10-Q

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 SECURITIESEXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 000-54369

Resource Real Estate Opportunity REIT, Inc.

(Exact name of registrant as specified in its charter)

Maryland	27-0331816
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
1845 Walnut Street, 18th Floor, Philadelphia, PA 19103
(Address of principal executive offices) (Zip code)
(215) 231-7050
(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 filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

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

As of May 13, 2014, there were 67,738,650 outstanding shares of common stock of Resource Real Estate Opportunity REIT, Inc.

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

INDEX TO ANNUAL REPORT

ON FORM 10-Q

		PAGE
PART 1	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets - March 31, 2014 (unaudited) and December 31, 2013	3
	Consolidated Statements of Operations and Comprehensive Loss - Three Months Ended March 31, 2014 and 2013 (unaudited)	4
	Consolidated Statement of Changes in Stockholders' Equity - Three Months Ended March 31, 2014 (unaudited)	5
	Consolidated Statements of Cash Flows - Three Months Ended March 31, 2014 and 2013 (unaudited)	6
	Notes to Consolidated Financial Statements - March 31, 2014 (unaudited)	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	44
Item 4.	Controls and Procedures	44
PART II
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	45
Item 6.	Exhibits	45
SIGNATURES		47

Forward-Looking Statements

Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements.  Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts.  In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expects,” “intend,” “may,” “plan,” “potential,” “project,” “should,” “will” and “would” or the negative of these terms or other comparable terminology.  Actual results may differ materially from those contemplated by such forward-looking statements.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  We undertake no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances after the date of this report, except as may be required under applicable law.

PART 1.     FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

	March 31, 2014			December 31, 2013
	(unaudited)
ASSETS
Investments:
Rental properties, net	$	650,306		$	390,373
Loans held for investment, net	1,746			1,724
Identified intangible assets, net	6,951			5,182
Assets of discontinued operations	—			88
	659,003			397,367
Cash	137,984			270,323
Restricted cash	3,432			4,456
Due from related parties	54			530
Tenant receivables, net	475			573
Deposits	241			141
Accounts receivable - other	39			—
Prepaid expenses and other assets	1,433			1,567
Deferred financing costs, net	4,606			3,602
Goodwill	7,031			—
Total assets	$	814,298		$	678,559
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Mortgage notes payable	$	249,342		$	111,811
Revolving credit facilities	37,041			37,041
Accounts payable	1,909			1,417
Accrued expenses and other liabilities	4,949			2,745
Accrued real estate taxes	2,776			2,117
Due to related parties, net	1,826			1,718
Tenant prepayments	796			615
Security deposits	2,446			1,826
Distribution payable	2,248			2,222
Total liabilities	303,333			161,512
Stockholders’ equity:
Preferred stock (par value $.01; 10,000,000 shares authorized, none issued)	—			—
Common stock (par value $.01; 1,000,000,000 shares authorized; 67,554,712 and 66,725,241 shares issued, respectively; and 67,450,482 and 66,667,136 shares outstanding, respectively)	675			668
Convertible stock (“promote shares”; par value $.01; 50,000 shares authorized, issued and outstanding)	1			1
Additional paid-in capital	598,236			590,591
Accumulated other comprehensive (loss) income	(38		)	20
Accumulated deficit	(99,038		)	(74,233		)
Total stockholders’ equity	499,836			517,047
Noncontrolling interest	11,129			—
Total equity	510,965			517,047
Total liabilities and stockholders’ equity	$	814,298		$	678,559

3

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share data)

(unaudited)

	Three Months Ended
	March 31,
	2014			2013
Revenues:				(Remeasured)
Rental income	$	20,669		$	6,796
Gain on foreclosures	—			3,460
Interest income	515			54
Total revenues	21,184			10,310
Expenses:
Rental operating	12,027			4,608
Acquisition costs	2,500			686
Foreclosure costs	—			39
Management fees - related parties	2,109			777
General and administrative	2,294			912
Loss on disposal of assets	1,627			37
Depreciation and amortization expense	11,079			2,769
Total expenses	31,636			9,828
(Loss) income before other expenses	(10,452		)	482
Other (expense) income:
Gain on forfeiture/redemption of stock	—			21
Interest expense	(2,739		)	(125		)
(Loss) income from continuing operations	(13,191		)	378
Discontinued operations:
Income (loss) from discontinued operations	2			(578		)
Net loss	(13,189		)	(200		)
Net income attributable to noncontrolling interest	(804		)	—
Net loss attributable to stockholders	$	(13,993	)	$	(200	)
Other comprehensive loss:
Net loss	$	(13,189	)	$	(200	)
Designated derivatives, fair value adjustment	(58		)	—
Comprehensive loss	$	(13,247	)	$	(200	)
Weighted average common shares outstanding	67,364			22,612
Basic and diluted (loss) income per common share:
Continuing operations	$	(0.20	)	$	0.02
Discontinued operations	—			(0.03		)
Net loss	$	(0.20	)	$	(0.01	)

The accompanying notes are an integral part of these consolidated statements.

4

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2014

(in thousands)

(unaudited)

	Common Stock				Convertible Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders’ Equity			Noncontrolling interests			Total Equity
	Shares		Amount		Shares	Amount
Balance at January 1, 2014	66,667		$	668	50	$	1	$	590,591		$	20		$	(74,233	)	$	517,047		$	—		$	517,047
Common stock issued through distribution reinvestment plan	496		4		—	—		4,708			—			—			4,712			—			4,712
Syndication costs	—		—		—	—		3			—			—			3			—			3
Distributions of common stock	333		3		—	—		3,330			—			(3,333		)	—			—			—
Distributions declared	—		—		—	—		—			—			(6,729		)	(6,729		)	—			(6,729		)
Share redemptions	(46	)	—		—	—		(396		)	—			54			(342		)	—			(342		)
Designated derivatives, fair value adjustment	—		—		—	—		—			(58		)	—			(58		)	—			(58		)
Acquisition of noncontrolling interests	—		—		—	—		—			—			—			—			17,237			17,237
Deconsolidation of noncontrolling interest	—		—		—	—		—			—			—			—			(6,912		)	(6,912		)
Net loss	—		—		—	—		—			—			(13,993		)	(13,993		)	804			(13,189		)
Net income attributable to noncontrolling interests	—		—		—	—		—			—			(804		)	(804		)	—			(804		)
Balance at March 31, 2014	67,450		$	675	50	$	1	$	598,236		$	(38	)	$	(99,038	)	$	499,836		$	11,129		$	510,965

The accompanying notes are an integral part of these consolidated statements.

5

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
	Three Months Ended
	March 31,
	2014			2013
				(Remeasured)
Cash flows from operating activities:
Net loss	$	(13,189	)	$	(200	)
Adjustments to reconcile net loss to net cash used in operating activities:
(Income) loss from discontinued operations	(2		)	578
Gain on foreclosures	—			(3,460		)
Loss on disposal of assets	1,627			37
Loss on property impairment	—			539
Depreciation and amortization	11,079			3,140
Amortization of deferred financing costs	188			59
Deferred offering costs	—			(500		)
Accretion of discount and direct loan fees and costs	—			(9		)
Changes in operating assets and liabilities, net of acquisitions:
Restricted cash	1,024			100
Tenant receivables, net	98			(38		)
Deposits	(100		)	38
Prepaid expenses and other assets	569			362
Due to related parties, net	108			862
Accounts payable and accrued expenses	3,328			1,818
Tenant prepayments	135			3
Security deposits	414			7
Net cash provided by operating activities of continuing operations	5,279			3,336
Cash flows from investing activities:
Property acquisitions	(70,164		)	(18,386		)
Ownership acquisitions	(58,493		)	—
Capital expenditures	(4,712		)	(6,393		)
Principal payments received on loans	(22		)	9
Net cash used in investing activities of continuing operations	(133,391		)	(24,770		)
Cash flows from financing activities:
Proceeds from issuance of common stock	—			54,541
Redemptions	(342		)	—
Payment of deferred financing costs	(1,192		)	—
Deferred offering costs	—			1,334
Principal payments on borrowings	(797		)	(49		)
Distributions paid on common stock	(1,989		)	(1,062		)
Syndication costs	3			(6,408		)
Net cash (used in) provided by financing activities of continuing operations	(4,317		)	48,356
Net cash (used in) provided by continuing operations	(132,429		)	26,922

The accompanying notes are an integral part of these consolidated statements.

6

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued) (in thousands) (unaudited)
	Three Months Ended
	March 31,
	2014			2013
Cash flows from discontinued operations:
Net cash provided by (used in) operating activities	90			(1,433		)
Net cash provided by (used in) investing activities	—			—
Net cash provided by (used in) financing activities	—			—
Net cash provided by (used in) discontinued operations	90			(1,433		)
Net (decrease) increase in cash	(132,339		)	25,489
Cash at beginning of period	270,323			29,336
Cash at end of period	$	137,984		$	54,825

The accompanying notes are an integral part of these consolidated statements.

7

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2013

(unaudited)

NOTE 1 – NATURE OF BUSINESS AND OPERATIONS

Resource Real Estate Opportunity REIT, Inc. (the “Company”) was organized in Maryland on June 3, 2009 to purchase a diversified portfolio of discounted U.S. commercial real estate and real estate-related assets in order to generate gains to stockholders from the potential appreciation in the value of the assets and to generate current income for stockholders by distributing cash flow from the Company’s investments. Resource Real Estate Opportunity Advisor, LLC (the “Advisor”), an indirect wholly owned subsidiary of Resource America, Inc. (“RAI”), a publicly traded company (NASDAQ: REXI) operating in the real estate, financial fund management and commercial finance sectors, has been engaged to manage the day-to-day operations of the Company. 

On September 15, 2009, the Company commenced a private placement offering to accredited investors for the sale of up to 5.0 million shares of common stock at a price of $10 per share, with discounts available to certain categories of purchasers. The private offering which closed on June 9, 2010, raised aggregate gross proceeds of $12.8 million, or $11.3 million, net of $1.5 million in syndication costs, from the issuance of 1,283,727 common shares, including 20,000 shares purchased by the Advisor.  In conjunction with the private offering, the Company also offered 5,000 shares of convertible stock at a price of $1 per share.  Investors acquired 937 shares of the convertible stock and the Advisor purchased 4,063 shares.  The Advisor contributed $200,000 to the Company in exchange for 20,000 shares of common stock on June 17, 2009, of which 4,500 shares were exchanged for 45,000 shares of convertible stock in June 2010 (see Note 15).  

On June 16, 2010, the Company’s registration statement on Form S-11 (File No. 333-160463), registering a primary public offering of up to 75.0 million shares of common stock and a public offering pursuant to the Company’s distribution reinvestment plan of up to an additional 7.5 million shares of common stock, was declared effective under the Securities Act of 1933, as amended, and the Company commenced its public offering.  The Company is also offering shares pursuant to its distribution reinvestment plan at a purchase price equal to $9.50 per share.  The primary portion of the initial public offering closed on December 13, 2013. On December 26, 2013, the unsold primary offering shares were deregistered and, on December 30, 2013, the registration of the shares issuable pursuant to the distribution reinvestment plan was continued pursuant to a Registration Statement on Form S-3. The Advisor agreed to invest 1% of the first $250.0 million invested in the Company by non-affiliated investors, or up to $2.5 million. The Advisor purchased 35,000 shares of common stock in 2011 for $315,000; 141,500 shares in 2012 for $1.3 million; and 84,056 shares in 2013 for $756,504. As of March 31, 2014, the Advisor had purchased 276,056 shares of common stock for an aggregate purchase price of $2.5 million.

As of December 13, 2013, the Company had raised aggregate gross offering proceeds of $645.8 million through its private and public offerings, which resulted in the issuance of 64,926,311 shares of common stock, including the 276,056 shares purchased by the Advisor. The Company issued 496,135 shares for $4.7 million pursuant to the distribution reinvestment plan since December 31, 2013.

The Company has acquired, and intends to continue to acquire, real estate-related debt and equity that has been significantly discounted due to the effects of economic events and high levels of leverage, as well as stabilized properties that may benefit from extensive renovations that may increase their long-term values.  The Company has a particular focus on acquiring and operating multifamily assets, and it has targeted, and intends to continue to target, this asset class while also acquiring interests in other types of commercial property assets consistent with its investment objectives.  The Company’s targeted portfolio consists of commercial real estate assets, principally (i) non-performing or distressed loans, including but not limited to first and second priority mortgage loans, mezzanine loans,  subordinate participations in first mortgage loans, or B-Notes, and other loans, (ii) real estate that was foreclosed upon and sold by financial institutions, (iii) multifamily rental properties to which the Company can add value with a capital infusion (“value add properties”), and (iv) discounted investment-grade commercial mortgage-backed securities.  However, the Company is not limited in the types of real estate assets in which it may invest and, accordingly, it may invest in other real estate-related assets either directly or together with a co-investor or joint venture partner.

The Company is organized and conducts its operations in a manner intended to allow it to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes under Subchapter M of the Internal Revenue Code of 1986, as amended.  The Company also operates its business in a manner intended to maintain its exemption from registration under the Investment Company Act of 1940, as amended.

8

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2013

(unaudited)

The consolidated financial statements and the information and tables contained in the notes thereto as of March 31, 2014 are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). However, in the opinion of management, these interim financial statements include all the necessary adjustments to fairly present the results of the interim periods presented. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. The results of operations for the three months ended March 31, 2014 may not necessarily be indicative of the results of operations for the full year ending December 31, 2013.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows:

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as follows:

Subsidiary	Apartment Complex	Number of Units	Property Location
RRE Opportunity Holdings, LLC	N/A	N/A	N/A
Resource Real Estate Opportunity OP, LP	N/A	N/A	N/A
RRE Charlemagne Holdings, LLC	N/A	N/A	N/A
RRE 107th Avenue Holdings, LLC (“107th Avenue”)	107th Avenue	5	Omaha, NE
RRE Westhollow Holdings, LLC (“Westhollow”)	Arcadia	404	Houston, TX
RRE Crestwood Holdings, LLC (“Crestwood”)	Town Park (a)	N/A	Birmingham, AL
RRE Iroquois, LP (“Vista”)	Vista Apartment Homes	133	Philadelphia, PA
RRE Iroquois Holdings, LLC	N/A	N/A	N/A
RRE Campus Club Holdings, LLC (“Campus Club”)	Campus Club	64	Tampa, FL
RRE Bristol Holdings, LLC (“Bristol”)	The Redford	856	Houston, TX
RRE Cannery Holdings, LLC (“Cannery”)	Cannery Lofts	156	Dayton, OH
RRE Williamsburg Holdings, LLC (“Williamsburg”)	Williamsburg	976	Cincinnati, OH
WPL Holdings, LLC	Williamsburg Parking Lot	N/A	Cincinnati, OH
RRE Skyview Holdings, LLC ("Skyview")	Cityside Crossing	360	Houston, TX
RRE Park Forest Holdings, LLC ("Park Forest")	Mosaic	216	Oklahoma City, OK
RRE Foxwood Holdings, LLC ("Foxwood")	The Reserve at Mt. Moriah	220	Memphis, TN
RRE Flagstone Holdings, LLC ("Flagstone")	The Alcove	292	Houston, TX
RRE Deerfield Holdings, LLC ("Deerfield")	Deerfield	166	Hermantown, MN
RRE Kenwick Canterbury Holdings, LLC ("Kenwick & Canterbury")	One Hundred Chevy Chase Apartments	244	Lexington, KY
RRE Armand Place Holdings, LLC ("Armand")	Ivy at Clear Creek	244	Houston, TX
RRE Autumn Wood Holdings, LLC ("Autumn Wood")	Retreat at Rocky Ridge	196	Hoover, AL
RRE Village Square Holdings, LLC ("Village Square")	Trailpoint at the Woodlands	271	Houston, TX
RRE Nob Hill Holdings, LLC ("Nob Hill")	Nob Hill	192	Winter Park, FL
RRE Brentdale Holdings, LLC ("Brentdale")	Brentdale	412	Plano, TX
RRE Jefferson Point Holdings, LLC ("Jefferson Point")	Jefferson Point	208	Newport News, VA
RRE Centennial Holdings, LLC ("Centennial")	Centennial	276	Littleton, CO
RRE Pinnacle Holdings, LLC ("Pinnacle")	Pinnacle	224	Westminster, CO
RRE Jasmine Holdings, LLC ("Jasmine")	Jasmine at Holcomb Bridge	437	Alpharetta, GA
RRE River Oaks Holdings, LLC ("River Oaks")	Terrace at River Oaks	314	San Antonio, TX
RRE Nicollet Ridge Holdings, LLC ("Nicollet Ridge")	Nicollet Ridge	339	Burnsville, MN
RRE Addison Place, LLC ("Addison Place")	Addison Place	403	Alpharetta, GA

N/A - Not Applicable

(a) - Discontinued operations

9

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

All intercompany accounts and transactions have been eliminated in consolidation.

The consolidated financial statements reflect the Company's accounts and the accounts of the Company's majority-owned and/or controlled subsidiaries. The Company follows the provisions of Accounting Standards Codification (“ASC”) Topic 810, “Consolidation,” and accordingly consolidates entities that are variable interest entities (“VIEs”) where it has determined that it is the primary beneficiary of such entities. Once it has been determined that the Company holds a variable interest in a VIE, management performs a qualitative analysis to determine (i) if the Company has the power to direct the matters that most significantly impact the VIE's financial performance; and (ii) if the Company has the obligation to absorb the losses of the VIE that could potentially be significant to the VIE or the right to receive the benefits of the VIE that could potentially be significant to the VIE. If the Company's interest possesses both of these characteristics, the Company is deemed to be the primary beneficiary and would be required to consolidate the VIE. The Company will continually assess its involvement with VIEs and re-evaluate the requirement to consolidate them. The portions of these entities that the Company does not own are presented as noncontrolling interests as of the dates and for the periods presented in the consolidated financial statements. The consolidated financial statements also include the accounts of the Company and its majority-owned and/or controlled subsidiaries as follows:

Subsidiary	Ownership %	Apartment Complex	Number of Units	Property Location
PRIP 3700, LLC ("Champion Farms")	70.0%	Champion Farms	264	Louisville, KY
PRIP 10637, LLC ("Fieldstone")	83.0%	Fieldstone	266	Woodlawn, OH
PRIP 500, LLC ("Pinehurst")	97.5%	Pinehurst	146	Kansas City, MO
PRIP 1102, LLC ("Pheasant Run")	97.5%	Pheasant Run	160	Lee's Summit, MO
PRIP 11128, LLC ("Retreat at Shawnee")	97.5%	Retreat at Shawnee	342	Shawnee, KS
PRIP 6700, LLC ("Hilltop Village")	49.0%	Hilltop Village	124	Kansas City, MO
PRIP 3383, LLC ("Conifer Place")	42.5%	Conifer Place	420	Norcross, GA
PRIP Stone Ridge, LLC ("Stone Ridge")	68.5%	Stone Ridge	191	Columbia, SC
PRIP Coursey, LLC ("Evergreen at Coursey Place")	51.7%	Evergreen at Coursey Place	352	Baton Rouge, LA
PRIP Pines, LLC ("Pines of York")	90.0%	Pines of York	248	Yorktown, VA

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Rental Properties

The Company records acquired rental properties at fair value. The Company considers the period of future benefit of an asset to determine its appropriate useful life and depreciates using the straight line method.  The Company anticipates the estimated useful lives of its assets by class as follows:

Buildings	27.5 years
Building improvements	3.0 to 27.5 years
Tenant improvements	Shorter of lease term or expected useful life

Impairment of Long Lived Assets

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for permanent impairment.  This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition.  The review also considers factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors.

10

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

An impairment loss will be recorded to the extent that the carrying value exceeds the estimated fair value of a property to be held and used.  For properties held for sale, the impairment loss would be the adjustment to fair value less the estimated cost to dispose of the asset.  For the three months ended March 31, 2013, the Company recorded a $539,000 impairment charge for one of its loans held for investment (Heatherwood Note). The Heatherwood Note impairment charge of $539,000 is reflected in income from discontinued operations, as the Company sold the Heatherwood Apartments in April 2013.

Loans Held for Investment, Net

The Company records acquired performing loans held for investment at cost and reviews them for potential impairment at each balance sheet date.  The Company considers a loan to be impaired if one of two conditions exists.  The first condition is if, based on current information and events, management believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.  The second condition is if the loan is deemed to be a troubled-debt restructuring (“TDR”) where a concession has been given to a borrower in financial difficulty.  A TDR may not have an associated specific loan loss allowance if the principal and interest amount is considered recoverable based on current market conditions, expected collateral performance and/or guarantees made by the borrowers.

The amount of impairment, if any, is measured by comparing the recorded amount of the loan to the present value of the expected cash flows or, as a practical expedient, the fair value of the collateral.  If a loan is deemed to be impaired, the Company records a reserve for loan losses through a charge to income for any shortfall.    

Interest income from performing loans held for investment is recognized based on the contractual terms of the loan agreement.  Fees related to any buy down of the interest rate are deferred as prepaid interest income and amortized over the term of the loan as an adjustment to interest income.  The initial investment made in a purchased performing loan includes the amount paid to the seller plus fees.  The initial investment frequently differs from the related loan’s principal amount at the date of the purchase.  The difference is recognized as an adjustment of the yield over the life of the loan.  Closing costs related to the purchase of a performing loan held for investment are amortized over the term of the loan and accreted as an adjustment to interest income.

The Company may acquire real estate loans at a discount due to the credit quality of such loans and the respective borrowers under such loans.  Revenues from these loans are recorded under the effective interest method.  Under this method, an effective interest rate (“EIR”) is applied to the cost basis of the real estate loan held for investment.  The EIR that is calculated when the loan held for investment is acquired remains constant and is the basis for subsequent impairment testing and income recognition.  However, if the amount and timing of future cash collections are not reasonably estimable, the Company accounts for the real estate receivable on the cost recovery method.  Under the cost recovery method of accounting, no income is recognized until the basis of the loan held for investment has been fully recovered.

Allocation of the Purchase Price of Acquired and Foreclosed Assets

The cost of rental properties acquired directly as fee interests and through foreclosing on a loan are allocated to net tangible and intangible assets based on their relative fair values.  The Company allocates the purchase price of properties to acquired tangible assets, consisting of land, buildings, fixtures and improvements, and to identified intangible lease assets and liabilities, consisting of the value of above-market and below-market leases, as applicable, the value of in-place leases and the value of tenant relationships. Fair value estimates are based on information obtained from a number of sources, including information obtained about each property as a result of pre-acquisition due diligence, marketing and leasing activities.  In addition, the Company may obtain independent appraisal reports. The information in the appraisal reports along with the aforementioned information available to the Company's management is used in allocating the purchase price. The independent appraisers have no involvement in management's allocation decisions other than providing market information.

In allocating the purchase price, management also includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up period.  Management also estimates costs to execute similar leases, including leasing commissions and legal and other related expenses, to the extent that such costs have not already been incurred in connection with a new lease origination as part of the transaction.

11

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

The Company records above-market and below-market in-place lease values for acquired properties based on the present value (using an interest rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease.  The Company amortizes any capitalized above-market or below-market lease values as an increase or reduction to rental income over the remaining non-cancelable terms of the respective leases.    

The Company measures the aggregate value of other intangible assets acquired based on the difference between (i) the property valued with existing in-place leases adjusted to market rental rates and (ii) the property valued as if it were vacant.  Management’s estimates of value are made using methods similar to those used by independent appraisers (e.g., discounted cash flow analysis).  Factors to be considered by management in its analysis include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions and costs to execute similar leases.

The total amount of other intangible assets acquired is further allocated to customer relationship intangible values based on management’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with that respective tenant.  Characteristics to be considered by management in allocating these values include the nature and extent of the Company’s existing relationships with the tenant, the tenant’s credit quality and expectations of lease renewals (including those existing under the terms of the lease agreement), among other factors.

The Company amortizes the value of in-place leases to expense over the average remaining term of the respective leases.  The value of customer relationship intangibles are amortized to expense over the initial term and any renewal periods in the respective leases, but in no event will the amortization periods for the intangible assets exceed the remaining depreciable life of the building.  Should a tenant terminate its lease, the unamortized portion of the in-place lease value and customer relationship intangibles associated with that tenant would be charged to expense in that period.

The determination of the fair value of assets and liabilities acquired requires the use of significant assumptions with regard to current market rental rates, discount rates and other variables.  The use of inappropriate estimates would result in an incorrect assessment of the purchase price allocations, which could impact the amount of the Company’s reported net income.  Initial purchase price allocations are subject to change until all information is finalized, which is generally within one year of the acquisition date.

Goodwill

The Company records the excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed as goodwill. Goodwill is not amortized but is tested for impairment at a level of reporting referred to as a reporting unit on an annual basis, during the fourth quarter of each calendar year, or more frequently, if events or changes in circumstances indicate that the asset might be impaired.

Noncontrolling Interests

Noncontrolling interests are presented and disclosed as a separate component of stockholders' equity (not as a liability or other item outside of stockholders' equity). Consolidated net income (loss) includes the noncontrolling interests’ share of income (loss). All changes in the Company’s ownership interest in a subsidiary are accounted for as stockholders' equity transactions if the Company retains its controlling financial interest in the subsidiary.

Revenue Recognition

The Company recognizes minimum rent, including rental abatements and contractual fixed increases attributable to operating leases, on a straight-line basis over the term of the related lease and includes amounts expected to be received in later years in deferred rents.  The Company records property operating expense reimbursements due from tenants for common area maintenance, real estate taxes and other recoverable costs in the period in which the related expenses are incurred.

12

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

The specific timing of a sale is measured against various criteria related to the terms of the transaction and any continuing involvement associated with the property.  If the criteria for gain recognition under the full-accrual method are not met, the Company defers gain recognition and accounts for the continued operations of the property by applying the percentage-of-completion, reduced profit, deposit, installment or cost recovery methods, as appropriate, until the appropriate criteria are met.

The future minimum rental payments to be received from noncancelable operating leases are $40.3 million and $2 million for the 12 months periods ending March 31, 2015 and 2016, respectively, and none thereafter.

Tenant Receivables

Tenant receivables are stated in the financial statements at amounts due from tenants net of an allowance for uncollectible receivables.  Payment terms vary and receivables outstanding longer than the payment terms are considered past due.  The Company determines its allowance by considering a number of factors, including the length of time receivables are past due, security deposits held, the Company’s previous loss history, the tenants’ current ability to pay their obligations to the Company, the condition of the general economy and the industry as a whole.  The Company writes off receivables when they become uncollectible.  At March 31, 2014 and December 31, 2013 , there were allowances for uncollectible receivables of $19,000 and $86,000, respectively.

Deferred Offering Costs

Through March 31, 2014, the Advisor has advanced $4.6 million on behalf of the Company for the payment of public offering costs consisting of accounting, advertising, allocated payroll, due diligence, marketing, legal and similar costs.  A portion of these costs was charged to equity upon the sale of each share of common stock sold under the public offering.  Similarly, a portion of the proceeds received from the sales of shares in the Company's public offering was paid to the Advisor to reimburse it for the amount incurred on behalf of the Company.  Deferred offering costs represent the portion of the total costs incurred that have not been charged to equity to date. As of March 31, 2014 and December 31, 2013, $4.6 million and $4.2 million, respectively, have been reimbursed to the Advisor.  

Income Taxes

To maintain its REIT qualification for U.S. federal income tax purposes, the Company is generally required to distribute at least 90% of its taxable net income (excluding net capital gains) to its stockholders as well as comply with other requirements, including certain asset, income and stock ownership tests.  Accordingly, the Company generally will not be subject to corporate U.S. federal income taxes to the extent that it annually distributes at least 90% of its taxable net income to its stockholders.  If the Company fails to qualify as a REIT, and does not qualify for certain statutory relief provisions, it is subject to U.S. federal, state and local income taxes and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year in which it fails its REIT qualification.  Accordingly, the Company’s failure to qualify as a REIT could have a material adverse impact on its results of operations and amounts available for distribution to its stockholders.

The dividends-paid deduction of a REIT for qualifying dividends to its stockholders is computed using the Company’s taxable income as opposed to net income reported on the financial statements.  Generally, taxable income differs from net income reported on the financial statements because the determination of taxable income is based on tax provisions and not financial accounting principles.

The Company may elect to treat certain of its subsidiaries as a taxable REIT subsidiary (“TRS”). In general, the Company’s TRSs may hold assets and engage in activities that the Company cannot hold or engage in directly and generally may engage in any real estate or non-real estate-related business.  A TRS is subject to U.S. federal, state and local corporate income taxes.  As of March 31, 2014 and December 31, 2013, the Company had no TRSs.

The Company evaluates the benefits from tax positions taken or expected to be taken in its tax return. Only the largest amount of benefits from tax positions that will more likely than not be sustainable upon examination are recognized by the Company.  The Company does not have any unrecognized tax benefits, nor interest and penalties, recorded in its consolidated financial statements and does not anticipate significant adjustments to the total amount of unrecognized tax benefits within the next 12 months.

The Company is subject to examination by the U.S. Internal Revenue Service and by the taxing authorities in other states in which the Company has significant business operations.  The Company is not currently undergoing any examinations by taxing authorities.

13

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

Earnings Per Share

Basic earnings per share are calculated on the basis of the weighted-average number of common shares outstanding during the year.  Basic earnings per share are computed by dividing income available to common stockholders by the weighted-average common shares outstanding during the period.  Diluted earnings per share take into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted to common stock.  Due to reported losses for the periods presented, $50,000 of the convertible shares (discussed in Note 15) are not included in the diluted earnings per share calculations.  For the purposes of calculating earnings per share, all common shares and per common share information in the financial statements have been adjusted retroactively for the effect of seven1.5% stock distributions, two0.75% stock distributions, one0.585% stock distribution and two0.5% stock distributions issued to stockholders. Common stock shares issued on the Consolidated Balance Sheets have also been adjusted retroactively for the effect of these 12 distributions.

Reclassifications

Certain amounts in the prior year financial statements have been reclassified to conform to the current-year presentation. The impact of the reclassifications made to prior year amounts are not material and did not affect net income (loss).

Adoption of New Accounting Standard

The Company early adopted the following accounting standard during 2014 which had a material impact on its consolidated financial position, results of operations and cash flows:

Accounting Standards Issued But Not Yet Effective

In April 2014, the Financial Accounting Standards Board, or FASB, issued authoritative guidance to change the criteria for reporting discontinued operations. Under the new guidance, only disposals representing a strategic shift in a company's operations and financial results should be reported as discontinued operations, with expanded disclosures. In addition, disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify as a discontinued operation is required. The Company has early adopted this guidance and such guidance became effective for the Company during the three months ended March 31, 2014.

NOTE 3 – SUPPLEMENTAL CASH FLOW INFORMATION

The following table presents supplemental cash flow information (in thousands):

	March 31, 2014		December 31, 2013
Non-cash activities:
Property and intangibles received on foreclosure of loans held for investment	$	—	$	10,150
Financing provided for disposed property	—		800
Stock issued from distribution reinvestment plan	4,712		9,984
Stock distributions issued	3,333		8,221
Cash distributions on common stock declared but not yet paid	2,248		2,222
Deferred financing costs and escrow deposits funded directly by mortgage note and revolving credit facility	—		2,880
Debt assumed	138,327		—
Cash paid during the period for:
Interest	$	1,778	$	537

14

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

NOTE 4 – RENTAL PROPERTIES, NET

The Company’s investments in rental properties consisted of the following (in thousands):

	March 31, 2014			December 31, 2013
Land	$	125,072		$	62,859
Building and improvements	529,467			325,412
Furniture, fixtures and equipment	16,218			17,051
Construction in progress	1,679			827
	672,436			406,149
Less: accumulated depreciation	(22,130		)	(15,776		)
	$	650,306		$	390,373

Depreciation expense for the three months ended March 31, 2014 and 2013 was $5.9 million and $1.8 million, respectively.

NOTE 5 − LOANS HELD FOR INVESTMENT, NET

On March 15, 2011, the Company purchased, at a discount, two non-performing promissory notes and two performing promissory notes (the “Notes”), each of which was secured by a first priority mortgage on the respective multifamily rental apartment communities.  The contract purchase price for the Notes was a total of $3.1 million, excluding closing costs.  On August 2, 2011, the borrower of one of the non-performing promissory notes entered into a forbearance agreement with the Company and, on September 23, 2011, paid the Company a negotiated amount in satisfaction of the note in full.  On August 18, 2011, the Company was the successful bidder at a foreclosure sale of the property collateralizing the second non-performing note, the Heatherwood Note.  Possession of the Heatherwood Apartments was obtained in February 2012 and the property was subsequently sold in April 2013 (see Note 8).   The face value of the performing notes as of both March 31, 2014 and December 31, 2013 was $1.9 million. The performing notes were purchased net of discounts and the unamortized accretable discounts totaled $287,000 and $292,000 at March 31, 2014 and December 31, 2013, respectively.

On April 18, 2013, in connection with the sale of the Heatherwood Apartments, the Company originated an $800,000 mortgage loan to the purchaser of the Heatherwood Apartments on the same date.

The following table provides the aging of the Company’s loans held for investment (dollars in thousands):

	March 31, 2014			December 31, 2013
	Amount		Percent	Amount		Percent
Current	$	1,551	89%	$	1,529	89%
Delinquent:
30−89 days	—		—%	195		11%
90−180 days	195		11%	—		—%
Greater than 180 days	—		—%	—		—%
	$	1,746	100%	$	1,724	100%

The following table provides information about the credit quality of the Company’s loans held for investment, net, (in thousands):

	March 31, 2014		December 31, 2013
Loans:
Performing	$	1,551	$	1,529
Nonperforming	195		195
Total	$	1,746	$	1,724

15

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

The following table provides information about the terms of the Company's loans held for investment (dollars in thousands):

	Peterson Note			Trail Ridge Note			Heatherwood Note
Face value	$	242		$	1,058		$	800
Maturity date	12/31/2013			10/28/2021			5/17/2016
Interest rate	7.4		%	7.5		%	4.0		%
Average monthly payment	$	3		$	8		$	11

The Peterson Note matured on December 31, 2011 with an unpaid balance of $238,000.  Accordingly, the Company and the borrower under this note entered into a forbearance agreement in January 2012 which expired on December 31, 2013.  The borrower did not pay the outstanding balance at the expiration of the forbearance period, which caused the borrower under the Peterson Note to be in default of such agreement. This forbearance agreement is considered a troubled debt restructuring.  On February 27, 2014, the Company was the successful bidder at a foreclosure sale of the property collateralizing the Peterson Note. On April 6, 2014, the Company sold its interest in the sheriff's deed for the Peterson Apartments for $195,000 to an unaffiliated third party.

The Company has individually evaluated each loan for impairment and determined that, as of March 31, 2014, two loans were not impaired and the Peterson Note was impaired.  As of March 31, 2014, the Company recorded an impairment charge of approximately $24,000 on the Peterson Note.

There was a $24,000 allowance for credit losses as of March 31, 2014. There were no charge-offs for the three months ended March 31, 2014.

NOTE 6 – ACQUISITIONS, GOODWILL AND FORECLOSURES

Real Estate Investments

As of March 31, 2014, the Company owned interests in 35 properties, including 10 multifamily properties purchased on January 28, 2014 as part of the Paladin acquisition, discussed below. The Company estimated the fair values of certain of the acquired assets and liabilities based on preliminary valuations at the date of purchase. The Company is in the process of obtaining appraisals in order to finalize the estimated valuations for the more recent acquisitions.

16

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

The table below summarizes the Company's wholly-owned acquisitions and the respective fair values assigned (dollars in thousands):

Multifamily Community Name	City and State	Date of Acquisition	Purchase Price (2)			Land		Building and Improvements		Furniture, Fixture and Equipment		Intangible Assets		Other Assets		Other Liabilities			Fair Valued Assigned
Addison Place	Alpharetta, GA	3/28/2014	$	70,500	(3)	$	18,137	$	51,843	$	—	$	521	$	55	$	(392	)	$	70,164
Nicollet Ridge	Burnsville, MN	12/20/2013	33,149			4,134		26,992		1,016		1,008		36		(107		)	33,079
Terrace at River Oaks	San Antonio, TX	12/16/2013	22,500			3,830		17,510		491		669		48		(63		)	22,485
Jasmine at Holcomb Bridge	Alpharetta, GA	10/25/2013	25,050			7,582		16,023		587		859		37		(161		)	24,927
Centennial	Littleton, CO	9/30/2013	30,600			5,702		23,609		198		1,090		24		(190		)	30,433
Pinnacle	Westminster, CO	9/30/2013	24,250			2,923		20,301		97		928		20		(147		)	24,122
Jefferson Point	Newport News, VA	9/9/2013	18,250			3,951		13,048		584		667		23		(59		)	18,214
Brentdale	Plano, TX	7/25/2013	32,200			5,785		24,418		798		1,199		52		(317		)	31,935
Nob Hill	Winter Park, FL	6/27/2013	10,100			2,512		6,459		523		606		50		(61		)	10,089
Trailpoint at the Woodlands	Spring, TX	6/24/2013	27,200			3,785		22,014		697		704		40		(170		)	27,070
Retreat at Rocky Ridge	Hoover, AL	4/18/2013	8,500			1,616		6,418		30		436		2		(89		)	8,413
Ivy at Clear Creek	Houston, TX	3/28/2013	11,750			1,877		9,175		28		670		8		(127		)	11,631
One Hundred Chevy Chase Apartments	Lexington, KY	3/13/2013	6,850			1,323		4,981		41		505		7		(101		)	6,756
Deerfield	Hermantown MN	3/21/2012	10,300		(4) (1)	1,660		11,110		500		423		1		(4		)	13,690
The Alcove	Houston, TX	12/21/2012	5,500			1,202		3,865		20		413		54		(13		)	5,541
Cityside Crossing	Houston, TX	12/19/2012	14,425			1,949		11,676		37		763		49		(68		)	14,406
The Reserve at Mount Moriah	Memphis, TN	12/7/2012	2,275			775		1,124		39		337		16		(90		)	2,201
Mosaic	Oklahoma City, OK	12/6/2012	2,050			1,000		2,609		30		123		14		(14		)	3,762
Williamsburg Apartments	Cincinnati, OH	6/20/2012	41,250			3,223		35,111		1,007		1,909		49		(274		)	41,025
Cannery Lofts	Dayton, OH	5/13/2011	7,100		(5) (1)	160		7,913		200		609		35		—			8,917
The Redford	Houston, TX	3/27/2012	11,400			4,073		5,235		262		1,558		272		—			11,400
Campus Club Apartments	Tampa, FL	10/21/2012	8,300		(6) (1)	1,650		6,250		200		435		—		—			8,535
Vista Apartment Homes	Philadelphia, PA	6/17/2011	12,000		(7) (1)	1,163		9,913		—		535		530		(141		)	12,000
Arcadia at Westheimer	Houston, TX	9/3/2010	7,800		(8) (1)	943		6,599		—		258		—		—			7,800
107th Avenue	Omaha, NE	8/18/2010	225			25		196		—		4		—		—			225

(1) The date of acquisition reflects the date the Company acquired the note secured by the property listed.

(2) Purchase price excludes closing costs and acquisition expenses. For properties acquired through foreclosure, the purchase price reflects the contract purchase price of the note.

(3) Asset valuations are based on preliminary valuations at the date of purchase. The Company is in the process of obtaining an appraisal to finalize the valuation. The Company has up to 12 months from the date of acquisition to finalize the valuation.

17

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

(4) Deerfield originally served as the collateral for a non-performing note that the Company purchased on March 21, 2012. On July 19, 2012, the Company was the successful bidder at a foreclosure sale and formally received title to the property on January 22, 2013.

(5) Cannery Lofts originally served as the collateral for a non-performing note that the Company purchased on May 13, 2011. On December 21, 2011, the Company entered into a settlement agreement with the borrower and, subsequently, the Company foreclosed and formally received title to the property on June 6, 2012.

(6) Campus Club Apartments originally served as collateral for a non-performing note that the Company purchased on October 21, 2011. On February 9, 2012, the Company was the successful bidder at a foreclosure sale and took title to the property on February 21, 2012.

(7) Vista Apartment Homes, formerly known as Iroquois Apartments, originally served as the collateral for a non-performing promissory note that the Company purchased on June 17, 2011. On August 2, 2011, the Company was the successful bidder at a sheriff's sale and formally received title to the property.

(8) Arcadia at Westheimer originally served as the collateral for a non-performing promissory note that the Company purchased on September 3, 2010. The Company commenced foreclosure proceedings and, on October 5, 2010, formally received title to the property.

Acquisitions

The Company acquired interests in 12 properties during the three months ended March 31, 2014. As of March 31, 2014, asset valuations are based on preliminary valuations at the date of purchase. In order to finalize the fair values of the acquired assets and liabilities, the Company is in the process of obtaining third-party appraisals for all of the properties acquired. The Company has up to 12 months from the date of acquisition to finalize the valuation for each property. The preliminary valuation of Addison Place is included in the table above.

Paladin Acquisition

On July 18, 2013, Resource Real Estate Opportunity OP, LP (the “Operating Partnership”), the operating partnership of the Company, entered into an Agreement and Plan of Merger with RRE Charlemagne Holdings, LLC, a wholly owned subsidiary of the Operating Partnership (“Merger Sub”), Paladin Realty Income Properties, Inc. (“Paladin”), and Paladin Realty Income Properties, L.P. (“Paladin OP”), whose sole general partner is Paladin, pursuant to which Paladin OP was to merge with and into Merger Sub (the “Merger”), with Merger Sub surviving as a wholly owned subsidiary of the Operating Partnership.

    On January 28, 2014, the parties completed the Merger resulting in the acquisition by the Operating Partnership of interests in 11 joint ventures that owned a total of 10 multifamily communities with more than 2,500 rentable units and two office properties that contain more than 75,000 rentable square feet. The Operating Partnership also acquired, as part of the Merger, a promissory note in the principal amount of $3.5 million issued by a consolidated joint venture which is eliminated in consolidation. This promissory note is secured by the co-venturer’s interests in such joint venture. The consideration for the Merger was $51.2 million, exclusive of transaction costs.    

On March 6, 2014, the Company, through a wholly-owned subsidiary, sold its entire 47.65% membership interest in FPA/PRIP Governor Park, LLC ("Governor Park") to FPA Governor Park Associates, LLC for $456,000 pursuant to that certain assignment and assumption of membership interests agreement of even date. Governor Park owns two small office buildings in San Diego, California. The sale price approximated the fair value, therefore no gain or loss has been recognized.

