Staff Menu (IO ID#: 486045):
EDIT IO DOCUMENTS
Funded
Multifamily
Villas del Mar
Fort Worth, TX
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
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100% funded
Offered By Comunidad Realty Partners
15.2%* TARGET IRR 14.2%-16.2%
10.6%* TARGET AVG CASH ON CASH
* TARGET EQUITY MULTIPLE
Estimated Hold Period 5 years
Estimated First Distribution 9/2018
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Overview
Value-add acquisition of a well located multifamily property by an experienced, repeat Real Estate Company.
Property At A Glance
Year Built 1968
# of Units 263
# of Buildings 35
Current Occupancy 94%
Parking Ratio 1.66 / Unit
Acquisition Price

$14,530,750

Amenities

Leasing office with full public kitchen, swimming pool, clubhouse, children's play area, a public mail  center, public laundry center and 24 hour emergency on-site maintenance.

Investment Highlights
Experienced Real Estate Company that owns and manages over $285 million in multifamily assets across 4,800 units and has transacted with RealtyMogul on six previous transactions.
Strong initial cash flow with achievable value-add upside through renovations: The Real Estate Company intends to increase the average rent at the Property by approximately $30 per unit upon completion of the capital improvement plan. The Real Estate Company's estimated post-renovation rents of $908 per unit is less than the Property appraisal's estimated current market rent figure of $919 per unit.
Stable market fundamentals: According to CoStar, Southwest Fort Worth anticipates population growth through 2022 of 10.6%, 9.5% and 8.9% within one, three and five miles of the Property.
Opportunity for Cost Efficiencies: The budgeted installation of low-flow water fixtures, LED exterior lighting, and zero-scape landscaping throughout the Property is expected to lower total utility expenditures by over 20%.
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 investors are to invest in Realty Mogul 109, LLC ("The Company"), which is to subsequently invest in Villas Del Mar Partners 29, LLC ("The Target"), a limited liability company that will hold title to the Property. Comunidad Realty Partners (the "Real Estate Company") is under contract to purchase the Property for approximately $14.5 million ($55,250 per unit) and the total project cost is expected to be approximately $16.2 million ($61,468 per unit).

The Real Estate Company’s business plan is to implement a value-add strategy by completing interior and exterior renovations at the Property, while also installing low-flow water fixtures throughout the Property to lower utility expenses and beginning to bill back a portion of utility expenses to tenants of the Property. Unit interior upgrades are expected to include a combination of black-on-black appliances, faux-wood flooring, and new light fixtures.  A summary of all capital expenditures planned by the Real Estate Company for the Property may be found in the table below.

Villas de Mar - Capital Expenditures Budget
CapEx Item $ Amount Per Unit
Interior Rehab ($3,200 each for 113 units) $361,600 $1,375
Utility Water Reduction Program $147,200 $560
Parking Lot Seal Coat and Striping $25,000 $95
Leasing Clubhouse Upgrades $25,000 $95
Signage $25,000 $95
Solar Screen Installations $20,000 $76
Immediate Repair Items $17,188 $65
Security Upgrades $15,000 $57
Carpentry and Exterior Paint $10,000 $38
Grill and Bench Installation $10,000 $38
Upgrading Existing Playground $10,000 $38
Exterior LED Light Installation $9,000 $34
Tree Trimming $7,500 $29
Dog Park  $7,500 $29
Sewer Hydrojet Cleaning $1,650 $29
Contingency 10.0% $71,681 $273
Construction Management Fee 10.0% $71,681 $273
Total $860,000 $3,270

The seller of the Property has already completed interior renovations on 150 of the 263 units at the Property.  The Real Estate Company plans to renovate the remaining 113 currently unrenovated units, achieving an average post renovated net effective rent of $908 per unit, and to sell the Property in five (5) years at a 7.00% cap rate.  The pro forma financials included in the Issuer Document Package attached to the Financials tab of this offering anticipate a net yield to investors in the Company of 6.6% in Year One of the hold period, increasing to 12.3% in Year Two.

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.

Property
Property Details

Built in 1968, the Property consists of one, two and three-bedroom floor plans combining to 263 units, 35 buildings, 437 parking spaces (1.66 per unit), and 274,213 square feet.  As of December 2017, the Property was 94% occupied. The weighted average unit size and in-place net effective rent per unit is 1,043 square feet and $876 ($0.84 per square foot), respectively (per the December 2017 rent roll). Amenities across the Properties include a swimming pool, clubhouse, children's play area, a public mail center, a public laundry center, 24 hour emergency on-site maintenance, and a leasing center with full public kitchen. 

