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Funded
Multifamily
Americana Apartments
Fremont, CA
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
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100% funded
Offered By Trion Properties
14.9%* TARGET IRR 13.9%-15.9%
3.3%* TARGET AVG CASH ON CASH
1.84* TARGET EQUITY MULTIPLE
Estimated Hold Period 5 years
Estimated First Distribution 6/2019
*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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Explore this Project
Overview
Value-add acquisition in Fremont by an experienced Real Estate Company who currently owns four other apartment communities in the Bay Area.
Property At A Glance
Year Built 1966
Number of Units 88
Current Occupancy 96.6%
Parking Ratio 1.83 spaces per unit (161 total spaces)
Acquisition Price

$26,500,000

Investment Highlights
Bay Area Location, just four miles from Tesla's 5.3 million square foot factory, and nearby other large employers such as Seagate Technology and Amazon.com.
Strong market fundamentals and estimated growth. Axiometrics estimates 4.0% rent growth through 2022 in a submarket that is currently 96.3% occupied.
Experienced, repeat Real Estate Company that currently owns and manages four other assets in the Bay Area.
Management
Cumulative Distributions

Trion Properties

Trion Properties focuses on potentially maximizing investor returns by increasing net operating income throughout the holding period through a hands-on management style of heavy renovation and aggressive lease-up.Trion Properties is a private equity investment company which acquires opportunistic real estate investments that need moderate to heavy rehab on a mid to long term investment horizon.

Founded in 2005, Trion has successfully closed over $200 million in transactions through either the purchase of the fee simple interest or taking ownership of the asset through acquiring the non-performing debt.Trion Properties is managed by principals whose combined experience spans over 20 years in West Coast real estate markets and is in excess of one billion dollars in transactions.

RealtyMogul.com has invested in two prior transactions with the Real Estate Company - Woodland Park Estates and Buckingham Apartments. As of Q2 2017, all of the units at Woodland Park Estates had been renovated, and average in-place rents were 54.5% higher than average rents at the time of acquisition and 20% higher than proforma rents. As of Q3 2017, the cash-on-cash return since inception was 6.7%, which does not include refinance proceeds that returned approximately 15% of capital to investors.  As of Q2 2017, Buckingham Apartments was still undergoing renovations, with 25 of 48 units complete, and another 10 units that were expected to be completed by the end of Q3 2017.  Average in-place rents as of Q2 2017 were 22.8% above average rents at the time of acquisition. 

https://trion-properties.com/
  • Max Sharkansky
    Co-Founder and Managing Partner
  • Mitch Paskhover
    Co-Founder
Max Sharkansky
Co-Founder and Managing Partner

Max Sharkansky oversees all aspects of acquisition, disposition, and property analysis for Trion Properties.  Since founding Trion Properties, Max has led the acquisition, renovation and disposition of over $100 million in mismanaged and distressed assets, primarily in multifamily.. Max launched his foray into investments with two acquisitions of value-add multifamily properties in 2005. Following the first two closings, Max, along with partner Mitch Paskhover, created the platform and formed the Company in 2006 to execute a business plan of acquiring mispriced and mismanaged properties throughout Los Angeles. Max led Trion in the execution of several acquisitions in its first two years of existence and exited the portfolio prior to the economic crisis. With cash on hand and no resources tied up in workouts, Max assisted in implementing an acquisition strategy of targeting distressed debt secured by multifamily, and distressed multifamily REOs, which led to the ultra-successful campaign of the acquisition of 20 properties throughout the downturn. Since the recovery and the clearing of distress from the marketplace, Max has shifted strategies to the acquisition of value-add properties where value can be created through extensive renovations, hands-on management, and improvement of operating efficiencies. 

Prior to co-founding Trion Properties, Max was a Senior Associate at Marcus & Millichap from 2002 through 2006. While at Marcus & Millichap, Max managed the sale of several million dollars in real estate throughout the continental United States, specifically in the multifamily arena, elevating him to one of the top-ranking brokers in Los Angeles.  He graduated from Loyola Marymount University where he earned a Bachelor’s degree in Business Administration with an emphasis on Finance.