18

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

The estimated allocation of the purchase price for the interests in the other 10 joint ventures, which is expected to be completed by June 30, 2014, is included below:

Multifamily Community Name	City and State	Ownership %		Land		Building and Improvements		Intangible Assets		Fair Value of Property		Other Net Assets (Liabilities)			Non-controlling interest			Total Company Equity			Goodwill		Allocation of Purchase Price
Champion Farms	Louisville, KY	70.0	%	$	3,146	$	21,838	$	646	$	25,630	$	(17,419	)	$	(2,463	)	$	5,748		$	366	6,114
Fieldstone	Woodlawn, OH	83.0	%	3,089		18,980		854		22,923		(16,201		)	(1,143		)	5,579			328		5,907
Pinehurst	Kansas City, MO	97.5	%	1,627		7,193		153		8,973		(4,510		)	(112		)	4,351			—		4,351
Pheasant Run	Lee's Summit, MO	97.5	%	1,486		9,321		306		11,113		(6,711		)	(110		)	4,292			—		4,292
Retreat at Shawnee	Shawnee, KS	97.5	%	2,363		16,126		659		19,148		(14,543		)	(115		)	4,490			—		4,490
Hilltop Village	Kansas City, MO	49.0	%	715		3,241		264		4,220		(4,729		)	260			(249		)	60		(189		)
Conifer Place	Norcross, GA	42.5	%	10,798		24,176		1,139		36,113		(29,596		)	(3,745		)	2,772			3,986		6,758
Stone Ridge	Columbia, SC	68.5	%	2,825		3,840		335		7,000		506			(2,364		)	5,142			1,052		6,194
Evergreen at Coursey Place	Baton Rouge, LA	51.7	%	9,470		33,209		705		43,384		(29,063		)	(6,912		)	7,409			620		8,029
Pines of York	Yorktown, VA	90.0	%	8,773		11,231		800		20,804		(15,473		)	(533		)	4,798			—		4,798
				$	44,292	$	149,155	$	5,861	$	199,308	$	(137,739	)	$	(17,237	)	$	44,332		$	6,412	$	50,744
Governor Park (sold March 6, 2014)		47.7	%																				456
Total purchase price																							$	51,200

On March 31, 2014, the Company purchased the remaining 48.3% ownership interest of its joint venture partner in ERES Coursey, LLC ("Coursey Place") for $7.5 million, bringing the Company's ownership percentage of Evergreen at Coursey Place to 100% from 51.7%. A summary of the transaction is below:

Purchase price excluding closing costs	$	7,500
Noncontrolling interest assumed	6,912
Prepaid insurance	7
Goodwill	619
Transaction expenses	45
	$	7,583

Total goodwill for the Company is as follows:

Goodwill at date of acquisition	$	6,412
Buyout of Coursey Place joint venture interest	619
Total goodwill	$	7,031

19

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

NOTE 7 - MEASUREMENT PERIOD ADJUSTMENTS

On January 22, 2013, the Company took title to Deerfield after foreclosing on the Deerfield Note, which was originally acquired by the Company for $10.3 million.      

The measurement period for the above acquisition was finalized during the three months ended December 31, 2013. In completing the accounting for the acquisition of Deerfield, the Company determined that the fair value of the net assets acquired exceeded the fair value of the consideration paid for this acquisition. Accordingly, the Company retrospectively adjusted the provisional amounts with respect to the Deerfield acquisition that was recognized at the acquisition date to reflect new information from the completed third party appraisal report that, if known at the acquisition date, would have affected the measurement of the amounts recognized as of that date.  The final purchase price adjustment recorded during the measurement period resulted in a gain on foreclosure of $3.4 million on the Deerfield acquisition.  Those changes are reflected in the table below:

Deerfield

	January 22, 2013 (As initially reported)		Measurement period adjustment			January 22, 2013 (As adjusted)
Land	$	1,028	$	632		$	1,660
Building	8,592		2,518			11,110
Personal property	—		500			500
Intangible assets	680		(257		)	423
Identifiable net assets	10,300		3,393			13,693
Gain on foreclosure	—		(3,393		)	—
Total net identifiable net assets	$	10,300	$	—		$	13,693

NOTE 8 – DISPOSITION OF PROPERTIES AND DISCONTINUED OPERATIONS

The Company reported its property dispositions as discontinued operations under prior accounting guidance. Assuming no significant continuing involvement by the Company after the sale, the sale of property is considered a discontinued operation.  Included in discontinued operations for the three months ended March 31, 2014 and 2013 are the operating results of the two properties discussed below.

      The Company sold the Heatherwood Apartments, which was originally obtained through foreclosure in February 2012, to an unaffiliated purchaser for $1.0 million on April 18, 2013 and recognized a loss on disposition of $31,000. The Company provided the purchaser with financing for $800,000 and the purchaser paid cash of $200,000 in connection with the disposition.

The Company sold the Town Park Apartments to an unaffiliated purchaser on April 30, 2013 for $10.3 million and recognized a gain of approximately $3.2 million on disposition.    

20

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

The results of discontinued operations are summarized for the three months ended March 31, 2014 and 2013 as follows (in thousands): 

	Three Months Ended
	March 31,
	2014		2013
Revenues:
Rental income	$	3	$	806
Total revenues	3		806
Expenses:
Rental operating	1		646
General and administrative	—		58
Loss on property impairment	—		539
Depreciation and amortization expense	—		141
Total expenses	1		1,384
Income (loss) from discontinued operations	2		(578		)
Weighted average common shares outstanding	67,364		22,612
Basic and diluted loss per common share	$	—	$	(0.03	)

NOTE 9 – IDENTIFIED INTANGIBLE ASSETS, NET

Identified intangible assets, net, consist of rental and antennae leases and leasing commissions. The value of the acquired in-place leases totaled $23.0 million and $16.7 million as of March 31, 2014 and December 31, 2013, respectively, net of accumulated amortization of $16.1 million and $11.5 million, respectively.  The weighted-average remaining life of the rental leases is 10.0 months and 11.6 months as of March 31, 2014 and December 31, 2013, respectively.  Expected amortization for the antennae leases at the Vista Apartment Homes is $16,000 annually through 2025.  Amortization of the rental and antennae leases for the three months ended March 31, 2014 was $4.6 million.

Expected amortization for the rental and antennae leases for the next five years ending March 31, and thereafter, is as follows (in thousands): 

2015	$	6,761
2016	19
2017	17
2018	16
2019	16
Thereafter	122
	$	6,951

21

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

NOTE 10 – MORTGAGE NOTES PAYABLE

The following is a summary of the mortgage notes payable (in thousands, except percentages):

	Balance Outstanding at March 31,		Maturity Date	Annual Interest Rate			Average Monthly Debt Service		Interest Expense
									Three Months Ended   March 31,
Collateral	2014								2014		2013
Vista Apartment Homes	$	8,794	5/1/2017	2.76	%	(1)	$	38	$	61	$	64
Cannery Lofts	8,190		9/1/2020	3.45	%	(1)	24		71		N/A
Deerfield	10,530		11/1/2020	4.66	%	(2)	41		123		N/A
Village Square	19,362		11/1/2023	5.02	%	(1)	81		124		N/A
Ivy at Clear Creek	8,586		11/1/2023	5.02	%	(1)	36		55		N/A
Centennial	23,161		1/1/2019	3.60	%	(2)	101		209		N/A
Pinnacle	18,702		1/1/2019	3.60	%	(2)	82		169		N/A
Terrace at River Oaks	14,259		1/1/2022	4.32	%	(2)	69		154		N/A
Champion Farms	17,403		7/1/2016	6.14	%	(2)	85		173		N/A
Fieldstone	15,979		7/1/2014	6.05	%	(2)	137		167		N/A
Pinehurst	4,428		1/1/2016	5.58	%	(2)	39		41		N/A
Pheasant Run	6,759		10/1/2017	5.95	%	(2)	31		64		N/A
Retreat of Shawnee	14,333		2/1/2018	5.58	%	(2)	99		129		N/A
Hilltop Village	4,505		12/1/2017	5.81	%	(2)	33		42		N/A
Conifer Crossing	29,380		9/1/2015	5.96	%	(2)	203		286		N/A
Coursey Place	29,313		8/1/2021	5.07	%	(2)	154		247		N/A
Pines of York	15,658		12/1/2021	4.46	%	(2)	80		121		N/A
	$	249,342

(1) Variable rate based on one-month LIBOR of 0.15175% (as of March 31, 2014).

(2) Fixed rate.

Annual principal payments on the mortgage notes payable for each of the next five years ending March 31, and thereafter, are as follows (in thousands):

2015	$	21,300
2016	5,871
2017	50,273
2018	26,886
2019	30,026
Thereafter	$	114,986
	$	249,342

The mortgage notes payable are recourse only with respect to the properties that secure the notes, subject to certain limited standard exceptions, as defined in each mortgage note. The Company has guaranteed the mortgage notes by executing a guarantee with respect to the properties.  These exceptions are referred to as “carveouts.”  In general, carveouts relate to damages suffered by the lender for a borrower’s failure to pay rents, insurance or condemnation proceeds to lender, failure to pay water, sewer and other public assessments or charges, failure to pay environmental compliance costs or to deliver books and records, in each case as required in the loan documents.  The exceptions also require the Company to guarantee payment of audit costs, lender’s enforcement of its rights under the loan documents and payment of the loan if the borrower voluntarily files for bankruptcy or seeks reorganization, or if a related party of the borrower does so with respect to the subsidiary.

22

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

NOTE 11 – REVOLVING CREDIT FACILITIES

On December 2, 2011, the Company, through its operating partnership, entered into a secured revolving credit facility (the “Bank of America Credit Facility”) with Bank of America, N.A. (“Bank of America”).  On May 23, 2013 the Company amended the Bank of America Credit Facility to increase the amount it may borrow under the Bank of America Credit Facility from $25 million to $50 million (the “Facility Amount”). Draws under the Bank of America Credit Facility are secured by certain of the Company's properties with an aggregate value of $102.0 million and are guaranteed by the Company.  The amount currently available to be borrowed is $45.5 million. The Company paid certain closing costs in connection with the Bank of America Credit Facility, including loan fees totaling $413,305. As of both March 31, 2014 and December 31, 2013, the Company had outstanding borrowings of $1.5 million under the Bank of America Credit Facility.

      The Bank of America Credit Facility, as amended, matures on May 23, 2017, and may be extended to May 23, 2019 subject to satisfaction of certain conditions and payment of an extension fee equal to 0.25% of the amount committed under the Bank of America Credit Facility. Interest on outstanding borrowings is incurred at a rate of LIBOR plus 3.0% (3.15% at March 31, 2014).  The Company is required to make monthly interest-only payments.  The Company also may prepay the Bank of America Credit Facility in whole or in part at any time without premium or penalty. The Company recorded interest expense of $8,000 for the three months ended March 31, 2014 in connection with its borrowings under the Bank of America Credit Facility.

The operating partnership's obligations with respect to the Bank of America Credit Facility are guaranteed by the Company, pursuant to the terms of a guaranty dated as of December 2, 2011, or the Guaranty.  The Bank of America Credit Facility and the Guaranty contain restrictive covenants for maintaining a certain tangible net worth and a certain level of liquid assets, and for restricting the securing of additional debt as follows:

• the Company must maintain a minimum tangible net worth equal to at least (i) 200% of the outstanding principal amount of the Bank of America Credit facility and (ii) $20.0 million;

• the Company must also maintain unencumbered liquid assets with a market value of not less than the greater of (i) $5.0 million or (ii) 20% of the outstanding principal amount of the Bank of America Credit Facility; and

• the Company may not incur any additional secured or unsecured debt without Bank of America's prior written consent and approval, which consent and approval is not to be unreasonable withheld.

The Company was in compliance with all such covenants at March 31, 2014.  

On December 20, 2013, the Company, through a wholly-owned subsidiary, entered into a secured revolving credit facility, ("Jefferson Point Credit Facility") with PNC Bank, National Association for $15 million.  Draws under the Jefferson Point Credit Facility are secured by the assets of Jefferson Point Apartments. The Company provided a repayment guarantee of all interest and scheduled monthly principal payments (excluding the final payment at maturity for the outstanding balance.) The Jefferson Point Credit Facility matures on December 20, 2018. As of March 31, 2014 and December 31, 2013, the Company had outstanding borrowings of $12.5 million. Interest on outstanding borrowings is incurred at a rate of LIBOR plus 2.00% (2.15% at March 31, 2014). The Company paid certain closing costs in connection with the Jefferson Point Credit Facility, including loan fees totaling $75,000. The Company recorded interest expense of $68,000 for the three months ended March 31, 2014 in connection with its borrowings under the Jefferson Point Credit Facility.         

On December 27, 2013, the Company, through a wholly-owned subsidiary, entered into a secured revolving credit facility ("Brentdale Credit Facility") with U.S. Bank National Association for $29.7 million.  Draws under the Brentdale Credit Facility are secured by the assets of Brentdale Apartments. The Company provided a $6.5 million repayment guarantee. The Brentdale Credit Facility matures on December 27, 2017, and may be extended to December 27, 2019 subject to satisfaction of certain conditions and payment of an extension fee equal to 0.25% of the amount committed under the Brentdale Credit Facility. As of March 31, 2014 and December 31, 2013, the Company had outstanding borrowings of $23.0 million. Interest on outstanding borrowings is incurred at a rate of LIBOR plus 1.95% (2.10% at March 31, 2014). The Company paid certain closing costs in connection with the Brentdale Credit Facility, including loan fees totaling $222,000. The Company recorded interest expense of $7,000 for the three months ended March 31, 2014 in connection with its borrowings under the Brentdale Credit Facility.

23

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

NOTE 12 – DEFERRED FINANCING COSTS

Deferred financing costs incurred to obtain financing are amortized over the term of the related debt.  Accumulated amortization as of March 31, 2014 and December 31, 2013 was approximately $550,000 and $419,000, respectively.  Estimated amortization of the existing deferred financing costs for the next five years ending March 31, and thereafter, are as follows (in thousands):

2015	$	943
2016	930
2017	924
2018	560
2019	276
Thereafter	973
	$	4,606

NOTE 13 - ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table presents the changes in each component of accumulated other comprehensive income for the three months ended March 31, 2014 (dollars in thousands):

	Net unrealized gain (loss) on derivatives
January 1, 2014	$	20
Unrealized loss on designated derivative	(58		)
March 31, 2014	$	(38	)

24

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

NOTE 14 – CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In the ordinary course of its business operations, the Company has ongoing relationships with several related parties. 

Relationship with RAI

The Company's properties participate in an insurance pool with other properties directly and indirectly managed by RAI. RAI holds the escrow funds related to the insurance pool on its books. The insurance pool covers losses up to $3.0 million. Catastrophic insurance would cover losses in excess of the insurance pool up to $85.0 million. Therefore, unforeseen or catastrophic losses in excess of the Company's insured limits could have a material adverse effect on the Company's financial condition and operating results.

Relationship with the Advisor

In September 2009, the Company entered into an advisory agreement (the “Advisory Agreement”) pursuant to which the Advisor provides the Company with investment management, administrative and related services.  The Advisory Agreement was amended in January 2010 and further amended in January 2011.  The Advisory Agreement has a one-year term and renews for an unlimited number of successive one-year terms upon the approval of the conflicts committee of the Company's board of directors.  The Company renewed the advisory agreement for another year on September 15, 2013. Under the Advisory Agreement, the Advisor receives fees and is reimbursed for its expenses as set forth below:

Acquisition fees. The Company pays the Advisor an acquisition fee of 2.0% of the cost of investments acquired on behalf of the Company, plus any capital expenditure reserves allocated, or the amount funded by the Company to acquire loans, including acquisition expenses and any debt attributable to such investments. 

Asset management fees. The Company pays the Advisor a monthly asset management fee equal to one-twelfth of 1.0% of the higher of the cost or the independently appraised value of each asset, without deduction for depreciation, bad debts or other non-cash reserves.  The asset management fee is based only on the portion of the costs or value attributable to the Company’s investment in an asset if the Company does not own all or a majority of an asset and does not manage or control the asset.  

Disposition fees. The Advisor earns a disposition fee in connection with the sale of a property equal to the lesser of one-half of the aggregate brokerage commission paid, or if none is paid, 2.75% of the contract sales price. No properties were sold during the three months ended March 31, 2014 and 2013 and, therefore, no disposition fees were earned in either period.

Debt financing fees. The Advisor earns a debt financing fee equal to 0.5% of the amount available under any debt financing obtained for which it provided substantial services.

Expense reimbursements. The Company also pays directly or reimburses the Advisor for all of the expenses paid or incurred by the Advisor or its affiliates on behalf of the Company or in connection with the services provided to the Company in relation to its public offering, including its ongoing distribution reinvestment plan offering.  This includes all organization and offering costs of up to 2.5% of gross offering proceeds.

Reimbursements also include expenses the Advisor incurs in connection with providing services to the Company, including the Company’s allocable share of costs for Advisor personnel and overhead, out of pocket expenses incurred in connection with the selection and acquisition of properties or other real estate related debt investments, whether or not the Company ultimately acquires the investment.  However, the Company will not reimburse the Advisor or its affiliates for employee costs in connection with services for which the Advisor earns acquisition or disposition fees.

Relationship with Resource Real Estate Opportunity Manager

Resource Real Estate Opportunity Manager, LLC (the “Manager”), an affiliate of the Advisor, manages the Company's real estate properties and real estate-related debt investments and coordinates the leasing of, and manages construction activities related to, some of the Company’s real estate properties pursuant to the terms of the management agreement with the Manager.

Property management fees. The Manager is entitled to specified fees upon the provision of certain services, including construction management fee and property management/debt servicing fees.  

25

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

Construction management fees. The Manager earns a construction management fee of 5.0% of actual aggregate costs to construct improvements, or to repair, rehab or reconstruct a property.

Debt servicing fees. The Manager earns a debt servicing fee of 2.75% on payments received from loans held by the Company for investment.  

Expense reimbursement. During the ordinary course of business, the Manager or other affiliates of RAI may pay certain shared operating expenses on behalf of the Company. 

Relationship with Resource Securities

Resource Securities, Inc. (“Resource Securities”), an affiliate of the Advisor, served as the Company’s dealer-manager and was responsible for marketing the Company’s shares in the primary portion of its public offering.  Pursuant to the terms of the dealer-manager agreement with Resource Securities, the Company paid Resource Securities a selling commission of up to 7% of gross primary offering proceeds and a dealer-manager fee of up to 3% of gross primary offering proceeds.

Resource Securities reallowed all selling commissions earned and up to 1% of the dealer-manager fee as a marketing fee to participating broker-dealers.  No selling commissions or dealer-manager fees are earned by Resource Securities in connection with sales under the distribution reinvestment plan.  Additionally, the Company could reimburse Resource Securities for bona fide due diligence expenses.

Relationship with Other Related Parties

The Company has also made payment for legal services to the law firm of Ledgewood P.C. (“Ledgewood”).  Until 1996, the Chairman of RAI was of counsel to Ledgewood.  In connection with the termination of his affiliation with Ledgewood and its redemption of his interest, the Chairman continues to receive certain payments from Ledgewood.  Until March 2006, a current executive of RAI was the managing member of Ledgewood.  This executive remained of counsel to Ledgewood through June 2007, at which time he became an Executive Vice President of RAI.  In connection with his separation, this executive is entitled to receive payments from Ledgewood through 2013. 

The Company utilizes the services of a printing company, Graphic Images, LLC (“Graphic Images”), whose principal owner is the father of RAI’s Chief Financial Officer.  

The fees earned / expenses paid and the amounts payable to such related parties are summarized in the following tables (in thousands):

	March 31, 2014		December 31, 2013
Receivables from related parties:
RAI and affiliates	$	54	$	530
Payables to related parties:
Advisor:
Acquisition fees	$	952	$	—
Expense reimbursements	228		775
Resource Real Estate Opportunity Manager, LLC:
Property management fees	269		266
Operating expense reimbursements	362		500
Resource Securities, Inc.
Selling commissions and dealer manager fees	—		174
Other	15		3
	$	1,826	$	1,718

26

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

	Three Months Ended March 31,
	2014		2013
Fees earned / expenses paid to related parties:
Advisor:
Acquisition fees	$	2,723	$	555
Asset management fees	$	1,250	$	406
Organization and offering costs	$	—	$	103
Overhead allocation	$	351	$	101
Resource Real Estate Opportunity Manager LLC:
Property management fees	$	696	$	413
Construction management fees	$	229	$	—
Debt servicing fees	$	—	$	1
Resource Securities, Inc.:
Selling commissions and dealer manager fees	$	—	$	5,100
Other:
Ledgewood	$	30	$	31
Graphic Images	$	33	$	133

NOTE 15 – EQUITY

Preferred Stock

The Company’s charter authorizes the Company to issue 10.0 million shares of its $0.01 par value preferred stock.  As of March 31, 2014 and December 31, 2013, no shares of preferred stock were issued and outstanding.

Common Stock

As of March 31, 2014, the Company had issued an aggregate of 67,554,712 shares, net of redemptions, of its $0.01 par value common stock as follows (dollars in thousands):

	Shares Issued	Gross Proceeds
Shares issued through private offering	1,263,727	$	12,500
Shares issued through primary public offering	62,485,461	622,000
Shares issued through stock distributions	2,132,266	—
Shares issued through distribution reinvestment plan	1,657,758	16,000
Shares issued in conjunction with the Advisor's initial investment, net of 4,500 share conversion	15,500	200
Total	67,554,712	$	650,700

Convertible Stock

As of March 31, 2014 and December 31, 2013, the Company had 50,000 shares of $0.01 par value convertible stock outstanding of which the Advisor and affiliated persons own 49,063 shares and outside investors own 937 shares.  The convertible stock will convert into shares of the Company’s common stock upon the occurrence of (a) the Company having paid distributions to common stockholders that in the aggregate equal 100% of the price at which the Company originally sold the shares plus an amount sufficient to produce a 10% cumulative, non-compounded annual return on the shares at that price; or (b) if the Company lists its common stock on a national securities exchange and, on the 31st trading day after listing, the Company’s value based on the average trading price of its common stock since the listing, plus prior distributions, combine to meet the same 10% return threshold.

27

Redemption of Securities

During the three months ended March 31, 2014, the Company redeemed its shares as follows:

Period	Total Number of Shares Redeemed (1)	Average Price Paid per Share	Cumulative Number of Shares Purchased as Part of a Publicly Announced Plan or Program (2)	Approximate Dollar Value of Shares Available That May Yet Be Redeemed Under the Program
January 2014	—	—	—	(2)
February 2014	—	—	—	(2)
March 2014	46,237	$8.66	46,237	(2)

(1) All redemptions of equity securities by the Company in the three months ended March 31, 2014 were made pursuant to the Company's share redemption program.

(2) The Company currently limits the dollar value and number of shares that may be redeemed under the program as described below.

All redemption requests tendered were honored during the three months ended March 31, 2014.

The Company will not redeem in excess of 5% of the weighted-average number of shares outstanding during the 12-month period immediately prior to the effective date of redemption. The Company's board of directors will determine at least quarterly whether it has sufficient excess cash to repurchase shares. Generally, the cash available for redemptions will be limited to proceeds from the Company's distribution reinvestment plan plus, if the Company has positive operating cash flow from the previous fiscal year, 1% of all operating cash flow from the previous year.

The Company's Board of Directors, in its sole discretion, may suspend, terminate or amend the Company's share redemption program without stockholder approval upon 30 days' notice if it determines that such suspension, termination or amendment is in the Company's best interest. The Company's board may also reduce the number of shares purchased under the share redemption program if it determines the funds otherwise available to fund the Company's share redemption program are needed for other purposes. These limitations apply to all redemptions, including redemptions sought upon a stockholder's death, qualifying disability or confinement to a long-term care facility.

Distributions

For the three months ended March 31, 2014, the Company paid aggregate distributions of $6.7 million, including $2.0 million of distributions paid in cash and $4.7 million of distributions reinvested in shares of common stock through the Company's distribution reinvestment plan, as follows (in thousands):

Record Date	Per Common Share		Distribution Date	Distribution invested in shares of Common Stock		Aggregate Cash Distribution		Total Aggregate Distribution
December 31, 2013	$	0.033	January 2, 2014	$	1,566	$	656	$	2,222
January 31, 2014	0.033		February 3, 2014	1,575		663		2,238
February 28, 2014	0.033		March 2, 2014	1,571		670		2,241
				$	4,712	$	1,989	$	6,701

On February 4, 2014, the Company's Board of Directors declared cash distributions of $2.2 million ($0.3333 per common share) to stockholders of record as of the close of business on March 31, 2014, which distributions were paid on April 1, 2014.

Since its formation, the Company has declared a total of seven quarterly stock distributions of 0.015 shares each, two quarterly stock distributions of 0.0075 shares each, one quarterly stock distribution of 0.00585 shares each, and two quarterly stock distributions of 0.005 shares each of its common stock outstanding. In connection with these stock distributions, the Company increased its accumulated deficit by $21.0 million as of March 31, 2014.

28

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

NOTE 16 – FAIR VALUE MEASURES AND DISCLOSURES

In analyzing the fair value of its investments accounted for on a fair value basis, the Company follows the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  The Company determines fair value based on quoted prices when available or, if quoted prices are not available, through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. The fair value of cash, tenant receivables and accounts payable, approximate their carrying value due to their short nature.  The hierarchy followed defines three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. 

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.

Level 3 - Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

The determination of where an asset or liability falls in the hierarchy requires significant judgment.  The Company evaluates its hierarchy disclosures each quarter; depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter.  However, the Company expects that changes in classifications between levels will be rare.

Rental properties obtained through a foreclosed note are measured at fair value on a non-recurring basis.  The fair value of rental properties is usually estimated based on information obtained from a number of sources, including information obtained about each property as a result of pre-acquisition due diligence, marketing and leasing activities.  The Company allocates the purchase price of properties to acquired tangible assets, consisting of land, buildings, fixtures and improvements, and identified intangible lease assets and liabilities, consisting of the value of above-market and below-market leases, as applicable, the value of in-place leases and the value of tenant relationships, based in each case on their fair values.

The carrying and fair values of the Company’s loans held for investment, net, mortgage note payable and revolving credit facilities were as follows (in thousands):

	March 31, 2014						December 31, 2013
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Loans held for investment, net	$	1,746		$	1,746		$	1,724		$	1,724
Mortgage notes payable	$	(249,342	)	$	(248,393	)	$	(111,811	)	$	(110,413	)
Revolving credit facilities	$	(37,041	)	$	(37,041	)	$	(37,041	)	$	(37,041	)

The fair value of the loans held for investment, net, was estimated by comparing the recorded amount of the loan to the fair value of the collateral. On February 27, 2014, the Company foreclosed on the property securing the Peterson Note. On March 3, 2014, an offer to purchase the property was presented to the Company for $24,000 less than the carrying amount of the note. Accordingly, the Company has adjusted the carrying amount of the note at December 31, 2013 for such impairment.

The fair value of the mortgage notes payable was estimated using rates available to the Company for debt with similar terms and remaining maturities.

The fair values of the revolving credit facilities equal the carrying amounts because the interest rate of each of the credit facilities is variable.

29

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

NOTE 17 – DERIVATIVES AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

As a condition to certain of the Company’s financing facilities, from time to time the Company may be required to enter into certain derivative transactions as may be required by the lender. These transactions would generally be in line with the Company’s own risk management objectives and also service to protect the lender.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company entered into two interest rate caps that were designated as cash flow hedges during 2013. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the year end December 31, 2013 such derivatives were used to hedge the variable cash flows, indexed to USD-LIBOR, associated with existing variable-rate loan agreements. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the three months ended March 31, 2014, the Company did not record any hedge ineffectiveness in earnings.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

As of March 31, 2014, the Company had the following outstanding interest rate derivatives,which mature on November 1, 2018, that were designated as cash flow hedges of interest rate risk (dollars in thousands):

Interest Rate Derivative	Number of Instruments	Notional Amount
Interest Rate Caps	2	$	27,948

Tabular Disclosure of Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet as of March 31, 2014 and December 31, 2013 (in thousands):

Asset Derivatives						Liability Derivatives
March 31, 2014			December 31, 2013			March 31, 2014			December 31, 2013
Balance Sheet	Fair Value		Balance Sheet	Fair Value		Balance Sheet	Fair Value		Balance Sheet	Fair Value
Interest rate cap	$	232	Interest rate cap	$	290	—	$	—	—	$	—

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RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2014

(unaudited)

NOTE 18 – OPERATING EXPENSE LIMITATION

Under its charter, the Company must limit its total operating expenses to the lesser of 2% of its average invested assets or 25% of its net income for the four most recently completed fiscal quarters, unless the conflicts committee of the Company’s board of directors has determined that such excess expenses were justified based on unusual and non-recurring factors.  Operating expenses for the four quarters ended March 31, 2014 were in compliance with the charter imposed limitation.

NOTE 19 – GAIN ON FORECLOSURE

On January 22, 2013, the Company completed the foreclosure of Deerfield. The Company's fair value of the property exceeded the carrying value of the Deerfield Note by $3.4 million. After making adjustments to security deposits totaling $81,000, the Company recorded a net gain on foreclosure of $3.5 million during the three months ended March 31, 2013.

NOTE 20 – SUBSEQUENT EVENTS

On February 27, 2014, the Company was the successful bidder at a foreclosure sale of the property collateralizing the Peterson Note. On April 6, 2014, the Company sold its interest in the sheriff's deed for the Peterson Apartment for $195,000 to an unaffiliated purchaser.

On May 5, 2014, the Company purchased a 142-unit multifamily community located in Plano, Texas from an unaffiliated seller for $15.0 million.

The Company has evaluated subsequent events and determined that no events have occurred, other than those disclosed above, which would require an adjustment to the consolidated financial statements.

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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 Resource Real Estate Opportunity REIT, Inc. and the notes thereto. See also “Cautionary Note Regarding Forward-Looking Statements” preceding Part I, as well as the notes to our financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations provided in our Annual Report on Form 10-K for the year ended December 31, 2013. As used herein, the terms “we,” “our” and “us” refer to Resource Real Estate Opportunity REIT, Inc., a Maryland corporation, and, as required by context, Resource Real Estate Opportunity OP, LP, a Delaware limited partnership, and to their subsidiaries.

Overview

We have sought to acquire, a diversified portfolio of discounted U.S. commercial real estate and real estate-related debt that has been significantly discounted due to the effects of recent economic events and high levels of leverage on U.S. commercial real estate, including properties that may benefit from extensive renovations that may increase their long-term values. Following years of unprecedented appreciation in commercial real estate values fueled by readily available and inexpensive credit, the commercial real estate market began a significant decline in late 2007 as a result of the massive contraction in the credit and securitization markets. We believe that this decline has produced an attractive environment to acquire commercial real estate and real estate-related debt at significantly discounted prices. We have a particular focus on operating multifamily assets and we intend to target this asset class while also purchasing interests in other types of commercial property assets consistent with our investment objectives. Our targeted portfolio will consist of commercial real estate assets, principally (i) non-performing or distressed loans, including but not limited to first- and second-priority mortgage loans, mezzanine loans, B-Notes and other loans, (ii) real estate owned by financial institutions, (iii) multifamily rental properties to which we can add value with a capital infusion (referred to as “value add properties”), and (iv) discounted investment-grade commercial mortgage-backed securities. However, we are not limited in the types of real estate and real estate-related assets in which we may invest and, accordingly, we may invest in other real estate assets either directly or together with a co-investor or joint venture partner. We currently anticipate holding approximately 45% of our total assets in categories (i) and (ii), and 55% of our total assets in category (iii). We may make adjustments to our target portfolio based on real estate market conditions and investment opportunities. We will not forego a good investment because it does not precisely fit our expected portfolio composition. Thus, to the extent our Advisor presents us with investment opportunities that allow us to meet the requirements to be treated as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended (the "Internal Revenue code") and to maintain our exclusion from regulation as an investment company pursuant to the Investment Company Act, our portfolio composition may vary from what we have initially disclosed.

We commenced the public offering of our common stock on June 16, 2010 after having completed a private offering of our common stock on June 9, 2010, both of which have provided our initial capitalization. The primary portion of our initial public offering closed on December 13, 2013. We continue to offer shares to our existing stockholders pursuant to our distribution reinvestment plan. We describe these offerings further in “Liquidity and Capital Resources” below.

Results of Operations

We were formed on June 3, 2009.  We commenced active real estate operations on September 7, 2010 when we raised the minimum offering amount in our initial public offering.  As of March 31, 2014, we owned interests in a total of 35 multifamily properties. In the three months ended March 31, 2014, we acquired interests in 12 multifamily properties. Our management is not aware of any material trends or uncertainties, favorable, or unfavorable, other than national economic conditions affecting our targeted portfolio, the multifamily residential housing industry and real estate generally, which may reasonably be expected to have a material impact on either capital resources or the revenues or incomes to be derived from the operation of such assets or those that we expect to acquire.

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Three Months EndedMarch 31, 2014 Compared to the Three Months EndedMarch 31, 2013

The following table sets forth the results of our operations (in thousands):

	Three Months Ended
	March 31,
	2014			2013
				(Remeasured)
Revenues:
Rental income	$	20,669		$	6,796
Gain on foreclosures	—			3,460
Interest income	515			54
Total revenues	21,184			10,310
Expenses:
Rental operating	12,027			4,608
Acquisition costs	2,500			686
Foreclosure costs	—			39
Management fees - related parties	2,109			777
General and administrative	2,294			912
Loss on disposal of assets	1,627			37
Depreciation and amortization expense	11,079			2,769
Total expenses	31,636			9,828
(Loss) income before other expenses	(10,452		)	482
Other (expense) income:
Gain on forfeiture/redemption of stock	—			21
Interest expense	(2,739		)	(125		)
(Loss) income from continuing operations	(13,191		)	378
Discontinued operations:
Income (loss) from discontinued operations	2			(578		)
Net loss	(13,193		)	(200		)
Net income attributable to noncontrolling interest	(804		)	—
Net loss attributable to stockholders	$	(13,993	)	$	(200	)

Revenues: During the three months ended March 31, 2014 and 2013, our income was primarily from rents from our multifamily properties. The increase in rental income is due to the increased number of operating properties we owned interests from 16 to 35 as compared to the three months ended March 31, 2013. During the three months ended March 31, 2013, we recorded a gain on foreclosure of $3.5 million for the excess of market value over carrying value at one foreclosed property.

Expenses.  Our rental operating expenses increased for the three months ended March 31, 2014 as compared to the three months ended March 31, 2013 primarily due to an increase in the number of operating properties we owned. Accordingly, we incurred increased management fees, general and administrative expenses, and depreciation and amortization expenses.  

◦ General and administrative expenses increased from $912,000 for the three months ended March 31, 2013 to $2.3 million for the three months ended March 31, 2014 primarily related to the following:

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◦ General and administrative expenses increased at the property level from $533,000 for the three months ended March 31, 2013 to $1.2 million for the three months ended March 31, 2014 due to the operation of 19 additional properties in which we acquired interests directly or through foreclosure subsequent to March 31, 2013, offset in part by the decrease in general and administrative expenses related to the disposition of two properties in 2013.

◦ Other company level general and administrative expenses increased, primarily related to a $228,000 increase in payroll expense allocated to us by our Advisor.

◦ Acquisition costs for the three months ended March 31, 2014 were $2.5 million (primarily related to the acquisition of interests in 12 properties with an aggregate purchase price of $121.7 million) as compared to acquisition costs of $686,000 for the three months ended March 31, 2013 (related to the acquisition of one loan and two properties with an aggregate purchase price of $18.6 million).  

◦ The $2.6 million increase in interest expense is due to draw downs on our line of credit as well as the borrowings under seven additional mortgage loans into which we entered subsequent to March 31, 2013.

◦ The asset carrying value for one property, which was sold in April 2013, was determined to exceed its estimated fair value and, therefore, we recorded a $539,000 loss on impairment during the three months ended March 31, 2013, which is included in income (loss) from discontinued operations.

Liquidity and Capital Resources

We derive the capital required to purchase real estate investments and conduct our operations from the proceeds of our private and public offerings and any future offerings we may conduct, secured or unsecured financings from banks, proceeds from the sale of real estate, and cash flow generated by our real estate and real estate-related investments.

We have allocated a portion of the funds we raised in our initial public offering to preserve capital for our investors by supporting the maintenance and viability of the properties we have acquired and those properties that we may acquire in the future.  If these allocated amounts and any other available income become insufficient to cover our operating expenses and liabilities, it may be necessary to obtain additional funds by borrowing, refinancing properties or liquidating our investment in one or more properties, debt investments or other assets we may hold.  We cannot assure you that we will be able to access additional funds upon acceptable terms when we need them.

Capital Expenditures.

We deployed a total of $4.7 million during the three months ended March 31, 2014 for capital expenditures primarily related to unit rehabilitations, which included the following:

	Capital deployed during the three months ended
Property	March 31, 2014		Remaining capital budgeted
Jefferson Point	$	1,070	$	2,782
Nob Hill	783		$	1,948
Village Square	481		$	2,723
The Redford	441		$	207
Ivy at Clear Creek	324		$	798
All other properties	1,613
	$	4,712

An estimated additional $13.3 million in capital is budgeted to be deployed over the next two years for improvements to the properties purchased during the three months ended March 31, 2014.

Initial Public Offering. 

The primary portion of our initial public offering closed on December 13, 2013, at which time we had raised aggregate gross offering proceeds of $633.1 million, which resulted in the issuance of 63,647,084 shares of our common stock, including 1,161,623 shares sold pursuant to our distribution reinvestment plan.  On December 26, 2013, the unsold primary offering shares were deregistered and, on December 30, 2013, the registration of the shares issuable pursuant to the distribution reinvestment plan was continued pursuant to a Registration Statement on Form S-3.

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We continue to offer up to 7.5 million shares of common stock pursuant to our distribution reinvestment plan under which our stockholders may elect to have distributions reinvested in additional shares at $9.50 per share. 

Gross offering proceeds.

As of March 31, 2014,an aggregate of 67,554,712 shares of our $0.01 par value common stock have been issued as follows (dollars in thousands):

	Shares Issued	Gross Proceeds
Shares issued through private offering	1,263,727	$	12,500
Shares issued through primary public offering	62,485,461	622,000
Shares issued through stock distributions	2,132,266	—
Shares issued through distribution reinvestment plan	1,657,758	16,000
Shares issued in conjunction with the Advisor's initial investment, net of 4,500 share conversion	15,500	200
Total	67,554,712	$	650,700

Revolving Credit Facilities

On December 2, 2011, through our operating partnership, we entered into a secured revolving credit facility, or the Bank of America Credit Facility, with Bank of America, N.A., or Bank of America.  On May 23, 2013, we amended the Bank of America Credit Facility to increase the amount we may borrow under the Credit Facility from $25.0 million to $50.0 million, the Facility Amount. Draws under the Bank of America Credit Facility are secured by certain of our properties with an aggregate value of $102.0 million and are guaranteed by us.  The amount currently available to be borrowed is $45.5 million. We paid certain closing costs in connection with the Bank of America Credit Facility, including loan fees totaling $413,000. As of March 31, 2014, we had outstanding borrowings of $1.5 million under the Credit Facility.

      The Bank of America Credit Facility, as amended, matures on May 23, 2017, and may be extended to May 23, 2019 subject to satisfaction of certain conditions and payment of an extension fee equal to 0.25% of the amount committed under the Bank of America Credit Facility. Interest on outstanding borrowings is incurred at a rate of London Interbank Offered Rate ("LIBOR") plus 3.0% (3.15% at March 31, 2014).  We are required to make monthly interest-only payments.  We also may prepay the Bank of America Credit Facility in whole or in part at any time without premium or penalty. We recorded interest expense of $8,000 for the three months ended March 31, 2014 in connection with our borrowings under the Bank of America Credit Facility.

Our operating partnership’s obligations with respect to the Bank of America Credit Facility are guaranteed by us, pursuant to the terms of a guaranty dated as of December 2, 2011, or the Guaranty.  The Bank of America Credit Facility and the Guaranty contain restrictive covenants for maintaining a certain tangible net worth and a certain level of liquid assets, and for restricting the securing of additional debt as follows:

• we must maintain a minimum tangible net worth equal to at least (i) 200% of the outstanding principal amount of the Bank of America Credit facility and (ii) $20.0 million;

• we must also maintain unencumbered liquid assets with a market value of not less than the greater of (i) $5.0 million or (ii) 20% of the outstanding principal amount of the Bank of America Credit Facility; and

• we may not incur any additional secured or unsecured debt without Bank of America's prior written consent and approval, which consent and approval is not to be unreasonable withheld.

We are currently in compliance with all such covenants. Although we expect to remain in compliance with these covenants for the duration of the term of the Bank of America Credit Facility, depending upon our future operating performance, property and financing transactions and general economic conditions, we cannot assure you that we will continue to be in compliance.

On December 20, 2013, through a wholly-owned subsidiary, entered into a secured revolving credit facility, or the Jefferson Point Credit Facility, with PNC Bank, National Association for $15.0 million.  Draws under the Jefferson Point Credit Facility are secured by the assets of Jefferson Point Apartments. We provided a repayment guarantee of all interest and scheduled monthly principal payments (excluding the final payment at maturity for the outstanding balance.) The Jefferson Point Credit Facility matures on December 20, 2018. As of March 31, 2014, we had outstanding borrowings of $12.5 million. Interest on outstanding borrowings is incurred at a rate of LIBOR plus 2.00% (2.15% at March 31, 2014). We paid certain closing costs in connection with the Jefferson Point Credit Facility, including loan fees totaling $75,000. We recorded interest expense of $68,000 for the three months ended March 31, 2014 in connection with borrowings under the Jefferson Point Credit Facility.

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On December 27, 2013, through a wholly-owned subsidiary, we entered into a secured revolving credit facility, the Brentdale Credit Facility, with U.S. Bank National Association, or US Bank, for $29.7 million.  Draws under the Brentdale Credit Facility are secured by the assets of Brentdale Apartments. We provided a $6.5 million repayment guarantee. As of March 31, 2014, we had outstanding borrowings of $23.0 million under the Brentdale Credit Facility. Interest on outstanding borrowings is incurred at a rate of LIBOR plus 1.95% (2.10% at March 31, 2014). We paid certain closing costs in connection with the Brentdale Credit Facility, including loan fees totaling $222,000. We recorded interest expense of $7,000 for the three months ended March 31, 2014 in connection with our borrowings under the Brentdale Credit Facility.

