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.