Steadfast Income REIT 10-Q 2016 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2016

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from  to

Commission file number 000-54674

STEADFAST INCOME REIT, INC.

(Exact Name of Registrant as Specified in Its Charter)

Maryland	27-0351641
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)
18100 Von Karman Avenue, Suite 500
Irvine, California	92612
(Address of Principal Executive Offices)	(Zip Code)

(949) 852-0700

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated filer o Accelerated filer o Non-Accelerated filer þ (Do not check if smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of May 6, 2016, there were 76,479,192 shares of the Registrant’s common stock issued and outstanding.

STEADFAST INCOME REIT, INC.

INDEX

	Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements	2
Consolidated Balance Sheets as of March 31, 2016 (unaudited) and December 31, 2015	2
Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015 (unaudited)	3
Consolidated Statements of Stockholders’ Equity for the year ended December 31, 2015 and for the three months ended March 31, 2016 (unaudited)	4
Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015 (unaudited)	5
Condensed Notes to Consolidated Financial Statements as of March 31, 2016 (unaudited)	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3. Quantitative and Qualitative Disclosures About Market Risk	50
Item 4. Controls and Procedures	51
PART II — OTHER INFORMATION
Item 1. Legal Proceedings	52
Item 1A. Risk Factors	52
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3. Defaults Upon Senior Securities	53
Item 4. Mine Safety Disclosures	53
Item 5. Other Information	53
Item 6. Exhibits	53
Signatures	54

1

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

STEADFAST INCOME REIT, INC.

CONSOLIDATED BALANCE SHEETS

	March 31, 2016			December 31, 2015
	(Unaudited)
ASSETS
Assets:
Real Estate:
Land	$	174,102,422		$	174,102,422
Building and improvements	1,491,754,456			1,487,961,762
Other intangible assets	2,644,263			2,644,263
Construction-in-progress	4,729,835			2,192,635
Total real estate, cost	1,673,230,976			1,666,901,082
Less accumulated depreciation and amortization	(180,393,255		)	(163,445,987		)
Total real estate, net	1,492,837,721			1,503,455,095
Cash and cash equivalents	36,480,248			32,076,582
Restricted cash	17,279,593			27,700,811
Rents and other receivables	3,401,197			2,742,011
Other assets, net	3,092,748			4,328,851
Total assets	$	1,553,091,507		$	1,570,303,350
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Accounts payable and accrued liabilities	$	30,559,977		$	40,752,458
Notes payable:
Mortgage notes payable, net	1,111,838,945			1,115,752,899
Revolving credit facility	16,000,000			—
Total notes payable, net	1,127,838,945			1,115,752,899
Distributions payable	4,647,928			4,668,261
Due to affiliates, net	1,738,135			2,682,209
Total liabilities	1,164,784,985			1,163,855,827
Commitments and contingencies (Note 10)
Stockholders’ Equity:
Preferred stock, $0.01 par value per share; 100,000,000 shares authorized, no shares issued and outstanding	—			—
Common stock, $0.01 par value per share; 999,999,000 shares authorized, 76,575,259 and 76,674,502 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively	765,753			766,745
Convertible stock, $0.01 par value per share; 1,000 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively	10			10
Additional paid-in capital	676,752,303			677,624,840
Cumulative distributions and net losses	(289,211,544		)	(271,944,072		)
Total stockholders’ equity	388,306,522			406,447,523
Total liabilities and stockholders’ equity	$	1,553,091,507		$	1,570,303,350

See accompanying notes to consolidated financial statements.

2

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended March 31,
	2016			2015
Revenues:
Rental income	$	47,170,635		$	45,532,588
Tenant reimbursements and other	5,736,273			5,518,713
Total revenues	52,906,908			51,051,301
Expenses:
Operating, maintenance and management	13,709,810			12,827,151
Real estate taxes and insurance	8,911,021			9,055,399
Fees to affiliates	5,522,423			5,368,476
Depreciation and amortization	16,947,268			16,154,311
Interest expense	10,046,840			9,987,234
General and administrative expenses	1,387,688			1,482,231
Acquisition costs	—			7,145
Total expenses	56,525,050			54,881,947
Net loss	$	(3,618,142	)	$	(3,830,646	)
Loss per common share — basic and diluted	$	(0.05	)	$	(0.05	)
Weighted average number of common shares outstanding — basic and diluted	76,350,555			76,353,484
Distributions declared per common share	$	0.178		$	0.177

See accompanying notes to consolidated financial statements.

3

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2015

AND FOR THE THREE MONTHS ENDED MARCH 31, 2016 (Unaudited)

	Common Stock					Convertible Stock			Additional Paid- In Capital			Cumulative Distributions & Net Losses			Total Stockholders’ Equity
	Shares		Amount			Shares	Amount
BALANCE, December 31, 2014	76,858,483		$	768,585		1,000	$	10	$	680,138,132		$	(203,843,497	)	$	477,063,230
Issuance of common stock	14,008		140			—	—		(62		)	—			78
Transfers to redeemable common stock	—		—			—	—		(1,000,000		)	—			(1,000,000		)
Redemption of common stock	(197,989	)	(1,980		)	—	—		(1,998,020		)	—			(2,000,000		)
Distributions declared	—		—			—	—		—			(55,076,217		)	(55,076,217		)
Amortization of stock-based compensation	—		—			—	—		184,350			—			184,350
Change in value of restricted common stock to Advisor	—		—			—	—		300,440			—			300,440
Net loss for the year ended December 31, 2015	—		—			—	—		—			(13,024,358		)	(13,024,358		)
BALANCE, December 31, 2015	76,674,502		766,745			1,000	10		677,624,840			(271,944,072		)	406,447,523
Redemption of common stock	(99,243	)	(992		)	—	—		(999,008		)	—			(1,000,000		)
Distributions declared	—		—			—	—		—			(13,649,330		)	(13,649,330		)
Amortization of stock-based compensation	—		—			—	—		12,864			—			12,864
Change in value of restricted common stock to Advisor	—		—			—	—		113,607			—			113,607
Net loss for the three months ended March 31, 2016	—		—			—	—		—			(3,618,142		)	(3,618,142		)
BALANCE, March 31, 2016	76,575,259		$	765,753		1,000	$	10	$	676,752,303		$	(289,211,544	)	$	388,306,522

See accompanying notes to consolidated financial statements.

4

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2016			2015
Cash Flows from Operating Activities:
Net loss	$	(3,618,142	)	$	(3,830,646	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	16,947,268			16,154,311
Amortization of deferred financing costs	382,044			363,977
Amortization of stock-based compensation	12,864			22,884
Change in value of restricted common stock to Advisor	113,607			16,907
Amortization of loan premiums and discounts	(308,698		)	(308,698		)
Change in fair value of interest rate cap agreements	232,712			1,021,586
Changes in operating assets and liabilities:
Restricted cash for operating activities	9,544,451			9,554,428
Rents and other receivables	(659,186		)	(59,974		)
Other assets	951,635			1,100,432
Accounts payable and accrued liabilities	(10,840,794		)	(11,862,875		)
Due to affiliates, net	(814,996		)	(1,140,283		)
Net cash provided by operating activities	11,942,765			11,032,049
Cash Flows from Investing Activities:
Additions to real estate investments	(5,810,659		)	(7,021,999		)
Restricted cash for investing activities	876,767			(22,505		)
Net cash used in investing activities	(4,933,892		)	(7,044,504		)
Cash Flows from Financing Activities:
Proceeds from issuance of mortgage notes payable	162,086			2,841,761
Principal payments on mortgage notes payable	(4,097,630		)	(3,369,182		)
Borrowings from credit facility	16,000,000			6,000,000
Payment of deferred financing costs	—			(10,000		)
Distributions to common stockholders	(13,669,663		)	(13,585,602		)
Redemptions of common stock	(1,000,000		)	—
Net cash used in financing activities	(2,605,207		)	(8,123,023		)
Net increase (decrease) in cash and cash equivalents	4,403,666			(4,135,478		)
Cash and cash equivalents, beginning of period	32,076,582			29,529,312
Cash and cash equivalents, end of period	$	36,480,248		$	25,393,834
Supplemental Disclosures of Cash Flow Information:
Interest paid, net of amounts capitalized of $25,904 and $38,761 for the three months ended March 31, 2016 and 2015, respectively	$	9,598,899		$	8,913,815
Supplemental Disclosure of Noncash Transactions:
Distributions paid to common stockholders through common stock issuances pursuant to the distribution reinvestment plan	$	—		$	78
Increase in accounts payable and accrued liabilities from additions to real estate investments	$	648,313		$	195,940
Decrease in due to affiliates, net from additions to real estate investments	$	(129,078	)	$	—

See accompanying notes to consolidated financial statements.

5

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

1. Organization and Business

Steadfast Income REIT, Inc. (the “Company”) was formed on May 4, 2009, as a Maryland corporation that has elected to be treated as, and currently qualifies as, a real estate investment trust (“REIT”). On June 12, 2009, the Company was initially capitalized pursuant to the sale of 22,223 shares of common stock to Steadfast REIT Investments, LLC (the “Sponsor”) at a purchase price of $9.00 per share for an aggregate purchase price of $200,007. On July 10, 2009, Steadfast Income Advisor, LLC (the “Advisor”), a Delaware limited liability company formed on May 1, 2009, invested $1,000 in the Company in exchange for 1,000 shares of convertible stock (the “Convertible Stock”) as described in Note 6.

Substantially all of the Company’s business is conducted through Steadfast Income REIT Operating Partnership, L.P., a Delaware limited partnership formed on July 6, 2009 (the “Operating Partnership”). The Company is the sole general partner of the Operating Partnership. As the Company accepted subscriptions for shares of its common stock in the Public Offering (as defined below), the Company transferred substantially all of the net offering proceeds to the Operating Partnership in exchange for partnership interests and the Company’s percentage ownership in the Operating Partnership increased proportionately. The Company and Advisor entered into an Amended and Restated Limited Partnership Agreement of the Operating Partnership (the “Partnership Agreement”) on September 28, 2009.

As of March 31, 2016, the Company owned 65 multifamily properties comprising a total of 16,622 apartment homes and an additional 25,973 square feet of rentable commercial space at three properties.

Private Offering

On October 13, 2009, the Company commenced a private offering of up to $94,000,000 in shares of the Company’s common stock at a purchase price of $9.40 per share (with discounts available for certain categories of purchasers) (the “Private Offering”). The Company offered its shares of common stock for sale in the Private Offering pursuant to a confidential private placement memorandum and only to persons that were “accredited investors,” as that term is defined under the Securities Act of 1933, as amended (the “Securities Act”), and Regulation D promulgated thereunder. On July 9, 2010, the Company terminated the Private Offering and on July 19, 2010, the Company commenced its registered public offering described below. The Company sold 637,279 shares of common stock in the Private Offering for gross offering proceeds of $5,844,325.

Public Offering

On July 23, 2009, the Company filed a registration statement on Form S-11 with the Securities and Exchange Commission (the “SEC”) to offer a maximum of 150,000,000 shares of common stock for sale to the public at an initial price of $10.00 per share (with discounts available for certain categories of purchasers) (the “Primary Offering”). The Company also registered up to 15,789,474 shares of common stock for sale pursuant to the Company’s distribution reinvestment plan (the “DRP,” and together with the Primary Offering, the “Public Offering”) at an initial price of $9.50 per share.The SEC declared the Company’s registration statement effective on July 9, 2010. The Company commenced the Public Offering on July 19, 2010. The Company could reallocate shares of common stock registered in the Public Offering between the Primary Offering and the DRP.

On July 12, 2012, the Company’s board of directors determined an estimated value per share of the Company’s common stock as of March 31, 2012 of $10.24. As a result of the determination of the estimated value per share of the Company’s common stock as of March 31, 2012, effective September 10, 2012, the offering price of the Company’s common stock to the public in the Primary Offering increased from the previous price of $10.00 per share to $10.24 per share. Additionally, effective September 10, 2012, the price of shares of the Company’s common stock issued pursuant to the DRP increased from a price of

6

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

$9.50 per share to a price of $9.73 per share, or 95% of the new Primary Offering price of $10.24 per share. Effective September 10, 2012, the Company’s board of directors increased the amount of distributions paid on each share of the Company’s common stock from $0.001917 per share per day to $0.001964 per share per day, which, if paid each day over a 365-day period, is equivalent to a 7.0% annualized distribution rate based on the new offering price of $10.24 per share. The Company terminated its Public Offering on December 20, 2013. Following termination of the Public Offering, the Company continued to offer shares of common stock pursuant to the DRP until the Company’s board of directors suspended the DRP effective for distributions earned beginning on December 1, 2014. Through December 20, 2013, the Company sold 73,608,337 shares of common stock in the Public Offering for gross proceeds of $745,389,748, including 1,588,289 shares of common stock issued pursuant to the DRP for gross offering proceeds of $15,397,232.

On March 10, 2015, the Company’s board of directors determined an estimated value per share of the Company’s common stock of $10.35 as of December 31, 2014. On February 25, 2016, the Company’s board of directors determined an estimated value per share of the Company’s common stock of $11.44 as of December 31, 2015.

The business of the Company is externally managed by the Advisor, pursuant to the Advisory Agreement by and among the Company, the Operating Partnership and the Advisor (as amended, the “Advisory Agreement”), which is subject to annual renewal by the Company’s board of directors. The current term of the Advisory Agreement expires on November 15, 2016. Subject to certain restrictions and limitations, the Advisor manages the Company’s day-to-day operations, manages the Company’s portfolio of properties and real estate-related assets, sources and presents investment opportunities to the Company’s board of directors and provides investment management services on the Company’s behalf. Steadfast Capital Markets Group, LLC (the “Dealer Manager”), an affiliate of the Advisor, served as the dealer manager for the Public Offering. The Dealer Manager was responsible for marketing the Company’s shares of common stock being offered pursuant to the Public Offering. The Advisor, along with the Dealer Manager, also provides marketing, investor relations and other administrative services on the Company’s behalf.

The Partnership Agreement provides that the Operating Partnership is operated in a manner that will enable the Company to (1) satisfy the requirements for being classified as a REIT for tax purposes, (2) avoid any federal income or excise tax liability and (3) ensure that the Operating Partnership will not be classified as a “publicly traded partnership” for purposes of Section 7704 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), which classification could result in the Operating Partnership being taxed as a corporation, rather than as a partnership. In addition to the administrative and operating costs and expenses incurred by the Operating Partnership in acquiring and operating real properties, the Operating Partnership may pay all of the Company’s administrative costs and expenses, and such expenses will be treated as expenses of the Operating Partnership.

2. Summary of Significant Accounting Policies

There have been no significant changes to the Company’s accounting policies since it filed its audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2015, other than Accounting Standard Updates (“ASU”) 2015-03, as amended by ASU 2015-15, as further described below. For further information about the Company’s accounting policies, refer to the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2015 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 18, 2016.

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of the Company, the Operating Partnership and its subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. The financial statements of the Company’s subsidiaries are prepared using accounting policies consistent with those of the Company.

7

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

The accompanying unaudited consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments that are of a normal and recurring nature and necessary for a fair and consistent presentation of the results of such periods. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The unaudited consolidated financial statements herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.

Reclassifications

Certain prior year amounts in the consolidated financial statements have been reclassified to conform with the current year presentation. These reclassifications have not changed the results of operations of prior periods. During the three months ended March 31, 2016, the Company adopted new accounting guidance to simplify the presentation of debt issuance costs. As a result, net deferred financing costs of $6,697,472 related to mortgage notes payable as of December 31, 2015, were reclassified from other assets, net to mortgage notes payable, net on the consolidated balance sheets.

Fair Value Measurements

Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other assets and liabilities at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

• Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

When available, the Company utilizes quoted market prices from an independent third-party source to determine fair value and will classify such items in Level 1 or Level 2. In instances where the market is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent

8

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for a financial instrument owned by the Company to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and will establish a fair value by assigning weights to the various valuation sources.