Mitch Paskhover
Co-Founder

Mitch Paskhover is a real estate investment professional and brings strategic planning, financial experience and vision to the management team. Mr. Paskhover directs all financing activities for Trion, including the procurement of acquisition and project financing. Mr. Paskhover also assists in all acquisition, disposition and risk management activities for Trion. His ability to seek out and acquire distressed multifamily properties and his expertise of the marketplace have been instrumental in the success of Trion Properties. 

Prior to co-founding Trion Properties, Paskhover was a Managing Director in the Los Angeles office of HFF (Holliday Fenoglio Fowler, L.P.).  Paskhover has over eight years of experience in commercial real estate finance. Mr. Paskhover’s primary focus was on debt and equity transactions including multifamily, office, retail and hospitality properties with an emphasis on multifamily.  During his tenure at HFF, Mitch Paskhover was promoted to Managing Director within two years of becoming a Director. Throughout his career in commercial real estate, Mr. Paskhover has been involved in over $2.5 billion in commercial real estate transactions.  Mr. Paskhover joined HFF in June 2002.  Prior to HFF, Mr. Paskhover was with Prudential in their Los Angeles office where he was responsible for originating commercial real estate loans.  He graduated from University of Southern California where he earned a Bachelor’s degree in Business Administration with an emphasis on Finance. He is a licensed California Real Estate Broker.

