FORMALIZED DUE DILIGENCE PROCESS 
Sponsors

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Funded
Estimated Hold Period 36 Months
Estimated First Distribution 5/2024
FUNDED 100%
...
View Our Due Diligence Process
Offered By
ClearWorth Capital
Investment Strategy Value-Add
Investment Type Equity
Minimum Investment 35000
Overview
Lavera at Lake Highlands is a Class B, 280-unit, garden-style apartment complex located in the affluent Lake Highlands neighborhood of Dallas MSA, being purchased by a Dallas-based Sponsor with 4,800+ units under management in Texas and a strong track record.
Basis

ClearWorth has secured an exclusive multifamily real estate opportunity in Dallas through a strong local broker relationship. The investment basis of approximately $119k per unit ($116 per square foot) is significantly lower than replacement cost and recent trades in the area. With a cap rate exceeding 6%, the property's core location adds to its attractiveness. 

Location

Lavera is situated in the Lake Highlands neighborhood of Northeast Dallas, surrounded by new luxury developments. The median income within a 1-mile radius of Lavera stands at $103,000, indicating the presence of a prosperous community. The area is experiencing rapid gentrification, attracting young and affluent families who value access to premier schools and various entertainment options.

Value-Add

The property currently has 30% of its units renovated, leaving an opportunity to upgrade the remaining 70% with potential rental premiums averaging $268. Additionally, the fact that it is under out-of-state ownership and subpar 3rd party management presents a strong case for immediate rental upside, along with the potential for better expense control.

Property at a glance
# Units 280
Current Occupancy 91.1%
Year Built 1970
Total CapEx Budget $5,267,890
Exit Cap Rate 5.8%
Acquisition Price $33,300,000
Investment Highlights
Strong Sponsorship with High Co-Invest: ClearWorth Capital (“The Sponsor”) is a vertically integrated multifamily owner that has operated extensively in the Dallas market. The company has a track record of delivering consistent, superior returns, and its managing partner has acquired and renovated 28 multifamily projects with a value of $600+ million in his career. Clearworth will provide about 24% of the total equity, further illustrating their confidence in the investment.
Unit Mix: The property features a unit mix with a significant proportion (83%) of 2 and 3-bedroom units, offering ample space for residents. With an average square footage of 1,024, these spacious units will cater to families seeking proximity to excellent schools or roommates desiring a residence in a gentrified neighborhood. Single-family home prices nearby exceed $400/SF, and brand new homes are being built nearby starting at $1 million; this rent vs. buy gap is protective for rents.
Schools: The Lake Highlands neighborhood sits in rapidly gentrifying Northeast Dallas and boasts attractive one-mile median incomes of $103,000. The Lavera boasts a prime, core location in the submarket and feeds into the highly rated and sought-after Richardson Independent School District (ISD), with all schools earning an 'A' rating (Niche.com).
Demographics: Lavera enjoys a favorable location with a 1-mile median income of $103,000. The adjacent Lakeridge shopping center has recently undergone renovations and re-tenanting to align with the surrounding demographics. Additionally, single-family homes in the immediate vicinity are trading at prices exceeding $400 per square foot, and brand-new homes are being built nearby starting at $1M+.
Sale Comps: ClearWorth is acquiring Lavera at a remarkable discount compared to recent sale comparables. The purchase represents a substantial 30% discount on a price per unit basis and a more impressive 70% discount on a price per square foot basis when compared to recent similar properties in the market.
Flexible Fixed Rate Debt: The Sponsor has secured attractive, low leverage financing from a regional bank that has an attractive fixed interest rate and 27 months of interest only. The 3-year term bridge loan has zero prepayment penalty, which allows for a short hold period or the option to refinance should the capital markets improve. This provides flexibility and potential cost savings in the future.
Proximity to High Paying Jobs: Residents of Lavera enjoy convenient access to major employment hubs, with the property situated only 7 miles from Uptown, 6.5 miles from Preston Center, and 3 miles from the Telecom Corridor (US 75). The area is home to significant employers, including Texas Presby (2,500 employees), Medical City (2,895 employees), Uptown (70,000 employees), Downtown (135,000 employees), and the Telecom Corridor (130,000 employees). The ongoing LBJ East project reflects the city's commitment to updated infrastructure investments, featuring a signature bridge, sound-damping walls, and Skillman and Audelia realignment, which will create 9 acres of available space for additional mixed-use projects.
Management
Cumulative Distributions

ClearWorth Capital

ClearWorth Capital is a vertically integrated, Texas-based multifamily owner and operator with offices in Dallas and Houston. The company serves as a deal sponsor providing acquisition, investment management, and disposition functions. ClearWorth Residential provides property and construction management services. ClearWorth seeks to maximize returns for investment partners through physical property enhancements and operational improvements. They enhance their business through joint venture partnerships, creative deal structuring, sophisticated approaches to finance, and the implementation of transformative technologies.