The following describes the valuation methodologies used by the Company to measure fair value, including an indication of the level in the fair value hierarchy in which each asset or liability is generally classified.

Interest rate cap agreements — These derivatives did not qualify as fair value hedges and are recorded at fair value. Fair value was based on a model-driven valuation using the associated variable rate curve and an implied market volatility, both of which were observable at commonly quoted intervals for the full term of the interest rate cap agreements. Therefore, the Company’s interest rate cap agreements were classified within Level 2 of the fair value hierarchy and are included in other assets, net in the accompanying consolidated balance sheets.

The following table reflects the Company’s assets required to be measured at fair value on a recurring basis on the consolidated balance sheets:

	March 31, 2016
	Fair Value Measurements Using
	Level 1		Level 2		Level 3
Assets:
Interest rate cap agreements	$	—	$	65,431	$	—

	December 31, 2015
	Fair Value Measurements Using
	Level 1		Level 2		Level 3
Assets:
Interest rate cap agreements	$	—	$	298,143	$	—

Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument.

Fair Value of Financial Instruments

The accompanying consolidated balance sheets include the following financial instruments: cash and cash equivalents, restricted cash, rents and other receivables, accounts payable and accrued liabilities, distributions payable, due to affiliates and notes payable.

The Company considers the carrying value of cash and cash equivalents, restricted cash, rents and other receivables, accounts payable and accrued liabilities and distributions payable to approximate the fair value of these financial instruments based on the short duration between origination of the instruments and their expected realization. The Company considers the carrying value of the revolving line of credit to approximate fair value based on time to maturity. The fair value of amounts due to affiliates is not determinable due to the related party nature of such amounts.

9

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

The fair value of the mortgage notes payable is estimated using a discounted cash flow analysis using borrowing rates available to the Company for debt instruments with similar terms and maturities. As of March 31, 2016 and December 31, 2015, the fair value of the mortgage notes payable was $1,130,001,965 and $1,118,126,231, respectively, compared to the carrying value of $1,111,838,945 and $1,115,752,899, respectively. The Company has determined that its mortgage notes payable are classified as Level 3 within the fair value hierarchy.

Distribution Policy

The Company has elected to be taxed as a REIT and to operate as a REIT beginning with its taxable year ending December 31, 2010. To maintain its qualification as a REIT, the Company intends to make distributions each taxable year equal to at least 90% of its REIT taxable income (which is determined without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). Distributions were based on daily record dates and calculated at a rate of $0.001964 per share per day during the year ended December 31, 2015 and three months ended March 31, 2016. Each day during the three months ended March 31, 2016 and 2015 was a record date for distributions.

Distributions to stockholders are determined by the board of directors of the Company and are dependent upon a number of factors relating to the Company, including funds available for the payment of distributions, financial condition, the timing of property acquisitions, capital expenditure requirements and annual distribution requirements in order for the Company to qualify as a REIT under the Internal Revenue Code. During the three months ended March 31, 2016 and 2015, the Company declared distributions of $0.178 and $0.177 per common share, respectively.

Per Share Data

Basic earnings (loss) per share attributable for all periods presented are computed by dividing net income (loss) attributable to controlling interest by the weighted average number of shares of the Company’s common stock outstanding during the period. Diluted earnings (loss) per share are computed based on the weighted average number of shares of the Company’s common stock and all potentially dilutive securities, if any. Distributions declared per common share assumes each share was issued and outstanding each day during the period. The Company’s unvested shares of restricted common stock contain non-forfeitable rights to dividends and are considered to be participating securities in accordance with GAAP and, therefore, are included in the computation of earnings (loss) per share under the two-class method. Under the two-class method, net losses are not allocated to participating securities unless the holder of the security has a contractual obligation to share in the losses. The unvested shares of restricted common stock are not allocated losses as the awards do not have a contractual obligation to share in the losses of the Company. The two-class method is an earnings (loss) allocation formula that determines earnings (loss) per share for each class of common shares and participating securities according to dividends declared and participation rights in undistributed earnings.

Segment Disclosure

The Company has determined that it has one reportable segment with activities related to investing in multifamily properties. The Company’s investments in real estate are in different geographic regions, and management evaluates operating performance on an individual asset level. However, as each of the Company’s assets has similar economic characteristics, tenants and products and services, its assets have been aggregated into one reportable segment.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The new guidance requires an entity to recognize the revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new guidance

10

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

supersedes the revenue requirements in Revenue Recognition (Topic 605) and most industry-specific guidance throughout the Industry Topics of the Codification. The new guidance does not apply to lease contracts within the scope of Leases (Topic 840). In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606), which delayed the effective date of the new guidance by one year, which will result in the new guidance being effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and is to be applied retrospectively. Early adoption is permitted, but can be no earlier than the original public entity effective date of fiscal years, and interim periods within those years, beginning after December 15, 2016. The Company is still evaluating the impact of adopting the new guidance on its financial statements, but does not expect the adoption to have a material impact on its financial statements.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, that requires management to evaluate whether there are conditions and events that raise substantial doubt about an entity’s ability to continue as a going concern. Until now, the requirement to perform a going concern evaluation existed only in auditing standards. The new guidance requires management to evaluate relevant conditions, events and certain management plans that are known or reasonably knowable as of the evaluation date when determining whether substantial doubt about an entity’s ability to continue as a going concern exists. Management will be required to make this evaluation for both annual and interim reporting periods. The standard states substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. The guidance is effective for annual periods ending after December 15, 2016 and for annual periods and interim periods thereafter. Early adoption is permitted. The Company does not expect there to be a material impact from adopting this new guidance.

In January 2015, the FASB issued ASU 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, that eliminates the concept of the extraordinary items from GAAP. The objective of the new guidance is to simplify the income statement presentation requirements of GAAP by altogether removing the concept of extraordinary items from consideration. The guidance is effective for annual periods, including interim periods within that period, beginning after December 15, 2015. The Company did not experience a material impact from adopting this new guidance.

In February 2015, the FASB issued ASU 2015-02, Consolidation, which makes changes to both the variable interest model and the voting model of consolidation. Under ASU 2015-02, companies will need to re-evaluate whether an entity meets the criteria to be considered a variable interest entity (“VIE”) or whether the consolidation of an entity should be assessed under the voting model. The new standard specifically eliminates the presumption in the current voting model that a general partner controls a limited partnership or similar entity unless that presumption can be overcome. The new standard was effective for the Company beginning on January 1, 2016. The adoption of the new standard did not result in the consolidation of entities not previously consolidated or the deconsolidation of any entities previously consolidated. Upon adopting the new standard, the Operating Partnership became a VIE as the limited partner lacks substantive kick-out rights and substantive participating rights. The Company is the primary beneficiary of, and continues to consolidate, the Operating Partnership determined to be a VIE.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, as amended in August 2015 by ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, that will require that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The FASB will permit debt issuance costs related to line-of-credit arrangements to be deferred and presented as an asset and subsequently amortized over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.The recognition and measurement guidance for debt issuance costs will not be affected by the new guidance. The guidance requires retrospective application and is effective for annual periods, including interim periods within that period, beginning after December 15, 2015. Early adoption is permitted. Upon adoption, the Company reclassified net debt issuance costs of $6,367,184 and $6,697,472 as

11

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

of March 31, 2016 and December 31, 2015, respectively, related to mortgage notes payable from other assets, net to mortgage notes payable, net on the consolidated balance sheets.

In February 2016, the FASB issued ASU 2016-02, Leases, amending the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The guidance will be effective in the first quarter of 2019 and allows for early adoption. The Company is assessing whether the new standard will have a material effect on its financial position or results of operations.

3. Real Estate

As of March 31, 2016, the Company owned 65 multifamily properties, encompassing in the aggregate 16,622 apartment homes and 25,973 square feet of rentable commercial space. The total purchase price of the Company’s real estate portfolio was $1,634,327,541, inclusive of development and construction costs for apartment homes constructed by the Company. As of March 31, 2016 and December 31, 2015, the Company’s portfolio was approximately 94.5% and 94.0% occupied and the average monthly rent was $1,005 and $999, respectively.

As of March 31, 2016 and December 31, 2015, accumulated depreciation and amortization related to the Company’s consolidated real estate properties and related intangibles were as follows:

	March 31, 2016
	Assets
	Land		Building and Improvements			Other Intangible Assets			Construction-in-Progress		Total Real Estate
Investments in real estate	$	174,102,422	$	1,491,754,456		$	2,644,263		$	4,729,835	$	1,673,230,976
Less: Accumulated depreciation and amortization	—		(179,962,100		)	(431,155		)	—		(180,393,255		)
Net investments in real estate and related lease intangibles	$	174,102,422	$	1,311,792,356		$	2,213,108		$	4,729,835	$	1,492,837,721

	December 31, 2015
	Assets
	Land		Building and Improvements			Other Intangible Assets			Construction-in-Progress		Total Real Estate
Investments in real estate	$	174,102,422	$	1,487,961,762		$	2,644,263		$	2,192,635	$	1,666,901,082
Less: Accumulated depreciation and amortization	—		(163,053,124		)	(392,863		)	—		(163,445,987		)
Net investments in real estate and related lease intangibles	$	174,102,422	$	1,324,908,638		$	2,251,400		$	2,192,635	$	1,503,455,095

Depreciation and amortization expenses were $16,947,268 and $16,154,311 for the three months ended March 31, 2016 and 2015, respectively.

Depreciation of the Company’s buildings and improvements were $16,908,976 and $15,905,614 for the three months ended March 31, 2016 and 2015, respectively.

12

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

Amortization of the Company’s tenant origination and absorption costs for the three months ended March 31, 2016 and 2015 were $0 and $210,405, respectively. Tenant origination and absorption costs had a weighted-average amortization period as of the date of acquisition of less than one year. At December 31, 2015, all tenant origination and absorption costs were fully amortized and written off.

Amortization of the Company’s other intangible assets for the three months ended March 31, 2016 and 2015 were $38,292 and $38,292, respectively.

The future amortization of the Company’s acquired other intangible assets as of March 31, 2016 and thereafter is as follows:

April 1 through December 31, 2016	$	114,876
2017	153,168
2018	153,168
2019	153,168
2020	153,168
Thereafter	1,485,560
	$	2,213,108

Operating Leases

As of March 31, 2016, the Company’s real estate portfolio was comprised of 16,622 apartment homes and was 96.6% leased by a diverse group of residents. For each of the three months ended March 31, 2016 and 2015, the Company’s real estate portfolio earned approximately 99% of its rental income from residential tenants and approximately 1% of its rental income from commercial office tenants, respectively. The residential tenant lease terms consist of lease durations equal to 12 months or less. The commercial office tenant leases consist of remaining lease durations varying from 0.08 to 3.59 years.

Some residential and commercial leases contain provisions to extend the lease agreements, options for early termination after paying a specified penalty and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires security deposits from tenants in the form of a cash deposit and/or a letter of credit for commercial tenants. Amounts required as security deposits vary depending upon the terms of the respective leases and the creditworthiness of the tenant, but generally are not significant amounts. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash related to tenant leases are included in accounts payable and accrued liabilities in the accompanying consolidated balance sheets and totaled $4,821,956 and $4,672,961 as of March 31, 2016 and December 31, 2015, respectively.

13

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

The future minimum rental receipts from the Company’s properties under non-cancelable operating leases attributable to commercial office tenants as of March 31, 2016 and thereafter is as follows:

April 1 through December 31, 2016	$	56,037
2017	67,120
2018	69,136
2019	58,760
	$	251,053

As of March 31, 2016 and December 31, 2015, no tenant represented over 10% of the Company’s annualized base rent and there were no significant industry concentrations with respect to its commercial leases.

4. Other Assets, Net

As of March 31, 2016 and December 31, 2015, other assets, net of accumulated amortization, consisted of:

	March 31, 2016			December 31, 2015
Deferred financing costs	$	660,585		$	660,585
Less: accumulated amortization	(599,158		)	(547,402		)
	61,427			113,183
Prepaid expenses	1,727,750			2,648,238
Interest rate cap agreements (Note 11)	65,431			298,143
Deposits	1,238,140			1,269,287
	$	3,092,748		$	4,328,851

14

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

5. Debt

Mortgage Notes Payable

The following is a summary of mortgage notes payable, net secured by real property as of March 31, 2016 and     December 31, 2015:

	March 31, 2016
			Interest Rate Range				Weighted Average Interest Rate
Type	Number of Instruments	Maturity Date Range	Minimum		Maximum				Principal Outstanding
Mortgage notes payable - fixed	37	10/1/2017 - 1/1/2053	3.31	%	5.94	%	4.32	%	$	475,302,163
Mortgage notes payable - variable(1)	30	5/16/2017 - 1/1/2026	1-Mo LIBOR + 1.62%		1-Mo LIBOR + 2.75%		2.78	%	639,760,660
Total mortgage notes payable, gross	67						3.44	%	1,115,062,823
Premium/discount,      net(2)									3,143,306
Deferred financing costs, net(3)									(6,367,184		)
Total mortgage notes payable, net									$	1,111,838,945

	December 31, 2015
			Interest Rate Range				Weighted Average Interest Rate
Type	Number of Instruments	Maturity Date Range	Minimum		Maximum				Principal Outstanding
Mortgage notes payable - fixed	37	10/1/2017 - 1/1/2053	3.31	%	5.94	%	4.32	%	$	477,139,001
Mortgage notes payable - variable(1)	30	5/16/2017 - 1/1/2026	1-Mo LIBOR + 1.62%		1-Mo LIBOR + 2.75%		2.77	%	641,859,365
Total mortgage notes payable, gross	67						3.44	%	1,118,998,366
Premium/discount,      net(2)									3,452,005
Deferred financing costs, net(3)									(6,697,472		)
Total mortgage notes payable, net									$	1,115,752,899

_______________

(1) See Note 11 for a discussion of the interest rate cap agreements used to manage the exposure to interest rate movement on the Company’s variable rate loans.

15

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

(2) The following table summarizes the debt premiums and discounts as of March 31, 2016, including the unamortized portion included in the principal balance as well as amounts amortized as an offset to interest expense in the accompanying consolidated statements of operations:

Unamortized Portion of Net Debt Premium as of March 31, 2016		Amortization of Net Debt Premium During the Three Months Ended March 31,
		2016		2015
$	3,143,306	$	308,698	$	308,698

(3) The following table summarizes the deferred financing costs, net related to mortgage notes payable as of March 31, 2016 and December 31, 2015:

	March 31, 2016			December 31, 2015
Deferred financing costs	$	10,140,097		$	10,140,097
Less: accumulated amortization	(3,772,913		)	(3,442,625		)
Deferred financing costs, net	$	6,367,184		$	6,697,472

Revolving Credit Facility

The Company entered into a revolving credit facility with PNC Bank, N.A. (“PNC Bank”) to borrow up to $20,000,000. On July 18, 2014, the Company and PNC Bank amended the revolving credit facility to, among other things, increase the potential borrowing limit from $20,000,000 to $35,000,000. The amended and restated credit facility consists of a Tranche A and a Tranche B, and provides certain security for borrowings under the credit facility. The maximum amount that may be borrowed under Tranche A and Tranche B are $20,000,000 and $15,000,000, respectively. The amended and restated credit facility has a maturity date of July 17, 2016, subject to extension.

For each advance under the amended and restated credit facility, the Company has the option to select the interest rate from the following options: (1) Base Rate Option (as defined in the amended and restated credit facility) plus (i) with respect to Tranche A, 0.75% and (ii) with respect to Tranche B, 2.0%; or (2) LIBOR Option, which is a rate per annum fixed for the LIBOR Interest Period (as defined in the amended and restated credit facility) equal to the sum of LIBOR plus (i) with respect to Tranche A, 1.6% and (ii) with respect to Tranche B, 3.0%. The Company elected the LIBOR Option and the in-place interest rate was 2.04% as of March 31, 2016.

As of March 31, 2016, $16,000,000 was outstanding under the credit facility. No amounts were outstanding under the credit facility as of December 31, 2015.

