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Completed Equity
Multifamily
Ravenwood Apartments
Fort Worth, TX
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
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100% funded
Offered By NAPA Ventures, LLC
17.0%* TARGET IRR 17.0%-%
7.4%* TARGET AVG CASH ON CASH
1.6* TARGET EQUITY MULTIPLE
Estimated Hold Period 3 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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Overview
Multi-family property being acquired at a significant discount to appraised value. Located near demand drivers including schools, major employers, and Lake Arlington
Property at a glance
Year Built 1983
Number of Units 123 (one unit is used as a leasing office)
Unit Types 16 one bedroom/one bathroom (1/1) 58 two bedroom/one bathroom (2/1) 16 two bedroom/two bathroom (2/2) 33 three bedroom/two bathroom (3/2)
Number of Stories Two 
Parking Ratio 2.0 per unit
Acquisition Price

$4,900,000

Occupancy

92%

Investment Highlights
Purchase Price of $180,000 less than August 2016 Appraised Value
Recent Leasing Exceeds Expected Post-Renovation Underwritten Rents
Texas Based Sponsor with Previous Experience in the Market
Located Near Demand Drivers Including Schools, Major Employers, and Lake Arlington
Management
Cumulative Distributions

NAPA Ventures, LLC

NAPA Ventures, LLC also known as NAPA, is a multifamily and commercial real estate investment company focused on the acquisition, rehabilitation and operation of value-add and core asset investment properties in Texas.  NAPA is currently continuing to aggressively and profitably expand their real estate holdings within Texas and other growth markets of the USA.

NAPA currently has ownership in over 3,700 existing units.  Realty Mogul investors have previously invested with NAPA on the Woodbridge Townhomes and Ravenwood Apartments transactions.

http://napa-ventures.com/
  • Shravan Parsi
    Principal and Co-Founder
  • Glenn Gonzales
    Principal and Co-Founder
Shravan Parsi
Principal and Co-Founder

Shravan Parsi is an entrepreneur and an innovator with a background in two diversified professional fields: real estate investments and pharmaceutical research.

Shravan is the Co-CEO & Co-Founder of NAPA, LLC, which has acquired 7 apartment complexes and 2 commercial properties in the past 18 months. NAPA will continue to aggressively grow with a forecasted pipeline of $150MM in planned acquisitions in 2016. Shravan is a featured speaker at Texas CEO Magazine’s 2015 Enlightened Speaker series event & was recently featured as a value investor in the Austin American Statesman for the commercial real estate investment he purchased adjacent to the Formula 1 Race Track prior to the inaugural US Grand Prix in Austin, Texas.

By education, Shravan is a Pharmaceutical Scientist, owns investments in Medical Device & Health-Tech space. Shravan has published articles in the academic journals and made presentations to FDA and American Association of Pharmaceutical Scientists (AAPS).

With 11 years of RE Investment experience and 12 years of Pharma industry scientific and management experience, Shravan brings a unique skill set and strategic business vision to NAPA investments. He is currently a member of prestigious entrepreneur network TIGER 21, Central Texas Angel Network (CTAN), and the Austin Technology Council (ATC), and a past member of Entrepreneurs Org (EO).

Glenn Gonzales
Principal and Co-Founder

Mr. Glenn Gonzales is an entrepreneurial individual able to leverage 25 years of commercial real estate experience. Glenn served as Treasurer on the Board of Directors for the Washington Multi-family Housing Association, and was elected as President of the association in 2006. From 1994 to 1998, Glenn was a board member for the Utah Apartment Association. He also served a two-year term as the Chairman of the Public Relations Committee and a one-year term as the Secretary-Treasurer for the Institute of Real Estate Management (IREM). Since 1994, Glenn has also been an instructor for the Apartment Associations in his local markets.

