We run extensive background checks, criminal checks, bad actor checks, and reference checks on sponsors. In addition to never allowing a sponsor with a criminal history / any securities related issue to use the platform, we may also turn down sponsors due to poor reference checks even if background and criminal checks come back clear.
We require unaffiliated sponsors to use an unaffiliated third-party escrow agent. When an investor makes an investment with unaffiliated sponsors using the RealtyMogul platform, the investor’s money is transferred directly into a third-party escrow account. All closing conditions in connection with a sponsor’s offering need to be met before the third-party escrow agent will approve releasing investor funds to the issuer or general partner. For example, if an issuer or general partner plans to use funds for a real estate acquisition that does not ultimately transact, the third-party escrow agent will not transfer investor funds to the issuer or general partner, and funds will be returned to investors.
Our controls include visiting every property (or a subset of properties if it’s a fund) to confirm the real estate is what and where the real estate is supposed to be.
We have robust quality controls with detailed checklists and a review of third-party reports.
Comunidad Realty Partners
Comunidad Realty Partners (CRP) is a dynamic real estate investment firm specializing in multifamily apartment communities in densely-populated Hispanic neighborhoods. Core to its investment strategy is creating culturally-relevant, inclusive communities that are tailored to the various ethnicities living at its communities. CRP owns and manages over $286 million in multifamily assets overall, comprising approximately 4,800 units.
CRP specializes in acquiring and repositioning apartments in infill locations and implementing its proprietary cultural management platform which includes specific cultural upgrades and community-oriented resident services and programs. CRP uses its multifamily lifestyle brand “Buena Vida Community” at its properties to represent its mission of delivering an unparalleled experience of enhanced multifamily living by providing more than just a home but a lifestyle. The firm was founded on a simple principle: enrich lives through enhancing communities while creating value for all stakeholders involved. The firm takes a holistic approach to its investments through symbiotic stakeholder integration of residents, staff, vendors, the greater community, the environment, and investors in order to truly maximize economic and social returns. Its investment philosophy is predicated on fostering innovative lifestyle improvements that align with its residents wants and needs and differentiate the living experience in order to create long-term value for residents and communities in a socially responsible way. Additionally, the firm is focused on “green” environmental improvements that reduce its properties’ energy footprint while reducing utility costs for residents.
RealtyMogul has invested in six prior transactions with the Real Estate Company (Tuscany Apartments, Plano Portfolio, Gazebo Park, Villas de Serenada, Villas del Cabo & Villas de Santa Fe, and Villas de la Colonia). Villas de la Colonia (formerly Metrocrest Village) was acquired in Q2 2014, went full cycle in Q2 2017, and resulted in an IRR to RealtyMogul investors that exceeded pro forma. The renovation program at Villas de la Colonia pushed average leased rents up 20.1%, from $730 per unit to $877 per unit, and reduced the property's expense ratio from 56.8% to 37.3%. Net operating income increased by 32.4% at Villas de la Colonia over the hold period.
http://www.comunidadpartners.com/-
J. Antonio MarquezManaging Partner -
Santiago Rivera TorresManaging Director
J. Antonio Marquez serves as Principal and Managing Partner of Comunidad Realty Partners, a Quez Capital company. He is responsible for strategic planning, capital raising efforts, and sourcing acquisition opportunities for the firm. He is involved in business plan formation on new acquisitions, value-add strategy implementation, and Hispanic marketing efforts. Mr. Marquez has 15 years of experience with his family’s group of companies targeting the Hispanic demographic. He has been involved in over $130 million in commercial/multifamily real estate transactions working with GE Capital, Goldman Sachs, and Principal Real Estate Investors. He has over 10 years of experience managing his family’s commercial portfolio totaling over 1.5 million square feet of office, retail, and industrial space and valued over $110 million. Mr. Marquez graduated cum laude from California Polytechnic – San Luis Obispo and attended the University of Southern California’s Lusk Center for Real Estate where he focused his postgraduate studies in urban real estate with emphasis in affordable/workforce housing through the Stan Ross Program in Real Estate.
