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Completed Equity
Multifamily
Desert Peaks Apartments
El Paso, TX
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
Add to Watchlist
100% funded
Offered By Berkshire Property Holdings
15.1%* TARGET IRR 14.1%-16.1%
9.8%* TARGET AVG CASH ON CASH
1.5x* TARGET EQUITY MULTIPLE
Estimated Hold Period 3 Years
Estimated First Distribution 6/2019
*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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Explore this Project
Overview
Value-add acquisition of a well maintained multifamily property with further upside potential.
Value-Add

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.

Cash Flow

After the Property is stabilized, double-digit cash-on-cash is expected.

Basis

The Property is being acquired at a favorable basis compared to recent transactions in the market, on a per unit and cap rate basis.

Property At A Glance
Year Built 1966/1973
# of Units 159
# of Buildings 14
Current Occupancy 87%
Acquisition Price

$6,250,000

Investment Highlights
Attractive Basis: The Real Estate Company is purchasing the Property for $39,308 per unit, which is nearly $20,000 per unit below nearby sale comps and $400,000 below the lender's appraisal
Value-add Upside Potential: In-place rents are far below market, and there is even further upside potential through renovations
Stable Market: Per Axiometrics, both rent growth and occupancy have remained and are anticipated to remain stable, which provides comfort for future assumptions
Management
Cumulative Distributions

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/
  • Zamir Kazi
    CEO / Co-Founder
  • Hamza Kuraishi
    Managing Principal / Co-Founder
Zamir Kazi
CEO / Co-Founder

Zamir is the CEO and co-founder of Berkshire Property Holdings. He is responsible for the overall operations and management of Berkshire Property Holdings, as well as overseeing the origination, structuring and asset management of all of Berkshire’s investment activities. Zamir has overseen over 36 successful real estate transactions for Berkshire Property Holdings.

Zamir attended FSU and graduated magna cum laude with a Bachelor’s degree in Pre-Med with Business. Post university, Zamir started and sold several successful business and has been frequently published in Forbes Magazine, Entrepreneur, Inc and The Huffington Post. A true entrepreneur, Zamir’s vision, verve and drive are integral assets to Berkshire Property Holdings success.

Hamza Kuraishi
Managing Principal / Co-Founder

Hamza is the Managing Principal and co-founder of Berkshire Property Holdings. While intimately involved in all aspects of the company, Hamza’s main focus at Berkshire Property Holdings is in raising capital and managing investor relations.

Prior to founding Berkshire Property Holdings, Hamza was a partner at a London stock brokerage company for 10 years. Hamza has a background in Military Engineering and holds an honour’s Bachelor’s Degree in Geography and Urban Planning from the University of London. A graduate of the Royal Military Academy Sandhurst, Hamza’s man management skills are integral to all repositioning success at the properties.

Track Record

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

Business Plan

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:

Desert Peaks Apartments - Capital Expenditures 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
Property
Property Details

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. 

In-Place Unit Mix
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

 

Comparables

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

Location

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

Demographics
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.

Photos
Financials
Sources & Uses

Total Capitalization
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
Debt Assumptions

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.

Distributions

The Target will make distributions to investors (The Company and Real Estate Company, collectively, the "Members") as follows:  

Operating Income, Refinance, and Sales Proceeds

  1. To the Members, pari passu, all excess operating cash flows to an 8.0% IRR to the Members;
  2. 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; 
  3. 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. 

Cash Flow Summary
  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
RealtyMogul 114, LLC Cash Flows
  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
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 $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.
Recurring Fees
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.

Documents
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.


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.


Texas Flood Risk

The Property is located in El Paso, Texas, an area which is subject to occasional and sometimes destructive flooding emanating from various weather systems, and may be located in a special flood hazard zone. There can be no assurance that a flood will not cause significant damage to the Property, in which case the business and financial condition of the Target, and thus the Company, would be materially adversely affected.


Escrow Contingency

All funds from investors will be held in a non-interest bearing escrow account with Broker-Dealer as escrow agent for the benefit of the investors in accordance with Rule 15c2-4 under the Exchange Act. All investor funds will be transmitted directly by wire or electronic funds transfer via ACH to the escrow account maintained by the escrow agent per the instructions in the Subscription Agreement. Upon certification by Broker-Dealer and acceptance by the Company that all contingencies have been met, the investor’s funds will be promptly transmitted to the Company. If the contingencies fail to be satisfied during the offering period, we will instruct the Broker-Dealer to return all funds to the investors without interest, deduction, or setoff, and all of the obligations of the investor hereunder shall terminate.


Interest-Only Loan Period

The loan being used to acquire the Property is expected to have an interest-only period during the first 3 years of the loan term, which means that there will be no reduction in the principal balance during that interest-only period.


Apartment Complex - Competition

Competition in the Property’s local market area is significant and may affect the Property’s occupancy levels, rental rates and operating expenses. The Property will compete with other residential alternatives to attract tenants, including but not limited to other apartment units that are currently available for rent, new apartments that are built and condominiums/houses that are for rent or sale. If development of apartment complexes by other operators were to increase, due to increases in availability of funds for investment or other reasons, then competition with the Property could intensify. If the Property is not able to successfully compete with the competitive residential alternatives in the local or regional area this could adversely affect the ability of Target to sell the Property, rent its units as necessary to maintain occupancy, and/or to increase or maintain unit rental rates.


Renovation Risks

As of December 2018, the Property had a 90% occupancy level, and the Target intends to implement a capital improvement plan involving the interior and exterior renovation of the Property, and a leasing program in its effort to add value to the Property. The Target intends to renovate all or some of the units within the Property and increase the current rental rates of such renovated units. There can be no assurance that, (i) the renovations will be consummated on a timely basis, (ii) the renovations will be completed satisfactorily, (iii) such work will not materially adversely affect other aspects of the operation of the Property, and (iv) the planned rental rate increase will have favorable results to meet the goals the Target projected. Any delays or negative results of the renovation work or rental increase efforts could adversely affect the Property’s financial results or occupancy levels, including its business operations and thus the value of the Company’s investment.


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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