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Funded
Multifamily
Trails at Lakeside
Indianapolis, IN
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
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100% funded
Offered By Birge & Held Asset Management
15.2%* TARGET IRR 15.2%-%
10.4%* TARGET AVG CASH ON CASH
2.33* TARGET EQUITY MULTIPLE
Estimated Hold Period 7 Years
Estimated First Distribution 3/2017
*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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Explore this Project
Overview
Multifamily property with upside potential that is being acquired by an experienced local Sponsor who currently owns and manages eight other assets in Indianapolis.
Property At A Glance
Year Built 1989
Number of Units 208
Current Occupancy 93%
Number of Parking Spaces 364 spaces (1.75 spaces per unit), including 52 carports
Amenities Fitness center, outdoor pool with sundeck, carports, dog park, package acceptance, 24‐hour emergency maintenance.
Acquisition Price

$16,000,000

Investment Highlights
Recent leasing of renovated units is currently generating rental premiums in excess of those projected by the Sponsor
Well located near demand drivers such as Broad Ripple Village and Keystone at the Crossing with easy access to downtown Indianapolis
According to Axiometrics, annual rent growth in the submarket is expected to average 3.30% over the next five years, accompanied by an average 5.49% vacancy rate over the same period
Experienced local Sponsor who currently owns and manages over 3,500 multi-family units
Management
Cumulative Distributions

Birge & Held Asset Management

Birge & Held is a national apartment real estate, private equity and investment firm located in Carmel, Indiana.  In an effort to take advantage of strategic real estate acquisition opportunities in the distressed real estate marketplace, J. Taggart Birge and Andrew J. Held started what is now Birge & Held in 2008.  Birge & Held has acquired and managed over $400,000,000 in multi-family assets across the country and currently employs over 80 professionals, per the Sponsor.  Through private equity and creative debt structures, Birge & Held continues to grow its portfolio of assets.  For capital investors who seek to identify and pursue apartment real estate opportunities, Birge & Held provides an experienced operating partner.

http://www.birgeandheld.com/
  • Tag Birge - CEO
  • Andrew Held - President & COO
Tag Birge - CEO

Mr. Birge has been involved in commercial development and financing since 1997. He graduated cum laude from Indiana University in 1993 (BA – Political Science). In 1997, he received his JD from the University of Virginia and joined Bose McKinney & Evans, LLP, Indianapolis, Indiana, as an associate, becoming a partner in the real estate group in 2004. His legal practice focused on office and industrial development representing Duke Realty Corporation on numerous transactions around the United States. As an attorney, Mr. Birge was ranked by his peers as one the best real estate attorneys in the State of Indiana. 

In 2004, Mr. Birge withdrew from the partnership of Bose McKinney & Evans and joined Lauth Property Group. While at Lauth Property Group, Mr. Birge developed approximately $200 million worth of office and health care buildings around the country. Initially, Mr. Birge ran the Midwest office and health care development for Lauth Property Group and in 2007 assumed responsibility for all of Lauth’s medical development in the United States. During his tenure at Lauth, they were named a top ten developer of medical office buildings as tracked by Modern Healthcare. 

Since 2008, Mr. Birge has overseen the acquisition, financing and management of BH's $230 million in multifamily assets. Mr. Birge currently serves on the Board of Directors of Bowen Engineering, the Sports Corporation Board, Heart of Gold Charity Board, and the Orchard School Board of Trustees.

Andrew Held - President & COO

Mr. Held has been involved in commercial and residential development and financing since 2003. He graduated from Indiana University in 1999 (BA – History) where he was a student-athlete and received academic All-American honors. In 2002, he received his JD from the Indiana University School of Law and practiced with the law firms of Hackman Hullet & Cracraft and Bose McKinney & Evans. His practice areas focused on commercial and residential real estate development, handling acquisitions, leasing, financing and dispositions for many of the largest commercial development and construction companies in the United States.

In 2007, Mr. Held received his MBA with a finance focus from Butler University. Since 2008, Mr. Held has overseen BH’s acquisition, financing and management of the company’s $230 million in multifamily assets. Mr. Held currently serves as the President of the Penrod Society focused on raising millions of dollars to serve the Indiana cultural and arts community. He was recently named to the Indianapolis Business Journal’s 2013 “Forty Under Forty” Class.