ClearWorth has a track record of delivering consistent, superior returns. Its managing partner, Matthew Stone, has been a principal in development and renovation projects totaling over $1.8 billion in value. Development experience includes thirty-seven (37) projects, twenty-eight (28) of which were multifamily, with 5,000+ multifamily units, as well as senior housing, student housing, townhomes, hotels, condominiums, and office buildings. He has also acquired and renovated twenty-eight (28) multifamily projects with a value of $600+ million.

https://clearworthcapital.com/
  • Matthew Stone
    Managing Partner and CEO
  • Chris Mendenhall
    Senior Vice President
Matthew Stone
Managing Partner and CEO

During his career, Mr. Stone has been part of the Sponsor team for over $1.8 billion in commercial real estate development and renovation projects. His development experience includes 37 projects, including over 6,000 multifamily units, as well as senior housing, student living, townhomes, condominiums, office buildings, and hotels.

Through ClearWorth Capital and its predecessor companies, Matthew has also acquired and renovated 28 multifamily projects totaling over 5,500 units. During his career, Matthew has held a number of other positions, including:

  • President and CEO of Seneca Investments, a real estate development company
  • Associate with Oliver Wyman, a global strategy and operations consulting firm
  • Loan officer with Bank of America engaged in the origination of construction loans, lines of credit, bridge loans, and mini-perms in excess of $500M.

Matthew earned a BS in Industrial Engineering from Stanford University and an MBA with distinction (Sord Scholar, Dean’s Award, MBA Excellence Fund Scholar, and Endowed Presidential Scholar) from the University of Texas at Austin with a concentration in Real Estate Finance.

Chris Mendenhall
Senior Vice President

Chris Mendenhall joined the ClearWorth team in February of 2018 and currently serves as Vice President, Investments. He is responsible for acquisitions as well as investment management. Chris began his career in corporate investment banking at JP Morgan, and has held various positions with multiple companies, including:

  • Development and Acquisitions Associate at Seneca Investments with responsibilities including development project management, asset management, and debt and equity relationships.
  • Development Associate at Genesis Real Estate Group with responsibilities including site selection, construction management, and development project management. While at Genesis, Chris worked on two high-rise multifamily projects totaling over 1,000 units.
  • Investment Analyst and Transaction Manager with Newmark Knight Frank (formerly Apartment Realty Advisors), where he gained experience underwriting 200+ assets throughout the Southwest valued at over $5.5 billion.

Chris earned his degree in Real Estate Finance from the University of Arkansas. He is a member of the Urban Land Institute and holds a real estate sales license in the state of Texas.