 

In-Place Unit Mix
Unit Type # of Units % of Total Unit (Square Feet) Total Square Feet Rent Per Unit Rent Per Square Foot
1 Bedroom 44 17% 860 37,840 $785 $0.91
2 Bedroom 162 61% 1,011 163,854 $846 $0.84
3 Bedroom 57 22% 1,272 72,519 $1,031 $0.81
Totals/Averages 263 100% 1,043 274,213 $876 $0.84
Comparables

Sale Comparables
  Tradewind I & II Sonoma Apartments French Colony Hampton Terrace Falls and Oak Village Averages Subject
Date February 2017 August 2017 August 2016 December 2016 January 2017   February 2018
# of Units 308 60 94 244 408 223 263
Year Built 1967 1964 1963 1969 1977 1973 1968
Purchase Price $16,700,000 $3,510,000 $5,100,000 $14,150,000 $26,000,000 $13,092,000 $14,530,000
$/Unit $54,221 $58,500 $54,255 $57,992 $63,725 $57,739 $55,250
Cap Rate 6.69% 6.50% 6.45% 5.40% 5.40% 6.09% 5.83%
Lease Comparables
  El Ranchito West Bella Terra Westlake Gardens El Jardin Apartments Parkside Apartment Homes Chilsolm Trail Townhomes Averages Subject (Post-Renovation)
# of Units 68 200 180 93 170 168 147 263
Year Built 1968 1970 1984 1965 1973 1982 1974 1968
Occupancy 92% 93% 95% 95% 89% 97% 94% 94%
Average SF 1,046 921 740 1,098 819 1,068 949 1,043
Average Rental Rate $906 $824 $834 $1,104 $881 $878 $905 $908
Average $/SF $0.87 $0.89 $1.13 $1.01 $1.08 $0.82 $0.97 $0.87
Distance (miles from subject) 0.1 0.7 0.7 1.9 1.9 0.4 1.0  

Lease and Sale Comparable information provided by Property appraisal.

Location

Located off of Las Vegas Trail, the Property offers easy access to I-30, Loop 820, TX State Highway 183, US Highway 377, and Chilsom Trail Parkway. and TX-151. It is in close proximity to several shopping, dining and entertainment options including Westover Marketplace, Ingram Park Mall, and Walmart Supercenter (less than one mile away). 

Per CoStar, from an employment standpoint, Southwest Fort Worth's healthcare and government/defense jobs are key drivers of demand. The Southwest Fort Worth Submarket has dozens of healthcare facilities, including six hospitals, which employ more than 2,500 people. And the majority of Southwest Fort Worth's apartments are close to these hospitals. The submarket is also home to many defense sector employers, like Lockheed Martin, which recently won a nearly $1 billion contract for its Fort Worth facility and will add 1,800 jobs there. Such companies employ more than 3,000 people and occupy almost three million square feet in this submarket. The elephant in the room in terms of employment, though, is the proximity of Southwest Fort Worth to employment in Downtown Fort Worth and the economic headwinds associated with sustained low energy prices. However, while Fort Worth has not seen the type of exceptional job and population growth that the Dallas side of the metroplex has, it's still adding jobs at a faster clip than the national average. In a notable recent deal, WeWork announced it will take 44,000 SF at the Offices at Clearfork in 2018. That space will have enough room to accommodate more than 800 workers.

Per CoStar, Texas Christian University (TCU) also provides consistent apartment demand for the submarket. It is a strong demand driver in Southwest Fort Worth because of all the TCU students and graduates who work in Fort Worth. Its proximity to downtown Fort Worth gives it an appealing live/work/play environment. The school enrolls over 10,000 students, which creates a strong demand for apartments in the area, whether from students moving off campus or those who want to remain in the area and work in downtown Fort Worth after graduation.

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Market Overview 

Per Axiometrics, annual effective rental growth rate in the Fort Worth-Arlington market was 4.4% in 2017. Annual effective rent growth is forecast to be 3.2% in 2018, and average 2.8% from 2019 to 2021. Annual effective rent growth has averaged 4.9% since the beginning of 2011. The market's annual rent growth rate was above the national average of 2.3%. Out of the 120 markets ranked by Axiometrics nationally, Fort Worth-Arlington, TX Metro Division was 50th for quarterly effective rent growth, and 29th for annual effective rent growth for 4Q17. The market's occupancy rate decreased from 95.3% in 3Q17 to 94.6% in 4Q17, and was down from 95.5% a year ago. The market's occupancy rate was below the national average of 94.7% in 4Q17. For the forecast period, the market's occupancy rate is expected to be 94.8% in 2018, and average 94.8% from 2019 to 2021. The market's occupancy rate has averaged 94.2% since the beginning of 2011.