Mortgage Debt

The following is a summary of our mortgage notes payable (in thousands, except percentages):

	Balance Outstanding at March 31,		Maturity Date	Annual Interest Rate			Average Monthly Debt Service		Interest Expense
									Three Months Ended   March 31,
Collateral	2014								2014		2013
Vista Apartment Homes	$	8,794	5/1/2017	2.76	%	(1)	$	38	$	61	$	64
Cannery Lofts	8,190		9/1/2020	3.45	%	(1)	24		71		N/A
Deerfield	10,530		11/1/2020	4.66	%	(2)	41		123		N/A
Village Square	19,362		11/1/2023	5.02	%	(1)	81		124		N/A
Ivy at Clear Creek	8,586		11/1/2023	5.02	%	(1)	36		55		N/A
Centennial	23,161		1/1/2019	3.60	%	(2)	101		209		N/A
Pinnacle	18,702		1/1/2019	3.60	%	(2)	82		169		N/A
Terrace at River Oaks	14,259		1/1/2022	4.32	%	(2)	69		154		N/A
Champion Farms	17,403		7/1/2016	6.14	%	(2)	85		173		N/A
Fieldstone	15,979		7/1/2014	6.05	%	(2)	137		167		N/A
Pinehurst	4,428		1/1/2016	5.58	%	(2)	39		41		N/A
Pheasant Run	6,759		10/1/2017	5.95	%	(2)	31		64		N/A
Retreat of Shawnee	14,333		2/1/2018	5.58	%	(2)	99		129		N/A
Hilltop Village	4,505		12/1/2017	5.81	%	(2)	33		42		N/A
Conifer Crossing	29,380		9/1/2015	5.96	%	(2)	203		286		N/A
Coursey Place	29,313		8/1/2021	5.07	%	(2)	154		247		N/A
Pines of York	15,658		12/1/2021	4.46	%	(2)	80		121		N/A
	$	249,342

(1) Variable rate based on one-month LIBOR of 0.15175% (as of March 31, 2014).

(2) Fixed rate.

At March 31, 2014, the weighted average interest rate of all our outstanding indebtedness was 4.58% .

Once we have fully invested the proceeds of our public offering, based on current lending market conditions, we expect that the debt financing we incur, on a total portfolio basis, will not exceed 35% of the cost of our real estate investments if unstabilized and 65% to 70% if stabilized (before deducting depreciation or other non-cash reserves) plus the value of our other assets. We may also increase the amount of debt financing we use with respect to an investment over the amount originally incurred if the value of the investment increases subsequent to our acquisition and if credit market conditions permit us to do so. Our charter limits us from incurring debt such that our total liabilities may not exceed 75% of the cost (before deducting depreciation or other non-cash reserves) of our tangible assets, although we may exceed this limit under certain circumstances. We expect that our primary liquidity source for acquisitions and long-term funding will include the net proceeds from our offerings and, to the extent we co-invest with other entities, capital from any future joint venture partners. We may also pursue a number of potential other funding sources, including mortgage loans, portfolio level credit lines and government financing.

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Operating Properties

As of March 31, 2014, wholly-owned interests in multifamily properties are as follows:

Property	Apartment Complex	Number of Units	Location
RRE 107th Avenue Holdings, LLC (“107th Avenue”)	107th Avenue	5	Omaha, NE
RRE Westhollow Holdings, LLC (“Westhollow”)	Arcadia	404	Houston, TX
RRE Iroquois, LP (“Vista”)	Vista Apartment Homes	133	Philadelphia, PA
RRE Campus Club Holdings, LLC (“Campus Club”)	Campus Club	64	Tampa, FL
RRE Bristol Holdings, LLC (“Bristol”)	The Redford	856	Houston, TX
RRE Cannery Holdings, LLC (“Cannery”)	Cannery Lofts	156	Dayton, OH
RRE Williamsburg Holdings, LLC (“Williamsburg”)	Williamsburg	976	Cincinnati, OH
RRE Skyview Holdings, LLC ("Skyview")	Cityside Crossing	360	Houston, TX
RRE Park Forest Holdings, LLC ("Park Forest")	Mosaic	216	Oklahoma City, OK
RRE Foxwood Holdings, LLC ("Foxwood")	The Reserve at Mt. Moriah	220	Memphis, TN
RRE Flagstone Holdings, LLC ("Flagstone")	The Alcove	292	Houston, TX
RRE Deerfield Holdings, LLC ("Deerfield")	Deerfield	166	Hermantown, MN
RRE Kenwick Canterbury Holdings, LLC ("Kenwick & Canterbury")	One Hundred Chevy Chase Apartments	244	Lexington, KY
RRE Armand Place Holdings, LLC ("Armand")	Ivy at Clear Creek	244	Houston, TX
RRE Autumn Wood Holdings, LLC ("Autumn Wood")	Retreat at Rocky Ridge	196	Hoover, AL
RRE Village Square Holdings, LLC ("Village Square")	Trailpoint at the Woodlands	271	Houston, TX
RRE Nob Hill Holdings, LLC ("Nob Hill")	Nob Hill	192	Winter Park, FL
RRE Brentdale Holdings, LLC ("Brentdale")	Brentdale	412	Plano, TX
RRE Jefferson Point Holdings, LLC ("Jefferson Point")	Jefferson Point	208	Newport News, VA
RRE Centennial Holdings, LLC ("Centennial")	Centennial	276	Littleton, CO
RRE Pinnacle Holdings, LLC ("Pinnacle")	Pinnacle	224	Westminster, CO
RRE Jasmine Holdings, LLC ("Jasmine")	Jasmine at Holcomb Bridge	437	Alpharetta, GA
RRE River Oaks Holdings, LLC ("River Oaks")	Terrace at River Oaks	314	San Antonio, TX
RRE Nicollet Ridge Holdings, LLC ("Nicollet Ridge")	Nicollet Ridge	339	Burnsville, MN
RRE Addison Place, LLC ("Addison Place")	Addison Place	403	Alpharetta, GA
		7,608

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The consolidated financial statements also include our majority-owned and/or controlled joint venture interests as follows:

Property	Ownership %		Apartment Complex	Number of Units	Property Location
PRIP 3700, LLC ("Champion Farms")	70.0	%	Champion Farms	264	Louisville, KY
PRIP 10637, LLC ("Fieldstone")	83.0	%	Fieldstone	266	Woodlawn, OH
PRIP 500, LLC ("Pinehurst")	97.5	%	Pinehurst	146	Kansas City, MO
PRIP 1102, LLC ("Pheasant Run")	97.5	%	Pheasant Run	160	Lee's Summit, MO
PRIP 11128, LLC ("Retreat at Shawnee")	97.5	%	Retreat at Shawnee	342	Shawnee, KS
PRIP 6700, LLC ("Hilltop Village")	49.0	%	Hilltop Village	124	Kansas City, MO
PRIP 3383, LLC ("Conifer Place")	42.5	%	Conifer Place	420	Norcross, GA
PRIP Stone Ridge, LLC ("Stone Ridge")	68.5	%	Stone Ridge	191	Columbia, SC
PRIP Coursey, LLC ("Evergreen at Coursey Place")	51.7	%	Evergreen at Coursey Place	352	Baton Rouge, LA
PRIP Pines, LLC ("Pines of York")	90.0	%	Pines of York	248	Yorktown, VA
				2,513

Organization and Offering Costs

Our Advisor has advanced funds to us for certain organization and offering costs.  We reimbursed the Advisor for all of the expenses paid or incurred by our Advisor or its affiliates on behalf of us or in connection with the services provided to us in relation to our initial public offering.  This includes all organization and offering costs of up to 2.5% of gross offering proceeds, but only to the extent that such reimbursement did not cause organization and offering expenses (other than selling commissions and the dealer manager fee) to exceed 2.5% of gross offering proceeds as of the date of such reimbursement.  The primary portion of our initial public offering closed on December 13, 2013. As of December 31, 2013, we are no longer incurring organizational and offering costs. As of March 31, 2013, a total of $420,000 of these advances from our Advisor for organization and offering costs were unpaid and due to our Advisor.  We subsequently reimbursed our Advisor for these costs. As of March 31, 2014, we had directly paid for organization and offering costs totaling $6.7 million.

Operating Costs

In addition to making investments in accordance with our investment objectives, we expect to use our capital resources to make payments to our Advisor. During our acquisition and development stage, we expect to make payments to our Advisor in connection with the acquisition of real estate investments. In addition, we expect to continue to make payments to our Advisor for the management of our assets and costs incurred by our Advisor in providing services to us. We describe these payments in more detail in Note 14 of the notes to our consolidated financial statements.

Under our charter, we are required to limit our total operating expenses to the greater of 2% of our average invested assets or 25% of our net income for the four most recently completed fiscal quarters, as these terms are defined in our charter, unless the conflicts committee of our board of directors has determined that such excess expenses were justified based on unusual and non-recurring factors. Operating expense reimbursements for the four fiscal quarters ended March 31, 2014 did not exceed the charter imposed limitation.

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Distributions

For the three months ended March 31, 2014, we paid aggregate distributions of $6.7 million, including $2.0 million of distributions paid in cash and $4.7 million of distributions reinvested in shares of common stock through our distribution reinvestment plan, as follows: (in thousands, except per share data)

Record Date	Per Common Share		Distribution Date	Distribution invested in shares of Common Stock		Net Cash Distribution		Total Aggregate Distribution
December 31, 2013	$	0.033	January 2, 2014	$	1,566	$	656	$	2,222
January 31, 2014	0.033		February 3, 2014	1,575		663		2,238
February 28, 2014	0.033		March 2, 2014	1,571		670		2,241
				$	4,712	$	1,989	$	6,701

On February 4, 2014, our Board of Directors declared cash distributions of $2.2 million ($0.33 per common share) to stockholders of record as of the close of business on March 31, 2014, which distributions were paid on April 1, 2014.

Since its formation, we have declared a total of seven quarterly stock distributions of 0.015 shares each, two quarterly stock distributions of 0.0075 shares each, one quarterly stock distribution of 0.00585 shares each, and two quarterly stock distributions of 0.005 shares each of its common stock outstanding. In connection with these stock distributions, our accumulated deficit increased by $21.0 million as of March 31, 2014.

Our net loss attributable to common stockholders' for the three months ended March 31, 2014 was $14.0 million and net cash provided by operating activities of continuing operations was $5.3 million. For the three months ended March 31, 2014, 66.8% of our distributions was funded from net cash provided by operating activities of continuing operations and 33.2% of our distributions was funded from proceeds from debt financing. Our cumulative cash distributions and net loss from inception through March 31, 2014 were $23.3 million and $53.0 million, respectively. We have funded our cumulative distributions, which includes net cash distributions and distributions reinvested by stockholders, with cash flows from operating activities and proceeds from debt financing. To the extent that we pay distributions from sources other than our cash flow from operating activities or gains from asset sales, we will have fewer funds available for investment in commercial real estate and real estate-related debt, the overall return to our stockholders may be reduced and subsequent investors may experience dilution.

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Funds from Operations, Modified Funds from Operations and Adjusted Funds from Operations

Funds from operations, or FFO, is a non-GAAP financial performance measure that is widely recognized as a measure of REIT operating performance.  We use FFO as defined by the National Association of Real Estate Investment Trusts to be net income (loss), computed in accordance with GAAP excluding extraordinary items, as defined by GAAP, and gains (or losses) from sales of property (including deemed sales and settlements of pre-existing relationships), plus depreciation and amortization on real estate assets, and after related adjustments for unconsolidated partnerships, joint ventures and subsidiaries and noncontrolling interests.  We believe that FFO is helpful to our investors and our management as a measure of operating performance because it excludes real estate-related depreciation and amortization, gains and losses from property dispositions, and extraordinary items, and as a result, when compared year to year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses, and interest costs, which are not immediately apparent from net income.  Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate and intangibles diminishes predictably over time.  Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting alone to be insufficient.  As a result, our management believes that the use of FFO, together with the required GAAP presentations, is helpful for our investors in understanding our performance.  Factors that impact FFO include start-up costs, fixed costs, delay in buying assets, lower yields on cash held in accounts, income from portfolio properties and other portfolio assets, interest rates on acquisition financing and operating expenses.  In addition, FFO will be affected by the types of investments in our targeted portfolio which will consist of, but are not limited to, commercial real estate assets, principally (i) non-performing or distressed loans, including but not limited to first- and second-priority mortgage loans, mezzanine loans, B-Notes and other loans, (ii) real estate that was foreclosed upon and sold by financial institutions, (iii) multifamily rental properties to which we can add value with a capital infusion (referred to as “value add properties”), and (iv) discounted investment-grade commercial mortgage-backed securities.

Since FFO was promulgated, GAAP has adopted several new accounting pronouncements, such that management and many investors and analysts have considered the presentation of FFO alone to be insufficient. Accordingly, in addition to FFO, we use modified funds from operations, or MFFO, as defined by the Investment Program Association, or IPA.  MFFO excludes from FFO the following items:

(1) acquisition fees and expenses;

(2) straight-line rent amounts, both income and expense;

(3) amortization of above- or below-market intangible lease assets and liabilities;

(4) amortization of discounts and premiums on debt investments;

(5) impairment charges;

(6) gains or losses from the early extinguishment of debt;

(7) gains or losses on the extinguishment or sales of hedges, foreign exchange, securities and other derivatives holdings except where the trading of such instruments is a fundamental attribute of our operations;

(8) gains or losses related to fair-value adjustments for derivatives not qualifying for hedge accounting, including interest rate and foreign exchange derivatives;

(9) gains or losses related to consolidation from, or deconsolidation to, equity accounting;

(10) gains or losses related to contingent purchase price adjustments; and

(11) adjustments related to the above items for unconsolidated entities in the application of equity accounting.

We believe that MFFO is helpful in assisting management assess the sustainability of operating performancein future periods and, in particular, after our offering and acquisition stages are complete, primarily because it excludes acquisition expenses that affect property operations only in the period in which the property is acquired.  Although MFFO includes other adjustments, the exclusion of acquisition expenses is the most significant adjustment to us at the present time, as we are currently in our acquisition stage.  Thus, MFFO provides helpful information relevant to evaluating our operating performance in periods in which there is no acquisition activity.    

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As explained below, management’s evaluation of our operating performance excludes the items considered in the calculation based on the following economic considerations.  Many of the adjustments in arriving at MFFO are not applicable to us.  Nevertheless, we explain below the reasons for each of the adjustments made in arriving at our MFFO definition:

• Acquisition expenses. In evaluating investments in real estate, including both business combinations and investments accounted for under the equity method of accounting, management’s investment models and analysis differentiate costs to acquire the investment from the operations derived from the investment. Prior to 2009, acquisition costs for both of these types of investments were capitalized under GAAP; however, beginning in 2009, acquisition costs related to business combinations are expensed.  Both of these acquisition costs have been and will continue to be funded from the proceeds of our offering and not from operations.  We believe by excluding expensed acquisition costs, 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 expenses include those paid to our Advisor or third parties.

• Adjustments for straight-line rents and amortization of discounts and premiums on debt investments.  In the proper application of GAAP, rental receipts and discounts and premiums on debt investments are allocated to periods using various systematic methodologies. This application will result in income recognition that could be significantly different than underlying contract terms. By adjusting for these items, MFFO provides useful supplemental information on the realized economic impact of lease terms and debt investments and aligns results with management’s analysis of operating performance.

• Adjustments for amortization of above or below market intangible lease assets.  Similar to depreciation and amortization of other real estate related assets that are excluded from FFO, GAAP implicitly assumes that the value of intangibles diminishes predictably over time and that these charges be recognized currently in revenue.  Since real estate values and market lease rates in the aggregate have historically risen or fallen with market conditions, management believes that by excluding these charges, MFFO provides useful supplemental information on the performance of the real estate.

• Impairment charges, gains or losses related to fair-value adjustments for derivatives not qualifying for hedge accounting and gains or losses related to contingent purchase price adjustments.  Each of these items relates to a fair value adjustment, which is based on the impact of current market fluctuations and underlying assessments of general market conditions and specific performance of the holding which may not be directly attributable to current operating performance.  As these gains or losses relate to underlying long-term assets and liabilities, management believes MFFO provides useful supplemental information by focusing on the changes in our core operating fundamentals rather than changes that may reflect anticipated gains or losses. In particular, because GAAP impairment charges are not allowed to be reversed if the underlying fair values improve or because the timing of impairment charges may lag the onset of certain operating consequences, we believe MFFO provides useful supplemental information related to current consequences, benefits and sustainability related to rental rate, occupancy and other core operating fundamentals.

• Adjustment for gains or losses related to early extinguishment of hedges, debt, consolidation or deconsolidation and contingent purchase price.  Similar to extraordinary items excluded from FFO, these adjustments are not related to continuing operations.  By excluding these items, management believes that MFFO provides supplemental information related to sustainable operations that will be more comparable between other reporting periods and to other real estate operators.

By providing MFFO, we believe we are presenting useful information that also assists investors and analysts in the assessment of the sustainability of our operating performance after our offering and acquisition stages are completed.  We also believe that MFFO is a recognized measure of sustainable operating performance by the real estate industry.  MFFO is useful in comparing the sustainability of our operating performance after our offering and acquisition stages are completed with the sustainability of the operating performance of other real estate companies that are not as involved in acquisition activities or as affected by other MFFO adjustments.  However, investors are cautioned that MFFO should only be used to assess the sustainability of our operating performance after our acquisition stage is completed, as it excludes acquisition costs that have a negative effect on our operating performance and the reported book value of our common stock and stockholders’ equity during the periods in which properties are acquired.

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As an opportunity REIT, a core element of our investment strategy and operations is the acquisition of distressed and value-add properties and the rehabilitation and renovation of such properties in an effort to create additional value in such properties.  As part of our operations, we intend to realize gains from such value-add efforts through the strategic disposition of such properties after we have added value through the execution of our business plan.  As we do not intend to hold any of our properties for a specific amount of time, we intend to take advantage of opportunities to realize gains from our value-add efforts on a regular basis during the course of our operations as such opportunities become available, in all events subject to the rules regarding "prohibited transactions" of real estate investment trusts of the Internal Revenue Code.  Therefore, we also use adjusted funds from operations, or AFFO, in addition to FFO and MFFO when evaluating our operations.  We calculate AFFO by adding/subtracting gains/losses realized on sales of our properties from MFFO.  We believe that AFFO presents useful information that assists investors and analysts in the assessment of our operating performance as it is reflective of the impact that regular, strategic property dispositions have on our continuing operations.

Core to our business plan is the acquisition of distressed assets at deep discounts.  These assets are operationally distressed at the time of purchase. Such assets often require substantial investments of capital and increased operating costs after acquisition to convert these assets into stable, cash flowing properties.  These capital expenditures are central to our revitalization strategy and are critical to creating value and restoring assets to their optimal performance.  These planned expenditures are necessary primarily during the first 12 to 24 months after we take operating control of an asset and often result in negative, or reduced, net operating income, MFFO and AFFO during this turnaround stage. We believe that the presentation of the MFFO and AFFO attributed to our stabilized assets and the MFFO and AFFO attributed to our unstabilized assets allows investors to better understand the operating performance of our stabilized assets as compared to those assets for which we have yet to complete the stabilization process. Stabilized assets are defined as assets that produced a positive MFFO during the three months ended March 31, 2014 and 2013, respectively.

Stabilized assets during the three months ended March 31, 2014 included: 107th Avenue, Arcadia, Vista Apartment Homes, Campus Club, Cannery Lofts, Williamsburg, The Redford, Cityside Crossing, Deerfield, The Reserve at Mt. Moriah, The Alcove, Ivy at Clear Creek, Retreat at Rocky Ridge, Village Square, Nob Hill, Brentdale, Centennial, Pinnacle, Jasmine at Holcomb Bridge, Addison Place, Pines of York, Evergreen at Coursey Place, Stone Ridge, Conifer Place, Hilltop Village, Retreat at Shawnee, Pheasant Run, Pinehurst and Fieldstone. Unstabilized assets during the three months ended March 31, 2014 included: Mosaic, One Hundred Chevy Chase Apartments, Jefferson Point, Terrace at River Oaks, Nicollet Ridge and Champion Farms. Non-property assets and corporate overhead, which consists primarily of general and administrative expenses at the company level, are allocated between stabilized and unstabilized assets based on the percentage of the total purchase price of all of our assets that the aggregate purchase prices of our stabilized and unstabilized assets respectively represent.

Stabilized assets during the three months ended March 31, 2013 included: 107th Avenue, Arcadia, Vista Apartment Homes, Campus Club, Cannery Lofts, Williamsburg, Cityside Crossing, Town Park (which was sold in April 2013) and Heatherwood (which was sold in April 2013), Deerfield, One Hundred Chevy Chase Apartments and Ivy at Clear Creek. Unstabilized assets during the three months ended March 31, 2013 consisted of The Redford, Mosaic, The Reserve at Mt. Moriah and The Alcove. Non-property assets and corporate overhead, which consists primarily of general and administrative expenses at the company level, are allocated between stabilized and unstabilized assets based on the percentage of the total purchase price of all our assets that the aggregate purchase prices of stabilized and unstabilized assets respectively represent.

Neither FFO, MFFO nor AFFO should be considered as an alternative to net income (loss), nor as an indication of our liquidity, nor are any of these measures indicative of funds available to fund our cash needs, including our ability to fund distributions.  In particular, as we are currently in the acquisition phase of our life cycle, acquisition costs and other adjustments that are increases to MFFO and AFFO are, and may continue to be, a significant use of cash.  Accordingly, FFO, MFFO and AFFO should be reviewed in connection with other GAAP measurements.  Our FFO, MFFO and AFFO as presented may not be comparable to amounts calculated by other REITs.

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The following section presents our calculation of FFO, MFFO and AFFO and provides additional information related to our operations (in thousands, except per share amounts).  As a result of the timing of the commencement of our public offering and our active real estate operations, FFO, MFFO and AFFO are not relevant to a discussion comparing operations for the two periods presented.  We expect revenues and expenses to increase in future periods as we acquire additional investments.

	Three Months Ended
	March 31,
	2014			2013
Net loss – GAAP	$	(13,993	)	$	(200	)
Gain on bargain purchase	—			(3,460		)
Depreciation expense	6,467			1,784
FFO	(7,526		)	(1,876		)
Adjustments for straight-line rents	(228		)	(64		)
Amortization of intangible lease assets	4,612			985
Impairment charge	—			539
Acquisition costs	2,500			686
MFFO	(642		)	270
AFFO	$	(642	)	$	270
Basic and diluted loss per common share - GAAP	$	(0.21	)	$	(0.01	)
FFO per share	$	(0.11	)	$	0.05
MFFO per share	$	(0.01	)	$	0.02
AFFO per share	$	(0.01	)	$	0.02
Weighted average shares outstanding	67,364			22,612

	Three Months Ended March 31, 2014									Three Months Ended March 31, 2013
	MFFO and			MFFO and						MFFO and			MFFO and
	AFFO Attributed to Stabilized Assets			AFFO Attributed to Unstabilized Assets			Total			AFFO Attributed to Stabilized Assets			AFFO Attributed to Unstabilized Assets			Total
Net income (loss) - GAAP	$	(7,265	)	$	(6,728	)	$	(13,993	)	$	1,302		$	(1,502	)	$	(200	)
Gain on bargain purchase	—			—			—			—			(3,460		)	(3,460		)
Depreciation expense	5,457			1,010			6,467			1,284			500			1,784
FFO	(1,808		)	(5,718		)	(7,526		)	2,586			(4,462		)	(1,876		)
Adjustments for straight-line rents	(228		)	—			(228		)	(64		)	—			(64		)
Amortization of intangible lease assets	3,936			676			4,612			709			276			985
Impairment charge	—			—			—			—			539			539
Acquisition costs	204			2,296			2,500			601			85			686
MFFO	2,104			(2,746		)	(642		)	3,832			(3,562		)	270
AFFO	$	2,104		$	(2,746	)	$	(642	)	$	3,832		$	(3,562	)	$	270

Off-Balance Sheet Arrangements

As of March 31, 2014 and December 31, 2013, we did not have any off-balance sheet arrangements or obligations.

Subsequent Events

On February 27, 2014, we were the successful bidder at a foreclosure sale of the property collateralizing the Peterson Note. On April 6, 2014, we sold our interest in the sheriff's deed for the Peterson Apartments for $195,000 to an unaffiliated purchaser.

On May 5, 2014, we purchased a 142-unit multifamily community located in Plano, Texas from an unaffiliated seller for $15 million.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Omitted as permitted under rules applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this report, management, including our principal executive officer and principal financial officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon, and as of the date of, that evaluation, our principal executive officer and principal financial officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this quarterly 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 within the time periods specified in applicable SEC rules and forms, including providing a reasonable level of assurance that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during the quarter ended March 31, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sale of Equity Securities

All securities sold by us during the three months ended March 31, 2014 were sold in an offering registered under the Securities Act of 1933, as amended (the "Securities Act").

Use of Proceeds of Registered Securities

On June 16, 2010, our registration statement on Form S-11 (File No. 333-160463) was declared effective under the Securities Act.  We offered a maximum of 75,000,000 shares in our primary offering at an aggregate offering price of up to $750.0 million, or $10.00 per share with discounts available to certain categories of purchasers.  Additionally, we continue to offer up to 7,500,000 shares under our distribution reinvestment plan at an aggregate offering price of $71.25 million, or $9.50 per share.  Resource Securities was the dealer manager of our offering.  The primary offering closed on December 13, 2013, at which time we sold 62,485,502 shares of our common stock pursuant to our public offering, which generated gross offering proceeds of approximately $622.1 million. In addition, as of March 31, 2014, 1,657,758 shares had been purchased under our distribution reinvestment plan, which generated additional gross offering proceeds of approximately $16.0 million.

From the commencement of the public offering through March 31, 2014, we incurred selling commissions, dealer manager fees, other underwriting compensation and other organization and offering costs in the amounts set forth below. We pay selling commissions and dealer manager fees to Resource Securities, Inc., which then reallows all selling commissions and a portion of the dealer manager fees to participating broker-dealers. In addition, we reimburse our Advisor and Resource Securities, Inc. for certain offering expenses as described in our prospectus, as amended and supplemented.

Type of Expense	Amount
Selling commissions and dealer manager fees	$	61,219,304
Other organization and offering costs (excluding underwriting compensation)	10,871,866
Total expenses	$	72,091,170

From the commencement of the initial public offering through March 31, 2014, the net offering proceeds to us, after deducting the total expenses incurred as described above, were approximately $573.8 million. As of March 31, 2014, we have

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used the net proceeds from our initial public offering to acquire approximately $343.5 million in real estate and real estate-related investments and to fund $4.7 million of capital expenditure projects to improve certain of our investments.  Of the amount used for the purchase of these investments, approximately $10.5 million was paid to our Advisor in the form of acquisition and advisory fees and acquisition expense reimbursements.

Redemption of Securities

During the three months ended March 31, 2014, we redeemed shares of our common stock as follows:

Period	Total Number of Shares Redeemed (1)	Average Price Paid per Share	Cumulative Number of Shares Purchased as Part of a Publicly Announced Plan or Program (2)	Approximate Dollar Value of Shares Available That May Yet Be Redeemed Under the Program
January 2014	—	—	—	(2)
February 2014	—	—	—	(2)
March 2014	46,237	$8.66	46,237	(2)

(1)    All redemptions of equity securities in the three months ended March 31, 2014 were made pursuant to our share redemption program.

(2)    The share redemption program commenced on June 16, 2010 and was subsequently amended on September 29, 2011.

(3)    We currently limit the dollar value and number of shares that may be redeemed under the program as described below.

All redemption requests tendered were honored during the three months ended March 31, 2014.

We will not redeem in excess of 5% of the weighted-average number of shares outstanding during the 12-month period immediately prior to the effective date of redemption. Our board of directors will determine at least quarterly whether it has sufficient excess cash to redeem shares. Generally, the cash available for redemptions will be limited to proceeds from our distribution reinvestment plan plus, if we have positive operating cash flow from the previous fiscal year, 1% of all operating cash flow from the previous year.

Our Board of Directors, in its sole discretion, may suspend, terminate or amend our share redemption program without stockholder approval upon 30 days' notice if it determines that such suspension, termination or amendment is in our best interest. Our board may also reduce the number of shares purchased under the share redemption program if it determines the funds otherwise available to fund our share redemption program are needed for other purposes. These limitations apply to all redemptions, including redemptions sought upon the stockholder's death, qualifying disability or confinement to a long-term care facility.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

(a) There have been no defaults with respect to any of our indebtedness.

(b) Not applicable.

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ITEM 6. EXHIBITS

Exhibit No.	Description
2.1	Agreement and Plan of Merger, dated July 18, 2013, by and among Paladin Realty Income Properties, Inc., Paladin Realty Income Properties, L.P., Resource Real Estate Opportunity OP, LP, and RRE Charlemagne Holdings, LLC (incorporated by reference to the Company’s Post-Effective Amendment No. 13 to the Registration Statement on Form S-11 (No. 333-163411) filed September 16, 2013)
2.2	Second Amendment to Agreement and Plan of Merger, dated September 13, 2013, by and among Paladin Realty Income Properties, Inc., Paladin Realty Income Properties, L.P., Resource Real Estate Opportunity OP, LP, and RRE Charlemagne Holdings, LLC (incorporated by reference to the Company’s Post-Effective Amendment No. 13 to the Registration Statement on Form S-11 (No. 333-163411) filed September 16, 2013)
2.3	Third Amendment to Agreement and Plan of Merger, dated December 16, 2013, by and among Paladin Realty Income Properties, Inc., Paladin Realty Income Properties, L.P., Resource Real Estate Opportunity OP, LP, and RRE Charlemagne Holdings, LLC (incorporated by reference to Post-Effective Amendment No. 15 to the Company's Registration Statement on Form S-11 (No. 333-160463) filed December 30, 2013)
3.1	Amended and Restated Articles of Incorporation (incorporated by reference to Pre-Effective Amendment No. 3 to the Company’s Registration Statement on Form S-11 (No. 333-160463) filed February 9, 2010)
3.2	Bylaws (incorporated by reference to Pre-Effective Amendment No. 3 to the Company’s Registration Statement on Form S-11 (No. 333-160463) filed February 9, 2010)
4.1	Form of Distribution Reinvestment Plan Enrollment Form, included as Appendix B to the prospectus (incorporated by reference to Post-Effective Amendment No. 15 to the Company’s Registration Statement on Form S-11 (No. 333-160463) filed December 30, 2013)
4.2	Statement regarding restrictions on transferability of shares of common stock (to appear on stock certificate or to be sent upon request and without charge to stockholders issued shares without certificates) (incorporated by reference to Pre-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11 (No. 333-160463) filed November 12, 2009)
4.3	Amended and Restated Distribution Reinvestment Plan, included as Appendix A to the prospectus (incorporated by reference to Post-Effective Amendment No. 15 to the Company’s Registration Statement on Form S-11 (No. 333-160463) filed December 30, 2013)
10.1	Agreement of Sale and Purchase by and between Resource Real Estate Opportunity OP, LP and Addison Place Apartment Manager, LLC and Addison Place Townhomes, LLC, dated February 24, 2014

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1	Amended and Restated Share Redemption Program (incorporated by reference to the Company's Quarterly Report on Form 10-Q filed November 14, 2011)
101.1	The following information from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations and Comprehensive Loss; (iii) Consolidated Statements of Changes in Stockholders' Equity; (iv) Consolidated Statements of Cash Flows

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SIGNATURES

Pursuant to the requirements of Section 12 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.

		RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.
May 15, 2014	By:	/s/ Alan F. Feldman
		ALAN F. FELDMAN
		Chief Executive Officer
		(Principal Executive Officer)
May 15, 2014	By:	/s/ Steven R. Saltzman
		STEVEN R. SALTZMAN
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

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EX-10.1

Exhibit 10.1

AGREEMENT OF SALE AND PURCHASE

THIS AGREEMENT OF SALE AND PURCHASE (this "Agreement") is made as of the 24^th day of February, 2014 (the “Effective Date”) by and between RESOURCE REAL ESTATE OPPORTUNITY OP, LP, a Delaware limited partnership ("Purchaser"), and ADDISON PLACE APARTMENT MANAGER, LLC, a Delaware limited liability company (“APAM”) and ADDISON PLACE TOWNHOMES, LLC, a Delaware limited liability company (“APT” and, together with APAM, "Seller"), under the following circumstances:

A.    Seller is the owner of a 403 unit apartment complex located at 5100 Abbotts Bridge Road, Alpharetta, Georgia and known as Addison Place Apartments and Townhomes (the “Apartments”).

B.    Seller desires to sell, and Purchaser desires to purchase, the Apartments pursuant to the terms set forth herein.

NOW THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, and subject to the terms and conditions hereof, Seller and Purchaser hereby covenant and agree as follows:

Seller hereby agrees to sell to Purchaser and Purchaser hereby agrees to purchase from Seller, upon the terms and conditions contained in this Agreement, the "Property" (as such term is defined in Section 1.1 hereof).

ARTICLE I    INCLUSIONS IN SALE

1.1.    There shall be included in this sale all of the following (collectively, the "Property"):

1.1.1.    The real property described on Exhibit A attached hereto and made a part hereof (the "Land"), together with all rights and appurtenances pertaining thereto, including, without limitation, any and all rights of Seller in and to all oil, gas and other minerals, air and development rights, roads, alleys, easements (including without limitation, the Tract 1 Easements and the Tract 2 Easements as defined on Exhibit A), streets and ways adjacent to the Land, rights of ingress and egress thereto, any strips and gores within or bounding the Land and in profits or rights or appurtenances pertaining to the Land.

1.1.2.    The buildings and all other improvements, structures and fixtures placed, constructed or installed on the Land (collectively, the "Improvements").

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1.1.3.    All right, title and interest of the landlord in and to all leases, licenses and other occupancy agreements (collectively, the "Leases") covering space situate at or within the Land and Improvements and any claim or right to claim against a tenant or occupant (collectively, the "Tenants") under any Lease and all security deposits paid or deposited by Tenants in respect of the Leases.

1.1.4.    All of Seller's rights in and to all contractual rights with respect to the operation, maintenance, repair and improvement of the Land and Improvements, including service and maintenance agreements, construction, material and labor contracts, utility agreements and other contractual arrangements, all to the extent designated by the provisions of this Agreement (collectively, the "Contracts"); the Contracts shall not include Seller’s rights under master agreements with NuVox Communications, Inc. (phone) and IKON Office Solutions, Inc. (copier), which rights will be terminated as to the Apartments as of the closing.

1.1.5.    All equipment, furnishings, appliances and other tangible personal property owned by Seller (collectively, the "Personal Property") placed or installed on or about the Land or Improvements now or prior to "Closing" (as such term is defined in Section 7.1 hereof) and used as part of or in connection with the Land and Improvements, but expressly excluding project signage bearing any name, logo or trademark of Seller or any of its affiliates, and any items of personal property owned by tenants, any managing agent or others.

1.1.6.    All of Seller’s right, title and interest, if any, in and to all of the following items, to the extent assignable and without warranty (the “Intangible Personal Property”): (a) licenses (excluding any and all licenses of software), permits, government approvals and certificates of occupancy relating to the operation of the Property, (b) the right to use the name of the Apartments (if any) in connection with the Property, (c) the domain name and ulr for the Apartments website (excluding the website’s content), (d) all telephone numbers and listings identifiable with the Property, including 678-393-2722 (phone) and 678-393-2724 (fax) and (e) if still in effect, guaranties and warranties received by Seller from any unrelated third party, contractor, manufacturer or other person in connection with construction of the Improvements or operation of the Property.

ARTICLE II.     PURCHASE PRICE

2.1.    The purchase price (the "Purchase Price") for the Property shall be SEVENTY MILLION FIVE HUNDRED THOUSAND DOLLARS AND NO/00 ($70,500,000.00), payable as follows:

2.1.1.    The sum of ONE MILLION FOUR HUNDRED THOUSAND DOLLARS AND NO/00 ($1,400,000.00) (together with all interest earned thereon, the "Earnest Money") shall be delivered to Land Services USA, Inc. 1835 Market Street, Suite 420, Philadelphia, PA 19103 Attn: Alison Neumann Zugschwert, Email:

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azugschwert@lsutitle.com, Tel: 215-255-8981, Fax: 215-255-8963 (the "Escrow Agent") by Purchaser within three Business Days of the Effective Date. In the event that Purchaser fails to timely deposit the Earnest Money with the Escrow Agent, this Agreement shall be of no force and effect.

2.1.2.    The balance of the Purchase Price, subject to adjustments as provided in Article VI, shall be deposited by Purchaser with the Escrow Agent in immediate, same-day federal funds wired for credit into the Escrow Agent’s escrow account at a bank reasonably satisfactory to Seller.

ARTICLE III.    INSPECTION PERIOD

3.1.    For the period (the "Inspection Period") commencing on the date hereof and ending on the Closing Date, Purchaser shall have the right, upon 48 hours prior notice to Seller, to have performed (i) a physical, mechanical and environmental inspection of the Property as Purchaser deems necessary to determine the physical condition of the Property, and (ii) an inspection of all books and records and financial information pertaining thereto. Purchaser shall not conduct an invasive testing without Seller’s prior written approval, which approval may be granted or withheld in Seller’s sole discretion. During the Inspection Period, Seller shall cooperate with Purchaser in its inspection of the Property, including but not limited to, furnishing, to the extent such information is in Seller’s possession, to Purchaser such information, materials and documents as Purchaser may reasonably request. If Purchaser, in Purchaser's sole judgment, shall find such inspection to be unsatisfactory for any reason whatsoever or for no reason, Purchaser shall have the right, at its option, to be exercised not later than 25 days after the Effective Date (the "Inspection Period Expiration Date"), to elect to terminate this Agreement by written notice to Seller and the Escrow Agent, and, upon such election, all Earnest Money shall be immediately refunded to Purchaser and, thereupon, the parties hereto shall have no further liabilities one to the other (other than those that are expressly stated to survive the termination of this Agreement). If Purchaser fails to terminate this Agreement on or before the Inspection Period Expiration Date by written notice to Seller and the Escrow Agent, Purchaser shall be deemed to have waived its right to terminate this Agreement pursuant to this Section 3.1. Purchaser agrees that it shall not unreasonably interfere with Tenants in performing its inspection. Notwithstanding any provision to the contrary, in any case in which the Earnest Money is to be returned to Purchaser, then nevertheless Twenty-Five Dollars ($25.00) thereof shall be paid to Seller and deducted from the amount due Purchaser, and such Twenty-Five Dollars ($25.00) shall belong to Seller in any and all events and shall in effect constitute option money, making this Agreement binding even if any conditions or provisions herein are entirely within the discretion or control of Purchaser for certain time periods.

Except to the extent arising out of the negligence or willful misconduct of Seller or its agents, Purchaser shall indemnify and hold Seller harmless for any and all damage, cost and expense arising out of Purchaser’s, or its employees’, agents’ or contractors’ activities on the Property pursuant to the inspection rights granted herein, provided that the foregoing indemnity shall not apply to, and Purchaser shall have no liability for losses or expenses resulting from the discovery of adverse information relating to Seller or the Property except to the extent

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Purchaser’s actions exacerbate any adverse condition of the Property. This indemnity shall survive the Closing for a period of three (3) months.

Purchaser shall not, during the term of this Agreement, solicit Seller's or its managing agent's personnel for employment, or discuss the terms and provisions of this Agreement with such personnel without Seller’s prior consent.

3.2.     In addition to those items requested by Purchaser under Section 3.1 above, to the extent not heretofore provided, within five (5) Business Days after the Effective Date Seller shall make available to Purchaser, to the extent in Seller’s possession or control, copies of, or access to with the right to copy, the documents, reports and other items listed on Schedule 3.2 attached hereto (the “Property Information”). Except as otherwise expressly provided herein, Seller makes no representations or warranties as to the accuracy or completeness of the Property Information or any other documents and information Seller may provide to Purchaser.

3.3.    Purchaser shall obtain a title commitment (the “Title Commitment”) from Land Services USA, Inc., as agent for First American Title Insurance Company (the “Title Company”) and Purchaser shall, if Purchaser desires, have the Existing Survey (as defined on Schedule 3.2) updated at Purchaser’s cost (such updated survey being the “Survey”). Purchaser shall have until the Inspection Period Expiration Date to examine the condition of title and the Survey and to approve or disapprove the same. If Purchaser shall disapprove the condition of title or Survey, such disapproval shall be set forth in one or more notices (each, a "Title Disapproval Notice") given to Seller not later than the Inspection Period Expiration Date stating that the condition of title to the Property, any of the terms, provisions or contents of said items and documents or contents of the Survey are disapproved by Purchaser. Notwithstanding the foregoing, Purchaser may deliver one or more additional Title Disapproval Notices after the Inspection Period Expiration Date if, at any time after the Inspection Period Expiration Date, Purchaser receives (i) an amendment to the Title Commitment previously delivered to it by the Title Company (as hereinafter defined) containing any exception not set forth in a Title Commitment previously delivered to it or (ii) a revision of the Survey containing any encumbrances or other defects not included on the previous Survey, provided that any such additional Title Disapproval Notice shall be given, if at all, within five (5) days after Purchaser receives such amendment or revised survey. Seller shall have until the date which is five (5) Business Days after the date of the applicable Title Disapproval Notice (the "Title Cure Expiration Date") in which to cure or eliminate or agree to cure or eliminate all items which Purchaser disapproves in the applicable Title Disapproval Notice, and to furnish evidence satisfactory to Purchaser and the Title Company that all such items have been cured or eliminated or that arrangements have been made with the Title Company and any parties in interest to cure or eliminate the same at or prior to the Closing. If such evidence is not received by Purchaser and the Title Company on or before the Title Cure Expiration Date or if at Closing there are any additional exceptions to title of which the Title Company has not theretofore provided to Purchaser (all exceptions to title set forth in any and all Title Disapproval Notices and all such additional exceptions to title are herein called "Non-Permitted Exceptions") and Seller is unable or unwilling to cure or eliminate such items, then Purchaser shall have the right to elect to terminate this Agreement within five (5) Business Days of receipt of Seller’s notice that Seller cannot or will not cure such items and upon such election, all Earnest Money shall be immediately refunded to Purchaser, and thereupon the

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parties hereto shall have no further obligations one to the other under this Agreement (other than those that are expressly stated to survive the termination of this Agreement). For purposes hereof, the term “Permitted Exceptions” shall include all title exceptions and encumbrances that have been not been objected to by Purchaser in its sole and absolute discretion pursuant to the terms of this Section 3.3. Notwithstanding the foregoing, Seller shall take such actions as are necessary to allow the Title Company to remove from Purchaser’s title policy all mortgages, monetary liens and judgments filed against the Property arising through the actions or omissions of Seller, including without limitation any exception raised by the Title Company with respect to the litigation described on Schedule 4.1.2 attached hereto.

