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Completed Equity
Multifamily
Jersey City Portfolio
Multiple Locations
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
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100% funded
Offered By Rhodium Capital Advisors
16.1%* TARGET IRR 16.1%-%
2.8%* TARGET AVG CASH ON CASH
1.5* TARGET EQUITY MULTIPLE
Estimated Hold Period 3 Years
Estimated First Distribution 9/2018
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Project Summary
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Overview
Portfolio consisting of seven properties located throughout Jersey City, NJ. The Portfolio is being acquired by an experienced Sponsor who has stated that they own more than $250 million in similar assets.
Property At A Glance
Year Built 1880 - 1935
Number of Properties Seven
Number of Units 31
Current Occupancy 84%
Acquisition Price

$5,200,000

Investment Highlights
Experienced Sponsor with a track record of purchasing and adding value to multifamily properties in New York and New Jersey
Strong Market Conditions—Axiometrics predicts average rent growth of 3.15% along with a 3.95% average vacancy rate for the submarket over the next five years
Opportunity for an experienced Sponsor to add value through capital improvements and improved management and leasing efforts
Management
Cumulative Distributions

Rhodium Capital Advisors

Rhodium Capital Advisors ("Rhodium") is a full service real estate firm actively involved in the acquisition of residential assets primarily in the NYC metropolitan area, including the boroughs of New York City and Jersey City, NJ.  Rhodium seeks to acquire assets where it can immediately implement an aggressive strategy to enhance operating profits and capital appreciation by reducing operating costs and/or improving the asset.  Rhodium has strong relationships with large regional banks that specialize in their targeted assets and regularly secures non-recourse loan commitments at attractive rates.  Rhodium currently owns and manages thousands of residential units in New York and New Jersey with a market value of over $250 million.

http://rhodiumlp.com
  • Mark Silber
    Managing Member
  • Fredrick Schulman
    Managing Member
  • Jerald Belofsky
    General Counsel
Mark Silber
Managing Member

Mark Silber is a successful entrepreneur who has, in recent years, directed his energies and his capital into the development of a sizeable commercial real estate portfolio with an acquisition, management, and development infrastructure. He has focused on the acquisition and management of income producing residential properties in the New York metropolitan area, including the boroughs of New York City, Rockland County (NY), and New Jersey. He believes that these types of assets and geographies have experienced, and will continue to experience, consistent growth in cash flows and capital appreciation, with limited financial pressures during challenging economic times.

Prior to establishing Rhodium, (a) from 2008 to 2012, Mark founded and built Innovative Credit Consultants ("ICC"), a credit consulting firm with offices in New York, New Jersey, and Florida; (b) from 2008 to 2012, Mark was a principal in the family business (generally doing business as ACX Capital), acquiring, financing, and consulting with respect to life settlements, and providing litigation finance; and, (c) from 2010 to 2012, Mark worked with prominent owners of apartment buildings in New York City where he developed his acquisition and management expertise. In 2012, Mark rolled up his real estate holdings and activities into Rhodium Capital Advisors, a full service real estate acquisition, management, maintenance, and development firm. Through a subsidiary, Rhodium Management, real estate management services are also offered to third party real estate owners in New York City and Rockland County. Rhodium Management is also a licensed general contractor in New York City, resulting in efficiencies and cost effectiveness that has benefited the entire real estate portfolio. To date, he has been involved in real estate transactions with an aggregate value of over $400 million.

Fredrick Schulman
Managing Member

Fredrick Schulman has over 35 years of experience as an investment banker, business and real estate principal, and attorney, with great expertise in corporate, commercial, and real estate finance. In addition to his position and interest in Rhodium, Fred is currently (a) the Chairman (and one of the founding shareholders) of NewBank, a New York-based community commercial bank with branch offices in Manhattan, Flushing (Queens), NY, Fort Lee, NJ, and Closter, NJ, (b) the President of East Coast Capital Holdings, Ltd., a Specialized Small Business Investment Company and Community Development Entity based in Manhattan and licensed by the U.S. Small Business Administration, and (c) the President of Targeted Capital Funding LLC, with offices in Manhattan and Wall, NJ, specializing in asset-based finance and equipment leasing.

