Investment Summary

RealtyeVest has a stake in all real estate investments offered in our marketplace.

RealtyeVest has obtained exclusive rights to an investment opportunity for accredited investors, REV Towne Oaks, LLC . a Florida limited liability company (the “Company”). The manager of the company is RealtyeVest, LLC, a Florida limited liability company (the “Manager” and organizer of the company).

The Company has been formed for the purpose of providing investors the opportunity to invest an existing Multifamily Complex located at 3900 Old Bullard Rd Tyler, TX 75701 (the “Property”).

Towne Oaks East was acquired for $4,500,000 by a newly formed single purpose entity, 3900 Old Bullard Holdings, LLC, a Delaware limited liability company (the “SPE”). The $700,000 Equity Investment will pay-off a short-term bridge loan which was used to fund initial closing costs and the current cap-ex budget.

This offering is available with an annual 8.5% preferred return. Additionally, the sponsors are offering investors 70/30 waterfall participation in which 70% of the remaining cash flow will belong to the investors and 30% to the sponsors. Investors can expect to receive interest checks quarterly on the 8.5% preferred return.

Investment Type:
Preferred Equity
70/30 Waterfall Participation
after 8.5% preferred return

Term:
60 Months
No extensions are expected
 

Raise Amount: $700,000
 

8.5% Preferred Return
IRR: 22.1%

Deal Multiple:
2.1x

Business Plan

The Manager’s investment strategy is to reposition the Property through a capital renovations program in order to bring occupancy and rents to levels consistent with competitive properties. The Property has not taken advantage of market strength in recent years, and as a result rents are significantly below market averages. In addition, current ownership has not implemented management practices designed to increase occupancy and lower resident turnover. If successful, the Manager believes the Property can generate strong cash on cash returns during the hold period. By negotiating an off market transaction, the Manager believes the acquisition costs are below the true market value of the property, resulting in downside protection in the event future market conditions decline from current levels.

With the absence of new luxury apartments, there is a clear opportunity to achieve the attractive risk adjusted returns in the Tyler market. For Towne Oaks East, the investment strategy focuses on maximizing rent potential through the combination of: 1) renovating and raising rents to market rates, 2) implementing a capital improvement program in years 1 and 2 to enhance the marketability and overall appeal of the Property, and 3) bringing in professional property management services to reposition the tenant profile and increase tenant retention. We plan to bring the Property up to the Tyler rental market’s 96% average occupancy level as well as bringing rents up to market levels, which are approximately 10 - 15% higher than current rates at the Property. We plan to aggressively increase rents upon implementation of the planned capital improvements.

The Property’s location is exceptional in terms of its proximity to shopping, dining, amenities, industry and three colleges. The Manager believes its planned upgrades of unit interiors, along with exterior improvements to enhance curb appeal, coupled with professional property management, will greatly enhance the overall appeal against its competitors. Because competing properties are achieving rents of approximately $779 per month, or approximately $1.00/sf on average, we believe the projected rent increases for the Property are highly supportable

FOR FURTHER DETAILS PLEASE SEE OM IN DOCUMENTS SECTION

Exit Strategy

The Manager envisions a refinance at the end of year 3, followed by a possible sale of the property in year 5, depending on market conditions at that time. Proceeds from a refinance and eventual sale will be used to pay Company liabilities, return investor (Class A) capital contributions, make up arrearages in Investor Preferred Returns if any, and split the remaining profits 70% to investors and 30% to the Manager.

Why You Should Invest:

8.5% Pref, 22.1% IRR and 2.1x Multiple: The sponsors are offering a 8.5% preferred return or 70/30 waterfall cash distributions with 70% belonging to the investors whichever is greater. The deal is slated to have a IRR of 22.1% and a Deal Multiple of 2.1x.

Strong Demographic Trends: Tyler ranks as the fastest growing metro area in east Texas. The population of Tyler, TX grew by 15.8% from 2000–2010, and by another 12.5% from 2010–2016. The Median Household Income for the 75701 zip code in Tyler, TX is over $42,000. The Median household value in the 75701 zip code is $117,500.

Robust Property Improvement Plan: The Manager will address various deferred maintenance and cosmetic upgrades to the Property shortly after closing: These include balcony and wood fence replacement, soffit repair, landscaping, wrought iron fence replacement as well as general cleanup of the property in order to improve the property’s curb appeal. The Manager will consider signage updates as well as window and sliding glass door replacements. A more attractive exterior appearance of the property will attract higher quality tenants, facilitate leasing, justify higher rents and charges, shorten turnover time, and therefore increase income.