16

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

The following is a summary of the Company’s aggregate maturities as of March 31, 2016:

					Maturities During the Years Ending December 31,
Contractual Obligation	Total		Remainder of 2016		2017		2018		2019		2020		Thereafter
Principal payments on outstanding debt obligations(1)	$	1,131,062,823	$	28,684,494	$	52,802,464	$	84,365,561	$	94,045,493	$	291,404,511	$	579,760,300

________________

(1) Projected principal payments on outstanding debt obligations are based on the terms of the notes payable agreements. Amounts exclude the amortization of the deferred financing costs and debt premiums associated with certain notes payable.

The Company’s notes payable contain customary financial and non-financial debt covenants. As of March 31, 2016 and December 31, 2015, the Company was in compliance with all financial and non-financial debt covenants.

For the three months ended March 31, 2016 and 2015, the Company incurred interest of $10,072,744 and $10,025,995. Interest expense for the three months ended March 31, 2016 and 2015 includes amortization of deferred financing costs of $382,044 and $363,977, amortization of loan premiums and discounts of $308,698 and $308,698, net unrealized loss from the change in fair value of interest rate cap agreements of $232,712 and $1,021,586 and capitalized interest of $25,904 and $38,761, respectively. The capitalized interest is included in real estate on the consolidated balance sheets.

Interest expense of $3,074,805 and $2,932,922 was payable as of March 31, 2016 and December 31, 2015, respectively, and is included in accounts payable and accrued liabilities in the accompanying consolidated balance sheets.

6. Stockholders’ Equity

General

Under the Company’s Third Articles of Amendment and Restatement (the “Charter”), the total number of shares of capital stock authorized for issuance is 1,100,000,000 shares, consisting of 999,999,000 shares of common stock with a par value of $0.01 per share, 1,000 shares of convertible stock with a par value of $0.01 per share and 100,000,000 shares designated as preferred stock with a par value of $0.01 per share.

Common Stock

The shares of the Company’s common stock entitle the holders to one vote per share on all matters upon which stockholders are entitled to vote, to receive dividends and other distributions as authorized by the Company’s board of directors in accordance with the Maryland General Corporation Law and to all rights of a stockholder pursuant to the Maryland General Corporation Law. The common stock has no preferences or preemptive, conversion or exchange rights.

During 2009, the Company issued 22,223 shares of common stock to the Sponsor for $200,007. As of March 31, 2016, the Company had issued 76,732,395 shares of common stock in its Private Offering and Public Offering for offering proceeds of $679,572,220, net of offering costs of $95,845,468, including 4,073,759 shares of common stock pursuant to the DRP, for total proceeds of $39,580,847. Offering costs primarily consist of selling commissions and dealer manager fees. The Company terminated its Public Offering on December 20, 2013, but continued to offer shares pursuant to the DRP through November 30, 2014.

17

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

The issuance and vesting activity for the three months ended March 31, 2016 and for the years ended December 31, 2015 and 2014 for the restricted stock issued to the Company’s independent directors as compensation for services in connection with their initial election or re-election to the board of directors at the Company’s annual meeting, upon their departure from the board of directors, or in appreciation of their service and commitment to the Company is as follows:

	For the Three Months Ended March 31, 2016	For the years ended December 31,
		2015		2014
Nonvested shares at the beginning of the period	11,250	16,875		18,750
Granted shares	—	14,000		10,000
Vested shares	—	(19,625	)	(11,875	)
Nonvested shares at the end of the period	11,250	11,250		16,875

Additionally, the weighted average fair value of restricted stock issued to the Company’s independent directors for the three months ended March 31, 2016 and for the years ended December 31, 2015 and 2014 is as follows:

Grant Year	Weighted Average Fair Value
2014	$	10.24
2015	10.35
2016	n/a

The shares of restricted common stock vest and become non-forfeitable in four equal annual installments beginning on the date of grant and ending on the third anniversary of the date of grant and will become fully vested and become non-forfeitable on the earlier to occur of (1) the termination of the independent director’s service as a director due to his or her death or disability, or (2) a change in control of the Company and as otherwise provided in the Incentive Award Plan, as defined below.

Included in general and administrative expenses is $12,864 and $22,884 for the three months ended March 31, 2016 and 2015, respectively, for compensation expense related to the issuance of restricted common stock. The weighted average remaining term of the restricted common stock is 1.61 years as of March 31, 2016. As of March 31, 2016, the compensation expense related to the issuance of the restricted common stock not vested was $82,739.

On June 11, 2014, the Company entered into a restricted stock agreement with the Advisor whereby the Company issued to the Advisor 488,281.25 restricted shares of the Company’s common stock at a fair market value of $10.24 per share in satisfaction of certain deferred fees due to the Advisor in the aggregate amount of $5,000,000. The shares of restricted stock vest and become non-forfeitable upon the earliest to occur of (i) 50% at December 31, 2015 and 50% at December 31, 2016, (ii) certain liquidity events of the Company, (iii) the Company’s cumulative modified funds from operations exceed the lesser of (a) the cumulative amount of distributions paid to the Company’s stockholders or (b) an amount that is equal to a 7.0% cumulative, non-compounded annual return on the Company’s stockholders’ invested capital, or (iv) the Company’s termination of, or failure to renew, the Advisory Agreement other than for “cause” (as defined in the Advisory Agreement). The shares of restricted stock shall be forfeited if the Advisor is terminated for any reason other than (iv) above. The fair value of the shares of unvested restricted stock was $2,792,969 as of March 31, 2016. As of March 31, 2016, 244,141 shares were vested. The fair value of the vested common stock and unvested restricted common stock as of March 31, 2016 and December 31, 2015 of $5,585,938 and $5,493,164, respectively, are recorded in stockholders’ equity in the accompanying consolidated balance sheets.

18

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

Included in general and administrative expenses on the accompanying consolidated statements of operations is $113,607 and $16,907 for the three months ended March 31, 2016 and 2015, respectively, for the change in value of restricted common stock issued to the Advisor.

Convertible Stock

The Company issued 1,000 shares of Convertible Stock to the Advisor for $1,000. The Convertible Stock will convert into shares of the Company’s common stock if and when: (A) the Company has made total distributions on the then outstanding shares of common stock equal to the original issue price of those shares plus an 8.0% cumulative, non-compounded, annual return on the original issue price of those shares, (B) subject to specified conditions, the Company lists the common stock for trading on a national securities exchange or (C) the Advisory Agreement is terminated or not renewed by the Company (other than for “cause” as defined in the Advisory Agreement). A “listing” will also be deemed to have occurred on the effective date of any merger of the Company in which the consideration received by the holders of the Company’s common stock is the securities of another issuer that are listed on a national securities exchange. Upon conversion, each share of Convertible Stock will convert into a number of shares of common stock equal to 1/1000 of the quotient of (A) 10% of the amount, if any, by which (1) the Company’s “enterprise value” (as defined in the Charter) plus the aggregate value of distributions paid to date on the outstanding shares of common stock exceeds (2) the aggregate purchase price paid by the stockholders for those shares plus an 8.0% cumulative, non-compounded, annual return on the original issue price of those shares, divided by (B) the Company’s enterprise value divided by the number of outstanding shares of common stock, in each case calculated as of the date of the conversion. In the event of a termination or non-renewal of the Advisory Agreement by the Company for cause, the Convertible Stock will be redeemed by the Company for $1.00.

Preferred Stock

The Charter also provides the Company’s board of directors with the authority to issue one or more classes or series of preferred stock, and prior to the issuance of such shares of preferred stock, the board of directors shall have the power from time to time to classify or reclassify, in one or more series, any unissued shares and designate the preferences, rights and privileges of such shares of preferred stock. The Company’s board of directors is authorized to amend the Charter, without the approval of the stockholders, to increase the aggregate number of authorized shares of capital stock or the number of shares of any class or series that the Company has authority to issue. As of March 31, 2016 and December 31, 2015, no shares of the Company’s preferred stock were issued and outstanding.

Distribution Reinvestment Plan

In connection with the Public Offering, the Company’s board of directors approved the DRP through which common stockholders could elect to reinvest an amount equal to the distributions declared on their shares of common stock in additional shares of the Company’s common stock in lieu of receiving cash distributions. The initial purchase price per share under the DRP was $9.50. Effective September 10, 2012, in connection with the change in the Public Offering price, shares of the Company’s common stock were issued pursuant to the DRP at a price of $9.73 per share. Effective with distributions earned beginning on December 1, 2014, the Company’s board of directors elected to suspend the DRP. As a result, all distributions are paid in cash and not reinvested in shares of the Company’s common stock. The Company’s board of directors may, in its sole discretion, from time to time, reinstate the DRP at a price based upon the Company’s estimated value per share and other factors that the Company’s board of directors deems relevant, although there is no assurance as to if or when this will happen.

No sales commissions or dealer manager fees were payable on shares sold through the DRP.

19

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

Share Repurchase Program and Redeemable Common Stock

The Company’s share repurchase program may provide an opportunity for stockholders to have their shares of common stock repurchased by the Company, subject to certain restrictions and limitations. No shares can be repurchased under the Company’s share repurchase program until after the first anniversary of the date of purchase of such shares; provided, however, that this holding period shall not apply to repurchases requested within two years after the death or disability of a stockholder.

The purchase price for shares repurchased under the Company’s share repurchase program is as follows:

Share Purchase Anniversary	Repurchase Price on Repurchase Date(1)
Less than 1 year	No Repurchase Allowed
1 year	92.5% of Estimated Value per Share(2)
2 years	95.0% of Estimated Value per Share(2)
3 years	97.5% of Estimated Value per Share(2)
4 years	100.0% of Estimated Value per Share(2)
In the event of a stockholder’s death or disability(3)	Average Issue Price for Shares(4)

________________

(1) As adjusted for any stock dividends, combinations, splits, recapitalizations or any similar transaction with respect to the shares of common stock.

(2) For purposes of the share repurchase program, the “Estimated Value per Share” will equal the most recently determined Estimated Value per Share.

(3) The required one year holding period to be eligible to redeem shares under the Company’s share repurchase program does not apply in the event of death or disability of a stockholder.

(4) The purchase price per share for shares redeemed upon the death or disability of a stockholder will be equal to the average issue price per share for all of the stockholder’s shares.

The purchase price per share for shares repurchased pursuant to the share repurchase program will be further reduced by the aggregate amount of net proceeds per share, if any, distributed to the Company’s stockholders prior to the repurchase date as a result of the sale of one or more of the Company’s assets that constitutes a return of capital distribution as a result of such sales.

Repurchases of shares of the Company’s common stock are made quarterly upon written request to the Company at least 15 days prior to the end of the applicable quarter for which the share repurchase program is in effect. Repurchase requests are honored approximately 30 days following the end of the applicable quarter (the “Repurchase Date”). Stockholders may withdraw their repurchase request at any time up to three business days prior the Repurchase Date. On October 21, 2014, the Company’s board of directors elected to suspend the Company’s share repurchase program, effective November 20, 2014. On May 12, 2015, the Company’s board of directors elected to reinstate the share repurchase program effective July 1, 2015.

During the three months ended March 31, 2016, the Company redeemed a total of 99,243 shares with a total redemption value of $1,000,000 and received net requests for the redemption of 347,512 shares with a total net redemption value of $3,763,312. No amounts were requested or redeemed during the three months ended March 31, 2015.

20

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

The Company cannot guarantee that the funds set aside for the share repurchase program will be sufficient to accommodate all repurchase requests made in any quarter. In the event that the redemption requests exceed the Company’s restrictions on limitation or the Company does not have sufficient funds available to repurchase all of the shares of the Company’s common stock for which repurchase requests have been submitted in any quarter, priority will be given to redemption requests in the case of the death or disability of a stockholder. If the Company repurchases less than all of the shares subject to a repurchase request in any quarter, with respect to any shares which have not been repurchased, the requesting stockholder could (1) withdraw the request for repurchase or (2) ask that the Company honor the request in a future quarter, if any, when such repurchases may be made pursuant to the limitations of the share repurchase program and when sufficient funds are available. Such pending requests would be honored among all requests for redemptions in any given redemption period as follows: first, pro rata as to redemptions sought upon a stockholder’s death or disability; and, next, pro rata as to other redemption requests.

The Company is not obligated to repurchase shares of the Company’s common stock under the share repurchase program. In no event shall redemptions under the share repurchase program exceed 5% of the weighted average number of shares of the Company’s common stock outstanding during the prior calendar year. Effective July 1, 2015, in no event shall the value of the shares repurchased pursuant to the share repurchase program exceed $2,000,000 during the quarter beginning July 1, 2015, with each subsequent quarter not to exceed $1,000,000. There is no fee in connection with a repurchase of shares of the Company’s common stock. As of March 31, 2016, the Company has recognized redemptions payable of $1,000,000, which is included in accounts payable and accrued liabilities on the accompanying consolidated balance sheets.

In addition, the Company’s board of directors may, in its sole discretion, amend, suspend, or terminate the share repurchase program at any time upon 30 days notice to the Company’s stockholders if it determines that the funds available to fund the share repurchase program are needed for other business or operational purposes or that amendment, suspension or termination of the share repurchase program is in the best interest of the Company’s stockholders. Therefore, stockholders may not have the opportunity to make a repurchase request prior to any potential termination of the Company’s share repurchase program.

Pursuant to the share repurchase program, for the three months ended March 31, 2016 and 2015, the Company reclassified $0 and $0, net of $1,000,000 and $0 of fulfilled redemption requests, respectively, from permanent equity to temporary equity, which is included as redeemable common stock on the accompanying consolidated balance sheets.

Distributions Declared

Distributions declared to date (1) accrue daily to stockholders of record as of the close of business on each day, (2) are payable in cumulative amounts on or before the third day of each calendar month with respect to the prior month and (3) are calculated at a rate of $0.001964 per share per day during the three months ended March 31, 2016 and 2015.

Distributions declared for the three months ended March 31, 2016 and 2015 were $13,649,330 and $13,585,679, including $0 and $78, or 0 shares and 8 shares, respectively, of common stock attributable to the DRP.

As of March 31, 2016 and December 31, 2015, $4,647,928 and $4,668,261 distributions declared were payable, none of which was reinvested pursuant to the DRP.

21

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

Distributions Paid

For the three months ended March 31, 2016 and 2015, the Company paid cash distributions of $13,669,663 and $13,585,602, which related to distributions declared for each day in the period from December 1, 2015 through February 29, 2016 and December 1, 2014 through February 28, 2015, respectively. Additionally, for the three months ended March 31, 2016 and 2015, 0 and 8 shares of common stock were issued pursuant to the DRP for gross offering proceeds of $0 and $78, respectively. For the three months ended March 31, 2016 and 2015, the Company paid total distributions of $13,669,663 and $13,585,680, respectively.

7. Earnings (Loss) Per Share

The following table presents a reconciliation of net loss attributable to common stockholders and shares used in calculating basic and diluted earnings (loss) per share, or EPS, for the three months ended March 31, 2016 and 2015:

	Three Months Ended March 31,
	2016			2015
Net loss attributable to the Company	$	(3,618,142	)	$	(3,830,646	)
Less: dividends declared on participating securities	45,505			89,291
Net loss attributable to common stockholders	(3,663,647		)	(3,919,937		)
Weighted average common shares outstanding — basic and diluted	76,350,555			76,353,484
Loss per common share — basic and diluted	$	(0.05	)	$	(0.05	)

The Company excluded all unvested restricted common shares outstanding issued to the Advisor and the Company’s independent directors from the calculation of diluted loss per common share as the effect would have been antidilutive.

8. Related Party Arrangements

The Company has entered into the Advisory Agreement with the Advisor. Pursuant to the Advisory Agreement, the Company is obligated to pay the Advisor specified fees upon the provision of certain services related to the investment of funds in real estate and real estate-related investments, the management of the Company’s investments and for other services (including, but not limited to, the disposition of investments). Subject to the limitations described below, the Company is also obligated to reimburse the Advisor and its affiliates for organization and offering costs incurred by the Advisor and its affiliates on behalf of the Company, and the Company is obligated to reimburse the Advisor and its affiliates for acquisition and origination expenses and certain operating expenses incurred on behalf of the Company or incurred in connection with providing services to the Company.