Prior to his involvement with Rhodium and the various finance entities, Fred simultaneously managed his interests in (a) various consumer products, retail, and real estate companies, and (b) his law practice (which began at Kahr Spitzer and Howard in Manhattan, followed by his law partnership called Bragar Spiegel Schulman Rubin & Driggin (which specialized in commercial real estate syndications), and followed by his own offices). From 1994 to 1999, he grew from General Counsel to Director of Investment Banking at RAS Securities Corp. in Manhattan (with over seventy transactions funded, involving over $1 billion). Fred holds a Bachelor of Arts Degree from Clark University and a Juris Doctor Degree from Boston College School of Law.

Jerald Belofsky
General Counsel

Jerald Belofsky is an investment banker and attorney, and has originated or managed billions of dollars of transactions, mostly in the real estate arena.

In addition to his position at Rhodium, Jerry is currently the Chairman (and the founder) of Oldfield Capital Group, a New York based broker-dealer regulated by FINRA and the SEC, engaged in investment banking activities. He is also the General Counsel to Oldfield's Registered Investment Advisor, and to Targeted Capital Funding, an asset-based finance company (of which Fredrick Schulman is the principal).

Prior to forming Oldfield in 2011, Jerry worked for Oppenheimer AG (with offices in Zurich and New York) from 2005 to 2010. He started and ran the New York-based investment activities of this Swiss family office, growing the New York office from two employees to twenty employees. During his time with Oppenheimer, he (a) managed projects in Oman, Bahrain, Dubai, China, Singapore, and Eastern Europe that produced $48 million in fee income over a five-year period; (b) led teams of lawyers, accountants, and investment bankers in a $950 million global bond offering for a real estate project in Oman; (c) managed consulting assignments for governments in restructuring alternative investments in Kuwait, workouts of real estate and industrial projects in Dubai, Bahrain, Greece, and Albania, and a bank restructuring in Bosnia; and (d) over a three year period, mediated disputes between Greek and Turkish contractors, architects, and royal families in Bahrain and Oman, involving a Middle Eastern mixed use real estate development project roughly the size of Manhattan.

Prior to Oppenheimer, Jerry was President of the North American asset-based and structured finance operations for affiliates of ABN-AMRO Bank, growing the U.S. offices from one to five. Prior to ABN-AMRO, Jerry oversaw the global equipment leasing and project finance activities for Bear Stearns.

Jerry holds a BS Degree in Business from Boston University, a Master’s Degree in Finance from New York University, and a JD from George Washington University Law School.

Track Record

Recent Acquisitions
Description Number of Units Purchase Date Purchase Price
Six-building NYC Portfolio  118 December 2015 $34,100,000
Thirteen-building NYC Portfolio 378 January 2016 $98,000,000
Eight-building NYC Portfolio 129 December 2016 $37,000,000

 

Recently Sold Assets
Address Purchase Date # of Residential
Units
Purchase Price Sale Price Sale Date
920 Madison Street, Brooklyn, NY Nov-14 13 $2,125,000 $2,900,000 July 2015
1004 Hegeman Avenue,  Brooklyn, NY May-15 20 $2,450,000 $3,700,000 February 2017
803 East 49th Street,  Brooklyn, NY Nov-15 14 $2,500,000 $3,250,000* -
Total   47 $7,075,000 $9,850,000  
*Under contract to sell

 

The Sponsor's bio and track record were provided by the Sponsor and have not been verified by RealtyMogul.com or NCPS

Business Plan

In this transaction, RealtyMogul.com investors will invest in Realty Mogul 77, LLC. Realty Mogul 77, LLC is to subsequently invest in RH JC 5 Holdings, LLC, a limited liability company that is to hold title to the Property.  

Rhodium Capital Advisors (the "Sponsor') believes that there is an opportunity in Jersey City as the area continues to gentrify.  They plan to improve unit interiors for the 12 fair-market units, as well as the vacant rent controlled unit at 21 Gray Street. The level of improvement is determined on a case-by-case basis and typically includes new dry wall, plaster and paint, LED energy efficient lighting throughout the unit, eight-foot solid core doors, six-inch baseboard and casing, hardwood flooring, new bathrooms, and renovated kitchens with granite countertops and stainless steel appliances.  The bathrooms are to be renovated with WonderBoard waterproofing, new plumbing where needed, new tile, toilets, and high-end vanities.  33 Madison Avenue is to receive two new kitchens as the previous single-family occupant only had one kitchen in the building.  After renovations, the first floor and basement level of 33 Madison are to house a three-bedroom unit, and the upper two floors are to each house a two-bedroom unit.  Exterior and common area improvements are budgeted to include painting, new steel entry doors, LED lighting, staircase upgrades, and roof improvements at 33 Madison.

