61,261,186 | 2.2x | 19.2% | 10.9% | |
| Eastern Parkway Portfolio | Oct-14 | TBD | Multifamily | Brooklyn, NY | 10,000,000 | 2,287,600 | 8,408,604 | 3.7x | 42.3% | 13.6% | |
| Brooklyn 9 Portfolio | Aug-15 | TBD | Multifamily | Brooklyn, NY | 30,000,000 | 7,137,217 | 11,759,579 | 3.1x | 28.4% | 9.1% | |
| Park Avenue Apartments | Mar-16 | TBD | Multifamily | Plainfield, NJ | 3,000,000 | 1,100,000 | 3,187,156 | 2.9x | 26.0% | 11.3% | |
| Subtotal | $704,750,000 | $240,464,643 | $510,928,916 | 2.1x | 26.5% | 11.4% | |||||
| Total Portfolio | $704,750,000 | $240,464,643 | $510,928,916 | 2.1x | 26.5% | 11.4% | |||||
(a) Purchase price, UPB, or appraised value, whichever is greater at time of acquisition.
(b) Includes capitalized expenses allocated to each investment and co-investments made by third parties.
(c) All estimates are forward looking and are provided by the Sponsor.
(d) Performance for investments is based on future performance of each investment as projected. The projections assess factors including but not limited to: net asset values, liquidation timing, interim cash flow distributions, transaction expenses that materially affect the projection of cash flows and Gross IRR for each investment. There can be no assurance that these investments will produce values equal to or in excess of such reported values.
(e) Unless otherwise indicated, all references in this document to rates of return are to gross internal rates of return, meaning aggregate, compound, annual gross internal rates of return on investments. Gross IRRs are calculated as of projected realization dates, and are before expenses, fees and carried interest. IRRs are calculated on an annualized basis and reflect the actual timing of daily cash inflows and outflows. Cash on Cash calculation includes refinance distributions in the denominator as reduction to actual investment basis and are annualized (when applicable).
(f) Invested & committed capital represents Day 1 equity investment. Performance projections include assumed refinancing distribution upon asset stabilization.
In this transaction, RealtyMogul.com investors will invest in Realty Mogul 67, LLC. Realty Mogul 67, LLC will subsequently invest in 330 22nd, LLC, a limited liability company that holds title to the Property. Inception Investors, the "Sponsor", is under contract to purchase the Property for $4,750,000 ($175,926 per unit).
The Sponsor views the purchase as an opportunity to acquire the Property at a price below market, in a neighborhood where ongoing gentrification and the subsequent impact on rental increases will coincide with their projected hold period. All 27 units are currently subject to rent stabilization rules as determined by the City of New York Rent Guidelines Board(1). The Sponsor has budgeted $12,000 to $20,000 for renovations for each unit that becomes vacant. There are presently two vacant units which the Sponsor will begin renovations on immediately following closing. There are an additional seven units that the Sponsor anticipates renovating during the hold period. The rent guidelines limit rent increases to 1/40th of the cost of construction(2). The renovations are projected to drive an increase in cash flow and value for investors during the hold period and the stabilized rents project to be below market to comparable units in similar buildings.
The renovations will include a full kitchen renovation including new appliances, stove and counter tops as well as bathroom renovations with new shower heads and toilets. The Sponsor will also replace the dated flooring, improve the lighting, and will install new video intercoms for the tenants.
The Sponsor plans to engage EPP Management to manage the asset. EPP Management is a wholly owned subsidiary of Inception Investors and they currently manage over 400 units in the New York market. The management company is run by Cheskel Engel, one of the principals of the Sponsor. Inception engages EPP Management for all of its assets. The Sponsor intends to sell the Property in five (5) years.
(1) Per the New York State Division of Housing and Community Renewal Office of Rent Administration, the Rent Guidelines Board sets rent increases in stabilized apartments. These guidelines are set once a year and are effective for leases beginning on or after October 1st of each year. Rents can be increased during the lease period in any one of three ways as described here.
(2) - Rents for renovated units are subject to the Individual Apartment Improvement (IAI) rules which limit rent increases to 1/40th of the cost of construction (for properties with 35 units or less) as described here. Vacant units are subject to 20% increases over the last legal rent per the Board guidelines as described here.