Track Record

Currently Owned Assets
Property Name Location Number of Units Date Acquired Total Cost Basis
Aurum Indianapolis, IN 208 2/12/13 $13,940,593
Beacon Hill Apartments Indianapolis, IN 14 4/1/13 $1,000,000
Clinton Estates Indianapolis, IN 184 7/1/13 $13,553,680
College Court Condominiums Frankfort, IN 48 11/25/13 $1,800,000
Cypress Square Apartments Indianapolis, IN 188 3/27/14 $12,350,000
Eagle Creek Apartments Muncie, IN 67 4/25/14 $5,279,925
Echo Ridge Apartments Muncie, IN 36 4/25/14 $2,376,609
Elston Point Apartments Elkhart, IN 76 10/16/14 $3,550,000
English Village Apartments Elkhart, IN 95 10/16/14 $3,300,000
Greenleaf Hunter's Pond Apartments Indianapolis, IN 208 10/22/14 $8,600,000
Kensington/Chesterfield South Bend, IN 60 11/7/14 $6,000,000
Parc Bordeaux Apartments Bloomington, IN 62 11/7/14 $4,000,000
Pheasant Run Apartments Indianapolis, IN 208 12/9/14 $8,700,000
Railway Manor Bloomington, IN 32 8/31/15 $3,575,000
Regency Park Indianapolis, IN 632 9/18/15 $45,000,000
The Arbors Bloomington, IN 24 10/6/15 $2,732,000
The Oaks of Eagle Creek Apartments Indianapolis, IN 304 12/22/15 $15,322,000
Walnut Springs Apartments Lafayette, IN 62 1/19/16 $3,882,000
Woodwind Apartments Lafayette, IN 44 1/28/16 $2,220,000
The Villager Centerville, OH 276 2/19/16 $22,900,000
Chesapeake Landing Centerville, OH 256 4/28/16 $22,110,000
Beechmill Apartments Indianapolis, IN 256 5/6/16 $19,175,000
Trails at Lakeside Apartments Indianapolis, IN 208 9/8/16 $18,100,000
Lakeshore Apartments Indianapolis, IN 740 9/15/16 $84,900,000
Cross Creek Apartments Indianapolis, IN 208 1/9/17 $14,725,000
Total   4,496   $339,091,808
Sold Assets
Property Name Location Number of Units Date Acquired Total Cost Basis Sale Price
Harborview Condominiums San Diego, CA 81 3/1/09  $20,406,491 $22,000,000
Bear Valley Apartments San Diego, CA 24 11/8/10  $4,200,000 $4,900,000
Walnut Manor Apartments Muncie, IN 120 11/30/11  $2,471,700 $4,850,000
Centro Apartments San Diego, CA 60 12/19/11  $11,213,764 $15,800,000
Palm Valley Apartments Goodyear, AZ 264 4/1/12  $22,925,000 $27,200,000
Fox Brook Apartments Muncie, IN 41 4/2/12  $1,275,000 $1,900,000
Total   590   $62,491,955 $76,650,000
Total Currently Owned and Sold   5,086   $401,583,763 $76,650,000

*Performance information provided by the Sponsor

Business Plan

In this transaction, RealtyMogul.com investors will invest in Realty Mogul 34, LLC. Realty Mogul 34, LLC is to subsequently invest in BH Trails at Lakeside, LLC, a limited liability company that is to (through another wholly-owned entity) hold title to the Property.  

Birge & Held Asset Management (the "Sponsor") believes that rents at the Property are currently below market, and plans to implement approximately $2,100,000 ($10.1K per unit) of interior and exterior renovations to achieve rental increases averaging $112/unit, a 14% increase. Renovated units at the property are currently achieving rental premiums of $127 - $171 per unit. To date, only 14 units at the Property have been renovated, while 23 have been mildly updated under the previous ownership. The Sponsor intends to renovate an additional 180 units over a 30 month time frame. $8K/unit has been budgeted for interior renovations which will include new kitchen and bathroom cabinets, counters, sinks, LVT wood flooring in the kitchen, bathrooms and common areas, new kitchen appliances, doors, and fixtures, along with new paint and trim. Exterior renovations of $660K have been budgeted and will include a fitness center expansion, clubhouse remodel, siding replacement, new signage, and grounds landscaping.