3.4    Except for the representations expressly provided by Seller in Section 4.1 below, Purchaser agrees (i) that it is purchasing the Property on an “AS-IS, WHERE-IS” and “WITH ALL FAULTS” basis and based exclusively on its own investigation and examination of the Property, (ii) that neither Seller nor its employees, officers, directors, trustees, principals, agents, consultants, affiliates, parents, brokers, property managers, attorneys, contractors, and their respective successors and assigns (collectively, “Representatives”) have made, and Seller and its Representatives do not make and specifically negate and disclaim any warranty, representation, covenant, agreement or guarantee of any kind or character whether express, implied or statutory, written or oral, past, present or future, of, as to, concerning or with respect to any matter pertaining to the Property including without limitation: (a) the value of Property; (b) any income to be derived from the Property; (c) the suitability of the Property for any and all activities and uses which Purchaser may conduct thereon, including the possibilities for future development of the Property; (d) the habitability, merchantability, marketability, profitability or fitness for a particular purpose of the Property; (e) the manner, quality, state of repair or lack of repair on the Property; (f) the nature, quality or condition of the Property, including, without limitation, water, water rights, soil, or geological conditions; (g) the compliance of or by the Seller, the Property, or its operation with any codes, laws, rules, ordinances, regulations of any applicable governmental authority or body, including, without limitation, any applicable zoning or building requirements; (h) the nature, manner or quality of the construction or materials incorporated into the Property, including, without limitation, any latent or patent defects; (i) the design of the Property, including, without limitation, the specification of any materials or products incorporated into or used in connection with the construction of the Property; (j) compliance with any environmental, health, safety or land use laws, rules, regulations, orders, codes or requirements, including, but not limited to, the Americans with Disabilities Act of 1990, the Federal Water Pollution Control Act, the Federal Resource Conservation and Recovery Act, the U.S. Environmental Protection Agency Regulations at 40 CFR Part 261, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”), the Resource Conservation and Recovery Act of 1976, the Clean Water Act, the Safe Drinking Water Act, the Hazardous Materials Transportation Act, the Toxic Substance Control Act, and regulations promulgated under any of the foregoing as well as any and all other laws, ordinances, rules and/or regulations created or imposed by any governmental authority having jurisdiction over the Property, whether local, state or federal, pertaining to environmental regulation, contamination, clean-up or disclosure, as now existing and/or as hereafter amended. (collectively, “Environmental Laws”); (k) the presence or absence of “hazardous materials” (as defined below) at, on, or under the Property or any property near or adjacent to the Property; (l) the presence or absence of any underground storage tanks on the Property or on property adjacent to or near the Property; (m)

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the content, completeness or accuracy of the offering, if any, prepared by Seller’s broker, or any other materials related to Purchaser’s inspection of the Property, or any preliminary reports, title commitments, or other reports or documents regarding title to the Property; (n) the tenant occupancy level at the Property; (o) deficiency of any undershoring; (p) deficiency of any drainage; (q) the fact that all or a portion of the Property may be located in or near any flood area or zone or wetlands; (r) the existence of vested land use, zoning or building entitlements affecting the Property (Purchaser is solely responsible for obtaining any certification of occupancy or any other approval or permit necessary for transfer or occupancy of the Property); (s) the square footage of the Land or the conformity of the Improvements to any plans or specifications for the property, including any plans and specifications that may have been provided to Purchaser; and (t) any other matter relating to the Property or to the development or operation of the Property. As used herein, the term “hazardous materials” shall mean any hazardous or toxic materials, substances or wastes that are or become regulated by any federal, state or local governmental authority, including, without limitation, (i) substances defined as “hazardous substances,” “hazardous materials” or “toxic substances” in any environmental laws; (ii) any materials, substances or wastes which are toxic, ignitable, radioactive, corrosive or reactive and which are regulated by any state or local governmental authority or any agency of the United States of America; (iii) asbestos, mold, fungi, petroleum and petroleum based products, urea formaldehyde foam insulation, polychlorinated biphenyls (pcbs), and freon and other chlorofluorocarbons; and (iv) those substances defined as any of the foregoing in the regulations adopted and publications promulgated pursuant to each of the aforesaid laws. Purchaser acknowledges that the Purchase Price reflects the “AS-IS,” “WHERE-IS” nature of this sale and any faults, liabilities, defects or other adverse matters that may be associated with the Property and Purchaser’s agreement to purchase the Property “AS-IS” is a material inducement to Seller to agree to sell the Property at the Purchase Price provided herein.

3.5    On or prior to the Inspection Period Expiration Date, Purchaser shall advise Seller in writing of any Contracts which it elects to have cancelled upon Closing. Promptly upon receipt of such notice, Seller agrees to give appropriate notices of termination of the Contracts which Purchaser timely notifies Seller it wants cancelled, but only to the extent termination is permitted thereunder without penalty to Seller unless Purchaser first agrees in writing to pay such penalty; provided, however, that if the notice required to terminate such Contracts will not have run prior to Closing, Seller shall assign and Purchaser shall assume any remaining rights and obligations under such Contracts. Notwithstanding anything to the contrary contained herein, all existing agreements for management of the Property shall be terminated at Closing. All Contracts not terminated shall be assigned by Seller and assumed by Purchaser at Closing. Seller shall cooperate with Purchaser, both before and after Closing, to obtain any approvals or consents required to assign any Contracts to Purchaser, including, without limitation, sending requests for such approvals or consents to the party or parties whose consent or approval is required with a copy to Purchaser. If Seller fails to timely send any such requests for approval or consent, Purchaser may do so in Seller’s name. Seller’s obligations under this Section 3.5 shall survive Closing. Notwithstanding the foregoing, at or prior to Closing, Seller shall provide Purchaser with copies of all notices of cancellation or assignment sent by Seller to any vendors under this Section.

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3.6    Without limiting the foregoing and subject solely to Seller’s representations in Section 4.1 below, Purchaser, for itself and its agents, parents, affiliates, successors and assigns, waives its right to recover from and releases and forever discharges Seller, and its Representatives from any and all claims, demands, liabilities, losses, damages, penalties, fines, liens, judgments, costs or expenses (including without limitation attorney fees and disbursements) whatsoever (collectively “claims”) whether at law or in equity, whether known or unknown at the time of this Agreement, which Purchaser has or may have in the future, arising out of the physical (including without limitation, design and construction defects), environmental, health, safety, economic or legal condition of the Property, including, without limitation, all claims in tort or contract and any claim for indemnification or contribution arising under any environmental laws or any similar federal, state or local statute, rule or regulation (including any subsequent amendment or addition thereto and judicial interpretations thereof). Purchaser, for itself and its agents, affiliates, parents, successors and assigns upon Closing, shall be deemed to have waived, relinquished and released Seller, and its Representatives from and against any and all matters affecting the Property. The agreement of Purchaser set forth in this Section 3.4 shall be deemed to be affirmed as of the Closing and the provisions of this Section 3.4 shall survive indefinitely the Closing or earlier termination of this Agreement and shall not be merged into the deeds or other closing documents.

ARTICLE IV.    REPRESENTATIONS AND WARRANTIES

4.1.    Seller represents to Purchaser the following (collectively, the “Seller’s Representations”) as of the Effective Date and the Closing Date:

4.1.1.    The rent roll and pre-paid report attached hereto as Exhibit B (collectively, the “Rent Roll”) is, and all other rent rolls or operating statements provided or to be provided by Seller to Purchaser will be, true, correct and genuine in all material respects as of the date shown thereon, however Seller does not and will not represent or warrant that Purchaser will be able to, or that Purchaser should be able to, operate the Property in a manner which will produce results which are the same as or similar to those reflected in the Operating Statements. To Seller's knowledge, except for those tenants under the Leases, as shown on the Rent Roll, there are no other tenants in possession of, or claiming any possession to, any portion of the Property (subject to any new Leases that Seller is permitted to enter into under this Agreement prior to Closing). To Seller's knowledge, Seller is not in material default or breach under any of the Leases, and Seller is the owner of the lessor's interest under the Leases. Seller has not conveyed any of the lessor's interest under the Leases, except for collateral assignments/liens to be released at Closing. Except as set forth in the Rent Roll, there are no prepayments of rent under the Leases more than 30 days in advance of the due date.

4.1.2.    Except as set forth in Schedule 4.1.2, there are no actions, suits, proceedings, litigation, inquiry, or governmental investigations or condemnation actions, either pending or, to the best of Seller’s knowledge, threatened with respect to the Seller or the Property (including, without limitation, involving the federal Department of Housing and Urban Development or the Americans with Disabilities Act of 1990, as

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amended, or any other law, rule or regulation governing access by disabled persons) which could affect Purchaser or the Property upon or subsequent to the Closing.

4.1.3.    All of the Contracts which affect the Property are set forth on Exhibit C attached hereto and made a part hereof. To the best of Seller's knowledge, each of the Contracts referred to on Exhibit C are valid and in full force and effect, and no party thereto is in default thereunder.

4.1.4.    Seller is not a "foreign person" as such term is defined in Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended (the "Code").

4.1.5.    Seller has not received any notice from any governmental agency of (i) any uncured material violation of any federal, state, county or municipal law, ordinance, order, regulation or requirement affecting the Property or (ii) any change to the zoning classification of, or any condemnation proceedings or similar proceeding or pending public improvements in or adjoining the Property, which will in any manner affect the Property.

4.1.6.    To the best of Seller’s knowledge, there are no material defaults under any instrument, document or agreement recorded against the Property or for the benefit of the Property, including those easement agreements described on Exhibit A attached hereto.

4.1.7.    Each person executing and delivering this Agreement and all documents to be executed and delivered by Seller at the Closing represents and warrants to Purchaser that he has due and proper authority to execute and deliver same. Seller has the full right, power and authority to sell and convey the Property to Purchaser as provided herein and to carry out its obligations hereunder. No other party has any right to purchase the Property, or any part thereof.

4.1.8.     Each of the entities comprising Seller is a limited liability company, duly formed, validly existing and in good standing under the laws of the State of Delaware, with all legal power and authority to undertake, observe and perform all of Seller’s agreements and obligations hereunder.

4.1.9.     No consents are required to be obtained from, and no filings are required to be made with, any governmental authority or other third party in connection with the execution and delivery of this Agreement by Seller or the consummation by Seller of the transactions contemplated hereby.

4.1.10.     The execution and delivery of this Agreement by Seller and the performance by Seller of its obligations under this Agreement and the completion of the transfer of the Property contemplated by this Agreement will not result in (i) a breach of, or a default under, any contract, agreement, commitment or other document or instrument to which Seller is a party or by which Seller or the Property is bound or (ii) a violation of any law, ordinance, regulation or rule of any governmental authority applicable to Seller

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or the Property or any judgment, order or decree of any court or governmental authority that is binding on Seller or the Property.

4.1.11.    The schedule of Personal Property attached hereto and made a part hereof as Exhibit D contains a correct and complete list of all Personal Property and fixtures owned by Seller and located at or used in connection with the operation of the Property. All Personal Property is, and as of the Closing will be, owned by Seller free from encumbrances or liens. The Personal Property to be conveyed is subject to depletions, replacements and additions in the ordinary course of Seller’s business.

Definition of Seller’s Knowledge. Any representations made “to Seller’s knowledge” shall not be deemed to imply any duty of inquiry. For purposes of this Agreement, the term “to Seller’s knowledge” shall mean and refer only to actual knowledge of the Designated Representative of Seller and shall not be construed to refer to the knowledge of any other partner, officer, director, agent, employee or representative of Seller, or any affiliate or parent of Seller, or to impose upon such Designated Representative any duty to investigate the matter to which such actual knowledge or the absence thereof pertains, or to impose upon such Designated Representative any individual personal liability. As used herein, the term Designated Representative shall refer to Lisa Garrison, Property Manager of the Property. Seller hereby represents, warrants and covenants to Purchaser that the Designated Representative is responsible for overseeing the operations of the Property and that the Designated Representative is the person who has the most knowledge regarding the Property.

Except as specifically set forth in this Article IV, Seller has not made, or has not authorized anyone to make, any warranty or representation as to the Leases, the Contracts, any written materials delivered to Purchaser, the persons preparing such materials, the present or future physical condition, development potential, zoning, building or land use law or compliance therewith, the operation, income generated by, or any other matter or thing affecting or relating to the Property or any matter or thing pertaining to this Agreement. The representations and warranties in this Section 4.1 will survive Closing for a period of one (1) year.

4.2.    In order to induce Seller to enter into this Agreement, Purchaser represents and warrants to Seller that, as of the Effective Date and the Closing Date:

4.2.1    Purchaser is a limited partnership duly organized and validly existing under the laws of the State of Delaware.

4.2.2    Purchaser has the authority to enter into this Agreement, to perform its obligations under this Agreement and to complete the purchase of the Property as contemplated by this Agreement. Purchaser has taken all partnership action necessary to authorize the execution and delivery of this Agreement and the performance by Purchaser of its obligations under this Agreement. This Agreement has been duly executed and delivered by Purchaser and constitutes a valid, binding and enforceable obligation of Purchaser, subject to bankruptcy and other debtor relief laws and principles of equity. The entry into this Agreement by Purchaser, and the performance of Purchaser’s obligations hereunder does not violate the organizational documents of Purchaser or any

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agreement to which it is a party or any governmental or court order or ruling applicable to Purchaser.

4.2.3    Purchaser is a sophisticated and experienced purchaser of multifamily apartment projects, and has participated in and is familiar with the acquisition, development, redevelopment, ownership, management, and operation of real estate projects similar to the Property. Purchaser has or will have under the terms of this Agreement adequate opportunity to complete and has completed all physical, financial, legal, environmental and regulatory investigations and examinations relating to the Property that it deems necessary, and will acquire the same solely on the basis of such investigations and examinations and title insurance protection and not on the basis of any information provided or to be provided by Seller or any Seller’s Representatives (other than as provided to the contrary in Section 4.1).

ARTICLE V.    OPERATIONS PRIOR TO CLOSING/CONDITIONS TO CLOSING

5.1.    Seller agrees that between the Effective Date and the Closing Date, Seller shall:

5.1.1.    Continue to operate and maintain the Property in accordance with Seller’s customary practices, including without limitation, maintaining the Property and every part thereof in good repair and working order and sound condition, reasonable wear and tear and damage by fire and other casualty excepted, and complying with all licenses, permits, governmental approvals and certificates of occupancy and all covenants, conditions, restrictions, laws, statutes, rules, regulations and ordinances applicable to the Property. Seller shall immediately give Purchaser copies of all notices received by Seller asserting any breach or default under the Leases or the Contracts or any violation of any licenses, permits, governmental approvals or certificates of occupancy or any covenants, conditions, restrictions, laws, statutes, rules, regulations or ordinances applicable to the Property, and perform when due all of Seller’s obligations under all applicable laws provided, however, if any notice of a building code or zoning violation code would require the expenditure of more than $50,000.00 to cure, Seller shall not be obligated to cure such violation in which event, Purchaser shall have the option to terminate this Agreement within five (5) Business Days of receipt of Seller’s notice that Seller cannot or will not cure such violation and upon such election, all Earnest Money shall be immediately refunded to Purchaser, Seller shall reimburse Purchaser for due diligence inspections performed by Purchaser and its consultants up to a maximum amount of $60,000, and thereupon the parties hereto shall have no further obligations one to the other under this Agreement (other than those that are expressly stated to survive the termination of this Agreement).

5.1.2.    Pay, in the normal course of business, and, in any event, prior to Closing, sums due for work, materials or services furnished or otherwise incurred in the ownership and operation of the Property up to the Closing.

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5.1.3.    Comply with the terms of all Leases and enter into new and renewal Leases in accordance with Seller’s customary practice and its current leasing parameters, including without limitation, at rental rates prevailing as of the Effective Date.

5.1.4.    Not permit any alteration, structural modification or additions to the Property, except in the nature of ordinary maintenance.

5.1.5.    Comply with the terms of all Contracts and shall not enter into any new service contract (or renew any existing Contract) that is not terminable upon 30 days or less notice without the payment of any penalty or premium.

5.2    Without limiting any of the rights of Purchaser elsewhere provided for in this Agreement, Purchaser’s obligation to close under this Agreement shall be subject to and conditioned upon the fulfillment of each and all of the following conditions precedent:

(i)    All of the documents and other items required to be delivered by Seller to Purchaser at the Closing pursuant to the terms and conditions hereof shall have been delivered;

(ii)    Each of representations of Seller set forth in Section 4.1 shall be true in all material respects as of the Closing Date;

(iii)    The Title Company is prepared to issue, upon the condition of the payment of its scheduled premiums, the an Owner’s Policy of Title Insurance in such form and with such endorsements as required by Purchaser in its sole discretion (the “Title Policy”), subject to the Permitted Exceptions applicable to the Property; and

(iv)    Purchaser has not elected to terminate this Agreement pursuant to Article III.

5.3    Without limiting any of the rights of Seller elsewhere provided for in this Agreement, Seller’s obligation to close with respect to conveyance of the Property under this Agreement shall be subject to and conditioned upon the fulfillment of each and all of the following conditions precedent:

(i)    All of the documents and funds required to be delivered by Purchaser to Seller at the Closing pursuant to the terms and conditions hereof shall have been delivered; and

(ii)    Each of the representations of Purchaser set forth in Section 4.2 shall be true in all material respects as of the Closing Date.

5.4    In the event any of the conditions set forth in Sections 5.2 or 5.3 are not fulfilled or waived, the party benefited by such conditions may, by written notice to the other party, terminate this Agreement, whereupon all rights and obligations hereunder of each party shall terminate except those that expressly survive any termination. Either party may, at its election, at

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any time or times on or before the date specified for the satisfaction of the condition, waive in writing the benefit of any of the conditions set forth in Sections 5.2 or 5.3. In the event this Agreement is terminated as a result of any condition set forth in Section 5.2 or 5.3, Purchaser, shall be entitled to a refund of the Earnest Money. In any event, Purchaser’s consent to the close of escrow pursuant to this Agreement shall waive any remaining unfulfilled conditions, and any liability on the part of Seller for breaches of covenants, representations and warranties of which Purchaser had knowledge as of the Closing.

ARTICLE VI.    CLOSING ADJUSTMENTS

6.1.    The following are to be prorated or adjusted (as appropriate), if feasible, at the Closing, as of 11:59 P.M. on the day immediately preceding the Closing (the "Adjustment Date"):

6.1.1.     All collected rent and other collected income (and any applicable state or local tax on rent) under Leases in effect on the Closing Date shall be prorated. Seller shall be charged with any rent and other income collected by Seller before Closing but applicable to any period of time after Closing. Uncollected rent and other income shall not be prorated. Purchaser shall apply rent and other income from tenants that are collected after the Closing first to the obligations then owing to Purchaser for its period of ownership and to costs of collection, remitting the balance, if any, to Seller. Any prepaid rents for the period following the Closing Date shall be paid over by Seller to Purchaser. Purchaser will make reasonable efforts, without suit, to collect any rents applicable to the period before the Closing Date. Seller may pursue collection against tenants as to any rent not collected by Purchaser within 6 months following the Closing Date provided that Seller shall have no right to pursue collection efforts against any tenant while in occupancy of an apartment at the Property. In the event that any tenant pays its rent via an ACH or other automatic debit system, Seller shall cancel such automatic payments at Closing; provided, however, in the event that an automatic rent payment is erroneously forwarded to Seller after Closing, Seller, shall remit such payment to Purchaser in accordance with Section 6.2. For purposes of this Section 6.1.1, the term "rents" excludes any application fees, administrative fees, non-refundable deposits, late fees or other charges. One final adjustment shall be made on or about the 90^th day following Closing and this adjustment shall be final.

6.1.2.    Real estate taxes and assessments (“Taxes”), including penalties and interest, shall be prorated as follows: Seller shall pay all Taxes which became due and payable prior to the Closing and a prorata share of the Taxes becoming due and payable after the Closing based on the Taxes which are a lien for the year of the Closing, even if such Taxes and assessments are not yet due and payable. If bills for real estate taxes have not been issued as of the Closing Date, and if the amount of real estate taxes for the then current tax year is not then known, the apportionment of real estate taxes shall be made at Closing on the basis of the full value of the prior year’s real estate taxes and adjusted after Closing pursuant to Section 6.2 hereof.

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Seller’s protest of the 2013 Taxes has been resolved and Seller shall pay, on or before Closing, the balance of any amounts due for the 2013 real estate tax liability for the Property.

6.1.3.    Tax and utility company deposits, if any, and if assignable and assigned.

6.1.4.    Electric, gas, water and sewer charges on the basis of the most recent bills available, but if there are meters on the Property, Seller, to the extent the same is obtainable, shall furnish a reading effective as of the Adjustment Date, or if not so obtainable, to a date not more than 30 days prior to the Adjustment Date, and the unfixed meter charges based thereon for the intervening period shall be apportioned on the basis of such last reading. Upon the taking of a subsequent actual reading, such apportionment shall be readjusted and Seller or Purchaser, as the case may be, will promptly deliver to the other the amount determined to be so due upon such readjustment. If Seller is unable to furnish such prior reading, any reading subsequent to the Closing will be apportioned on a per diem basis from the date of such reading immediately prior thereto and Seller shall pay the proportionate charges due up to the date of Closing.

6.1.5.    Amounts paid or payable in respect of any Contracts assigned to Purchaser pursuant to the "Bill of Sale and Assignment" (as such term is defined in Section 8.1.2 hereof).

6.1.6.    Purchaser shall receive a credit against the cash portion of the Purchase Price in an amount equal to all Tenant security deposits and accrued interest required to be held by Seller as landlord under the Leases.

6.1.7. All other normal and customarily proratable items including without limitation operating expenses, personal property taxes, prepaid license fees, pre-paid “door fees”, if any, and other charges for licenses and permits for the Real Property which will remain in effect for Purchaser’s benefit after Closing, shall be apportioned pro rata between Seller and Purchaser on a per diem basis based upon a calendar year.

6.1.8. Not more than forty eight (48) hours prior to Closing (“Walk Though Date”), a representative of Purchaser and a representative of Seller shall conduct an onsite walk-through of the then unoccupied rental units on the Property to determine whether such unoccupied rental units are in “rent ready” condition. With respect to any rental unit that is vacated on or before five (5) Business Days prior to Closing that Seller has not placed in a “rent ready” condition before the Walk Through Date, Purchaser shall receive a credit against the Purchase Price at Closing in the amount of $750 per unit. As used herein, “‘rent ready’ condition” shall mean ready for occupancy, equipped, repaired, and cleaned in accordance with Seller’s normal operating practices. Nothing contained in this Section 6.1.8 shall be construed as limiting Purchaser’s rights and Seller’s obligations under the other provisions of this Agreement.

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Except as set forth in this Agreement, the customs of the county in which the Property is located shall govern prorations. The provisions of Section 6.1 and 6.2 shall survive the Closing.

6.2.    If final prorations cannot be made at Closing for any item being prorated under Section 6.1, then Purchaser and Seller agree to allocate such items on a fair and equitable basis as soon as invoices or bills are available, with final adjustment to be made as soon as reasonably possible after the Closing, but no later than 90 days after the Closing (except that taxes will be reprorated within 30 days after each party receives a final, non-appealable tax bill and without regard to the foregoing 90 day period), to the effect that income and expenses are received and paid by the parties on an accrual basis with respect to their period of ownership. Payments in connection with the final adjustment shall be due within 30 days of written notice. Seller shall have reasonable access to, and the right to inspect and audit, Purchaser’s books to confirm the final prorations.

ARTICLE VII.     CLOSING

The closing of the transaction which is the subject of this Agreement (the "Closing") shall occur on or before 1:30 p.m. Eastern Standard Time on a date mutually acceptable to the parties within seven (7) days after the Inspection Period Expiration Date but in no event later than March 28, 2014 (the "Closing Date"). Notwithstanding the foregoing, the parties hereby agree to use good faith, commercially reasonable efforts to complete a “dry” closing on March 27, 2014 and the remainder of the closing process on March 28, 2014. The Closing shall occur on the Closing Date through the usual form of deed and money escrow, which the parties shall establish with Escrow Agent.

ARTICLE VIII.    CLOSING DOCUMENTS

8.1.    At the Closing, Seller shall cause to be delivered to Purchaser the following documents and instruments, and any other items specified in this Agreement, duly executed and acknowledged, in recordable form where applicable, and dated as of the Closing Date:

8.1.1.    A special or limited warranty deed (the "Deed") in the form of Exhibit E attached hereto and made a part hereof (and in the event the legal description of the Land contained in the Survey differs from that contained in the Deed, a quitclaim deed with respect to such real property assets using the description taken from the Survey for such purpose (the "Quitclaim Deed").

8.1.2.    A bill of sale and assignment of leases and contracts (the "Bill of Sale and Assignment") in the form of Exhibit F attached hereto and made a part hereof.

8.1.3.    A certificate in the form of Exhibit G attached hereto and made a part hereof.

8.1.4.    Intentionally omitted.

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8.1.5.    A notice to the tenants regarding the sale of the Property in form to be prepared by Purchaser and mutually agreed upon by Seller and Purchaser, executed by Seller;

8.1.6.    An updated Rent Roll dated within three (3) days of the Closing Date certified by Seller to be true, correct and complete as of the date thereof;

8.1.7    All keys and combinations to all locks on the Improvements which are in Seller’s possession.

8.1.8.    To the extent in Seller’s possession, all plans, specifications, mechanical, electrical and plumbing layouts, operating manuals, purchase orders, brochures, marketing materials, advertisements, Tenant lease files, resident ledger and other files and records in the possession of Seller and its managing agent and utilized in connection with the operation and maintenance of the Land and Improvements.

8.1.9.    Affidavits and certificates as to facts within the knowledge of Seller relevant to the determination by the Title Company as to the condition of title or the due performance by Seller of its obligations under this Agreement, and in all events to the extent required by the Title Company for it to issue the Title Policy without taking exception to the so-called "gap" exclusion or to any liens arising pursuant to O.C.G.A. § 44-14-600, et seq. Seller shall execute at Closing an affidavit as to authority, the rights of tenants in occupancy and the status of mechanics’ liens (and sufficient to remove from the Title Policy any exception for mechanics’ liens filed against the Real Property which relate to any matters occurring prior to the Closing Date) as the Title Company shall reasonably require for the issuance of the Title Policy.

8.1.10    A Georgia Affidavit of Seller’s Gain in the form attached hereto as Exhibit H (and if any withholding is due, the sum required to be remitted to the State of Georgia based upon the Affidavit of Seller's Gain will be withheld from Seller's Purchase Price proceeds and deposited with Escrow Agent at Closing for Escrow Agent to remit to the State of Georgia and Seller shall also deliver a duly executed withholding return for delivery to the Georgia Department of Revenue, and if no withholding is due, Seller will also deliver a duly executed and acknowledged Seller's Certificate of Exemption in the form promulgated by the Georgia Department of Revenue), and if Seller fails to satisfy the foregoing requirements, Seller agrees that three percent (3%) of the Purchase Price will be withheld from Seller's Purchase Price proceeds and deposited with Escrow Agent at Closing for Escrow Agent to remit to the State of Georgia in accordance with O.C.G.A. § 48-7-128.

8.1.11    A broker affidavit and lien waiver duly executed by each person or entity entitled to or having a claim to a brokerage commission or fee in connection with the management, leasing or sale of the Property (unless arising through Purchaser), and acknowledged by a notary, waiving and releasing any and all lien rights of such person granted pursuant to the Commercial Real Estate Broker Lien Act (O.C.G.A. § 44-14-600, et seq.) in form satisfactory to the Title Company to remove any exception for liens

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arising pursuant to the foregoing.

8.1.12.    A Closing Statement to be prepared by the Escrow Agent and agreed upon by Seller and Purchaser.

8.1.13.    Any other instruments specifically referred to in this Agreement.

8.1.14.    Such disclosures, forms and reports as are required by applicable state and local law in connection with the conveyance of real property;

8.1.15 Any additional documents that Purchaser, Escrow Agent or the Title Company may reasonably require for the proper consummation of the transaction contemplated by this Contract.

8.2.    At the Closing, Purchaser or its assignee shall cause to be delivered to the Escrow Agent the following documents and instruments:

8.2.1.    Funds payable to the Escrow Agent representing the cash payment due in accordance with Section 2.1.3 hereof and any other sums payable by Purchaser at the Closing under any provisions of this Agreement.

8.2.2.    Purchaser’s counterpart to the Bill of Sale and Assignment.

8.2.3.    Evidence reasonably acceptable to the Title Company authorizing the consummation by Purchaser of the transaction which is the subject of this Agreement and the execution and delivery of documents on behalf of Purchaser.

8.2.4.    Any other instruments specifically referred to in this Agreement.

8.3.    At the Closing, Seller and Purchaser shall cause to be delivered such other instruments and documents as may be required by law in order to complete the Closing of the transaction which is the subject of this Agreement.

8.4.    As a simultaneous condition to Purchaser's obligations at the Closing, possession of the Property, in accordance with this Agreement, shall be delivered to Purchaser.

8.5.    Purchaser agrees to preserve Property files and records, specifically including Tenant lease files and electronically stored information. Upon written request by Seller, Purchaser shall permit Seller to inspect and/or copy any information in such files and records with respect to pre-closing information. In the event Purchaser intends to dispose of or destroy such files and records, Purchaser shall give Seller 60 days written notice of such intention, during which time Seller shall have the right, at Seller’s cost, to copy or collect any such files and records upon written notice to Purchaser. The obligations of Purchaser pursuant to this Section 8.6 shall survive the Closing.

ARTICLE IX.        COSTS

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Seller shall pay the cost of (i) all transfer taxes, stamp taxes, deed taxes or similar impositions payable in connection with the transaction which is the subject of this Agreement, (ii) all expenses charged by the Escrow Agent for sending wire transfers with respect to sums to be paid by Seller pursuant to this Agreement and/or at the request of Seller, and (iii) one-half of the Escrow Agent's fees as escrow agent. Purchaser shall pay the cost of (i) the Title Commitment, Title Policy and Survey, (ii) all expenses charged by the Escrow Agent for sending wire transfers with respect to sums to be paid by Purchaser pursuant to this Agreement and/or at the request of Purchaser, and (iii) one-half of the Escrow Agent's fees as escrow agent. All other escrow and closing costs shall be allocated to and paid by Seller and Purchaser in accordance with the manner in which such costs are customarily borne by such parties in sales of similar property in the county in which the Property is located; provided, however, that each party shall pay its own attorneys' fees.

ARTICLE X.        COMMISSIONS

Seller shall pay the brokerage commission due to Jones Lang LaSalle ("Broker") in accordance with the terms of a separate agreement, and Seller shall indemnify, defend and hold Purchaser harmless from any and all real estate commissions, claims for such commissions or similar fees, including attorneys' fees incurred in any lawsuit regarding such commissions or fees (collectively, "Claims") arising out of contracts executed by or activities engaged in by Seller. The provisions of this paragraph shall survive the Closing or the earlier termination of this Agreement. Purchaser shall indemnify, defend and hold Seller harmless from any and all Claims arising out of contracts executed by Purchaser, except for any commissions payable to or Claims made by the Broker which shall be paid by Seller. The provisions of this paragraph shall survive the Closing or the earlier termination of this Agreement.

ARTICLE XI.        RISK OF LOSS

11.1.    The risk of loss or damage to the Property by fire, earthquake, or other casualty shall be borne by Seller. If damage, loss or destruction of the Property or any part thereof, by fire, earthquake, or other casualty, occurs prior to the Closing, Seller shall promptly notify Purchaser of such damage, loss or destruction.

11.2.    If the Property is damaged by fire, earthquake, or other casualty, and the damage, loss or destruction shall cost less than $1,000,000.00 to repair, based upon the determination of a contractor acceptable to Seller and Purchaser, which shall not be unreasonably withheld or delayed (“Acceptable Contractor”), then Purchaser shall close the purchase of the Property with a credit against the cash portion of the Purchase Price in an amount equal to the cost of repairing such damage as so determined together with an assignment of Seller's rights to payments with respect to rents due subsequent to the Closing Date under any rental insurance policy or policies with respect to the Property; provided, however, Purchaser shall have the right to elect to terminate this Agreement if, as a result of such damage by fire, earthquake, or other casualty, (i) the Property may not, as a matter of applicable law, be rebuilt as it currently exists, or (ii) access to the Property from a publicly dedicated street is prevented, and if Purchaser so elects, the Earnest Money shall be immediately refunded to Purchaser, and thereupon, this Agreement shall

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be terminated and the parties hereto shall be relieved of all further obligations and liability under this Agreement, other than those that are expressly stated to survive the termination of this Agreement.

11.3.    If the Property is damaged by fire, earthquake, or other casualty and the damage, loss or destruction shall cost $1,000,000.00 or more to repair, based upon the determination of an Acceptable Contractor, then Seller shall, promptly after Purchaser's request therefor, deliver to Purchaser a copy of each of the applicable insurance policies covering such fire, earthquake, or other casualty, and Purchaser shall, at its option, elect one of the following:

11.3.1.    To terminate this Agreement, in which event, the Earnest Money shall be immediately refunded to Purchaser, and thereupon, this Agreement shall be terminated, and the parties hereto shall be relieved of all further obligations and liability under this Agreement (other than those that are expressly stated to survive the termination of this Agreement); or

11.3.2.    To proceed with the Closing (provided that Purchaser may elect to extend the Closing Date by up to 60 days in connection with this election) and receive (i) a credit against the cash balance of the Purchase Price payable at Closing to the extent of payments received by or on behalf of Seller prior to the Closing Date under any applicable insurance policy or policies in effect with respect to the Property, (ii) an assignment of Seller's rights to any payments which may be payable subsequent to the Closing Date under any applicable insurance policy or policies in effect with respect to the Property, (iii) an assignment of Seller's rights to payments with respect to rents due subsequent to the Closing Date under any rental insurance policy or policies with respect to the Property, and (iv) a credit against the cash balance of the Purchase Price payable at the Closing in an amount equal to the aggregate amount of the deductibles with respect to all such insurance policies.

If Purchaser elects to exercise the option set forth in Section 11.3.2 hereof, then pending the Closing, Purchaser and Seller shall cooperate to adjust, compromise and settle with the insurance company(s) with respect to the insurance policies.

11.4.    If, prior to Closing, any governmental authority or other entity having condemnation authority shall institute an eminent domain proceeding or take any steps preliminary thereto (including the giving of any direct or indirect notice of intent to institute such proceedings) with regard to a material portion of the Land or Improvements, and the same is not dismissed in a final determination for which all appeal periods have passed on or before ten (10) days prior to the Closing Date set forth in this Agreement, then Seller shall promptly notify Purchaser thereof and Purchaser shall be entitled to terminate this Agreement in which event, the provisions of Section 11.3.1 hereof shall be applicable.

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ARTICLE XII. REMEDIES FOR DEFAULT

12.1.    Seller’s covenants, indemnities, warranties and representations contained in this Agreement and in any document executed by Seller pursuant to this Agreement (excluding any limited warranties contained in the Deed and in Article X upon which there shall be no time limitation) shall survive Purchaser’s purchase of the Property only for a period commencing on the Closing Date and ending one year after the Closing Date (the “Limitation Period”). Seller’s liability for breach of any such covenant, indemnity, representation or warranty shall be limited to claims in excess of an aggregate amount of $15,000, and Seller shall be liable only to the extent that such aggregate amount exceeds such figure. Seller’s aggregate liability for claims arising out of such covenants, indemnities, representations and warranties shall not exceed $1,000,000. Notwithstanding anything to the contrary contained in this Agreement, Seller shall not be liable for consequential, punitive and/or exemplary damages of any nature whatsoever. Purchaser shall provide written notice to Seller of any alleged breach of such covenants, indemnities, warranties or representations and shall allow Seller 30 days within which to cure such breach, or, if such breach cannot reasonably be cured within 30 days, an additional reasonable time period of up to 90 days, so long as such cure has been commenced within such 30 days and is being diligently pursued. If Seller fails to cure such breach after written notice and within such cure period, Purchaser’s sole remedy shall be an action at law for actual damages as a consequence thereof, provided that any claim or action at law for actual damages brought after Closing based upon a misrepresentation or a breach of a covenant, indemnity, warranty or representation under this Agreement shall be actionable or enforceable if and only if notice of such claim is given to Seller within 60 days following the expiration of the Limitation Period. The Limitation Period referred to herein shall apply to known as well as unknown breaches of such covenants, indemnities, warranties or representations. Purchaser’s waiver and release set forth in Section 3.4 shall apply fully to liabilities under such covenants, indemnities, representations and warranties and is hereby incorporated by this reference. Purchaser specifically acknowledges that such termination of liability represents a material element of the consideration to Seller. The limitation as to Seller’s liability in this Section 12.1(a) does not apply to Seller’s liability with respect to prorations and adjustments under Article VI. The provision of this Section 12.1(a) shall survive indefinitely the Closing or earlier termination of this Agreement and shall not be merged into the Deed or other closing documents.

12.2    If Seller defaults in its obligation to sell and convey the Property to Purchaser pursuant to this Agreement, Purchaser’s sole and exclusive remedy shall be to elect one of the following: (a) to terminate this Agreement, in which event Purchaser shall be entitled to (i) the return by the Escrow Agent to Purchaser of the Earnest Money and Purchaser shall also be entitled to the recovery from Seller of Purchaser’s actual and reasonable out-of-pocket costs and expenses incurred in connection with entering into this Agreement and attempting to purchase the Property, including without limitation, due diligence inspections performed by Purchaser and its consultants, up to a maximum amount of $60,000.00 in the aggregate, and (ii) if such default is the result of Seller’s intentional breach of this Agreement for the purposes of depriving Purchaser of the benefit of its bargain, Purchaser shall also be entitled to the recovery from Seller of Purchaser’s actual and reasonable out-of-pocket costs and expenses incurred in connection with entering into this Agreement and attempting to purchase the Property, including without limitation, due diligence inspections performed by Purchaser and its consultants, up to a

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maximum amount of $250,000.00 in the aggregate, and after Purchaser has recovered all the foregoing neither party shall have any further rights or obligations except for Purchaser’s indemnity obligations hereunder, or (b) to bring a suit for specific performance provided that any suit for specific performance must be brought within 90 days of Seller’s default, to the extent permitted by law, Purchaser waiving the right to bring suit at any later date. Purchaser waives any other rights or remedies.

12.3.    Purchaser recognizes that if the purchase and sale which is the subject of this Agreement is not consummated because of a material default by Purchaser hereunder, Seller shall be entitled to compensation as a result thereof. Seller and Purchaser acknowledge that it is extremely difficult and impractical to ascertain the extent of the detriment, and to avoid this problem, Seller and Purchaser agree that if the purchase and sale which is the subject of this Agreement is not consummated solely as a result of a material default by Purchaser under this Agreement, Seller sole remedy shall be to recover from the Escrow Agent the Earnest Money as liquidated damages, which amount represents a bona fide good faith estimate of damages that Seller would suffer in such event. Upon Seller's receipt of the Earnest Money, this Agreement shall be terminated and thereupon the parties shall have no further obligations one to the other under this Agreement. In the event of Seller’s election to recover the Earnest Money, the parties agree that the sum stated above as liquidated damages shall be the sole and exclusive relief to which Seller might otherwise be entitled, as a result of Purchaser's default under this Agreement, Seller hereby specifically waiving any and all rights which it may have to damages or specific performance as a result of Purchaser's default under this Agreement.

ARTICLE XIII.    ESCROW

13.1.    The parties hereto have mutually requested that the Escrow Agent act as escrow agent for the purpose of holding the Earnest Money in accordance with the terms of this Agreement.

13.2.    The Earnest Money shall be deposited by the Escrow Agent in an interest bearing account approved by Purchaser.

13.3.    The Earnest Money shall be released or delivered to the party entitled thereto pursuant to this Agreement with reasonable promptness after the Escrow Agent shall have received notice from Seller and Purchaser authorizing release of the Earnest Money or the occurrence of the Closing, at which time the Earnest Money shall be paid to Seller and applied to the Purchase Price.

13.4.    (a)    The Escrow Agent is to be considered as a depository only, shall not be deemed to be a party to any document other than this Agreement, and shall not be responsible or liable in any manner whatsoever for the sufficiency, manner of execution, or validity of any written instructions, certificates or any other documents received by it, nor as to the identity, authority or rights of any persons executing the same. The Escrow Agent shall be entitled to rely at all times on instructions given by Seller and/or Purchaser, as the case may be and as required hereunder, without any necessity of verifying the authority therefor.

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(b)    The Escrow Agent shall not at any time be held liable for actions taken or omitted to be taken in good faith and without negligence. Seller and Purchaser agree to save and hold the Escrow Agent harmless and indemnify the Escrow Agent from any loss and from any claims or demands arising out of its actions hereunder other than any claims or demands arising from the Escrow Agent's negligence or willful misconduct.

(c)    It is further understood by Seller and Purchaser that if, as a result of any disagreement between them or adverse demands and claims being made by any of them upon the Escrow Agent, or if the Escrow Agent otherwise shall become involved in litigation with respect to this Agreement, the Escrow Agent may deposit the Earnest Money with a court of competent jurisdiction and/or in accordance with the order of a court of competent jurisdiction and in any such event, Seller and Purchaser agree that they, jointly and severally, are and shall be liable to the Escrow Agent and shall reimburse the Escrow Agent on demand for all costs, expenses and reasonable counsel fees it shall incur or be compelled to pay by reason of any such litigation. Seller and Purchaser agree between themselves that each shall be responsible to advance one-half of all amounts due the Escrow Agent pursuant to this Section 13.4, provided that any such advance by Seller or Purchaser as a result of any dispute or litigation between them shall be without prejudice to its right to recover such amount as damages from the breaching party.

(d)    In taking or omitting to take any action whatsoever hereunder, the Escrow Agent shall be protected in relying upon any notice, paper, or other document believed by it to be genuine, or upon evidence deemed by it to be sufficient, and in no event shall the Escrow Agent be liable hereunder for any act performed or omitted to be performed by it hereunder in the absence of negligence or bad faith. The Escrow Agent may consult with counsel in connection with its duties hereunder and shall be fully protected in any act taken, suffered or permitted by it in good faith and without negligence in accordance with the advice of such counsel.

13.5.    Upon the satisfaction of the mutual obligations of the parties hereunder, the Escrow Agent shall promptly submit for recording or filing, as applicable, all appropriate instruments delivered to it at the Closing.

13.6.    The Escrow Agent shall have no right or obligation to approve any amendment to this Agreement unless such amendment purports to affect the Escrow Agent's rights or obligations hereunder.