RealtyMogul.com, along with Inception Investors (the "Sponsor"), is providing the opportunity to invest in the acquisition and renovation of a 27-unit multi-family property located in the Flatbush neighborhood of Brooklyn, New York (the "Property").
The primary objective of this investment is to acquire the Property, perform interior renovations, increase rents on renovated units, and sell the Property within approximately five (5) years.
The Sponsor sees this investment as an opportunity to acquire a well located multi-family property in a gentrifying market where they are an experienced owner and manager of over 600 units in the Tri-State area. The Flatbush neighborhood has seen a recent influx of young professionals and the neighborhood's growth has coincided with the increase in rents in the Crown Heights and Prospect Park neighborhoods to the north of the Property.
The Property is a 27-unit walk-up building located at 330 E. 22nd Street in the Flatbush neighborhood of Brooklyn, NY. The Property was built in 1926 and is currently 93% leased. The unit mix consists of six 2-bedroom units, twenty 3-bedroom units, and one 4-bedroom unit. Average in-place rents are $1,053 per unit, ranging from $743 per unit to $1,450 per unit. Due to the rent stabilized nature of the units, in-place rents are currently below the similar properties in the neighborhood.
The current amenities at the property are consistent with those of buildings constructed in that era. Recently completed common area and building improvements by the current owner include: a new roof, electric paneling, masonry repairs, pointing, new hot water heater, security doors, and a new TV/security system. The sponsor’s proposed renovations should bring the units and building in-line with modern amenities found in newer construction.
Unit Mix
| Unit Type | # of Units | Avg In-Place Rent/Unit |
| 2/1 | 6 | 1,156 |
| 3/1.5 | 20 | 1,016 |
| 4/2 | 1 | 1,175 |
| Total | 27 | 1,053 |
| Pre-Renovation Rental Comparables | Subject | 835 Ocean Ave | 1135 Flatbush Ave | 1140 Flatbush Ave | 2112 Dorchester Rd | Total / Averages |
| 2/1 | $1,156 | $1,750 | - | - | - | $1,750 |
| 3/1.5 | $1,166 | - | $1,800 | $1,795 | $1,750 | $1,782 |
| Location Relative to Subject | SW | S | SW | SW | - | |
| Blocks From Subject | - | 3 | 1 | 1 | 2 | 2 |
| Post-Renovation Rental Comparables | Subject | 447 E 21st | 252 E 23rd Street | 1137 Flatbush Ave | 1066 Flatbush | 2503 Clarendon |
| 2/1 | $1,456 | - | - | - | - | $2,500 |
| 3/1.5 | $1,616 | $2,500 | $2,100 | $2,075 | $2,300 | - |
| 4/2 | $1,675 | - | - | - | - | - |
| Location Relative to Subject | - | E | E | S | NW | E |
| Blocks From Subject | - | 2 | 1 | 1 | 2 | 3 |
| 2434 Bedford Ave | 711 Ocean Ave | 810 Ocean Ave | 2395 Bedford Ave | 2149 Cortelyou Rd | Total / Averages | |
| 2/1 | $2,000 | $2,250 | - | $1,850 | $1,700 | $2,060 |
| 3/1.5 | - | - | $2,610 | $2,317 | ||
| 4/2 | - | - | $2,900 | $2,900 | ||
| Location Relative to Subject | E | NW | W | NE | N | - |
| Blocks From Subject | 2 | 5 | 2 | 3 | 0 | 2 |
Source: Zillow/Costar
| Sales Comparables | Subject | 485 E 21st St | 2505 Bedford Ave | 531 E 22nd St | 17 East 17th St | 398 E 18th St | Total / Averages |
| Date | June-16 | April-15 | December-15 | January-16 | June-15 | May-15 | |
| # of Units | 27 | 28 | 48 | 35 | 20 | 16 | 29 |
| Year Built | 1926 | 1922 | 1931 | 1934 | 1931 | 1927 | 1929 |
| Average SF (per bed) | 711 | 893 | 775 | 1,026 | 773 | 1,094 | 912 |
| Purchase Price | $4,750,000 | $5,025,000 | $8,550,000 | $7,000,000 | $4,900,000 | $3,250,000 | $6,436,054 |
| $/Unit | $175,926 | $179,464 | $178,125 | $200,000 | $245,000 | $203,125 | $201,162 |
| Cap Rate | 5.32% | N/A | 4.00% | N/A | 4.10% | 4.50% | 4.20% |
| Location Relative to Subject | - | SW | SE | SW | NW | W | |
| Blocks from Subject | - | 2 | 3 | 6 | 9 | 5 | 5 |
Source: RCA/Costar
The asset is located in the Flatbush neighborhood of Brooklyn, just south of the corner of Cortelyou Road and E. 22nd Street. Prospect Park, one of New York's most highly rated parks, is less than one mile to the north. Manhattan is less than 30 minutes away by the subway and tenants can walk nine blocks to the east to the Beverly Rd train stop to ride the 2 & 5 trains. Tenants can also easily catch the Q train from two different stops as the Beverley Road and Cortelyou Road train stations are both walking distance. With convenient access to the subway, the location provides a lower cost alternative to the traditionally more expensive neighborhoods such as Crown Heights, Prospect Heights, and greater downtown Brooklyn without a substantial change in travel time to Manhattan.