Track Record

Property Name Market Name City, State Status Acq Date Units Purchase Price Sales Price or Estimated Value IRR EM Exit Date Year Built Asset Type
Firewheel Town Village Dallas-Fort Worth Garland, Texas Owned 11-30-2018 154 $24,640,000 $36,960,000 19.50% 1.50X Currently Owned 2018 Senior Independent Living
Woodside Flats Dallas-Fort Worth Dallas, Texas Owned 05-31-2021 311 $20,837,000 $34,210,000 21.00% 1.64X Currently Owned 1982 Multifamily Value-Add
Northwood Dallas-Fort Worth Richardson, Texas Owned 12-20-2021 272 $40,800,000 $61,200,000 19.00% 1.50X Currently Owned 1969 Multifamily Value-Add
Solana Dallas-Fort Worth Garland, Texas Owned 04-30-2022 230 $23,000,000 $36,000,000 22.00% 1.57X Currently Owned 1965 Multifamily Value-Add
The Brooke Apartments Killeen Temple, Texas Owned 04-17-2023 206 $17,350,000 $28,840,000 20.48% 1.66X Currently Owned 1982 Multifamily Value-Add
The Halston College Station-Bryan College Station, Texas Owned 8-10-2022 284 $29,000,000 $49,000,000 22.37% 1.69X Currently Owned 1981 Multifamily Value-Add
Lockwood Heights Dallas-Fort Worth Richardson, Texas Owned 10-6-2022 202 $30,000,000 $44,440,000 19.50% 1.48X Currently Owned 1968 Multifamily Value-Add
Lakeridge Heights Dallas-Fort Worth Dallas, Texas Owned 7-28-2022 178 $21,000,000 $35,000,000 20.50% 1.67X Currently Owned 1969 Multifamily Value-Add
Verlaine on the Parkway Dallas-Fort Worth Dallas, Texas Owned 10-1-2020 294 $40,278,000 $60,270,000 19.75% 1.50X Currently Owned 1971 Multifamily Value-Add
North Bend Living Houston Houston, Texas Owned 9-9-2021 282 $22,500,000 $35,000,000 27.90% 1.56X Currently Owned 1983 Multifamily Value-Add
The Ambrose Houston Houston, Texas Owned 9-30-2022 408 $53,000,000 $91,500,000 19.00% 1.73X Currently Owned 1999 Multifamily Value-Add
Northside Heights Houston Conroe, Texas Owned 4-12-2022 228 $26,250,000 $38,750,000 19.50% 1.48X Currently Owned 1980 Multifamily Value-Add
Park At Woodmoor Apartments Houston Shenandoah, Texas Owned 3-1-2022 220 $32,760,000 $48,000,000 22.50% 1.47X Currently Owned 2000 Multifamily Value-Add
South Shore Coastal Living Corpus Christi Corpus Christi, Texas Owned 6-9-2021 233 $21,203,000 $32,228,560 18.00% 1.52X Currently Owned 1973 Multifamily Value-Add
The Reston Houston Conroe, Texas Owned 10-10-2018 212 $17,250,000 $25,440,000 21.00% 1.47X Currently Owned 1983 Multifamily Value-Add
The Palm on SPID Corpus Christi Corpus Christi, Texas Owned 08-31-2019 299 $21,300,000 $36,210,000 22.00% 1.70X Currently Owned 1973 Multifamily Value-Add
The Pointe at Victoria Victoria Victoria, Texas Owned 04-28-2022 286 $42,000,000 $60,000,000 21.50% 1.43X Currently Owned 2012 Multifamily Value-Add
Lakeside at Campeche Houston Galveston, Texas Owned 05-17-2023 320 $32,500,000 $55,500,000 25.80% 1.71X Currently Owned 1985 Multifamily Value-Add
Stoneleigh on the Lake Houston Houston, Texas Sold 12-15-2015 228 $20,145,000 $24,500,000 32.00% 1.96X 4-1-2013 2005 Multifamily Value-Add
Axiom Hub 121 Dallas-Fort Worth McKinney, Texas Sold 08-20-2022 286 $46,600,000 $80,000,000 34.00% 2.95X 3-1-2020 2020 Multifamily New Development
McDermott Park Dallas-Fort Worth Plano, Texas Sold 08-31-2018 144 $23,080,000 $38,293,700 34.00% 2.76X 2-1-2022 2018 Multifamily New Development
McDermott Crossing Dallas-Fort Worth Plano, Texas Sold 03-01-2012 123 $18,000,000 $28,706,300 18.00% 2.34X 8-1-2012 2011 Multifamily New Development
Stoneleigh on Cypress Pointe Houston Houston, Texas Sold 05-01-2016 228 $18,300,000 $23,800,000 32.30% 1.97X 5-1-2016 2007 Multifamily Value-Add
Estates of Coppell Dallas-Fort Worth Coppell, Texas Sold 02-01-2014 56 $9,260,000 $13,700,000 28.00% 1.84X 3-1-2017 2005 Multifamily Value-Add
Stoneleigh Spring Cypress Houston Houston, Texas Sold 04-01-2014 216 $19,986,000 $24,800,000 36.00% 2.26X 12-1-2017 2004 Multifamily Value-Add
The Grand Hampton at Clear Lake Houston Houston, Texas Sold 08-30-2017 347 $25,165,000 $39,011,000 24.10% 2.04X 9-14-2021 1976 Multifamily Value-Add
Champions at Ponderosa Houston Houston, Texas Sold 09-01-2016 177 $10,500,000 $16,700,000 16.20% 1.83X 2-23-2021 1978 Multifamily Value-Add
Huxley at Medical Center Houston Houston, Texas Sold 10-10-2018 284 $24,200,000 $36,000,000 22.60% 1.91X 12-9-2021 1983 Multifamily Value-Add
Creekside Villas at Lake Houston Houston, Texas Sold 08-30-2017 202 $13,215,000 $25,850,000 28.00% 2.25X 6-3-2022 1978 Multifamily Value-Add
Steeplecrest Houston Houston, Texas Sold 10-1-2019 260 $29,400,000   6.00% 1.15X 2-1-2023 1992 Multifamily Value-Add
Harbor House on Saratoga Corpus Christi Corpus Christi, Texas Sold 3-1-2019 252     18.00% 1.73X   1998 Multifamily Value-Add
Stoneleigh Corpus Christi Corpus Christi Corpus Christi, Texas Sold   348     15.00% 1.90X   2004 Multifamily Value-Add
Totals/Weighted Avg.         7,770 $773,519,000 $1,159,909,560          

