The team at our affiliated broker-dealer, RM Securities, conducts diligence on of the issuer, including detailed background checks, criminal checks, bad actor checks, and reference checks on sponsors. In addition to screening for any criminal background, we may also turn down sponsors due to poor reference checks, even if the background and criminal checks are satisfactory.
We require unaffiliated sponsors to use an unaffiliated third-party escrow agent.* When an investor makes an investment with such 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 contingency 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.
Unless otherwise disclosed, escrow accounts are not required for some investments that accommodate 1031 investments where the property is already acquired.
Our processes typically includes visiting certain properties (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. For certain properties that accommodate 1031 exchange investments, the team will review third-party prepared due diligence reports in lieu of a site visit.
We have formalized processes and checklists for every private placement deal listed on the platform.
Sheehy-Patel Investment Group, LLC
The managing principal of the Sheehy-Patel Investment Group, Alan Sheehy, fell on tough times during the economic recession and there have been a number of liens, judgments, and foreclosures associated with Mr. Sheehy as a result - some of which remain unsatisfied. In inquiring about them, Mr. Sheehy shared that the liens, judgments, and foreclosures were the result of the economic downturn and being over-leveraged on a number of real properties. Since then, Mr. Sheehy has shared that he is more conservative in his use of leverage and has been slowing rebuilding his portfolio since the downturn. As a result of the liens, judgments, and foreclosures, the loan-to-value for this portfolio, approximately 70% of current market value, is lower than the typical LTV that Realty Mogul provides loans for.
Alan Sheehy's credit was significantly impaired due to losses during the real estate downturn. Since then, he has built his real estate portfolio back up slowly using various sources of debt and equity capital, but due to his impaired credit, placing long term, permanent debt financing has been a challenge for him, hence a traditional bank is not lending on this portfolio.
At A Glance (Portfolio Metrics)
Property Type: | 7 Residential Properties |
Investment Type: | Loan Purchase* |
Estimated Return: | 9% annualized |
Loan Term: | 12 months |
Location: | St. Louis, MO |
Loan Amount: | $280,000 |
Est. Value: | $523,775 |
Est. LTV: | 53% |
Est. Protective Equity: | $243,775 |
Est. DSCR: | 2.15x |
Summary
Realty Mogul investors have the opportunity to invest in a loan. The loan is tied to payments from a pool of seven (7) underlying borrower loans that are tied to seven (7) residential properties located in St. Louis, Missouri. Each of the seven (7) loans are being made to one of three (3) legal entities managed by Alan Sheehy, the principal of Sheehy-Patel Investment Group. The funds will be used to refinance the seven (7) residential properties. The properties consist of six (6) single family homes and one 3-unit townhome. Sheehy-Patel Investment Group plans to use the loan proceeds to pay off the existing debt on each of the properties.
All seven (7) properties are currently fully occupied, and the combined monthly rent is $8,030. All of the current tenants are on annual leases. Sheehy-Patel Investment Group plans to continue leasing each property to its current tenant or tenants.
A summary of the loan portfolio is included as an attachment above.
Investors will receive interest payments of 9%, with a final, balloon payment when the loans are repaid in full. The underlying security interest for each loan is a deed of trust secured by the property in first position.*
Borrower Risk Factors
The managing principal of the Sheehy-Patel Investment Group, Alan Sheehy, fell on tough times during the economic recession and there have been a number of liens, judgments, and foreclosures associated with Mr. Sheehy as a result - some of which remain unsatisfied. In inquiring about them, Mr. Sheehy shared that the liens, judgments, and foreclosures were the result of the economic downturn and being over-leveraged on a number of real properties. Since then, Mr. Sheehy has shared that he is more conservative in his use of leverage and has been slowing rebuilding his portfolio since the downturn. As a result of the liens, judgments, and foreclosures, the loan-to-value for this portfolio, approximately 53% of current market value, is lower than the typical LTV that Realty Mogul provides loans for.
Alan Sheehy's credit was significantly impaired due to losses during the real estate downturn. Since then, he has built his real estate portfolio back up slowly using various sources of debt and equity capital, but due to his impaired credit, placing long term, permanent debt financing has been a challenge for him, hence a traditional bank is not lending on this portfolio.
Risk Mitigation**
- The loan-to-value for this portfolio, approximately 53% of current market value, is lower than the typical LTV that Realty Mogul provides loans for.
- The properties are all currently fully leased, with a portfolio debt service coverage ratio of 2.15x.
- There is a personal guarantee on all of the underlying borrower loans.*
- The underlying security interest for each of the borrower loans is a deed of trust.*
- The borrower loans are protected by title insurance.*
- Investor returns are not contingent on the appreciation of the property value and investor returns do not increase based on any resale price. The borrower is still obligated to repay the corresponding borrower loans.
