Filed Pursuant to Rule 253(g)(2)
File No. 024-10691
FUNDRISE FOR-SALE HOUSING EFUND – LOS ANGELES CA, LLC
SUPPLEMENT NO. 20 DATED MARCH 21, 2018
TO THE OFFERING CIRCULAR DATED MAY 10, 2017
This document supplements, and should be read in conjunction with, the offering circular of Fundrise For-Sale Housing eFUND – Los Angeles CA, LLC (the “Company”, “we”, “our” or “us”), dated May 10, 2017 and filed by us with the Securities and Exchange Commission (the “Commission”) on May 12, 2017 (the “Offering Circular”). Unless otherwise defined in this supplement, capitalized terms used in this supplement shall have the same meanings as set forth in the Offering Circular.
The purpose of this supplement is to disclose:
· | Asset Acquisition. |
Asset Acquisition
Acquisition of Controlled Subsidiary Investment – Fundrise eFUND – NPSC Westmoreland - Controlled Subsidiary
On March 15, 2018, we directly acquired an additional property within the ownership of a “majority-owned subsidiary” (the “Fundrise eFUND – NPSC Westmoreland - Controlled Subsidiary”), for an initial purchase price of $1,103,090which is the initial stated value of our additional equity interest in the Fundrise eFUND – NPSC WESTMORELAND - Controlled Subsidiary (the “NPSC WESTMORELAND#2 Investment”).
The Fundrise eFUND – NPSC WESTMORELAND - Controlled Subsidiary used the proceeds to acquire an existing currently improved as duplex home located on a 5,762 square foot lot in the East Hollywood neighborhood of North East Los Angeles (the “NPSC WESTMORELAND#2 Property”).
The NPSC WESTMORELAND Investment was funded with $100,000 in proceeds from that certain Promissory Grid Note by and between us and the sponsor, and the remaining amount was funded with proceeds from our Offering.
The Fundrise eFUND – NPSC WESTMORELAND - Controlled Subsidiary is managed by us and it is anticipated that the controlled subsidiary will transfer or turn into a joint venture in the future.
Pursuant to the agreements governing the NPSC WESTMORELAND Investment (the “NPSC WESTMORELAND Operative Agreements”), we have full authority for the management of the Fundrise eFUND – NPSC WESTMORELAND - Controlled Subsidiary, including the NPSC WESTMORELAND Property. In addition, Fundrise Lending, LLC, an affiliate of our Manager and a wholly-owned subsidiary of our sponsor, earned an origination fee of approximately 2.0% of the NPSC WESTMORELAND Investment, paid directly by the Fundrise eFUND – NPSC WESTMORELAND - Controlled Subsidiary. We anticipate retaining these control rights if the controlled subsidiary is contributed or turned into a joint venture structure in the future.
In addition to the purchase price of$1,103,090 for NPSC Westmoreland#2, we anticipate spending total costs between NPSC Westmoreland#2 and NPSC Westmoreland of approximately $450,000 to complete entitlement approvals yielding nine (9) small lot homes. The business plan then entails selling the property upon completion of entitlements. The property also may be leased prior to sale, though this cannot be guaranteed. There can be no assurance that the anticipated completion cost will be achieved.
The NPSC WESTMORELAND Investment is anticipated to be held for 24 to 30 months, including sale upon completion of entitlements. We believe the property will be able to achieve a 9.47% annual return upon sale based on a $370,000 per entitled lot sellout price. However, there can be no assurance that such value will be achieved.
The NPSC WESTMORELAND Investment thesis is based primarily upon the site’s improving location, physical barriers to entry, basis and market sales for entitled small lot land in the immediate submarket. The East Hollywood/Los Feliz neighborhood is considered to be rapidly gentrifying, as first-time home buyers are priced out of more established neighborhoods.
We believe these strong market fundamentals will continue to make the submarket a desirable investment location.
Entitlement and Development Investment Assumptions
Asset Name | Projected Annual Returns | Total Projected Development Costs through Entitlements | Projected Exit Price per Lot | Projected Leverage | Projected Number of Lots | Projected Hold Period |
NPSC Westmoreland- Controlled Subsidiary | 9.47 % - 11.23% | $425,000 - $450,000 | $360,000 - $380,000 | 0% | 9 | 2 - 2.5 years |