The above bios and track record were provided by ClearWorth Capital and have not been independently verified by RealtyMogul.

The IRRs and EMx of the owned deals represented above are projections based on initial budgets and underwriting. They do not reflect realized returns and are subject to change.

ClearWorth Capital is set to acquire a Class B asset located in the Lake Highlands submarket. The property boasts strong demographics in its immediate area, making it a promising investment. To further enhance its potential, ClearWorth plans to implement a comprehensive value-add program. This program will include unit renovations, exterior improvements, and expense control measures.

ClearWorth's interior renovation plan is as follows, approximately 70% of the units will undergo upgrades, such as fresh paint, granite countertops, backsplash installations, a new consistent component package, and resurfaced tubs and showers. Additionally, 15% of the units will receive stainless steel appliances, wood-like flooring, new cabinet fronts, pulls, and 2" blinds. Exterior improvements will focus on enhancing the common areas and grounds, refreshing exterior paint, addressing deferred maintenance, upgrading building systems, and giving the clubhouse and signage a facelift. The total capital budget for these improvements is almost $5.3 million, a feasible amount due to ClearWorth's low basis in the property.

Furthermore, ClearWorth's management team plans to implement expense controls to address the ballooning expenses that the current management has allowed. The expense ratio, which was running at 75% of income on the T12, will be optimized with specific areas of improvement, including marketing and electrical expenses.

Notably, there exists a significant rental rate gap between newer vintage assets and Class B assets in the area. The proposed rental increases will narrow this gap, though the rental rates will remain discounted by $600-$1,000 compared to the new Class A asset that is currently in lease-up less than 1 mile away.

Upon stabilization, ClearWorth Capital aims to sell the property at a projected 5.8% cap rate. This anticipated exit cap rate is still well above where most assets in Dallas are trading despite the high interest rate environment we are in relative to recent history.

 

CapEx Breakdown

Interior Renovations Total Amount Per Unit
Interior Paint / Carpentry $240,845 $860
Cabinets / Counters / Backsplash $854,000 $3,050
Hardware / Components / Accessories $88,200 $315
Make Ready / Demo / Clean $450,800 $1,610
Appliances $88,200 $315
Flooring $98,918 $353
Total Interior Renovations $1,820,963 $6,503
     
Exterior Renovations Total Amount Per Unit
Common Area / Grounds $238,000 $850
Building Exterior $1,325,000 $4,732
Building Systems $827,685 $2,956
Concrete / Metals / Fencing $118,000 $421
Clubhouse / Design / Amenities $315,000 $1,125
Total Exterior Renovation Costs $2,823,685 $10,084
     
Other Costs Total Amount Per Unit
Contingency $278,614 $995
Construction Management $344,628 $1,231
Total Other Costs $623,242 $2,226
     
Grand Total $5,267,890 $18,813

 

Property Information

Lavera, a stable property with 280 units, was constructed in 1970 and is situated in Lake Highlands, a vibrant neighborhood northeast of Downtown Dallas. Dallas consistently ranks among the top metropolitan areas in the country for job and population growth, and Lake Highlands is currently benefiting from the region's strong economic momentum. Its advantageous location offers easy access to major employers, top-rated schools in the Richardson Independent School District (RISD), and a wide range of recreational amenities and entertainment options. With 83% of its units featuring 2 and 3 bedrooms, Lavera caters well to families seeking access to the renowned Richardson ISD. The property is conveniently located within a mile of the Lake Highlands DART station Blue route and just over 1 mile away from the amenity-rich White Rock Lake.