Santiago Rivera Torres is a Managing Director at Comunidad Realty Capital. He oversees day to day operations across the portfolio including capital improvement projects, ancillary income services and cultural services & programs implementation. He also is involved in establishing and developing the firm’s commercial partnerships and strategic alliances as well as supporting capital raising efforts and investor relations. Mr. Rivera Torres has worked in the Real Estate and Construction sector in Mexico and U.S. for the last 12 years; his experience ranges from working on family-owned projects on beachfront developments in Baja to residential and low income housing projects in Northern Mexico and retail development in Cabo San Lucas. The Rivera Torres family has been involved in $3 billion USD in housing (400,000 units), hotels & resorts, industrial parks, retail/mall development, and infrastructure development throughout Mexico. In addition, he headed the sales effort for GlobalSolar, a Mexican green technology company specializing in energy-efficient and environmentally sustainable equipment for housing developments throughout Mexico. While he led the sales effort, the company quickly grew to become the largest provider of green technologies to the construction sector in Northern Mexico. Mr. Rivera Torres has a long lineage of real estate experience joined Quez Capital Interests in the early summer of 2012 after learning of their philosophy and Hispanic based multi-family business model.
| Property Name | Location | Asset | Units | Cost Basis | Occupancy |
|---|---|---|---|---|---|
| Villas de la Luz Apartments | Austin, TX | MF | 240 | $10,865,000 | 89% |
| Villas de la Cascada Apartments | San Antonio, TX | MF | 268 | $18,265,000 | 94% |
| Villas del Zocalo Phase 1 | Dallas, TX | MF | 206 | $5,344,828 | 96% |
| Villas del Zocalo Phase 2 | Dallas, TX | MF | 192 | $4,810,345 | 95% |
| Villas del Zocalo Phase 3 | Dallas, TX | MF | 224 | $5,344,828 | 98% |
| Villas de Estancia Apartments | Irving, TX | MF | 206 | $12,667,724 | 95% |
| Villas de Serenada Apartments | Euless, TX | MF | 208 | $13,625,000 | 96% |
| Villas del Encanto Apartments | San Antonio, TX | MF | 334 | $15,580,000 | 95% |
| The Vive Apartments | Dallas, TX | MF | 248 | $14,836,104 | 90% |
| Cantera Creek Ph. 1 Apartments | Dallas, TX | MF | 200 | $11,038,800 | 90% |
| Cantera Creek Ph. 2 Apartments | Dallas, TX | MF | 272 | $15,012,768 | 90% |
| The Lantern Apartments | Dallas, TX | MF | 340 | $20,943,660 | 90% |
| Villas de Santa Fe Apartments | San Antonio, TX | MF | 208 | $13,172,676 | 90% |
| Azura Apartments | Phoenix, AZ | MF | 387 | $24,000,000 | 93% |
| Colinas Ranch Apartments | Irving, TX | MF | 160 | $10,418,000 | 98% |
| Villas del Solamar | Dallas, TX | MF | 212 | $5,800,000 | 96% |
| Villas del Cabo | San Antonio, TX | MF | 272 | $19,613,324 | 93% |
| Parkview on Hollybrook | Longview, TX | MF | 209 | $31,588,000 | 80% |
| Gazebo Park Apartments | Acworth, GA | MF | 216 | $17,540,840 | 96% |
| Tuscany Apartments | San Antonio, TX | MF | 190 | $16,046,556 | 93% |
| Total | 4,792 | $286,513,453 |
| Property Name | Location | Asset | Units | Cost Basis | Occupancy |
|---|---|---|---|---|---|
| Villas de Sendero Apartments | San Antonio, TX | MF | 209 | $8,750,000 | 97% |
| Villas de las Colinas Apartments | Austin, TX | MF | 178 | $4,700,000 | 98% |
| Villas del Sol Apartments | Austin, TX | MF | 294 | $9,650,000 | 93% |
| Villas de Palmas Apartments | Houston, TX | MF | 659 | $22,425,687 | 98% |
| Villas de la Colonia Apartments | Carrollton, TX | MF | 143 | $6,055,000 | 99% |
| The Current Apartments | Austin, TX | MF | 302 | $22,650,000 | 95% |
| Total | 1,785 | $74,230,687 |
The above track record information was provided by the Sponsor and has not been independently verified by RealtyMogul.
In this transaction, RealtyMogul.com investors are to invest in Realty Mogul 100, LLC ("The Company"), which is to subsequently invest in Plano CRP Portfolio, LLC ("The Target"), a limited liability company that will hold title to the Properties. Comunidad Realty Partners (the "Real Estate Company") is under contract to purchase the Properties for $10.5 million ($67,308 per unit) and the total project cost is expected to be $11.9 million ($76,215 per unit).