The Sponsor is targeting rental increases for the 13 renovated units averaging $783/unit, a 95% increase over average in-place rents for those units. Renovations are anticipated to be completed within 13 months of the close date. Upon completion of the business plan, the Sponsor intends to sell the Portfolio within three years, although the hold period could be shorter or longer than three years depending on market conditions.

Budgeted Capital Improvements
Unit Interiors - 33 Madison Avenue (3 residential units)
Dry wall $9,000 $3,000/U
Plaster and Paint $7,500 $2,500/U
LED energy efficient lighting spotlights throughout the unit $6,000 $2,000/U
8-foot solid core doors and 6" baseboard and casing $7,500 $2,500/U
Hardwood Flooring $24,000 $8,000/U
High-end bathroom (gut renovate, wonder board waterproofing, plumbing, tile, vanity, toilet) $28,500 $9,500/U
High-end kitchen including granite countertops $33,000 $11,000/U
Stainless steel appliances $12,000 $4,000/U
Plumbing Risers $15,000 $5,000/U
Electric Risers (including USB outlets) $15,000 $5,000/U
Mini Boilers/Water Heaters (baseboards throughout) $22,500 $7,500/U
Subtotal: $180,000 $60,000/U
 
Exterior/ Common Area - 33 Madison Avenue (3 residential units)
Roof $10,000 $3,333/U
Staircases (completely redone) $20,000 $6,667/U
LED Lighting $5,000 $1,667/U
Common Area Drywall, Painting and Plastering $5,000 $1,667/U
Subtotal: $40,000 $13,333/U
 
Unit Interiors - Remaining Units to be Renovated (10 residential units)
Dry wall $27,000 $2,700/U
Plaster and Paint $15,000 $1,500/U
LED energy efficient lighting spotlights throughout the unit $10,000 $1,000/U
6-foot solid core doors and 6" baseboard and casing $2,500 $250/U
Hardwood Flooring $25,000 $2,500/U
Bathroom (gut renovate, wonder board waterproofing, plumbing, tile, vanity, toilet) $48,000 $4,800/U
Renovate kitchen including granite countertops $35,000 $3,500/U
Stainless steel appliances $22,000 $2,200/U
Subtotal: $184,500 $18,450/U
 
Exterior/ Common Area - 6 Buildings (24 residential units, 4 commercial units)
118 Old Bergen Commercial Space $3,500 $125/U
Painting $9,000 $321/U
New Carpet on Staircases $12,000 $429/U
Steel Entry Doors $18,000 $643/U
Subtotal: $42,500 $1,518/U
 
Total Capital Improvement Budget $447,000 $14,419/U
Property

RealtyMogul.com, along with Rhodium Capital Advisors (the "Sponsor"), is providing the opportunity to invest in the acquisition and improvement of a 31-unit mixed-use Portfolio consisting of seven properties in Jersey City, New Jersey (the "Portfolio").

The primary objective of this investment is to acquire the Portfolio, perform interior and common area upgrades, bring rents up to market, and sell the Property within approximately three (3) years.

The Sponsor sees this investment as an opportunity to capitalize on an underperforming portfolio of assets that can that be enhanced through capital improvements and improved management and leasing efforts.

Property Details

The Portfolio is comprised of seven two and three-story walkup buildings totaling 27 apartment units and four ground floor commercial units.  The residential units consist of four one-bedroom units, 17 two-bedroom units, and six three-bedroom units.  15 of the residential units are subject to rent control and 12 are currently fair-market.