The Manager has budgeted the installation of interior upgrades including flooring, tub surrounds, bathroom sinks and fixtures, upgraded kitchen cabinets, lighting and hardware. As units become available and are renovated, rents will adjusted to market levels based on prevailing rents in the market. The underwriting assumes 100% of projected rent premiums will be collected by year three.

Outperformance: The Manager has taken a conservative approach and believes there are key areas where metrics in the Proforma may outperform projections.

Property Highlights:

• The property is located in a very desirable area of Tyler, TX, approximately 10 miles South of I-20, the major highway running East/West, approximately midway between Dallas, TX and Shreveport, LA. In addition to being located near a major shopping mall with over 60 storefronts to include Dillards, JC Penneys and Sears, the property is located near restaurants and amenities, and less than 4 miles from Tyler Junior College, 5 miles from University of Texas Tyler, and 6 miles from Texas College.
• The Property consists of 11, 2-story garden style apartments buildings (85,320 net rentable square feet) that are situated alongside Old Bullard Road. The Property was constructed in 1971. The Property contains 104 units in a mix of one- and two - bedroom configurations.
• Amenities include swimming pool, laundry facilities, clubhouse, and grassy and treed areas, and all units have either a balcony or porch areas. The units feature wood-look vinyl flooring in main living areas, carpet in bedrooms, standard appliances, solid countertops, mini-blinds, ceiling fans and incandescent lighting.

Risk Mitigants:

• The Sponsors have assumed an exit valuation of $6.5mm (or $62,867 per unit) based on an estimated exit cap rate of 8.10%, which we believe is a conservative estimate (see Sales Comparables).
• The Property has recently increased occupancy from approximately 85% at initial underwriting to 92%. This suggests the Property may reach stabilized occupancy sooner than expected (we used Year 3 in our pro forma), and could generate returns superior to those shown in in our underwriting.
• Based upon recent improvements in property operations and continued market strength, a cash-out refinance may generate superior/faster returns to the investor over the 5 year hold period.

Risk Disclosures:

The offering materials to be reviewed and considered by investors with respect to this offering include the information described in the website content relating to this offering (as amended and supplemented through and until the closing of the transaction) and the subscription agreement relating to such securities (see the "Documents" tab). We refer to all of this information collectively as the "Property Information Package". Investors should review the Property Information Package in its entirety before investing and should consult with appropriate legal, tax, and investment advisors. Please note that RealtyeVest is not serving as your fiduciary or advisor with respect to this opportunity.

Below are certain risks associated with this investment that should be carefully reviewed prior to any investment in this opportunity:

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. Similarly, the financial forecasts contained herein and in any other offering materials are based on numerous assumptions. Although these assumptions are believed to be reasonable, they are all subject to uncertainty. Non-Transferability of Notes: The transferability of the Company's Notes is restricted both by the subscription agreement for that entity and by U.S. federal and state securities laws. In general, investors will not be able to sell or transfer the Notes. There is also no public market for the Notes and none is expected to be available in the future. Moreover, although there is a defined redemption date for the preferred equity investment in the Fund, an extension option may be exercised and in any event, there can be no assurance that the investment will be liquidated at or promptly after such maturity date (as it may be extended). 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.

Real Estate Market Risk: Investments related to real estate are subject to market valuation risks that may be caused by changing economic and local market conditions such as local real estate market conditions, prevailing interest rates, the rate of unemployment, the level of consumer confidence, the value of the U.S. dollar, energy prices, changes in consumer spending, the number of personal bankruptcies, disruptions in the credit markets and other factors. Such conditions are beyond the control of the Company and of the Fund. Real estate markets are affected by many factors, such as general economic conditions, supply and demand for real estate investments, interest rates, the availability of financing, and other factors, all of which are beyond the control of both the Company and the Fund.

Borrower Credit Risk: The Company’s obligation to make payments on a Note will not be guaranteed for the length of the term corresponding to the borrower’s loan. The Company (and thus investors) will be relying on the borrower for the execution of its business plan in a way that enables the sponsor to repay the principal of the corresponding borrower loan. The borrower may not have a significant record of performance and may be unable to sell or refinance the underlying property in a way that enables the borrower to fulfill its obligations under the corresponding borrower loan. The borrower loan is being made with respect to a property that does not generally meet the financing criteria for conventional mortgages from institutional sources. Credit risk is inherent in the mortgage lending industry, and there can be no assurance that the creditworthiness of the borrower will be sufficient to assure the full repayment of the underlying borrower loan. The Company does not guarantee payment of the Notes or the corresponding borrower loan, and the Notes are not obligations of our borrower.