The Real Estate Company’s business plan is to implement a value-add strategy by completing interior and exterior renovations at the Properties. Unit interior upgrades are expected to include a combination of black-on-black appliances, faux-wood flooring, utility saving devices, and new fixtures. Exterior and amenity improvements are expected to address painting, carpentry, landscaping, parking lots, leasing center, laundry facilities, and signage.
The Real Estate Company plans to renovate 71 units over 14.2 months (five units per month), which they state is a comfortable pace given their track record, and sell the Properties in five (5) years at a 6.50% cap rate. The pro forma financials assume that classic and renovated units will be able to achieve rental premiums of approximately $59 and $82 per unit per month upon completion, respectively.
RealtyMogul.com has invested in four prior transactions with the Real Estate Company (Gazebo Park, Villas de Serenada, Villas del Cabo & Villas de Santa Fe, and Villas de la Colonia), all of which are performing well. Villas de la Colonia (formerly Metrocrest Village) was acquired in Q2 2014, went full cycle in Q2 2017, and resulted in an IRR to RealtyMogul.com investors that exceeded pro forma. The renovation program at Villas de la Colonia pushed average leased rents up 20.1%, from $730 per unit to $877 per unit, and reduced the property's expense ratio from 56.8% to 37.3%. Net operating income increased by 32.4% at Villas de la Colonia over the hold period.
Built in 1950 (Oak Gate) and 1971 (Collin Park), this two-property portfolio consists of one and two-bedroom floor plans combining to 156 units, 17 buildings, 268 parking spaces, and 127,148 square feet. The weighted average unit size and rent per unit is 815 square feet and $806 ($0.99 per square foot), respectively (per the October 2017 rent roll). Amenities across the Properties include laundry centers, BBQ grills, a covered pavilion, 24-hour maintenance, and a leasing center. The Properties are currently 100.0% occupied and include 268 on-site parking spaces (1.72 per unit).
| Unit Type | # of Units | % of Total | Unit (Square Feet) | Total Square Feet | Rent per Unit | Rent per Square Foot |
|---|---|---|---|---|---|---|
| 1 Bed, 1 Bath | 24 | 40% | 697 | 16,728 | $702 | $1.01 |
| 2 Bed, 1 Bath | 36 | 60% | 867 | 31,212 | $859 | $0.99 |
| Totals/Averages | 60 | 100% | 799 | 47,940 | $796 | $1.00 |
| Unit Type | # of Units | % of Total | Unit (Square Feet) | Total Square Feet | Rent per Unit | Rent per Square Foot |
|---|---|---|---|---|---|---|
| 1 Bed, 1 Bath | 32 | 33% | 708 | 22,656 | $702 | $0.99 |
| 2 Bed, 1 Bath | 56 | 58% | 867 | 48,552 | $861 | $0.99 |
| 2 Bed, 2 Bath | 8 | 8% | 1,000 | 8,000 | $909 | $0.91 |
| Totals/Averages | 96 | 100% | 825 | 79,208 | $812 | $0.99 |
| Unit Type | # of Units | % of Total | Unit (Square Feet) | Total Square Feet | Rent per Unit | Rent per Square Foot |
|---|---|---|---|---|---|---|
| 1 Bed, 1 Bath | 56 | 36% | 703 | 39,384 | $702 | $1.00 |
| 2 Bed, 1 Bath | 92 | 59% | 867 | 79,764 | $860 | $0.99 |
| 2 Bed, 2 Bath | 8 | 5% | 1,000 | 8,000 | $909 | $0.91 |
| Totals/Averages | 156 | 100% | 815 | 127,148 | $806 | $0.99 |
| The Reserve at Lake Highlands | Toscana Apartments | Lafayette Square Apartments | Aspen Creek | Total / Averages | Subject | |
|---|---|---|---|---|---|---|
| Date | May-17 | April-17 | January-17 | May-16 | ||
| Submarket | Richardson | Timberglen | Richardson | Dallas Midtown | Plano | |
| Market | Dallas-Fort Worth | Dallas-Fort Worth | Dallas-Fort Worth | Dallas-Fort Worth | Dallas-Fort Worth | |
| # of Units | 152 | 192 | 81 | 192 | 154 | 156 |
| Year Built | 1980 | 1986 | 1961 | 1978 | 1976 | 1950-1971 |
| Purchase Price | $9,475,000 | $13,250,000 | $5,100,000 | $15,038,512 | $11,806,636 | $10,500,000 |
| $/Unit | $62,335 | $69,010 | $62,962 | $78,325 | $68,158 | $67,308 |
| Cap Rate | 6.4% | 6.1% | 6.8% | 5.9% | 6.3% | - |