Portfolio Summary
Building # of Stories Year Built Number of Commercial Units Number of Residential Units Average In-Place Residential Rent
308 Clerk Street 3 1880   6 $1,077
207 Mallory Avenue 2 1935 1 2 $1,000
207A Mallory Avenue 2 1935 1 2 $960
209 Mallory Avenue 2 1935 1 2 $883
118 Old Bergen Road 2 1925 1 3 $1,000
21 Gray Street 3 1912   9 $1,093
33 Madison Avenue 3 1870   3 -
Total/ Average 2 - 3  1913 4 27 $1,041
Unit Mix - All Residential Units
Unit Type Number of Units Vacant Units In-Place Avg.  Rent Proforma Rent  $ Increase % Increase
One Bedroom 4 0 $962 $962 $0 0.0%
Two Bedroom 17 3 $1,024 $1,526 $503 49.1%
Three Bedroom 6 1 $1,142 $1,643 $501 43.9%
Total/ Average 27 4 $1,041 $1,469 $428 40.7%
Unit Mix - Units to be Renovated
Unit Type Number of Units Vacant Units In-Place Avg.  Rent Proforma Rent  $ Increase % Increase
Two Bedroom 10 3 $941 $1,820 $879 93.5%
Three Bedroom 3 1 $1,050 $2,083 $1,033 98.4%
Total/ Average 13 4 $966 $1,881 $783 94.6%
Commercial Rent Roll
Building Tenant Type In-Place Rent Proforma Rent  $ Increase % Increase
207 Mallory Nail Salon $1,650 $1,650 $0 0.0%
207A Mallory Grocery $1,600 $1,600 $0 0.0%
209 Mallory 99¢ Store $1,900 $1,900 $0 0.0%
118 Old Bergen Road Vacant - $1,200 - -
Total/ Average   $1,717 $1,588 $0 0.0%
Comparables

Lease Comps
Property Name Miles from Subject Built Renovated Total Units 2-Bedroom 3-Bedroom
Units Rents SF Units Rents SF
613 Bramhall Avenue 0.1 1915 - 7 3 $2,004 - 4 $3,006 1,100
457 Wayne Street 0.1 - - 4 - - - 2 $2,200 1,000
347-353 Summit Ave 0.2 1870 - 17 - - - 2 $1,692 1,200
236 Van Horne St 0.5 1980 2012 6 4 $1,564 850 2 $1,879 1,450
25 Baldwin Ave 1.2 1900 2016 2 - - - 1 $2,200 1,150
Comp Set Average   1916   7   $1,784 850   $2,195 1,180
 
Subject - Turning Units Only - In-place 1913   2-3 10 $941 - 3 $1,050 -
Variance from Comp Set -90% -   -109% -
 
Subject - Turning Units Only - Targeted Post-renovation 2-3 10 $1,820 - 3 $2,083 -
Variance from Comp Set 2% -   -5% -

 

Sales Comps
Property Miles From Subj. Year Built Stories # Of Units Sale Date Sale Price Price / Unit
35 Orchard Street 1 - 3 5 Dec-15 $860,000 $172,000
18 Fulton Ave 1.2 1926 4 8 Aug-15 $2,150,000 $268,750
130 Woodlawn Ave 1.2 1915 3 6 Apr-15 $1,284,848 $214,141
175 Van Nostrand Ave 1.2 1922 3 6 Aug-15 $845,000 $140,833
96 Duncan Ave 1.5 1910 4 9 Aug-16 $1,700,000 $188,889
Total / Average 1.2 1918 3 7   $1,367,970 $196,923
               
Subject     2 - 3 2 - 9   $5,200,000 167,742
               
Subject Total Cost Basis           $5,948,649 191,892
Location


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The Portfolio is spread across the south side of Jersey City, which has easy access to Lower Manhattan via I-78 and the Holland Tunnel or Midtown Manhattan via the Lincoln Tunnel. Public transportation is readily available with a 24-hour PATH (Port Authority Trans-Hudson) Train service, the NY/NJ Waterway, and the Hudson-Bergen Light Rail system.

Market Overview

Jersey City is the second most populous city in the state of New Jersey with a 2015 Census Bureau Population estimate of 264,290.  According to the New York Times, an influx of new arrivals priced out of Manhattan and Brooklyn is helping make it the fastest growing metropolitan area in New Jersey, partly due to the quick train commute it offers to New York as well as its vibrant and expanding downtown area. The city’s close proximity to New York City has also contributed to the development of its own impressive skyline. This includes the Goldman Sachs building, which stands at 781 feet, granting it a distinction as one of the 200 tallest buildings in the world. Jersey City’s economic sphere has been fast-growing as Fortune 500 corporations such as Chase Bank, Merrill Lynch, Charles Schwab, and others continue to bring their businesses to the area.

Jersey City is home to the New Jersey City University, Saint Peter’s University, and Hudson County Community College. The University of Phoenix and Rutgers, the State University of New Jersey, also have locations within the city.  Additionally, McNair Academic High School has been named the top public high school in New Jersey and 15th in the nation.