The Sponsor also intends to enhance the overall operations of the Property through improved management and marketing efforts, drawing from their ownership experience of 3,900 multifamily units to date (see Management Track Record).  Upon completion of the business plan, the Sponsor intends on selling the Property within seven years.

Property

RealtyMogul.com, along with Birge & Held Asset Management, LLC (the "Sponsor"), is providing the opportunity to invest in the acquisition and renovation of a 208-unit multifamily property located in Indianapolis, IN (the "Property").

The primary objective of this investment is to acquire the Property, perform interior renovations on 180 of the units along with exterior and common area renovations, bring rents up to market, and sell the Property within approximately seven (7) years. 

The Sponsor sees this investment as an opportunity to capitalize on a well-located asset that has achieved rental premiums in excess of the Sponsor's projected rents on renovated units.

Property Details

Trails at Lakeside is a 208‐unit apartment community located on Indianapolis' affluent north side. The 1989‐built Property consists of one bedroom/one bathroom, two bedroom/one bathroom, two bedroom/two bathroom and three bedroom/ two bathroom garden‐style units. Units range in size from 594 square feet for a one bedroom to 1,246 square feet for a three bedroom. The exterior finish is oriented strand board (a wood product), and the roofs are pitched with asphalt shingles.

Community amenities include a fitness center, outdoor pool and sundeck, carports, dog park, package acceptance, and 24‐hour emergency maintenance. The property features 364 parking spaces (1.75 spaces per unit), including 52 carports, and is currently 93% occupied.​

Unit Mix
Unit Type # of Units % of Total Unit SF Avg. In-Place Rent Avg. In-Place Rent/ SF
1 Bed / 1 Bath (A1) 48 23.1% 594 $626 $1.05
1 Bed / 1 Bath (A2) 56 26.9% 752 $743 $0.99
2 Bed / 1 Bath 16 7.7% 910 $793 $0.87
2 Bed / 2 Bath 72 34.6% 1,056 $907 $0.86
3 Bed / 2 Bath 16 7.7% 1,246 $1,034 $0.83
Total/ Average 208 100% 871 $799 $0.94

 

Comparables

RENT COMPS
  1 Bed / 1 Bath 2 Bed / 1 Bath 2 Bed / 2 Bath 3 Bed / 2 Bath
Property Miles from Subject Built Renovated Occ. Avg. Size Avg. Rent Avg. Size Avg. Rent Avg. Size Avg. Rent Avg. Size Avg. Rent
Brockton 0.5 1964 Partial - 2013 95% 734 $794 844 $811 1,119 $994 1,340 $1,129
Ashford at Keystone 2.7 1967 Partial - 2013 94% 700 $720 900 $795 - - 1,056 $1,145
Monon Place - Phase I 3 1966 2013 96% - - 860 $913 1,088 $1,160 1,320 $1,732
Shadeland Station 4.6 1984 2011 99% 700 $728 - - 1,000 $868 - -
Chateau De Ville 0.1 1965 - 95% 700 $666 991 $768 1,350 $868 1,550 $990
Chateau in the Woods 0.3 1973 - 97% 712 $679 1,182 $799 1,144 $774 1,590 $1,009
Bayview Club 4.4 2003 - 94% 722 $795 - - 1,052 $855 1,242 $1,155
Average 2.2 1975   96% 711 $730 955 $817 1,126 $920 1,350 $1,193
Subject - In-Place   1989 Partial - 2015 93% 679 $676 910 $793 1,056 $907 1,246 $1,034
Discount to Comp Set         $54   $24   $13   $159


*Sources: Axiometrics, Costar, Tikijian Associates

SALES COMPS
Property Name Miles from Subject Date Sold Class Year Built Number of Units Sales Price Price/Unit Cap Rate
Bayview Club 4.4 May-15 B+ 2002 236 $25,300,000 $107,203 n/a
Woods of Castleton 5.6 May-16 B 1982 260 $16,500,000 $63,462 5.9%
Conner Farms 9.7 Dec-15 A- 1995 300 $33,200,000 $110,667 5.4%
Park at Eagle Creek 10.5 Mar-16 A- 1997 240 $24,300,000 $101,250 5.9%
Oaks of Eagle Creek 10.7 Sep-15 B 1987 632 $44,500,000 $70,411 6.2%
Eagle Lake Landing 12.3 Mar-15 B+ 1976 277 $13,200,000 $47,653 7.0%
Eagle Chase 12.5 Nov-15 B+ 1995 156 $15,736,041 $100,872 6.0%
Riverchase 13.4 May-15 B+ 2000 216 $16,150,000 $74,769 6.0%
Eagle Creek 14.3 Mar-14 B- 1972 188 $12,350,000 $65,691 6.7%
Village on Spring Mill 15.5 Oct-15 A- 1997 400 $50,000,000 $125,000 5.3%
Mission Hills 20.6 Oct-15 B+ 1982 267 $17,500,000 $65,543 6.4%
Total/ Average 11.8     1990 288 $24,430,549 $84,775 6.1%
Subject     B 1989 208 $16,000,000 $76,923 6.1%


