* NO ASSURANCE OF RETURN: The Company's pro-forma projections are based on assumptions regarding future events, such as the timing and extent of the recovery of the residential market and the stabilization of the debt markets. While the Manager believes that these assumptions are reasonable and achievable, the likelihood of its occurrence is subject to many factors that are not within the control of the Company or its Manager and that could impair the ability of the Company to meet its projections.

The purchase of the Units involves substantial risks and is suitable only for persons who have no need for liquidity in their investment and who can bear the risk of potential loss of their entire investment.  You should carefully consider the risk factors set forth below as well as the other information contained in this Memorandum before purchasing the Units.  We may encounter risks in addition to those described below.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect your investment. 

Investors should consider the risks described below, as well as the other information contained in this Memorandum or incorporated by reference hereto, before making a decision to invest in the Company.  Investors should be aware that an investment in the Company is speculative in nature and involves a high degree of risk.  The possibility of partial or total loss of capital exists and Investors must be prepared to bear capital losses that might result from such an investment.  If any of the following risks actually occur, the Company’s financial condition and the results of its operations could be materially and adversely affected.  In addition, there will be occasions when the Manager and its affiliates, on the one hand, and the Members, on the other hand, may encounter potential conflicts of interest in connection with the Company.  The considerations described below, among others, should be evaluated carefully before making an investment in the Company.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect your investment.

Risks Related to the COVID-19 Coronavirus Worldwide Pandemic

On March 11, 2020, the World Health Organization declared the COVID-19 coronavirus outbreak a worldwide pandemic (the “Pandemic”).  On March 13, 2020, President Trump declared a national emergency in the United States.  Various cities and states have also declared emergencies.  The Pandemic and the reactions of various governments and citizens is causing (and any future outbreaks of the coronavirus disease may cause) massive disruptions in economies, financial markets, supply chains, businesses and daily life on a worldwide scale never seen in recent history.  Such disruption may continue for an extended period or indefinitely, may lead to a recession or depression in the United States and/or globally, and may adversely impact the Company.  As of August 2020, the Pandemic has caused a near total cessation of all non-essential economic activities in many U.S. cities and states.  Many businesses have temporarily suspended operations and laid off employees.  In the United States, persons have been diagnosed with COVID-19 in each of the 50 states.  While the Company has a business continuity plan, it may be materially affected by the Pandemic.  The Pandemic and reactions by governments and citizens, and the impact of the Pandemic and such reactions on businesses and the economy, are creating and are likely to continue to create various issues for the economy that are impossible to fully predict or list here but all or many could, and are likely to be, material, with such likelihood of materiality increasing the longer the duration of the Pandemic (and whether or not there is a recurrence of coronavirus even after the current Pandemic improves).  The Pandemic may worsen substantially before it improves, and the entirety of the United States will continue to be impacted. There is little certainty as to when the Pandemic will abate, or to what extent the Unites States economy will recover from the disruption caused by the Pandemic.  In addition to the severe impact of the Pandemic on financial markets and economies, other things that may impact the Company in connection with the Pandemic include the closure of courts and state governments, which among other things, can directly affect the ability to complete or enforce evictions, and the lack of in-person walk-throughs of the Property (both for the Manager and appraisers).  The closure of certain businesses or limitations in the ability of certain businesses to function, as well as declarations of states of emergency, and “shelter at home” measures in certain areas, have and could affect the ability of the staff of the Manager  and/or applicable property managers to function properly.  A reduction in liquidity and increase in volatility in financial markets could affect the valuation of real estate, the health of the Company’s financing partners or other persons necessary for the Company to implement its strategy and the ability to find third party financing.  Also, the Principals and staff members of the Manager could become infected with COVID-19, develop symptoms, and not be able to work, or not be able to work effectively. Of course, this crisis may also create opportunities for the Manager for targeted investments and the Company will endeavor to position itself well to take advantage of these opportunities and mitigate the risks above inasmuch as they can be mitigated.

You will not have any control over the Property Owner or the Company or their respective operations. Rather, such control will be exercised solely by the Manages and the Principals.

You will not have any control over the Property Owner, the Company, or their respective operations.  Rather, all such decisions will be made by the Manager and the Principals.  Although the Principals have, to date, had a successful operating history in the real estate industry, there can be no guarantee that this will continue in the future.  Further, if the Property Owner, and therefore, the Company, does not achieve certain levels of performance, your investment would be adversely affected or lost entirely.