22

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

Amounts attributable to the Advisor and its affiliates incurred for the three months ended March 31, 2016 and 2015 and amounts outstanding to the Advisor and its affiliates as of March 31, 2016 and December 31, 2015 are as follows:

	Incurred For the Three Months Ended March 31,				Payable as of
	2016		2015		March 31, 2016		December 31, 2015
Consolidated Statements of Operations:
Expensed
Investment management fees(1)	$	3,501,124	$	3,441,922	$	5,243	$	1,169,770
Acquisition expenses(2)	—		7,145		—		—
Property management
Fees(1)	1,571,982		1,503,168		527,320		520,127
Reimbursement of onsite personnel(3)	4,564,368		4,465,296		938,321		703,791
Other fees(1)	449,317		423,386		50,370		52,237
Other operating expenses(4)	346,719		313,765		134,849		51,029
Consolidated Balance Sheets:
Capitalized
Construction management
Fees(5)	245,033		265,434		73,064		71,133
Reimbursement of labor costs(5)	83,050		23,091		8,968		114,122
	$	10,761,593	$	10,443,207	$	1,738,135	$	2,682,209

________________

(1) Included in fees to affiliates in the accompanying consolidated statements of operations.

(2) Included in acquisition costs in the accompanying consolidated statements of operations.

(3) Included in operating, maintenance and management in the accompanying consolidated statements of operations.

(4) Included in general and administrative expenses in the accompanying consolidated statements of operations.

(5) Included in building and improvements in the accompanying consolidated balance sheets.

Investment Management Fee

The Company pays the Advisor a monthly investment management fee equal to one-twelfth of 0.80% of (1) the cost of real properties and real estate-related assets acquired directly by the Company or (2) the Company’s allocable cost of each real property or real estate-related asset acquired through a joint venture. Such fee is calculated including acquisition fees, acquisition expenses and any debt attributable to such investments, or the Company’s proportionate share thereof in the case of investments made through joint ventures.

Acquisition Fees and Expenses

The Company pays the Advisor an acquisition fee equal to 2.0% of (1) the cost of investment, as defined in the Advisory Agreement, in connection with the acquisition or origination of any type of real property or real estate-related asset acquired

23

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

directly by the Company or (2) the Company’s allocable portion of the purchase price in connection with the acquisition or origination of any type of real property or real estate-related asset acquired through a joint venture, including any acquisition and origination expenses and any debt attributable to such investments.

In addition to acquisition fees, the Company reimburses the Advisor for amounts directly incurred by the Advisor or its affiliates, including personnel-related costs for acquisition due diligence, legal and non-recurring management services, and amounts the Advisor pays to third parties in connection with the selection, acquisition or development of a property or acquisition of real estate-related assets, whether or not the Company ultimately acquires the property or the real estate-related assets.

The Charter limits the Company’s ability to pay acquisition fees if the total of all acquisition fees and expenses relating to the purchase would exceed 6.0% of the contract purchase price. Under the Charter, a majority of the Company’s board of directors, including a majority of the independent directors, is required to approve any acquisition fees (or portion thereof) that would cause the total of all acquisition fees and expenses relating to an acquisition to exceed 6.0% of the contract purchase price. In connection with the purchase of securities, the acquisition fee may be paid to an affiliate of the Advisor that is registered as a FINRA member broker-dealer if applicable FINRA rules would prohibit the payment of the acquisition fee to a firm that is not a registered broker-dealer.

Property Management Fees and Expenses

The Company has entered into Property Management Agreements with Steadfast Management Company, Inc., an affiliate of the Sponsor (the “Property Manager”), in connection with the acquisition of each of the Company’s properties (other than EBT Lofts, Library Lofts and Stuart Hall Lofts, which are managed by an unaffiliated third-party management company). The property management fee payable with respect to each property under the Property Management Agreements (each a “Property Management Agreement”) ranges from 2.50% to 3.75% of the annual gross revenue collected, which is usual and customary for comparable property management services rendered to similar properties in similar geographic markets, as determined by the Advisor and approved by a majority of the Company’s board of directors, including a majority of the independent directors. The Property Manager also receives an oversight fee of 1% of gross revenues at certain of the properties at which it does not serve as a property manager. Generally, each Property Management Agreement has an initial one year term and will continue thereafter on a month-to-month basis unless either party gives a 60 day prior notice of its desire to terminate the Property Management Agreement, provided that the Company may terminate the Property Management Agreement at any time without cause or upon an uncured breach of the Property Management Agreement upon 30 days prior written notice to the Property Manager.

In addition to the property management fee, the Property Management Agreements also specify certain other fees payable to the Property Manager or its affiliates, including fees for benefit administration, information technology infrastructure, licenses, and support and training services. The Company also reimburses the Property Manager for the salaries and related benefits of on-site property management employees.

Construction Management Fees

The Company has entered into Construction Management Agreements with Pacific Coast Land and Construction, Inc., an affiliate of the Sponsor (the “Construction Manager”), in connection with the planned capital improvements and renovation for certain of the Company’s properties. The construction management fee payable with respect to each property under the Construction Management Agreements (each a “Construction Management Agreement”) ranges from 5.0% to 12.0% of the costs of the improvements for which the Construction Manager has planning and oversight authority. Generally, each Construction Management Agreement has a term equal to the planned renovation timeline unless either party gives a 30 day

24

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

prior notice of its desire to terminate the Construction Management Agreement. Construction management fees are capitalized to the respective real estate properties in the period in which they are incurred, as such costs relate to capital improvements and renovations for units taken out of service while they undergo the planned renovation.

Other Operating Expense Reimbursement

In addition to the various fees paid to the Advisor, the Company is obligated to pay directly or reimburse all expenses incurred by the Advisor in providing services to the Company, including the Company’s allocable share of the Advisor’s overhead, such as rent, employee costs, utilities and information technology costs. The Company will not reimburse the Advisor for employee costs in connection with services for which the Advisor or its affiliates receive acquisition fees or disposition fees or for the salaries the Advisor pays to the Company’s executive officers.

The Charter limits the Company’s total operating expenses during any four fiscal quarters to the greater of 2% of the Company’s average invested assets or 25% of the Company’s net income for the same period (the “2% 25% Limitation”). The Company may reimburse the Advisor, at the end of each fiscal quarter, for operating expenses incurred by the Advisor; provided, however, that the Company shall not reimburse the Advisor at the end of any fiscal quarter for operating expenses that exceed the 2%/25% Limitation unless the independent directors have determined that such excess expenses were justified based on unusual and non-recurring factors. The Advisor must reimburse the Company for the amount by which the Company’s operating expenses for the preceding four fiscal quarters then ended exceed the 2%/25% Limitation unless the independent directors have determined that such excess expenses were justified. For purposes of determining the 2%/25% Limitation amount, “average invested assets” means the average monthly book value of the Company’s assets invested directly or indirectly in equity interests and loans secured by real estate during the 12-month period before deducting depreciation, bad debts or other non-cash reserves. “Total operating expenses” means all expenses paid or incurred by the Company that are in any way related to the Company’s operation, including the Company’s allocable share of Advisor overhead and investment management fees, but excluding (a) the expenses of raising capital such as organization and offering expenses, legal, audit, accounting, underwriting, brokerage, listing, registration and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, listing and registration of shares of the Company’s common stock; (b) interest payments; (c) taxes; (d) non-cash expenditures such as depreciation, amortization and bad debt reserves; (e) reasonable incentive fees based on the gain in the sale of the Company’s assets; (f) acquisition fees and acquisition expenses (including expenses relating to potential acquisitions that the Company does not close); (g) real estate commissions on the resale of investments; and (h) other expenses connected with the acquisition, disposition, management and ownership of investments (including the costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of real property).

At March 31, 2016, the Company’s allocable share of the Advisor’s overhead expenses did not exceed the 2%/25% Limitation test.

Disposition Fee

The Company will pay the Advisor a disposition fee in connection with a sale of a property or real estate-related asset and in the event of the sale of the entire Company, in either case when the Advisor or its affiliates provides a substantial amount of services as determined by a majority of the Company’s independent directors. With respect to a sale of a property or real estate-related asset, the Company will pay the Advisor a disposition fee equal to 1.5% of the contract sales price of the investment sold. With respect to a final liquidity event, the Company will pay the Advisor a disposition fee equal to (i) 0.5% of the total consideration paid in a final liquidity event if the price per share paid to stockholders is less than or equal to $9.00; (ii) 0.75% of the total consideration paid in a final liquidity event if the price per share paid to stockholders is between $9.01 and $10.24;

25

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

(iii) 1.00% of the total consideration paid in a final liquidity event if the price per share paid to stockholders is between $10.25 and $11.24; (iv) 1.25% of the total consideration paid in a final liquidity event if the price per share paid to stockholders is between $11.25 and $12.00; and (v) 1.50% of the total consideration paid in a final liquidity event if the price per share paid to stockholders is greater than or equal to $12.01. To the extent the disposition fee is paid upon the sale of any assets other than real property, it will be included as an operating expense for purposes of the 2%/25% Limitation. In connection with the sale of securities, the disposition fee may be paid to an affiliate of the Advisor that is registered as a FINRA member broker-dealer if applicable FINRA rules would prohibit the payment of the disposition fee to a firm that is not a registered broker-dealer. The Charter limits the maximum amount of the disposition fees payable to the Advisor for the sale of any real property to the lesser of one-half of the brokerage commission paid or 3% of the contract sales price, but in no event shall the total real estate commissions paid, including any disposition fees payable to the Advisor, exceed 6% of the contract sales price.

Restricted Stock Agreement

On June 11, 2014, the Company entered into a restricted stock agreement with the Advisor whereby the Company issued to the Advisor 488,281.25 restricted shares of the Company’s common stock at a fair market value of $10.24 per share in satisfaction of certain deferred fees due to the Advisor in the aggregate amount of $5,000,000. The shares of restricted stock vest and become non-forfeitable upon the earliest to occur of (i) 50% at December 31, 2015 and 50% at December 31, 2016, (ii) certain liquidity events of the Company, (iii) the Company’s cumulative modified funds from operations exceed the lesser of (a) the cumulative amount of distributions paid to the Company’s stockholders or (b) an amount that is equal to a 7.0% cumulative, non-compounded annual return on the Company’s stockholders’ invested capital, or (iv) the Company’s termination of, or failure to renew, the Advisory Agreement other than for “cause” (as defined in the Advisory Agreement). The shares of restricted stock shall be forfeited if the Advisor is terminated for any reason other than (iv) above.

9. Incentive Award Plan and Independent Director Compensation

The Company has adopted an incentive plan (the “Incentive Award Plan”) that provides for the grant of equity awards to its employees, directors and consultants and those of the Company’s affiliates. The Incentive Award Plan authorizes the grant of non-qualified and incentive stock options, restricted stock awards, restricted stock units, stock appreciation rights, dividend equivalents and other stock-based awards or cash-based awards. No awards have been granted under the Incentive Award Plan as of March 31, 2016 and December 31, 2015, except those awards granted to the independent directors as described below.

Under the Company’s independent directors’ compensation plan, which is a sub-plan of the Incentive Award Plan, each of the Company’s independent directors was entitled to receive 5,000 shares of restricted common stock in connection with the initial meeting of the Company’s full board of directors. The Company’s board of directors, and each of the independent directors, agreed to delay the initial grant of restricted stock until the Company raised $2,000,000 in gross offering proceeds in the Private Offering. Each subsequent independent director that joins the Company’s board of directors receives 5,000 of restricted common stock upon election to the Company’s board of directors. In addition, on the date following an independent director’s re-election to the Company’s board of directors, he or she receives 2,500 shares of restricted common stock. One-fourth of the shares of restricted common stock generally vest and become non-forfeitable upon issuance and the remaining portion will vest in three equal annual installments beginning on the date of grant and ending on the third anniversary of the date of grant; provided, however, that the restricted stock will become fully vested and become non-forfeitable on the earlier to occur of (1) the termination of the independent director’s service as a director due to his or her death or disability, or (2) a change in control of the Company and as otherwise provided in the Incentive Award Plan. On August 10, 2015, the Company’s board of directors granted 2,000 shares of restricted common stock pursuant to the Incentive Award Plan to each of Larry H. Dale and Kerry D. Vandell in appreciation for their service as independent directors and commitment to the Company for their prior years of service as independent directors, all of which vested immediately. On August 11, 2015, the Company granted

26

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

5,000 shares of restricted common stock to its new independent director. The Company recorded stock-based compensation expense of $12,864 and $22,884 for the three months ended March 31, 2016 and 2015, respectively.

10. Commitments and Contingencies

Economic Dependency

The Company is dependent on the Advisor and its affiliates for certain services that are essential to the Company, including the identification, evaluation, negotiation, purchase, and disposition of real estate and real estate-related investments; management of the daily operations of the Company’s real estate and real estate-related investment portfolio; and other general and administrative responsibilities. In the event that these companies are unable to provide the respective services, the Company will be required to obtain such services from other sources.

Concentration of Credit Risk

The geographic concentration of the Company’s portfolio makes it particularly susceptible to adverse economic developments in the Houston, Texas, Chicago, Illinois and Austin, Texas apartment markets. Any adverse economic or real estate developments in these markets, such as business layoffs or downsizing, relocations of businesses, increased competition from other apartment communities, decrease in demand for apartments or any other changes, could adversely affect the Company’s operating results and its ability to make distributions to stockholders.

Environmental

As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. The Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s properties, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the properties could result in future environmental liabilities.

Legal Matters

From time to time, the Company is subject, or party, to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on the Company’s results of operations or financial condition nor is the Company aware of any such legal proceedings contemplated by government agencies.

27

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

11. Derivative Financial Instruments

The Company uses interest rate derivatives with the objective of managing exposure to interest rate movements thereby minimizing the effect of interest rate changes and the effect they could have on future cash flows. Interest rate cap agreements are used to accomplish this objective. The following table provides the terms of the Company’s interest rate derivative instruments that were in effect at March 31, 2016 and December 31, 2015:

March 31, 2016
Type	Maturity Date Range	Based on	Number of Instruments	Notional Amount		Variable Rate		Weighted Average Rate Cap		Fair Value
Interest rate cap	11/1/2016 - 10/1/2019	One-Month LIBOR	30	$	637,110,000	0.44	%	2.73	%	$	65,431

December 31, 2015
Type	Maturity Date Range	Based on	Number of Instruments	Notional Amount		Variable Rate		Weighted Average Rate Cap		Fair Value
Interest rate cap	11/1/2016 - 10/1/2019	One-Month LIBOR	30	$	637,110,000	0.43	%	2.68	%	$	298,143

The interest rate cap agreements are not designated as cash flow hedges. Accordingly, the Company records any changes in the fair value of the interest rate cap agreements as interest expense. The change in the fair value of the interest rate cap agreements for the three months ended March 31, 2016 and 2015 resulted in an unrealized loss of $232,712 and $1,021,586, respectively, which is included in interest expense in the accompanying consolidated statements of operations. The fair value of interest rate cap agreements of $65,431 and $298,143 are included in other assets, net on the accompanying consolidated balance sheets.

12. Subsequent Events

Distributions Paid

On April 1, 2016, the Company paid distributions of $4,647,928, which related to distributions declared for each day in the period from March 1, 2016 through March 31, 2016. All such distributions were paid in cash.

On May 2, 2016, the Company paid distributions of $4,497,565, which related to distributions declared for each day in the period from April 1, 2016 through April 30, 2016. All such distributions were paid in cash.

Redemption

On April 29, 2016, the Company redeemed 96,215 shares of its common stock for a total redemption value of $1,000,000, or $10.39 per share, pursuant to the Company’s share repurchase program.