Submarket Overview

Out of 22 submarkets in the New York-Jersey City-White Plains, NY-NJ market, the Downtown Jersey City submarket ranked 6th for quarterly effective rent growth and 11th for annual effective rent growth for 2016, according to Axiometrics.  Effective rent growth only averaged 0.2% in 2016, but is expected to average 3.15% annually through 2021, and has averaged 3.4% per year since the first quarter of 2000.

The submarket's vacancy rate decreased from 3.1% in 3Q16 to 2.9% in 4Q16, and is down from 3.5% a year ago.  Vacancy in the submarket is expected to average 3.95% through 2021.

Axiometrics Annual Submarket Trend Report - Downtown Jersey City
  2016 2017 2018 2019 2020 2021
Submarket Vacancy 3.3% 4.5% 4.1% 3.5% 3.7% 4.0%
Avg Rent Growth 0.2% 1.5% 3.5% 4.2% 3.8% 2.8%

Demographic Information

Demographics

Distance from Property 1 Mile 3 Miles 5 Miles
Population (2016) 80,647 293,306 976,256
Growth (2010-2016) 3.66% 4.15% 3.52%
Growth (2016-2021) 4.89% 7.89% 8.16%
Median Household Income (2016) $44,057 $62,982 $75,491
Average Household Income (2016) $61,182 $90,381 $109,295

*Demographic information was obtained from CoStar.  Location based statistics were based on the most central asset in the Portfolio, 33 Madison Avenue.

Photos
Financials
Sources & Uses

Total Capitalization
Sources of Funds  
Debt $3,640,000
Equity $2,326,650
Total Sources of Funds $5,966,650
 
Uses of Funds  
Purchase Price $5,200,000
Acquisition Fee (1.00%) $52,000
NC BD Placement Fee (3.50%) $64,750
Eastern Union BD Fee (1.00%) $18,500
Capital Expenditures $447,000
Title $30,000
Legal $30,000
Lender Legal $10,000
Lender Fees (0.50%) $18,200
Mortgage Broker Fee (1.00%) $36,400
33 Madison Escrow $37,800
Misc. Reserve $22,000
Total Uses of Funds $5,966,650
Debt Assumptions

The proposed terms of the debt financing are as follows:

  • Lender: The Westchester Bank
  • Proceeds: $3,640,000
  • Term: 3 years
  • Rate: 4.00% fixed
  • Amortization: 30 Years
  • Interest Only: None
  • Recourse: Unlimited, joint and several personal guaranty of Fredrick Schulman.
  • Prepayment: 5% in Year One, 4% in Year Two, 3% in Year Three. However, in the event that the prepayment is from internally generated cash flow and not through a refinance with another financial institution, the prepayment will not be subject to the prepayment fees mentioned above. Therefore, a prepayment using proceeds from the sale of the Property will not incur these fees.
  • Loan to Value: 70%
  • Loan to Cost: 61%

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.

Distributions

RH JC 5 Holdings, LLC is to make distributions to Investors (Realty Mogul 77, LLC, and Sponsor, collectively, the "Members") per the priority order below. Realty Mogul 77, LLC is to distribute 100% of its share of excess cash flow (after expenses) to the members of Realty Mogul 77, LLC (the RealtyMogul.com investors). 

Order of Distributions to Members (Operating Income, Sales or Refinance Proceeds - after first lien debt repayment)

  • First, to the Members in proportion to their respective unpaid 8% preferred return until the unpaid preferred return of each Member is reduced to zero;
  • Second, to the Members pro-rata, until such time as their respective unreturned capital contributions are reduced to zero;
  • Third, seventy percent (70%) to the Members on a pro rata basis, and thirty percent (30%) to the Sponsor, until such time as the Members have received aggregate distributions in an amount sufficient to provide such Members with an eighteen percent (18.0%) IRR with respect to all of their aggregate capital contributions;
  • Fourth, sixty percent (60%) to the Members on a pro rata basis and forty percent (40%) to the Sponsor, until such time as the Members have received aggregate distributions in an amount sufficient to provide such Members with a twenty percent (20.0%) IRR with respect to all of their aggregate capital contributions;
  • Thereafter, fifty percent (50%) to the Members on a pro rata basis and fifty percent (50%) to the Sponsor.

Distributions are targeted to begin in September 2018 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.

