Staff Menu (IO ID#: 433406):
EDIT IO DOCUMENTS
Funded
Multifamily
Plano Multifamily Portfolio
Multiple Locations
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
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100% funded
Offered By Comunidad Realty Partners
17.8%* TARGET IRR 16.8%-18.8%
10.6%* TARGET AVG CASH ON CASH
2.05* TARGET EQUITY MULTIPLE
Estimated Hold Period 5 years
Estimated First Distribution 6/2018
*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
Value-add acquisition of a well located multifamily property by an experienced, repeat Real Estate Company.
Property At A Glance
Year Built 1950-1971
# of Units 156
# of Buildings 17
Current Occupancy 100.0%
Parking Ratio 1.72/Unit
Acquisition Price

$10,500,000

Amenities

Laundry centers, BBQ grills, 24-hour maintenance, a covered pavilion and leasing center.

Investment Highlights
Experienced Repeat Real Estate Company: The Real Estate Company owns and manages over $270 million in multifamily assets overall, comprising approximately 4,600 units, and RealtyMogul.com has invested with Real Estate Company on four previous transactions
Attractive Basis: The Real Estate Company is purchasing two properties which collectively account for $67,308 per unit and compare favorably to comparable transactions in the market
Well Located: The Properties are situated in a major market with favorable fundamentals; in close proximity to retail amenities, public transportation and public facilities
Well Occupied: The Properties were 100% occupied as of October 2017
Management
Cumulative Distributions

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 Marquez
    Managing Partner
  • Santiago Rivera Torres
    Managing Director
J. Antonio Marquez
Managing Partner

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
Managing Director

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.

Track Record

Schedule of Real Estate Owned
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  

 

Full Cycle Transactions
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.

 

Business Plan

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.

Property
Property Details

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).

In-Place Unit Mix - Collin Park
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
In-Place Unit Mix - Oak Gate
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
In-Place Unit Mix - Consolidated
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
Comparables

Sale Comparables
  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% -
Lease Comparables
  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.

Location

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

Demographics
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.

Photos
Financials
Sources & Uses

Total Capitalization
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
Debt Assumptions

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.

Distributions

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

  1. To the Members, in proportion to, and to the extent of, their accrued but unpaid preferred returns (8.0%).
  2. To the Members, in proportion to, and to the extent of, their unreturned capital.
  3. 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. 
  4. 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. 

Cash Flow Summary
  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
Realty Mogul 100, LLC Cash Flows
  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
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 $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  
Recurring Fees
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.

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.


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.

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