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.
There is an opportunity to renovate the Property and increase rental income. $5,000 is budgeted per unit for interior renovations along with an additional $1.1 million for exterior improvements.
After the Property is stabilized, double-digit cash-on-cash is expected.
The Property is being acquired at a favorable basis compared to recent transactions in the market, on a per unit and cap rate basis.
Berkshire Property Holdings
Berkshire Property Holdings (the "Real Estate Company") was founded in 2013 by Hamza Kuraishi and Zamir Kazi and is headquartered in Miami, Florida. It is a real estate investment firm specializing in multifamily acquisitions and re-developments throughout the USA. It currently operates in California, Florida, Georgia and Texas. In a short space of time, Berkshire Property Holdings has established an excellent reputation for moving swiftly and decisively when identifying undervalued and under-performing assets in strategic locations. The company's strategy has been to operate in markets where it sees significant growth potential. The company believes that its success hinges on careful market selection, strong sourcing capabilities, comprehensive due diligence, detailed financial analysis, and methodical execution. Berkshire Property Holdings uses it’s veteran acquisition team’s market expertise to target assets in high growth submarkets and then create value through a combination of rebranding, renovating, and revitalizing property management. A disciplined investment approach to renovation and tenant improvement has led to repositioning opportunities in assets with significant value-add potential, while always maintaining a focus on downside risk limitation.
http://berkshirepropertyholdings.com/Real Estate Company Portfolio
Property | Location | Asset Type | Acq Date | Units | Purchase Price | Sale Price | ||
Las Lomas | Dallas, TX | Multifamily | 2019 | 221 | $18,000,000 | Not Sold | ||
Park at Peachtree Hills | Atlanta, GA | Multifamily | 2019 | 118 | $18,000,000 | Not Sold | ||
Camelot Gardens | Jacksonville, FL | Multifamily | 2019 | 691 | $40,000,000 | Not Sold | ||
Desert Peaks | El Paso, TX | Multifamily | 2018 | 175 | $6,250,000 | Not Sold | ||
Alexandria Landings | Atlanta, GA | Multifamily | 2018 | 472 | $19,700,000 | Not Sold | ||
Phillippi Shores | Sarasota, FL | Multifamily | 2018 | 28 | $2,005,000 | $3,600,000 | ||
Willow Bend | Orlando, FL | Multifamily | 2016 | 188 | $8,500,000 | $13,500,000 | ||
Pine View | Orlando, FL | Multifamily | 2016 | 91 | $2,600,000 | $4,000,000 | ||
Riviera Villas | Orlando, FL | Multifamily | 2015 | 40 | $1,250,000 | $2,200,000 | ||
Park Sands | Tampa, FL | Multifamily | 2015 | 28 | $1,400,000 | $1,650,000 | ||
Florida Portfolio | Various, FL | Multifamily | 2015 | 150 | $3,750,000 | $5,000,000 | ||
Orlando Portfolio | Orlando, FL | Multifamily | 2015 | 150 | $3,750,000 | $5,000,000 | ||
Total | 2,352 | $125,205,000 | $34,950,000 |
The above bios and track record were provided by the Real Estate Company and have not been independently verified by RealtyMogul
In this transaction, RealtyMogul investors are to invest in RealtyMogul 114, LLC ("The Company"), which is to subsequently invest in Desert Peaks JV, LLC ("The Target"), a limited liability company that will indirectly own interest in the Property. Berkshire Property Holdings (the "Real Estate Company") is under contract to purchase the Property for $6.25 million ($39,308 per unit) and the total project cost is expected to be $9.0 million ($56,808 per unit).
The Real Estate Company plans to implement a value-add strategy, in which it will capitalize $2.1 million ($13,069 per unit) to renovate the Property in the first 24 months. $795,000 ($5,000 per unit) has been budgeted for interior unit upgrades which include painting, new cabinets, light fixtures and black appliances, and vinyl plank flooring. Additionally, $1.1 million has been budgeted for deferred maintenance and exterior improvements including the installation of new A/C units, resurfacing of asphalt, stair renovations, new exterior signage, addition of a playground set, highend grill, and pool upgrades. Upon stabilization, the Sponsor expects to achieve net effective rents of $775 per unit, which represents a 30% premium over in-place rents but a 3% discount to the Northwest El Paso submarket average rent, according to Axiometrics. The business plan calls for a 3 year hold, at which point the Property is expected to be sold at a 7.25% cap rate.