Track Record

Currently Owned Assets
Property Address City Property Type Date Acquired # of Units Square Feet Status Purchase Price Total Capitalization
412 S Lake St Los Angeles, CA MF 8/1/2013 41 - Stabilized $1,600,000 $9,000,000
4620 S Slauson Ave Los Angeles, CA MF 9/12/2014 28 - Stabilized $6,750,000 $10,800,000
1802-1820 Pacific Coast Hwy Redondo Beach, CA Retail 11/24/2014 - 20,191 Stabilized $5,781,250 $9,800,000
28955 Pacific Coast Hwy Malibu, CA   2/28/2014 - 16,711 Renovating $5,750,000 $9,300,000
1804 NE 104th St Portland, OR MF 5/14/2015 74 - Stabilized $6,642,598 $11,100,000
3635 College Ave San Diego, CA MF 6/15/2015 98 - Stabilized $9,650,000 $19,400,000
2222 SW Spring Garden Portland, OR MF 8/14/2015 44 - Renovating $4,450,000 $5,730,000
324S Catalina St Los Angeles, CA MF 11/23/2015 47 - Stabilized $7,540,000 $9,400,000
239 242nd St Hayward, CA MF 12/23/2015 30 - Stabilized $6,650,000 $8,650,000
348 Estabrook San Leandro, CA MF 1/4/2016 38 - Stabilized $7,200,000 $12,000,000
5012 Slauson Ave Culver City, CA MF 4/1/2016 - N/A Entitlement $2,610,500 $3,800,000
11255 SW Greenburg Rd Tigard, OR MF 7/11/2016 36   Renovating $3,800,000 $5,580,000
180 Buckingham Ave Redwood City, CA MF 7/13/2016 48 - Renovating $15,000,000 $17,330,000
14620-14650 SW Farmigton Rd Beaverton, OR MF 10/14/2016 61 - Renovating $7,250,000 $9,222,384
77-85 Estabrook St San Leandro, CA MF 3/24/2017 146 - Renovating $36,600,000 $42,511,937
12020 Why Worry Lane Beaverton, OR MF 6/19/2017 67 - Renovating $9,185,000 $10,700,000
Currently Owned Total       758     $136,459,348 $194,324,321
Sold Assets
Property Address City Property Type Date Acquired # of Units Square Feet Status Purchase Price Total Capitalization Sale Price Sale Date
6180 Aldama Los Angeles, CA MF 7/31/2015 15 - Realized $3,375,000 $4,113,253 $5,530,000 5/19/2017
24510 Town Center Dr Valencia, CA Retail 10/22/2013 - 26,186 Exchange $6,900,000 $7,900,000 $9,728,000 12/21/2016
3536 Watt Ave Sacramento, CA MF 4/1/2013 128 96,800 Exchange $4,900,000 $5,932,025 $10,250,000 9/30/2016
5416 Jackson St North Highlands, CA MF 1/28/2014 185 0 Realized $9,300,000 $10,738,981 $15,500,000 9/1/2016
909 Sunshine Ave El Cajon, CA MF 4/10/2013 22 - Realized $2,350,000 $2,619,213 $3,740,000 5/7/2015
3298 Mooney Blvd Visalia, CA Retail 12/31/2012 - 57,254 Realized $2,746,650 $2,756,277 $4,000,000 6/1/2013
7629-7633 Normal Ave La Mesa, CA MF 11/20/2012 21 - Realized $1,900,000 $2,263,689 $3,580,000 6/9/2015
Arden Loan Portfolio Sacramento, CA MF 7/26/2012 224 - Realized $5,750,000 $6,085,860 $7,134,385 2/1/2013
1535 N Cedar Ave Fresno, CA MF 7/13/2012 124 - Realized $3,248,750 $4,435,709 $5,500,000 3/4/2015
4318 Avalon Los Angeles, CA MF 1/3/2012 11 - Realized $515,000 $563,902 $680,000 7/18/2012
2280 South Drive Auburn, CA MF 12/30/2011 16 - Realized $1,350,000 $1,727,568 $2,400,000 7/12/2012
210 43rd Place Los Angeles, CA MF 9/26/2011 30 - Realized $949,000 $1,040,393 $1,480,000 6/25/2012
8833 Tobias Ave Panorama City, CA MF 9/21/2011 20 - Realized $1,169,000 $1,278,675 $1,430,000 12/30/2011
225 N Avenue 53 Los Angeles, CA MF 4/28/2011 20 - Realized $1,249,463 $1,526,243 $2,075,000 5/12/2012
4620 Coliseum Los Angeles, CA MF 12/17/2010 35 - Realized $1,800,000 $1,985,773 $2,550,000 12/29/2011
1324 57th St Los Angeles, CA MF 11/23/2010 14 - Realized $875,000 $977,018 $1,155,000 10/28/2011
6407 10th Ave Los Angeles, CA MF 5/5/2010 28 - Realized $1,500,000 $1,763,512 $2,125,000 7/29/2011
East West Bank Portfolio LA County, CA MF 8/14/2009 21 - Realized $725,000 $740,024 $960,000 9/1/2010
13490-13520 Foothill Blvd Sylmar, CA MF 6/4/2007 81 - Realized $11,150,000 $11,786,570 $12,850,000 7/1/2008
7445 Vineland Sun Valley, CA MF 4/10/2007 20 - Realized $1,867,125 $1,928,485 $2,250,000 8/5/2008
4632 Laurel Canyon Valley Village, CA MF 3/20/2007 44 - Realized $5,225,000 $5,529,035 $4,851,125 5/29/2009
12717 Barbara Ann North Hollywood, CA MF 11/2/2006 24 - Realized $2,625,000 $2,800,887 $3,200,000 4/10/2009
417W Los Feliz Glendale, CA MF 12/30/2005 34 - Realized $2,200,000 $2,444,000 $3,495,000 5/17/2007
7355- 7359 Vineland Sun Valley, CA MF 12/28/2005 12 - Realized $1,147,466 $1,263,093 $1,600,000 4/11/2007
Sold Assets Total       1,129     $74,817,454 $84,200,185 $108,063,510  
                     
Grand Total       1,887     $211,276,802 $278,524,506    

 

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

Business Plan

In this transaction, RealtyMogul.com investors will invest in Realty Mogul 95, LLC (the "Company"). Realty Mogul 95, LLC will subsequently invest in 4445 Stevenson Investors, LLC (the "Target"), the entity that will directly or indirectly hold title to the Property.