13.7.    The Escrow Agent hereby agrees to serve as the "real estate reporting person" (as such term is defined in Section 6045(e) of the Code). This Agreement shall constitute a designation agreement, the name and address of the transferor and transferee of the transaction contemplated hereby as well as the name and address of the Escrow Agent appear in Section 14.1 hereof, and Seller, Purchaser and the Escrow Agent agree to retain a copy of this Agreement for a period of four years following the end of the calendar year in which the Closing occurs. The provisions of this Section shall survive the Closing.

ARTICLE XIV.    NOTICES

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14.1.    Except as otherwise provided in this Agreement, any and all notices, elections, demands, requests and responses thereto permitted or required to be given under this Agreement shall be in writing, signed by the party giving the same or by its attorneys, and shall be deemed to have been properly given and shall be deemed effective upon being (i) personally delivered, or (ii) delivered to an overnight delivery service with receipt for delivery, or (iii) deposited in the United States mail, postage prepaid, certified with return receipt requested, or (iv) transmitted by email or facsimile, provided that such email or facsimile transmission is confirmed within one (1) Business Day thereafter in the manner set forth in either clause (i), (ii) or (iii) of this sentence, to the other party at the address of such other party set forth below or at such other address within the continental United States as such other party may designate by notice specifically designated as a notice of change of address and given in accordance herewith; provided, however, that the time period in which a response to any such notice, election, demand or request must be given shall commence on the date of receipt thereof. Personal delivery to a party or to any officer, partner, member, agent or employee of such party at said address shall constitute receipt. Rejection or other refusal to accept or inability to deliver because of changed address of which no notice has been received shall also constitute receipt. Any such notice, election, demand, request or response shall be addressed as follows:

IF TO PURCHASER:        Resource Real Estate Opportunity OP, LP

3033 E. 1^st Avenue, Suite 805

Denver, Colorado 80206

Attn: Marshall P. Hayes

Telephone: (303) 209-6351

Facsimile: (303) 553-8409

email: mhayes@resourcerei.com

with a copy to be given simultaneously to:

Resource Real Estate Opportunity OP, LP

1845 Walnut Street, 18^th Floor

Philadelphia, PA 19103

Attn: Shelle Weisbaum

Telephone: (215) 832-4187

Facsimile: (215) 761-0452

email: sweisbaum@resourcerei.com

And to:

Ledgewood, PC

1900 Market Street, Suite 750

Philadelphia, PA 19103

Attn: Stacy C. Bedwick, Esq

Telephone: (215) 731-9450

Facsimile: (215) 735-2513

email: sbedwick@ledgewood.com

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IF TO SELLER:        Addison Place Apartment Manager, LLC

Addison Place Townhomes, LLC

6485 Centerville Business Parkway

Centerville, Ohio 45459

Attn: Chris Mullins

Phone No.: 937-424-3095

Facsimile No.: 937-434-6215

Email: cmullins@theconnorgrp.com

with a copy to be given simultaneously to:

Dinsmore & Shohl LLP

1100 Courthouse Plaza, SW

10 N. Ludlow Street

Dayton, Ohio 45402

Attn: Karen R. Dillon, Esq.

Phone No.: 937-449-2825

Facsimile No.: 937-463-4947

Email: karen.dillon@dinsmore.com

IF TO THE ESCROW AGENT OR THE TITLE COMPANY:

Land Services USA, Inc.

1835 Market Street, Suite 420

Philadelphia, PA 19103            

Attn: Alison Zugschwert, Title Officer

Phone No.: 215-255-8981

Facsimile No.: 215-255-8963

Email: azugschwert@lsutitle.com

ARTICLE XV.        MISCELLANEOUS

15.1.    This Agreement and the Exhibits and Schedules attached hereto contain the entire agreement between the parties with respect to the subject matter hereof, and no promise, representation, warranty or covenant not included in this Agreement or such Exhibits or Schedules has been or is relied upon by either party. This Agreement is intended by the parties hereto to be the final expression of their agreement with respect to the matters herein contained and is the complete and exclusive statement of the terms thereof, notwithstanding any representation or statement to the contrary heretofore made.

15.2.    This Agreement cannot be changed, modified, discharged or terminated by any oral agreement or any other agreement and there cannot be any waiver of the warranties, representations and covenants expressly contained in this Agreement unless the same is in

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writing and signed by the party against whom enforcement of the change, modification, discharge, termination or waiver is sought.

15.3.    The Article and Exhibit headings herein are for convenience only, and are not to be used in determining the meaning of this Agreement or any part hereof.

15.4.    This Agreement shall be binding on, and the benefits hereof shall inure to, the successors and assigns of the parties hereto.

15.5.    If any term or provision of this Agreement, or any part of such term or provision, or the application thereof to any person or circumstance shall to any extent be held invalid or unenforceable, the remainder of this Agreement or the application of such term or provision or remainder thereof to persons or circumstances other than those as to which it is held invalid and unenforceable shall not be affected thereby and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

15.6.    All Exhibits and Schedules which are attached to this Agreement are part of this Agreement and are incorporated herein by reference.

15.7.    The provisions of this Agreement are for the sole benefit of the parties to this Agreement and their successors and assigns and shall not give rise to any rights by or on behalf of anyone other than such parties.

15.8.    This Agreement shall be construed without regard to any presumption or other rule requiring construction against the party causing this Agreement to be drafted.

15.9.    This Agreement may be executed in any number of counterparts, each of which shall, when executed, be deemed to be an original and all of which shall be deemed to be one and the same instrument.

15.10.    TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. NEITHER PARTY SHALL SEEK TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED. EACH OF THE PARTIES ACKNOWLEDGES THAT IT HAS RECEIVED THE ADVICE OF COUNSEL WITH RESPECT TO THIS WAIVER.

15.11.    If any litigation arises under this Agreement, the prevailing party (which term shall mean the party which obtains substantially all of the relief sought by such party) shall be entitled to recover, as a part of its judgment, reasonable attorneys' and paralegals' fees, court costs and expert witness fees. The provisions of this Section shall survive the Closing or earlier termination of this Agreement.

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15.12.    Purchaser shall have the right to assign this Agreement to an entity controlling, controlled by or under common control with Purchaser. In the event of any such assignment, Seller agrees to execute any documents specified by Purchaser to or in the name of Purchaser's assignee and agrees that all surviving representations and warranties of Seller hereunder shall be deemed to run in favor of, and be enforceable by said assignee as if it were the Purchaser hereunder. The provisions of this Section shall survive the Closing.

15.13.    The submission of a draft, or a marked up draft, of this Agreement by one party to another is not intended by either Seller or Purchaser to be an offer to enter into a legally binding contract with respect to the purchase and sale of the Property. Seller and Purchaser shall be legally bound with respect to the purchase and sale of the Property pursuant to the provisions of this Agreement or otherwise only if and when Seller and Purchaser have negotiated all of the provisions of this Agreement in a manner acceptable to Seller and Purchaser in their respective sole discretion, including, without limitation, all of the Exhibits and Schedules hereto, and each of Seller and Purchaser have fully executed and delivered to each other a counterpart of this Agreement signed by it.

15.14.    Seller will, whenever and as often as it shall be reasonably requested so to do by Purchaser, and Purchaser will, whenever and as often as it shall be reasonably requested so to do by Seller, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any and all conveyances, assignments, correction instruments and all other instruments and documents as may be reasonably necessary in order to complete the transaction which is the subject of this Agreement and to carry out the intent and purposes of this Agreement. All such instruments and documents shall be satisfactory to the respective attorneys for Purchaser and Seller. The provisions of this Section shall survive the Closing.

15.15.    If the date for performance of any act pursuant to this Agreement is not a Business Day, then such act shall be performed on the next succeeding Business Day. The term "Business Days" shall mean all days, except Saturdays, Sundays and all days observed by the Federal Government as legal holidays.

15.16.    Seller hereunder desires to exchange, for other property of like kind and qualifying use within the meaning of Section 1031 of the Internal Revenue Code of 1986, as amended and the Regulations promulgated thereunder, fee title in the property which is the subject of this Agreement. Seller expressly reserves the right to assign its rights, but not its obligations, hereunder to a Qualified Intermediary as provided in IRC Reg. 1.1031(k)-1(g)(4) on or before the closing date.

15.17.    Seller and Purchaser (each, a “Representing Party”) each represents and warrants to the other (i) that neither the Representing Party nor any person or entity that directly owns a 10% or greater equity interest in it nor any of its officers, directors or managing members is a person or entity (each, a “Prohibited Person”) with whom U.S. persons or entities are restricted from doing business under regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury (including those named on OFAC’s Specially Designated and Blocked Persons List) or under any statute, executive order (including Executive Order 13224 (the “Executive Order”) signed on September 24, 2001 and entitled “Blocking Property and

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Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action, (ii) that the Representing Party’s activities do not violate the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001 or the regulations or orders promulgated thereunder (as amended from time to time, the “Money Laundering Act”), and (iii) that throughout the term of this Agreement the Representing Party shall comply with the Executive Order and with the Money Laundering Act.

15.18     TIME IS OF THE ESSENCE OF THIS AGREEMENT.

15.19    This Agreement shall be governed by and construed under the laws of the State in which the Property is located.

15.20    Until the earlier to occur of termination of this Agreement or the Closing Date, Seller (and Seller’s agents, including Seller’s broker) shall cease to market the Property and shall refrain from solicitation of backup offers and any discussion, negotiation or any other communication concerning or related to the sale of the Property with any third party other than Purchaser.

15.21     Seller shall provide to Purchaser (at Purchaser’s expense) copies of, or shall provide Purchaser reasonable access to, such factual information as may be reasonably requested by Purchaser, and in the possession or reasonable control of Seller, or its property manager or accountants (without any requirement for Seller to compile, categorize or otherwise organize such information), to facilitate Purchaser's auditor in the conduct of an audit, in accordance with Rule 3-14 of Securities and Exchange Commission Regulation S-X, of the income statements of the Property for the year to date of the year in which Closing occurs plus the two (2) immediately preceding calendar years (provided, however, that other than fees paid or payable to Seller, a Seller affiliate or a third party for on-site property management, such audit shall not include an audit of asset management fees internally allocated by Seller (as opposed to paid to a third party) or interest expenses attributable to Seller). Purchaser shall be responsible for all out-of-pocket costs associated with this audit. Seller shall reasonably cooperate (at no cost to Seller) with Purchaser’s auditor in the conduct of such audit. In addition, Seller agrees to provide to Purchaser or any affiliate of Purchaser, if requested by such auditor, historical financial statements for the Property, including (without limitation) income and balance sheet data for the Property, whether requested before or after Closing. Seller’s obligation to maintain its records for use under this Section 8.24 shall be an on-going condition to Closing for Purchaser’s benefit until Closing. Seller shall remain in existence and maintain its records for use under this Section 15.21 for a period of not less than one year after the Closing Date. The provisions of this Section shall survive Closing.

ARTICLE XVI.    CONFIDENTIALITY

The Property Information and all other information, other than matters of public record or matters generally known to the public, furnished to, or obtained through inspection of the Property by, Purchaser, its affiliates, lenders, employees, attorneys, accountants and other professionals or agents relating to the Property, will be treated by Purchaser, its affiliates, lenders, employees and agents as confidential, and will not be disclosed to anyone other than on a need-to-know basis and to Purchaser's consultants who agree to maintain the confidentiality of

26

such information, and will be returned to Seller by Purchaser if the Closing does not occur. Purchaser and Seller, for themselves and their respective affiliates, lenders, employees and agents agree not to disclose the terms of this Agreement to any third party, provided, however, that upon closing Seller or Purchaser may disclose such details as are of public record as a result of the sale of the Property. The confidentiality provisions of this Article shall not apply to any disclosures made by Purchaser as required by law, by court order, or in connection with any subpoena served upon Purchaser; provided Purchaser shall provide Seller with written notice before making any such disclosure.

[Signatures on following page.]

27

IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of the date set forth above.

PURCHASER:

RESOURCE REAL ESTATE OPPORTUNITY OP, LP, a Delaware limited partnership                        RESOURCE REAL ESTATE OPPORTUNITY OP, LP, a Delaware limited partnership

By:    Resource Real Estate Opportunity REIT,

Inc., a Maryland corporation, its general

partner

By: ___________________________

Name:

Title:

SELLER:

ADDISON PLACE APARTMENT MANAGER,

LLC

a Delaware limited liability company

By:    _____________________________

Chris Mullins, Vice President

ADDISON PLACE TOWNHOMES, LLC

a Delaware limited liability company

By:    _____________________________

Chris Mullins, Vice President

With Respect Only to Article XIII -

Consented and Agreed to:

LAND SERVICES USA, INC.

By:    _________________________

Name:__________________________

Title:___________________________

28

EXHIBIT A

Tract 1 (Abbotts Bridge Townhomes)

ALL THAT TRACT OF LAND in Land Lots 230 and 235 of the 1^st District, 1^st Section, City of Johns Creek, Fulton County, Georgia, described as follows:

TO FIND THE TRUE POINT OF BEGINNING, commence at the intersection of the northwest right-of-way line of Dunhill Place Drive (50 foot right-of-way) with the northeast right-of-way line of Abbotts Bridge Road (also known as Georgia Highway No. 120) (variable width right-of-way, 104 feet to centerline at this point); running thence along the northeast right-of-way line of Abbotts Bridge Road North 33 degrees 17 minutes 22 seconds West 233.90 feet to a point on the south line of Land Lot 230 (said land lot line being common to Land Lots 229 and 230); thence leaving said right-of-way line, South 89 degrees 27 minutes 22 seconds East along the south line of said Land Lot 230 103.44 feet to a point; thence leaving said land lot line, North 18 degrees 42 minutes 22 seconds West 244.10 feet to a 1-1/2 inch open top pipe found at the most northwest corner of Lot #4 of Abbotts Cove Subdivision as per plat recorded in Plat Book 175, page 124, Fulton County, Georgia records, and the TRUE POINT OF BEGINNING; from the TRUE POINT OF BEGINNING AS THUS ESTABLISHED, running thence South 69 degrees 38 minutes 37 seconds West 186.37 feet to a point on the relocated northeast right-of-way line of Abbotts Bridge Road (also known as Georgia Highway No. 120, variable width right-of-way, Project No. STP-189-1 (28) Fulton County); thence along said relocated northeast right-of-way line of Abbotts Bridge Road (also known as Georgia Highway No. 120) the following courses and distances: (1) North 33 degrees 18 minutes 14 seconds West 437.23 feet to a point, and (2) along the arc of a curve to the left (which arc is subtended by a chord having a bearing and distance of North 40 degrees 24 minutes 46 seconds West 289.89 feet and a radius of 1171.26 feet) 290.64 feet to a point; thence leaving said relocated right-of-way line, North 51 degrees 11 minutes 07 seconds East 15.82 feet to ½-inch rebar found; thence South 56 degrees 24 minutes 43 seconds East 94.24 feet to a ½-inch rebar found; thence North 33 degrees 04 minutes 54 seconds East 84.95 feet to a ½-inch rebar found; thence North 56 degrees 25 minutes 59 seconds West 66.52 feet to a ½-inch rebar found; thence North 51 degrees 11 minutes 07 seconds East 452.10 feet to a point; thence South 65 degrees 23 minutes 21 seconds East 207.50 feet to a point; thence North 74 degrees 59 minutes 20 seconds East 190.00 feet to a ½-inch rebar found; thence North 87 degrees 14 minutes 51 seconds East 300.04 feet to a ½-inch rebar found; thence South 73 degrees 50 minutes 36 seconds East 173.07 feet to a ½-inch rebar found at the northwest corner of Lot #18 of Abbotts Cove Subdivision as per plat recorded in Plat Book 175, page 124, aforesaid records; thence along the west line of said Abbotts Cove Subdivision South 05 degrees 26 minutes 49 seconds East 538.06 feet to a ½-inch rebar found at the southwest corner of Lot #13 of said Abbotts Cove Subdivision; thence South 69 degrees 53 minutes 08 seconds West along the north lines of Lots 4-11 of said Abbotts Cove Subdivision 767.26 feet to the TRUE POINT OF BEGINNING, said tract containing approximately 18.79997 acres or 818,926 square feet, being designated "Tract 1" as shown on ALTA/ACSM Land Title Survey of Abbotts Bridge Townhomes-Phase 1 and Addison Place Apartments-Phase 2 for Addison Place Apartment Manager, LLC, a Delaware limited liability company, Addison Place Townhomes, LLC, a Delaware limited liability company, Federal Home Loan Mortgage Corporation, Primary

29

Capital Advisors LC, Wachovia Financial Services, Inc. and Chicago Title Insurance Company prepared by Watts & Browning Engineers, Inc., bearing the seal and certification of V. T. Hammond, Georgia Registered Land Surveyor No. 2554, dated April 25, 2006, last revised June 3, 2008.

TOGETHER WITH a non-exclusive right, title and interest in and to the easements appurtenant to the above-described tract created in that certain:

(i)    Declaration of Easements by Roberts Properties Residential, L.P. dated October 18, 1999, filed October 21, 1999, recorded in Deed Book 27850, page 46, Fulton County, Georgia records; as amended by First Amendment to Declaration of Easements by Roberts Properties Residential, L.P., dated May 2, 2000, filed May 4, 2000, recorded in Deed Book 28996, page 182, aforesaid records; as amended by that certain Second Amendment to Declaration of Easements by Roberts Properties Residential, L.P., dated May 4, 2000, filed June 15, 2000, recorded in Deed Book 29172, page 281, aforesaid records; and

(ii)    Reciprocal Easement, Restrictive Covenant and Covenant Agreement among Fulton County, Roberts Properties Jones Bridge, L.L.C. and Robert properties Residential, L.P., dated December 22, 1999, filed December 27, 1999, recorded in Deed Book 28224, page 83, aforesaid records; as affected by Affidavit deposed by Brian J. Sullivan, dated February 3, 2000, filed February 22, 2000, recorded in Deed Book 28576, page 325, aforesaid records

(collectively the foregoing appurtenances being referred to as the “Tract 1 Easements”).

Tract 2 - Addison Place Phase 2 Parcel

All that tract of land lying and being in Land Lots 230, 231, 234, & 235, 1st District, 1st Section, Fulton County, Georgia and being more particularly described as follows:

BEGINNING at a ½-inch rebar found at the intersection of the proposed east right-of-way line of Addison Way (right-of-way varies) with the land lot line common to said Land Lots 230 and 231, which ½-inch rebar found is located South 88 degrees 50 minutes 38 seconds East 280.22 feet along the land lot line common to said Land Lots 230 and 231 from a ¾-inch iron bar found in 1993 which is now destroyed at the common corner to Land Lots 197, 198, 230 and 231, 1st District, 1st Section, Fulton County, Georgia; running thence along the proposed east right-of-way line of Addison Way North 00 degrees 24 minutes 12 seconds East 164.13 feet to a ½-inch rebar found; thence, leaving said proposed right-of-way line, North 70 degrees 42 minutes 42 seconds East 144.99 feet to a ½-inch rebar found; thence North 00 degrees 20 minutes 06 seconds West 76.75 feet to a ½-inch rebar found; thence North 03 degrees 44 minutes 46 seconds West 54.84 feet to a ½-inch rebar found; thence North 16 degrees 40 degrees 49 seconds West 33.86 feet to a ½-inch rebar found; thence North 39 degrees 51 minutes 19 seconds West 54.71 feet to a ½-inch rebar found; thence North 40 degrees 54 minutes 27 seconds West 105.77 feet to a ½-inch rebar set; thence North 40 degrees 45 minutes 23 seconds West 36.77 feet to a ½-inch rebar found on the southeast right-of-way line of Jones Bridge Road (right-of-way varies); thence along the southeast right-of-way line of Jones Bridge Road the following courses and

30

distances: (1) North 50 degrees 08 minutes 06 seconds East 453.26 feet to a point, (2) along the arc of a curve to the right (which arc is subtended by a chord having a bearing and distance of North 50 degrees 20 minutes 34 seconds East 82.84 feet and a radius of 11,417.30 feet) 82.84 feet to a point, (3) North 50 degrees 33 minutes 03 seconds East 81.13 feet to a ½-inch rebar set, (4) North 55 degrees 41 minutes 36 seconds East 131.76 feet to a ½-inch rebar set, and (5) North 50 degrees 33 minutes 03 seconds East 168.08 feet to a ½-inch rebar set; thence, leaving said right-of-way line, South 43 degrees 17 minutes 02 seconds East 211.03 feet to a ½-inch rebar found; thence South 31 degrees 12 minutes 02 seconds East 269.95 feet to a ½-inch rebar found; thence South 43 degrees 12 minutes 02 seconds East 169.97 feet to a ½-inch rebar found; thence South 35 degrees 12 minutes 02 seconds East 199.96 feet to a ½-inch rebar found; thence South 35 degrees 06 minutes 54 seconds East 125.15 feet to a ½-inch rebar found; thence South 22 degrees 26 minutes 33 seconds East 160.21 feet to a ½-inch rebar found; thence South 29 degrees 19 minutes 38 seconds East 149.93 feet to a ½-inch rebar found; thence South 37 degrees 41 minutes 40 seconds East 154.92 to a ½-inch rebar found; thence South 47 degrees 58 minutes 48 seconds East 164.89 feet to a ½-inch rebar found; thence South 71 degrees 07 minutes 02 seconds West 134.90 feet to a ½-inch rebar found; thence South 86 degrees 52 minutes 02 seconds West 299.77 feet to a ½-inch rebar found; thence South 79 degrees 37 minutes 02 seconds West 124.91 feet to a ½-inch rebar found; thence North 73 degrees 51 minutes 50 seconds West 173.42 feet to a ½-inch rebar set; thence South 87 degrees 15 minutes 00 seconds West 300.00 feet to a ½-inch rebar set; thence South 75 degrees 00 minutes 00 seconds West 190.00 feet to a point in a lake; thence North 65 degrees 22 minutes 41 seconds West 207.50 feet to a ½-inch rebar found; thence South 51 degrees 09 minutes 57 seconds West 243.72 feet to a ½-inch rebar found; thence North 33 degrees 05 minutes 48 seconds East 258.89 feet to a ½-inch rebar set; thence North 11 degrees 54 minutes 35 seconds West 33.74 feet to a ½-inch rebar set; thence North 56 degrees 54 minutes 17 seconds West 178.55 feet to a ½-inch rebar found on the land lot line common to Land Lots 230 and 231; thence along said common land lot line, North 88 degrees 50 minutes 38 seconds West 24.40 feet to a ½-inch rebar found; thence leaving said common land lot line, South 71 degrees 34 minutes 47 seconds West 36.90 feet to a ½-inch rebar found on the proposed east right-of-way line of Addison Way; thence along said proposed right-of-way line, along the arc of a curve to the left (which arc is subtended by a chord having a bearing and distance of North 17 degrees 20 minutes 45 seconds East 12.87 feet and a radius of 362.86 feet) 12.87 feet to the POINT OF BEGINNING, said tract containing approximately 30.665 acres as shown on plat of ALTA/ACSM Land Title Survey for Roberts Properties Residential, L.P., Primary Capital Advisors LC, Federal Home Loan Mortgage Corporation and Commonwealth Land Title Insurance Company, prepared by Rochester & Associates, Inc., bearing the seal and certification of Josh W. Trawick, Georgia Registered Land Surveyor No. 2974, dated January 14, 2000, last revised April 18, 2005.

TOGETHER WITH, a non-exclusive right, title and interest in and to the easements appurtenant to the above described Tract created pursuant to that certain Reciprocal Easement, Restrictive Covenant and Covenant Agreement by and between Fulton County, a political subdivision of the State of Georgia, Roberts Properties Jones Bridge, L.L.C., a Georgia limited liability company, and Roberts Properties Residential, L.P., a Georgia limited partnership, dated December 22, 1999, filed for record on December 27, 1999, and recorded at Deed Book 28224, page 083, Fulton County, Georgia records; as affected by Affidavit deposed by Brian J. Sullivan,

31

dated February 3, 2000, filed February 22, 2000, recorded in Deed Book 28576, page 325, aforesaid records(the "Appurtenant Easement No. 1").

TOGETHER WITH, a non-exclusive right, title and interest in and to the easements appurtenant to the above described Tract created pursuant to that certain Declaration of Easements by Roberts Properties Residential, L.P., a Georgia limited partnership, dated October 19, 1999, filed for record on October 21, 1999, and recorded at Deed Book 27850, page 046, Fulton County, Georgia records; as amended by that certain First Amendment to Declaration of Easements by Roberts Properties Residential, L.P., dated May 2, 2000, recorded in Deed Book 28996, page 182, aforesaid records; as amended by that certain Second Amendment to Declaration of Easements by Roberts Properties Residential, L.P., dated May 4, 2000, filed June 15, 2000, recorded in Deed Book 29172, page 281, aforesaid records. (the "Appurtenant Easement No. 2").

TOGETHER WITH, a non-exclusive right, title and interest in and to the easement appurtenant to the above described tract created pursuant to that certain Grant of Access Easement by Roberts Properties Residential, L.P., a Georgia limited partnership, dated April 15, 2005, filed for record April 20, 2005, and recorded in Deed Book 39834, page 207, aforesaid records (the "Appurtenant Easement No. 3").

Appurtenant Easement Nos. 1, 2 and 3 are collectively referred to herein as “Tract 2 Easements”.

32

EXHIBIT B

[Rent Roll]

33

EXHIBIT C

Regional Billing Services - Utility Billing

Comcast - Cable and Bulk Addendums

Four Seasons - Landscaping

Team Pest - General Pest and Termite Baiting

Waste Management - Trash Removal

Loud Security - Security Monitoring

Month to Month Services Not Under Contract:

AT&T - Gate Monitoring

Master Agreements:

Seller’s rights under master agreements with NuVox Communications, Inc. (phone) and IKON Office Solutions, Inc. (copier) will be terminated as to the Apartments as of the Closing Date.

34

EXHIBIT D

Leasing Office - Back Room

• 1 surveillance system

• 1 stereo system for clubhouse

• 1 key machine

• 1 lateral file drawer

• 1 computer

• 1 Ricoh Aficio 1515MF copier

Property Manager’s Office

• Desk, chair, and credenza

• 2 side chairs

• 1 roll top desk

Leasing Manager’s Office

• Desk, chair, and credenza

• 2 side chairs

• 1 printer

Business Manager’s Office

• Desk, chair, and credenza

• 2 wood lateral file cabinets (contains lease files)

• 1 metal lateral file

• 1 computer with printer

• 2 lamp

• 1 side table

• 2 side chairs

Clubhouse Lobby

• 1 credenza

• 1 sofa table

• 2 side tables

• 4 chairs

• 2 lamps

• 1 chandelier

Leasing Office

• 1 small metal file cabinet

• 3 desks

• 3 credenzas

• 2 lamps

• 2 computers and 2 printer

• 8 chairs

• 2 side table

35

Club Room

• 1 chandelier

• 3 bar stools

• 2 sofas

• 1 sofa table

• 1 coffee tables

• 2 high back wing chairs

• 2 paintings

• 1 mirror

• 1 round table

• 1 side table

• 1 credenza

• 4 chairs

Kitchen

• 1 table with 3 chairs

• 1 dishwasher

• 1 ice maker

• 1 coffee maker

• 1 toaster

• 1 refrigerator

Television Room (off the main club room)

• 1 sofa

• 1 television

• 1 DVD player

• 5 casual chairs

• 1 round table with 5 chairs

• 2 coffee table

Conference Room

• 1 conference room table

• 1 credenza

• 6 chairs

• 1 wood-encased marker board

• 1 podium

Business Center

• 1 printers

• 2 computers

• 2 wood desks

• 2 chairs

• 1 Toshiba all in one copy, scan, fax machine

36

Pool Area - Apartments

• 34 lounge chairs

• 3 tables

• 14 side chairs

• 16 side tables

• 3 trash cans

Maintenance Building - Apartments

• 2 turbo blower

• 4 reclamation tanks

• 1 recovery machine

• 2 step ladders

• 1 ladder

• 2 paint sprayers

• 1 A/C vac

• 1 breezeway blower

• several brooms

• Miscellaneous small supplies

Laundry Room

• 2 bar stools

• 1 waste basket

• 1 television (wall mounted)

• 8 coin operated washers and dryers

Cardio Room

• 2 wall-mounted televisions

• 4 treadmills

• 3 elliptical machines

• 2 stationary bicycle machines

• 1 step machine

Weight Room

• 13 various power-weight stations

• 2 benches

• 6 free weights

• 1 weight scale

Kids Room (located in exercise area)

• 1 child table with 4 tiny chairs

• 2 side tables with chairs

• 4 bookcases with miscellaneous toys

• 1 book rack with miscellaneous children’s books

• 1 television

37

Every apartment has:

• 1 microwave

• 1 stove

• 1 refrigerator

• 1 dishwasher

• 1 garbage disposal

1 Sales Golf Cart

3 Maintenance Golf Carts

4 Chargers

38

EXHIBIT E

LIMITED WARRANTY DEED

[SPACE ABOVE LINE RESERVED FOR RECORDER]

AFTER RECORDING, RETURN TO:

STATE OF GEORGIA

COUNTY OF FULTON

LIMITED WARRANTY DEED

THIS DEED, made this _____ day of March, 2014, by and between ADDISON PLACE APARTMENT MANAGER, LLC, a Delaware limited liability company, and ADDISON PLACE TOWNHOMES, LLC, a Delaware limited liability company (collectively, “Grantor”), with an address of 6485 Centerville Business Parkway, Centerville, Ohio 45459, and ,a (“Grantee”), with an address of (the terms Grantor and Grantee to include their respective heirs, successors and assigns where the context hereof requires or permits),

WITNESSETH THAT: Grantor, for and in consideration of the sum of TEN AND NO/100 DOLLARS ($10.00), and other good and valuable consideration, in hand paid at and before the sealing and delivery of these presents, the receipt, adequacy and sufficiency of which being hereby acknowledged by Grantor, has granted, bargained, sold and conveyed, and by these presents does hereby grant, bargain, sell and convey unto Grantee, the real property described on Exhibit “A” attached hereto and made a part hereof (the “Property”).

39

TO HAVE AND TO HOLD the Property, together with all and singular the rights, members and appurtenances thereof, to the same being, belonging, or in anywise appertaining, to the only proper use, benefit and behoof of Grantee, forever in FEE SIMPLE.

AND, SUBJECT TO the title matters expressly set forth on Exhibit “B” attached hereto and made a part hereof, Grantor will warrant and forever defend the right and title to the Property unto the Grantee against the claims of all persons claiming by, through or under Grantor.

IN WITNESS WHEREOF, Grantor has signed and sealed this Deed the day and year first above written. 

As to all signatories, signed, sealed and delivered in the presence of: Unofficial Witness Print Name: Notary Public Print Name:______________ Commission Expiration Date:   [AFFIX NOTARIAL SEAL] ADDISON PLACE APARTMENT MANAGER, LLC a Delaware limited liability company By:[SEAL] Print Name: Title: ADDISON PLACE TOWNHOMES, LLC a Delaware limited liability company By:____________________________[SEAL] Name:__________________________ Title:___________________________

40

EXHIBIT F

BILL OF SALE AND ASSIGNMENT OF LEASES AND CONTRACTS

This instrument is executed and delivered as of the ____ day of March, 2014 pursuant to that certain Agreement of Sale and Purchase dated February ___, 2014 (the “Agreement”), by and between ADDISON PLACE APARTMENT MANAGER, LLC, a Delaware limited liability company (“APAM”) and ADDISON PLACE TOWNHOMES, LLC, a Delaware limited liability company (“APT” and, together with APAM, “Seller”), and __________________, a _____________________ (“Purchaser”), covering the real property described in Exhibit A attached hereto (“Property”).

1.    Sale of Personalty. For good and valuable consideration, Seller hereby sells, transfers, sets over and conveys to Purchaser the following without recourse or warranty (the “Personal Property”):

(a)    Tangible Personalty. All of Seller’s right, title and interest in and to all fixtures, furniture, equipment, and other tangible personal property, if any, owned by Seller presently located on such property, including without limitation all of the furniture, equipment, appliances and other tangible personal property listed on Exhibit B-1 attached hereto and incorporated herein by reference, but expressly excluding all computer equipment, computer networking equipment, check scanners, facsimile machines, photocopiers, any and all licenses and software in connection with any of the foregoing exclusions, project signage bearing any name, logo or trademark of Seller or any of its affiliates, and any items of personal property owned by tenants, any managing agent or others (the “Tangible Personalty”).

(b)    Intangible Personalty. All the right, title and interest of Seller in and to the following, to the extent assignable: ”): (i) licenses (excluding any and all licenses of software), permits, government approvals and certificates of occupancy relating to the operation of the Property, (ii) the right to use the name of the Apartments (if any) in connection with the Property, (iii) the domain name and ulr for the Apartments website (excluding the website’s content), (iv) all telephone numbers and listings identifiable with the Property, including _______________ (phone) and _____________ (fax) and (v) if still in effect, guaranties and warranties received by Seller from any unrelated third party, contractor, manufacturer or other person in connection with construction of the Improvements or operation of the Property.

2.    Assignment of Leases and Contracts. For good and valuable consideration, Seller hereby assigns, transfers, sets over and conveys to Purchaser, and Purchaser hereby accepts such assignment of, the following without recourse or warranty (the “Assigned Property”):

(a)    Leases. All of Seller’s right, title and interest in and to all leases, licenses and other occupancy agreements covering the Property and tenant security deposits which are specifically listed on Exhibit B-2 attached hereto and incorporated herein by reference (“Leases and Deposits”), and Purchaser hereby assumes all of Seller’s

41

obligations under the Leases and Deposits arising from and after the date of this instrument;

(b)    Service Contracts. All of Seller’s right, title and interest in and to the service contracts described in Exhibit B-3 attached hereto and incorporated herein by reference (the “Service Contracts”).

3.    Assumption. Purchaser, for itself and its successors or assigns, hereby assumes the obligations of Seller under the Leases and Deposits and Service Contracts arising from and after the date of this instrument and shall defend, indemnify and hold harmless Seller from and against any liability, damages, causes of action, expenses, and attorneys’ fees incurred by Seller by reason of Purchaser’s breach or default of its obligations with respect to the Leases or tenant security deposits arising on and after the date of this instrument. Seller shall defend, indemnify and hold harmless Purchaser from and against any liability, damages, causes of action, expenses, and attorneys’ fees incurred by Purchaser by reason of Seller’s breach or default of its obligations under the Leases and Service Contracts arising before the date of this instrument and for the failure to remit to Purchaser any tenant security deposits and other refundable deposits and amounts not listed on Exhibit B-2.

4.    Agreement Applies. The covenants, agreements, representations, warranties, releases, indemnities and limitations provided in the Agreement with respect to the property conveyed hereunder (including, without limitation, the limitations of liability provided in the Agreement), are hereby incorporated herein by this reference as if herein set out in full and shall inure to the benefit of and shall be binding upon Purchaser and Seller and their respective successors and assigns.

5.    Disclaimer. As set forth in the Agreement, which provisions are hereby incorporated by this reference as if herein set out in full, the Personal Property and Assigned Property are conveyed by Seller and accepted by Purchaser AS IS, WHERE IS, AND WITHOUT ANY REPRESENTATIONS OR WARRANTIES OF WHATSOEVER NATURE, EXPRESS OR IMPLIED, IT BEING THE INTENTION OF SELLER AND PURCHASER EXPRESSLY TO NEGATE AND EXCLUDE ALL WARRANTIES, INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE, WARRANTIES CREATED BY ANY AFFIRMATION OF FACT OR PROMISE OR BY ANY DESCRIPTION OF THE PROPERTY CONVEYED HEREUNDER, AND ALL OTHER REPRESENTATIONS AND WARRANTIES WHATSOEVER CONTAINED IN OR CREATED BY THE UNIFORM COMMERCIAL CODE OF THE STATE OR STATES WHERE THE PROPERTY IS LOCATED.

6.    Counterparts. This instrument may be executed in multiple counterparts, each of which shall constitute an original and all of which when taken together shall constitute one instrument.

[Signatures on following page.]

42

IN WITNESS WHEREOF, the undersigned have caused this Bill of Sale and Assignment of Leases and Contracts to be executed as of the date written above.

PURCHASER:

RESOURCE REAL ESTATE OPPORTUNITY OP,LP, a Delaware limited partnership

By: Resource Real estate Opportunity REIT, Inc., a Maryland corporation, its general partner

By: _____________________________

Name:

Title:

SELLER:

ADDISON PLACE APARTMENT MANAGER,

LLC

a Delaware limited liability company

By:    _____________________________

Chris Mullins, Vice President

ADDISON PLACE TOWNHOMES, LLC

a Delaware limited liability company

By:    _____________________________

Chris Mullins, Vice President

With Respect Only to Article XIII -

Consented and Agreed to:

LAND SERVICES USA, INC.

By:_________________________

Name:__________________________

Title:___________________________

43

Exhibit A

Legal Description

44

Exhibit B-1

List of Personal Property

45

Exhibit B-2

Leases and Security Deposits

46

Exhibit B-3

Service Contracts

47

EXHIBIT G

STATE OF OHIO             )

)SS

COUNTY OF MONTGOMERY    )

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. For U.S. tax purposes (including section 1445), the undersigned, the owner of all of the membership interests of Addison Place Apartment Manager, LLC, a Delaware limited liability company, and Addison Place Townhomes, LLC, a Delaware limited liability company, which have legal title to a U.S. real property interest under local law, will be the actual transferor of the property for U.S. tax purposes and not the disregarded entities. To inform the transferee that withholding of tax is not required upon the disposition of a U.S. real property interest by the undersigned, the undersigned hereby certifies the following:

1.    Glen Lake Holdings, LLC (the “undersigned”) is a Delaware limited liability company and is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);

2.    The undersigned is the sole member of Addison Place Apartment Manager, LLC, a Delaware limited liability company, and Addison Place Townhomes, LLC, a Delaware limited liability company, each of which is a disregarded entity as defined in § 1.1445-2(b)(2)(iii) of the Federal Income Tax Regulations;

3.    The undersigned is not a disregarded entity as defined in § 1.1445-2(b)(2)(iii) of the Federal Income Tax Regulations;

4.    The undersigned’s U.S. employer identification number is ___________; and

5.    The undersigned’s office address is 6485 Centerville Business Parkway, Centerville, Ohio 45459.

The undersigned understands that this certification may be disclosed to the Internal Revenue Service by the transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

Under penalties of perjury I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign this document on behalf the undersigned.

Glen Lake Holdings, LLC, a Delaware limited liability company

______________________________

Chris Mullins, Vice President

Sworn to and subscribed before me

this ___ day of March, 2014.

___________________________

Notary Public

48

EXHIBIT H

AFFIDAVIT OF SELLER'S GAIN

Glen Lake Holdings, LLC

Transferor's Name    Transferor's Identification Number (SSN or FEI)

6485 Centerville Business Parkway___________________________________

Centerville, Ohio 45459

Transferor's Address

INSTRUCTIONS

The transferor is required to execute this form or a similar document and present it to the buyer where the transferor wishes to establish the gain to be recognized from a sale of real property, against which gain the withholding imposed by O.C.G.A. § 48-7-128 is to be applied. In order to be subject to withholding only upon the gain recognized, the transferor must submit this affidavit to the buyer. If a payment is due, the buyer must submit this form along with the withholding return to the Department of Revenue. A copy is not required to be submitted to the Department when no withholding tax is due, unless specifically requested by the Department.

The transferor is to complete this document by calculating the gain below. The transferor should retain the documentation of the cost basis, depreciation, and selling expenses claimed. This documentation should only be provided to the Department when requested.

The undersigned states that Addison Place Apartment Manager, LLC, a Delaware limited liability company, and Addison Place Townhomes, LLC, a Delaware limited liability company, which have legal title to a U.S. real property interest under Georgia law, are disregarded entities as defined in Section 1.1445-2 (b)(2)(iii) of the Federal Income Tax Regulations. For U.S. tax purposes (including section 1445), the undersigned, the owner of all of the membership interests of Addison Place Apartment Manager, LLC, a Delaware limited liability company, and Addison Place Townhomes, LLC, a Delaware limited liability company, will be the actual transferor of the property for U.S. tax purposes and not the disregarded entities.

The undersigned transferor states it is not a disregarded entity as defined in Section 1.1445-2 (b)(2)(iii) of the Federal Income Tax Regulations.

1. SALES PRICE                        $______________________

2. COST BASIS INCLUDING IMPROVEMENTS         $______________________

3. DEPRECIATION         $______________________

4. ADJUSTED COST BASIS (line 2 minus line 3)        $______________________

5. SELLING EXPENSES                    $______________________

6. NET TAXABLE GAIN (LOSS) (line 1 minus lines 4 and 5)    $______________________

[signature appears on following page]

49

Under penalty of perjury, I swear that the above information is to the best of my knowledge and belief, true, correct, and complete.

Glen Lake Holdings, LLC, a Delaware limited liability company

_____________________________

Chris Mullins, Vice President

Sworn to and subscribed before me

this ___ day of March, 2014.

___________________________

Notary Public

50

SCHEDULE 3.2

PROPERTY INFORMATION

(1) Monthly income statements for the Property beginning December 2012 and through date of sale;

(2) Monthly bank statements for the Property beginning December 2012 through date of sale;

(3) Reconciliations to aforementioned bank statements;

(4) Monthly rent rolls for December 2012 through month of sale;

(5) Trial Balances for the years ended 2012, 2013 and last date the seller owns the Property;

(6) Balance Sheet at 12/31/12, 12/31/13, 1/31/14 and the last month the Seller owns the Property;

(7) Account payable and account receivable detail listing/aging reports at 12/31/12, 12/31/13

and date of sale;

(8) Check registers and payables registers for January 2013, February 2013, January 2014,

and February 2014;

(9) Copy of portion of management agreement describing management fees;

(10) General Ledger for 2013 and 2014;

(11) Copies of all insurance invoices for past 12 months;

(12) Copies of all real estate tax bills for 2013 and 2014;

(13) Contact person at the property management company with whom the auditors can discuss internal control procedures and walkthrough information;

(14) Standard Lease form with respect to the Property;

(15) Copies of all utility bills and a utility recap for past 12 months;

(16) Copies of all utility contracts if applicable;

(17) On-site access to the Tenant Leases including any and all modifications, supplements or

amendments thereto and all tenant lease files;

(18) Intentionally omitted.