Below is a summary of the capital improvements budget:
CapEx Item | $ Amount | Per Unit |
---|---|---|
Interior Unit Renovations | $795,000 | $5,000 |
159 new A/C Units | $647,800 | $4,074 |
Brick enclosure redesign | $7,500 | $47 |
Exterior building paint | $98,000 | $616 |
Asphalt resurface | $65,000 | $409 |
Exterior stair renovation | $23,850 | $150 |
Monument sign | $11,750 | $74 |
New roofs | $195,000 | $1,226 |
Playground set | $5,200 | $33 |
Highend grill | $2,300 | $14 |
Pool furniture | $8,000 | $50 |
Gutters | $8,000 | $50 |
Fencing replacement | $5,500 | $35 |
Pool upgrade | $12,000 | $75 |
Window screens | $4,200 | $26 |
Contingency 10.0% | $188,910 | $1,188 |
Total | $2,078,010 | $13,069 |
Built in two phases in 1966 and 1973, the Property consists of 14 buildings, which house 55 one-bedroom, 91 two-bedroom, and 13 three-bedroom units. Amenities include a fitness center, business center, clubhouse, pet park, laundry facilities, two pools, balconies/patios, fireplaces, and washer/dryer hookups. Although the Property has been well-maintained, the majority of unit interiors have not undergone significant renovation. Within walking distance are Starbucks, McDonald's, Planet Fitness, and Walgreens. Within three miles are a Whole Foods, Walmart Supercenter, Home Depot, Sprouts, several shopping centers and restaurants.
Unit Type | # of Units | % of Total | Unit (Square Feet) | In-Place Rent Per Unit | Post-Reno Rent Per Unit |
---|---|---|---|---|---|
1/1 Small | 20 | 13% | 698 | $521 | $674 |
1/1 Large | 35 | 22% | 743 | $552 | $706 |
2/1 Small | 54 | 34% | 840 | $605 | $786 |
2/1 Large | 17 | 11% | 858 | $621 | $802 |
2/1.5 Townhouse | 20 | 13% | 942 | $613 | $813 |
3/2 Small | 12 | 8% | 1,240 | $727 | $980 |
3/2 Large | 1 | 1% | 1,680 | $750 | $1,005 |
Totals/Averages | 159 | 100% | 851 | $596 | $775 |
Sale Comparables
Ryan's Crossing | West Town | El Pavon | Mesa Village | Total/Averages | Subject | |
Date | Sep '17 | Jun '17 | Feb '17 | Nov '16 | Dec '18 | |
Year Built | 1986 | 1973 | 1993 | 1973 | 1966/1973 | |
CoStar Class | C | B | B | C | B | |
# of Units | 248 | 192 | 116 | 160 | 179 | 159 |
Purchase Price | $16,000,000 | $13,300,000 | $5,100,000 | $9,300,000 | $10,925,000 | $6,250,000 |
$/Unit | $64,516 | $69,271 | $43,966 | $58,125 | $58,969 | $39,308 |
Cap Rate | 6.22% | 6.48% | 6.50% | 6.50% | 6.43% | 8.20% |
Distance from Subject | 0.9 miles | 1.4 miles | 3.4 miles | 2.3 miles | 2.0 miles |
Lease Comparables
Caprock Apartments | Coronado Trails | Indian Springs | WestTown Apartments | Total/Averages | Subject | |
Number of Units | 296 | 60 | 232 | 192 | 195 | 159 |
Year Built | 1978 | 1974 | 1982 | 1973 | 1977 | 1966/1973 |
Average SF | 819 | 958 | 835 | 1,085 | 924 | 851 |
Average Rental Rate | $783 | $747 | $775 | $839 | $786 | $775 |
Average Rent per SF | $0.96 | $0.78 | $0.93 | $0.77 | $0.85 | $0.91 |
Distance from Subject | 0.4 miles | 1.4 miles | 2.0 miles | 1.3 miles | 1.3 miles |
Sale and lease comps were obtained from CoStar and Axiometrics
Market Overview
Per Axiometrics, the military provides a strong and stable economic anchor for the El Paso metro, with Fort Bliss and William Beaumont Army Medical Center being major contributors to the local economy. As such, the El Paso metro recorded year‐over‐year job growth during the past eight years. According to the Bureau of Labor Statistics, the metro posted a net gain of 7,800 jobs in the year‐ending October 2018, with those additions growing the existing employment base 2.2%. Annual job gains were most pronounced in the Education/Health Services sector. Employment gains over the past year took El Paso’s total job count some 39,200 positions or 13.9% above the first quarter 2008 level. El Paso’s unemployment rate hit 3.9% in October 2018.