Distributions Declared

On May 10, 2016, the Company’s board of directors approved and authorized a daily distribution to stockholders of record as of the close of business on each day of the period commencing on July 1, 2016 and ending on September 30, 2016. The distributions will be equal to $0.001958 per share of the Company’s common stock. The distributions for each record date in

28

PART I — FINANCIAL INFORMATION (continued)

Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

July 2016, August 2016 and September 2016 will be paid in August 2016, September 2016 and October 2016, respectively. The distributions will be payable to stockholders from legally available funds therefor.

29

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the accompanying financial statements of Steadfast Income REIT, Inc. and the notes thereto. As used herein, the terms “we,” “our” and “us” refer to Steadfast Income REIT, Inc., a Maryland corporation, and, as required by context, Steadfast Income REIT Operating Partnership, L.P., a Delaware limited partnership, which we refer to as our “operating partnership,” and to their subsidiaries.

Forward-Looking Statements

Certain statements included in this Quarterly Report on Form 10-Q that are not historical facts (including any statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto) are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are only predictions. We caution that forward-looking statements are not guarantees. Actual events or our investments and results of operations could differ materially from those expressed or implied in any forward-looking statements. Forward-looking statements are typically identified by the use of terms such as “may,” “should,” “expect,” “could,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “predict,” “potential” or the negative of such terms and other comparable terminology.

The forward-looking statements included herein are based upon our current expectations, plans, estimates, assumptions and beliefs, which involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to:

• the fact that we have had a net loss for each quarterly and annual period since inception;

• changes in economic conditions generally and the real estate and debt markets specifically;

• our ability to successfully dispose of real estate on terms that are favorable to us;

• risks inherent in the real estate business, including tenant defaults, tenant vacancies, potential liability relating to environmental matters and liquidity of real estate investments;

• the fact we pay fees and expenses to our advisor and its affiliates that were not negotiated on an arm’s length basis and the payment of these fees and expenses increases the risk that our stockholders will not earn a profit on their investment in us;

• legislative or regulatory changes (including changes to the laws governing the taxation of real estate investment trusts, or REITs);

• the availability of capital;

• changes in interest rates; and

• changes to generally accepted accounting principles, or GAAP.

Any of the assumptions underlying the forward-looking statements included herein could be inaccurate, and undue reliance should not be placed on any forward-looking statements included herein. All forward-looking statements are made as of the date this quarterly report is filed with the Securities and Exchange Commission, or SEC, and the risk that actual results will differ materially from the expectations expressed herein will increase with the passage of time. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements made herein, whether as a result of new information, future events, changed circumstances or any other reason. In light of the significant uncertainties inherent in the forward-looking statements included in this quarterly report, the inclusion of such

30

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

forward-looking statements should not be regarded as a representation by us or any other person that the objectives and plans set forth in this quarterly report will be achieved.

All forward-looking statements included herein should be read in light of the factors identified in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 18, 2016.

Overview

We were formed on May 4, 2009, as a Maryland corporation that has elected to qualify as a real estate investment trust, or REIT. As described in more detail below, we own and manage a diverse portfolio of real estate investments, primarily in the multifamily sector, located throughout the United States.

On July 19, 2010, we commenced our initial public offering of up to a maximum of 150,000,000 shares of common stock at an initial price of $10.00 per share (subject to certain discounts) and up to 15,789,474 shares of common stock pursuant to our distribution reinvestment plan at an initial price of $9.50 per share. On July 12, 2012, our board of directors determined an estimated value per share of our common stock of $10.24 as of March 31, 2012. As a result of the determination of the estimated value per share of our common stock as of March 31, 2012, effective September 10, 2012, the offering price of our common stock in our ongoing public offering increased from the previous price of $10.00 per share to $10.24 per share. Additionally, effective September 10, 2012, the price of shares of our common stock issued pursuant to our distribution reinvestment plan increased from a price of $9.50 per share to a price of $9.73 per share, or 95% of the new offering price of $10.24 per share. On March 10, 2015, our board of directors determined an estimated value per share of the Company’s common stock of $10.35 as of December 31, 2014. On February 25, 2016, our board of directors determined an estimated value per share of the Company’s common stock of $11.44 as of December 31, 2015.

On December 20, 2013, we terminated our ongoing public offering. Upon termination of our public offering, we had sold 73,608,337 shares of common stock for gross proceeds of $745,389,748, including 1,588,289 shares of common stock issued pursuant to our distribution reinvestment plan for gross offering proceeds of $15,397,232. Following the termination of our initial public offering, we continued to offer shares of our common stock pursuant to our distribution reinvestment plan until our board of directors determined to suspend our distribution reinvestment plan effective with distributions earned beginning on December 1, 2014. Our board of directors may, in its sole discretion, change the price at which we offer shares of common stock to our stockholders pursuant to the distribution reinvestment plan to reflect future changes in our estimated value per share and other factors that our board of directors deems relevant.

As of March 31, 2016, we owned 65 multifamily properties located within the greater midwest and southern geographic regions of the United States. Our property portfolio consists of an aggregate of 16,622 apartment homes and 25,973 square feet of rentable commercial space. The purchase price of our real estate portfolio was $1,634,327,541, exclusive of closing costs and inclusive of development and construction costs of apartment homes we constructed. At March 31, 2016, our portfolio was approximately 96.6% leased.

Steadfast Income Advisor, LLC is our advisor. Subject to certain restrictions and limitations, our advisor manages our day-to-day operations and our portfolio of properties. Our advisor sources and presents investment opportunities to our board of directors. Our advisor also provides investment management, marketing, investor relations and other administrative services on our behalf.

Substantially all of our business is conducted through our operating partnership. We are the sole general partner of our operating partnership. The initial limited partner of our operating partnership is our advisor. The limited partnership agreement of our operating partnership provides that our operating partnership will be operated in a manner that will enable us to (1) satisfy the requirements for being classified as a REIT for tax purposes, (2) avoid any federal income or excise tax liability and (3) ensure that our operating partnership will not be classified as a “publicly traded partnership” for purposes of Section 7704 of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, which classification could result in our operating partnership being taxed as a corporation, rather than as a partnership. In addition to the administrative and operating costs and expenses incurred by our operating partnership in acquiring and operating real properties, our operating

31

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

partnership will pay all of our administrative costs and expenses, and such expenses will be treated as expenses of our operating partnership.

We have elected to be taxed as a REIT for federal income tax purposes beginning with the taxable year ending December 31, 2010. As a REIT, we generally will not be subject to federal income tax on income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year in which qualification is denied. Failing to qualify as a REIT could materially and adversely affect our net income.

Market Outlook

During times of economic downturn, market conditions could negatively impact the multifamily real estate sector, resulting in lower occupancy, lower rental rates and declining values. The economy in the United States has improved; however, there is no assurance that economic conditions will continue to improve or will not worsen in the future. We believe we currently have unique investment opportunities, particularly in the multifamily sector. Home ownership rates are the lowest they have been since 1967. Demographic and economic factors favor the flexibility of rental housing and discourage the potential financial burden associated with home ownership. Additionally, Millennials and Baby Boomers, the two largest demographic groups comprising roughly half of the total population in the United States, are increasingly choosing to live in a variety of rental housing. Our plan is to provide rental housing for these multi-generational groups as they age. Millennials are getting married and having children later and are choosing to live in apartment communities until their mid-30s. Today, 30% of Millennials are still living with their parents or are still in school. When they get a job, Millennials will likely rent moderate income apartments based upon an average income of $35,000. We believe this creates demand for multifamily housing.

32

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Our Real Estate Portfolio

As of March 31, 2016, we owned the 65 multifamily properties listed below:

					Contract Purchase Price(1)		Mortgage Debt Outstanding at March 31, 2016		Average Occupancy as of				Average Monthly Rent(2) as of
	Property Name	Location	Purchase Date	Number of Units					Mar 31, 2016		Dec 31, 2015		Mar 31, 2016		Dec 31, 2015
1	Park Place Condominiums	Des Moines, IA	12/22/2010	151	$	8,323,400	$	4,759,429	94.7	%	94.7	%	$	908	$	877
2	Clarion Park Apartments	Olathe, KS	6/28/2011	220	11,215,000		8,252,961		97.7	%	95.0	%	797		781
3	Cooper Creek Village Apartments	Louisville, KY	8/24/2011	123	10,420,000		6,318,194		95.1	%	94.3	%	929		903
4	Truman Farm Villas	Grandview, MO	12/22/2011	200	9,100,000		5,547,057		98.5	%	98.5	%	712		697
5	EBT Lofts	Kansas City, MO	12/30/2011	102	8,575,000		5,244,485		98.0	%	95.1	%	1,020		1,009
6	Windsor on the River Apartments	Cedar Rapids, IA	1/26/2012	424	33,000,000		22,955,209		93.6	%	92.2	%	699		688
7	Renaissance at St. Andrews	Louisville, KY	2/17/2012	216	12,500,000		8,627,140		97.7	%	94.9	%	707		705
8	Spring Creek Apartments	Edmond, OK	3/9/2012	252	19,350,000		13,108,481		95.2	%	95.6	%	904		842
9	Montclair Parc Apartment Homes	Oklahoma City, OK	4/26/2012	360	35,750,000		23,140,000		94.7	%	94.7	%	861		864
10	Sonoma Grande Apartments	Tulsa, OK	5/24/2012	336	32,200,000		21,698,083		95.2	%	93.8	%	952		956
11	Estancia Apartments	Tulsa, OK	6/29/2012	294	27,900,000		20,978,141		93.5	%	93.9	%	948		967
12	Montelena Apartments	Round Rock, TX	7/13/2012	232	18,350,000		11,872,939		94.4	%	93.5	%	1,084		1,071
13	Valley Farms Apartment Homes	Louisville, KY	8/30/2012	160	15,100,000		9,690,971		93.8	%	93.8	%	859		857
14	Hilliard Park Apartments	Columbus, OH	9/11/2012	201	19,800,000		13,126,180		95.0	%	91.5	%	1,005		998
15	Sycamore Terrace Apartments	Terre Haute, IN	9/20/2012 & 3/5/2014	250	23,174,157		17,771,500		93.2	%	97.6	%	1,115		1,154
16	Hilliard Summit Apartments	Columbus, OH	9/28/2012	208	24,100,000		15,950,533		93.8	%	92.8	%	1,140		1,105
17	Springmarc Apartments	San Marcos, TX	10/19/2012	240	21,850,000		14,676,026		97.5	%	97.9	%	945		956
18	Renaissance at St. Andrews Condominiums	Louisville, KY	10/31/2012	29	1,375,000		—		100.0	%	100.0	%	696		689
19	Ashley Oaks Apartment Homes	San Antonio, TX	11/29/2012	462	30,790,000		20,689,583		95.9	%	95.2	%	792		793
20	Arrowhead Apartment Homes	Palatine, IL	11/30/2012	200	16,750,000		11,961,757		96.0	%	93.5	%	1,024		1,061
21	The Moorings Apartments	Roselle, IL	11/30/2012	216	20,250,000		14,460,157		97.2	%	95.8	%	1,060		1,080

33

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

					Contract Purchase Price(1)		Mortgage Debt Outstanding at March 31, 2016		Average Occupancy as of				Average Monthly Rent(2) as of
	Property Name	Location	Purchase Date	Number of Units					Mar 31, 2016		Dec 31, 2015		Mar 31, 2016		Dec 31, 2015
22	Forty 57 Apartments	Lexington, KY	12/20/2012	436	$	52,500,000	$	37,546,621	95.9	%	95.2	%	$	868	$	881
23	Keystone Farms Apartments	Nashville, TN	12/28/2012	90	8,400,000		5,920,981		97.8	%	100.0	%	1,144		1,138
24	Riverford Crossing Apartments	Frankfort, KY	12/28/2012	300	30,000,000		21,334,735		96.3	%	95.3	%	845		835
25	Valley Farms North(3)	Louisville, KY	12/28/2012	128	14,709,984		9,654,584		87.5	%	74.2	%	952		885
26	Montecito Apartments	Austin, TX	12/31/2012	268	19,000,000		13,600,387		96.6	%	97.0	%	921		908
27	Hilliard Grand Apartments	Dublin, OH	12/31/2012	314	40,500,000		28,425,847		94.9	%	94.9	%	1,224		1,252
28	The Hills at Fair Oaks	Fair Oaks Ranch, TX	1/31/2013	288	34,560,000		24,184,756		94.4	%	91.7	%	1,013		1,032
29	Library Lofts East	Kansas City, MO	2/28/2013	118	12,750,000		8,638,971		91.5	%	95.8	%	958		981
30	Trails at Buda Ranch	Buda, TX	3/28/2013	264	23,000,000		16,341,368		95.8	%	97.0	%	1,008		1,003
31	Deep Deuce at Bricktown	Oklahoma City, OK	3/28/2013	294	38,220,000		25,564,937		90.8	%	92.5	%	1,321		1,349
32	Deer Valley Apartments	Lake Bluff, IL	4/30/2013	224	28,600,000		20,049,415		94.2	%	92.4	%	1,262		1,262
33	Grayson Ridge Apartment Homes	North Richland Hills, TX	5/31/2013	240	14,300,000		10,259,378		97.5	%	95.4	%	813		815
34	Rosemont at Olmos Park	San Antonio, TX	5/31/2013	144	22,050,000		14,308,820		93.8	%	93.8	%	1,219		1,218
35	Retreat at Quail North	Oklahoma City, OK	6/12/2013	240	25,250,000		16,817,943		97.5	%	94.6	%	983		948
36	Lodge at Trails Edge	Indianapolis, IN	6/18/2013	268	18,400,000		12,233,455		94.8	%	94.8	%	717		714
37	Arbors of Carrollton	Carrollton, TX	7/3/2013	131	8,800,000		6,062,161		96.2	%	95.4	%	911		893
38	Waterford on the Meadow	Plano, TX	7/3/2013	350	23,100,000		16,086,164		95.7	%	96.6	%	907		885
39	The Belmont	Grand Prairie, TX	7/26/2013	260	12,100,000		8,969,894		95.8	%	95.4	%	758		767
40	Meritage at Steiner Ranch	Austin, TX	8/6/2013	502	80,000,000		53,518,990		94.0	%	94.0	%	1,391		1,368
41	Tapestry Park Apartments	Birmingham, AL	8/13/2013 & 12/1/2014	354	50,285,000		34,335,198		92.9	%	95.2	%	1,276		1,273
42	Dawntree Apartments	Carrollton, TX	8/15/2013	400	24,000,000		15,379,934		96.5	%	96.0	%	862		836
43	Stuart Hall Lofts	Kansas City, MO	8/27/2013	115	16,850,000		12,078,074		96.5	%	96.5	%	1,255		1,274
44	BriceGrove Park Apartments	Canal Winchester, OH	8/29/2013	240	20,100,000		14,405,682		95.8	%	95.0	%	830		815
45	Retreat at Hamburg Place	Lexington, KY	9/5/2013	150	16,300,000		12,015,810		95.3	%	94.0	%	970		953