Track Record

 Property Name   Location   Asset Type   Date
Acquired 
 # of
Units

Purchase Price

 
 Encinal   San Antonio, TX  Multifamily 12/19/2013 201 $4,818,750
 Lakeview Apartments   Killeen, TX  Multifamily 4/4/2014 62 $1,175,000
 Morgan Manor   San Antonio, TX  Multifamily 9/26/2014 157 $3,650,000
 Summerlyn   Killeen, TX  Multifamily 1/6/2015 200 $6,300,000
 Sante Fe   San Antonio, TX  Multifamily 6/30/2015 327 $7,300,000
 Montecito Creek   Dallas, TX   Multifamily 9/30/2015 650 $34,000,000
 Oates Creek   Mesquite, TX  Multifamily 6/30/2016 280 $15,700,000
 Parkside Townhomes   Arlington, TX  Multifamily 7/14/2016 144 $11,500,000
 Woodbridge Townhomes   Arlington, TX  Multifamily 8/24/2016 91 $6,225,000
 Westwood Apartments   Dallas, TX  Multifamily 8/31/2016 187 $7,400,000
 Ravenwood Apartments Fort Worth, TX Multifamily 10/12/2016 122 $4,900,000
 Brandon Mill Dallas, TX Multifamily 9/26/2016 300 $12,160,000
 Eagle Point Dallas, TX Multifamily 11/15/2016 156 $6,961,100
 Pleasant Creek Lancaster, TX Multifamily 12/30/2016 159 $8,580,000
 Oyster Creek Lake Jackson, TX Multifamily 2/28/2017 201 $15,900,000
Treasure Bay Lake Jackson, TX Multifamily 2/28/2017 200 $15,100,000
Prescott Woods Tulsa, OK Multifamily 5/12/2017 256 $8,300,000
      Totals  3,749 $169,969,850

The Sponsor's bio and track record were provided by the Sponsor and have not been verified by RealtyMogul.com or NCPS

Business Plan

In this transaction, RealtyMogul.com investors are to invest in Realty Mogul 72, LLC. Realty Mogul 72, LLC is to subsequently invest in NAPA Ventures Ravenwood, LLC, the entity that will hold title to the Property.  

Within the first three to five months of acquiring the Property, the Sponsor intends on implementing a $575,000 exterior capital improvement plan to address deferred maintenance and mechanical issues, make improvements to the common areas, and increase the Property's curb appeal. The exterior capital improvements include painting the building exteriors, rehabilitating the leasing office, upgrading the landscaping, as well as renovating the pool and laundry room. The Sponsor has also budgeted for interior renovations of $427,000, or $7,000 per unit, for 50% of the rentable units, which is expected to include new countertops, new appliances, refreshing of cabinetry, new paint and new carpet. The Sponsor estimates that upon renovation, the renovated units is expected to be able to achieve rental premiums of approximately 13.4% above the average in-place rents.

Per review of the August 2016 rent roll, recent leasing at the property has already achieved the post-renovation rents for three of the four different unit types. Refer below for a comparison of the underwritten post renovation rents to the highest in-place rents at the Property by unit type:

 
Unit Type  U/W Post-Renovation Rent   Highest In-Place Rent
1/1 $649 $676
2/1 $799 $809
2/2 $880 $845
3/2 $969 $975

It is expected that all interior renovations will be completed in approximately 12 months, with an average of five (5) units being renovated per month. Upon completion of all renovations, the Sponsor intends on selling the Property within three years, although if the renovations are successfully implemented ahead of schedule and market conditions allow for a favorable sale, the hold period could be shorter. However, the hold period is not guaranteed and could also extend beyond the three year expected hold period. 

A summary of the capital expenditures planned at the Property is as follows:

Ravenwood Apartments - Capital Expenditures Budget
CapEx Item $ Amount Per Unit
Interior Rehab ($7,000 each for 61 units) $427,000 $3,500
Exterior Painting $115,000 $943
Leasing Office Rehab $50,000 $410
Roof Replacement (as needed) $45,000 $369
Carpentry $40,000 $328
Landscaping $35,000 $287
Exterior Lighting $30,000 $246
Pool Deck $30,000 $246
Concrete & Striping (parking lot) $25,000 $205
Stairwell repairs $25,000 $205
Laundry room renovation $20,000 $205
Signage $20,000 $164
Office furniture $20,000 $164
Mail Kiosk replacement $17,000 $139
Gutters $15,000 $123
Pool Furniture $15,000 $123
Plumbing $12,145 $100
Condenser Pad Replacement $10,000 $82
Storage Unit Repairs $10,000 $82
Contingency 10.0% $95,615 $784
Subtotal $1,051,759 $8,621
Construction Management Fee 3.0% $31,553 $259
Total $1,0832,312 $8,880

Sponsor Case Study - Montecito Creek Apartments

Per discussions with the Sponsor, the Montecito Creek Apartments complex, which was purchased approximately nine months ago, recently received an unsolicited offer to purchase at approximately the year three underwritten exit value for the property.  The Sponsor stated that the business plan for Montecito, which is located in Dallas, TX, was effectively similar to that of the Property, with the Sponsor intending to renovate approximately 50%-60% of the units and then sell the asset with additional value add potential left for the buyer.  Instead, the Sponsor has renovated approximately two thirds of the total intended units (about 40% of all units at the property), and has already received an offer to buy Montecito which they expect they will accept.  The Sponsor anticipates accepting this purchase offer should yield a net return to investors in excess of their initial underwritten projections.