Because the Company intends to invest solely in the Property Owner, the sole asset of which will be the Property, your investment will not be diversified, thus subjecting your investment to greater risk should the Property prove not to be a profitable investment.

The Company will be treated as a partnership for United States federal income tax purposes.  As such, the Company will not be subject to United States federal income tax.  Rather, such taxes will be paid by the Company’s Members based on their respective shares of the Company’s taxable income.  Each Member will be allocated his or her share of items of income, gain, loss, deduction, and credit attributable to the Company each year in accordance with the terms set forth in the Company LLC Agreement, and will be required to include this allocable share of the Company’s taxable income in computing such Member’s federal income tax liability for that year.  This will be the case even though the Company may not have made any cash distributions to its Members in that year or may not have made cash distributions in that year that are sufficient to satisfy the incremental income tax liabilities incurred by the Members as a result of having to report their share of the Company’s taxable income on their income tax returns.  Thus, it is possible that your investment will increase your federal income tax burden, without a corresponding cash distribution with which to pay such taxes, in which case you would be required to satisfy tax liabilities attributable to your share of Company income with cash from sources other than the Company.

The Company’s revenues will indirectly depend on the ability of the Property Owner to lease the Property at low vacancy rates.

The Property Owner’s, and therefore the Company’s, revenues from the Property will be dependent upon the creditworthiness of the Property’s tenants and would adversely be affected by the loss of or default by lessees.  Lease payment defaults by tenants could indirectly cause the Company to reduce the amount of distributions to the Members and force the Property Owner to find an alternative source of revenue to pay any mortgage loan on the Property.

In the event of a tenant default, the Property Owner may also experience delays in enforcing their rights as landlord and may incur substantial costs in protecting their investment and re-leasing the Property.  If a lease for a unit on the Property is terminated or expires, the Property Owner may be unable to lease units in the Property for the rent previously received.  Furthermore, the Property may have some level of vacancy from time to time.  In addition, the resale value of the Property could be diminished because the market value may depend principally upon the value of the leases of the Property. As a result of the foregoing, the Property Owner, and therefore, the Company, may suffer reduced revenues resulting in the Company making lower or no cash distributions to the Members. 

The existence of debt secured by the Property creates special risks to the Property Owner, which could have an adverse effect on the Company’s performance.

The presence of mortgage financing on the Property creates special risks.  If there is a shortfall between the cash flow from the Property and the cash flow needed to service mortgage debt on the Property, then the amount of cash that flows up to the Company and is available for distributions to the Members may be reduced. In addition, there is increased risk of loss since defaults on indebtedness secured by the Property may result in the Property lenders initiating foreclosure actions. In that case, the Property Owner could lose the Property if the loan is in default, thus indirectly reducing the value of the Members’ investments to virtually nothing.  If the Property is foreclosed upon due to a default, it is highly unlikely that the Company would be able to pay cash distributions to the Members, and your investment would be partially lost or lost entirely. In addition, the Property Owner may be unable to refinance mortgage debt on the Property at appropriate times, which may require the Property Owner to refinance such mortgage debt on terms that are not advantageous to the Property Owner, or could result in the foreclosure of the Property which, in turn, would have a material adverse effect on your investment.

Increased government regulations could have the effect of increasing the Property Owner’s expenses and adversely affecting the Company’s operating results.

Governmental authorities at all levels are actively involved in the promulgation and enforcement of regulations relating to land use and zoning restrictions, environmental protection and safety and other matters affecting the ownership, use and operation of real property. Regulations may be promulgated which could restrict or curtail usages of existing structures, or require that such structures be renovated or altered in some manner. The enforcement of such regulations could have the effect of increasing the expenses, and lowering the income or rate of return, as well as adversely affecting the value of the Property, and therefore, indirectly, the operating results of the Company.

The Company’s returns to the Investors will depend largely on the ability of the Property Owner to keep operating expenses low.

The Property will be subject to increases in certain operating expenditures associated with real estate, such as tax rates, fuel, utility costs, insurance costs, labor, repairs and maintenance, building materials and supplies, debt service, administrative and other operating expenses.  These costs are not generally decreased by events generally adversely affecting rental revenues, such as an unforeseen downturn in the real estate market, a lack of investor confidence in the market or a softening of demand.  If the Property Owner is unable to lease units on the Property on a basis requiring the tenants to pay all or some of the expenses, it would be required to pay those costs, and the cost of operating the Property may exceed the rental income derived from the Property.  In addition, the Property Owner will generally be responsible for real property taxes related to the Property.  If the Property Owner fails to pay any such expenses payable to a governmental entity, such as taxes, the applicable taxing authorities may place a lien on the Property and the Property may be subject to a tax sale.  The foregoing could have a material and adverse effect on the operating results of the Property Owner, and therefore, your investment.