34

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

					Contract Purchase Price(1)		Mortgage Debt Outstanding at March 31, 2016		Average Occupancy as of				Average Monthly Rent(2) as of
	Property Name	Location	Purchase Date	Number of Units					Mar 31, 2016		Dec 31, 2015		Mar 31, 2016		Dec 31, 2015
46	Cantare at Indian Lake Village	Hendersonville, TN	9/24/2013	206	$	29,000,000	$	18,666,148	94.7	%	96.1	%	$	1,149	$	1,164
47	The Landing at Mansfield	Mansfield, TX	9/27/2013	336	30,900,000		21,971,455		96.4	%	97.0	%	981		949
48	Heights at 2121	Houston, TX	9/30/2013	504	37,000,000		28,016,025		92.3	%	92.5	%	967		957
49	Villas at Huffmeister	Houston, TX	10/10/2013	294	37,600,000		25,133,182		90.5	%	92.9	%	1,190		1,145
50	Villas at Kingwood	Kingwood, TX	10/10/2013	330	40,150,000		27,206,720		95.2	%	90.6	%	1,226		1,241
51	Waterford Place at Riata Ranch	Cypress, TX	10/10/2013	228	23,400,000		15,809,447		91.7	%	91.7	%	1,104		1,093
52	Carrington Place	Houston, TX	11/7/2013	324	32,900,000		22,150,882		93.2	%	92.0	%	1,092		1,054
53	Carrington at Champion Forest	Houston, TX	11/7/2013	284	33,000,000		22,730,540		95.1	%	96.1	%	1,097		1,099
54	Carrington Park at Huffmeister	Cypress, TX	11/7/2013	232	25,150,000		17,527,446		93.1	%	93.5	%	1,159		1,126
55	Willow Crossing Apartments	Elk Grove, IL	11/20/2013	579	58,000,000		57,558,740		92.6	%	94.8	%	1,052		1,062
56	Echo at Katy Ranch	Katy, TX	12/19/2013	260	35,100,000		—		84.6	%	86.9	%	1,350		1,236
57	Heritage Grand at Sienna Plantation	Missouri City, TX	12/20/2013	240	27,000,000		16,500,960		94.2	%	92.5	%	1,184		1,190
58	Audubon Park Apartments	Nashville, TN	12/27/2013	256	16,750,000		11,657,770		92.2	%	91.8	%	765		895
59	Mallard Crossing Apartments	Loveland, OH	12/27/2013	350	39,800,000		27,041,341		93.7	%	90.6	%	1,053		986
60	Renaissance at Carol Stream	Carol Stream, IL	12/31/2013	293	29,150,000		19,850,261		92.5	%	92.5	%	994		1,008
61	Reserve at Creekside	Chattanooga, TN	3/28/2014	192	18,875,000		14,169,660		94.3	%	95.3	%	974		959
62	Mapleshade Park	Dallas, TX	3/31/2014	148	23,325,000		15,082,470		95.9	%	91.2	%	1,526		1,474
63	Richland Falls(4)	Murfreesboro, TN	5/16/2014	190	21,000,000		13,774,062		98.4	%	96.8	%	955		924
64	Oak Crossing	Fort Wayne, IN	6/3/2014	222	24,230,000		15,662,682		90.1	%	89.6	%	956		950
65	Park Shore Apartments	St. Charles, IL	9/12/2014	160	18,350,000		12,766,223		93.1	%	90.6	%	1,149		1,152
				16,622	$	1,634,327,541	$	1,111,838,945	94.5	%	94.0	%	$	1,005	$	999

________________

(1) The contract purchase price is comprised of the purchase price upon acquisition and the development and construction costs of apartment homes we have constructed, as applicable.

(2) Average monthly rent is based upon the effective rental income after considering the effect of vacancies, concessions and write-offs.

35

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

(3) Valley Farms North was acquired by the Company on December 28, 2012, comprised of 32 apartment homes, and is entitled for an additional 224 apartment homes. During 2014, construction began on an additional 96 of the entitled 224 apartment homes at Valley Farms North. During 2015, all 96 additional apartment homes were completed and available to be leased.

(4) Richland Falls was acquired by the Company on May 16, 2014, and included improved land zoned for an additional 86 apartment homes. During 2015, construction began on an additional 86 apartment homes at Richland Falls, none of which were completed as of March 31, 2016.

Critical Accounting Policies

The preparation of our financial statements requires significant management judgments, assumptions and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. A discussion of the accounting policies that management considers critical in that they involve significant management judgments, assumptions and estimates is included in our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC. There have been no significant changes to our accounting policies during 2016, other than as discussed in Note 2 to our condensed consolidated unaudited financial statements in this Quarterly Report on Form 10-Q.

Income Taxes

We elected to be taxed as a REIT under the Internal Revenue Code and have operated as such beginning with the taxable year ended December 31, 2010. To continue to qualify as a REIT, we must continue to meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our annual REIT taxable income to stockholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, we generally will not be subject to federal income tax to the extent we distribute qualifying dividends to our stockholders. If we fail to qualify as a REIT in any taxable year, we would be subject to federal income tax on our taxable income at regular corporate income tax rates and generally would not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification was lost, unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to stockholders. However, we believe we are organized and operate in such a manner as to qualify for treatment as a REIT.

We follow the income tax guidance under GAAP to recognize, measure, present and disclose in our consolidated financial statements uncertain tax positions that we have taken or expect to take on a tax return. As of March 31, 2016 and December 31, 2015, we did not have any liabilities for uncertain tax positions that we believe should be recognized in our consolidated financial statements. Due to uncertainty regarding the realization of certain deferred tax assets, we have established valuation allowances, primarily in connection with the net operating loss carryforward related to the REIT. We have not been assessed interest or penalties by any major tax jurisdictions. Our evaluation was performed for the tax years ended December 31, 2015, 2014 and 2013.

Distributions

Our board of directors has declared daily distributions that are paid on a monthly basis. We expect to continue paying monthly distributions unless our results of operations, our general financial condition, general economic conditions or other factors prohibit us from doing so. We may declare distributions in excess of our funds from operations. As a result, our distribution rate and payment frequency may vary from time to time. However, to qualify as a REIT for tax purposes, we must make distributions equal to at least 90% of our “REIT taxable income” each year.

36

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Distributions declared (1) accrue daily to our stockholders of record as of the close of business on each day, (2) are payable in cumulative amounts on or before the third day of each calendar month with respect to the prior month and (3) are calculated at a rate of $0.001964 per share per day during the year ended December 31, 2015 and three months ended March 31, 2016.

The distributions paid during each of the last five fiscal quarters ended March 31, 2016, along with the amount of distributions reinvested pursuant to the distribution reinvestment plan were as follows:

Period	Distributions Declared(1)		Distributions Declared Per Share(1)(2)		Distributions Paid(3)						Sources of Distributions Paid				Net Cash Provided By Operating Activities
											Cash Flow From Operations		Revolving Credit Facility
					Cash		Reinvested		Total
First Quarter 2015	$	13,585,679	$	0.177	$	13,585,602	$	78	$	13,585,680	$	11,032,049	$	2,553,631	$	11,032,049
Second Quarter 2015	13,736,290		0.179		13,887,241		—		13,887,241		11,382,294		2,504,947		11,382,294
Third Quarter 2015	13,888,802		0.181		13,887,973		—		13,887,973		13,887,973		—		14,287,719
Fourth Quarter 2015	13,865,446		0.181		13,726,517		—		13,726,517		13,726,517		—		14,722,025
First Quarter 2016	13,649,330		0.178		13,669,663		—		13,669,663		11,942,765		1,726,898		11,942,765
	$	68,725,547	$	0.896	$	68,756,996	$	78	$	68,757,074	$	61,971,598	$	6,785,476	$	63,366,852

________________

(1) Distributions are based on daily record dates and calculated at a rate of $0.001964 per share per day during the year ended December 31, 2015 and three months ended March 31, 2016.

(2) Assumes each share was issued and outstanding each day during the periods presented.

(3) Distributions are paid on a monthly basis. Distributions for all record dates of a given month are paid approximately three days following month end.

For the three months ended March 31, 2016, we paid aggregate distributions of $13,669,663. All such distributions were paid in cash. For the three months ended March 31, 2016, we had a net loss of $3,618,142. We had funds from operations, or FFO, for the three months ended March 31, 2016 of $13,329,126 and net cash provided by operating activities was $11,942,765. For the three months ended March 31, 2016, we funded $11,942,765 of distributions paid with net cash provided by operating activities and $1,726,898 of distributions paid with proceeds from the revolving credit facility. For information on how we calculate FFO and the reconciliation of FFO to net loss, see “—Funds from Operations and Modified Funds from Operations.”

Over the long-term, we expect that our distributions will be paid from cash flow from operations (except with respect to distributions related to sales of our real estate and real estate-related investments). However, our operating performance cannot be accurately predicted and may deteriorate in the future due to numerous factors, including those discussed under “Forward-Looking Statements,” and “Results of Operations” herein. In the event our cash flow from operations decreases in the future, the level of our distributions may also decrease.

Inflation

Substantially all of our multifamily property leases will be for a term of one year or less. In an inflationary environment, this may allow us to realize increased rents upon renewal of existing leases or the beginning of new leases. Short-term leases generally will minimize our risk from the adverse effects of inflation, although these leases generally permit tenants to leave at the end of the lease term and therefore will expose us to the effects of a decline in market rents. In a deflationary rent environment, we may be exposed to declining rents more quickly under these shorter term leases.

37

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

With respect to our commercial properties, we include in our leases future provisions designed to protect us from the impact of inflation. These provisions include reimbursement billings for operating expense pass-through charges, real estate tax and insurance reimbursements, or in some cases annual reimbursement of operating expenses above a certain allowance. We believe that shorter term lease contracts on commercial properties lessen the impact of inflation due to the ability to adjust rental rates to market levels as leases expire.

As of March 31, 2016, we had not entered into any leases as a lessee.

REIT Compliance

To qualify as a REIT for tax purposes, we are required to distribute at least 90% of our REIT taxable income (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP) to our stockholders. We must also meet certain asset and income tests, as well as other requirements. We will monitor the business and transactions that may potentially impact our REIT status. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates.

Liquidity and Capital Resources

We use, and intend to use in the future, secured and unsecured borrowings. At the conclusion of our initial public offering, our overall borrowings were approximately 65% of the cost of our investments. Going forward, we expect that our borrowings will be approximately 65% of the value of our properties, as determined by an independent third party appraiser or qualified independent valuation expert. Under our Third Articles of Amendment and Restatement, or our charter, we have a limitation on borrowing in excess of 300% of the value of our net assets, which generally approximates to 75% of the aggregate cost of our assets, though we may exceed this limit under certain circumstances. As of March 31, 2016, our borrowings were not in excess of 300% of the value of our net assets.

We expect to use our capital resources to make certain payments to our advisor in connection with the disposal of investments, the management of our assets and costs incurred by our advisor in providing services to us.

Our principal demand for funds will be to fund value-enhancement and other capital improvement projects, to pay operating expenses and interest on our outstanding indebtedness and to make distributions to our stockholders. We intend to generally fund our cash needs for items, other than asset acquisitions, from operations. Otherwise, we expect that our principal sources of working capital will include:

• current cash balances;

• various forms of secured and unsecured financing;

• equity capital from joint venture partners; and

• cash from operations.

Over the short term, we believe that our sources of capital, specifically our cash balances, cash flow from operations, our ability to raise equity capital from joint venture partners and our ability to obtain various forms of secured and unsecured financing will be adequate to meet our liquidity requirements and capital commitments.

Over the longer term, in addition to the sources of capital noted above which we will rely on to meet our short term liquidity requirements, we may also utilize additional secured and unsecured financings and proceeds from the sale of our properties. We may also conduct additional public or private offerings. We expect these resources to be adequate to fund our operating activities, debt service and distributions, which we presently anticipate will grow over time, and will be sufficient to fund our ongoing operating activities as well as providing capital for investment in future development and other joint ventures along with potential forward purchase commitments.

38

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

On October 22, 2012, we entered into a revolving credit facility with PNC Bank, National Association to borrow up to $5,000,000. On April 25, 2013, we amended the credit facility to increase the borrowing capacity to $20,000,000. On July 18, 2014, we further amended the revolving credit facility, to, among other things, increase the borrowing capacity from $20,000,000 to $35,000,000. The amended and restated credit facility consists of a Tranche A and a Tranche B, and provides certain security for borrowings under the credit facility. The maximum amount that may be borrowed under Tranche A and Tranche B is $20,000,000 and $15,000,000, respectively. The amended and restated credit facility has a maturity date of July 17, 2016, subject to extension. As of March 31, 2016, $16,000,000 was outstanding on our revolving line of credit. We continue to evaluate possible sources of capital, including, without limitation, entering into additional credit facilities. There can be no assurance that we will be able to obtain any such financings on favorable terms, if at all.

Our advisor may, but is not required to, establish working capital reserves out of cash flow generated by our investments or out of proceeds from the sale of our investments. We do not anticipate establishing a general working capital reserve; however, we may establish capital reserves with respect to particular investments. We also may, but are not required to, establish reserves out of cash flow generated by investments or out of net sale proceeds in non-liquidating sale transactions. Working capital reserves are typically utilized to fund tenant improvements, leasing commissions and major capital expenditures. Our lenders also may require working capital reserves.

To the extent that the working capital reserve is insufficient to satisfy our cash requirements, additional funds may be provided from cash generated from operations or through short-term borrowing. In addition, subject to certain limitations described in our charter, we may incur indebtedness in connection with the acquisition of any real estate asset, refinance the debt thereon, arrange for the leveraging of any previously unfinanced property or reinvest the proceeds of financing or refinancing in additional properties.

Cash Flows Provided by Operating Activities

As of March 31, 2016, we owned 65 multifamily properties. During the three months ended March 31, 2016, net cash provided by operating activities was $11,942,765 compared to $11,032,049 for the three months ended March 31, 2015. The increase in net cash provided by operating activities is primarily due to the decreases in net loss, due to affiliates, net and accounts payable and accrued liabilities, partially offset by the decreases in the change in fair value of interest rate cap agreements and increase in rents and other receivables compared to the first quarter of 2015.

Cash Flows Used in Investing Activities

During the three months ended March 31, 2016, net cash used in investing activities was $4,933,892 compared to $7,044,504 during the three months ended March 31, 2015. The decrease in net cash used in investing activities was primarily due to fewer value-enhancement and other capital improvement projects being paid during the three months ended March 31, 2016 compared to the three months ended March 31, 2015. Net cash used in investing activities during the three months ended March 31, 2016 consisted of the following:

• $5,810,659 of cash used for improvements to real estate investments; and

• $876,767 of cash provided by restricted cash accounts related to replacement reserves.

Cash Flows Used in Financing Activities

During the three months ended March 31, 2016, net cash used in financing activities was $2,605,207 compared to net cash used in financing activities of $8,123,023 during the three months ended March 31, 2015. The decrease in cash flows used in financing activities is due primarily to the increase in borrowings from the credit facility partially offset by decreases in proceeds from the issuance of mortgage notes payable and increases in the principal payments on mortgage notes payable and redemptions of common stock. Net cash used in financing activities during the three months ended March 31, 2016 consisted of the following:

• $3,935,544 of principal payments on mortgage notes payable, net of proceeds of $162,086;

39

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

• $16,000,000 from borrowings on our credit facility;

• $1,000,000 of cash paid for the redemption of common stock; and

• $13,669,663 of cash distributions.

Contractual Commitments and Contingencies

We use, and intend to use in the future, secured and unsecured debt. We believe that the careful use of borrowings will help us achieve our diversification goals and potentially enhance the returns on our investments. At the conclusion of our public offering, our borrowings were approximately 65% of the cost of our real properties (before deducting depreciation and amortization) plus the value of our other investments. Going forward, we expect that our borrowings will be approximately 65% of the value of our properties, as determined by an independent third party appraiser or qualified independent valuation expert. Under our charter, we are prohibited from borrowing in excess of 300% of our net assets, which generally approximates to 75% of the aggregate cost of our assets. We may borrow in excess of this amount if such excess is approved by a majority of our independent directors and disclosed to stockholders in our next quarterly report, along with a justification for such excess. In such event, we will monitor our debt levels and take action to reduce any such excess as practicable. Our aggregate borrowings are reviewed by our board of directors at least quarterly. As of March 31, 2016, our aggregate borrowings were not in excess of 300% of the value of our net assets.

In addition to using our capital resources for investing purposes and meeting our debt obligations, we expect to use our capital resources to make certain payments to our advisor. We expect to make payments to our advisor or its affiliates in connection with the selection and origination or purchase of real estate and real estate-related investments, the management of our assets, the management of the development or improvement of our assets and costs incurred by our advisor in providing services to us.