Before and after pictures of the Montecito property are as follows:

Note:  The above case study details were provided by the Sponsor and have not been independently verified by RM, though RM did tour the Montecito property with the Sponsor.

Property

RealtyMogul.com, along with Network Acquisition Partnership Alliance, LLC (“NAPA” or the “Sponsor”), is providing the opportunity to invest in the acquisition and ownership of the Ravenwood Apartments (the "Property"), a 123 unit, garden-style apartment complex in Fort Worth, TX.  The Property is comprised of 16 buildings, a leasing office, a pool, and green space. 

The primary objective of this investment is to acquire the Property at an attractive price, implement exterior and interior capital improvements, increase rental rates, and sell the Property within three (3) years.

Property Details

The Property is a 123-unit garden-style apartment complex located at 2333 Escalante Ave, Fort Worth, Texas. The unit mix consists of 16 one (1) bedroom, one (1) bathroom units, 58 two (2) bedroom, one (1) bathroom units, 16 two (2) bedroom, two (2) bathroom units, and 33 three (3) bedroom, two (2) bathroom units.  Three bedrooms are fairly unique for the immediate area as most of the comps only offer one and two bedrooms.  Average in-place rents average $737 and range from $560 for one bedrooms and $975 for three bedrooms. The unit mix includes one unit that is currently being used as the leasing office.

Amenities at the Property include a swimming pool, one laundry facility, covered parking, and storage units.  Interior finishes include dishwashers, wood-burning fireplaces, patios/balconies, and large closets. Approximately half of the units feature upgrades performed by the seller including wood flooring, new carpet, new appliances, and new countertops.  

Unit Mix
Unit Type # of Units Avg SF/Unit In-Place Rent Rent/SF Post-Reno Rent Rent/SF % Variance*
1 Bed, 1 Bath 16 554 $599 $1.08 $649 $1.17 8.3%
2 Bed, 1 Bath 58 781 $681 $0.87 $799 $1.02 17.3%
2 Bed, 2 Bath 16 835 $793 $0.95 $880 $1.05 11.0%
3 Bed, 2 Bath 33 1,010 $875 $0.87 $969 $0.96 10.7%
Total 123 820 $737 $0.91 $836 $1.02 13.4%

*Note:  This figure is representative of the expected achievable rents for post-renovation units as a percentage of in-place rents.

Comparables

Sales Comps
  Subject The Vibe at Landry Way Lofton Place La Jolla on Meadowbrook La Jolla Ridge Parkside Townhomes Averages
Date Sep-16 Jun-15 Nov-15 Dec-15 Jul-15 Jul-16  
# of Units 122 224 258 160 208 144 208
Year Built 1983 1978 1984 1984 1985 1984 1983
Average SF (per unit) 818 929 773 755 889 N/A 736
Purchase Price $4,900,000 $8,800,000 $21,010,000 $10,000,000 $11,500,000 $11,500,000 $13,017,424
$/Unit $40,164 $39,386 $81,434 $62,500 $55,288 $79,861 $60,348
Cap Rate  5.50% 6.80% 6.4% N/A N/A N/A 6.37%

 

Pre-Renovated Leasing Comps
   Subject (In-Place Rents)  Brentwood   Lofton Place*   Havenwood   Park Place   Total / Averages 
 Total # of Units  122 292 258 316 256 287
 Occupancy  92% 94% 95% 95% 97% 96%
 Year Built  1983 1985 1984 1987 1980 1985
 1 Bedroom 1 Bathroom           
 Average $/Unit  $599 $695 $682 $661 $648 $671
 Average Square Feet  554 715 679 654 714 691
 Average $/SF  $1.08 $0.97 $1.00 $1.01 $0.91 $0.97
 2 Bedroom 1 Bathroom           
 Average $/Unit  $681 Not offered $805 $784 $820 $803
 Average Square Feet  781 Not offered 876 895 964 912
 Average $/SF  $0.87 Not offered $0.92 $0.88 $0.85 $0.88
 2 Bedroom 2 Bathroom           
 Average $/Unit  $793 $868 $930 $876 $875 $887
 Average Square Feet  835 975 1,037 1,094 1,076 1,046
 Average $/SF  $0.95 $0.89 $0.90 $0.80 $0.81 $0.85
 3 Bedroom 2 Bathroom           
 Average $/Unit  $875 Not offered Not offered Not offered $1,005 $1,005
 Average Square Feet  1,010 Not offered Not offered Not offered 1,298 1,298
 Average $/SF  $0.87 Not offered Not offered Not offered $0.77 $0.77

