We run extensive background checks, criminal checks, bad actor checks, and reference checks on sponsors. In addition to never allowing a sponsor with a criminal history / any securities related issue to use the platform, we may also turn down sponsors due to poor reference checks even if background and criminal checks come back clear.
We require unaffiliated sponsors to use an unaffiliated third-party escrow agent. When an investor makes an investment with unaffiliated 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 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.
Our controls include visiting every property (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.
We have robust quality controls with detailed checklists and a review of third-party reports.

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/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
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:
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.
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.
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 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.
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% |
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- 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
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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.

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.
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.
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:
- To the Members, pari passu, all excess cash flows and appreciation to a 10.0% IRR to the Members,
- 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.
- 65.0% / 35.0% of excess cash flow and appreciation to a 20.0% IRR to Members and
- 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.
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 |
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.
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.