The strategic positioning of Lavera provides residents with convenient transportation options and easy access to various attractions, making it an attractive place to call home. Its strong unit mix and proximity to key amenities contribute to the property's appeal and potential for continued success in the thriving Dallas real estate market.

Unit Type # of Units Avg SF/Unit Avg Rent
(Proforma)
Rent PSF
(Proforma)
Avg Rent
(In Place)
Rent PSF
(In Place)
Studio E1 (A1 website) 8 484 $1,082 $2.24 $952 $1.97
1x1 WD (A2) 16 675 $1,198 $1.77 $1,017 $1.51
1x1 WD (A3) 24 782 $1,235 $1.58 $1,025 $1.31
2x2 WD (B1) 30 949 $1,532 $1.61 $1,277 $1.35
2x2 (B2) 30 1,056 $1,625 $1.54 $1,341 $1.27
2x2 (B3) 24 1,057 $1,608 $1.52 $1,324 $1.25
2x1.5 WD (B4 TH) 96 1,058 $1,644 $1.55 $1,359 $1.28
2x2.5 WD (B5) 10 1,165 $1,872 $1.61 $1,558 $1.34
3x2 (C1) 16 1,185 $2,102 $1.77 $1,784 $1.51
3x2.5 WD (C2) 16 1,347 $2,087 $1.55 $1,837 $1.36
3x2 WD (C3) 4 1,367 $1,997 $1.46 $1,622 $1.19
3x2 (C4) 6 1,389 $2,046 $1.47 $1,723 $1.24
Totals / Averages 280 1,023 $1,624 $1.59 $1,356 $1.33

 

Comparables

Lease Comparables

  Paxton Trellis at Lake Highlands Laney Melville Lakeridge Heights Averages Lavera at Lake Highlands (Post Reno)
Distance from Subject Property Adjacent Adjacent 1.0 Mile 2.0 Miles 1.5 Miles 1.5 Miles NA
Year Built 1969 1984 1982 1979 1968 1976 1970
Number of Units 114 104 71 356 178 165 280
$ / Unit $1,765 $1,494 $1,517 $1,318 $1,310 $1,587 $1,623
Avg. Square Feet 945 SF 834 SF 905 SF 743 SF 707 SF 827 SF 1,024 SF
$ / SF $1.87 $1.79 $1.73 $1.75 $1.66 $1.76 $1.59
               
1 Bedroom 24 24 29 192 68 67 48
$ / Unit $1,327 $1,179 $1,178 $1,193 $1,202 $1,216 $1,197
Square Feet 737 SF 658 SF 630 SF 631 SF 603 SF 652 SF 697 SF
$ / SF $1.80 $1.79 $1.87 $1.89 $1.99 $1.87 $1.72
               
2 Bedrooms 70 80 43 156 70 84 190
$ / Unit $1,825 $1,588 $1,710 $1,540 $1,582 $1,649 $1,630
Square Feet 965 SF 887 SF 1,069 SF 920 SF 885 SF 945 SF 1,045 SF
$ / SF $1.89 $1.79 $1.60 $1.67 $1.79 $1.75 $1.56
               
3 Bedrooms 20       20 20 42
$ / Unit $2,082       $2,035 $2,059 $2,079
Square Feet 1, 122 SF       1,146 SF 1,134 SF 1,293 SF
$ / SF $1.86       $1.78 $1.82 $1.61