* - Excludes 2 bedroom townhomes

Post-Renovated Leasing Comps
 Post- Renovation Rental Comparables   Subject   Brentwood*   Lofton Place*   Windsong   Valencia   Tuscany Apartments   Total / Averages 
 Total # of Units  122 292 258 188 263 240 248
 Occupancy  92% 94% 95% 98% 93% 96% 95%
 Year Built  1983 1985 1984 2003 1985 1986 1989
 1 Bedroom 1 Bathroom             
 Average $/Unit  $649 $745 $758 $785 $765 $682 $747
 Average Square Feet  554 715 679 747 674 662 695
 Average $/SF  $1.17 $1.04 $1.12 $1.05 $1.13 $1.03 $1.07
 2 Bedroom 1 Bathroom             
 Average $/Unit  $799 Not offered $870 $880 $855 $835 $860
 Average Square Feet  781 Not offered 876 870 855 902 876
 Average $/SF  $1.02 Not offered $0.99 $1.01 $1.00 $0.93 $0.98
 2 Bedroom 2 Bathroom             
 Average $/Unit  $880 $918 $975 $975 $963 $910 $948
 Average Square Feet  835 975 1,037 994 1,057 965 1,006
 Average $/SF  $1.05 $0.94 $0.94 $0.98 $0.91 $0.94 $0.94
 3 Bedroom 2 Bathroom             
 Average $/Unit  $969 Not offered Not offered $1,220 Not offered Not offered $1,220
 Average Square Feet  1,010 Not offered Not offered 1,230 Not offered Not offered 1,230
 Average $/SF  $0.96 Not offered Not offered $0.99 Not offered Not offered $0.99

* - Excludes 2 bedroom townhomes

Location


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Tucked in between two residential neighborhoods, the Property is located at the corner of Meadowbrook Drive and Escalante Ave in Fort Worth. The Property is located within walking distance of Bill J. Elliot Elementary School & Handley Middle School. The immediate surrounding areas consist of underdeveloped wooded land to the north across Meadowbrook Drive; single-family residential to the south; single-family residential to the east; and single-family residential to the west across Escalante Avenue. Retail is limited in the immediate area, however, there are several prominent retailers within two miles of the property including a CVS, Aldi, Papa John’s, and McDonalds. 

The Property is centrally located approximately 10 miles east of the Fort Worth Central Business District (CBD) and approximately 23 miles west of the Dallas CBD. The Dallas/Fort Worth International Airport is approximately 11 miles northeast of the subject property. The asset has immediate access to East Loop 820 via the Meadowbrook Drive exit as well as Interstate 30 via the Eastchase Parkway exit. Lake Arlington is less than two miles away from the Property. 

Market Overview 

Per Axiometrics, Fort Worth-Arlington, TX Metro Division's two largest job sectors are the Trade, Transportation, and Utilities sector (24.5% of employment), followed by the Education & Health Services sector (12.8% of employment). The Trade, Transportation, and Utilities sector gained 6,700 jobs during the 12 months ending July 2016, constituting job growth of 2.8%. The Education & Health Services sector grew 1,400 jobs during the same period; a 1.1% growth rate. According to the July 2016 figures from the Bureau of Labor Statistics, the Dallas-Fort Worth-Arlington, TX MSA has a population of approximately 3.7 million people in the workforce and an unemployment rate of 4.2%.  This compares favorably to the national average of 4.9%

According to the most recent Costar Dallas - Fort Worth market report, The Fort Worth market has been experiencing some of the best in-migration and employment growth in the country. Vacancies continue to hover around 4% even as 22,000 units have come online since the beginning of 2015. However, there are another 35,000 units on the way that will continue to test the market's vacancy rates. Employers have been taking note and several large relocations have occurred or are in the works including Toyota, Liberty Mutual, and the JP Morgan regional consolidation.

According to the 2Q 2016 Axiometrics market report, vacancies and annual effective rent growth continue to outperform the national averages. The vacancy rate for the market stands at 4.2% and annualized effective rent growth of 6.8% as of the completion of the second quarter.  Average rents for the market are $1,001/unit and the average build of the market is 1995. 