| Amber Vista | Bel Air on 16th | Alta Vista | Belleview | Courtyard Apartments | 1201 Park | The Westside | Waterford on the Meadow | Bel Air Ranch | Total / Averages | Subject - Post Renovation | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| # of Units | 88 | 152 | 133 | 45 | 28 | 368 | 408 | 350 | 208 | 198 | 156 |
| Year Built | 1970 | 1965 | 1962 | 1967 | 1960 | 1997 | 1983 | 1985 | 1974 | 1974 | 1950-1971 |
| Occupancy | 97% | 99% | 100% | 98% | 96% | 94% | 94% | 94% | 94% | 96% | 96% |
| Average SF | 959 | 870 | 895 | 647 | 800 | 744 | 865 | 868 | 754 | 822 | 815 |
| Average Rental Rate | $997 | $1,022 | $915 | $841 | $808 | $1,080 | $1,053 | $1,015 | $957 | $965 | $902 |
| Average $/SF | $1.04 | $1.17 | $1.02 | $1.30 | $1.01 | $1.45 | $1.22 | $1.17 | $1.27 | $1.18 | $1.11 |
| Distance (miles from subject) | 1.3 | 0.4 | 0.1 | 0.7 | 0.9 | 1.5 | 2.1 | 3.0 | 3.4 | 1.5 | - |
Lease and Sale Comparable information provided by Axiometrics and Real Capital Analytics.
The Properties are located in the Plano Submarket within the greater Dallas-Fort Worth, MSA as defined by Axiometrics. Per CoStar, demand in the Plano Submarket is driven by large corporations like Frito Lay, Dr Pepper Snapple, and JCPenney, and will be boosted by the relocation of Toyota's North American headquarters as well as new regional campuses for Liberty Mutual and JPMorgan Chase. The CityLine mixed-use development in the south of the submarket brought State Farm (with 8,000 new jobs and plans to add even more) and Raytheon (1,700 employees moved to CityLine). If that isn't enough, construction is underway on a 300,000 square foot regional headquarters for Fannie Mae at Granite Park that could employ about 2,000 as soon as 2018, and Pizza Hut is nearly doubling its office footprint in Plano over the next few years. In other recent deals, Crestron Electronics moved to Legacy Tower, adding more than 250 new jobs in a regional expansion, Boeing's Global Services division employs about 50 at their new headquarters in Legacy, Altice USA will add about 400 jobs at its new location in Granite Park, and NTT Data continues to expand its presence in Plano by moving into 150,000 square feet at One Legacy West in June 2017. USAA is also expanding its campus in Legacy, adding hundreds of jobs when its new 150,000 square foot office building completes.
Market Overview
Per CoStar, the Dallas-Fort Worth apartment market has outperformed over the last few years, thanks to exceptional demand driven by some of the best in-migration and employment growth in the country. While 2017 and 2018 will likely be the peak years of the cycle in terms of supply, the influx of tens of thousands of jobs from corporate moves like those by Toyota and Liberty Mutual should give the D-FW apartment market a big boost, especially in the northern suburbs along the Dallas North Tollway. Rent growth has cooled from the 2015 peak, but it remains well above the historical average. However, pricey submarkets like Uptown/Park Cities have seen flat or negative rent growth in the face of record supply levels with even more set to deliver soon.
Submarket Overview
Per CoStar, Plano is one of the most desirable places to live in the United States, thanks to plenty of high-paying jobs and abundant retail and entertainment amenities. An important factor when Toyota chose to relocate to Plano was the reported quality of its schools. Toyota backed this up by donating $1 million to the Plano school district-demonstrating its commitment to the area and not so subtly urging its employees to live in Plano. Superb population growth and high household incomes make this one of the most dynamic submarkets in the metro. But as in most northern Dallas suburbs, homeownership a major draw. It isn't difficult to find three- and four-bedroom homes for around $300,000-relatively inexpensive compared to prices in other top-tier suburbs nationally. However, nearly 40% of households are renters, significantly higher than the 20%-25% of households that rent in neighboring Frisco/Prosper and Allen/McKinney.