The asset is located two blocks away from the historic Kings Theatre. Built in 1929 and suffering from decades of neglect, the theater recently underwent a $95 million restoration and re-opened in January 2015. The theater's interior spaces were restored to their 1929 appearance and its stage facilities were completely rebuilt to modern standards.
Brooklyn College is a little more than one mile south of the property. There is a thriving retail corridor near the college including a Target, the rest of the Triangle Junction Plaza, and the site of Nike's first New York Community store that opened in May.
Market Overview
Brooklyn is located in the New York-Jersey City-White Plains, NY-NJ Metropolitan Statistical Area (MSA).
Effective rent dropped 0.5% in the first quarter of 2016 to $2,961 per unit which resulted in an annual growth rate of 1.3% for the Metro. Effective rent per unit ranks second nationally of all markets. The market's occupancy rate remained at 96.6% for the first quarter of 2016, a figure that ranks thirteenth for all markets at the national level.
The Bureau of Labor Statistics reported that job growth was 2.2% in April 2016 for the metro. The job growth figure was above the national number of 1.9%.
The Metro's two largest job sectors are the Education & Health Services Sector (20.0% of employment) and the Trade, Transportation, and Utilities sector (17.3% of employment). The Education & Health Services Sector grew by 3.4% for the 12 months ending April 2016 and the Trade, Transportation, and Utilities sector grew by 1.1% over the same period.
Market Overview information above was obtained from AxioMetrics
Submarket Overview
The Property is located in the Brooklyn (aka Kings County) submarket of the New York-Jersey City-White Plains, NY-NJ MSA.
Of the 21 total submarkets in the market, Kings County ranks as follows:
- Effective Rent Growth: fifth. Effective rent growth is forecasted at 3.0% for 2016 and is projected to be an average of 5.6% for the period of 2017-2020
- Occupancy: seventeenth. Occupancy is currently at 95.9% for 2016 and is projected to be an average of 96.2% for the period of 2017-2020
Over the past 12 months, 2,006 units were absorbed across the market with 271 units of them in the submarket.
Submarket Overview information above was obtained from AxioMetrics
Demographic Information
| Demographic Information (2015) | 1 mile radius | 3 mile radius | 5 mile radius |
| Population | 213,223 | 1,290,129 | 2,548,460 |
| Population Projection (2020) | 227,435 | 1,352,387 | 2,675,334 |
| Average Age | 37 | 36 | 37 |
| Median Household Income | $47,143 | $51,860 | $49,265 |
| Average Household Size | 2.8 | 2.7 | 2.7 |
| Median Home Value | $465,460 | $603,125 | $589,766 |
| Owner Occupied Households | 12,886 | 125,384 | 252,195 |
| Renter Occupied Households | 62,776 | 332,661 | 676,880 |
| Population Growth 2015 -2020 | 6.67% | 4.83% | 4.98% |
Demographic information above was obtained from CoStar and Census.gov
| Total Capitalization | |
| Sources of Funds | |
| Senior Loan | $3,320,000 |
| Equity | $1,834,940 |
| Total Sources of Funds | $5,154,940 |
| Uses of Funds | |
| Purchase Price | $4,750,000 |
| Cap Ex Reserves | $160,000 |
| Closing Costs | $164,940 |
| Broker Dealer Placement Fee | $40,000 |
| Sponsor Acquisition Fee | $40,000 |
| Total Uses of Funds | $5,154,940 |
The projected terms of the debt financing are as follows:
- Lender: Oritani Finance Company
- Principal Balance: $3,320,000
- Term: 36 months
- Extension Term: 36 months (RM assumes Sponsor executes)
- Rate: 2.75%. Initial 3-year term at the greater of i) the Federal Home Loan Bank of New York (FHLB) Amortizing Advance Indication for 3-Year Final Maturities plus 125 basis points and ii) 2.75%
- Rate on Extension Term: The interest rate shall reset to the then current FHLB New York 3-year Fixed Rate Advance plus 125 basis points, subject to a floor of 2.75%.