As of March 31, 2016, we had indebtedness totaling an aggregate principal amount of $1,127,838,945, including the net premiums and discounts on certain notes payables of $3,143,306 and the net deferred financing costs of $6,367,184. The following is a summary of our contractual obligations as of March 31, 2016:

			Payments due by period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Interest payments on outstanding debt obligations(1)	$	279,195,631	$	29,969,630	$	79,437,562	$	65,378,049	$	104,410,390
Principal payments on outstanding debt obligations(2)	1,131,062,823		28,684,494		137,168,025		385,450,004		579,760,300
Total	$	1,410,258,454	$	58,654,124	$	216,605,587	$	450,828,053	$	684,170,690

________________

(1) Projected interest payments on outstanding debt obligations are based on the outstanding principal amounts and interest rates in effect at March 31, 2016. We incurred interest of $10,072,744 during the three months ended March 31, 2016, including amortization of deferred financing costs totaling $382,044, amortization of loan premiums of $308,698, net unrealized losses from the change in fair value of interest rate cap agreements of $232,712 and capitalized interest of $25,904.

(2) Projected principal payments on outstanding debt obligations are based on the terms of the notes payable agreements. Amounts exclude the amortization of the debt premiums and discounts in addition to net deferred financing costs associated with certain notes payable.

40

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Results of Operations

The discussion that follows is based on our consolidated results of operations for the three months ended March 31, 2016 and 2015. The ability to compare one period to another is affected by our value-enhancement strategy. Although the number of multifamily properties owned as of March 31, 2016 remained unchanged at 65 compared to March 31, 2015, our results of operations were impacted by the construction of an additional 96 apartment homes at one existing multifamily property during 2015 and our value-enhancement activity completed through March 31, 2016, as further discussed below.

Our results of operations for the three months ended March 31, 2016 and 2015 are not indicative of those expected in future periods. For the three months ended March 31, 2016, we continue the process of value-enhancement projects, which may have a significant impact on our future results of operations. In general, we expect that our income and expenses related to our portfolio will increase in future periods as a result of organic rent increases and anticipated value-enhancement projects.

To provide additional insight into our operating results, we are also providing a detailed analysis of same-store versus non-same-store net operating income, or NOI. For more information on NOI and a reconciliation of NOI (a non-GAAP measure) to net loss, see “—Net Operating Income.”

Consolidated Results of Operations for the Three Months Ended March 31, 2016 and 2015

The following table summarizes the consolidated results of operations for the three months ended March 31, 2016 and 2015:

	For the Three Months Ended March 31,
	2016			2015			Change $			Change %
Total revenues	$	52,906,908		$	51,051,301		$	1,855,607		4	%
Operating, maintenance and management	(13,709,810		)	(12,827,151		)	(882,659		)	7	%
Real estate taxes and insurance	(8,911,021		)	(9,055,399		)	144,378			(2	)%
Fees to affiliates	(5,522,423		)	(5,368,476		)	(153,947		)	3	%
Depreciation and amortization	(16,947,268		)	(16,154,311		)	(792,957		)	5	%
Interest expense	(10,046,840		)	(9,987,234		)	(59,606		)	1	%
General and administrative expenses	(1,387,688		)	(1,482,231		)	94,543			(6	)%
Acquisition costs	—			(7,145		)	7,145			(100	)%
Net loss	$	(3,618,142	)	$	(3,830,646	)	$	212,504		(6	)%
NOI(1)	$	28,264,778		$	27,242,197		$	1,022,581		4	%
FFO(2)	$	13,329,126		$	12,323,665		$	1,005,461		8	%
MFFO(2)	$	13,675,445		$	13,369,303		$	306,142		2	%

________________

(1) NOI is a non-GAAP financial measure used by investors and our management to evaluate and compare the performance of our properties and to determine trends in earnings. However, the usefulness of NOI is limited because it excludes general and administrative costs, interest expense, interest income and other expense, acquisition costs, certain fees to affiliates, depreciation and amortization expense and gains or losses from the sale of our properties and other gains and losses as stipulated by GAAP, the level of capital expenditures and leasing costs, all of which are significant economic costs. For additional information on how we calculate NOI and a reconciliation of NOI to net loss, see “—Net Operating Income.”

41

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

(2) GAAP basis accounting for real estate assets utilizes historical cost accounting and assumes real estate values diminish over time. In an effort to overcome the difference between real estate values and historical cost accounting for real estate assets, the Board of Governors of NAREIT established the measurement tool of FFO. Since its introduction, FFO has become a widely used non-GAAP financial measure among REITs. Additionally, we use modified funds from operations, or MFFO, as defined by the Investment Program Association as a supplemental measure to evaluate our operating performance. MFFO is based on FFO but includes certain adjustments we believe are necessary due to changes in accounting and reporting under GAAP since the establishment of FFO. Neither FFO nor MFFO should be considered as alternatives to net loss or other measurements under GAAP as indicators of our operating performance, nor should they be considered as alternatives to cash flow from operating activities or other measurements under GAAP as indicators of liquidity. For additional information on how we calculate FFO and MFFO and a reconciliation of FFO and MFFO to net loss, see “—Funds From Operations and Modified Funds From Operations.”

Net loss

For the three months ended March 31, 2016, we had a net loss of $3,618,142 compared to a net loss of $3,830,646 for the three months ended March 31, 2015. The decrease in net loss of $212,504 over the prior year period was primarily due to the increase in total revenues of $1,855,607, the decrease in real estate taxes and insurance of $144,378, the decrease in general and administrative expenses of $94,543 and the decrease in other acquisition costs of $7,145, partially offset by the increase in operating, maintenance and management expenses of $882,659, the increase in fees to affiliates of $153,947, the increase in depreciation and amortization expense of $792,957 and the increase in interest expense of $59,606. The improved operations were primarily due to the increased revenues of our property portfolio.

Total revenues

Rental income and tenant reimbursements for the three months ended March 31, 2016 were $52,906,908 compared to $51,051,301 for the three months ended March 31, 2015. The increase of $1,855,607 was primarily due to the average monthly rent increasing from $966 at March 31, 2015 to $1,005 at March 31, 2016 and the results of our value-enhancement activity. Additionally, our total units increased by 96 from 16,526 at March 31, 2015 to 16,622 at March 31, 2016. We expect rental income and tenant reimbursements to increase in future periods as a result of ordinary monthly rent increases and our value-enhancement strategy.

Operating, maintenance and management

Operating, maintenance and management expenses for the three months ended March 31, 2016 were $13,709,810 compared to $12,827,151 for the three months ended March 31, 2015. The increase of $882,659 was primarily due to increased repair and maintenance costs and property level general and administrative costs. We expect that these amounts will decrease as a percentage of total revenues as we implement operational efficiencies at our multifamily properties.

Real estate taxes and insurance

Real estate taxes and insurance expenses for the three months ended March 31, 2016 were $8,911,021 compared to $9,055,399 for the three months ended March 31, 2015. The decrease of $144,378 was due to negotiating reduced assessed values on certain properties, thereby reducing the real estate tax liabilities. These amounts may increase in future periods as a result of ordinary municipal property tax increases and/or increases in the assessed value of our property portfolio.

Fees to affiliates

Fees to affiliates for the three months ended March 31, 2016 were $5,522,423 compared to $5,368,476 for the three months ended March 31, 2015. The increase of $153,947 primarily was due to increases to the property management and investment management fees payable to our affiliated property manager and advisor for the three months ended March 31, 2016 as a result of the growth of our property portfolio. We expect fees to affiliates to increase in future periods as a result of increased property management fees from anticipated increases in future rental income.

42

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Depreciation and amortization

Depreciation and amortization expenses for the three months ended March 31, 2016 were $16,947,268 compared to $16,154,311 for the three months ended March 31, 2015. The increase of $792,957 was primarily due to the increase in depreciable and amortizable assets of $29,710,370 since March 31, 2015. We expect these amounts to increase slightly in future periods as a result of anticipated future enhancements to our real estate portfolio.

Interest expense

Interest expense for the three months ended March 31, 2016 was $10,046,840 compared to $9,987,234 for the three months ended March 31, 2015. The interest expenses were consistent, with no meaningful changes from the three months ended March 31, 2015 to the three months ended March 31, 2016. Our interest expense in future periods will vary based on our level of borrowings, which will depend on the availability and cost of debt financing, the opportunity to acquire real estate and real estate-related investments meeting our investment objectives and the opportunity to sell real estate properties and real estate-related investments.

General and administrative expense

General and administrative expenses for the three months ended March 31, 2016 were $1,387,688 compared to $1,482,231 for the three months ended March 31, 2015. These general and administrative costs consisted primarily of legal fees, insurance premiums, audit fees, other professional fees, independent director compensation and certain state taxes. The decrease of $94,543 primarily was due to reduced audit fees for the three months March 31, 2016 compared to the three months ended March 31, 2015. We expect general and administrative expenses incurred by our advisor to decrease as a percentage of total revenue.

Acquisition costs

Acquisition costs for the three months ended March 31, 2016 were $0 compared to $7,145 for the three months ended March 31, 2015. There were no acquisitions of multifamily properties during the three months ended March 31, 2016 or 2015. The acquisition costs were consistent, with no meaningful changes from the three months ended March 31, 2015 to the three months ended March 31, 2016. We do not expect to incur significant acquisition costs in the future as we have invested all proceeds from our public offering.

43

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Property Operations for the Three Months Ended March 31, 2016 Compared to the Three Months Ended March 31, 2015

For purposes of evaluating comparative operating performance, we categorize our properties as “same-store” or “non-same-store.” A “same-store” property is a property that was owned at January 1, 2015. A “non-same-store” property is a property that was acquired, placed into service or disposed of after January 1, 2015. As of March 31, 2016, 65 properties were categorized as same-store properties.

The following table presents the same-store and non-same-store results from operations for the three months ended March 31, 2016 and 2015:

	For the Three Months Ended March 31,
	2016		2015		Change $			Change %
Same-store properties:
Revenues	$	52,906,909	$	51,043,313	$	1,863,596		4	%
Operating expenses	24,642,131		23,828,594		813,537			3	%
Net operating income	28,264,778		27,214,719		1,050,059			4	%
Non-same-store properties:
Net operating income	—		27,478		(27,478		)
Total net operating income(1)	$	28,264,778	$	27,242,197	$	1,022,581

________________

(1) See “—Net Operating Income” below for a reconciliation of NOI to net income (loss).

Net Operating Income

Same-store net operating income for the three months ended March 31, 2016 was $28,264,778 compared to $27,214,719 for the three months ended March 31, 2015. The 4% increase in same-store net operating income was primarily due to the 4% increase in same-store revenues offset by the 3% increase in same-store operating expenses over the comparable prior year period.

Revenues

Same-store revenues for the three months ended March 31, 2016 were $52,906,909 compared to $51,043,313 for the three months ended March 31, 2015. The 4% increase in same-store revenues was primarily due to the average rent increases at the same-store properties from $966 as of March 31, 2015 to $1,005 as of March 31, 2016.

Operating Expenses

Same-store operating expenses for the three months ended March 31, 2016 were $24,642,131 compared to $23,828,594 for the three months ended March 31, 2015. The 3% increase in same-store operating expenses was primarily due to increased repairs and maintenance costs and property level general and administrative costs at the same-store properties during the three months ended March 31, 2016 compared to the three months ended March 31, 2015.

44

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Net Operating Income

NOI is a non-GAAP financial measure of performance. NOI is used by investors and our management to evaluate and compare the performance of our properties and to determine trends in earnings and to compute the fair value of our properties as it is not affected by (1) the cost of funds, (2) acquisition costs, (3) non-operating fees to affiliates, (4) the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP or (5) general and administrative expenses and other gains and losses that are specific to us. The cost of funds is eliminated from net income (loss) because it is specific to our particular financing capabilities and constraints. The cost of funds is also eliminated because it is dependent on historical interest rates and other costs of capital as well as past decisions made by us regarding the appropriate mix of capital which may have changed or may change in the future. Acquisition costs and non-operating fees to affiliates are eliminated because they do not reflect continuing operating costs of the property owner.

Depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets are eliminated because they may not accurately represent the actual change in value in our multifamily properties that result from use of the properties or changes in market conditions. While certain aspects of real property do decline in value over time in a manner that is reasonably captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time. Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale which will usually change from period to period. These gains and losses can create distortions when comparing one period to another or when comparing our operating results to the operating results of other real estate companies that have not made similarly timed purchases or sales. We believe that eliminating these costs from net income is useful because the resulting measure captures the actual revenue generated and actual expenses incurred in operating our properties as well as trends in occupancy rates, rental rates and operating costs.

The usefulness of NOI is limited because it excludes general and administrative costs, interest expense, interest income and other expense, acquisition costs, certain fees to affiliates, depreciation and amortization expense and gains or losses from the sale of properties, and other gains and losses as stipulated by GAAP, the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, all of which are significant economic costs. NOI may fail to capture significant trends in these components of net income which further limits its usefulness.

NOI is a measure of the operating performance of our properties but does not measure our performance as a whole. NOI is therefore not a substitute for net income (loss) as computed in accordance with GAAP. This measure should be analyzed in conjunction with net income (loss) computed in accordance with GAAP and discussions elsewhere in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the components of net income (loss) that are eliminated in the calculation of NOI. Other companies may use different methods for calculating NOI or similarly entitled measures and, accordingly, our NOI may not be comparable to similarly entitled measures reported by other companies that do not define the measure exactly as we do.

45

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

The following is a reconciliation of our NOI to net loss for the three months ended March 31, 2016 and 2015 computed in accordance with GAAP:

	For the Three Months Ended March 31,
	2016			2015
Net loss	$	(3,618,142	)	$	(3,830,646	)
Fees to affiliates(1)	3,501,124			3,441,922
Depreciation and amortization	16,947,268			16,154,311
Interest expense	10,046,840			9,987,234
General and administrative expenses	1,387,688			1,482,231
Acquisition costs	—			7,145
Net operating income	$	28,264,778		$	27,242,197

________________

(1) Fees to affiliates for the three months ended March 31, 2016 and 2015 excludes property management fees of $1,571,982 and $1,503,168 and other fees of $449,317 and $423,386, respectively, that are included in NOI.

Funds from Operations and Modified Funds from Operations

Due to certain unique operating characteristics of real estate companies, as discussed below, NAREIT, an industry trade group, has promulgated a measure known as funds from operations, or FFO, which we believe to be an appropriate supplemental measure to reflect the operating performance of a real estate investment trust, or REIT. The use of FFO is recommended by the REIT industry as a supplemental performance measure. FFO is not equivalent to our net income (loss) as determined under GAAP.

We define FFO, a non-GAAP financial measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004, or the White Paper. The White Paper defines FFO as net income (loss) computed in accordance with GAAP, excluding gains or losses from sales of property and non-cash impairment charges of real estate related investments, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. In particular, we believe it is appropriate to disregard impairment charges, as this is a fair value adjustment that is largely based on market fluctuations and assessments regarding general market conditions which can change over time. An asset will only be evaluated for impairment if certain impairment indications exist and if the carrying, or book value, exceeds the total estimated undiscounted future cash flows (including net rental and lease revenues, net proceeds on the sale of the property, and any other ancillary cash flows at a property or group level under GAAP) from such asset. Investors should note, however, that determinations of whether impairment charges have been incurred are based partly on anticipated operating performance, because estimated undiscounted future cash flows from a property, including estimated future net rental and lease revenues, net proceeds on the sale of the property, and certain other ancillary cash flows, are taken into account in determining whether an impairment charge has been incurred. While impairment charges are excluded from the calculation of FFO as described above, investors are cautioned that due to the fact that impairments are based on estimated future undiscounted cash flows and the relatively limited term of our operations, it could be difficult to recover any impairment charges. Our FFO calculation complies with NAREIT’s policy described above.

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time, especially if such assets are not adequately maintained or repaired and renovated as required by relevant circumstances and/or as requested or required by lessees for operational purposes in order to maintain the value disclosed. We believe that since real estate values historically rise and fall with market conditions, including inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation may be less informative. Historical

46

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. However, FFO, and MFFO as described below, should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP FFO and MFFO measures and the adjustments to GAAP in calculating FFO and MFFO.