 
Cash Flow Targets
  12/31/2017 12/31/2018 12/31/2019
Effective Gross Revenue $206,051 $504,357 $541,501
Total Operating Expenses $97,500 $178,021 $184,183
Net Operating Income $108,551 $326,335 $357,318
Distributions to Realty Mogul 77, LLC Investors $0 $60,319 $2,727,449
Fees

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 $52,000 Sponsor Capitalized Equity Contribution 1.0% of the Portfolio purchase price
Broker-Dealer Fee 3.5% North Capital (1) Capitalized Equity Contribution 3.5% based on the amount of equity invested by Realty Mogul 77, LLC
Broker-Dealer Fee 1.0%
Palladium Capital Advisors, LLC
Capitalized Equity Contribution 1.0% based on the amount of equity invested by Realty Mogul 77, LLC 
Recurring Fees:
Property Management Fee 5.0% of Effective Gross Income Sponsor Operating Cash Flow 5.0% of Effective Gross Income
Asset Management Fee 1.0% of Effective Gross Income Sponsor Operating Cash Flow 1.0% of Effective Gross Income
Management and Administrative Fee 1.0% of amount invested in Realty Mogul 77, LLC RM Manager, LLC Distributable Cash RM Manager, LLC is the Manager of Realty Mogul 77, 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 77, 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.

Disclaimers/FAQs
Disclaimers

Fluctuations in Interest Rates

A mortgage loan will be taken out on the Property. Mortgage loan interest rates may be significantly affected by economic downturns or general economic conditions beyond the Company’s control and beyond the control of the Sponsors. In particular, loss rates on mortgage loans may increase due to factors such as (among other things) local real estate market conditions, prevailing interest rates, the rate of unemployment, the level of consumer confidence, the value of the U.S. dollar, energy prices, changes in consumer spending, the number of personal bankruptcies, disruptions in the credit markets and other factors. Any change in interest rates may drastically affect the value of your investment in the Company.


Rising Interest Rates

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 an 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).


Equity Invested

The manager of the Sponsor Entity (“Sponsor Manager”) is expected to invest certain equity in the Sponsor Entity. However, the principals of the Sponsor Manager may have raised some of this equity from third parties and the principals of the Sponsor Manager may be permitted to sell a portion of their equity interest at a later time. Thus, either at closing or at a later time, the principals of the Sponsor Manager may not have a significant portion of their own personal funds invested in this transaction.


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 77, 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.


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 77, 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.


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.


Renovation Risk

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 cost approximately $447,000 total and are projected to take up to 13 months to complete. 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 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.


Retail Competition

Competition in the Property’s local market area is significant and may affect the Property’s occupancy levels, rental rates and operating expenses. In addition, internet-based retailing presents significant competition to certain types of retailers. If development of retail centers by other operators were to increase due to increases in availability of funds for investment or other reasons, or if internet-based retailing continues to draw consumers away from making purchases of goods and/or services of the types offered by tenants of the Property (or if it decreases the prices that such consumers are willing to pay for such goods and/or services), then this competition with the Property and its tenants could cause the value of the Property and the cash flow from the Property to decrease.


Lease-up Risks

The Property currently has a 84% 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 maintain that occupancy level. 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 maintaining 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. 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.


Tenants’ Loss of Revenues Could Reduce the Sponsor Entity’s Cash Flow

Tenants of the Property may encounter significant macroeconomic, governmental and competitive forces. Adverse changes in consumer spending or consumer preferences for particular goods, services or store-based retailing could severely impact these tenants’ ability to pay rent. The default, financial distress, bankruptcy or liquidation of one or more of the Property’s tenants could cause substantial vacancies, which would likely reduce the Sponsor Entity’s revenues, increase property expenses and could decrease the value of the Property. Upon the expiration of a lease, the tenant may choose not to renew the lease and/or the Sponsor Entity may not be able to re-lease the vacant space at a comparable lease rate or without incurring additional expenditures in connection with such renewal or re-leasing.


Vacancies and Tenant Defaults May Reduce the Property’s Revenue

A vacancy or default of a tenant on its rent will cause Sponsor Entity to lose the revenue from that unit and, if enough effective vacancies occur, it could cause 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 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.


Hurricane Risk

New Jersey is located near the Atlantic Ocean, which is subject to frequent and sometimes destructive hurricanes. There can be no assurance that a sizable hurricane will not cause significant damage to the Property, in which case the business and financial condition of the Sponsor Entity, and thus the Company, would be materially adversely affected. There is no guarantee that the Sponsor Entity has or will obtain hurricane or flood insurance for the Property.


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 77, 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.

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