(19) Current notices to vacate report;

(20) A schedule of all tenant deposits in the form customarily utilized by Seller;

(21) Contracts relating to the maintenance and operation of the Property and access at the

Property to all maintenance and service logs for the Property;

51

(22) To the extent available at the property, copies of or access to any and all site plans, as-

built, boundary and topographical surveys of the Property, zoning reports, soil and compaction studies or tests for the Property, architectural drawings, plans and specifications with respect to the Property;

(23) Insurance loss runs during the period of Seller’s ownership of the Property;

(24) Most recent elevation certificates (if available);

(25) To the extent available, copies of all guaranties or warranties currently in effect related to

the roof or any structure or operating system at the Property;

(26) A list of employee units and model/office units, and employee rental and discount

information;

(27) A schedule of capital improvements completed during the period of Seller’s ownership;

(28) Documentation related to eviction activity for the past 12 months;

(29) List of all personal property to be conveyed with the Property;

(30) Historical real property tax bills for the past three years and the most recent notice of

reassessment, if one exists;

(31) To the extent available, the most recent tax, license fee and permit bills and copies of all

such licenses and permits, including the certificates of occupancy;

(32) Intentionally omitted;

(33) All engineering studies (to the extent in Seller’s possession or control) environmental reports, termite inspections or warranties, to the extent available and in the Seller’s possession, which relate to its Property and were prepared for such Seller by third parties;

(34) The Seller’s ACM plan, lead in water O&M, and other O&M plans, if any; and

(35) The most recent Title and Survey in Seller’s possession, which relate to its Property and were prepared for such Seller by third parties.

52

SCHEDULE 4.1.2

Pro Care Environmental Services, L.L.C. (“Pro Care”) filed a mechanic’s lien against Seller on January 17, 2014 in the Fulton County, Georgia Records claiming it was owed $1,075.00 plus interest in connection with work performed at the Property. Seller contests that any amount is owed to Pro Care and has filed a Notice of Contest of Lien pursuant to Georgia law.

53

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Alan F. Feldman, certify that:

1) I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2014 of Resource Real Estate Opportunity REIT, Inc.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5) The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.
May 15, 2014	By:	/s/ Alan F. Feldman
		Alan F. Feldman
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steven R. Saltzman, certify that:

1) I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2014 of Resource Real Estate Opportunity REIT, Inc.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5) The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.
May 15, 2014	By:	/s/ Steven R. Saltzman
		Steven R. Saltzman
		Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Resource Real Estate Opportunity REIT, Inc. (“the Company”) on Form 10-Q for the quarter ended March 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Alan F. Feldman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.
May 15, 2014	By:	/s/ Alan F. Feldman
		Alan F. Feldman
		Chief Executive Officer
		(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Resource Real Estate Opportunity REIT, Inc. (“the Company”) on Form 10-Q for the quarter ended March 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Steven R. Saltzman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.
May 15, 2014	By:	/s/ Steven R. Saltzman
		Steven R. Saltzman
		Chief Financial Officer
		(Principal Financial Officer)

XML

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS (Tables)

3 Months Ended

Mar. 31, 2014

Related Party Transactions [Abstract]

Fees Earned From / Expenses Paid to Related Parties

The fees earned / expenses paid and the amounts payable to such related parties are summarized in the following tables (in thousands):

	March 31, 2014		December 31, 2013
Receivables from related parties:
RAI and affiliates	$	54	$	530
Payables to related parties:
Advisor:
Acquisition fees	$	952	$	—
Expense reimbursements	228		775
Resource Real Estate Opportunity Manager, LLC:
Property management fees	269		266
Operating expense reimbursements	362		500
Resource Securities, Inc.
Selling commissions and dealer manager fees	—		174
Other	15		3
	$	1,826	$	1,718

	Three Months Ended March 31,
	2014		2013
Fees earned / expenses paid to related parties:
Advisor:
Acquisition fees	$	2,723	$	555
Asset management fees	$	1,250	$	406
Organization and offering costs	$	—	$	103
Overhead allocation	$	351	$	101
Resource Real Estate Opportunity Manager LLC:
Property management fees	$	696	$	413
Construction management fees	$	229	$	—
Debt servicing fees	$	—	$	1
Resource Securities, Inc.:
Selling commissions and dealer manager fees	$	—	$	5,100
Other:
Ledgewood	$	30	$	31
Graphic Images	$	33	$	133

XML

ACQUISITIONS, GOODWILL AND FORECLOSURES (Acquisitions) (Details) (USD $)	3 Months Ended			0 Months Ended		0 Months Ended		0 Months Ended										0 Months Ended
	Mar. 31, 2014 Property	Jan. 28, 2014	Dec. 31, 2013	Mar. 06, 2014 FPA/PRIP Governor Park, LLC [Member]	Mar. 31, 2014 FPA/PRIP Governor Park, LLC [Member] Office Building [Member] Property	Jan. 28, 2014 Merger with Paladin Realty Income Properties, L.P. [Member] Resource Real Estate Opportunity OP, LP [Member] Unit Joint_Venture	Jan. 28, 2013 Merger with Paladin Realty Income Properties, L.P. [Member] Resource Real Estate Opportunity OP, LP [Member] sqft	Jan. 28, 2014 Merger with Paladin Realty Income Properties, L.P. [Member] Multifamily Community [Member] Resource Real Estate Opportunity OP, LP [Member] Property	Jan. 28, 2014 Merger with Paladin Realty Income Properties, L.P. [Member] Office Building [Member] Resource Real Estate Opportunity OP, LP [Member] Property	Jan. 28, 2014 Champion Farms [Member]	Jan. 28, 2014 Fieldstone [Member]	Jan. 28, 2014 Pinehurst [Member]	Jan. 28, 2014 Pheasant Run [Member]	Jan. 28, 2014 Retreat at Shawnee [Member]	Jan. 28, 2014 Hilltop Village [Member]	Jan. 28, 2014 Conifer Place [Member]	Jan. 28, 2014 Stone Ridge [Member]	Mar. 31, 2014 Evergreen at Coursey Place [Member]	Mar. 30, 2014 Evergreen at Coursey Place [Member]	Jan. 28, 2014 Evergreen at Coursey Place [Member]	Jan. 28, 2014 Pines of York [Member]
Business Acquisition [Line Items]
Number of properties acquired	12							10	2
Valuation period	12 months
Number of joint venture interests acquired						11
Number of rentable units						2,500
Net rentable square feet							75,000
Acquisition of promissory note						$ 3,500,000
Payment to acquire joint venture interests, real estate property, and promissory note						51,200,000
Sale of membership interest, percent sold				47.65%
Proceeds from sale of membership interest				456,000
Number of acquisitions of joint venture interest, net of interest sold						10
Fair value of the net assets acquired:
Ownership %																		48.30%
Land		44,292,000								3,146,000	3,089,000	1,627,000	1,486,000	2,363,000	715,000	10,798,000	2,825,000			9,470,000	8,773,000
Building and Improvements		149,155,000								21,838,000	18,980,000	7,193,000	9,321,000	16,126,000	3,241,000	24,176,000	3,840,000			33,209,000	11,231,000
Intangible Assets		5,861,000								646,000	854,000	153,000	306,000	659,000	264,000	1,139,000	335,000			705,000	800,000
Fair Value of Property		199,308,000								25,630,000	22,923,000	8,973,000	11,113,000	19,148,000	4,220,000	36,113,000	7,000,000			43,384,000	20,804,000
Other Net Assets (Liabilities)		(137,739,000)								(17,419,000)	(16,201,000)	(4,510,000)	(6,711,000)	(14,543,000)	(4,729,000)	(29,596,000)	506,000			(29,063,000)	(15,473,000)
Total Company Equity		44,332,000								5,748,000	5,579,000	4,351,000	4,292,000	4,490,000	(249,000)	2,772,000	5,142,000			7,409,000	4,798,000
Non-controlling interest		(17,237,000)								(2,463,000)	(1,143,000)	(112,000)	(110,000)	(115,000)	260,000	(3,745,000)	(2,364,000)	6,912,000		(6,912,000)	(533,000)
Fair Valued Assigned		50,744,000								6,114,000	5,907,000	4,351,000	4,292,000	4,490,000	(189,000)	6,758,000	6,194,000	7,583,000		8,029,000	4,798,000
Total purchase price	51,200,000
Payments to acquire interest in joint venture																		7,500,000
Ownership percentage in joint venture										70.00%	83.00%	97.50%	97.50%	97.50%	49.00%	42.50%	68.50%	100.00%	51.70%	51.70%	90.00%
Prepaid insurance																		7,000
Goodwill	7,031,000	6,412,000	0							366,000	328,000	0	0	0	60,000	3,986,000	1,052,000	619,000		620,000	0
Transaction expenses																		$ 45,000
Number of properties	35				2

XML

RENTAL PROPERTIES, NET (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Investments in rental properties [Abstract]
Land	$ 125,072,000		$ 62,859,000
Building and improvements	529,467,000		325,412,000
Furniture, fixtures and equipment	16,218,000		17,051,000
Construction in progress	1,679,000		827,000
Rental properties, gross	672,436,000		406,149,000
Less: accumulated depreciation	(22,130,000)		(15,776,000)
Rental properties, net	650,306,000		390,373,000
Depreciation expense	$ 5,900,000	$ 1,800,000

XML

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS (Relationship with Resource Securities) (Narrative) (Details) (Resource Securities, Inc. [Member])	3 Months Ended
	Mar. 31, 2014
Resource Securities, Inc. [Member]
Related Party Transaction [Line Items]
Selling commission to be paid, maximum (in hundredths)	7.00%
Dealer manager fee to be paid, maximum (in hundredths)	3.00%
Percentage dealer manager fees reallows to participating brokers (in hundredths)	1.00%

XML

ACQUISITIONS, GOODWILL AND FORECLOSURES (Coursey Place) (Details) (USD $) In Thousands, unless otherwise specified				0 Months Ended
	Mar. 31, 2014	Jan. 28, 2014	Dec. 31, 2013	Mar. 31, 2014 Evergreen at Coursey Place [Member]	Jan. 28, 2014 Evergreen at Coursey Place [Member]
Business Acquisition [Line Items]
Purchase price excluding closing costs				$ 7,500
Noncontrolling interest assumed		(17,237)		6,912	(6,912)
Prepaid insurance				7
Goodwill	7,031	6,412	0	619	620
Transaction expenses				45
Fair Valued Assigned		$ 50,744		$ 7,583	$ 8,029

XML

DERIVATIVES AND HEDGING ACTIVITIES (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014 derivative	Dec. 31, 2013
Derivatives, Fair Value [Line Items]
Number of Instruments	2
Notional Amount	$ 27,948
Liability Derivatives, Fair Value	0	0
Interest Rate Cap [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives, Fair Value	$ 232	$ 290

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Rental Property Useful Lives) (Details)	3 Months Ended
	Mar. 31, 2014
Building [Member]
Real Estate Properties [Line Items]
Estimated useful lives	27 years 6 months
Building Improvements [Member] | Minimum [Member]
Real Estate Properties [Line Items]
Estimated useful lives	3 years
Building Improvements [Member] | Maximum [Member]
Real Estate Properties [Line Items]
Estimated useful lives	27 years 6 months
Tenant improvements [Member]
Real Estate Properties [Line Items]
Estimated useful life description	Shorter of lease term or expected useful life

XML

MEASUREMENT PERIOD ADJUSTMENTS (Tables)

3 Months Ended

Mar. 31, 2014

Accounting Changes and Error Corrections [Abstract]

Schedule of Measurement Period Adjustments

Deerfield

	January 22, 2013 (As initially reported)		Measurement period adjustment			January 22, 2013 (As adjusted)
Land	$	1,028	$	632		$	1,660
Building	8,592		2,518			11,110
Personal property	—		500			500
Intangible assets	680		(257		)	423
Identifiable net assets	10,300		3,393			13,693
Gain on foreclosure	—		(3,393		)	—
Total net identifiable net assets	$	10,300	$	—		$	13,693

XML

OPERATING EXPENSE LIMITATION WAIVER (Details)	Mar. 31, 2014 Quarter
OPERATING EXPENSE LIMITATION WAIVER [Abstract]
Average invested assets (in hundredths)	2.00%
Net income of operating expense (in hundredths)	25.00%
Number of most recently completed fiscal quarters for which Company must limit its operating expenses	4

XML

EQUITY (Preferred and Common Stock) (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Securities Financing Transaction [Line Items]
Preferred stock, authorized (in shares)	10,000,000	10,000,000
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Shares Issued	67,554,712	66,725,241
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Private Offering [Member]
Securities Financing Transaction [Line Items]
Common stock, par value (in dollars per share)	$ 0.01
Private Offering [Member] | Common Stock [Member]
Securities Financing Transaction [Line Items]
Shares Issued	67,554,712
Private Offering [Member]
Securities Financing Transaction [Line Items]
Shares Issued	1,263,727
Ongoing Public Offering [Member]
Securities Financing Transaction [Line Items]
Shares Issued	62,485,461

XML

MEASUREMENT PERIOD ADJUSTMENTS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			0 Months Ended			0 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Jan. 28, 2014	Jan. 22, 2013 Deerfield	Mar. 21, 2012 Deerfield	Jan. 22, 2013 Deerfield Scenario, Previously Reported [Member]	Jan. 22, 2013 Deerfield Scenario, Adjustment [Member]
Business Acquisition [Line Items]
Purchase price	$ 58,493	$ 0		$ 10,300
Gain on foreclosure							3,393
Land			44,292	1,660	1,660	1,028	632
Building				11,110		8,592	2,518
Personal property				500		0	500
Intangible assets			5,861	423	423	680	(257)
Gain on foreclosure							(3,393)
Identifiable net assets			$ 199,308	$ 13,693		$ 10,300	$ 3,393

XML

EQUITY (Distribution Reinvestment Plan and Distributions) (Details) (USD $)	3 Months Ended	0 Months Ended			3 Months Ended				0 Months Ended
	Mar. 31, 2014 distributions	Jan. 02, 2014 Record Date December 2013 [Member]	Feb. 03, 2014 Record Date January 2014 [Member]	Mar. 03, 2014 Record Date February 2014 [Member]	Mar. 31, 2014 Dividend Distribution One [Member] Distribution	Mar. 31, 2014 Dividend Distribution Two [Member] Distribution	Mar. 31, 2014 Dividend Distribution Three [Member] Distribution	Mar. 31, 2014 Dividend Distribution Four [Member] Distribution	Apr. 02, 2014 Subsequent Event [Member] Record Date March 2014 [Member]
Securities Financing Transaction [Line Items]
Per Common Share		$ 0.03333	$ 0.03333	$ 0.03333					$ 0.3333
Distribution invested in shares of Common Stock	$ 4,712,000	$ 1,566,000	$ 1,575,000	$ 1,571,000
Aggregate Cash Distribution	1,989,000	656,000	663,000	670,000					2,200,000
Total Aggregate Distribution	6,701,000	2,222,000	2,238,000	2,241,000
Number of stock distributions	12				7	2	1	2
Common stock distributions (in shares)					0.015	0.0075	0.00585	0.005
Increase in accumulated deficit from stock distributions	$ 21,000,000

XML

SUBSEQUENT EVENTS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		0 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	May 05, 2014 Subsequent Event [Member] Multifamily Community - Plano, Texas [Member] Unit	Apr. 06, 2014 Subsequent Event [Member] Peterson Note [Member]
Subsequent Event [Line Items]
Sale of interest in Peterson				$ 195
Number of units			142
Purchase price	$ 58,493	$ 0	$ 15,000

XML

FAIR VALUE MEASURES AND DISCLOSURES (Carrying and Fair Values of the Company's Loans Held for Investment, Net, Mortgage Note Payable and Revolving Credit Facility) (Details) (USD $) In Thousands, unless otherwise specified					0 Months Ended
	Mar. 31, 2014 Carrying Amount [Member]	Dec. 31, 2013 Carrying Amount [Member]	Mar. 31, 2014 Fair Value [Member]	Dec. 31, 2013 Fair Value [Member]	Mar. 03, 2014 Peterson Note [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans held for investment, net	$ 1,746	$ 1,724	$ 1,746	$ 1,724
Mortgage notes payable	(249,342)	(111,811)	(248,393)	(110,413)
Revolving credit facilities	(37,041)	(37,041)	(37,041)	(37,041)
Offer for sale of loans held for investment					$ 24

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS (Schedule of Related Party Transactions) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Related Party Transaction [Line Items]
Receivables from related parties	$ 54		$ 530
Payables to related parties	1,826		1,718
Resource America, Inc. and Affiliates [Member]
Related Party Transaction [Line Items]
Receivables from related parties	54		530
Advisor [Member] | Acquisition Fees [Member]
Related Party Transaction [Line Items]
Payables to related parties	952		0
Fees earned / expenses paid to related parties	2,723	555
Advisor [Member] | Asset Management Fees [Member]
Related Party Transaction [Line Items]
Fees earned / expenses paid to related parties	1,250	406
Advisor [Member] | Organization and Offering Cost [Member]
Related Party Transaction [Line Items]
Fees earned / expenses paid to related parties	0	103
Advisor [Member] | Overhead Allocation [Member]
Related Party Transaction [Line Items]
Fees earned / expenses paid to related parties	351	101
Advisor [Member] | Expense Reimbursements [Member]
Related Party Transaction [Line Items]
Payables to related parties	228		775
Resource Real Estate Opportunity Manager LLC [Member] | Expense Reimbursements [Member]
Related Party Transaction [Line Items]
Payables to related parties	362		500
Resource Real Estate Opportunity Manager LLC [Member] | Property Management Fees [Member]
Related Party Transaction [Line Items]
Payables to related parties	269		266
Fees earned / expenses paid to related parties	696	413
Resource Real Estate Opportunity Manager LLC [Member] | Construction Management Fees [Member]
Related Party Transaction [Line Items]
Fees earned / expenses paid to related parties	229	0
Resource Real Estate Opportunity Manager LLC [Member] | Debt Servicing Fees [Member]
Related Party Transaction [Line Items]
Fees earned / expenses paid to related parties	0	1
Resource Securities, Inc. [Member] | Selling Commission and Dealer Management Fees [Member]
Related Party Transaction [Line Items]
Payables to related parties	0		174
Fees earned / expenses paid to related parties	0	5,100
Other Related Party [Member]
Related Party Transaction [Line Items]
Payables to related parties	15		3
Ledgewood P.C. [Member]
Related Party Transaction [Line Items]
Fees earned / expenses paid to related parties	30	31
Graphic Images LLC [Member]
Related Party Transaction [Line Items]
Fees earned / expenses paid to related parties	$ 33	$ 133

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GAIN ON FORECLOSURE

3 Months Ended

Mar. 31, 2014

GAIN ON FORECLOSURE [Abstract]

GAIN ON FORECLOSURE

GAIN ON FORECLOSURE

On January 22, 2013, the Company completed the foreclosure of Deerfield. The Company's fair value of the property exceeded the carrying value of the Deerfield Note by $3.4 million. After making adjustments to security deposits totaling $81,000, the Company recorded a net gain on foreclosure of $3.5 million during the three months ended March 31, 2013.

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LOANS HELD FOR INVESTMENT, NET (Loans Held for Investments) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Loans Held for Investment [Line Items]
Total loans held for investment, net	$ 1,746	$ 1,724
Percentage of loan to total loans (in hundredths)	100.00%	100.00%
Current [Member]
Loans Held for Investment [Line Items]
Total loans held for investment, net	1,551	1,529
Percentage of loan to total loans (in hundredths)	89.00%	89.00%
30-89 Days [Member]
Loans Held for Investment [Line Items]
Total loans held for investment, net	0	195
Percentage of loan to total loans (in hundredths)	0.00%	11.00%
90 - 180 Days [Member]
Loans Held for Investment [Line Items]
Total loans held for investment, net	195	0
Percentage of loan to total loans (in hundredths)	11.00%	0.00%
Greater Than 180 Days [Member]
Loans Held for Investment [Line Items]
Total loans held for investment, net	$ 0	$ 0
Percentage of loan to total loans (in hundredths)	0.00%	0.00%

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DERIVATIVES AND HEDGING ACTIVITIES (Tables)

3 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Outstanding Interest Rate Derivatives

As of March 31, 2014, the Company had the following outstanding interest rate derivatives,which mature on November 1, 2018, that were designated as cash flow hedges of interest rate risk (dollars in thousands):

Interest Rate Derivative	Number of Instruments	Notional Amount
Interest Rate Caps	2	$	27,948

Fair Value and Balance Sheet Location of Derivatives

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet as of March 31, 2014 and December 31, 2013 (in thousands):

Asset Derivatives						Liability Derivatives
March 31, 2014			December 31, 2013			March 31, 2014			December 31, 2013
Balance Sheet	Fair Value		Balance Sheet	Fair Value		Balance Sheet	Fair Value		Balance Sheet	Fair Value
Interest rate cap	$	232	Interest rate cap	$	290	—	$	—	—	$	—

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EQUITY (Redemption of Securities) (Details) (USD $)	3 Months Ended	1 Months Ended
	Mar. 31, 2014	Mar. 31, 2013 Common Stock [Member]		Feb. 28, 2013 Common Stock [Member]		Jan. 31, 2013 Common Stock [Member]
Class of Stock [Line Items]
Total Number of Shares Redeemed		46,237	[1],[2]	0	[1]	0	[1],[2]
Average Price Paid per Share		$ 8.66	[2]	$ 0.00		$ 0.00	[2]
Cumulative Number of Shares Purchased as Part of a Publicly Announced Plan or Program		46,237	[2]	0	[2]	0	[2]
Percentage of weighted-average number of outstanding shares during the 12-month period immediately prior to the effective date of the redemption that company will not redeem in excess of (in excess of 5%)	5.00%
Cash available for redemption, percentage of previous fiscal year operating cash flow	1.00%
Number of days' notice required to suspend, terminate or amend share redemption program	30 days

[1] All redemptions of equity securities by the Company in the three months ended March 31, 2014 were made pursuant to the Company's share redemption program.

[2] The Company currently limits the dollar value and number of shares that may be redeemed under the program as described below.

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DEFERRED FINANCING COSTS (Tables)

3 Months Ended

Mar. 31, 2014

DEFERRED FINANCING COSTS [Abstract]

Estimated Amortization of Deferred Financing Costs

Estimated amortization of the existing deferred financing costs for the next five years ending March 31, and thereafter, are as follows (in thousands):

2015	$	943
2016	930
2017	924
2018	560
2019	276
Thereafter	973
	$	4,606

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LOANS HELD FOR INVESTMENT, NET (Terms of Loans Held for Investment) (Details) (USD $) In Thousands, unless otherwise specified		3 Months Ended
	Apr. 18, 2013	Mar. 31, 2014 Peterson Note [Member]	Mar. 31, 2014 Trail Ridge Note [Member]	Mar. 31, 2014 Heatherwood Note [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Face value	$ 800	$ 242	$ 1,058	$ 800
Interest rate		7.39%	7.50%	4.00%
Average monthly payment		$ 3	$ 8	$ 11

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS (Relationship with RAI) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014
Related Party Transactions [Abstract]
Insurance pool, amount of losses covered	$ 3.0
Catastrophic insurance, amount of losses covered	$ 85.0

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IDENTIFIED INTANGIBLE ASSETS, NET (Rental and Antennae Leases) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Goodwill and Intangible Assets Disclosure [Abstract]
2014	$ 6,761
2015	19
2016	17
2017	16
2018	16
Thereafter	122
Total	$ 6,951	$ 5,182

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SUPPLEMENTAL CASH FLOW INFORMATION (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Non-cash activities:
Property and intangibles received on foreclosure of loans held for investment	$ 0		$ 10,150
Financing provided for disposed property	0	0	800
Stock issued from distribution reinvestment plan	4,712		9,984
Stock distributions issued	3,333		8,221
Cash distributions on common stock declared but not yet paid	2,248		2,222
Deferred financing costs and escrow deposits funded directly by mortgage note and revolving credit facility	0		2,880
Debt assumed	138,327		0
Cash paid during the period for:
Interest	$ 1,778		$ 537

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SUPPLEMENTAL CASH FLOW INFORMATION

3 Months Ended

Mar. 31, 2014

Supplemental Cash Flow Elements [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

SUPPLEMENTAL CASH FLOW INFORMATION

The following table presents supplemental cash flow information (in thousands):

	March 31, 2014		December 31, 2013
Non-cash activities:
Property and intangibles received on foreclosure of loans held for investment	$	—	$	10,150
Financing provided for disposed property	—		800
Stock issued from distribution reinvestment plan	4,712		9,984
Stock distributions issued	3,333		8,221
Cash distributions on common stock declared but not yet paid	2,248		2,222
Deferred financing costs and escrow deposits funded directly by mortgage note and revolving credit facility	—		2,880
Debt assumed	138,327		—
Cash paid during the period for:
Interest	$	1,778	$	537

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MORTGAGE NOTE PAYABLE (Summary of Mortgage Notes Payable) (Details) (USD $) In Thousands, unless otherwise specified			3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2014 Vista Apartment Homes [Member]	Mar. 31, 2013 Vista Apartment Homes [Member]	Mar. 31, 2014 Cannery Lofts [Member]	Mar. 31, 2014 Deerfield [Member]	Mar. 31, 2014 Village Square [Member]	Mar. 31, 2014 Ivy at Clear Creek [Member]	Mar. 31, 2014 Centennial [Member]	Mar. 31, 2014 Pinnacle [Member]	Mar. 31, 2014 Terrace at River Oaks [Member]	Mar. 31, 2014 Champion Farms [Member]	Mar. 31, 2014 Fieldstone [Member]	Mar. 31, 2014 Pinehurst [Member]	Mar. 31, 2014 Pheasant Run [Member]	Mar. 31, 2014 Retreat at Shawnee [Member]	Mar. 31, 2014 Hilltop Village [Member]	Mar. 31, 2014 Conifer Crossing [Member]	Mar. 31, 2014 Coursey Place [Member]	Mar. 31, 2014 Pines of York [Member]	Mar. 31, 2014 London Interbank Offered Rate (LIBOR) [Member]
Participating Mortgage Loans [Line Items]
Mortgage notes payable	$ 249,342	$ 111,811	$ 8,794		$ 8,190	$ 10,530	$ 19,362	$ 8,586	$ 23,161	$ 18,702	$ 14,259	$ 17,403	$ 15,979	$ 4,428	$ 6,759	$ 14,333	$ 4,505	$ 29,380	$ 29,313	$ 15,658
Mortgage loan, maturity date			May 01, 2017		Sep. 01, 2020	Nov. 01, 2020	Nov. 01, 2023	Nov. 01, 2023	Jan. 01, 2019	Jan. 01, 2019	Jan. 01, 2022	Jul. 01, 2016	Jul. 01, 2014	Jan. 01, 2016	Oct. 01, 2017	Feb. 01, 2018	Dec. 01, 2017	Sep. 01, 2015	Aug. 01, 2021	Dec. 01, 2021
Mortgage note, annual interest rate (in hundredths)			2.76%		3.45%	4.66%	5.02%	5.02%	3.60%	3.60%	4.32%	6.14%	6.05%	5.58%	5.95%	5.58%	5.81%	5.96%	5.07%	4.46%	0.15175%
Mortgage loan, average monthly debt service			38		24	41	81	36	101	82	69	85	137	39	31	99	33	203	154	80
Interest Expense			$ 61	$ 64	$ 71	$ 123	$ 124	$ 55	$ 209	$ 169	$ 154	$ 173	$ 167	$ 41	$ 64	$ 129	$ 42	$ 286	$ 247	$ 121
Mortgage loan, description of variable rate basis																					one-month LIBOR

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NATURE OF BUSINESS AND OPERATIONS (Narrative) (Details) (USD $)	3 Months Ended				1 Months Ended	9 Months Ended		9 Months Ended		3 Months Ended	42 Months Ended	3 Months Ended		12 Months Ended	42 Months Ended	9 Months Ended		9 Months Ended				3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013	Jun. 16, 2010 Common Stock [Member]	Jun. 30, 2010 Common Stock [Member] Advisor [Member]	Jun. 09, 2010 Common Stock [Member] Private Offering [Member]	Sep. 15, 2009 Common Stock [Member] Private Offering [Member]	Jun. 17, 2009 Common Stock [Member] Private Offering [Member] Advisor [Member]	Mar. 31, 2014 Common Stock [Member] Private Offering [Member] Advisor [Member]	Mar. 31, 2014 Common Stock [Member] Ongoing Public Offering [Member]	Dec. 31, 2013 Common Stock [Member] Ongoing Public Offering [Member]	Mar. 31, 2014 Common Stock [Member] Ongoing Public Offering [Member] Advisor [Member]	Mar. 31, 2013 Common Stock [Member] Ongoing Public Offering [Member] Advisor [Member]	Dec. 31, 2011 Common Stock [Member] Ongoing Public Offering [Member] Advisor [Member]	Dec. 31, 2013 Common Stock [Member] Ongoing Public Offering [Member] Advisor [Member]	Jun. 09, 2010 Convertible Stock [Member] Private Offering [Member]	Sep. 15, 2009 Convertible Stock [Member] Private Offering [Member]	Jun. 09, 2010 Convertible Stock [Member] Private Offering [Member] Advisor [Member]	Jun. 16, 2010 Maximum [Member]	Sep. 15, 2009 Maximum [Member] Common Stock [Member] Private Offering [Member]	Jun. 16, 2010 Maximum [Member] Common Stock [Member] Ongoing Public Offering [Member]	Mar. 31, 2014 Maximum [Member] Common Stock [Member] Ongoing Public Offering [Member] Advisor [Member]
Securities Financing Transaction [Line Items]
Entity organized date	Jun. 03, 2009
Maximum shares under offering (in shares)	1,000,000,000		1,000,000,000																	5,000,000	75,000,000.0
Sale price of share (in dollars per share)				$ 9.50			$ 10										$ 1
Proceeds from issuance of stock under private offering						$ 12,800,000		$ 200,000		$ 645,800,000		$ 756,504	$ 1,300,000	$ 315,000
Net proceeds from issuance from private placement						11,300,000
Payment of syndication costs	(3,000)	6,408,000				1,500,000
Issuance of common stock (in shares)						1,283,727		20,000			64,926,311	84,056	141,500	35,000	276,056	5,000		4,063
Stock acquired by outside investors (in shares)	0		0													937
Common shares converted by advisor (in shares)					4,500
Convertible shares issued (in shares)					45,000
Shares authorized, distribution reinvestment plan (in shares)																			7,500,000.0
Percentage the advisor has agreed to invest												1.00%
Amount invested by non affiliated investors												250,000,000
Amount agreed by advisor to be invested maximum																						2,500,000.0
Shares purchased by Advisor (in shares)									276,056
Shares purchased by Advisor	675,000		668,000						2,500,000
Common stock issued through distribution reinvestment plan (in shares)	496,135
Common stock issued through distribution reinvestment plan	$ 4,712,000

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SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

3 Months Ended

Mar. 31, 2014

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

The following table presents supplemental cash flow information (in thousands):

	March 31, 2014		December 31, 2013
Non-cash activities:
Property and intangibles received on foreclosure of loans held for investment	$	—	$	10,150
Financing provided for disposed property	—		800
Stock issued from distribution reinvestment plan	4,712		9,984
Stock distributions issued	3,333		8,221
Cash distributions on common stock declared but not yet paid	2,248		2,222
Deferred financing costs and escrow deposits funded directly by mortgage note and revolving credit facility	—		2,880
Debt assumed	138,327		—
Cash paid during the period for:
Interest	$	1,778	$	537

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Wholly Owned Subsidiaries Information

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as follows:

Subsidiary	Apartment Complex	Number of Units	Property Location
RRE Opportunity Holdings, LLC	N/A	N/A	N/A
Resource Real Estate Opportunity OP, LP	N/A	N/A	N/A
RRE Charlemagne Holdings, LLC	N/A	N/A	N/A
RRE 107th Avenue Holdings, LLC (“107th Avenue”)	107th Avenue	5	Omaha, NE
RRE Westhollow Holdings, LLC (“Westhollow”)	Arcadia	404	Houston, TX
RRE Crestwood Holdings, LLC (“Crestwood”)	Town Park (a)	N/A	Birmingham, AL
RRE Iroquois, LP (“Vista”)	Vista Apartment Homes	133	Philadelphia, PA
RRE Iroquois Holdings, LLC	N/A	N/A	N/A
RRE Campus Club Holdings, LLC (“Campus Club”)	Campus Club	64	Tampa, FL
RRE Bristol Holdings, LLC (“Bristol”)	The Redford	856	Houston, TX
RRE Cannery Holdings, LLC (“Cannery”)	Cannery Lofts	156	Dayton, OH
RRE Williamsburg Holdings, LLC (“Williamsburg”)	Williamsburg	976	Cincinnati, OH
WPL Holdings, LLC	Williamsburg Parking Lot	N/A	Cincinnati, OH
RRE Skyview Holdings, LLC ("Skyview")	Cityside Crossing	360	Houston, TX
RRE Park Forest Holdings, LLC ("Park Forest")	Mosaic	216	Oklahoma City, OK
RRE Foxwood Holdings, LLC ("Foxwood")	The Reserve at Mt. Moriah	220	Memphis, TN
RRE Flagstone Holdings, LLC ("Flagstone")	The Alcove	292	Houston, TX
RRE Deerfield Holdings, LLC ("Deerfield")	Deerfield	166	Hermantown, MN
RRE Kenwick Canterbury Holdings, LLC ("Kenwick & Canterbury")	One Hundred Chevy Chase Apartments	244	Lexington, KY
RRE Armand Place Holdings, LLC ("Armand")	Ivy at Clear Creek	244	Houston, TX
RRE Autumn Wood Holdings, LLC ("Autumn Wood")	Retreat at Rocky Ridge	196	Hoover, AL
RRE Village Square Holdings, LLC ("Village Square")	Trailpoint at the Woodlands	271	Houston, TX
RRE Nob Hill Holdings, LLC ("Nob Hill")	Nob Hill	192	Winter Park, FL
RRE Brentdale Holdings, LLC ("Brentdale")	Brentdale	412	Plano, TX
RRE Jefferson Point Holdings, LLC ("Jefferson Point")	Jefferson Point	208	Newport News, VA
RRE Centennial Holdings, LLC ("Centennial")	Centennial	276	Littleton, CO
RRE Pinnacle Holdings, LLC ("Pinnacle")	Pinnacle	224	Westminster, CO
RRE Jasmine Holdings, LLC ("Jasmine")	Jasmine at Holcomb Bridge	437	Alpharetta, GA
RRE River Oaks Holdings, LLC ("River Oaks")	Terrace at River Oaks	314	San Antonio, TX
RRE Nicollet Ridge Holdings, LLC ("Nicollet Ridge")	Nicollet Ridge	339	Burnsville, MN
RRE Addison Place, LLC ("Addison Place")	Addison Place	403	Alpharetta, GA

N/A - Not Applicable

(a) - Discontinued operations

Estimated Useful Lives of Assets

The Company anticipates the estimated useful lives of its assets by class as follows:

Buildings	27.5 years
Building improvements	3.0 to 27.5 years
Tenant improvements	Shorter of lease term or expected useful life

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ACQUISITIONS, GOODWILL AND FORECLOSURES (Goodwill) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Jan. 28, 2014	Dec. 31, 2013
Business Acquisition [Line Items]
Goodwill	$ 7,031	$ 6,412	$ 0
Evergreen at Coursey Place [Member]
Business Acquisition [Line Items]
Goodwill	$ 619	$ 620

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2014 distributions	Mar. 31, 2013 Property	Dec. 31, 2013
Asset Impairment Charges [Abstract]
Loss on property impairment	$ 0	$ 539,000
Number of impaired properties		1
Allocation of Purchase Price of Acquired Assets [Abstract]
Initial purchase price allocation subject to change, period	1 year
Revenue Recognition [Abstract]
Future minimum rental payments to be received from noncancelable operating leases - fiscal 2014	40,300,000
Future minimum rental payments to be received from noncancelable operating leases - fiscal 2015	2,000,000
Tenant Receivable [Abstract]
Allowance for uncollectable receivables	19,000		86,000
Income Taxes [Abstract]
Minimum percentage distribution (in hundredths)	90.00%
Number of years entity may be precluded from REIT qualifications (in years)	4 years
Earnings Per Share [Abstract]
Antidilutive securities not included in the diluted earnings per share calculations	50,000	50,000,000
Number of stock distributions	12
Dividend Distribution One [Member]
Earnings Per Share [Abstract]
Number of stock distributions	7
Dividend Distribution Two [Member]
Earnings Per Share [Abstract]
Number of stock distributions	2
Dividend Distribution Three [Member]
Earnings Per Share [Abstract]
Number of stock distributions	1
Dividend Distribution Four [Member]
Earnings Per Share [Abstract]
Number of stock distributions	2
Common Stock [Member] | Dividend Distribution One [Member]
Earnings Per Share [Abstract]
Number of stock distributions	7
Common stock dividend rate	1.50%
Common Stock [Member] | Dividend Distribution Two [Member]
Earnings Per Share [Abstract]
Number of stock distributions	2
Common stock dividend rate	0.75%
Common Stock [Member] | Dividend Distribution Three [Member]
Earnings Per Share [Abstract]
Number of stock distributions	1
Common stock dividend rate	0.585%
Common Stock [Member] | Dividend Distribution Four [Member]
Earnings Per Share [Abstract]
Number of stock distributions	2
Common stock dividend rate	0.50%
Advisor [Member]
Deferred Offering Costs [Abstract]
Advanced deferred offering cost	4,600,000
Reimbursement of offering cost	$ 4,600,000		$ 4,200,000

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RENTAL PROPERTIES, NET (Tables)

3 Months Ended

Mar. 31, 2014

Real Estate Investments, Net [Abstract]

Investments in Rental Properties

The Company’s investments in rental properties consisted of the following (in thousands):

	March 31, 2014			December 31, 2013
Land	$	125,072		$	62,859
Building and improvements	529,467			325,412
Furniture, fixtures and equipment	16,218			17,051
Construction in progress	1,679			827
	672,436			406,149
Less: accumulated depreciation	(22,130		)	(15,776		)
	$	650,306		$	390,373

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LOANS HELD FOR INVESTMENT, NET (Tables)

3 Months Ended

Mar. 31, 2014

LOANS HELD FOR INVESTMENT, NET [Abstract]

Aging of Loans Held for Investment

The following table provides the aging of the Company’s loans held for investment (dollars in thousands):

	March 31, 2014			December 31, 2013
	Amount		Percent	Amount		Percent
Current	$	1,551	89%	$	1,529	89%
Delinquent:
30−89 days	—		—%	195		11%
90−180 days	195		11%	—		—%
Greater than 180 days	—		—%	—		—%
	$	1,746	100%	$	1,724	100%

Credit Quality of Loans Held for Investment

The following table provides information about the credit quality of the Company’s loans held for investment, net, (in thousands):

	March 31, 2014		December 31, 2013
Loans:
Performing	$	1,551	$	1,529
Nonperforming	195		195
Total	$	1,746	$	1,724

Terms of Loans Held for Investment

The following table provides information about the terms of the Company's loans held for investment (dollars in thousands):

	Peterson Note			Trail Ridge Note			Heatherwood Note
Face value	$	242		$	1,058		$	800
Maturity date	12/31/2013			10/28/2021			5/17/2016
Interest rate	7.4		%	7.5		%	4.0		%
Average monthly payment	$	3		$	8		$	11

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows:

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as follows:

Subsidiary	Apartment Complex	Number of Units	Property Location
RRE Opportunity Holdings, LLC	N/A	N/A	N/A
Resource Real Estate Opportunity OP, LP	N/A	N/A	N/A
RRE Charlemagne Holdings, LLC	N/A	N/A	N/A
RRE 107th Avenue Holdings, LLC (“107th Avenue”)	107th Avenue	5	Omaha, NE
RRE Westhollow Holdings, LLC (“Westhollow”)	Arcadia	404	Houston, TX
RRE Crestwood Holdings, LLC (“Crestwood”)	Town Park (a)	N/A	Birmingham, AL
RRE Iroquois, LP (“Vista”)	Vista Apartment Homes	133	Philadelphia, PA
RRE Iroquois Holdings, LLC	N/A	N/A	N/A
RRE Campus Club Holdings, LLC (“Campus Club”)	Campus Club	64	Tampa, FL
RRE Bristol Holdings, LLC (“Bristol”)	The Redford	856	Houston, TX
RRE Cannery Holdings, LLC (“Cannery”)	Cannery Lofts	156	Dayton, OH
RRE Williamsburg Holdings, LLC (“Williamsburg”)	Williamsburg	976	Cincinnati, OH
WPL Holdings, LLC	Williamsburg Parking Lot	N/A	Cincinnati, OH
RRE Skyview Holdings, LLC ("Skyview")	Cityside Crossing	360	Houston, TX
RRE Park Forest Holdings, LLC ("Park Forest")	Mosaic	216	Oklahoma City, OK
RRE Foxwood Holdings, LLC ("Foxwood")	The Reserve at Mt. Moriah	220	Memphis, TN
RRE Flagstone Holdings, LLC ("Flagstone")	The Alcove	292	Houston, TX
RRE Deerfield Holdings, LLC ("Deerfield")	Deerfield	166	Hermantown, MN
RRE Kenwick Canterbury Holdings, LLC ("Kenwick & Canterbury")	One Hundred Chevy Chase Apartments	244	Lexington, KY
RRE Armand Place Holdings, LLC ("Armand")	Ivy at Clear Creek	244	Houston, TX
RRE Autumn Wood Holdings, LLC ("Autumn Wood")	Retreat at Rocky Ridge	196	Hoover, AL
RRE Village Square Holdings, LLC ("Village Square")	Trailpoint at the Woodlands	271	Houston, TX
RRE Nob Hill Holdings, LLC ("Nob Hill")	Nob Hill	192	Winter Park, FL
RRE Brentdale Holdings, LLC ("Brentdale")	Brentdale	412	Plano, TX
RRE Jefferson Point Holdings, LLC ("Jefferson Point")	Jefferson Point	208	Newport News, VA
RRE Centennial Holdings, LLC ("Centennial")	Centennial	276	Littleton, CO
RRE Pinnacle Holdings, LLC ("Pinnacle")	Pinnacle	224	Westminster, CO
RRE Jasmine Holdings, LLC ("Jasmine")	Jasmine at Holcomb Bridge	437	Alpharetta, GA
RRE River Oaks Holdings, LLC ("River Oaks")	Terrace at River Oaks	314	San Antonio, TX
RRE Nicollet Ridge Holdings, LLC ("Nicollet Ridge")	Nicollet Ridge	339	Burnsville, MN
RRE Addison Place, LLC ("Addison Place")	Addison Place	403	Alpharetta, GA

N/A - Not Applicable

(a) - Discontinued operations

All intercompany accounts and transactions have been eliminated in consolidation.