Sales Comparables

  Paxton Lake Highlands Lakewood on the Trail Maverick Oak Lawn Hidden Oaks Bay Island Zander Park Tides at Royal North Trellis at Lake Highlands (Recap) Legends on Lake Highlands The Lex Averages Lavera at Lake Highlands - Purchase Price Lavera at Lake Highlands - All In Cost Basis
Sale Date 07-31-2022 03-31-2022 10-31-2022 09-30-2022 08-31-2022 09-30-2022 04-30-2022 07-01-2023 04-30-2022 02-28-2023 9-17-2022 09-01-2023 09-01-2023
Sales Price $17,200,000 $77,000,000 $24,800,000 $34,300,000 $19,750,000 $25,400,000 $53,676,310 $16,000,000 $51,100,000 $21,000,000 $34,022,631 $33,300,000 $41,592,379
Year Built 1969 1987 1970 1974 1973 1972 1978 1984 1971 1984 1976.2 1970 1970
# of Units 114 352 137 208 120 160 340 104 348 144 203 280 280
Average Unit Size 945 SF 734 SF 826 SF 889 SF 865 SF 978 SF 873 SF 834 SF 753 SF 820 SF 852 SF 1024 SF 1024 SF
Sales Price / Unit $150,877 $218,750 $181,022 $164,904 $164,583 $158,750 $157,872 $153,846 $146,839 $145,833 $164,328 $118,929 $148,544
Sales Price / SF $160 $298 $219 $185 $190 $162 $181 $184 $195 $178 $195 $116 $145
Cap Rate 4.00%     3.64%           5.25% 4.30% 6.15% 4.92%
Distance from Subject Property Adjacent 6.0 Miles 10.0 Miles 1.0 Miles 14.0 Miles 24.0 Miles 2.0 Miles Adjacent 2.0 Miles 2.0 Miles 7.6 mi NA NA

(1) The Sponsor has underwritten exiting the Property in Month 36 for $55.8M ($199,343/unit) assuming a 5.80% exit cap rate.

 

Location Information

Market Overview

Apartment demand in Dallas continues to thrive, supported by the city's enduring reputation as a powerhouse for job and population growth. In the aftermath of the pandemic, rent growth and occupancy levels reached record highs. Although the influx of new supply has moderated the rapid increases, rent growth remains robust, averaging 4.7% over the past 5 years, as reported by CoStar. Interestingly, CoStar also notes that 'mid-tier' or value-add apartments have demonstrated greater resilience in rent growth compared to new luxury properties that directly compete with the influx of new supply.

Despite rising rents in the past decade, Dallas remains an affordable market relative to states like California and New York, which contribute significantly to Texas' population growth. The city's diversified economic base bolsters its resilience even in times of national downturns. As a result, Dallas stands strong as an attractive and stable investment destination, with a consistently high demand for rental properties.

Submarket Overview

Apartment fundamentals in East Dallas are demonstrating notable strength, driven by robust demand. The 'East Dallas/M Street/White Rock' submarket, part of the greater Dallas area, ranks among the top 5 submarkets with positive changes in occupancy and rent growth, according to ALN Data. Over the past year, occupancy has increased by 1.7% to reach a stable 92.3% per ALN, and further growth is anticipated. Rent growth has proven to show continued strength, rising by 5.7% year over year per ALN. As much of East Dallas is already developed, new development opportunities are limited. However, the area continues to attract strong demand as it presents an enticing option for renters seeking affordability compared to the Uptown/Park Cities and Downtown submarkets. The region's emerging communities, cultural attractions, and convenient access to major employment centers contribute to its growing appeal.

Cap Stack
Sources & Uses

Total Capitalization

Sources of Funds $ Amount $ / Unit
Senior Loan $26,942,153 $96,222
GP Equity $3,500,000 $12,500
LP Equity $11,150,226 $39,822
Total Sources of Funds $41,592,379 $148,544
     
Uses of Funds $ Amount $/Unit
Purchase Price $33,300,000 $118,929
Soft Costs / Closing Costs / Contingency $3,024,419 $10,801
Renovation Budget $5,267,960 $18,814
Total Uses of Funds $41,592,379 $148,544

(1) The Sponsor’s equity contribution may consist of friends and family equity and equity from funds controlled by the Sponsor.

Debt Assumptions

The expected terms of the debt financing are as follows:

  • Lender: Gateway First Bank
  • Loan Type: Bridge Loan
  • Term: 3 + 1 + 1 Years
  • Loan-to-Value (LTV): 65.1%
  • Loan-to-Cost (LTC): 64.8%
  • Estimated Proceeds: $26,942,153
  • Interest Type: Fixed
  • Annual Interest Rate: 7.0%
  • Interest-Only Period: 27 Months
  • Amortization: 30 Years
  • Prepayment Terms: Prepayable day 1 without any penalty
  • Extension Requirements: 1.25x DSCR & 10 bps fee per extension
  • Recourse Description: Non-recourse

(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. 