Trion Properties (the "Real Estate Company") believes that rents at the Property are currently below market, and plans to implement a capital improvement plan of approximately $3,371,445 ($38,312 per unit) in order to enhance the Property's appeal and bring rents up to market. Interior renovations are budgeted at $25,000 per unit and are to include vinyl plank flooring, stainless steel appliances and stovetops, new cabinetry, quartz countertops, window treatments, plumbing and fixtures, Bluetooth smart locks, new vanities, re-glazed bathtubs, paint, and lighting. The Real Estate Company also plans to install a washer and dryer inside each unit. Exterior renovations are to include paint, fencing, removing dry rot, upgrading amenities, HVAC, landscaping, branding/signage, improving carports, roof repair, and lighting. Upon completion, the Real Estate Company expects to be able to achieve rental increases averaging $917 per unit, a 55% increase over average in-place rents.

The Real Estate Company also intends to enhance the overall operations of the Property through improved management and marketing efforts, drawing from their ownership experience of over 1,800 multifamily units to date.  After renovations are complete, the Real Estate Company plans to refinance the Property, and sell within five years.

RealtyMogul.com has invested in two prior transactions with the Real Estate Company - Woodland Park Estates and Buckingham Apartments. As of Q2 2017, all of the units at Woodland Park Estates had been renovated, and average in-place rents were 54.5% higher than average rents at the time of acquisition and 20% higher than proforma rents. As of Q3 2017, the cash-on-cash return since inception was 6.7%, which does not include refinance proceeds that returned approximately 15% of capital to investors.  As of Q2 2017, Buckingham Apartments was still undergoing renovations, with 25 of 48 units complete, and another 10 units that were expected to be completed by the end of Q3 2017.  Average in-place rents as of Q2 2017 were 22.8% above average rents at the time of acquisition. 

Property

RealtyMogul.com, along with Trion Properties  (the "Real Estate Company"), is providing the opportunity to invest in the acquisition and ownership of an 88-unit apartment community located in Fremont, CA, within the San Francisco-Oakland-Hayward, CA​ MSA.

The primary objective of this investment is to acquire the Property, implement a $3,371,445 capital improvement program, increase rents to market rates, and sell the Property within approximately five (5) years. 

The Real Estate Company sees this investment as an opportunity to capitalize on an under managed asset in a market where they currently own and manage four other multifamily assets.

Property Details

First completed in 1966, Americana Apartments is an 88-unit garden style apartment community. The complex contains 17 free-standing buildings, 14 of which contain the 88 dwelling units. Floorplans consist of two bedroom/one and a half bathroom, and three bedroom/two bathroom two-story townhome configurations. The Property is located on a 4.65-acre parcel in Fremont, California.

Amenities consist of two in-ground pools within gated pool decks, four laundry rooms (three of which are free-standing) and two carports structures containing 77 covered parking spaces. Dwelling units conform to the same general finishes, fixtures, and appliances. Each contains a refrigerator, electric oven/range, dishwasher, and garbage disposal. Living rooms and bedrooms have carpet flooring, with VCT (vinyl composition tile) flooring in kitchens and bathrooms.

Unit Type
  # of Units Avg SF/Unit Avg In-Place Rent/Unit
2BD / 1.5BA Townhouse 72 987 $1,635
3BD / 2BA Townhouse 16 1,100 $1,810
Total 88 1,008 $1,667