Submarket Overview

According to the 2Q 2016 Axiometrics market report, the I-820 submarket has experienced effective annual rent growth (11.7% in 2Q16) and ranks as one of the fastest growing markets in the United States in terms of rent growth and population growth. Ranking fifth of the eleven submarkets, the vacancy rate of 3.7% is below the market average of 4.2% as of the second quarter.  Average rents for the submarket are $723/unit and the average build of the submarket is 1985. 

Demographic Information

 
Distance from Property 1 Mile 3 Miles 5 Miles
Population 9,672 86,700 234,572
Population Growth (2010-2016) 9.20% 11.37% 10.37%
Projected Growth (2016-2021) 7.55% 7.88% 7.72%
Average HH Income  $61,123 $65,318 $65,517
Median HH Income  $47,096 $46,357 $46,693
Median Home Value $125,579 $141,046 $138,796
Owner Occupied Households 2,176 19,232 50,763
Renter Occupied Households 1,596 16,147 40,113

Demographic information above was obtained from CoStar.

Photos
Financials
Sources & Uses

Total Capitalization
Sources of Funds Cost
Debt $4,865,000
Equity $1,437,962
Total Sources of Funds $6,302,962
Uses of Funds Cost
Purchase Price $4,900,000
CapEx Reserve $1,083,312*
Closing Costs, Legal Fees, & Other $157,000
Sponsor Acquisition Fee $49,000
Lender Origination Fee $48,650
North Capital Broker Dealer Fee $40,000
Working Capital $25,000
Total Uses of Funds $6,302,962

* - Note that the construction budget for the CapEx Reserve is inclusive of a 10% contigency

Debt Assumptions

The projected terms of the debt financing are as follows:

  • Lender: Arbor Commercial Funding
  • Loan Type: Agency (Fannie Mae - DUS)
  • Proceeds: $4,865,000
  • Term: 12 years
  • Rate: 10-Year Treasury Rate plus 294 basis point spread, 4.63% (as of September 12, 2016)
  • Amortization: 30 years
  • Interest Only Period: 12 months
  • Prepayment Fee: 11.5 years yield maintenance
  • Assumption Fee: 1.0%

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

NAPA Ventures Ravenwood, LLC intends to make distributions to investors (Realty Mogul 72, LLC - 86.2%, Sponsor co-invest - 13.8%. collectively, the "Members")  as follows:

  1. To the Members, pari passu, all excess cash flows and appreciation to a 10.0% IRR to the Members,
  2. 80.0% / 20.0% (80.0% to Members / 20.0% to the Sponsor) of excess cash flows and appreciation to a 15.0% IRR to Members. 
  3. 65.0% / 35.0% of excess cash flow and appreciation to a 20.0% IRR to Members and
  4. 50.0% / 50.0% of excess cash flow and appreciation thereafter.  

Note that these distributions will occur after the payment of the Company's liabilities (loan payments, operating expenses and other fees as set forth in the LLC agreement, in addition to any member loans or returns due on member loans).

Realty Mogul 72, LLC will distribute 100% of its share of excess cash flow (after expenses and fees) to the members of Realty Mogul 72, LLC (the RealtyMogul.com investors). 

Distributions are expected to start in March 2017 and are expected 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
Effective Gross Revenue $1,063,027 $1,234,102 $1,271,125
Total Operating Expenses $749,704 $776,849 $799,048
Net Operating Income $313,136 $457,253 $472,077
Annual Debt Service $225,201 $300,294 $300,294
Distributions to Realty Mogul 72, LLC Investors $50,162 $108,208 $1,815,147
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 Fee $49,000 Sponsor Capitalized Equity Contribution 1.0% of the property purchase price
Disposition Fee 0.5% of Gross Sales Price Sponsor Sales Proceeds Included in the proforma as a portion of the cost of sale
Broker-Dealer Fee $40,000 North Capital (1) Capitalized Equity Contribution Fixed $40,000 fee
Recurring Fees
Property Management Fee 3.5% of Effective Gross Income Sponsor-Affiliated Party Distributable Cash Note that RM has underwritten a conservative 4.0% Property Management Fee in the attached proforma. 
Construction Management Fee 3.0% of Total Costs Sponsor Capital Expenditure Reserve  
Asset Management Fee 1.0% of Effective Gross Income Sponsor Operating Cash Flow  
Management and Administrative Fee 1.0% of amount invested in Realty Mogul 72, LLC RM Manager, LLC Distributable Cash  RM Manager, LLC is the Manager of Realty Mogul 72, 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 72, 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
Disclaimers

Financial Past of Sponsor’s Principal

Investors should consider that one of the Sponsor’s principals experienced personal bankruptcy in 2002 and a foreclosure on his primary residence in 2009. It should be noted that past financial events are not necessarily indicative of future performance or management ability.