Sources: Real Capital Analytics, Costar, Tikijian Associates

Location

Trails at Lakeside is located in a convenient location on the affluent North side of Indianapolis.  The Property is two miles East of the very popular Broad Ripple Village, one of the city’s six official Cultural Districts. Broad Ripple Village offers a high concentration of unique restaurants, bars, shops and live entertainment clubs and is one of the most popular entertainment districts in Indianapolis for college students and young adults. The Property is just a few miles south of the Keystone at the Crossing / Castleton area which is one of Indianapolis’ most affluent and desirable areas from a commercial and residential perspective. Keystone at the Crossing is home to a variety of high-end retail amenities including The Fashion Mall, an upscale shopping mall owned and operated by Simon Property Group, the largest owner of retail shopping malls in the United States with headquarters in Indianapolis. Downtown Indianapolis is a short 12 to 15‐minute drive South of the Property, offering an employment base of over 130,000 jobs and an abundance of entertainment opportunities.

Market Overview 

Indianapolis ranked as the nation's 14th largest city in 2015, according to estimates from the U.S. Census Bureau. Population of the Indianapolis Metropolitan Statistical Area (MSA), which includes Marion County, as well as Boone, Hamilton, Hancock, Hendricks, Johnson, Madison, Morgan, and Shelby counties, totaled 1,971,274 residents in 2014, making it the 33rd largest MSA in the country according to the Bureau of Economic Analysis (bea.gov).

Several national and multi-national companies have world, national or regional headquarters in Indianapolis. The national headquarters of pharmaceutical giant Eli Lilly, as well as many of the company's manufacturing facilities, are located in the city. Lilly employs approximately 12,000 people in greater Indianapolis. Simon Property Group, the country's largest shopping center developer, is based in Indianapolis and recently completed construction of a 15-story office building across from the Indiana Statehouse.  Adjacent to the Property is Community Hospital South, one of Community Health Network’s hospitals which received a $130 million expansion in 2010, a new world-class cancer center in 2014, and a two-story heart center in 2015.

No less than five traditional colleges and universities are located in Indianapolis. The largest, Indiana University-Purdue University at Indianapolis (IUPUI), is the state's third largest university, with a student body in excess of 30,000 and staff of over 6,800. Ivy Tech, a state-wide community college, has over 12,000 students studying in Indianapolis. Private schools Butler University, Marian University, and the University of Indianapolis have student populations which, taken together, total almost 12,000.

Submarket Overview

According to Axiometrics, the Castleton submarket has the fourth highest occupancy in the market (out of 12 submarkets), with a 2Q2016 average occupancy of 94.8%. Axiometrics predicts a 5.5% average vacancy rate over the next five years for the submarket, along with an effective annual rent growth of 3.3% over the same period.

Axiometrics - Annual Submarket Trend Report
Year 2016 2017 2018 2019 2020 2021
Submarket Vacancy 5.9% 5.7% 5.4% 5.0% 5.4% 6.0%
Average Rent Growth 2.8% 3.4% 3.6% 3.8% 3.0% 2.6%

Demographic Information

Demographics
Distance from Property 1 Mile 3 Miles 5 Miles
Population (2015) 7,843 87,994 224,994
Growth (2010-2015) 2.0% 3.4% 8.1%
Growth (2015-2020) 3.5% 3.8% 4.9%
Median Household Income (2015) $51,176 $46,481 $40,457