Per Axiometrics, Effective rent increased 0.9% from $1,222 in 2Q17 to $1,232 in 3Q17. The submarket's annual rent growth rate of 0.6% was below the market average of 2.2%. Out of the 27 submarkets in the market, the Plano/Allen/Mckinney submarket ranked 13th for quarterly effective rent growth and 21st for annual effective rent growth for 3Q17. Annual effective rent growth is forecast to be 1.8% in 2017, and average 3.6% through 2018 to 2020. The annual effective rent growth has averaged 2.0% per year since 3Q96. The submarket's occupancy rate increased from 94.4% in 2Q17 to 94.7% in 3Q17, and was down from 95.8% a year ago. The submarket's occupancy rate was below the market average of 94.9% in 3Q17. For the forecast period, the submarket's occupancy rate is expected to decrease to 94.4% in 2017 and average 95.3% from 2018 to 2020. The submarket's occupancy rate has averaged 92.6% since 3Q96.
Demographic Information
| Distance from Property | 1 Mile | 3 Miles | 5 Miles |
| Population (2017) | 13,026 | 109,994 | 302,406 |
| Population (2022) | 14,807 | 124,172 | 338,631 |
| Population Growth (2017-2022) | 13.67% | 12.89% | 11.98% |
| Median HH Income | $48,196 | $67,991 | $77,684 |
| Median Home Value | $153,483 | $192,038 | $233,071 |
| Average Age | 34.60 | 37.90 | 38.40 |
Demographic information above was obtained from CoStar.
| Sources of Funds | Cost |
|---|---|
| Debt | $8,640,000 |
| Equity | $3,249,463 |
| Total Sources of Funds | $11,889,463 |
| Uses of Funds | Cost |
| Purchase Price | $10,500,000 |
| CapEx Reserve | $750,000 |
| Real Estate Company Acquisition Fee | $157,500 |
| North Capital Broker Dealer Fee | $134,063 |
| Lender Origination Fee | $86,400 |
| Closing Costs | $161,500 |
| Working Capital | $100,000 |
| Total Uses of Funds | $11,889,463 |
The expected terms of the debt financing are as follows:
- Property: Collin Park
- Lender: Freddie Mac
- Estimated Proceeds: $3,304,000
- Estimated Rate (Fixed): 4.49%
- Amortization: 30 years, with three years of interest-only
- Term: 10 years
- Property: Oak Gate
- Lender: Freddie Mac
- Estimated Proceeds: $5,336,000
- Estimated Rate (Fixed): 4.47%
- Amortization: 30 years, with three years of interest-only
- Term: 10 years
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.
The Target will make distributions to investors (The Company, MogulREIT II, and Real Estate Company, collectively, the "Members") as follows:
Operating Income, Refinance, and Sales Proceeds
- To the Members, in proportion to, and to the extent of, their accrued but unpaid preferred returns (8.0%).
- To the Members, in proportion to, and to the extent of, their unreturned capital.
- 70.0% / 30.0% (70.0% to Members / 30.0% to the Real Estate Company) of excess cash flows and appreciation to a 16.0% IRR to Members.
- 60.0% / 40.0% (60.0% to Members / 40.0% to the Real Estate Company) of excess cash flow and appreciation thereafter.
Note that these distributions will occur after the payment of the Company's liabilities (loan payments, 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% pro-rata) of the Real Estate Company's promote interest. Distributions are expected to start in June 2018 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.