- In a worst case scenario, a foreclosure of any of the properties is possible. Proceeds would be distributed to investors according to the percentage of the total investment opportunity initially funded net of any expenses incurred for the foreclosure proceedings.
*An investment in this pool of loans will be made through a borrower dependent payment note issued by Realty Mogul. These promissory notes are dependent on payments that Realty Mogul receives on the underlying borrower loans. While the borrower loans are secured by legal title on real estate, the borrower dependent payment note is not itself secured nor does it have a personal guarantee.
**The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Investor Document Package for a discussion of additional risks.
Address | Square Feet | Year Built | Annual Rent | Loan Amount |
---|---|---|---|---|
565 Versailles Drive | 1,064 | 1959 | $11,820 | $35,000 |
1725 Crystal Court | 1,248 | 1947 | $10,500 | $30,000 |
1921 McLaran Avenue | 1,762 | 1890 | $11,400 | $20,000 |
9531 Margo Ann Lane | 1,088 | 1956 | $9,000 | $25,000 |
412 South Clark Avenue | 1,187 | 1910 | $10,500 | $30,000 |
10623 Landseer Drive | 1,015 | 1959 | $11,940 | $30,000 |
2640 Russell Boulevard | 3,125 | 1894 | $31,200 | $110,000 |
For additional information on each property information, please refer to the property PDFs attached below on the right hand side of this page.
St. Louis is one of the major cities in Missouri with a population that exceeds 300,000. It is also a major United States port on the eastern line of the state. The city seceded from St. Louis County in 1877, allowing it to become an independent city and limiting its political boundaries. The economy of St. Louis relies on service, manufacturing, trade, transportation of goods, and tourism. The city is home to several Fortune 500 corporations, including Express Scripts, Emerson Electric, Monsanto, Reinsurance Group of America, Centene, Peabody Energy, Ameren, Graybar Electric, and Edward Jones Investments.
St. Louis is home to three professional sports teams: the St. Louis Cardinals, one of the most successful Major League Baseball clubs; the hockey St. Louis Blues, and the football St. Louis Rams. The city is commonly identified with the Gateway Arch, part of the Jefferson National Expansion Memorial in downtown St. Louis. The rivers of St. Louis continue to play a large role in moving goods, especially bulk commodities such as grain, coal, salt, and certain chemicals and petroleum products.
The St. Louis area's major airport, Lambert-St. Louis International Airport, has 85 gates and serves 20 airlines. Lambert is 15 miles northwest of downtown St. Louis and has on-site access to the MetroLink light rail system. In addition, MidAmerica St. Louis Airport in St. Clair County, Illinois, is approximately 24 miles east of downtown St. Louis and serves as a reliever for Lambert. MidAmerica is a joint civilian-military use airport that focuses primarily on international cargo service.
RM Securities, LLC, its registered representatives, affiliates, associated persons, and personnel of its affiliates who may also be associated with it, including our associated persons and personnel of our affiliates who are also be associated with RM Securities, LLC (it (“RM Securities,” “we,” “our,” or “us”) will receive fees, expense reimbursements, and other compensation (“Fees”) from the issuer of this investment offering, its sponsor, or an affiliate thereof (“Sponsor”), or otherwise in connection with Sponsor’s offering. The Fees paid to us are in addition to other fees you will pay to Sponsor or in connection with Sponsor’s investment offering. You will pay Fees to Sponsor, either directly or indirectly as an investor in the Sponsor’s offering. Sponsor will use the Fees you pay, as well as funds you invest in the relevant offering, to compensate us. The Fees paid to us will directly or indirectly be borne by you as the investor (typically, but not always, in the form of an expense of the Sponsor’s offering in which you invest) because such Fees will reduce the proceeds available for distribution to you and reduce the amount you earn over time.
For more information on the Fees paid to us, or any other Fees you will pay in connection with Sponsor’s offering, please carefully review the Sponsor’s Investment Documents. Please also carefully review RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.
No Approval, Opinion or Representation, or Warranty by RM Securities, LLCSponsor has provided, approved, and is solely responsible in all aspects for the information on this webpage (“Page”), including Sponsor’s offering documentation, which may include without limitation the Private Placement Memorandum, Operating or Limited Partnership Agreement, Subscription Agreement, the Project Summary and all exhibits and other documents attached thereto or referenced therein (collectively, the “Investment Documents”). The Investment Documents linked on this page have been prepared and posted by Sponsor, and not by RM Securities. We did not assist in preparing, do not adopt or endorse, and we are not otherwise responsible for, the Sponsor’s Investment Documents. We make no representations or warranties as to the accuracy of information on this Page or in the Sponsor’s Investment Documents and we accept no liability therefor. No part of the information on this Page or in the Sponsor’s Investment Documents is intended to be binding on us.