Demographic information above was obtained from CoStar and Census.gov

Photos
Financials
Sources & Uses

Total Capitalization
Sources of Funds Cost
Debt $13,695,000
Equity $4,109,773
Total Sources of Funds $17,804,773
Uses of Funds Cost
Purchase Price $16,000,000
Bridge Loan Escrows & Other Costs $100,000
Sponsor Acquisition/ Guarantor Fee $240,000
HUD Financing Costs $18,110
Working Capital/ PCNA Contingency $102,500
Bridge Loan Financing Costs $94,163
Due Diligence, Legal & Closing Costs $50,000
Broker-Dealer Placement Fee $60,000
Capital Reserves (Pre-HUD) $1,140,000
Total Uses of Funds $17,804,773
Debt Assumptions

The projected terms of the debt financing are as follows:

Bridge Loan

  • Lender: Merchants Bank of Indiana
  • Total Proceeds: $13,695,000
  • Term: 12 Months
  • Rate: 30 Day LIBOR + 275 bps
  • Amortization: Interest Only
  • Loan to Cost: 76.9%
  • Loan to Purchase Price: 85.6%

Permanent Loan

  • Lender: HUD
  • Principal Balance: $15,420,000
  • Term: 35 Years
  • Rate: 3.50%
  • Amortization: 35 Years
  • Loan to Value: 85% of Purchase Price + Repair Reserves

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.

Distributions

Order of Distributions to Realty Mogul 34, LLC (Operating Income)

  • First, to investors for any accumulated unpaid preferred return
  • Second, a cumulative non-compounded 8% annual preferred return
  • Then, any excess balance will be split 70% to members ​pari passu and 30% to Sponsor

Order of Distributions to Realty Mogul 34, LLC (Sales or Refinance Proceeds)

  • First, to investors for any accumulated unpaid preferred return
  • Second, return of Capital Contribution
  • Then, any excess balance will be split 70% to members ​pari passu and 30% to Sponsor

Realty Mogul 34, LLC is expected to distribute 100% of its share of excess cash flow (after expenses) to the members of Realty Mogul 34, LLC (the RealtyMogul.com investors).  The manager of Realty Mogul 34, LLC is to receive a portion (up to 10%) of the Sponsor's promote interest. Depreciation and tax losses will be allocated based on the promote structure, i.e. 70/30 (70% to members, 30% to Sponsor). Solely in connection with the contribution of the Property to a "real estate investment trust" (as defined under IRS Code Section 856), the Sponsor may require that after at least one year of ownership, investors agree to sell any portion of their equity units at a price equal to the greater of fair market value or the amount required to achieve a 20% IRR​ to the investor.

Distributions are projected to start in March 2017 and are projected to continue on a quarterly basis thereafter, until the Sponsor obtains HUD Financing, after which distributions are projected to be made semi-annually. 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 Year 6 Year 7
Effective Gross Revenue $2,038,383 $2,170,432 $2,313,664 $2,405,191 $2,486,923 $2,571,557 $2,657,128
Total Operating Expenses $927,630 $956,891 $1,013,135 $1,068,827 $1,125,688 $1,184,273 $1,218,734
Net Operating Income $1,110,753 $1,213,541 $1,300,528 $1,336,364 $1,361,235 $1,387,284 $1,438,394
Distributions to Realty Mogul 34, LLC Investors $100,900 $119,144 $159,976 $169,508 $176,251 $183,310 $2,633,993
Fees

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/ Guarantor Fee $240,000 Sponsor Capitalized Equity Contribution 1.50% of the Property purchase price
Broker-Dealer Fee 4.0% North Capital (1) Capitalized Equity Contribution 4.0% based on the amount of equity invested by Realty Mogul 34, LLC
Recurring Fees:
Property Management Fee 4.0% of monthly gross revenue, plus $3.00 per unit per month Sponsor Operating Cash Flow 4.0% of monthly gross revenue, plus an additional $3.00 per unit per month for the use of the Sponsor's centralized office resources
Management and Administrative Fee 1.0% of amount invested in Realty Mogul 34, LLC RM Manager, LLC Distributable Cash  RM Manager, LLC is the Manager of Realty Mogul 34, 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 34, 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.

Disclaimers/FAQs
Disclaimers

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 $10,096 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 34, 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 14% increase over the existing average 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 34, LLC’s investment.


Lease-Up Risks

The Property currently has approximately a 93% occupancy level, and the Sponsor intends to implement a capital improvement plan involving the renovations of certain units and a leasing program in its effort to maintain that occupancy level.  There can be no assurance that such renovations will be consummated on a timely basis, that such work will not materially adversely affect other aspects of the operation of the Property, or that the planned lease-up program will result in the Property maintaining its occupancy level at rental rates in line with those projected.  Any delays or adverse effects of such renovation work or lease-up efforts could adversely affect the Property’s financial results or business operations and thus the value of the Company’s investment.

