The Sponsor is Acquiring the Asset from an Unsophisticated Seller: The Seller is a local one-man operator who is leaving money on the table and has not optimally managed the asset. DMJ is purchasing the Property at a 5.6% cap rate, a steep discount to the 4.1% average market cap rates for comparable assets. Additionally, whereas DMJ is vertically integrated with a deep, experienced team, the Seller has only remodeled 19 of the 44 units.
Rehabbed Units are Already Outperforming: The Property’s 25 unrenovated units are significantly underperforming their market potential. Renovation premiums for the 19 remodeled units have led to rent increases as high as 60%. While DMJ will renovate units as quickly as is feasible, they have underwritten a rehab schedule of just one unit per month over the next two years. Investors should note that DMJ has underwritten zero rent growth for the first 12 months of the targeting holding period.
Attractive Debt Financing Will Mitigate Interest Rate Risk: The Sponsor is utilizing a leverage of 54.3% LTC and 64.4% LTV. The interest rate is fixed at 5.75%, which eliminates the risk of floating rate debt in a rising rate environment. Additionally, they are working with a relationship lender (a Credit Union) which provides for no-prepayment penalty and ensures maximum flexibility as they add value to the asset over time.
$11,650,000
DMJ Capital Partners
DMJ Capital Partners (the "Sponsor") is a commercial real estate investment company founded in 2018 and is focused on acquiring value-add assets throughout Southern California. They seek to acquire unique investments that will maximize returns to investors and partners. The leadership team has over 50 years of combined experience and is focused on acquiring value-add multi-family and office opportunities through select investing in submarkets with high barriers to entry, DMJ is dedicated to guiding its partners and investors to long-term prosperity by means of local expertise in the marketplace.
https://www.dmjcapitalptrs.com/-
Matt MiduraCo-Founder -
Doug CeresiaCo-Founder -
Josh BuchholzCo-Founder
Matt is Co-Founder and Principal of DMJ Capital Partners and is focused on the company’s acquisitions, investor relations, and execution of growth strategies. He believes that real estate is the best asset class for long-term wealth protection and growth. Growing up as the son of an FBI Agent and an X-Ray Technician, Matt understands the day-to-day commitments that face honest, hard-working American families. Matt received an appointment to attend college at the U.S. Naval Academy in Annapolis, MD. While at USNA, Matt received a B.S. in Economics and lettered in Lacrosse, playing in the NCAA Division I National Championship where he learned the values of team building and goal setting. After graduating from the Naval Academy, Matt was commissioned as an Officer in the U.S. Navy and ultimately served as a Division Officer in the Combat Direction Center on board USS Carl Vinson Aircraft Carrier supporting operations throughout the Middle East, Mediterranean, and Pacific before entering the private sector. Matt transitioned from the Navy and for 12 years worked as a commercial real estate broker for a leading global commercial real estate brokerage company underwriting over $2.5 billion of unpaid principal balance and managing the leasing and sale process of properties in 37 states. Today at DMJ, Matt is an integral part of directing the strategic direction of the Company as well as sourcing deals, leading investor relations, and overseeing the investment performance of the assets.
Doug is Co-Founder and Principal at DMJ Capital Partners and he oversees the company’s business units, focuses on acquisitions and supporting the firm’s principal activities. After graduating from the University of Missouri, Doug began his career in commercial real estate with Bank of America in 1996 originating CMBS loans for commercial assets. Doug has served as President of both SIOR (“the Society of Industrial and Office Realtors) and CCIM (Certified Commercial Investment Managers) for the San Diego chapters and is heavily involved in the local real estate circles as recognized by the San Diego Metropolitan Magazine as one of San Diego’s “40 under 40” in 2007. In his role as Principal, he directs the firm’s investment and development activities, focusing on multi-family and office value add investment opportunities. Doug plays an integral part in directing the strategic direction of the Company as well as focusing on the operations and execution of the assets business plan. Doug, his wife, two sons and their Golden Retriever (Yadi) live in the Scripps Ranch area of San Diego where he coached baseball with the Scripps Ranch Little League and enjoys numerous outdoor activities with his family including, fishing, hiking and playing sports.