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Comparables

Sales Comparables
  Camden Village Apts. Victoria Park Apts. Sofi Fremont Trimboli Terrace Apts. Cambridge Court Townhomes Woodbridge Apartment Homes Total / Averages Subject
Date 6/16 5/16 12/16 3/17 12/16 3/17 - -
Units(#) 196 60 204 19 17 19 86 88
Year Built 1969 1987 1973 1989 1985 1989 1982 1966
SF 163,584 50,052 162,932 14,350 21,760 14,350 134,406 88,705
Average Size/Unit 835 834 799 755 1,280 755 876 1,008
Purchase Price $63,000,000 $18,600,000 $74,500,000 $7,750,000 $7,650,000 $7,775,000 $58,345,363 $26,500,000
$/Unit $321,429 $310,000 $365,196 $407,895 $450,000 $409,211 $377,288 $301,136
$/SF $385 $372 $457 $540 $352 $542 $441 $299
Cap Rate 4.50% 3.20% 4.76% 4.89% N/A N/A 4.34% 3.22%
Distance from Subject 2.5 1.7 2.7 0.8 1.2 1.0 1.7 -
Lease Comparables
  Sundale Apartments Camden Village Stevenson Place Waterstone Fremont Woodcreek Apartments* Briarwood at Central Park Total / Averages Subject (Targeted)
Units(#) 286 192 200 526 96 159 243 88
Year Built 1963 1966 1971 1974 1986 1970 1,972 1966
Distance from Subject 0.6 2.6 0.4 1.1 1.9 1.0 1.3 -
Rents (2 Bedroom) $2,595 $2,703 $2,583 $2,685 $2,425 $2,456 $2,575 $2,525
Average Size 1,026 1,017 1,110 1,040 881 828 984 987
Average Rent/SF $2.53 $2.66 $2.33 $2.58 $2.75 $2.97 $2.64 $2.56
Rents (3 Bedroom) - $3,211 - - $2,900 - $3,056 $2,850
Average Size - 1,300 - - 1,152 - 1,226 1,110
Average Rent/SF - $2.47 - - $2.52 - $2.49 $2.59
*Two bedroom floorplans at this comp feature 2 bathrooms  
Location

The Property is located in Fremont, the fourth largest city in the Bay Area, less than two miles from I-880, and four miles from Tesla's 5.3 million square foot factory.  Fremont is very well connected to the rest of the Bay Area via I-880, the Dumbarton Bridge, the San Mateo Bridge, and Bay Area Rapid Transit (BART), which has a station in Fremont approximately two miles from the subject Property.  CoStar reports a 2015 study that measured a daily traffic count of 36,892 cars on Stevenson Boulevard at the location of the Property.

Market Overview 

CoStar reports that the Bay Area's booming economy and healthy population growth has helped to maintain strong apartment demand in the East Bay. The market benefits from its proximity to two major employment centers. Many residents work in San Francisco or San Jose, metros with significant labor-market gains in recent years. East Bay is also generating its own growth, with pending relocations by companies such as Uber, which are drawn to the market's cheaper office rents. (Source: CoStar)

According to Axiometrics, effective rent increased 4.1% from $2,314 in 1Q17 to $2,409 in 2Q17, which resulted in an annual growth rate of 1.2%. Annual effective rent growth is forecast to be 3.6% in 2018, and average 3.8% from 2019 to 2021. The market's occupancy rate increased from 95.5% in 1Q17 to 96.1% in 2Q17.  For the forecast period, the market's occupancy rate is expected to be 96.1% in 2018, and average 96.1% from 2019 to 2021. (Source: Axiometrics)

Submarket Overview

Axiometrics reports that effective rent increased 4.5% from $2,319 in 1Q17 to $2,422 in 2Q17. Out of the 8 submarkets in the market, the Fremont/Newark/Union City submarket ranked 3rd for quarterly effective rent growth and 4th for annual effective rent growth for 2Q17. Annual effective rent growth is forecast to be 1.3% in 2017, and average 3.4% through 2019. The submarket's occupancy rate increased from 95.5% in 1Q17 to 96.3% in 2Q17, and was up from 96.2% a year ago.  The submarket's occupancy rate is expected average 96.4% from 2017 to 2019. (Source: Axiometrics)

According to CoStar, Fremont/Hayward, like many parts of the East Bay, benefits from population growth and demand spillover from San Francisco and Silicon Valley. Landlords also benefit from the submarket's status as a key industrial center. All of this, as well as the lack of new construction, has allowed vacancies to remain relatively tight around the historical average.