Distributions

ClearWorth Capital intends to make distributions as follows:

  1. Pari-passu all cash flow available for distribution to the Equity Investors(1) until the Equity Investors(1) receive a 9.0% IRR
  2. 70% / 30% (70% to Equity Investors(1) / 30% to Promoted/Carried Interest(2)) of all cash flow available for distribution thereafter.

ClearWorth Capital 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 May 2024 and are projected to continue on a quarterly basis thereafter. Distributions are at the discretion of ClearWorth Capital, who may decide to delay distributions for any reason, including maintenance or capital reserves.

(1) Equity Investors include all members part of the Limited Partnership and General Partnership, including Sponsor

(2) ClearWorth Capital will receive a promoted/carried interest as indicated above.

Cash Flow Summary
  Year 0 Year 1 Year 2 Year 3
Effective Gross Revenue   $5,343,680 $6,018,830 $6,876,011
Total Operating Expenses   $3,306,236 $3,403,658 $3,470,646
Net Operating Income   $2,037,445 $2,615,172 $3,405,365
         
Project-Level Cash Flows
  Year 0 Year 1 Year 2 Year 3
Net Cash Flow ($38,777,960) $1,946,957 $2,522,450 $3,309,806
         
Investor-Level Cash Flows(1)
  Year 0 Year 1 Year 2 Year 3
Net Cash Flow ($14,650,226) $293,005 $875,266 $26,791,586
         
Investor-Level Cash Flows - Hypothetical $50,000 Investment(1)
  Year 0 Year 1 Year 2 Year 3
Net Cash Flow ($50,000) $1,000 $2,987 $91,437

(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.

 

Fees

Certain fees and compensation will be paid over the life of the transaction; please refer to ClearWorth Capital's 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 2.00% of Purchase Price ClearWorth Capital Capitalized Equity Contribution
Financing Fee 1.55% of Loan Proceeds Lender and Mortgage Broker Capitalized Equity Contribution
Equity Fees 4% of $3.5M raise Prevail Real Estate 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
Asset Management Fee 1.50% of Effective Gross Income ClearWorth Capital Cash Flow
Property Management Fee 3.00% of Effective Gross Income ClearWorth Residential Cash Flow
Construction Management Fee 7.00% of Total Costs Before Contingency ClearWorth Construction 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.

The following offering documents have been prepared and are being delivered by the Sponsor of this investment opportunity, and not by RM Securities, LLC. RM Securities, LLC and its associated persons did not assist in preparing, do not explicitly or implicitly adopt or endorse, and are not otherwise responsible for, the Sponsors offering documents posted below or any content therein.
RM Securities, LLC and its Affiliates Compensation

RM Securities, LLC, its registered representatives, affiliates, associated persons, and personnel of its affiliates who may also be associated with it, including our associated persons and personnel of our affiliates who are also be associated with RM Securities, LLC (it (“RM Securities,” “we,” “our,” or “us”) will receive fees, expense reimbursements, and other compensation (“Fees”) from the issuer of this investment offering, its sponsor, or an affiliate thereof (“Sponsor”), or otherwise in connection with Sponsor’s offering. The Fees paid to us are in addition to other fees you will pay to Sponsor or in connection with Sponsor’s investment offering. You will pay Fees to Sponsor, either directly or indirectly as an investor in the Sponsor’s offering. Sponsor will use the Fees you pay, as well as funds you invest in the relevant offering, to compensate us. The Fees paid to us will directly or indirectly be borne by you as the investor (typically, but not always, in the form of an expense of the Sponsor’s offering in which you invest) because such Fees will reduce the proceeds available for distribution to you and reduce the amount you earn over time.

For more information on the Fees paid to us, or any other Fees you will pay in connection with Sponsor’s offering, please carefully review the Sponsor’s Investment Documents. Please also carefully review RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.