Josh is Co-Founder and Principal at DMJ Capital Partners and he oversees the company’s business units and is active in supporting the firm’s service and principal activities. After receiving his Bachelor of Arts degree in International Business from San Diego State University, Josh began his career in Commercial Real Estate focusing on Class A management with the Abbey Company out of Long Beach California before transitioning to a career in Brokerage in 2005. Prior to DMJ, Josh had a prolific Brokerage career, and three times was named the firm's Top Producer of the Year in San Diego. He is actively involved in the Rotary Club 33 of San Diego, as well as a member of the board of trustees for the San Diego History Center. In his role as Principal, he directs the firm’s management and development activities, focusing on multi-family and office value-add investment opportunities. Josh plays an integral part in directing the strategic direction of the Company as well as focusing on the operations of the business units and execution of the asset business plans. Josh enjoys coaching girls' soccer for the Pacific Youth Soccer League, and when he is away from the office loves surfing, backpacking, rock climbing, camping, mountain biking, or any other type of outdoor activity with his wife, two children, and their black lab Bronco.
DMJ Capital Partners Track Record
| City, State | Asset Type | Acq Date | Units or SF | Purchase Price | Current Value/Sale Price | Realized IRR | |
| 3929-3933 Gresham St. | San Diego, CA | Multi-Family | 10/2018 | 12 units | $5,500,000 | SOLD $7,795,000 | 37.43% |
| 2308 Albatross St. | San Diego, CA | Multi-Family | 7/2019 | 9 units | $4,000,000 | SOLD $6,875,000 | 21.30% |
| 6265 Greenwich Dr. | San Diego, CA | Office | 11/2021 | 32,483 SF | $7,500,000 | $17,000,000 | |
| Notable Sales Brokered by DMJ Principals | |||||||
| 9303 & 9323 Chesapeake Dr | San Diego, CA | Office | 2/2018 | 37,754 SF | $6,450,000 | ||
| 8787 Complex Dr. | San Diego, CA | Office | 10/2017 | 55,500 SF | $12,100,000 | ||
| Valley Corporate Center | San Diego, CA | Office | 1/2017 | 175,826 SF | $42,125,000 | ||
| 2251 San Diego Ave. | San Diego, CA | Office | 1/2017 | 64,000 SF | $13,825,000 | ||
| 232 West Ash | San Diego, CA | Office | 9/2016 | 20,000 SF | $8,258,160 | ||
| 1400 Front | San Diego, CA | Office | 9/2016 | 12,454 SF | $6,941,840 | ||
| 2051 Columbia St. | San Diego, CA | Office | 12/2016 | N/A | $11,800,000 | ||
| 330 A Street | San Diego, CA | Office | 12/2016 | 9,000 SF | $6,250,000 | ||
| 1620 5th Avenue | San Diego, CA | Office | 12/2015 | 80,660 SF | $18,500,000 | ||
| The Campus at Fashion Valley | San Diego, CA | Office | 12/2015 | 69,895 SF | $17,000,000 | ||
| 600 B Street | San Diego, CA | Office | 8/2012 | 374,000 SF | $49,000,000 | ||
| 668 Sixth Ave | San Diego, CA | Office | 1/2012 | 32,124 SF | $8,000,000 | ||
The above biography and track record were provided by the Sponsor and have not been independently verified by RM Technologies, LLC or its affiliates. Past performance is not indicative of future results. Please carefully review the Disclaimers section below.
The Sponsor plans to execute a value-add opportunity to increase remaining rents by significantly enhancing the overall quality of the Property and continuing renovations to the interior and exterior of the buildings. 19 of the 44 units have already been fully remodeled to include in-unit washer and dryers. The Seller completed extensive capital expenditures and upgrades to the common areas to include new roofs, new dual pane windows, a new leasing office, and new landscaping, thus providing a strong foundation from which to continue the value-add program. The business plan includes renovating 3 units per quarter over the next 25 months to follow a more natural attrition and turnover of units.
The proposed improvement plan includes a full cosmetic renovation to the interior of the remaining 25 units including new cabinets, countertops, stainless steel appliances, LVT-type wood plank flooring, bathroom upgrades, new fixtures, doors, and paint throughout. In addition, the Sponsor will complete upgrades to the aesthetic design of the exterior meant to modernize the look and feel. The concept is to create a modern and best-in-class experience.