Although the Sponsor believes that comparable properties are currently achieving rental rates that are in line with those expected from the Property, there can be no assurance that such increased occupancy levels or 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 Company’s investment.


Vacancies and Tenant Defaults May Reduce the Property's Revenues

A vacancy or default of a tenant on its rent will cause Sponsor Entity to lose the revenue from that unit and, if enough effective vacancies occur, it could cause Sponsor Entity 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 the Company may be adversely affected.


Bridge Loan

The loan used to acquire the Property is a bridge loan.  The Sponsor is in the process of obtaining HUD refinancing.    Financing risk is inherent in the mortgage lending industry, and there can be no assurance that the lender will complete financing on the rates and terms including in the underwriting being presented in the model for this investment opportunity.  Should the terms of the debt financing change materially and adversely, investors will be notified.


Interest-Only Loan

The bridge loan being used to acquire the Property is expected to have an interest-only period during the first year of the term, which means that there will be no reduction in the principal balance during that interest-only period.


Rising Interest Rates

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 an 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).


The Company is Subscribing for an Interest in a Pre-Existing Entity

The Company’s investment in the Company will effectively recapitalize that entity, which has been in existence (and held title to the property) for a short period.  The Company expects to receive assurances from the Sponsor as to any prior acts or omissions concerning the Property, but there can be no certainty that any such assurances will sufficiently reduce the risk of any pre-existing liabilities connected with the Property.


Equity Invested

The manager of the Sponsor Entity (“Sponsor Manager”) is expected to invest certain equity in the Sponsor Entity.   However, the principals of the Sponsor Manager may have raised some of this equity from third parties and the principals of the Sponsor Manager may be permitted to sell a portion of their equity interest at a later time.  Thus, either at closing or at a later time, the principals of the Sponsor Manager may not have a significant portion of their own personal funds invested in this transaction.


No Operating Agreement Changes

Although the Company may prefer to have certain provisions inserted in the existing operating agreement of the Sponsor Entity, the operating agreement for the Sponsor Entity is likely to remain unchanged (except to reflect a change in ownership).  All potential investors should review the operating agreement of the Sponsor Entity to determine if it is acceptable to them.


Sponsor's Agreements with Affiliates

The Company’s operating agreement does not prohibit, nor require member consent for, agreements between the Sponsor and its affiliates.  This could result in such agreements having non-market terms, which may negatively impact the investment’s performance and the returns to investors.


Tornado Risk

Indianapolis lies in the central part of the state of Indiana, in an area which can be subject to frequent and sometimes destructive tornadoes.  There is no guarantee that the Sponsor Entity will obtain tornado insurance. If no insurance is obtained, a tornado could have a material adverse impact on the Sponsor Entity, and thus the Company.  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 Entity.


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 34, 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 34, 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 34, 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.


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 Trails at Lakeside, LLC (including Realty Mogul 34, 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 Trails at Lakeside, LLC is a newly formed company and has no operating history or record of performance.  Realty Mogul 34, LLC is pursuing a venture capital strategy through its investment in BH Trails at Lakeside, LLC, and the manager of Realty Mogul 34, LLC is expected to be treated as an investment adviser exempt from federal or state registration under this strategy.


Manager of Realty Mogul 34, LLC Will Participate in Sponsors' Promote Interest

The manager of Realty Mogul 34, 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 34, 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 34, 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 semi-annually.


Risk of Interest Charges for Sponsor Capital Calls

The amount of capital that may be required by BH Trails at Lakeside, LLC from Realty Mogul 34, LLC is unknown, and although BH Trails at Lakeside, 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 34, LLC does not intend to participate in a capital call if one is requested by BH Trails at Lakeside, LLC, and in such event the manager of BH Trails at Lakeside, LLC may accept additional contributions from other members of BH Trails at Lakeside, LLC.  Any member may make a loan to BH Trails at Lakeside, LLC under such terms and conditions as may be agreed to by the member and BH Trails at Lakeside, 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 34, LLC's interest in BH Trails at Lakeside, 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 34, 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 Trails at Lakeside, 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 34, 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.

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