The consolidated financial statements reflect the Company's accounts and the accounts of the Company's majority-owned and/or controlled subsidiaries. The Company follows the provisions of Accounting Standards Codification (“ASC”) Topic 810, “Consolidation,” and accordingly consolidates entities that are variable interest entities (“VIEs”) where it has determined that it is the primary beneficiary of such entities. Once it has been determined that the Company holds a variable interest in a VIE, management performs a qualitative analysis to determine (i) if the Company has the power to direct the matters that most significantly impact the VIE's financial performance; and (ii) if the Company has the obligation to absorb the losses of the VIE that could potentially be significant to the VIE or the right to receive the benefits of the VIE that could potentially be significant to the VIE. If the Company's interest possesses both of these characteristics, the Company is deemed to be the primary beneficiary and would be required to consolidate the VIE. The Company will continually assess its involvement with VIEs and re-evaluate the requirement to consolidate them. The portions of these entities that the Company does not own are presented as noncontrolling interests as of the dates and for the periods presented in the consolidated financial statements. The consolidated financial statements also include the accounts of the Company and its majority-owned and/or controlled subsidiaries as follows:

Subsidiary	Ownership %	Apartment Complex	Number of Units	Property Location
PRIP 3700, LLC ("Champion Farms")	70.0%	Champion Farms	264	Louisville, KY
PRIP 10637, LLC ("Fieldstone")	83.0%	Fieldstone	266	Woodlawn, OH
PRIP 500, LLC ("Pinehurst")	97.5%	Pinehurst	146	Kansas City, MO
PRIP 1102, LLC ("Pheasant Run")	97.5%	Pheasant Run	160	Lee's Summit, MO
PRIP 11128, LLC ("Retreat at Shawnee")	97.5%	Retreat at Shawnee	342	Shawnee, KS
PRIP 6700, LLC ("Hilltop Village")	49.0%	Hilltop Village	124	Kansas City, MO
PRIP 3383, LLC ("Conifer Place")	42.5%	Conifer Place	420	Norcross, GA
PRIP Stone Ridge, LLC ("Stone Ridge")	68.5%	Stone Ridge	191	Columbia, SC
PRIP Coursey, LLC ("Evergreen at Coursey Place")	51.7%	Evergreen at Coursey Place	352	Baton Rouge, LA
PRIP Pines, LLC ("Pines of York")	90.0%	Pines of York	248	Yorktown, VA

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Rental Properties

The Company records acquired rental properties at fair value. The Company considers the period of future benefit of an asset to determine its appropriate useful life and depreciates using the straight line method.  The Company anticipates the estimated useful lives of its assets by class as follows:

Buildings	27.5 years
Building improvements	3.0 to 27.5 years
Tenant improvements	Shorter of lease term or expected useful life

Impairment of Long Lived Assets

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for permanent impairment.  This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition.  The review also considers factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors.

An impairment loss will be recorded to the extent that the carrying value exceeds the estimated fair value of a property to be held and used.  For properties held for sale, the impairment loss would be the adjustment to fair value less the estimated cost to dispose of the asset.  For the three months ended March 31, 2013, the Company recorded a $539,000 impairment charge for one of its loans held for investment (Heatherwood Note). The Heatherwood Note impairment charge of $539,000 is reflected in income from discontinued operations, as the Company sold the Heatherwood Apartments in April 2013.

Loans Held for Investment, Net

The Company records acquired performing loans held for investment at cost and reviews them for potential impairment at each balance sheet date.  The Company considers a loan to be impaired if one of two conditions exists.  The first condition is if, based on current information and events, management believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.  The second condition is if the loan is deemed to be a troubled-debt restructuring (“TDR”) where a concession has been given to a borrower in financial difficulty.  A TDR may not have an associated specific loan loss allowance if the principal and interest amount is considered recoverable based on current market conditions, expected collateral performance and/or guarantees made by the borrowers.

The amount of impairment, if any, is measured by comparing the recorded amount of the loan to the present value of the expected cash flows or, as a practical expedient, the fair value of the collateral.  If a loan is deemed to be impaired, the Company records a reserve for loan losses through a charge to income for any shortfall.    

Interest income from performing loans held for investment is recognized based on the contractual terms of the loan agreement.  Fees related to any buy down of the interest rate are deferred as prepaid interest income and amortized over the term of the loan as an adjustment to interest income.  The initial investment made in a purchased performing loan includes the amount paid to the seller plus fees.  The initial investment frequently differs from the related loan’s principal amount at the date of the purchase.  The difference is recognized as an adjustment of the yield over the life of the loan.  Closing costs related to the purchase of a performing loan held for investment are amortized over the term of the loan and accreted as an adjustment to interest income.

The Company may acquire real estate loans at a discount due to the credit quality of such loans and the respective borrowers under such loans.  Revenues from these loans are recorded under the effective interest method.  Under this method, an effective interest rate (“EIR”) is applied to the cost basis of the real estate loan held for investment.  The EIR that is calculated when the loan held for investment is acquired remains constant and is the basis for subsequent impairment testing and income recognition.  However, if the amount and timing of future cash collections are not reasonably estimable, the Company accounts for the real estate receivable on the cost recovery method.  Under the cost recovery method of accounting, no income is recognized until the basis of the loan held for investment has been fully recovered.

Allocation of the Purchase Price of Acquired and Foreclosed Assets

The cost of rental properties acquired directly as fee interests and through foreclosing on a loan are allocated to net tangible and intangible assets based on their relative fair values.  The Company allocates the purchase price of properties to acquired tangible assets, consisting of land, buildings, fixtures and improvements, and to identified intangible lease assets and liabilities, consisting of the value of above-market and below-market leases, as applicable, the value of in-place leases and the value of tenant relationships. Fair value estimates are based on information obtained from a number of sources, including information obtained about each property as a result of pre-acquisition due diligence, marketing and leasing activities.  In addition, the Company may obtain independent appraisal reports. The information in the appraisal reports along with the aforementioned information available to the Company's management is used in allocating the purchase price. The independent appraisers have no involvement in management's allocation decisions other than providing market information.

In allocating the purchase price, management also includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up period.  Management also estimates costs to execute similar leases, including leasing commissions and legal and other related expenses, to the extent that such costs have not already been incurred in connection with a new lease origination as part of the transaction.

The Company records above-market and below-market in-place lease values for acquired properties based on the present value (using an interest rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease.  The Company amortizes any capitalized above-market or below-market lease values as an increase or reduction to rental income over the remaining non-cancelable terms of the respective leases.    

The Company measures the aggregate value of other intangible assets acquired based on the difference between (i) the property valued with existing in-place leases adjusted to market rental rates and (ii) the property valued as if it were vacant.  Management’s estimates of value are made using methods similar to those used by independent appraisers (e.g., discounted cash flow analysis).  Factors to be considered by management in its analysis include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions and costs to execute similar leases.

The total amount of other intangible assets acquired is further allocated to customer relationship intangible values based on management’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with that respective tenant.  Characteristics to be considered by management in allocating these values include the nature and extent of the Company’s existing relationships with the tenant, the tenant’s credit quality and expectations of lease renewals (including those existing under the terms of the lease agreement), among other factors.

The Company amortizes the value of in-place leases to expense over the average remaining term of the respective leases.  The value of customer relationship intangibles are amortized to expense over the initial term and any renewal periods in the respective leases, but in no event will the amortization periods for the intangible assets exceed the remaining depreciable life of the building.  Should a tenant terminate its lease, the unamortized portion of the in-place lease value and customer relationship intangibles associated with that tenant would be charged to expense in that period.

The determination of the fair value of assets and liabilities acquired requires the use of significant assumptions with regard to current market rental rates, discount rates and other variables.  The use of inappropriate estimates would result in an incorrect assessment of the purchase price allocations, which could impact the amount of the Company’s reported net income.  Initial purchase price allocations are subject to change until all information is finalized, which is generally within one year of the acquisition date.

Goodwill

The Company records the excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed as goodwill. Goodwill is not amortized but is tested for impairment at a level of reporting referred to as a reporting unit on an annual basis, during the fourth quarter of each calendar year, or more frequently, if events or changes in circumstances indicate that the asset might be impaired.

Noncontrolling Interests

Noncontrolling interests are presented and disclosed as a separate component of stockholders' equity (not as a liability or other item outside of stockholders' equity). Consolidated net income (loss) includes the noncontrolling interests’ share of income (loss). All changes in the Company’s ownership interest in a subsidiary are accounted for as stockholders' equity transactions if the Company retains its controlling financial interest in the subsidiary.

Revenue Recognition

The Company recognizes minimum rent, including rental abatements and contractual fixed increases attributable to operating leases, on a straight-line basis over the term of the related lease and includes amounts expected to be received in later years in deferred rents.  The Company records property operating expense reimbursements due from tenants for common area maintenance, real estate taxes and other recoverable costs in the period in which the related expenses are incurred.

The specific timing of a sale is measured against various criteria related to the terms of the transaction and any continuing involvement associated with the property.  If the criteria for gain recognition under the full-accrual method are not met, the Company defers gain recognition and accounts for the continued operations of the property by applying the percentage-of-completion, reduced profit, deposit, installment or cost recovery methods, as appropriate, until the appropriate criteria are met.

The future minimum rental payments to be received from noncancelable operating leases are $40.3 million and $2 million for the 12 months periods ending March 31, 2015 and 2016, respectively, and none thereafter.

Tenant Receivables

Tenant receivables are stated in the financial statements at amounts due from tenants net of an allowance for uncollectible receivables.  Payment terms vary and receivables outstanding longer than the payment terms are considered past due.  The Company determines its allowance by considering a number of factors, including the length of time receivables are past due, security deposits held, the Company’s previous loss history, the tenants’ current ability to pay their obligations to the Company, the condition of the general economy and the industry as a whole.  The Company writes off receivables when they become uncollectible.  At March 31, 2014 and December 31, 2013 , there were allowances for uncollectible receivables of $19,000 and $86,000, respectively.

Deferred Offering Costs

Through March 31, 2014, the Advisor has advanced $4.6 million on behalf of the Company for the payment of public offering costs consisting of accounting, advertising, allocated payroll, due diligence, marketing, legal and similar costs.  A portion of these costs was charged to equity upon the sale of each share of common stock sold under the public offering.  Similarly, a portion of the proceeds received from the sales of shares in the Company's public offering was paid to the Advisor to reimburse it for the amount incurred on behalf of the Company.  Deferred offering costs represent the portion of the total costs incurred that have not been charged to equity to date. As of March 31, 2014 and December 31, 2013, $4.6 million and $4.2 million, respectively, have been reimbursed to the Advisor.  

Income Taxes

To maintain its REIT qualification for U.S. federal income tax purposes, the Company is generally required to distribute at least 90% of its taxable net income (excluding net capital gains) to its stockholders as well as comply with other requirements, including certain asset, income and stock ownership tests.  Accordingly, the Company generally will not be subject to corporate U.S. federal income taxes to the extent that it annually distributes at least 90% of its taxable net income to its stockholders.  If the Company fails to qualify as a REIT, and does not qualify for certain statutory relief provisions, it is subject to U.S. federal, state and local income taxes and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year in which it fails its REIT qualification.  Accordingly, the Company’s failure to qualify as a REIT could have a material adverse impact on its results of operations and amounts available for distribution to its stockholders.

The dividends-paid deduction of a REIT for qualifying dividends to its stockholders is computed using the Company’s taxable income as opposed to net income reported on the financial statements.  Generally, taxable income differs from net income reported on the financial statements because the determination of taxable income is based on tax provisions and not financial accounting principles.

The Company may elect to treat certain of its subsidiaries as a taxable REIT subsidiary (“TRS”). In general, the Company’s TRSs may hold assets and engage in activities that the Company cannot hold or engage in directly and generally may engage in any real estate or non-real estate-related business.  A TRS is subject to U.S. federal, state and local corporate income taxes.  As of March 31, 2014 and December 31, 2013, the Company had no TRSs.

The Company evaluates the benefits from tax positions taken or expected to be taken in its tax return. Only the largest amount of benefits from tax positions that will more likely than not be sustainable upon examination are recognized by the Company.  The Company does not have any unrecognized tax benefits, nor interest and penalties, recorded in its consolidated financial statements and does not anticipate significant adjustments to the total amount of unrecognized tax benefits within the next 12 months.

The Company is subject to examination by the U.S. Internal Revenue Service and by the taxing authorities in other states in which the Company has significant business operations.  The Company is not currently undergoing any examinations by taxing authorities.

Earnings Per Share

Basic earnings per share are calculated on the basis of the weighted-average number of common shares outstanding during the year.  Basic earnings per share are computed by dividing income available to common stockholders by the weighted-average common shares outstanding during the period.  Diluted earnings per share take into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted to common stock.  Due to reported losses for the periods presented, $50,000 of the convertible shares (discussed in Note 15) are not included in the diluted earnings per share calculations.  For the purposes of calculating earnings per share, all common shares and per common share information in the financial statements have been adjusted retroactively for the effect of seven1.5% stock distributions, two0.75% stock distributions, one0.585% stock distribution and two0.5% stock distributions issued to stockholders. Common stock shares issued on the Consolidated Balance Sheets have also been adjusted retroactively for the effect of these 12 distributions.

Reclassifications

Certain amounts in the prior year financial statements have been reclassified to conform to the current-year presentation. The impact of the reclassifications made to prior year amounts are not material and did not affect net income (loss).

Adoption of New Accounting Standard

The Company early adopted the following accounting standard during 2014 which had a material impact on its consolidated financial position, results of operations and cash flows:

Accounting Standards Issued But Not Yet Effective

In April 2014, the Financial Accounting Standards Board, or FASB, issued authoritative guidance to change the criteria for reporting discontinued operations. Under the new guidance, only disposals representing a strategic shift in a company's operations and financial results should be reported as discontinued operations, with expanded disclosures. In addition, disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify as a discontinued operation is required. The Company has early adopted this guidance and such guidance became effective for the Company during the three months ended March 31, 2014.

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ACQUISITIONS, GOODWILL AND FORECLOSURES (Tables)

3 Months Ended

Mar. 31, 2014

Business Combinations [Abstract]

Schedule of purchase price allocation

The estimated allocation of the purchase price for the interests in the other 10 joint ventures, which is expected to be completed by June 30, 2014, is included below:

Multifamily Community Name	City and State	Ownership %		Land		Building and Improvements		Intangible Assets		Fair Value of Property		Other Net Assets (Liabilities)			Non-controlling interest			Total Company Equity			Goodwill		Allocation of Purchase Price
Champion Farms	Louisville, KY	70.0	%	$	3,146	$	21,838	$	646	$	25,630	$	(17,419	)	$	(2,463	)	$	5,748		$	366	6,114
Fieldstone	Woodlawn, OH	83.0	%	3,089		18,980		854		22,923		(16,201		)	(1,143		)	5,579			328		5,907
Pinehurst	Kansas City, MO	97.5	%	1,627		7,193		153		8,973		(4,510		)	(112		)	4,351			—		4,351
Pheasant Run	Lee's Summit, MO	97.5	%	1,486		9,321		306		11,113		(6,711		)	(110		)	4,292			—		4,292
Retreat at Shawnee	Shawnee, KS	97.5	%	2,363		16,126		659		19,148		(14,543		)	(115		)	4,490			—		4,490
Hilltop Village	Kansas City, MO	49.0	%	715		3,241		264		4,220		(4,729		)	260			(249		)	60		(189		)
Conifer Place	Norcross, GA	42.5	%	10,798		24,176		1,139		36,113		(29,596		)	(3,745		)	2,772			3,986		6,758
Stone Ridge	Columbia, SC	68.5	%	2,825		3,840		335		7,000		506			(2,364		)	5,142			1,052		6,194
Evergreen at Coursey Place	Baton Rouge, LA	51.7	%	9,470		33,209		705		43,384		(29,063		)	(6,912		)	7,409			620		8,029
Pines of York	Yorktown, VA	90.0	%	8,773		11,231		800		20,804		(15,473		)	(533		)	4,798			—		4,798
				$	44,292	$	149,155	$	5,861	$	199,308	$	(137,739	)	$	(17,237	)	$	44,332		$	6,412	$	50,744
Governor Park (sold March 6, 2014)		47.7	%																				456
Total purchase price																							$	51,200

The table below summarizes the Company's wholly-owned acquisitions and the respective fair values assigned (dollars in thousands):

Multifamily Community Name	City and State	Date of Acquisition	Purchase Price (2)			Land		Building and Improvements		Furniture, Fixture and Equipment		Intangible Assets		Other Assets		Other Liabilities			Fair Valued Assigned
Addison Place	Alpharetta, GA	3/28/2014	$	70,500	(3)	$	18,137	$	51,843	$	—	$	521	$	55	$	(392	)	$	70,164
Nicollet Ridge	Burnsville, MN	12/20/2013	33,149			4,134		26,992		1,016		1,008		36		(107		)	33,079
Terrace at River Oaks	San Antonio, TX	12/16/2013	22,500			3,830		17,510		491		669		48		(63		)	22,485
Jasmine at Holcomb Bridge	Alpharetta, GA	10/25/2013	25,050			7,582		16,023		587		859		37		(161		)	24,927
Centennial	Littleton, CO	9/30/2013	30,600			5,702		23,609		198		1,090		24		(190		)	30,433
Pinnacle	Westminster, CO	9/30/2013	24,250			2,923		20,301		97		928		20		(147		)	24,122
Jefferson Point	Newport News, VA	9/9/2013	18,250			3,951		13,048		584		667		23		(59		)	18,214
Brentdale	Plano, TX	7/25/2013	32,200			5,785		24,418		798		1,199		52		(317		)	31,935
Nob Hill	Winter Park, FL	6/27/2013	10,100			2,512		6,459		523		606		50		(61		)	10,089
Trailpoint at the Woodlands	Spring, TX	6/24/2013	27,200			3,785		22,014		697		704		40		(170		)	27,070
Retreat at Rocky Ridge	Hoover, AL	4/18/2013	8,500			1,616		6,418		30		436		2		(89		)	8,413
Ivy at Clear Creek	Houston, TX	3/28/2013	11,750			1,877		9,175		28		670		8		(127		)	11,631
One Hundred Chevy Chase Apartments	Lexington, KY	3/13/2013	6,850			1,323		4,981		41		505		7		(101		)	6,756
Deerfield	Hermantown MN	3/21/2012	10,300		(4) (1)	1,660		11,110		500		423		1		(4		)	13,690
The Alcove	Houston, TX	12/21/2012	5,500			1,202		3,865		20		413		54		(13		)	5,541
Cityside Crossing	Houston, TX	12/19/2012	14,425			1,949		11,676		37		763		49		(68		)	14,406
The Reserve at Mount Moriah	Memphis, TN	12/7/2012	2,275			775		1,124		39		337		16		(90		)	2,201
Mosaic	Oklahoma City, OK	12/6/2012	2,050			1,000		2,609		30		123		14		(14		)	3,762
Williamsburg Apartments	Cincinnati, OH	6/20/2012	41,250			3,223		35,111		1,007		1,909		49		(274		)	41,025
Cannery Lofts	Dayton, OH	5/13/2011	7,100		(5) (1)	160		7,913		200		609		35		—			8,917
The Redford	Houston, TX	3/27/2012	11,400			4,073		5,235		262		1,558		272		—			11,400
Campus Club Apartments	Tampa, FL	10/21/2012	8,300		(6) (1)	1,650		6,250		200		435		—		—			8,535
Vista Apartment Homes	Philadelphia, PA	6/17/2011	12,000		(7) (1)	1,163		9,913		—		535		530		(141		)	12,000
Arcadia at Westheimer	Houston, TX	9/3/2010	7,800		(8) (1)	943		6,599		—		258		—		—			7,800
107th Avenue	Omaha, NE	8/18/2010	225			25		196		—		4		—		—			225

(1) The date of acquisition reflects the date the Company acquired the note secured by the property listed.

(2) Purchase price excludes closing costs and acquisition expenses. For properties acquired through foreclosure, the purchase price reflects the contract purchase price of the note.

(3) Asset valuations are based on preliminary valuations at the date of purchase. The Company is in the process of obtaining an appraisal to finalize the valuation. The Company has up to 12 months from the date of acquisition to finalize the valuation.

(4) Deerfield originally served as the collateral for a non-performing note that the Company purchased on March 21, 2012. On July 19, 2012, the Company was the successful bidder at a foreclosure sale and formally received title to the property on January 22, 2013.

(5) Cannery Lofts originally served as the collateral for a non-performing note that the Company purchased on May 13, 2011. On December 21, 2011, the Company entered into a settlement agreement with the borrower and, subsequently, the Company foreclosed and formally received title to the property on June 6, 2012.

(6) Campus Club Apartments originally served as collateral for a non-performing note that the Company purchased on October 21, 2011. On February 9, 2012, the Company was the successful bidder at a foreclosure sale and took title to the property on February 21, 2012.

(7) Vista Apartment Homes, formerly known as Iroquois Apartments, originally served as the collateral for a non-performing promissory note that the Company purchased on June 17, 2011. On August 2, 2011, the Company was the successful bidder at a sheriff's sale and formally received title to the property.

(8) Arcadia at Westheimer originally served as the collateral for a non-performing promissory note that the Company purchased on September 3, 2010. The Company commenced foreclosure proceedings and, on October 5, 2010, formally received title to the property.

A summary of the transaction is below:

Purchase price excluding closing costs	$	7,500
Noncontrolling interest assumed	6,912
Prepaid insurance	7
Goodwill	619
Transaction expenses	45
	$	7,583

Total goodwill for the Company is as follows:

Goodwill at date of acquisition	$	6,412
Buyout of Coursey Place joint venture interest	619
Total goodwill	$	7,031

Schedule of goodwill

Total goodwill for the Company is as follows:

Goodwill at date of acquisition	$	6,412
Buyout of Coursey Place joint venture interest	619
Total goodwill	$	7,031

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EQUITY (Tables)

3 Months Ended

Mar. 31, 2014

Equity [Abstract]

Schedule of Shares Issued

As of March 31, 2014, the Company had issued an aggregate of 67,554,712 shares, net of redemptions, of its $0.01 par value common stock as follows (dollars in thousands):

	Shares Issued	Gross Proceeds
Shares issued through private offering	1,263,727	$	12,500
Shares issued through primary public offering	62,485,461	622,000
Shares issued through stock distributions	2,132,266	—
Shares issued through distribution reinvestment plan	1,657,758	16,000
Shares issued in conjunction with the Advisor's initial investment, net of 4,500 share conversion	15,500	200
Total	67,554,712	$	650,700

Schedule of Redemption of Securities

During the three months ended March 31, 2014, the Company redeemed its shares as follows:

Period	Total Number of Shares Redeemed (1)	Average Price Paid per Share	Cumulative Number of Shares Purchased as Part of a Publicly Announced Plan or Program (2)	Approximate Dollar Value of Shares Available That May Yet Be Redeemed Under the Program
January 2014	—	—	—	(2)
February 2014	—	—	—	(2)
March 2014	46,237	$8.66	46,237	(2)

(1) All redemptions of equity securities by the Company in the three months ended March 31, 2014 were made pursuant to the Company's share redemption program.

(2) The Company currently limits the dollar value and number of shares that may be redeemed under the program as described below.

Schedule of Distributions

For the three months ended March 31, 2014, the Company paid aggregate distributions of $6.7 million, including $2.0 million of distributions paid in cash and $4.7 million of distributions reinvested in shares of common stock through the Company's distribution reinvestment plan, as follows (in thousands):

Record Date	Per Common Share		Distribution Date	Distribution invested in shares of Common Stock		Aggregate Cash Distribution		Total Aggregate Distribution
December 31, 2013	$	0.033	January 2, 2014	$	1,566	$	656	$	2,222
January 31, 2014	0.033		February 3, 2014	1,575		663		2,238
February 28, 2014	0.033		March 2, 2014	1,571		670		2,241
				$	4,712	$	1,989	$	6,701

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ACQUISITIONS, GOODWILL AND FORECLOSURES (Real Estate Investments) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		0 Months Ended															0 Months Ended
	Mar. 31, 2014 Property	Jan. 28, 2014	Mar. 28, 2014 Addison Place	Dec. 20, 2013 Nicollet Ridge	Dec. 16, 2013 Terrace at River Oaks	Oct. 25, 2013 Jasmine at Holcomb Bridge	Sep. 30, 2013 Centennial	Sep. 30, 2013 Pinnacle	Sep. 09, 2013 Jefferson Point	Jul. 25, 2013 Brentdale	Jun. 27, 2013 Nob Hill	Jun. 24, 2013 Trailpoint at the Woodlands	Apr. 18, 2013 Retreat at Rocky Ridge	Mar. 28, 2013 Ivy at Clear Creek	Mar. 13, 2013 One Hundred Chevy Chase Apartments	Mar. 21, 2012 Deerfield	Jan. 22, 2013 Deerfield	Dec. 21, 2012 The Alcove	Dec. 19, 2012 Cityside Crossing	Dec. 07, 2012 The Reserve at Mount Moriah	Dec. 06, 2012 Mosaic	Jun. 20, 2012 Williamsburg Apartments	May 13, 2011 Cannery Lofts	Mar. 27, 2012 The Redford	Oct. 21, 2012 Campus Club Apartments	Jun. 17, 2011 Vista Apartment Homes	Sep. 03, 2010 Arcadia at Westheimer	Aug. 18, 2010 107th Avenue	Jan. 28, 2014 Multifamily Community [Member] Resource Real Estate Opportunity OP, LP [Member] Paladin acquisition Property
Business Acquisition [Line Items]
Number of properties acquired	12																												10
Number of properties	35
Purchase Price			$ 70,500	$ 33,149	$ 22,500	$ 25,050	$ 30,600	$ 24,250	$ 18,250	$ 32,200	$ 10,100	$ 27,200	$ 8,500	$ 11,750	$ 6,850	$ 10,300		$ 5,500	$ 14,425	$ 2,275	$ 2,050	$ 41,250	$ 7,100	$ 11,400	$ 8,300	$ 12,000	$ 7,800	$ 225
Rental property:
Land		44,292	18,137	4,134	3,830	7,582	5,702	2,923	3,951	5,785	2,512	3,785	1,616	1,877	1,323	1,660	1,660	1,202	1,949	775	1,000	3,223	160	4,073	1,650	1,163	943	25
Building and Improvements		149,155	51,843	26,992	17,510	16,023	23,609	20,301	13,048	24,418	6,459	22,014	6,418	9,175	4,981	11,110		3,865	11,676	1,124	2,609	35,111	7,913	5,235	6,250	9,913	6,599	196
Furniture, Fixture and Equipment			0	1,016	491	587	198	97	584	798	523	697	30	28	41	500		20	37	39	30	1,007	200	262	200	0	0	0
Intangible Assets		5,861	521	1,008	669	859	1,090	928	667	1,199	606	704	436	670	505	423	423	413	763	337	123	1,909	609	1,558	435	535	258	4
Other Assets			55	36	48	37	24	20	23	52	50	40	2	8	7	1		54	49	16	14	49	35	272	0	530	0	0
Other Liabilities			(392)	(107)	(63)	(161)	(190)	(147)	(59)	(317)	(61)	(170)	(89)	(127)	(101)	(4)		(13)	(68)	(90)	(14)	(274)	0	0	0	(141)	0	0
Fair Valued Assigned		$ 50,744	$ 70,164	$ 33,079	$ 22,485	$ 24,927	$ 30,433	$ 24,122	$ 18,214	$ 31,935	$ 10,089	$ 27,070	$ 8,413	$ 11,631	$ 6,756	$ 13,690		$ 5,541	$ 14,406	$ 2,201	$ 3,762	$ 41,025	$ 8,917	$ 11,400	$ 8,535	$ 12,000	$ 7,800	$ 225
Valuation period	12 months

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EQUITY (Schedule of Shares Issued) (Details) (USD $) In Thousands, except Share data, unless otherwise specified							3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2014 Private Offering [Member]	Mar. 31, 2014 Public Placement [Member]	Mar. 31, 2014 Stock Dividends [Member]	Mar. 31, 2014 Distribution Reinvestment Plan [Member]	Mar. 31, 2014 Advisor [Member]
Class of Stock [Line Items]
Shares Issued	67,554,712	66,725,241	1,263,727	62,485,461	2,132,266	1,657,758	15,500
Shares converted							4,500
Gross Proceeds	$ 650,700		$ 12,500	$ 622,000	$ 0		$ 200
Gross Proceeds, distribution reinvestment plan						$ 16,000

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Investments:
Rental properties, net	$ 650,306	$ 390,373
Loans held for investment, net	1,746	1,724
Identified intangible assets, net	6,951	5,182
Assets of discontinued operations	0	88
Investments	659,003	397,367
Cash	137,984	270,323
Restricted cash	3,432	4,456
Due from related parties	54	530
Tenant receivables, net	475	573
Deposits	241	141
Accounts receivable - other	39	0
Prepaid expenses and other assets	1,433	1,567
Deferred financing costs, net	4,606	3,602
Goodwill	7,031	0
Total assets	814,298	678,559
Liabilities:
Mortgage notes payable	249,342	111,811
Revolving credit facilities	37,041	37,041
Accounts payable	1,909	1,417
Accrued expenses and other liabilities	4,949	2,745
Accrued real estate taxes	2,776	2,117
Due to related parties, net	1,826	1,718
Tenant prepayments	796	615
Security deposits	2,446	1,826
Distribution payable	2,248	2,222
Total liabilities	303,333	161,512
Stockholders’ equity:
Preferred stock (par value $.01; 10,000,000 shares authorized, none issued)	0	0
Common stock (par value $.01; 1,000,000,000 shares authorized; 67,554,712 and 66,725,241 shares issued, respectively; and 67,450,482 and 66,667,136 shares outstanding, respectively)	675	668
Convertible stock (“promote shares”; par value $.01; 50,000 shares authorized, issued and outstanding)	1	1
Additional paid-in capital	598,236	590,591
Accumulated other comprehensive (loss) income	(38)	20
Accumulated deficit	(99,038)	(74,233)
Total stockholders’ equity	499,836	517,047
Noncontrolling interest	11,129	0
Total equity	510,965	517,047
Total liabilities and stockholders’ equity	$ 814,298	$ 678,559

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Principles of Consolidation) (Details)	3 Months Ended
	Mar. 31, 2014 Unit
RRE 107th Avenue Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	107th Avenue
Number of Units	5
Property Location	Omaha, NE
RRE Westhollow Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Arcadia
Number of Units	404
Property Location	Houston, TX
RRE Crestwood Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Town Park (a)
Property Location	Birmingham, AL
RRE Iroquois, LP [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Vista Apartment Homes
Number of Units	133
Property Location	Philadelphia, PA
RRE Campus Club Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Campus Club
Number of Units	64
Property Location	Tampa, FL
RRE Bristol Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	The Redford
Number of Units	856
Property Location	Houston, TX
RRE Cannery Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Cannery Lofts
Number of Units	156
Property Location	Dayton, OH
RRE Williamsburg Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Williamsburg
Number of Units	976
Property Location	Cincinnati, OH
WPL Holdings LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Williamsburg Parking Lot
Property Location	Cincinnati, OH
RRE Skyview Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Cityside Crossing
Number of Units	360
Property Location	Houston, TX
RRE Park Forest Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Mosaic
Number of Units	216
Property Location	Oklahoma City, OK
RRE Foxwood Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	The Reserve at Mt. Moriah
Number of Units	220
Property Location	Memphis, TN
RRE Flagstone Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	The Alcove
Number of Units	292
Property Location	Houston, TX
RRE Deerfield Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Deerfield
Number of Units	166
Property Location	Hermantown, MN
RRE Kenwick Canterbury Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	One Hundred Chevy Chase Apartments
Number of Units	244
Property Location	Lexington, KY
RRE Armand Place Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Ivy at Clear Creek
Number of Units	244
Property Location	Houston, TX
RRE Autumn Wood Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Retreat at Rocky Ridge
Number of Units	196
Property Location	Hoover, AL
RRE Village Square Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Trailpoint at the Woodlands
Number of Units	271
Property Location	Houston, TX
RRE Nob Hill Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Nob Hill
Number of Units	192
Property Location	Winter Park, FL
RRE Brentdale Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Brentdale
Number of Units	412
Property Location	Plano, TX
RRE Jefferson Point Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Jefferson Point
Number of Units	208
Property Location	Newport News, VA
RRE Centennial Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Centennial
Number of Units	276
Property Location	Littleton, CO
RRE Pinnacle Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Pinnacle
Number of Units	224
Property Location	Westminster, CO
RRE Jasmine Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Jasmine at Holcomb Bridge
Number of Units	437
Property Location	Alpharetta, GA
RRE River Oaks Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Terrace at River Oaks
Number of Units	314
Property Location	San Antonio, TX
RRE Nicollet Ridge Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Nicollet Ridge
Number of Units	339
Property Location	Burnsville, MN
PRIP 3700, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Champion Farms
Number of Units	264
Property Location	Louisville, KY
PRIP 10637, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Fieldstone
Number of Units	266
Property Location	Woodlawn, OH
PRIP 500, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Pinehurst
Number of Units	146
Property Location	Kansas City, MO
PRIP 1102, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Pheasant Run
Number of Units	160
Property Location	Lee's Summit, MO
PRIP 11128, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Retreat at Shawnee
Number of Units	342
Property Location	Shawnee, KS
PRIP 6700, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Hilltop Village
Number of Units	124
Property Location	Kansas City, MO
PRIP 3383, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Conifer Place
Number of Units	420
Property Location	Norcross, GA
PRIP Stone Ridge, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Stone Ridge
Number of Units	191
Property Location	Columbia, SC
PRIP Coursey, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Evergreen at Coursey Place
Number of Units	352
Property Location	Baton Rouge, LA
PRIP Pines, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Pines of York
Number of Units	248
Property Location	Yorktown, VA
PRIP Addison Place, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Addison Place
Number of Units	403
Property Location	Alpharetta, GA

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities:
Net loss	$ (13,189)	$ (200)
Adjustments to reconcile net loss to net cash used in operating activities:
(Income) loss from discontinued operations	(2)	578
Gain on foreclosures	0	(3,460)
Loss on disposal of assets	1,627	37
Loss on property impairment	0	539
Depreciation and amortization	11,079	3,140
Amortization of deferred financing costs	188	59
Deferred offering costs	0	(500)
Accretion of discount and direct loan fees and costs	0	(9)
Changes in operating assets and liabilities, net of acquisitions:
Restricted cash	1,024	100
Tenant receivables, net	98	(38)
Deposits	(100)	38
Prepaid expenses and other assets	569	362
Due to related parties, net	108	862
Accounts payable and accrued expenses	3,328	1,818
Tenant prepayments	135	3
Security deposits	414	7
Net cash provided by operating activities of continuing operations	5,279	3,336
Cash flows from investing activities:
Property acquisitions	(70,164)	(18,386)
Ownership acquisitions	(58,493)	0
Capital expenditures	(4,712)	(6,393)
Principal payments received on loans	(22)	9
Net cash used in investing activities of continuing operations	(133,391)	(24,770)
Cash flows from financing activities:
Proceeds from issuance of common stock	0	54,541
Redemptions	(342)	0
Payment of deferred financing costs	1,192	0
Deferred offering costs	0	1,334
Principal payments on borrowings	(797)	(49)
Distributions paid on common stock	(1,989)	(1,062)
Syndication costs	3	(6,408)
Net cash (used in) provided by financing activities of continuing operations	(4,317)	48,356
Net cash (used in) provided by continuing operations	(132,429)	26,922
Cash flows from discontinued operations:
Net cash provided by (used in) operating activities	90	(1,433)
Cash Provided by (Used in) Investing Activities, Discontinued Operations	0	0
Financing provided for disposed property	0	0
Net cash provided by (used in) discontinued operations	90	(1,433)
Net (decrease) increase in cash	(132,339)	25,489
Cash at beginning of period	270,323	29,336
Cash at end of period	$ 137,984	$ 54,825

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DISPOSITION OF PROPERTIES (Results of Discontinued Operations) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Revenues:
Rental income	$ 3	$ 806
Total revenues	3	806
Expenses:
Rental operating	1	646
General and administrative	0	58
Loss on property impairment	0	539
Depreciation and amortization expense	0	141
Total expenses	1	1,384
Income (loss) from discontinued operations	$ 2	$ (578)
Weighted average common shares outstanding (in shares)	67,364	22,612
Discontinued operations (in dollars per share)	$ 0.00	$ (0.03)

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IDENTIFIED INTANGIBLE ASSETS, NET (Tables)

3 Months Ended

Mar. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Rental and Antennae Leases

Expected amortization for the rental and antennae leases for the next five years ending March 31, and thereafter, is as follows (in thousands): 

2015	$	6,761
2016	19
2017	17
2018	16
2019	16
Thereafter	122
	$	6,951

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DEFERRED FINANCING COSTS (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
DEFERRED FINANCING COSTS [Abstract]
Accumulated amortization, deferred finance costs	$ 550	$ 419
2015	943
2016	930
2017	924
2018	560
2019	276
Thereafter	973
Deferred financing costs, net	$ 4,606	$ 3,602

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FAIR VALUE MEASURES AND DISCLOSURES

3 Months Ended

Mar. 31, 2014

Fair Value Disclosures [Abstract]

FAIR VALUE MEASURES AND DISCLOSURES

FAIR VALUE MEASURES AND DISCLOSURES

In analyzing the fair value of its investments accounted for on a fair value basis, the Company follows the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  The Company determines fair value based on quoted prices when available or, if quoted prices are not available, through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. The fair value of cash, tenant receivables and accounts payable, approximate their carrying value due to their short nature.  The hierarchy followed defines three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. 

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.

Level 3 - Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

The determination of where an asset or liability falls in the hierarchy requires significant judgment.  The Company evaluates its hierarchy disclosures each quarter; depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter.  However, the Company expects that changes in classifications between levels will be rare.

Rental properties obtained through a foreclosed note are measured at fair value on a non-recurring basis.  The fair value of rental properties is usually estimated based on information obtained from a number of sources, including information obtained about each property as a result of pre-acquisition due diligence, marketing and leasing activities.  The Company allocates the purchase price of properties to acquired tangible assets, consisting of land, buildings, fixtures and improvements, and identified intangible lease assets and liabilities, consisting of the value of above-market and below-market leases, as applicable, the value of in-place leases and the value of tenant relationships, based in each case on their fair values.

The carrying and fair values of the Company’s loans held for investment, net, mortgage note payable and revolving credit facilities were as follows (in thousands):

	March 31, 2014						December 31, 2013
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Loans held for investment, net	$	1,746		$	1,746		$	1,724		$	1,724
Mortgage notes payable	$	(249,342	)	$	(248,393	)	$	(111,811	)	$	(110,413	)
Revolving credit facilities	$	(37,041	)	$	(37,041	)	$	(37,041	)	$	(37,041	)

The fair value of the loans held for investment, net, was estimated by comparing the recorded amount of the loan to the fair value of the collateral. On February 27, 2014, the Company foreclosed on the property securing the Peterson Note. On March 3, 2014, an offer to purchase the property was presented to the Company for $24,000 less than the carrying amount of the note. Accordingly, the Company has adjusted the carrying amount of the note at December 31, 2013 for such impairment.

The fair value of the mortgage notes payable was estimated using rates available to the Company for debt with similar terms and remaining maturities.

The fair values of the revolving credit facilities equal the carrying amounts because the interest rate of each of the credit facilities is variable.

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MORTGAGE NOTE PAYABLE (Tables)

3 Months Ended

Mar. 31, 2014

Debt Disclosure [Abstract]

Summary of Mortgage Notes Payable

The following is a summary of the mortgage notes payable (in thousands, except percentages):

	Balance Outstanding at March 31,		Maturity Date	Annual Interest Rate			Average Monthly Debt Service		Interest Expense
									Three Months Ended   March 31,
Collateral	2014								2014		2013
Vista Apartment Homes	$	8,794	5/1/2017	2.76	%	(1)	$	38	$	61	$	64
Cannery Lofts	8,190		9/1/2020	3.45	%	(1)	24		71		N/A
Deerfield	10,530		11/1/2020	4.66	%	(2)	41		123		N/A
Village Square	19,362		11/1/2023	5.02	%	(1)	81		124		N/A
Ivy at Clear Creek	8,586		11/1/2023	5.02	%	(1)	36		55		N/A
Centennial	23,161		1/1/2019	3.60	%	(2)	101		209		N/A
Pinnacle	18,702		1/1/2019	3.60	%	(2)	82		169		N/A
Terrace at River Oaks	14,259		1/1/2022	4.32	%	(2)	69		154		N/A
Champion Farms	17,403		7/1/2016	6.14	%	(2)	85		173		N/A
Fieldstone	15,979		7/1/2014	6.05	%	(2)	137		167		N/A
Pinehurst	4,428		1/1/2016	5.58	%	(2)	39		41		N/A
Pheasant Run	6,759		10/1/2017	5.95	%	(2)	31		64		N/A
Retreat of Shawnee	14,333		2/1/2018	5.58	%	(2)	99		129		N/A
Hilltop Village	4,505		12/1/2017	5.81	%	(2)	33		42		N/A
Conifer Crossing	29,380		9/1/2015	5.96	%	(2)	203		286		N/A
Coursey Place	29,313		8/1/2021	5.07	%	(2)	154		247		N/A
Pines of York	15,658		12/1/2021	4.46	%	(2)	80		121		N/A
	$	249,342

(1) Variable rate based on one-month LIBOR of 0.15175% (as of March 31, 2014).

(2) Fixed rate.