Changes in the accounting and reporting promulgations under GAAP (for acquisition fees and expenses from a capitalization/depreciation model to an expensed-as-incurred model) that were put into effect in 2009 and other changes to GAAP accounting for real estate subsequent to the establishment of NAREIT’s definition of FFO have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses for all industries as items that are expensed under GAAP, that are typically accounted for as operating expenses. Management believes these fees and expenses do not affect our overall long-term operating performance. Publicly registered, non-listed REITs typically have a significant amount of acquisition activity and are substantially more dynamic during their initial years of investment and operation. While other start-up entities may also experience significant acquisition activity during their initial years, we believe that public, non-listed REITs, like us, are unique in that they have a limited life with targeted exit strategies within a relatively limited time frame after acquisition activity ceases. Our board of directors will determine to pursue a liquidity event when it believes that the then-current market conditions are favorable. Thus, as a limited life REIT, we will not continuously purchase assets and will have a limited life.

Due to the above factors and other unique features of publicly registered, non-listed REITs, the Investment Program Association, or IPA, an industry trade group, has standardized a measure known as MFFO, which the IPA has recommended as a supplemental measure for publicly registered non-listed REITs and which we believe to be another appropriate supplemental measure to reflect the operating performance of a public, non-listed REIT having the characteristics described above. MFFO is not equivalent to our net income or loss as determined under GAAP, and MFFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate with a limited life and targeted exit strategy, as currently intended. We believe that, because MFFO excludes costs that we consider more reflective of investing activities and other non-operating items included in FFO and also excludes acquisition fees and expenses that affect our operations only in periods in which properties are acquired, MFFO can provide, on a going forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance after the period in which we are acquiring our properties and once our portfolio is in place. By providing MFFO, we believe we are presenting useful information that assists investors and analysts to better assess the sustainability of our operating performance after our offering has been completed and our properties have been acquired. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry. Further, we believe MFFO is useful in comparing the sustainability of our operating performance after our offering and acquisitions are completed with the sustainability of the operating performance of other real estate companies that are not as involved in acquisition activities. Investors are cautioned that MFFO should only be used to assess the sustainability of our operating performance after our offering has been completed and properties have been acquired, as it excludes acquisition costs that have a negative effect on our operating performance during the periods in which properties are acquired.

We define MFFO, a non-GAAP financial measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations, or the Practice Guideline, issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for the following items, as applicable, included in the determination of GAAP net income: acquisition fees and expenses; amounts relating to deferred rent receivables and amortization of above and below market leases and liabilities (which are adjusted in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments); accretion of discounts and amortization of premiums on debt investments; mark-to-market adjustments included in net income; nonrecurring gains or losses included in

47

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. The accretion of discounts and amortization of premiums on debt investments, nonrecurring unrealized gains and losses on hedges, foreign exchange, derivatives or securities holdings, unrealized gains and losses resulting from consolidations, as well as other listed cash flow adjustments are adjustments made to net income in calculating the cash flows provided by operating activities and, in some cases, reflect gains or losses which are unrealized and may not ultimately be realized. While we rely on our advisor for managing interest rate, hedge and foreign exchange risk, we do not retain an outside consultant to review all our hedging agreements. Inasmuch as interest rate hedges are not a fundamental part of our operations, we believe it is appropriate to exclude such non-recurring gains and losses in calculating MFFO, as such gains and losses are not reflective of on-going operations.

Our MFFO calculation complies with the IPA’s Practice Guideline described above. In calculating MFFO, we exclude acquisition related expenses, amortization of above and below market leases, fair value adjustments of derivative financial instruments, deferred rent receivables and the adjustments of such items related to noncontrolling interests. Under GAAP, acquisition fees and expenses are characterized as operating expenses in determining operating net income. These expenses are paid in cash by us. All paid and accrued acquisition fees and expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of other properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to such property. In the event that operational earnings and cash flow are not available to fund our reimbursement of acquisition fees and expenses incurred by our advisor, such fees and expenses will need to be reimbursed to our advisor from other sources, including debt, net proceeds from the sale of properties, or from ancillary cash flows. The acquisition of properties, and the corresponding acquisition fees and expenses, is the key operational feature of our business plan to generate operational income and cash flow to fund distributions to our stockholders. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income in determining cash flow from operating activities. In addition, we view fair value adjustments of derivatives and gains and losses from dispositions of assets as non-recurring items or items which are unrealized and may not ultimately be realized, and which are not reflective of on-going operations and are therefore typically adjusted for when assessing operating performance.

Our management uses MFFO and the adjustments used to calculate MFFO in order to evaluate our performance against other public, non-listed REITs which have limited lives with short and defined acquisition periods and targeted exit strategies shortly thereafter. As noted above, MFFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate in this manner. We believe that our use of MFFO and the adjustments used to calculate MFFO allow us to present our performance in a manner that reflects certain characteristics that are unique to public, non-listed REITs, such as their limited life, limited and defined acquisition period and targeted exit strategy, and hence that the use of such measures is useful to investors. By excluding expensed acquisition costs, the use of MFFO provides information consistent with management’s analysis of the operating performance of the properties. Additionally, fair value adjustments, which are based on

the impact of current market fluctuations and underlying assessments of general market conditions, but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such changes that may reflect anticipated and unrealized gains or losses, we believe MFFO provides useful supplemental information.

Presentation of this information is intended to provide useful information to investors as they compare the operating performance to that of other public, non-listed REITs, although it should be noted that not all public, non-listed REITs calculate FFO and MFFO the same way, so comparisons with other public, non-listed REITs may not be meaningful. Furthermore, FFO and MFFO are not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as an indication of our performance, as an alternative to cash flows from operations as an indication of our liquidity, or indicative of funds available to fund our cash needs, including our ability to make distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with GAAP measurements as an indication of our performance. MFFO has limitations as a performance measure where there is no regular net asset value determination of us. MFFO is useful in assisting management and investors in assessing the

48

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

sustainability of operating performance in future operating periods, and in particular, after the offering and acquisition stages are complete and net asset value is disclosed. MFFO is not a useful measure in evaluating net asset value because impairments are taken into account in determining net asset value but not in determining MFFO.

Neither the SEC, NAREIT nor any other regulatory body has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. In the future, the SEC, NAREIT or another regulatory body may decide to standardize the allowable adjustments across the non-listed REIT industry and in response to such standardization we may have to adjust our calculation and characterization of FFO or MFFO accordingly.

Our calculation of FFO and MFFO is presented in the following table for the three months ended March 31, 2016 and 2015:

	For the Three Months Ended March 31,
Reconciliation of net loss to MFFO:	2016			2015
Net loss	$	(3,618,142	)	$	(3,830,646	)
Depreciation of real estate assets	16,908,976			15,905,614
Amortization of lease-related costs	38,292			248,697
FFO	13,329,126			12,323,665
Acquisition fees and expenses(1)(2)	—			7,145
Unrealized loss on derivative instruments	232,712			1,021,586
Change in value of restricted common stock to Advisor	113,607			16,907
MFFO	$	13,675,445		$	13,369,303

________________

(1) By excluding acquisition fees and expenses, management believes MFFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of our properties. Acquisition fees and expenses include payments to our advisor or third parties. Acquisition fees and expenses under GAAP are considered operating expenses and as expenses included in the determination of net income (loss) and income (loss) from continuing operations, both of which are performance measures under GAAP. All paid and accrued acquisition fees and expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to the property. In the event that operational earnings and cash flows are not available to fund our reimbursement of acquisition fees and expenses incurred by our advisor, such fees and expenses will need to be reimbursed to the advisor from other sources, including debt, net proceeds from the sale of properties, or from ancillary cash flows.

(2) Acquisition fees and expenses for the three months ended March 31, 2016 and 2015 includes acquisition expenses of $0 and $7,145, respectively, that are recorded in acquisition costs in the accompanying consolidated statements of operations. No acquisition fees were incurred for the three months ended March 31, 2016 and 2015.

FFO and MFFO may be used to fund all or a portion of certain capitalizable items that are excluded from FFO and MFFO, such as tenant improvements, building improvements and deferred leasing costs.

Off-Balance Sheet Arrangements

As of March 31, 2016, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial conditions, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

49

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Related-Party Transactions and Agreements

We have entered into agreements with our advisor and its affiliates whereby we have paid, and may continue to pay, certain fees to, or reimburse certain expenses of, our advisor or its affiliates for acquisition and advisory fees and expenses, financing coordination fees, organization and offering costs, asset and property management fees and expenses, leasing fees and reimbursement of certain operating costs. Refer to Note 8 to our condensed consolidated unaudited financial statements included in this Quarterly Report on Form 10-Q for a discussion of the various related-party transactions, agreements and fees.

Item 3. Qualitative and Quantitative Disclosure About Market Risk

We may be exposed to the effects of interest rate changes as a result of borrowings used to maintain liquidity and to fund the acquisition, expansion and refinancing of our real estate investment portfolio and operations. We may be also exposed to the effects of changes in interest rates as a result of the acquisition and origination of mortgage, mezzanine, bridge and other loans. Our profitability and the value of our investment portfolio may be adversely affected during any period as a result of interest rate changes. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings, prepayment penalties and cash flows and to lower overall borrowing costs. We have managed and will continue to manage interest rate risk by maintaining a ratio of fixed rate, long-term debt such that floating rate exposure is kept at an acceptable level. In addition, we have, and may in the future, utilize a variety of financial instruments, including interest rate caps, floors and swap agreements, in order to limit the effects of changes in interest rates on our operations. When we use these types of derivatives to hedge the risk of interest-earning assets or interest-bearing liabilities, we may be subject to certain risks, including the risk that losses on a hedge position will reduce the funds available for payments to holders of our common stock and that the losses may exceed the amount we invested in the instruments.

We borrow funds and make investments at a combination of fixed and variable rates. Interest rate fluctuations will generally not affect our future earnings or cash flows on our fixed rate debt unless such instruments mature or are otherwise terminated. However, interest rate changes will affect the fair value of our fixed rate instruments. At March 31, 2016, the fair value of our fixed rate debt was $477,601,666 and the carrying value of our fixed rate debt was $476,334,866. The fair value estimate of our fixed rate debt was estimated using a discounted cash flow analysis utilizing rates we would expect to pay for debt of a similar type and remaining maturity if the loans were originated at March 31, 2016. As we expect to hold our fixed rate instruments to maturity and the amounts due under such instruments would be limited to the outstanding principal balance and any accrued and unpaid interest, we do not expect that fluctuations in interest rates, and the resulting change in fair value of our fixed rate instruments, would have a significant impact on our operations.

Conversely, movements in interest rates on our variable rate debt would change our future earnings and cash flows, but not significantly affect the fair value of those instruments. However, changes in required risk premiums would result in changes in the fair value of floating rate instruments. At March 31, 2016, the fair value of our variable rate debt was $668,400,299 and the carrying value of our variable rate debt was $651,504,079. Based on interest rates as of March 31, 2016, if interest rates are 100 basis points higher during the 12 months ending March 31, 2017, interest expense on our variable rate debt would increase by $6,537,782 and if interest rates are 100 basis points lower during the 12 months ending March 31, 2017, interest expense on our variable rate debt would decrease by $2,852,527.

At March 31, 2016, the weighted-average interest rate of our fixed rate debt and variable rate debt was 4.32% and 2.76%, respectively. The weighted-average interest rate of our blended fixed and variable rates was 3.42% at March 31, 2016. The weighted-average interest rate represents the actual interest rate in effect at March 31, 2016 (consisting of the contractual interest rate), using interest rate indices as of March 31, 2016, where applicable.

We will also be exposed to credit risk. Credit risk is the failure of the counterparty to perform under the terms of a derivative contract. If the fair value of a derivative contract is positive, the counterparty will owe us, which creates credit risk for us. If the fair value of a derivative contract is negative, we will owe the counterparty and, therefore, do not have credit risk. We will seek to minimize the credit risk in derivative instruments by entering into transactions with high-quality counterparties. As of March 31, 2016, we did not have counterparty risk on our interest rate cap agreements as the underlying variable rates for

50

PART I — FINANCIAL INFORMATION (continued)

each of our interest rate cap agreements as of March 31, 2016 were not in excess of the capped rates. See also Note 11 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report, our management, including our principal executive officer and our principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon and as of the date of the evaluation, our chief executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file and submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ending March 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

51

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are party to legal proceedings that arise in the ordinary course of our business. Management is not aware of any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on our results of operations or financial condition, nor are we aware of any such legal proceedings contemplated by government agencies.

Item 1A. Risk Factors

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended March 31, 2016, we fulfilled redemption requests and redeemed shares of our common stock pursuant to our share repurchase program as follows:

	Total Number of Shares Requested to be Redeemed(1)	Total Number of Shares Redeemed(2)	Average Price Paid per Share(3)		Approximate Dollar Value of Shares Available That May Yet Be Redeemed Under the Program
January 2016	95,406	99,243	$	10.08	(4)
February 2016	45,778	—	—		(4)
March 2016	206,328	—	—		(4)
	347,512	99,243

________________

(1) We generally redeem shares on the last business day of the month following the end of each fiscal quarter in which requests were received. On April 29, 2016, we redeemed 96,215 shares of our common stock for a total redemption value of $1,000,000, or $10.39 per share, pursuant to our share repurchase program.

(2) We are not obligated to repurchase shares under the share repurchase program.

(3) Pursuant to the program, as amended, we currently redeem shares at prices determined as follows:

•92.5% of the estimated value per share for stockholders who have held their shares for at least one year;

•95.0% of the estimated value per share for stockholders who have held their shares for at least two years;

• 97.5% of the estimated value per share for stockholders who have held their shares for at least three years; and

•100.0% of the estimated value per share for stockholders who have held their shares for at least four years;

Notwithstanding the above, the redemption price for redemptions sought upon a stockholder’s death or “qualifying disability” will be equal to the average issue price per share for all of the stockholder’s shares purchased from us.

(4) The number of shares that may be redeemed pursuant to the share repurchase program during any calendar year is limited to 5% of the weighted-average number of shares outstanding during the prior calendar year and the value of the shares repurchased shall not exceed $2 million during the quarter beginning July 1, 2015, with shares repurchased each subsequent quarter not to exceed $1 million.

52

PART II—OTHER INFORMATION (continued)

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The exhibits listed on this Exhibit Index (following the signatures section of this Quarterly Report on Form 10-Q) are filed herewith, or incorporated by reference.

53

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Steadfast Income REIT, Inc.
Date:	May 12, 2016	By:	/s/ Rodney F. Emery
			Rodney F. Emery
			Chief Executive Officer and Chairman of the Board (Principal Executive Officer)
Date:	May 12, 2016	By:	/s/ Kevin J. Keating
			Kevin J. Keating
			Treasurer (Principal Financial and Accounting Officer)

54

EXHIBIT INDEX

Effective February 1, 2010, Steadfast Secure Income REIT, Inc., Steadfast Secure Income Advisor, LLC and Steadfast Secure Income REIT Operating Partnership, L.P. changed their names to Steadfast Income REIT, Inc., Steadfast Income Advisor, LLC and Steadfast Income REIT Operating Partnership, L.P., respectively. With respect to documents executed prior to the name change, the following Exhibit List refers to the entity names used prior to the name changes in order to accurately reflect the names of the entities that appear on such documents.

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the three months ended March 31, 2016 (and are numbered in accordance with Item 601 of Regulation S-K).

3.1 Third Articles of Amendment and Restatement of Steadfast Income REIT, Inc. (included as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed August 6, 2014 and incorporated herein by reference).

3.2 Bylaws of Steadfast Secure Income REIT, Inc. (included as Exhibit 3.2 to the Company’s Registration Statement on Form S-11 (File No. 333-160748) filed July 23, 2009 and incorporated herein by reference).

31.1* Certification of the Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2* Certification of the Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1** Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2** Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS* XBRL Instance Document.

101.SCH* XBRL Taxonomy Extension Schema Document.

101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB* XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document.

101.DEF* XBRL Taxonomy Extension Definition Linkbase Document.

____________

* Filed herewith.

** In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.