| 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|
| Effective Gross Revenue | $1,554,946 | $1,740,515 | $1,806,384 | $1,867,236 | $1,928,504 |
| Total Operating Expenses | $865,988 | $884,704 | $910,987 | $937,779 | $965,319 |
| Net Operating Income | $688,958 | $855,811 | $895,397 | $929,456 | $963,185 |
| Year 0 | 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|---|
| Distributions to Realty Mogul 100, LLC Investors |
($1,767,500) | $119,967 | $207,827 | $228,436 | $172,296 | $2,894,692 |
| Net Earnings to Investor - Hypothetical $50,000 Investment |
($50,000) | $3,394 | $5,879 | $6,462 | $4,874 | $81,887 |
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 |
|---|---|---|---|---|
| Acquisition Fee | $157,500 | Real Estate Company | Capitalized Equity Contribution | 1.5% of the Property purchase price. |
| Acquisition Fee | $48,750 | RM Advisor, LLC | Capitalized Equity Contribution | RM Advisor, LLC is the Manager of MogulREIT II and a wholly-owned subsidiary of Realty Mogul, Co. |
| Disposition Fee | 1.0% of gross sale proceeds | RM Advisor, LLC | Distributable Cash | RM Advisor, LLC is the Manager of MogulREIT II and a wholly-owned subsidiary of Realty Mogul, Co. |
| Broker-Dealer Fee | $85,313 | North Capital (1) | Capitalized Equity Contribution | 4.875% based on the amount of equity invested by Realty Mogul 100, LLC. |
| Construction Management Fee | 10.0% of costs | Real Estate Company | Capitalized Equity Contribution |
| Type of Fee | Amount of Fee | Received By | Paid From | Notes |
|---|---|---|---|---|
| Asset Management Fee | 2.0% of effective gross revenues | Real Estate Company | Operating Cash Flow | |
| Management and Administrative Fee | 1.25% of amount invested in Realty Mogul 100, LLC | RM Manager, LLC | Distributable Cash | RM Manager, LLC is the Manager of Realty Mogul 100, LLC and a wholly-owned subsidiary of Realty Mogul, Co. (2) |
(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 Real Estate Company 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.
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.
Conflict of Interest Risk
Mogul REIT II, Inc. (“MogulREIT II”), which is managed by RM Adviser, LLC (“RM Adviser”), an affiliate of Realty Mogul 100, LLC’s manager, may also make an investment in Plano CRP Portfolio, LLC (the “Sponsor Entity”). The total investment made by MogulREIT II may be more or less than the total investment made by the Sponsor Entity; however, RM Adviser may have additional rights and privileges, including more control over the Sponsor Entity, pursuant to the Sponsor Entity’s operating agreement. This could give rise to a conflict of interest between Sponsor Entity and Mogul REIT II, which may limit the Company’s ability to have control over certain major decisions concerning the Sponsor Entity, and it may result in a material adverse effect on your investment.
Capital Call Risk
The amount of capital that may be required by Target from the Company is unknown, and although Target does not require that the Company and its members contribute additional capital to it, it may from time to time request additional funds in the form of loans or sell additional equity. The Company does not intend to participate in a capital call if one is requested by Target, and in such event the manager of Target may accept additional contributions from other members of Target or from new members. In the event that the manager of Target advances any capital on behalf of the Company, it will be deemed to be a manager loan at an interest rate that cannot be determined at this time. Amounts that are contributed by existing or new members will be deemed to be additional capital contributions, in which case the Company's interest in Target will potentially suffer a proportionate amount of dilution.
Risks Related to Mortgage Interests
The Target is expected to obtain two separate senior loans (the “Loans”) to, in part, acquire each of the apartment communities, and each senior loan shall serve their respective property. The Loans are anticipated to each have a 10-year term, with an interest-only period of 3 years at a fixed interest rate, and an amortization schedule of 30 years. The Loans are expected to involve a prepayment penalty, which limits the Target’s ability to reduce any principal during its interest-only period.
Financing risk is inherent in the mortgage lending industry, and there can be no assurance that the lender will complete financing on the rates and terms including in the underwriting being presented in the model for this investment opportunity. Should the terms of the debt financing change materially and adversely, we currently plan to notify investors assuming it is practicable. If the debt financing on the subject properties does not occur as anticipated and the Target needs an extension on the purchase contract, the seller of the Property may not so extend and the transaction may be cancelled.
The Target may be unable to take advantage of more favorable financing terms. If the Target seeks alternative financing, there can be no assurance that the Target will be able to obtain such refinancing on a timely or favorable basis. The Loans being used to acquire the Property is interest-only for the first three years, which means that there will be no reduction in the principal balance during that period.
Texas State Risks
Texas is subject to frequent and sometimes debilitating tornadoes, floods, wild fires, coastal hurricanes, and other environmental factors. More recently, hurricane Harvey caused destruction and massive flooding within the state of Texas. There can be no assurance that frequent hurricanes and flooding within the state, or any other environmental factor, will not cause significant difficulties and disruptions in the daily operation of the Target’s business, or that Real Estate Company and Target are properly insured for any such damage caused to the property or its business operations. As a result, the business and financial condition of the Target, and thus the Company and its investors, may be materially adversely affected.
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.