Venture on 12th Place

6 buildings. 30 units. Getting a makeover

Highlights
  • Added value. Renovation of existing 30-unit property.
  • Experienced developer. This team has completed multiple housing projects.
  • Quick turn-around. Quick conversion to ensure operating cash flow.
  • Three-year plan. Re-financing or sale planned in three years.
  • Flexible capital stack. Funds raised and ready to fill an equity gap if needed.
  • Return. Cash flow distributions of 6% return expected to begin 8 months after acquisition, after property has been renovated, stabilized and is cash flowing.
  • Additional return. Additional “true up” to bring returns up to 12% upon sale or refinance.  
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About the Project

The Company plans to purchase a 30-unit residential apartment building at 3432 N.12th Place, Phoenix, Arizona 85014 (the “Property”). The Property consists of six separate buildings with a shared courtyard and was built in 1971. The 30 units include 16 two-bedroom one-bathroom units, 2 one-bedroom one-bathroom units, 4 two-bedroom 1.5-bathroom units, and 8 two-bedroom one-bathroom townhome units averaging 807 square feet per unit.

Renovations are planned for the interior of each unit to include replacement of fixtures, hardware, flooring, updated painting, and appliances. On the exterior we plan to transform the look of the property by installing new doors, painting the exterior, and updating the landscaping.

The Company plans to engage Eastfield Contracting, a third-party contractor, to complete the renovations. The total renovation budget is expected to be $1,350,000. $185,000.00 is earmarked for both exterior and common area upgrades including painting, improvements to the front building facade, and landscaping. $1,165,000.00 is planned for improvements to the 30 units as outlined above. Eastfield Contracting has completed renovations for the last 6 projects purchased and improved by Neighborhood Ventures.

The Company also plans to engage Sundial Real Estate as property manager. Sundial will manage the Property with the help of a property manager available for day-to-day management issues. Sundial currently manages over 2,000 doors in the Phoenix area including all the Phoenix area properties owned by Neighborhood Ventures. The Property will be leased up as a traditional multi-unit apartment and managed by Sundial Real Estate. The Company expects the Property to be fully leased and stabilized approximately six months after the property is acquired and renovated.

It is anticipated that the property will either be sold or refinanced after a three-year period. The renovation of the unit will bring them up to market value as follows:

Unit Type Current Avg Rent Post Renovation Rent
1-bedroom + 1 bathroom $694 per month $1,400 per month
2-bedroom + 1 bathroom $868 per month $1,700 per month
2 bedroom + 1.5 bathrooms $950 per month $1,800 per month
2 bedroom + 1 bathroom Townhome $994 per month $1,850 per month

You can download a more detailed analysis of rental comparables here.
 

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About the project
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About the Change

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About the Developer

The Company is managed by Neighborhood Management, LLC (the “Manager” or “Sponsor”), an Arizona limited liability company. The Manager of Neighborhood Management, LLC is Neighborhood Ventures Inc (“Neighborhood Ventures”). The principals and executives of Neighborhood Ventures are John Kobierowski and Jamison Manwaring.

Jamison Manwaring is Co-founder, Managing Partner, and CEO of Neighborhood Ventures. In 2020 he was selected as one of Phoenix Business Journal's 40 under 40. Before launching Neighborhood Ventures, he served as the Vice President of Investor Relations at LifeLock and assisted the company in its successful sale to Symantec in February of 2017.
Before working at LifeLock, Jamison was a technology analyst at Goldman Sachs where he participated in over a dozen software IPOs including Tableau, Alarm.com, and LifeLock. Jamison graduated from the University of Utah with a BS in Finance.

John Kobierowski is Co-founder, Managing Partner, and President of Real Estate at Neighborhood Ventures. He also co-founded ABI Multifamily in September 2013. In 2020 he became a contributing member of the Forbes Real Estate Council. John has over 25 years of commercial real estate experience. He bought his first small apartment building while still in college.

Over the course of his career, he has personally closed over 1,400 multifamily transactions, developed over 800 condominium units, and owned over 1,000 apartment units, homes, and condos. Prior to founding ABI, he was a founding adviser of Hendricks & Partners (Berkadia). John graduated from Arizona State University with a Bachelor of Science - Liberal Arts with a minor in Business and a concentration in Engineering and Architecture. In addition to being the Co-founder to Neighborhood Ventures, and a local executive at ABI Multifamily, he owns The Grid Works co-working space in Uptown Phoenix.