Fremont/Hayward is a largely blue-collar, low-rise suburban submarket consisting primarily of single-family homes. The submarket is home to the Tesla Motors factory, the last major automaker producing cars in California, which makes it an important industrial center in East Bay.  Tesla is currently adding an additional 4.6 million square feet of space to its Fremont facility, which will bring their total space to nearly 10 million square feet. Other big employers in the submarket include Seagate Technology, which purchased the Fremont manufacturing plant formerly occupied by the now bankrupt Solyndra and Amazon.com, which recently completed a lease for more than 500,000 square feet of distribution space, also in Fremont.

Developers have been quiet here during the current cycle, and there is less high-end product than elsewhere in the metro. However, more than 40% of Fremont/Hayward residents do rent, and a steady need for apartments throughout the metro has led to tight vacancies and strong rent growth in recent years. Trading of apartment units is mostly confined to lower-tiered buildings, because very little of the submarket's product is institutional-grade. (Source: CoStar)

Demographic Information

Demographics
Distance from Property 1 Mile 3 Miles 5 Miles
Population 38,253 167,712 289,460
Projected Growth (2017-2022) 8.23% 7.96% 7.76%
Median Household Income  $92,572 $105,097 $109,120
Average Household Income  $110,588 $126,594 $131,536
Median Home Value $665,338 $736,845 $742,900
% of Renter Households 55% 42% 38%

Demographic information above was obtained from CoStar

Photos
Financials
Sources & Uses

Total Capitalization
Source of Funds Cost
Senior Loan $19,750,000
Preferred Equity $1,500,000
Equity $10,491,737
Total Sources of Funds $31,741,737
Uses of Funds Cost
Purchase Price $26,500,000
Sponsor Acquisition Fee $265,000
Broker Dealer Fee (3.0%) $24,000
Interest Reserves $500,000
Closing Costs $132,500
Working Capital $576,917
Unit Renovation Budget $2,210,900
Exterior and Common Area Capex $1,160,545
Loan Broker Fee $212,500
Loan Fees $159,375
Total Uses of Funds $31,741,737
Debt Assumptions

Senior Loan

  • Lender: California Bank and Trust
  • Loan Type: Bridge Loan
  • Loan Amount: $19,750,000 (of which $3,525,000 is reserved for capital improvements and interest reserves)
  • Interest Rate: 30-Day LIBOR + 325 bps
  • Term: 36 Months
  • Amortization: 30 year amortization, extension periods only
  • Interest Only:  36 Months
  • Prepayment Penalty: Breakage fees only
  • Extensions: Two (2) 12 month extensions (0.25% fee)

Preferred Equity

  • Provider: Partners Capital Solutions Equity Fund III
  • Type: Preferred Equity
  • Loan Amount: $1,500,000
  • Interest Rate: 14.00%; 6.00% to be paid current, monthly, and 8.00% accruing, non-compounding, to be paid at a capital event.
  • Term: 5 Years
  • Amortization: None
  • Interest Only: Full term
  • Prepayment Penalty: None
  • Extensions: None
Distributions

The Target will make distributions to investors (The Company and the Real Estate Company, collectively, the "Members") as follows:  

Operating Income, Refinance, and Sales Proceeds

  • An 8% preferred return to all Members, pari passu, in proportion to their respective capital contributions;
  • ​Second, to all Members, pari passu, in proposition to their respective unreturned capital contributions, until all unreturned capital contributions to Members have been returned;
  • Any excess balance will be split 70% to Members ​pari passu and 30% to Sponsor

Note that these distributions will occur after the payment of the Company's liabilities (loan payments, preferred equity distributions, operating expenses and other fees as set forth in the LLC agreement, in addition to any Member loans or returns due on Member loans).

The Company will distribute 100% of its share of excess cash flow (after expenses) to the Members of the Company (the RealtyMogul.com investors). The manager of the Company will receive a portion (up to 10%) of the Real Estate Company's promote interest. Distributions are targeted to start in June 2019 and are projected to continue on a quarterly basis thereafter. These distributions are at the discretion of the Real Estate Company who may decide to delay distributions for any reason, including maintenance or capital reserves. 