These improvements should assist with resident acquisition and retention while further differentiating the Property from area comps. Thus far, renovation premiums have led to an increase in rent by as much as 60% which is proven by previous renovations completed by the Seller. Neighboring rents on the street in unrenovated 1 BD/1BA units are going for $1,900 while renovated units less than 2 miles away are achieving pricing as high as $2,195. The Sponsor is modeling $1,995 in rent for 1 BD/1BA and will provide brand-new upgraded finishes at a similar price point as unrenovated units nearby.
CapEx Budget:
| Hard Costs | $ Amount | Per Unit |
| Exterior Renovations(1) | $310,000 | $7,045 |
| Interior Unit Renovations(2) | $990,000 | $22,500 |
| Total Hard Costs | $1,300,000 | $29,545 |
| Soft Costs | ||
| Design Fees | $6,000 | $136 |
| Total Soft Costs | $6,000 | $136 |
| Contingency (10%) | $130,600 | $2,968 |
| Grand Total | $1,436,600 | $32,650 |
(1) Exterior paint and facade, gate/fencing, parking lot resurfacing, common area by pool, and landscaping.
(2) $40k per unrenovated unit to include flooring, paint, cabinets, countertops, fixtures, and appliances.
The Property offers investors the opportunity to acquire a value-add opportunity with a business plan to carry out a “proven” strategy by increasing the remaining rents through continued renovations and repositioning of the units. This workforce housing community is located 11 miles east of downtown San Diego in a readily accessible and ideal location with quick access to Highway 94. It also is located in the path of progress, sitting directly adjacent to the Campo Road Revitalization Specific plan which just received unanimous approval from the County of San Diego Board of Supervisors.
Unit Mix
| Unit Type | # of Units | Avg SF/Unit | Avg Rent (In-Place) | Avg Rent (Post-Reno) | Avg Rent Per SF (In-Place) | Avg Rent Per SF (Post-Reno) |
| 1x1 | 17 | 725 | $1,561 | $1,995 | $2.15 | $2.75 |
| 2x1 | 11 | 900 | $2,047 | $2,395 | $2.27 | $2.66 |
| 2x2 | 16 | 925 | $2,009 | $2,495 | $2.17 | $2.70 |
| Total/Averages | 44 | 841 SF | $1,845 | $2,277 | $2.20/SF | $2.70/SF |
Lease Comparables
| 3903 Conrad Dr | 4201 Spring Garden Rd | 4302 Palm Ave | 9209-9215 Kenwood Dr. | Averages | Subject (Post-Reno Rents) | |
| Year Built | 1970 | 1972 | 1972 | 1975 | 1972 | 1971 |
| # of Units | 102 | 104 | 75 | 57 | 85 | 44 |
| Average Unit Size | 996 SF | 780 SF | 889 SF | 843 SF | 877 SF | 841 SF |
| Levels | 2 | 2 | 2 | 2 | 2 | |
| Occupancy | 100% | 100% | 96% | 100% | 99% | 93% |
| Distance from Subject | Next Door | 1.9 miles | 2.0 miles | 0.8 miles | 1.2 miles | |
| $/Unit (1x1) | $1,895 | $1,945 | $2,275 | N/A | $2,038 | $1,995 |
| SF (1x1) | 800 SF | 650 SF | 817 SF | N/A | 756 SF | 725 SF |
| $/SF (1x1) | $2.37/SF | $2.99/SF | $2.78/SF | N/A | $2.72/SF | $2.75/SF |
| $/Unit (2x1) | N/A | $2,395 | $2,850 | $2,250 | $2,498 | $2,395 |
| SF (2x1) | N/A | 838 SF | 886 SF | 850 SF | 858 SF | 900 SF |
| $/SF (2x1) | N/A | $2.86/SF | $3.22/SF | $2.65/SF | $2.91/SF | $2.66/SF |
| $/Unit (2x2) | $2,295 | N/A | $2,950 | $2,400 | $2,548 | $2,495 |
| SF (2x2) | 1,000 SF | N/A | 936 SF | 960 SF | 965 SF | 925 SF |
| $/SF (2x2) | $2.30/SF | N/A | $3.15/SF | $2.50/SF | $2.65/SF | $2.70/SF |
Sales Comparables
| 2000 East Main | 247 North 1st St. | 7637-7647 Normal Ave | 4302 Palm Ave | 4590 Date Ave | Averages | Subject (Going-in) | |
| Date Sold | 6/30/2022 | 6/22/2022 | 9/16/2022 | 6/22/2021 | 8/17/2022 | ||
| Year Built | 1988 | 1972 | 1970 | 1972 | 1970 | 1974 | 1971 |
| # of Units | 61 | 31 | 21 | 75 | 12 | 40 | 44 |