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About the Company
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About Past Projects

Neighborhood Ventures (the “Sponsor”) was launched in 2017. Since then, Neighborhood Ventures has successfully raised funds online for 12 real estate projects using Arizona’s Intrastate Crowdfunding Law.

Ten of the offerings reached their maximum offerings goals, which ranged from $500,000 to $3.5 million, often selling out before the target date. The most recent offering, Venture at Route 66 reached its maximum goal within the first 48 hours after the offering launched. The largest project to date, and the first to be offered nationally, Venture on Country Club, reached 100% of the Arizona offering goal of $3.5 million, and raised $572,000 through a Regulation Crowdfunding offering, just like this one, on the Small Change funding portal. 
All of Neighborhood Ventures’ projects have been multifamily projects to date, except for Venture on Broadway, their first retail project. The projects have ranged in size from 8 to 120 units and one, Venture on 66th, was purchased and operated by Neighborhood Management LLC as an Airbnb for a year before it was sold.

Four projects, Venture on Wilson, Venture on Marlette, Venture on 66th, and Venture at Villa Hermosa have completed the full cycle, from raising funds through renovation and stabilization and sale, returning all equity and the full 12% preferred offered to investors. Four properties, Venture at Mountain View, Venture on 19th, Venture on Williams, and Venture on Country Club are now stabilized and are generating cash flow for investors. And the final four offerings, Venture on Elden, Venture on Broadway, Venture on Central, and Venture on Route 66 are currently in the renovation phase.

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Past Projects
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About the Market

North Central Phoenix is one of the Valley’s most dynamic areas, infused with charming elements of traditional local character and extensive and exciting development covering both major new facilities and detail-rich adaptive reuse.

Phoenix is the 5th largest city in the United States by population, making it one of the most populous state capitals.  Businesses looking to locate or expand to Phoenix will find a workforce demographic ripe for success.

With nearly 4.9 million people, Greater Phoenix is the 11th largest metropolitan area in the U.S., and its population is expected to double in the next two decades. A young and diverse market with nearly 500,000 students, the region is home to several major universities and colleges. Phoenix has significant new development as well as more centralized urban redevelopment. As this urban area densifies, its unique vibe remains distinctive and vibrant. 

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About the return

Under the Operating Agreement, all distributions will be made in the following order of priority, after all expenses, including debt service and fees:

  • First, to the Investor Members until they have received a full return of their investment.
  • Second, to the Investor Members until they have received a compounded annual return of 12% per year.
  • Third, to the Fund until it has received an additional compounded annual return of 3% per year.
  • Fourth, to Neighborhood Management.

Annual cash flow distributions to Investors averaging 6% are expected to start once the property is stabilized and cash flowing. The Company plans to either sell or refinance the Property after three years. Upon the liquidation or refinance of the Property the Company shall provide a true-up to Investors to bring returns up to 12%. If there are sufficient funds available, and only after all Investors have received their 12% preferred return and equity back, an additional 3% preferred return may be distributed to the Neighborhood Ventures Fund.

The following is an example of the return the Company expects to distribute on a $5,000 investment:
 

Year Amount returned
Year 1 $225
Year 2 $300
Year 3 $6,381
Total return $6,906

 

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About the Offering

The Company is engaged in a Regulation Crowdfunding (Reg CF) offering (the “Reg CF Offering”) to raise money for the planned acquisition and renovation of a 30-unit residential apartment building at 3432 N. 12th Place, Phoenix, Arizona 85014.

We are trying to raise a maximum of $500,000 but we will move forward with the Project and use investor funds if we are able to raise at least $100,000 (the “Target Amount”). If we have not raised at least the Target Amount by 11:59 pm EST on August 15, 2023 (the “Target Date”), we will terminate the Reg CF Offering and return 100% of their money to anyone who has subscribed.