No Approval, Opinion or Representation, or Warranty by RM Securities, LLC

Sponsor has provided, approved, and is solely responsible in all aspects for the information on this webpage (“Page”), including 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”). The Investment Documents linked on this page have been prepared and posted by Sponsor, and not by RM Securities. We did not assist in preparing, do not adopt or endorse, and we are not otherwise responsible for, the Sponsor’s Investment Documents. We make no representations or warranties as to the accuracy of information on this Page or in the Sponsor’s Investment Documents and we accept no liability therefor. No part of the information on this Page or in the Sponsor’s Investment Documents is intended to be binding on us.

Sponsor’s Information Qualified by Investment Documents

The information on this Page 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 subject to change at the Sponsor’s discretion at any time up to the closing date. The Sponsor’s Investment Documents and supplements thereto contain important information about the Sponsor’s offering including relevant investment objectives, the business plan, risks, charges, expenses, and other information, which you should consider carefully before investing. The information on this Page should not be used as a basis for an investor’s decision to invest.

Risk of Investment

This investment is speculative, highly illiquid, and involves substantial risk. There can be no assurances that all or any of Sponsor’s assumptions, expectations, estimates, goals, hypothetical illustrations, or other aspects of Sponsor’s business plans (“Assumptions”) will be true or that actual performance will bear any relation to Sponsor’s Assumptions, and no guarantee or representation is made that Sponsor’s Assumptions will be achieved. If Sponsor does not achieve its Assumptions, your investment could be materially and adversely affected. 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. Sponsor’s Assumptions should not be relied upon as the primary basis for your decision to invest.

No Reliance on Forward-Looking Statements; Sponsor Assumptions

Sponsor is solely responsible for statements made concerning forward-looking statements and Assumptions, which apply only as of the date made, are preliminary and subject to change, and are expressly qualified in their entirety by the disclosures and cautionary statements included in Sponsor’s Investment Documents, which you should carefully review. Neither RM Securities nor Sponsor are obligated to update or revise such forward-looking statements or Assumptions to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Sponsor’s forward-looking statements and Assumptions are hypothetical, not based on actual investment achievements or events, and are presented solely for purposes of providing insight into the Sponsor’s investment objectives, detailing Sponsor’s anticipated risk and reward characteristics, and establishing a benchmark for future evaluation of actual results; therefore, they are not a predictor, projection, or guarantee of future results. You should not rely on Sponsor’s forward-looking statements as a basis to invest.

Importantly, we do not adopt, endorse, or provide any assurance of returns or as to the accuracy or reasonableness of Sponsor’s Assumptions or forward-looking statements.

No Reliance on Past Performance

Any description of past performance is not a reliable indicator of future performance and should not be relied upon as the primary basis to invest.

Sponsor’s Use of Debt

A substantial portion of the total cost of the real estate asset acquired by the Sponsor with investor funds (“Property”) will be paid with borrowed funds, i.e., debt. Sponsor’s estimated rates and terms of the debt financing are subject to lender approval, and there is no assurance that the Sponsor will secure debt at the rates and terms presented on this Page or in the Sponsor’s Investment Documents, or at all. The use of borrowed money to acquire real estate is referred to as leveraging, which can amplify losses and could result in lender foreclosure. In addition, if the debt includes a variable (or “floating”) interest rate, the total amount of interest paid over the term of the debt will fluctuate and can increase. As a result, Sponsor’s use of debt can result in a loss of some or all of your investment.

Sponsor’s Offering is Not Registered

Sponsor’s securities offering 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 offering will not be registered under any state securities laws in reliance on exemptions from state registration. Such securities (your ownership 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 Platform are intended solely for “Accredited Investors,” as that term is defined in Rule 501(a) under the Securities Act.

No Investment Advice

Nothing on this Page should be regarded as investment advice (either with respect to a particular security or regarding an overall investment strategy), a recommendation, an offer to sell, or a solicitation of or an offer to buy any security. Advice from a securities professional is strongly advised to understand and assess the risks associated with real estate or private placement investments. For additional information on RM Securities’ involvement in this offering, please carefully review the Sponsor’s Investment Documents, and RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.

1031 Exchange Risk

Internal Revenue Code Section 1031 (“Section 1031”) contains complex tax concepts and certain tax consequences may vary depending on the individual circumstances of each investor. RM Securities and its affiliates make no representation or warranty of any kind with respect to the tax consequences of your investment or that the IRS will not challenge any such treatment. You should consult with and rely on your own tax advisor about the tax aspects with respect to your particular circumstances.

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