| Average Unit Size | 1,110 SF | 810 SF | 938 SF | 909 SF | 799 SF | 913 SF | 841 SF |
| Sale Price | $26,650,000 | $9,750,000 | $6,100,000 | $22,250,000 | $4,050,000 | $13,760,000 | $11,650,000 |
| $/Unit | $436,885 | $314,516 | $290,476 | $296,667 | $337,500 | $335,209 | $264,773 |
| $/SF | $394/SF | $389/SF | $310/SF | $326/SF | $309/SF | $345/SF | $315/SF |
| Cap Rate | 4.30% | 3.80% | 4.34% | 3.70% | 3.55% | 3.94% | |
| Building Size | 67,722 SF | 25,096 SF | 19,700 SF | 68,164 SF | 13,126 SF | 38,762 SF | 37,025 SF |
Market Overview
The final jobs report for San Diego in 2022 released by California's Employment Development Department saw the region add 16,100 nonfarm jobs in November. The San Diego unemployment rate currently sits at 3.3%. The local unemployment rate bested both the State of California's 4% and the nation's 3.4%.
San Diego is also home to more than 140,000 active duty and civilian military employees. The defense industry accounts for more than 350,000 jobs in the region according to the San Diego Military Advisory Council. That is close to 25% of the economy. The Navy's renewed focus on the Pacific theater of operation will result in a 60/40 split between the Pacific and Atlantic fleets, further solidifying San Diego's status as a major Navy hub. It is also why San Diego has one of the largest concentrations of millennials in the country, accounting for 25% of the population.
While rents are up with 5.1% growth over the past year, that is coming off a peak of 14.0% on an annualized basis in early 2022. With moderation setting in, rents declined on a month-over-month basis during the last quarter of 2022 before stabilizing in January 2023. Rents rose 0.5% in January.
Submarket Overview
More affordable submarkets with workforce housing in the east, south, and north/east county of San Diego have been among the top performers in the past 12 months. Apartment landlords have little to worry about from homeownership pulling demand from apartment renters. Interest rates are rising which has made the purchase of a home more expensive. San Diego home prices have risen by 9.5% in the past 12 months through September, according to the Case-Shiller Home Price Index, which is keeping people locked into the rental market.
East County San Diego contains the largest concentration of apartment inventory in San Diego and is one of the most populated areas in the metro, helping sustain structurally low vacancy. In fact, the vacancy rate has averaged 3.0% over the past five years, and the present rate is 3.2%. East San Diego is one of San Diego's healthiest investment markets, and institutional-grade properties often sell. Value-add opportunities and higher cap rates relative to the metro continue to attract interest in the area's assets, even amid an environment with elevated interest rates.
Total Capitalization
| Sources of Funds | $ Amount | $/Unit |
| Debt | $7,500,000 | $170,455 |
| GP Investor Equity(1) | $441,250 | $10,028 |
| LP Investor Equity | $5,874,826 | $133,519 |
| Total Sources of Funds | $13,816,076 | $314,002 |
| Uses of Funds | $ Amount | $/Unit |
| Purchase Price | $11,650,000 | $264,773 |
| Acquisition Fee | $291,250 | $6,619 |
| Loan Fee | $75,000 | $1,705 |
| Closing Costs(2) | $210,191 | $4,777 |
| CapEx | $1,436,600 | $32,650 |
| Tenant Incentives | $81,205 | $1,846 |
| Construction Mgmt Fee | $71,830 | $1,633 |
| Total Uses of Funds | $13,816,076 | $314,002 |
(1) The Sponsor’s equity contribution may consist of friends and family equity and equity from funds controlled by the Sponsor.