According to CoStar, apartment development in El Paso has been in full swing this cycle, and the metro has expanded its inventory by about 15% since 2010. Consistent demand for apartments has helped mitigate supply‐driven pressure on fundamentals in recent years. Traditionally, rent growth is meager in El Paso, but gains have started to gain traction more recently. Texas's non‐disclosure status can cloud the investment scene, but inventory turnover rarely exceeds 5% here, and most trades typically involve local investors.
Demographic Information
Distance from Property | 1 mile | 3 miles | 5 miles |
---|---|---|---|
Population (2018) | 15,454 | 70,690 | 179,395 |
Population (2023) | 15,641 | 71,335 | 180,806 |
Average Age | 38 | 38 | 37 |
Median Household Income | $53,676 | $55,447 | $48,022 |
Average Household Size | 2.4 | 2.5 | 2.8 |
Median Home Value | $177,165 | $196,987 | $167,661 |
Population Growth 2018-2023 | 1.2% | 0.9% | 0.8% |
Demographic information above was obtained from CoStar.
Sources of Funds | Cost |
---|---|
Debt | $6,212,500 |
Equity | $2,820,000 |
Total Sources of Funds | $9,032,500 |
Uses of Funds | Cost |
Purchase Price | $6,250,000 |
CapEx Reserve | $2,078,010 |
Loan Fee | $77,656 |
Real Estate Company Acquisition Fee | $93,750 |
North Capital Broker Dealer Fee | $99,000 |
Closing Costs | $244,084 |
Working Capital | $40,000 |
Cash Flow Reserve | $150,000 |
Total Uses of Funds | $9,032,500 |
The expected terms of the debt financing are as follows:
- Lender: Ameritas Investment Partners, Inc.
- Estimated Proceeds: $6,212,500
- Estimated Rate (Fixed): 6.2%
- Amortization: None
- Term: 3 years
- Interest Only: 3 years
- Prepayment Penalty: None, but there is 0.5% exit fee
- Extension Options: Two one-year extension options
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 and Real Estate Company, collectively, the "Members") as follows:
Operating Income, Refinance, and Sales Proceeds
- To the Members, pari passu, all excess operating cash flows to an 8.0% IRR to the Members;
- 70.0% / 30.0% (70.0% to Members / 30.0% to promote) of excess cash flows and appreciation to an 15.0% IRR to Members;
- 55.0% / 45.0% (55.0% to Members / 45.0% to promote) 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). The manager of The Company will receive a portion of the promote. Distributions are expected to start in June 2019 and are projected to continue on a quarterly basis thereafter. These distributions are at the discretion of the Real Estate Company, who may decide to delay distributions for any reason, including maintenance or capital reserves.
Year 1 | Year 2 | Year 3 | |
---|---|---|---|
Effective Gross Revenue | $1,286,714 | $1,480,929 | $1,545,473 |
Total Operating Expenses | $774,291 | $791,111 | $804,251 |
Net Operating Income | $512,422 | $689,818 | $741,222 |
Year 0 | 2019 | 2020 | 2021 | |
---|---|---|---|---|
Distributions to RealtyMogul 114, LLC Investors |
($2,500,000) | $238,640 | $225,525 | $3,236,350 |
Net Earnings to Investor - Hypothetical $50,000 Investment |
($50,000) | $4,773 | $4,511 | $64,727 |
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 | $93,750 | Real Estate Company | Capitalized Equity Contribution | 1.5% of the Property purchase price. |
Broker-Dealer Fee | $99,000 | North Capital (1) | Capitalized Equity Contribution | Greater of $50,000 and 4.0% of the equity raised by RealtyMogul 114, LLC. |
Type of Fee | Amount of Fee | Received By | Paid From | Notes |
---|---|---|---|---|
Management and Administrative Fee | 1.0% of amount invested in RealtyMogul 114, LLC | RM Manager, LLC | Distributable Cash | RM Manager, LLC is the Manager of RealtyMogul 114, LLC and a wholly-owned subsidiary of Realty Mogul, Co. (2) |
Asset Management Fee | 1.0% of Effective Gross Income | Real Estate Company | Distributable Cash | |
Property Management Fee | 3.0% of Effective Gross Income | FPI Management | Distributable Cash |
(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.
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.