The short-term nature of our residential leases may adversely impact our income. 

If the residents of the Property decide not to renew their leases upon expiration, the Property Owner may not be able to re-let their units.  Because the Property Owner’s residential leases will be for apartments, they will generally be for terms of no more than one or two years.  If the Property Owner is unable to promptly renew the leases or re-let the units, then the Property Owner’s results of operations and financial condition will be adversely affected, which will, in turn, affect the Company’s financial condition.  In addition, certain significant expenditures associated with the Property Owner’s business (such as mortgage payments, real estate taxes and maintenance costs) is generally not reduced when circumstances result in a reduction in rental income.  This may have an adverse effect on the Property Owner’s and, in turn, the Company’s financial condition.

Capital improvements and capital replacements could be costly to the Property Owner, and failure to make such improvements and replacements on a timely basis could hinder the Property Owner’s ability to fill vacancies.

The Property Owner may be required to expend funds to correct defects or to make improvements before the Property can be sold.  If the Property Owner does not establish sufficient reserves for working capital or obtain adequate secured financing to supply necessary funds for capital improvements or similar expenses, the Property Owner may be required to defer necessary or desirable improvements to the Property.  If the Property Owner defers such improvements, the Property may decline in value, and it may be more difficult for it to attract or retain tenants to the Property, or the amount of rent the Property Owner can charge for a unit on the Property may decrease. The Company cannot assure the Members that the Property Owner or the Company will have any sources of funding available for repair or reconstruction of damage to the Property in the future or to make such tenant improvements.  The foregoing could have a material and adverse effect on the operating results of the Property Owner and, therefore, your investment.

Investments in real estate are inherently risky, and there are no assurances that the Company will generate positive returns.

The assets underlying the Company’s investment in the Property Owner will consist solely of real estate, namely, the Property.  The Company is therefore subject to risks generally inherent in the investment in and ownership of real property, including changes in global, national, regional or local economic, social, demographic or real estate market conditions and other factors particular to the location of the Property.  The Company is unable to predict future changes in these market conditions. For example, a prolonged recession or rise in interest rates could make it more difficult to lease or dispose of the Property. In addition, rising interest rates could also make alternative interest bearing and other investments more attractive and therefore potentially lower the relative value of the Property.

Other risks generally associated with the ownership of real property include, without limitation: changes in the number and financial condition of buyers and sellers of properties; increases in the availability of supply of property relative to demand; the quality and philosophy of the managers of the properties; competition based on rental rates, attractiveness and location of the properties; financial condition of tenants; tenant vacancies; rent strikes; quality of maintenance; insurance services; increases in real property taxes and tax rates, energy prices and other operating expenses; changes in interest rates and the availability of mortgage financing; changes in the relative popularity of properties; risks due to dependence on cash flow; risks and operating problems arising out of the presence of certain construction materials; and acts of God, uninsurable losses, terrorist acts and other factors beyond our control.  Such risks also include fluctuations in occupancy rates, rent schedules and operating expenses, which could adversely affect the value of Property.

The Property may be subject to economic, political, regulatory and social risks, which may affect the liquidity of the investment.  There may be significant local government rules, regulations and fiscal policies relating to land use and permit restrictions (including those governing usage, improvements, zoning and rent control), local taxes and other transaction costs, and potential liability under changing environmental and other laws and regulations, which may adversely affect the returns sought by the Company.  In addition, real estate is subject to long-term cyclical trends that give rise to significant volatility in real estate values. 

All of these and other risks may adversely affect operating results or make the sale or refinancing of the Property difficult or unattractive. 

Based on the factors described above and elsewhere in this Memorandum, among other factors, the possibility of partial or total loss of capital exists, and investors in the Company should not invest unless they can readily bear the consequences of such a loss. Neither the Manager nor any of its affiliates, partners, officers or employees will be liable for the return to any Member of its capital contributions to the Company.  Such distributions and returns, if any, will be made solely from the Company’s assets.