(2) RM Technologies, LLC, an affiliate of RealtyMogul, operates the RealtyMogul Platform. RM Technologies, LLC charges a fixed, non-percentage-based fee for real estate companies and their sponsors to use the Platform and for Platform-related services. Please see the Fees and Disclaimers sections below for additional information concerning fees paid to RM Technologies, LLC.
The expected terms of the debt financing are as follows:
- Lender: CBC Credit Union
- Term: 10 year
- LTC: 54.3%
- LTV: 64.4%
- Estimated Proceeds: $7,500,000
- Interest Type: Fixed
- Annual Interest Rate: 5.75%
- Interest-Only Period: 0 months
- Amortization: 30 years
(1) A substantial portion of the total acquisition for the Property will be paid with borrowed funds, i.e., debt. Please carefully review the Disclaimers section below for additional information concerning the Sponsors use of debt.
DMJ Capital Partners intends to make distributions from 3827 Investors, LLC as follows:
- 100% to all Investors in proportion to their investment, until the Investors have received an 8.0% IRR;
- 70% to the Investors, 24% to the Sponsor (or Sponsor Affiliate), and 6% to RM Admin, until the Investors have received an 18.0% IRR;
- 50% to the Investors, 40% to the Sponsor (or Sponsor Affiliate), and 10% to RM Admin, thereafter.
DMJ Capital Partners intends to make distributions to investors after the payment of the company's liabilities (loan payments, operating expenses, and other fees as more specifically set forth in the LLC agreements, in addition to any member loans or returns due on member loan).
Distributions are expected to start in January 2024 and are projected to continue on a quarterly basis thereafter. Distributions are at the discretion of DMJ Capital Partners, who may decide to delay distributions for any reason, including maintenance or capital reserves.
DMJ Capital Partners will receive a promoted/carried interest as indicated above.
| Cash Flow Summary | ||||
| Year 1 | Year 2 | Year 3 | ||
| Effective Gross Revenue | $932,878 | $1,104,267 | $1,261,384 | |
| Total Operating Expenses | $306,793 | $331,472 | $408,756 | |
| Net Operating Income | $626,085 | $772,795 | $852,628 | |
| Project-Level Cash Flows | ||||
| Year 0 | Year 1 | Year 2 | Year 3 | |
| Net Cash Flow | ($6,316,076) | $91,541 | $236,536 | $10,180,676 |
| Cash Flows to Investors via RM Platform(1) | ||||
| Year 0 | Year 1 | Year 2 | Year 3 | |
| Net Cash Flow | ($3,000,000) | $13,480 | $82,349 | $4,293,214 |
| Cash Flows to Investors via RM Platform - Hypothetical $50,000 Investment(1) | ||||
| Year 0 | Year 1 | Year 2 | Year 3 | |
| Net Cash Flow | ($50,000) | $225 | $1,372 | $71,554 |
(1) RM Technologies, LLC and its affiliates do not provide any assurance of returns. Returns presented are net of all fees. Please carefully review the Fees and Disclaimers sections below for additional information concerning Sponsor’s use or projected returns and fees paid to Sponsor and RM Technologies, LLC.
Certain fees and compensation will be paid over the life of the transaction; please refer to DMJ Capital Partners' materials for details. The following fees and compensation will be paid(1)(2):
| One-Time Fees: | |||
| Type of Fee | Amount of Fee | Received By | Paid From |
| Acquisition Fee | 2.5% of Purchase Price | DMJ Capital Partners | Capitalized Equity Contribution |
| Construction Management Fee | 5.0% of Construction Costs | DMJ Capital Partners | Capitalized Equity Contribution |
| Technology Solution Licensing Fee(2) | Flat one-time licensing fees of $15,000 plus $1,500 per each prospective investor onboarded by Sponsor through its license and use of RM Technologies’ Technology Solution | RM Technologies, LLC |
Capitalization (at Sponsor’s discretion) |
| Recurring Fees: | |||
| Type of Fee | Amount of Fee | Received By | Paid From |
| Property Management Fee | 3.0% of Gross Income | DMJ Capital Partners | Cash Flow |
| Asset Management Fee | 1.0% of Gross Income | DMJ Capital Partners | Cash Flow |
| Administration Solution Licensing Fee(2) | Flat quarterly licensing fee of $125 per investor serviced by Sponsor through the license and use of RM Technologies’ Administration Solution | RM Technologies, LLC | Cash Flow |
(1) Fees may be deferred to reduce impact to investor distributions.