Cash Flow Projections
  Year 1 Year 2 Year 3 Year 4   Year 5  
Effective Gross Revenue $1,216,331 $2,185,562 $2,798,636 $2,976,769 $3,067,989
Total Operating Expenses $801,337 $858,784 $902,482 $929,295 $953,153
Net Operating Income $414,994 $1,326,778 $1,896,153 $2,047,474 $2,114,745

Realty Mogul 95, LLC Cash Flows

  Year 0 2017 2018 2019 2020 2021 2022
Distributions to Realty Mogul 95,
LLC Investors
($810,000) $0 $0 $218,126 $42,783 $47,698 $1,182,452
Net Earnings to Investor -
Hypothetical $50,000 Investment
($50,000) $0 $0 $13,465 $2,641 $2,944 $72,991
Fees

Certain fees and compensation will be paid over the life of the transaction. The following fees and compensation will be paid:

One-Time Fees
Type of Fee Amount of Fee Received By Paid From Notes
Acquisition Fee $265,000 Real Estate Company Capitalized Equity Contribution 1.0% of the property purchase price
Broker-Dealer Fee 3.0% North Capital (1) Capitalized Equity Contribution 3.0% based on the amount of equity invested by Realty Mogul 95, LLC
Mortgage Broker Fee 1.0% Continental Funding Group Capitalized Equity Contribution 1.0% of the total loan and preferred equity amounts arranged at closing, as well as any future refinance proceeds.  Continental Funding Group is a separate but affiliated entity of the Real Estate Company and its principals.
Construction Management Fee 5.0% of capital improvement budget Real Estate Company Capitalized Equity Contribution This expense is included in the capital improvement budget that is capitalized into the deal
Recurring Fees
Type of Fee Amount of Fee Received By Paid From Notes
Property Management Fee 4.0% Real Estate Company Operating Cash Flow The greater of 4.0% of Gross Operating Revenues or $2,500/month
Management and Administrative Fee 1.0% of amount invested in Realty Mogul 95, LLC RM Manager, LLC Distributable Cash  RM Manager, LLC is the Manager of Realty Mogul 95, 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 The Company, 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

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.


Non-Transferability of Securities

The transferability of membership interests in The Company 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. Moreover, the estimated investment holding period described herein is only a projection, and there can be no assurance when or if an investment may be liquidated. 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.


Credit Risk

The Company's investment in The Target will relate to a Property that will undergo some degree of renovation, a situation that does not always meet the financing criteria for conventional financing from institutional sources. Credit risk is inherent in the real estate financing industry, and there can be no assurance that the credit worthiness of the Real Estate Company will be sufficient to assure the full repayment of the The Company's common equity investment and thus The Company's ability to provide returns (or even repayment of principal) to investors.


Management Risk

Investors will be relying solely on the Real Estate Company for the execution of its business plan. The Real Estate Company may in turn rely on other key personnel with relevant experience and knowledge, including contractors and consultants. Members of The Target (including The Company) will agree to indemnify the manager in certain circumstances, which may result in a financial burden if any litigation results from the execution of the business plan. While the Real Estate Company has significant operating experience, The Target is a newly formed company and has no operating history or record of performance. The Company is pursuing a venture capital strategy through its investment in The Target, and the manager of The Company is expected to be treated as an investment adviser exempt from federal or state registration under this strategy.


Manager of The Company May Participate in Sponsor's Promote Interest

The manager of The Company may be entitled to a participation in the value of any excess distributable cash flow and any appreciation of the Property realized upon its sale. This could lead to a potential conflict of interest between the manager and The Company. Investors must recognize and agree to waive and bear the risk of this conflict of interest.


Capital Call Risk

The amount of capital that may be required by The Target from The Company is unknown, and although The Target does not require that its members contribute additional capital to it, it may from time to time request additional funds in the form of loans or additional capital. The Company does not intend to participate in a capital call if one is requested by The Target, and in such event the manager of The Target may accept additional contributions from other members of The Target. Amounts that the manager of The Target advances on behalf of The Company will be deemed to be a manager loan at an expected interest rate of 10%. Amounts that are contributed by existing or new members may be deemed to be additional capital contributions, in which case The Company's interest in The Target will suffer a proportionate amount of dilution.