- Interest Only: 12 months
- Amortization: 29 years thereafter
- Loan to Cost: 64%
- Loan to Purchase Price: 70%
- Prepayment Penalty: 3%, 2%, 1% last 90 days open, resets after 3 year initial loan term
- Reserves: Borrower will fund a reserve account of $48,000 from either 1) loan proceeds or 2) a monthly contribution of $4,000 for the renovation of vacated units
Realty Mogul has underwritten that the Sponsor exercises their 3-year option to extend the initial loan term.
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.
Order of Distributions to Realty Mogul 67, LLC (Operating Income, Sale or Refinance)
- First, to investors for any accumulated unpaid preferred return
- Second, a cumulative non-compounded 7% annual preferred return
- Then, any excess balance will be split 75% to members pari passu and 25% to Sponsor
Realty Mogul 67, LLC will distribute 100% of its share of excess cash flow (after expenses) to the members of Realty Mogul 67, LLC (the RealtyMogul.com investors). The manager of Realty Mogul 67, LLC will receive a portion (up to 10%) of the Sponsor's promote interest.
Distributions are projected to start in December 2016 and are projected to continue on a quarterly basis thereafter. These distributions are at the discretion of the Sponsor, who may decide to delay distributions for any reason, including maintenance or capital reserves.
| Cash Flow Projections | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Effective Gross Revenue | $417,698 | $439,164 | $460,131 | $483,264 | $497,762 |
| Total Operating Expenses | $157,125 | $162,108 | $167,299 | $172,709 | $177,891 |
| Net Operating Income | $260,573 | $277,056 | $292,832 | $310,555 | $319,872 |
| Distributions to Realty Mogul 67, LLC Investors | $61,419 | $36,338 | $44,075 | $52,768 | $1,431,081 |
Certain fees and compensation will be paid over the life of the transaction. The following fees and compensation will be paid:
| Type of Fee | Amount of Fee | Received By | Paid From | Notes |
| One-Time Fees: | ||||
|---|---|---|---|---|
| Acquisition Fee | $40,000 | Sponsor | Capitalized Equity Contribution | $40,000 fixed |
| Broker-Dealer Fee | $40,000 | North Capital (1) | Capitalized Equity Contribution | $40,000 fixed |
| Recurring Fees: | ||||
|
Asset Management Fee |
$10,000 annually | Sponsor | Operating Cash Flow | $10,000 fixed annually |
| Property Management Fee | 4.0% of monthly gross rental receipts | Sponsor | Operating Cash Flow | 4.0% of monthly gross rental receipts |
| Management and Administrative Fee | 1.0% of amount invested in Realty Mogul 67, LLC | RM Manager, LLC | Distributable Cash | RM Manager, LLC is the Manager of Realty Mogul 67, LLC and a wholly-owned subsidiary of Realty Mogul, Co. (2) |
Notes:
(1) Certain employees of Realty Mogul, Co. are registered representatives of, and are paid commissions by, North Capital Private Securities Corp., a Delaware corporation ("North Capital"). In addition, North Capital pays a technology provider services fee to Realty Mogul, Co. for licensing and access to certain technology, reporting, communications, branding, entity formation and administrative services performed from time to time by Realty Mogul, Co., and North Capital and Realty Mogul, Co. are parties to a profit sharing arrangement.
(2) Fees may be deferred to reduce impact to investor distributions
The above presentation is based upon information supplied by the Sponsor or others. Realty Mogul, Co., RM Manager, LLC, and Realty Mogul 67, 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.
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.