(2) Please see the Fees and Disclaimers sections below for additional information concerning fees paid to RM Technologies, LLC.
.
Sponsor’s Projects and Targets
*Assumptions and projections included in the information on this Page, including pro forma projections (collectively “Projections”) were provided by the Sponsor or an affiliate thereof and are not reflective of the position or opinions of, nor are they endorsed by, RM Technologies, LLC or its affiliates, or any other person or entity other than the Sponsor or its affiliates. RM Technologies, LLC and its affiliates do not provide any assurance of returns or the accuracy or reasonableness of the Projections provided by the Sponsor or its affiliates. There can be no assurance that the Sponsor’s methodology used for calculating any Projections, including Target IRR, Target Annualized Cash-on-Cash Return, and Target Equity Multiple (“Targets”), are appropriate or adequate. The Sponsor’s Projections and Targets are hypothetical, are not based on actual investment results, and are presented solely for the purpose of providing insight into the Sponsor’s investment objectives, detailing its anticipated risk and reward characteristics and for establishing a benchmark for future evaluation of the Sponsor’s performance. The Sponsor’s Projections and Targets are not a predictor, projection or guarantee of future performance. There can be no assurance that the Sponsor’s Projections or Targets will be met or that the Sponsor will be successful in meeting these Projections and Targets. Projections and Target returns should not be used as a primary basis for an investor’s decision to invest.
No Approval, Opinion or Representation, or Warranty by RM Technologies, LLC or it Affiliates
The information on this Page, including the Sponsor’s offering documentation, which may include without limitation the Private Placement Memorandum, Operating or Limited Partnership Agreement, Subscription Agreement, the Project Summary and all exhibits and other documents attached thereto or referenced therein (collectively, the “Investment Documents”) was provided by the Sponsor or an affiliate thereof. RM Technologies, LLC makes no representations or warranties as to the accuracy of such information and accepts no liability therefor. No part of the information on this Page is intended to be binding on RM Technologies, LLC or its affiliates, or to supersede any of the Sponsor’s Investment Documents. The opinions expressed on this page are solely the opinions of the Sponsor and its affiliates and none of the opinions expressed on this Page are the opinions of, nor are they endorsed by, RM Technologies, LLC or its affiliates.
Sponsor’s Information Qualified by Investment Documents
The Information on this Page, including of the principal terms of the Sponsor’s offering, is qualified in its entirety by reference to the more complete information about the offering contained in the Sponsor’s Investment Documents. The information on this Page is not complete, and each prospective investor should carefully read all of the Investment Documents and any supplements thereto, copies of which are available by clicking the links above or upon request, before deciding whether to make an investment. The information on this page should not be used as a primary basis for an investor’s decision to invest. In the event of an inconsistency between the information on this Page and the Investment Documents, investors should rely on the information contained in the Investment Documents. The information on this Page and the information in the Investment Documents are subject to last minute changes up to the closing date at the sole discretion of the Sponsor and its affiliates.
Risk of Investment
This real estate investment is speculative and involves substantial risk. There can be no assurances that all or any of the assumptions will be true or that actual performance will bear any relation to the hypothetical illustrations herein, and no guarantee or representation is made that investment objectives of the Sponsor will be achieved. In the event that actual performance is below the Sponsor’s Targets, your investment could be materially and adversely affected, and there can be no assurance that investors will not suffer significant losses. A loss of part or all of the principal value of your investment may occur. You should not invest unless you can readily bear the consequences of such loss. Please see the Sponsor’s Investment Documents for additional information, including the Sponsor’s discussion concerning risk factors.