Real Estate Market Risk

The Target's economic performance and value, and thus the value of investors’ investment in The Company, is subject to various risks associated with the Property. Real estate markets are affected by many factors, such as general economic conditions, supply and demand for real estate investments, interest rates, the availability of financing, and other factors. Investments related to real estate are also subject to market valuation risks that may be caused by changing economic and local market conditions such as local real estate market conditions. The Property’s economic performance and value, and thus the value of investors’ investment in The Company, is subject to such risks, all of which are beyond the control of both The Company and The Target.


Interest-Only Loan

The loan being used to acquire the Property is expected to have an interest-only period during the first three years of the term, which means that there will be no reduction in the principal balance during that interest-only period.


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 Real Estate Company Entity to sell the Property, rent its units as necessary to maintain occupancy, and/or to increase or maintain unit rental rates.


Lease-up Risks

The Property currently has a 96.6% occupancy level, and the Real Estate Company intends to implement a capital improvement plan in its effort to maintain and/or increase 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 plan will result in the Property maintaining its occupancy level at rental rates in line with those projected. Any delays or adverse effects of such work could adversely affect the Property’s financial results or business operations and thus the value of the Company’s investment. Although the Real Estate Company believes that comparable properties are currently achieving rental rates that are in line with those expected from the Property, there can be no assurance that such 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.


Extensive Rehab Planned

The Real Estate Company intends to renovate 88 (100%) units at the Property. The Real Estate Company has assumed that each unit will take approximately two weeks to renovate, and has assumed a 28-month timeline to complete the renovations, which equates to less than 6 units being renovated per month. 


Significantly Reduced Cash Flow During Extensive Renovation

The Title Holder intends to renovate all 88-units located within the Property. The Sponsor Entity assumes that each renovated unit will take approximately two weeks to accomplish and anticipates a 28-month timeline to complete these renovations.  As a result, it is anticipated that during the first 14 months of operation, cash flow will be significantly reduced. During this period of significantly reduced cash flow, the Title Holder is expected to utilize a $500,000 interest reserve, held with the lender, to pay for the debt service of the senior loan on the Property. Additionally, during this period of significantly reduced cash flow, it is anticipated that there will be insufficient cash flow for the Title Holder to make distributions to equity investors, including the Sponsor Entity, thereby the Company is not expecting to make distributions to investors during this period of time. There can be no assurance that the renovations undertaken at the property will be consummated or completed on a timely basis, that such work will not materially adversely affect other aspects of the operation of the Property, or that the planned renovations at the Property will result in increasing cash flow as expected. In the event that cash flows from the Property do not increase as timely as expected, due to delays in renovation or otherwise, the ability of the Title Holder to make distributions to equity investors and/or debt service payments may be materially adversely affected. 


California State Risks

The State of California is subject to various natural disasters, including severe drought, earthquakes, and fire seasons.  The Property is vulnerable to damage or interruption from such natural disasters, power losses, telecommunication failures, terrorist attacks, human errors, break-ins and similar events. The occurrence of a natural disaster or other unanticipated problem could result in a strain on the Company’s financial condition.  The is no guarantee that he Sponsor Entity will carry adequate insurance for the Property at the time of a loss. Because the Property is located in an earthquake fault zone, it is particularly sensitive to the risk of damage to, or total destruction of, the Property, which, if incurred, could adversely affect the Sponsor Entity’s results of operations and financial condition, and consequently have a material adverse effect to the Company’s financials and its investors.

Floating Interest Rate

The loan being used to acquire the Property is expected to have a floating rate based on the one-month London Interbank Offered Rate (“LIBOR”). If LIBOR increases the interest payments due on the loan are expected to increase as well. This could adversely affect the Property’s financial results or business operations and thus the value of the Company’s investment.


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 The Company, 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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