Sponsor’s Information Qualified by Investment DocumentsThe information on this Page is qualified in its entirety by reference to the more complete information about the offering contained in the Sponsor’s Investment Documents. The information on this Page is not complete and subject to change at the Sponsor’s discretion at any time up to the closing date. The Sponsor’s Investment Documents and supplements thereto contain important information about the Sponsor’s offering including relevant investment objectives, the business plan, risks, charges, expenses, and other information, which you should consider carefully before investing. The information on this Page should not be used as a basis for an investor’s decision to invest.
Risk of InvestmentThis investment is speculative, highly illiquid, and involves substantial risk. There can be no assurances that all or any of Sponsor’s assumptions, expectations, estimates, goals, hypothetical illustrations, or other aspects of Sponsor’s business plans (“Assumptions”) will be true or that actual performance will bear any relation to Sponsor’s Assumptions, and no guarantee or representation is made that Sponsor’s Assumptions will be achieved. If Sponsor does not achieve its Assumptions, your investment could be materially and adversely affected. A loss of part or all of the principal value of your investment may occur. You should not invest unless you can readily bear the consequences of such loss. Sponsor’s Assumptions should not be relied upon as the primary basis for your decision to invest.
No Reliance on Forward-Looking Statements; Sponsor AssumptionsSponsor is solely responsible for statements made concerning forward-looking statements and Assumptions, which apply only as of the date made, are preliminary and subject to change, and are expressly qualified in their entirety by the disclosures and cautionary statements included in Sponsor’s Investment Documents, which you should carefully review. Neither RM Securities nor Sponsor are obligated to update or revise such forward-looking statements or Assumptions to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Sponsor’s forward-looking statements and Assumptions are hypothetical, not based on actual investment achievements or events, and are presented solely for purposes of providing insight into the Sponsor’s investment objectives, detailing Sponsor’s anticipated risk and reward characteristics, and establishing a benchmark for future evaluation of actual results; therefore, they are not a predictor, projection, or guarantee of future results. You should not rely on Sponsor’s forward-looking statements as a basis to invest.
Importantly, we do not adopt, endorse, or provide any assurance of returns or as to the accuracy or reasonableness of Sponsor’s Assumptions or forward-looking statements.
No Reliance on Past PerformanceAny description of past performance is not a reliable indicator of future performance and should not be relied upon as the primary basis to invest.
Sponsor’s Use of DebtA substantial portion of the total cost of the real estate asset acquired by the Sponsor with investor funds (“Property”) will be paid with borrowed funds, i.e., debt. Sponsor’s estimated rates and terms of the debt financing are subject to lender approval, and there is no assurance that the Sponsor will secure debt at the rates and terms presented on this Page or in the Sponsor’s Investment Documents, or at all. The use of borrowed money to acquire real estate is referred to as leveraging, which can amplify losses and could result in lender foreclosure. In addition, if the debt includes a variable (or “floating”) interest rate, the total amount of interest paid over the term of the debt will fluctuate and can increase. As a result, Sponsor’s use of debt can result in a loss of some or all of your investment.
Sponsor’s Offering is Not RegisteredSponsor’s securities offering will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemptions from registration pursuant to Rule 506(c) of Regulation D as promulgated under the Securities Act (“Private Placement”). In addition, the offering will not be registered under any state securities laws in reliance on exemptions from state registration. Such securities (your ownership interests) are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable state and federal securities laws pursuant to registration or an available exemption. All Private Placements on the Platform are intended solely for “Accredited Investors,” as that term is defined in Rule 501(a) under the Securities Act.
No Investment AdviceNothing on this Page should be regarded as investment advice (either with respect to a particular security or regarding an overall investment strategy), a recommendation, an offer to sell, or a solicitation of or an offer to buy any security. Advice from a securities professional is strongly advised to understand and assess the risks associated with real estate or private placement investments. For additional information on RM Securities’ involvement in this offering, please carefully review the Sponsor’s Investment Documents, and RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.
1031 Exchange RiskInternal Revenue Code Section 1031 (“Section 1031”) contains complex tax concepts and certain tax consequences may vary depending on the individual circumstances of each investor. RM Securities and its affiliates make no representation or warranty of any kind with respect to the tax consequences of your investment or that the IRS will not challenge any such treatment. You should consult with and rely on your own tax advisor about the tax aspects with respect to your particular circumstances.