Submarket Overview

Per Axiometrics, annual effective rental growth rate in the Southwest submarket of the Fort Worth-Arlington market was 3.5% in 2017. Annual effective rent growth is forecast to be 3.0% in 2018, and average 2.6% from 2019 to 2021. Annual effective rent growth has averaged 4.3% since the beginning of 2011. The submarket's annual rent growth rate was above the national average of 2.3%. Out of the 12 submarkets of the Fort Worth-Arlington market ranked by Axiometrics, the Southwest submarket ranked eighth of 12 for projected effective rent growth for the period 2018 to 2021. Occupancy in the submarket average 95.1% in 2017, equivalent to its average in 2016.  For the period from 20181 to 2021 the submarket's projected occupancy averages 95.0%. The submarket's occupancy rate has averaged 94.2% since the beginning of 2011.

Demographic Information

Demographics

Distance from Property 1 mile 3 miles 5 miles
Population (2017) 19,768 81,282 151,049
Population (2022) 21,476 87,809 163,155
Average Age 34 36 38
Median Household Income $40,267 $67,379 $77,652
Median Household Income $40,267 $67,379 $77,652
Average Household Size 2.3 2.5 2.3
Median Home Value $94,745 $130,037 $154,719
Population Growth 2017-2022 10.6% 9.5% 8.9%

Demographic information above was obtained from CoStar.

Photos
Financials
Sources & Uses

Total Capitalization
Sources of Funds Cost
Debt $12,658,000
Equity $3,756,102
Total Sources of Funds $16,414,102
Uses of Funds Cost
Purchase Price $14,530,750
CapEx Reserve $860,000
Real Estate Company Acquisition Fee $217,960
MogulREIT II Acquisition Fee $48,750
North Capital Broker Dealer Fee $90,675
Lender Origination Fee $46,500
Buyer's Broker Fee $101,717
Working Capital $50,000
Escrows $95,000
Closing Costs $74,750
Cash Flow Reserve $298,000
Total Uses of Funds $16,414,102
Debt Assumptions

The expected terms of the debt financing are as follows:

  • Lender: Arbor Commercial Funding I, LLC (as DUS Lender for Fannie Mae)
  • Estimated Proceeds: $12,658,000
  • Estimated Rate (Fixed): 10 Year Treasury + 2.07% (4.93% all-in as of February 9, 2018)
  • Amortization: 30 years, with three years of interest-only
  • Term: 12 years
  • Prepayment Penalty: 11.5 years of yield maintenance
  • Assumption Fee: 1.0% of outstanding loan principal balance

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 investors).  Distributions are expected to start in September 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
  Year One Year Two Year Three Year Four Year Five
Effective Gross Revenue $2,493,314 $2,897,914 $2,992,545 $3,071,008 $3,143,439
Total Operating Expenses $1,611,838 $1,730,148 $1,775,415 $1,822,533 $1,870,701
Net Operating Income $881,476 $1,167,767 $1,217,130 $1,248,476 $1,272,739
Realty Mogul 109, LLC Cash Flows
  Year 0 2018 2019 2020 2021 2022 2023
Distributions to
Realty Mogul 109, LLC Investors
($1,875,000) $120,733 $222,811 $248,413 $189,322 $185,663 $2,505,006
Net Earnings to Investor
- Hypothetical $50,000 Investment
($50,000) $3,220 $5,942 $6,624 $5,049 $4,951 $66,800
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 $217,961 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 $90,675 North Capital (1) Capitalized Equity Contribution 4.875% based on the amount of equity invested by Realty Mogul 109, 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 1.5% of effective gross revenues Real Estate Company Operating Cash Flow  
Management and Administrative Fee 1.25% of amount invested in Realty Mogul 109, LLC RM Manager, LLC Distributable Cash  RM Manager, LLC is the Manager of Realty Mogul 109, 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 The Company’s manager, may also make an investment in the Target. The total investment made by MogulREIT II may be more, less, or equal to the total investment made by The Company. However, RM Adviser may have additional rights and privileges, including more control over the Target, pursuant to the Target's operating agreement.  This could give rise to a conflict of interest between The Company and Mogul REIT II, which may limit The Company's ability to have control over certain major decisions concerning the Target, and it may result in a material adverse effect on your investment.


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 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 the Target, and in such event the manager of the 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.


Interest-Only Loan Period

The Target is expected to obtain a senior loan (the “Loan”) to, in part, acquire the apartment community.  The Loan is anticipated to have an interest-only period during the first three years of the loan term, which means that there will be no reduction in the principal balance during that interest-only period.


Texas State Environmental 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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