Risk of Forward-Looking Statements
Forward-looking statements are found here and in the applicable Investment Documents and may include words like “expects,” “intends,” “anticipates,” “estimates” and other similar words. These statements are intended to convey the Project Sponsor’s projections or expectations as of the date made. These statements are inherently subject to a variety of risks and uncertainties. Please see the applicable Investment Documents for disclosure relating to forward-looking statements. All forward-looking statements attributable to the Sponsor or its affiliates apply only as of the date of the offering and are expressly qualified in their entirety by the cautionary statements included elsewhere in the Investment Documents. Any financial projections are preliminary and subject to change; the Sponsor undertakes no obligation to update or revise these forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Inevitably, some assumptions will not materialize, and unanticipated events and circumstances may affect the ultimate financial results. Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks, and the assumptions underlying the projections may be inaccurate in any material respect. Therefore, the actual results achieved may vary significantly from the forecasts, and the variations may be material.
Sponsor’s use of Debt
A substantial portion of the total acquisition for the Property will be paid with borrowed funds, i.e., debt. There can be no assurance that the Sponsor will secure debt on the rates and terms noted above, or at all. All of the Sponsor’s estimated rates and terms of the debt financing are subject to lender approval, including but not limited to the annual interest rate and possible increases in capital reserve requirements for funds to be held in a lender-controlled capital reserve account. The use of borrowed money to acquire real estate is referred to as leveraging. Leveraging increases the risk of loss. If the Sponsor were unable to pay the payments on the borrowed funds (called a "default"), the lender might foreclose, and the Sponsor could lose its investment in its property.
In addition, unless the debt provides for a fixed rate of interest during the term of the loan and/or any subsequent extensions, the total amount of interest paid over the term of the debt will increase by the same amount as the related index. For example, if the index rate increases by 0.50% (50 basis points) the interest rate on the loan will increase by the same amount. The amount of such interest rate increases may be capped either by its terms or as the result of the Sponsor entering into an arrangement that caps the interest rate with respect to the debt at a particular rate.
Sponsor’s Offering is Not Registered
The interests offered by the Sponsor will not be registered under the Securities Act of 1933, as amended (the “Securities Act”) in reliance upon the exemptions from registration pursuant to Rule 506(c) of Regulation D as promulgated under the Securities Act (“Private Placement.”). In addition, the interests will not be registered under any state securities laws in reliance on exemptions from registration. Such interests are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable state and federal securities laws pursuant to registration or an available exemption. All Private Placements on the RealtyMogul Platform are intended solely for “Accredited Investors,” as that term is defined Rule 501(a) of the Securities Act. Prospective investors must certify that they are Accredited Investors and provide either certain supporting documents or third party verification, and must acknowledge that they have received and read all investment materials.
RM Technologies, LLC Fees and Conflicts
RM Technologies, LLC, an affiliate of RealtyMogul, operates the RealtyMogul Platform. RM Technologies, LLC charges a fixed, non-percentage-based licensing fee for real estate companies and their sponsors to license and use the RM Technologies LLC’s proprietary Platform, including one-time flat licensing fees for its Technology Solution and an ongoing quarterly flat licensing fees for its Administration Solution. An estimate of the Technology Solution licensing fee is included in the Closing Costs above and is intended to be capitalized into the transaction at the discretion of the Sponsor. The licensing fees received by RM Technologies, LLC are disclosed in the relevant operating agreement(s). Additionally, from time to time, employees of RM Technologies, LL C and its affiliates invest in Sponsor’s offering. RM Technologies LLC’s receipt of licensing fees and its employee’s investments in Sponsor’s offering creates a conflict of interest between RealtyMogul and its affiliates, and investors or prospective investors.
No Investment Advice
None of RM Technologies nor any affiliate are registered as a broker, dealer, investment adviser, or funding portal (except with respect to RM Adviser, LLC, which has no involvement in the transactions to be consummated hereby or contemplated herein and solely for the purposes hereof, shall not be deemed an affiliate or RM Technologies). They do not provide investment advice or recommend the purchase of any securities that are the subject of this agreement or the Sponsor’s offering with respect to the Project. Project Sponsor’s use of the Platform, including Project Sponsor’s license to utilize the Platform and any related technology, software and supporting services, Project Sponsor’s posting of offering documents and all related information on the Platform does not constitute the approval of or endorsement by RM Technologies or any of its affiliates of Project Sponsor’s securities offering with respect to the Project or signify the suitability thereof in any manner.
For additional information on risks and disclosures visit https://www.realtymogul.com/investment-disclosure.