The minimum you can invest in the Reg CF Offering is $1,000. Investments above $1,000 may be made in $1,000 increments (e.g., $2,000 or $3,000 but not $1,136). An investor may cancel his or her commitment up until 11:59 pm EST on August 13, 2023, EST (i.e., two days before the Target Date). If we have raised at least the Target Amount, we might decide to accept the funds and admit investors to the Company before the Target Date; in that case we will notify you and give you the right to cancel.

After we accept the funds and admit investors to the Company, whether on the Target Date or before, we will continue the Reg CF Offering until we have raised the maximum amount.

Concurrent Offerings

The Company is seeking to raise capital through three different offerings, all conducted at the same time:

  1. This Reg CF Offering, with a maximum goal of $500,000.
  2. An offering conducted under the Arizona intrastate crowdfunding laws, with a maximum goal of $2 million.
  3. An offering conducted under SEC Rule 506(b) to Neighborhood Ventures Fund, LLC (the “Fund”), an affiliate, to make up any shortfalls in the first two offerings.

The money raised in all three offerings will be used for the same purposes.

You can review the disclosure packet by downloading it here, or on the SEC website here. Investments under Reg CF are offered by NSSC Funding Portal, LLC, a licensed funding portal.

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About the finances

Project acquisition and development costs are expected to total approximately $8.66 million. The Company expects to finance the Project through a bank loan of 70% - 80% of the Project cost with the remainder being financed through the three offerings described above.

Two scenarios for anticipated sources and uses for the Project are outlined in the table below, although more are possible. 

Uses 70% bank loan 80% bank loan
Acquisition costs $6,650,000 $6,650,000
Renovation $1,350,000 $1,350,000
Closing costs and reserves $660,000 $660,000
Total project cost $8,660,000 $8,660,000
     
Sources    
Bank loan $6,062,000 $6,928,000
Arizona IntraState Offering $2,000,000 $1,500,000
Small Change (Reg CF) Offering $500,000 $225,000
Neighborhood Ventures Fund $98,000 $7,000
Total $8,660,000 $8,660,000

Purchase price is at market value compared to other properties that have sold recently nearby:

Address     Sales Price      Date Sold       Size in s.f.       Per sf 
376 East Alvarao Road, Phoenix, AZ 85004     $2,900,000 04/22 6,831 $424.54 
1745-1809 East Cambridge Ave Phoenix AZ 85016.   $3,600,000 04/22 10,800 $333.33
4128 North 10th Street, Phoenix AZ 85014 $2,660,000 04/22 7,200 $369.44
4312 North 21st St, Phoenix AZ 85016 $2,125,000 06/22 5,510 $385.66
  $6,650,000 Pending 56,735 $232.66

For more detail review these detailed Sales Comparables and the Operating ProForma for the Project. 

Annual cash flow distributions to Investors averaging 6% are expected to start once the property is stabilized and cash flowing. The Company plans to either sell or refinance the Property after three years. Upon the liquidation or refinance of the Property the Company shall provide a true-up to Investors to bring returns up to 12%. If there are sufficient funds available, and only after all Investors have received their 12% preferred return and equity back, an additional 3% preferred return may be distributed to the Neighborhood Ventures Fund.  For more detail, see "About the Return."

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About the risks

A crowdfunding investment involves risk. You should not invest any funds in this offering unless you can afford to lose your entire investment. 

In making an investment decision, Investors must rely on their own examination of the issuer and the terms of the offering, including the merits and risks involved. These securities have not been recommended or approved by any federal or state securities commission or regulatory authority. Furthermore, these authorities have not passed upon the accuracy or adequacy of this document.

The U.S. Securities and Exchange Commission does not pass upon the merits of any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering document or literature.

These securities are offered under an exemption from registration; however, the U.S. Securities and Exchange Commission has not made an independent determination that these securities are exempt from registration.

Additional statement:

There are numerous risks to consider when making an investment such as this one and financial projections are just that - projections. Returns are not guaranteed. Conditions that may affect your investment include unforeseen construction costs, changes in market conditions, and potential disasters that are not covered by insurance. Please review this Risks of Investing document for a more expansive list of potential risks associated with an investment in this Company.

Unless otherwise noted, the images on the offering page are used to convey the personality of the neighborhood in which the project is planned. Properties shown in these images are not included in the offering and Investors will not receive an interest in any of them.

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