Apartment Complex - Competition

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 but not limited to other apartment units that are currently available for rent, new apartments that are built and condominiums/houses that are for rent or sale. 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. If the Property is not able to successfully compete with the competitive residential alternatives in the local or regional area this could adversely affect the ability of Sponsor Entity to sell the Property, rent its units as necessary to maintain occupancy, and/or to increase or maintain unit rental rates.


Lease-up Risks

The Property currently has a 92% 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 significantly increase that occupancy level. The Sponsor intends to renovate the common areas and some of the vacant units at the Property, and then to offer prospective tenants an attractive leasing package and to use both external and internal leasing resources in its efforts to lease up vacant space at the Property. 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 increasing 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.


Renovation Risks

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 include $7,000 in interior upgrades, in addition to approximately $575,000 in exterior improvements. 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 Company’s investment. Following the renovations, the Sponsor expects to be able to rent the apartment units at average rates that would represent an approximate 13.4% 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 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 the Sponsor Entity to lose the revenue from that unit and, if enough effective vacancies occur, it could cause the 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.


Sponsor’s Scalability in Light of Acquisition

Acquisition of the Property, along with the associated portfolio, will approximately double the number of units in the Sponsor’s portfolio. The transaction may strain current management and resources, and pose associated financial and management risks.


Units at the Property are Smaller than Comparable Properties

The smaller size of the units at the Property relative to comparable properties may limit the demand for units at the Property and prevent the Sponsor from achieving the projected occupancy and/or post-renovated rental rates for the Property. 


Variance in Appraisal Values

There were two appraisals completed for the property in the past year. The first was ordered by the seller and indicates an as-is value of $6,500,000. The second was ordered by the senior lender and indicates an as-is value of $5,100,000. The property was purchased by the Sponsor for $4,900,000, which is below both appraisal values but significantly closer to the lender’s value.


Interest-Only Loan Period

The loan being used to acquire the Property is expected to have an interest-only period during the first 12 months of the loan term, which means that there will be no reduction in the principal balance during that interest-only period.


Sponsor’s Acquisition of Seller’s Property Management Company

The Sponsor is currently under contract to purchase the seller’s property management company. This may potentially cause a disruption in the management of the Property as control of the property management company transitions.


Texas Tornado Risk

Fort Worth, Texas lies in the northern part of the state of Texas, 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.


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 72, 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 NAPA Ventures Ravenwood​, LLC (including Realty Mogul 72, 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, NAPA Ventures Ravenwood, LLC is a newly formed company and has no operating history or record of performance. Realty Mogul 72, LLC is pursuing a venture capital strategy through its investment in NAPA Ventures Ravenwood, LLC, and the manager of Realty Mogul 72, LLC is expected to be treated as an investment adviser exempt from federal or state registration under this strategy.


Uncertain Distributions

The Sponsor cannot offer any assurances that there will be sufficient cash available to make distributions to its members (including Realty Mogul 72, 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 NAPA Ventures Ravenwood, LLC from Realty Mogul 72, LLC is unknown, and although NAPA Ventures Ravenwood, 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 72, LLC does not intend to participate in a capital call if one is requested by NAPA Ventures Ravenwood, LLC, and in such event the manager of NAPA Ventures Ravenwood, LLC may accept additional contributions from other members of NAPA Ventures Ravenwood, LLC. Amounts that the manager of NAPA Ventures Ravenwood, LLC advances on behalf of Realty Mogul 72, LLC will be deemed to be a manager loan at an expected interest rate of 10%. Amounts that are contributed by existing or new members will be deemed to be additional capital contributions, in which case Realty Mogul 72, LLC's interest in NAPA Ventures Ravenwood, 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 three (3) year hold period, Realty Mogul 72, 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. If the Property is not sold after three (3) years, Realty Mogul 72, LLC may have the right (either at that point or at a later time), subject to other contractual limitations such as the loan on the Property and the requirements of the operating agreement of NAPA Ventures Ravenwood, LLC, to force a sale of the Property or force a sale of the interests of Realty Mogul 72, LLC in NAPA Ventures Ravenwood, 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 72, 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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