Annual Principal Payments on the Mortgage Note Payable

Annual principal payments on the mortgage notes payable for each of the next five years ending March 31, and thereafter, are as follows (in thousands):

2015	$	21,300
2016	5,871
2017	50,273
2018	26,886
2019	30,026
Thereafter	$	114,986
	$	249,342

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OPERATING EXPENSE LIMITATION

3 Months Ended

Mar. 31, 2014

OPERATING EXPENSE LIMITATION WAIVER [Abstract]

OPERATING EXPENSE LIMITATION

OPERATING EXPENSE LIMITATION

Under its charter, the Company must limit its total operating expenses to the lesser of 2% of its average invested assets or 25% of its net income for the four most recently completed fiscal quarters, unless the conflicts committee of the Company’s board of directors has determined that such excess expenses were justified based on unusual and non-recurring factors.  Operating expenses for the four quarters ended March 31, 2014 were in compliance with the charter imposed limitation.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS (Relationship with the Advisor) (Narrative) (Details) (Advisor [Member])	3 Months Ended
	Mar. 31, 2014
Advisor [Member]
Related Party Transaction [Line Items]
Agreement term (in years)	1 year
Percentage acquisition fee paid to advisor (in hundredths)	2.00%
Multiple for calculating monthly asset management fee, percentage (one-twelfth)	8.333%
Percentage annual asset management fee (in hundredths)	1.00%
Debt disposition fee, as a percentage of the contract sales price (in hundredths)	2.75%
Debt financing fee	0.50%
Maximum reimbursement limit on gross offering proceeds (in hundredths)	2.50%

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NATURE OF BUSINESS AND OPERATIONS

3 Months Ended

Mar. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NATURE OF BUSINESS AND OPERATIONS

NATURE OF BUSINESS AND OPERATIONS

Resource Real Estate Opportunity REIT, Inc. (the “Company”) was organized in Maryland on June 3, 2009 to purchase a diversified portfolio of discounted U.S. commercial real estate and real estate-related assets in order to generate gains to stockholders from the potential appreciation in the value of the assets and to generate current income for stockholders by distributing cash flow from the Company’s investments. Resource Real Estate Opportunity Advisor, LLC (the “Advisor”), an indirect wholly owned subsidiary of Resource America, Inc. (“RAI”), a publicly traded company (NASDAQ: REXI) operating in the real estate, financial fund management and commercial finance sectors, has been engaged to manage the day-to-day operations of the Company. 

On September 15, 2009, the Company commenced a private placement offering to accredited investors for the sale of up to 5.0 million shares of common stock at a price of $10 per share, with discounts available to certain categories of purchasers. The private offering which closed on June 9, 2010, raised aggregate gross proceeds of $12.8 million, or $11.3 million, net of $1.5 million in syndication costs, from the issuance of 1,283,727 common shares, including 20,000 shares purchased by the Advisor.  In conjunction with the private offering, the Company also offered 5,000 shares of convertible stock at a price of $1 per share.  Investors acquired 937 shares of the convertible stock and the Advisor purchased 4,063 shares.  The Advisor contributed $200,000 to the Company in exchange for 20,000 shares of common stock on June 17, 2009, of which 4,500 shares were exchanged for 45,000 shares of convertible stock in June 2010 (see Note 15).  

On June 16, 2010, the Company’s registration statement on Form S-11 (File No. 333-160463), registering a primary public offering of up to 75.0 million shares of common stock and a public offering pursuant to the Company’s distribution reinvestment plan of up to an additional 7.5 million shares of common stock, was declared effective under the Securities Act of 1933, as amended, and the Company commenced its public offering.  The Company is also offering shares pursuant to its distribution reinvestment plan at a purchase price equal to $9.50 per share.  The primary portion of the initial public offering closed on December 13, 2013. On December 26, 2013, the unsold primary offering shares were deregistered and, on December 30, 2013, the registration of the shares issuable pursuant to the distribution reinvestment plan was continued pursuant to a Registration Statement on Form S-3. The Advisor agreed to invest 1% of the first $250.0 million invested in the Company by non-affiliated investors, or up to $2.5 million. The Advisor purchased 35,000 shares of common stock in 2011 for $315,000; 141,500 shares in 2012 for $1.3 million; and 84,056 shares in 2013 for $756,504. As of March 31, 2014, the Advisor had purchased 276,056 shares of common stock for an aggregate purchase price of $2.5 million.

As of December 13, 2013, the Company had raised aggregate gross offering proceeds of $645.8 million through its private and public offerings, which resulted in the issuance of 64,926,311 shares of common stock, including the 276,056 shares purchased by the Advisor. The Company issued 496,135 shares for $4.7 million pursuant to the distribution reinvestment plan since December 31, 2013.

The Company has acquired, and intends to continue to acquire, real estate-related debt and equity that has been significantly discounted due to the effects of economic events and high levels of leverage, as well as stabilized properties that may benefit from extensive renovations that may increase their long-term values.  The Company has a particular focus on acquiring and operating multifamily assets, and it has targeted, and intends to continue to target, this asset class while also acquiring interests in other types of commercial property assets consistent with its investment objectives.  The Company’s targeted portfolio consists of commercial real estate assets, principally (i) non-performing or distressed loans, including but not limited to first and second priority mortgage loans, mezzanine loans,  subordinate participations in first mortgage loans, or B-Notes, and other loans, (ii) real estate that was foreclosed upon and sold by financial institutions, (iii) multifamily rental properties to which the Company can add value with a capital infusion (“value add properties”), and (iv) discounted investment-grade commercial mortgage-backed securities.  However, the Company is not limited in the types of real estate assets in which it may invest and, accordingly, it may invest in other real estate-related assets either directly or together with a co-investor or joint venture partner.

The Company is organized and conducts its operations in a manner intended to allow it to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes under Subchapter M of the Internal Revenue Code of 1986, as amended.  The Company also operates its business in a manner intended to maintain its exemption from registration under the Investment Company Act of 1940, as amended.

The consolidated financial statements and the information and tables contained in the notes thereto as of March 31, 2014 are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). However, in the opinion of management, these interim financial statements include all the necessary adjustments to fairly present the results of the interim periods presented. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. The results of operations for the three months ended March 31, 2014 may not necessarily be indicative of the results of operations for the full year ending December 31, 2013.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	10,000,000	10,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	1,000,000,000	1,000,000,000
Shares Issued	67,554,712	66,725,241
Common stock, outstanding (in shares)	67,450,482	66,667,136
Convertible stock ('promote shares'), par value (in dollars per share)	$ 0.01	$ 0.01
Convertible stock ('promote shares'), authorized (in shares)	50,000	50,000
Convertible stock ('promote shares'), issued (in shares)	50,000	50,000
Convertible stock ('promote shares'), outstanding (in shares)	50,000	50,000

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REVOLVING CREDIT FACILITY

3 Months Ended

Mar. 31, 2014

Line of Credit Facility [Abstract]

REVOLVING CREDIT FACILITY

REVOLVING CREDIT FACILITIES

On December 2, 2011, the Company, through its operating partnership, entered into a secured revolving credit facility (the “Bank of America Credit Facility”) with Bank of America, N.A. (“Bank of America”).  On May 23, 2013 the Company amended the Bank of America Credit Facility to increase the amount it may borrow under the Bank of America Credit Facility from $25 million to $50 million (the “Facility Amount”). Draws under the Bank of America Credit Facility are secured by certain of the Company's properties with an aggregate value of $102.0 million and are guaranteed by the Company.  The amount currently available to be borrowed is $45.5 million. The Company paid certain closing costs in connection with the Bank of America Credit Facility, including loan fees totaling $413,305. As of both March 31, 2014 and December 31, 2013, the Company had outstanding borrowings of $1.5 million under the Bank of America Credit Facility.

      The Bank of America Credit Facility, as amended, matures on May 23, 2017, and may be extended to May 23, 2019 subject to satisfaction of certain conditions and payment of an extension fee equal to 0.25% of the amount committed under the Bank of America Credit Facility. Interest on outstanding borrowings is incurred at a rate of LIBOR plus 3.0% (3.15% at March 31, 2014).  The Company is required to make monthly interest-only payments.  The Company also may prepay the Bank of America Credit Facility in whole or in part at any time without premium or penalty. The Company recorded interest expense of $8,000 for the three months ended March 31, 2014 in connection with its borrowings under the Bank of America Credit Facility.

The operating partnership's obligations with respect to the Bank of America Credit Facility are guaranteed by the Company, pursuant to the terms of a guaranty dated as of December 2, 2011, or the Guaranty.  The Bank of America Credit Facility and the Guaranty contain restrictive covenants for maintaining a certain tangible net worth and a certain level of liquid assets, and for restricting the securing of additional debt as follows:

• the Company must maintain a minimum tangible net worth equal to at least (i) 200% of the outstanding principal amount of the Bank of America Credit facility and (ii) $20.0 million;

• the Company must also maintain unencumbered liquid assets with a market value of not less than the greater of (i) $5.0 million or (ii) 20% of the outstanding principal amount of the Bank of America Credit Facility; and

• the Company may not incur any additional secured or unsecured debt without Bank of America's prior written consent and approval, which consent and approval is not to be unreasonable withheld.

The Company was in compliance with all such covenants at March 31, 2014.  

On December 20, 2013, the Company, through a wholly-owned subsidiary, entered into a secured revolving credit facility, ("Jefferson Point Credit Facility") with PNC Bank, National Association for $15 million.  Draws under the Jefferson Point Credit Facility are secured by the assets of Jefferson Point Apartments. The Company provided a repayment guarantee of all interest and scheduled monthly principal payments (excluding the final payment at maturity for the outstanding balance.) The Jefferson Point Credit Facility matures on December 20, 2018. As of March 31, 2014 and December 31, 2013, the Company had outstanding borrowings of $12.5 million. Interest on outstanding borrowings is incurred at a rate of LIBOR plus 2.00% (2.15% at March 31, 2014). The Company paid certain closing costs in connection with the Jefferson Point Credit Facility, including loan fees totaling $75,000. The Company recorded interest expense of $68,000 for the three months ended March 31, 2014 in connection with its borrowings under the Jefferson Point Credit Facility.         

On December 27, 2013, the Company, through a wholly-owned subsidiary, entered into a secured revolving credit facility ("Brentdale Credit Facility") with U.S. Bank National Association for $29.7 million.  Draws under the Brentdale Credit Facility are secured by the assets of Brentdale Apartments. The Company provided a $6.5 million repayment guarantee. The Brentdale Credit Facility matures on December 27, 2017, and may be extended to December 27, 2019 subject to satisfaction of certain conditions and payment of an extension fee equal to 0.25% of the amount committed under the Brentdale Credit Facility. As of March 31, 2014 and December 31, 2013, the Company had outstanding borrowings of $23.0 million. Interest on outstanding borrowings is incurred at a rate of LIBOR plus 1.95% (2.10% at March 31, 2014). The Company paid certain closing costs in connection with the Brentdale Credit Facility, including loan fees totaling $222,000. The Company recorded interest expense of $7,000 for the three months ended March 31, 2014 in connection with its borrowings under the Brentdale Credit Facility.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2014	May 13, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	Resource Real Estate Opportunity REIT, Inc.
Entity Central Index Key	0001466225
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Document Type	10-Q
Document Period End Date	Mar. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		67,738,650

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DEFERRED FINANCING COSTS

3 Months Ended

Mar. 31, 2014

DEFERRED FINANCING COSTS [Abstract]

DEFERRED FINANCING COSTS

DEFERRED FINANCING COSTS

Deferred financing costs incurred to obtain financing are amortized over the term of the related debt.  Accumulated amortization as of March 31, 2014 and December 31, 2013 was approximately $550,000 and $419,000, respectively.  Estimated amortization of the existing deferred financing costs for the next five years ending March 31, and thereafter, are as follows (in thousands):

2015	$	943
2016	930
2017	924
2018	560
2019	276
Thereafter	973
	$	4,606

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GAIN ON FORECLOSURE (Details) (USD $)	3 Months Ended		0 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Jan. 22, 2013 Foreclosure [Member]
Gain On Foreclosure [Line Items]
Fair value of the property exceeding carrying value			$ 3,400,000
Adjustment to security deposits			81,000
Gain on foreclosure	$ 0	$ 3,460,000	$ 3,500,000

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Revenues:
Rental income	$ 20,669	$ 6,796
Gain on foreclosures	0	3,460
Interest income	515	54
Total revenues	21,184	10,310
Expenses:
Rental operating	12,027	4,608
Acquisition costs	2,500	686
Foreclosure costs	0	39
Management fees - related parties	2,109	777
General and administrative	2,294	912
Loss on disposal of assets	1,627	37
Depreciation and amortization expense	11,079	2,769
Total expenses	31,636	9,828
(Loss) income before other expenses	(10,452)	482
Other (expense) income:
Gain on forfeiture/redemption of stock	0	21
Interest expense	(2,739)	(125)
(Loss) income from continuing operations	(13,191)	378
Discontinued operations:
Income (loss) from discontinued operations	2	(578)
Net loss	(13,189)	(200)
Net income attributable to noncontrolling interest	(804)	0
Net loss attributable to stockholders	(13,993)	(200)
Other comprehensive loss:
Designated derivatives, fair value adjustment	(58)	0
Comprehensive loss	$ (13,247)	$ (200)
Weighted average common shares outstanding (in shares)	67,364	22,612
Basic and diluted (loss) income per common share:
Continuing operations (in dollars per share)	$ (0.20)	$ 0.02
Discontinued operations (in dollars per share)	$ 0.00	$ (0.03)
Net loss (in dollars per share)	$ (0.20)	$ (0.01)

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ACQUISITIONS, GOODWILL AND FORECLOSURES

3 Months Ended

Mar. 31, 2014

Business Combinations [Abstract]

ACQUISITIONS, GOODWILL AND FORECLOSURES

ACQUISITIONS, GOODWILL AND FORECLOSURES

Real Estate Investments

As of March 31, 2014, the Company owned interests in 35 properties, including 10 multifamily properties purchased on January 28, 2014 as part of the Paladin acquisition, discussed below. The Company estimated the fair values of certain of the acquired assets and liabilities based on preliminary valuations at the date of purchase. The Company is in the process of obtaining appraisals in order to finalize the estimated valuations for the more recent acquisitions.

The table below summarizes the Company's wholly-owned acquisitions and the respective fair values assigned (dollars in thousands):

Multifamily Community Name	City and State	Date of Acquisition	Purchase Price (2)			Land		Building and Improvements		Furniture, Fixture and Equipment		Intangible Assets		Other Assets		Other Liabilities			Fair Valued Assigned
Addison Place	Alpharetta, GA	3/28/2014	$	70,500	(3)	$	18,137	$	51,843	$	—	$	521	$	55	$	(392	)	$	70,164
Nicollet Ridge	Burnsville, MN	12/20/2013	33,149			4,134		26,992		1,016		1,008		36		(107		)	33,079
Terrace at River Oaks	San Antonio, TX	12/16/2013	22,500			3,830		17,510		491		669		48		(63		)	22,485
Jasmine at Holcomb Bridge	Alpharetta, GA	10/25/2013	25,050			7,582		16,023		587		859		37		(161		)	24,927
Centennial	Littleton, CO	9/30/2013	30,600			5,702		23,609		198		1,090		24		(190		)	30,433
Pinnacle	Westminster, CO	9/30/2013	24,250			2,923		20,301		97		928		20		(147		)	24,122
Jefferson Point	Newport News, VA	9/9/2013	18,250			3,951		13,048		584		667		23		(59		)	18,214
Brentdale	Plano, TX	7/25/2013	32,200			5,785		24,418		798		1,199		52		(317		)	31,935
Nob Hill	Winter Park, FL	6/27/2013	10,100			2,512		6,459		523		606		50		(61		)	10,089
Trailpoint at the Woodlands	Spring, TX	6/24/2013	27,200			3,785		22,014		697		704		40		(170		)	27,070
Retreat at Rocky Ridge	Hoover, AL	4/18/2013	8,500			1,616		6,418		30		436		2		(89		)	8,413
Ivy at Clear Creek	Houston, TX	3/28/2013	11,750			1,877		9,175		28		670		8		(127		)	11,631
One Hundred Chevy Chase Apartments	Lexington, KY	3/13/2013	6,850			1,323		4,981		41		505		7		(101		)	6,756
Deerfield	Hermantown MN	3/21/2012	10,300		(4) (1)	1,660		11,110		500		423		1		(4		)	13,690
The Alcove	Houston, TX	12/21/2012	5,500			1,202		3,865		20		413		54		(13		)	5,541
Cityside Crossing	Houston, TX	12/19/2012	14,425			1,949		11,676		37		763		49		(68		)	14,406
The Reserve at Mount Moriah	Memphis, TN	12/7/2012	2,275			775		1,124		39		337		16		(90		)	2,201
Mosaic	Oklahoma City, OK	12/6/2012	2,050			1,000		2,609		30		123		14		(14		)	3,762
Williamsburg Apartments	Cincinnati, OH	6/20/2012	41,250			3,223		35,111		1,007		1,909		49		(274		)	41,025
Cannery Lofts	Dayton, OH	5/13/2011	7,100		(5) (1)	160		7,913		200		609		35		—			8,917
The Redford	Houston, TX	3/27/2012	11,400			4,073		5,235		262		1,558		272		—			11,400
Campus Club Apartments	Tampa, FL	10/21/2012	8,300		(6) (1)	1,650		6,250		200		435		—		—			8,535
Vista Apartment Homes	Philadelphia, PA	6/17/2011	12,000		(7) (1)	1,163		9,913		—		535		530		(141		)	12,000
Arcadia at Westheimer	Houston, TX	9/3/2010	7,800		(8) (1)	943		6,599		—		258		—		—			7,800
107th Avenue	Omaha, NE	8/18/2010	225			25		196		—		4		—		—			225

(1) The date of acquisition reflects the date the Company acquired the note secured by the property listed.

(2) Purchase price excludes closing costs and acquisition expenses. For properties acquired through foreclosure, the purchase price reflects the contract purchase price of the note.

(3) Asset valuations are based on preliminary valuations at the date of purchase. The Company is in the process of obtaining an appraisal to finalize the valuation. The Company has up to 12 months from the date of acquisition to finalize the valuation.

(4) Deerfield originally served as the collateral for a non-performing note that the Company purchased on March 21, 2012. On July 19, 2012, the Company was the successful bidder at a foreclosure sale and formally received title to the property on January 22, 2013.

(5) Cannery Lofts originally served as the collateral for a non-performing note that the Company purchased on May 13, 2011. On December 21, 2011, the Company entered into a settlement agreement with the borrower and, subsequently, the Company foreclosed and formally received title to the property on June 6, 2012.

(6) Campus Club Apartments originally served as collateral for a non-performing note that the Company purchased on October 21, 2011. On February 9, 2012, the Company was the successful bidder at a foreclosure sale and took title to the property on February 21, 2012.

(7) Vista Apartment Homes, formerly known as Iroquois Apartments, originally served as the collateral for a non-performing promissory note that the Company purchased on June 17, 2011. On August 2, 2011, the Company was the successful bidder at a sheriff's sale and formally received title to the property.

(8) Arcadia at Westheimer originally served as the collateral for a non-performing promissory note that the Company purchased on September 3, 2010. The Company commenced foreclosure proceedings and, on October 5, 2010, formally received title to the property.

Acquisitions

The Company acquired interests in 12 properties during the three months ended March 31, 2014. As of March 31, 2014, asset valuations are based on preliminary valuations at the date of purchase. In order to finalize the fair values of the acquired assets and liabilities, the Company is in the process of obtaining third-party appraisals for all of the properties acquired. The Company has up to 12 months from the date of acquisition to finalize the valuation for each property. The preliminary valuation of Addison Place is included in the table above.

Paladin Acquisition

On July 18, 2013, Resource Real Estate Opportunity OP, LP (the “Operating Partnership”), the operating partnership of the Company, entered into an Agreement and Plan of Merger with RRE Charlemagne Holdings, LLC, a wholly owned subsidiary of the Operating Partnership (“Merger Sub”), Paladin Realty Income Properties, Inc. (“Paladin”), and Paladin Realty Income Properties, L.P. (“Paladin OP”), whose sole general partner is Paladin, pursuant to which Paladin OP was to merge with and into Merger Sub (the “Merger”), with Merger Sub surviving as a wholly owned subsidiary of the Operating Partnership.

    On January 28, 2014, the parties completed the Merger resulting in the acquisition by the Operating Partnership of interests in 11 joint ventures that owned a total of 10 multifamily communities with more than 2,500 rentable units and two office properties that contain more than 75,000 rentable square feet. The Operating Partnership also acquired, as part of the Merger, a promissory note in the principal amount of $3.5 million issued by a consolidated joint venture which is eliminated in consolidation. This promissory note is secured by the co-venturer’s interests in such joint venture. The consideration for the Merger was $51.2 million, exclusive of transaction costs.    

On March 6, 2014, the Company, through a wholly-owned subsidiary, sold its entire 47.65% membership interest in FPA/PRIP Governor Park, LLC ("Governor Park") to FPA Governor Park Associates, LLC for $456,000 pursuant to that certain assignment and assumption of membership interests agreement of even date. Governor Park owns two small office buildings in San Diego, California. The sale price approximated the fair value, therefore no gain or loss has been recognized.

The estimated allocation of the purchase price for the interests in the other 10 joint ventures, which is expected to be completed by June 30, 2014, is included below:

Multifamily Community Name	City and State	Ownership %		Land		Building and Improvements		Intangible Assets		Fair Value of Property		Other Net Assets (Liabilities)			Non-controlling interest			Total Company Equity			Goodwill		Allocation of Purchase Price
Champion Farms	Louisville, KY	70.0	%	$	3,146	$	21,838	$	646	$	25,630	$	(17,419	)	$	(2,463	)	$	5,748		$	366	6,114
Fieldstone	Woodlawn, OH	83.0	%	3,089		18,980		854		22,923		(16,201		)	(1,143		)	5,579			328		5,907
Pinehurst	Kansas City, MO	97.5	%	1,627		7,193		153		8,973		(4,510		)	(112		)	4,351			—		4,351
Pheasant Run	Lee's Summit, MO	97.5	%	1,486		9,321		306		11,113		(6,711		)	(110		)	4,292			—		4,292
Retreat at Shawnee	Shawnee, KS	97.5	%	2,363		16,126		659		19,148		(14,543		)	(115		)	4,490			—		4,490
Hilltop Village	Kansas City, MO	49.0	%	715		3,241		264		4,220		(4,729		)	260			(249		)	60		(189		)
Conifer Place	Norcross, GA	42.5	%	10,798		24,176		1,139		36,113		(29,596		)	(3,745		)	2,772			3,986		6,758
Stone Ridge	Columbia, SC	68.5	%	2,825		3,840		335		7,000		506			(2,364		)	5,142			1,052		6,194
Evergreen at Coursey Place	Baton Rouge, LA	51.7	%	9,470		33,209		705		43,384		(29,063		)	(6,912		)	7,409			620		8,029
Pines of York	Yorktown, VA	90.0	%	8,773		11,231		800		20,804		(15,473		)	(533		)	4,798			—		4,798
				$	44,292	$	149,155	$	5,861	$	199,308	$	(137,739	)	$	(17,237	)	$	44,332		$	6,412	$	50,744
Governor Park (sold March 6, 2014)		47.7	%																				456
Total purchase price																							$	51,200

On March 31, 2014, the Company purchased the remaining 48.3% ownership interest of its joint venture partner in ERES Coursey, LLC ("Coursey Place") for $7.5 million, bringing the Company's ownership percentage of Evergreen at Coursey Place to 100% from 51.7%. A summary of the transaction is below:

Purchase price excluding closing costs	$	7,500
Noncontrolling interest assumed	6,912
Prepaid insurance	7
Goodwill	619
Transaction expenses	45
	$	7,583

Total goodwill for the Company is as follows:

Goodwill at date of acquisition	$	6,412
Buyout of Coursey Place joint venture interest	619
Total goodwill	$	7,031

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LOANS HELD FOR INVESTMENT, NET

3 Months Ended

Mar. 31, 2014

LOANS HELD FOR INVESTMENT, NET [Abstract]

LOANS HELD FOR INVESTMENT, NET

LOANS HELD FOR INVESTMENT, NET

On March 15, 2011, the Company purchased, at a discount, two non-performing promissory notes and two performing promissory notes (the “Notes”), each of which was secured by a first priority mortgage on the respective multifamily rental apartment communities.  The contract purchase price for the Notes was a total of $3.1 million, excluding closing costs.  On August 2, 2011, the borrower of one of the non-performing promissory notes entered into a forbearance agreement with the Company and, on September 23, 2011, paid the Company a negotiated amount in satisfaction of the note in full.  On August 18, 2011, the Company was the successful bidder at a foreclosure sale of the property collateralizing the second non-performing note, the Heatherwood Note.  Possession of the Heatherwood Apartments was obtained in February 2012 and the property was subsequently sold in April 2013 (see Note 8).   The face value of the performing notes as of both March 31, 2014 and December 31, 2013 was $1.9 million. The performing notes were purchased net of discounts and the unamortized accretable discounts totaled $287,000 and $292,000 at March 31, 2014 and December 31, 2013, respectively.

On April 18, 2013, in connection with the sale of the Heatherwood Apartments, the Company originated an $800,000 mortgage loan to the purchaser of the Heatherwood Apartments on the same date.

The following table provides the aging of the Company’s loans held for investment (dollars in thousands):

	March 31, 2014			December 31, 2013
	Amount		Percent	Amount		Percent
Current	$	1,551	89%	$	1,529	89%
Delinquent:
30−89 days	—		—%	195		11%
90−180 days	195		11%	—		—%
Greater than 180 days	—		—%	—		—%
	$	1,746	100%	$	1,724	100%

The following table provides information about the credit quality of the Company’s loans held for investment, net, (in thousands):

	March 31, 2014		December 31, 2013
Loans:
Performing	$	1,551	$	1,529
Nonperforming	195		195
Total	$	1,746	$	1,724

The following table provides information about the terms of the Company's loans held for investment (dollars in thousands):

	Peterson Note			Trail Ridge Note			Heatherwood Note
Face value	$	242		$	1,058		$	800
Maturity date	12/31/2013			10/28/2021			5/17/2016
Interest rate	7.4		%	7.5		%	4.0		%
Average monthly payment	$	3		$	8		$	11

The Peterson Note matured on December 31, 2011 with an unpaid balance of $238,000.  Accordingly, the Company and the borrower under this note entered into a forbearance agreement in January 2012 which expired on December 31, 2013.  The borrower did not pay the outstanding balance at the expiration of the forbearance period, which caused the borrower under the Peterson Note to be in default of such agreement. This forbearance agreement is considered a troubled debt restructuring.  On February 27, 2014, the Company was the successful bidder at a foreclosure sale of the property collateralizing the Peterson Note. On April 6, 2014, the Company sold its interest in the sheriff's deed for the Peterson Apartments for $195,000 to an unaffiliated third party.

The Company has individually evaluated each loan for impairment and determined that, as of March 31, 2014, two loans were not impaired and the Peterson Note was impaired.  As of March 31, 2014, the Company recorded an impairment charge of approximately $24,000 on the Peterson Note.

There was a $24,000 allowance for credit losses as of March 31, 2014. There were no charge-offs for the three months ended March 31, 2014.

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DERIVATIVES AND HEDGING ACTIVITIES

3 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES AND HEDGING ACTIVITIES

DERIVATIVES AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

As a condition to certain of the Company’s financing facilities, from time to time the Company may be required to enter into certain derivative transactions as may be required by the lender. These transactions would generally be in line with the Company’s own risk management objectives and also service to protect the lender.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company entered into two interest rate caps that were designated as cash flow hedges during 2013. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the year end December 31, 2013 such derivatives were used to hedge the variable cash flows, indexed to USD-LIBOR, associated with existing variable-rate loan agreements. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the three months ended March 31, 2014, the Company did not record any hedge ineffectiveness in earnings.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

As of March 31, 2014, the Company had the following outstanding interest rate derivatives,which mature on November 1, 2018, that were designated as cash flow hedges of interest rate risk (dollars in thousands):

Interest Rate Derivative	Number of Instruments	Notional Amount
Interest Rate Caps	2	$	27,948

Tabular Disclosure of Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet as of March 31, 2014 and December 31, 2013 (in thousands):

Asset Derivatives						Liability Derivatives
March 31, 2014			December 31, 2013			March 31, 2014			December 31, 2013
Balance Sheet	Fair Value		Balance Sheet	Fair Value		Balance Sheet	Fair Value		Balance Sheet	Fair Value
Interest rate cap	$	232	Interest rate cap	$	290	—	$	—	—	$	—

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ACCUMULATED OTHER COMPREHENSIVE INCOME

3 Months Ended

Mar. 31, 2014

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME

ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table presents the changes in each component of accumulated other comprehensive income for the three months ended March 31, 2014 (dollars in thousands):

	Net unrealized gain (loss) on derivatives
January 1, 2014	$	20
Unrealized loss on designated derivative	(58		)
March 31, 2014	$	(38	)

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IDENTIFIED INTANGIBLE ASSETS, NET

3 Months Ended

Mar. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

IDENTIFIED INTANGIBLE ASSETS, NET

IDENTIFIED INTANGIBLE ASSETS, NET

Identified intangible assets, net, consist of rental and antennae leases and leasing commissions. The value of the acquired in-place leases totaled $23.0 million and $16.7 million as of March 31, 2014 and December 31, 2013, respectively, net of accumulated amortization of $16.1 million and $11.5 million, respectively.  The weighted-average remaining life of the rental leases is 10.0 months and 11.6 months as of March 31, 2014 and December 31, 2013, respectively.  Expected amortization for the antennae leases at the Vista Apartment Homes is $16,000 annually through 2025.  Amortization of the rental and antennae leases for the three months ended March 31, 2014 was $4.6 million.

Expected amortization for the rental and antennae leases for the next five years ending March 31, and thereafter, is as follows (in thousands): 

2015	$	6,761
2016	19
2017	17
2018	16
2019	16
Thereafter	122
	$	6,951

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IDENTIFIED INTANGIBLE ASSETS, NET (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Finite-Lived Intangible Assets [Line Items]
Identified intangible assets, net	$ 6,951,000		$ 5,182,000
Weighted average remaining life (in months)	10 months	0 years 11 months 18 days
Amortization expense	4,600,000
Acquired in-place leases [Member]
Finite-Lived Intangible Assets [Line Items]
Identified intangible assets, net	23,000,000		16,700,000
Accumulated amortization	16,100,000		11,500,000
Antennae Leases [Member]
Finite-Lived Intangible Assets [Line Items]
Annual expected amortization expense through 2025	$ 16,000

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MEASUREMENT PERIOD ADJUSTMENTS

3 Months Ended

Mar. 31, 2014

Accounting Changes and Error Corrections [Abstract]

MEASUREMENT PERIOD ADJUSTMENTS

MEASUREMENT PERIOD ADJUSTMENTS

On January 22, 2013, the Company took title to Deerfield after foreclosing on the Deerfield Note, which was originally acquired by the Company for $10.3 million.      

The measurement period for the above acquisition was finalized during the three months ended December 31, 2013. In completing the accounting for the acquisition of Deerfield, the Company determined that the fair value of the net assets acquired exceeded the fair value of the consideration paid for this acquisition. Accordingly, the Company retrospectively adjusted the provisional amounts with respect to the Deerfield acquisition that was recognized at the acquisition date to reflect new information from the completed third party appraisal report that, if known at the acquisition date, would have affected the measurement of the amounts recognized as of that date.  The final purchase price adjustment recorded during the measurement period resulted in a gain on foreclosure of $3.4 million on the Deerfield acquisition.  Those changes are reflected in the table below:

Deerfield

	January 22, 2013 (As initially reported)		Measurement period adjustment			January 22, 2013 (As adjusted)
Land	$	1,028	$	632		$	1,660
Building	8,592		2,518			11,110
Personal property	—		500			500
Intangible assets	680		(257		)	423
Identifiable net assets	10,300		3,393			13,693
Gain on foreclosure	—		(3,393		)	—
Total net identifiable net assets	$	10,300	$	—		$	13,693

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DISPOSITION OF PROPERTIES

3 Months Ended

Mar. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

DISPOSITION OF PROPERTIES AND DISCONTINUED OPERATIONS

DISPOSITION OF PROPERTIES AND DISCONTINUED OPERATIONS

The Company reported its property dispositions as discontinued operations under prior accounting guidance. Assuming no significant continuing involvement by the Company after the sale, the sale of property is considered a discontinued operation.  Included in discontinued operations for the three months ended March 31, 2014 and 2013 are the operating results of the two properties discussed below.

      The Company sold the Heatherwood Apartments, which was originally obtained through foreclosure in February 2012, to an unaffiliated purchaser for $1.0 million on April 18, 2013 and recognized a loss on disposition of $31,000. The Company provided the purchaser with financing for $800,000 and the purchaser paid cash of $200,000 in connection with the disposition.

The Company sold the Town Park Apartments to an unaffiliated purchaser on April 30, 2013 for $10.3 million and recognized a gain of approximately $3.2 million on disposition.    

The results of discontinued operations are summarized for the three months ended March 31, 2014 and 2013 as follows (in thousands): 

	Three Months Ended
	March 31,
	2014		2013
Revenues:
Rental income	$	3	$	806
Total revenues	3		806
Expenses:
Rental operating	1		646
General and administrative	—		58
Loss on property impairment	—		539
Depreciation and amortization expense	—		141
Total expenses	1		1,384
Income (loss) from discontinued operations	2		(578		)
Weighted average common shares outstanding	67,364		22,612
Basic and diluted loss per common share	$	—	$	(0.03	)

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MORTGAGE NOTE PAYABLE

3 Months Ended

Mar. 31, 2014

Debt Disclosure [Abstract]

MORTGAGE NOTE PAYABLE

MORTGAGE NOTES PAYABLE

The following is a summary of the mortgage notes payable (in thousands, except percentages):

	Balance Outstanding at March 31,		Maturity Date	Annual Interest Rate			Average Monthly Debt Service		Interest Expense
									Three Months Ended   March 31,
Collateral	2014								2014		2013
Vista Apartment Homes	$	8,794	5/1/2017	2.76	%	(1)	$	38	$	61	$	64
Cannery Lofts	8,190		9/1/2020	3.45	%	(1)	24		71		N/A
Deerfield	10,530		11/1/2020	4.66	%	(2)	41		123		N/A
Village Square	19,362		11/1/2023	5.02	%	(1)	81		124		N/A
Ivy at Clear Creek	8,586		11/1/2023	5.02	%	(1)	36		55		N/A
Centennial	23,161		1/1/2019	3.60	%	(2)	101		209		N/A
Pinnacle	18,702		1/1/2019	3.60	%	(2)	82		169		N/A
Terrace at River Oaks	14,259		1/1/2022	4.32	%	(2)	69		154		N/A
Champion Farms	17,403		7/1/2016	6.14	%	(2)	85		173		N/A
Fieldstone	15,979		7/1/2014	6.05	%	(2)	137		167		N/A
Pinehurst	4,428		1/1/2016	5.58	%	(2)	39		41		N/A
Pheasant Run	6,759		10/1/2017	5.95	%	(2)	31		64		N/A
Retreat of Shawnee	14,333		2/1/2018	5.58	%	(2)	99		129		N/A
Hilltop Village	4,505		12/1/2017	5.81	%	(2)	33		42		N/A
Conifer Crossing	29,380		9/1/2015	5.96	%	(2)	203		286		N/A
Coursey Place	29,313		8/1/2021	5.07	%	(2)	154		247		N/A
Pines of York	15,658		12/1/2021	4.46	%	(2)	80		121		N/A
	$	249,342

(1) Variable rate based on one-month LIBOR of 0.15175% (as of March 31, 2014).

(2) Fixed rate.

Annual principal payments on the mortgage notes payable for each of the next five years ending March 31, and thereafter, are as follows (in thousands):

2015	$	21,300
2016	5,871
2017	50,273
2018	26,886
2019	30,026
Thereafter	$	114,986
	$	249,342

The mortgage notes payable are recourse only with respect to the properties that secure the notes, subject to certain limited standard exceptions, as defined in each mortgage note. The Company has guaranteed the mortgage notes by executing a guarantee with respect to the properties.  These exceptions are referred to as “carveouts.”  In general, carveouts relate to damages suffered by the lender for a borrower’s failure to pay rents, insurance or condemnation proceeds to lender, failure to pay water, sewer and other public assessments or charges, failure to pay environmental compliance costs or to deliver books and records, in each case as required in the loan documents.  The exceptions also require the Company to guarantee payment of audit costs, lender’s enforcement of its rights under the loan documents and payment of the loan if the borrower voluntarily files for bankruptcy or seeks reorganization, or if a related party of the borrower does so with respect to the subsidiary.

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REVOLVING CREDIT FACILITY (Details) (USD $)	3 Months Ended		0 Months Ended	3 Months Ended			0 Months Ended	3 Months Ended		0 Months Ended	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	May 23, 2013 Bank of America [Member] Revolving Credit Facility [Member]	Mar. 31, 2014 Bank of America [Member] Revolving Credit Facility [Member]	Dec. 31, 2013 Bank of America [Member] Revolving Credit Facility [Member]	May 22, 2013 Bank of America [Member] Revolving Credit Facility [Member]	Dec. 20, 2013 PNC Bank [Member] Revolving Credit Facility [Member]	Mar. 31, 2014 PNC Bank [Member] Revolving Credit Facility [Member]	Dec. 31, 2013 PNC Bank [Member] Revolving Credit Facility [Member]	Dec. 27, 2013 U.S. Bank [Member] Revolving Credit Facility [Member]	Mar. 31, 2014 U.S. Bank [Member] Revolving Credit Facility [Member]	Dec. 31, 2013 U.S. Bank [Member] Revolving Credit Facility [Member]	Mar. 31, 2014 Repayment Guarantee [Member]
Line of Credit Facility [Line Items]
Line of credit facility, initiation date				Dec. 02, 2011
Line of credit facility, maximum borrowing capacity			$ 50,000,000			$ 25,000,000.0	$ 15,000,000			$ 29,670,000
Repayment guarantee													6,500,000
Line of credit facility collateral amount				102,000,000
Line of credit facility, current borrowing capacity				45,500,000
Payment of deferred financing costs	1,192,000	0	413,305				75,000			222,000
Line of credit facility, amount outstanding				1,500,000	1,500,000			12,500,000	12,500,000		23,000,000	23,000,000
Line of credit facility, expiration date				May 23, 2017				Dec. 20, 2018			Dec. 27, 2017
Line of credit facility extended expiration date				May 23, 2019							Dec. 27, 2019
Interest expense	2,739,000	125,000		8,000				68,000			7,000
Minimum tangible net worth to maintain, percent of outstanding principal amount of credit facility				200.00%
Minimum tangible net worth to maintain				20,000,000.0
Minimum unencumbered liquid assets to maintain, market value				$ 5,000,000.0
Minimum unencumbered liquid assets to maintain, market value, percent of outstanding principal amount of credit facility				20.00%
Mortgage loan, description of variable rate basis				LIBOR				LIBOR			LIBOR
Basis spread on variable rate (in hundredths)				3.00%				2.00%			1.95%
Interest rate at end of period				3.15%				2.15%			2.10%
Extension fee percentage				0.25%							0.25%

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ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) (USD $) In Thousands, unless otherwise specified			3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2014 Net unrealized gain on derivatives [Member]
Accumulated Other Comprehensive Income [Rollforward]
Beginning balance	$ (38)	$ 20	$ 20
Unrealized loss on designated derivative			(58)
Ending balance	$ (38)	$ 20	$ (38)

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MORTGAGE NOTE PAYABLE (Annual Principal Payments on the Mortgage Note Payable) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014
Debt Disclosure [Abstract]
2015	$ 21,300
2016	5,871
2017	50,273
2018	26,886
2019	30,026
Thereafter	114,986
Total	$ 249,342

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DISPOSITION OF PROPERTIES (Tables)

3 Months Ended

Mar. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Results of Discontinued Operations

The results of discontinued operations are summarized for the three months ended March 31, 2014 and 2013 as follows (in thousands): 

	Three Months Ended
	March 31,
	2014		2013
Revenues:
Rental income	$	3	$	806
Total revenues	3		806
Expenses:
Rental operating	1		646
General and administrative	—		58
Loss on property impairment	—		539
Depreciation and amortization expense	—		141
Total expenses	1		1,384
Income (loss) from discontinued operations	2		(578		)
Weighted average common shares outstanding	67,364		22,612
Basic and diluted loss per common share	$	—	$	(0.03	)

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LOANS HELD FOR INVESTMENT, NET (Recorded Investment, Credit Quality Indicator) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 1,746	$ 1,724
Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,551	1,529
Nonperforming [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 195	$ 195

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EQUITY

3 Months Ended

Mar. 31, 2014

Equity [Abstract]

EQUITY

EQUITY

Preferred Stock

The Company’s charter authorizes the Company to issue 10.0 million shares of its $0.01 par value preferred stock.  As of March 31, 2014 and December 31, 2013, no shares of preferred stock were issued and outstanding.

Common Stock

As of March 31, 2014, the Company had issued an aggregate of 67,554,712 shares, net of redemptions, of its $0.01 par value common stock as follows (dollars in thousands):

	Shares Issued	Gross Proceeds
Shares issued through private offering	1,263,727	$	12,500
Shares issued through primary public offering	62,485,461	622,000
Shares issued through stock distributions	2,132,266	—
Shares issued through distribution reinvestment plan	1,657,758	16,000
Shares issued in conjunction with the Advisor's initial investment, net of 4,500 share conversion	15,500	200
Total	67,554,712	$	650,700

Convertible Stock

As of March 31, 2014 and December 31, 2013, the Company had 50,000 shares of $0.01 par value convertible stock outstanding of which the Advisor and affiliated persons own 49,063 shares and outside investors own 937 shares.  The convertible stock will convert into shares of the Company’s common stock upon the occurrence of (a) the Company having paid distributions to common stockholders that in the aggregate equal 100% of the price at which the Company originally sold the shares plus an amount sufficient to produce a 10% cumulative, non-compounded annual return on the shares at that price; or (b) if the Company lists its common stock on a national securities exchange and, on the 31st trading day after listing, the Company’s value based on the average trading price of its common stock since the listing, plus prior distributions, combine to meet the same 10% return threshold.

Redemption of Securities

During the three months ended March 31, 2014, the Company redeemed its shares as follows:

Period	Total Number of Shares Redeemed (1)	Average Price Paid per Share	Cumulative Number of Shares Purchased as Part of a Publicly Announced Plan or Program (2)	Approximate Dollar Value of Shares Available That May Yet Be Redeemed Under the Program
January 2014	—	—	—	(2)
February 2014	—	—	—	(2)
March 2014	46,237	$8.66	46,237	(2)

(1) All redemptions of equity securities by the Company in the three months ended March 31, 2014 were made pursuant to the Company's share redemption program.

(2) The Company currently limits the dollar value and number of shares that may be redeemed under the program as described below.

All redemption requests tendered were honored during the three months ended March 31, 2014.

The Company will not redeem in excess of 5% of the weighted-average number of shares outstanding during the 12-month period immediately prior to the effective date of redemption. The Company's board of directors will determine at least quarterly whether it has sufficient excess cash to repurchase shares. Generally, the cash available for redemptions will be limited to proceeds from the Company's distribution reinvestment plan plus, if the Company has positive operating cash flow from the previous fiscal year, 1% of all operating cash flow from the previous year.

The Company's Board of Directors, in its sole discretion, may suspend, terminate or amend the Company's share redemption program without stockholder approval upon 30 days' notice if it determines that such suspension, termination or amendment is in the Company's best interest. The Company's board may also reduce the number of shares purchased under the share redemption program if it determines the funds otherwise available to fund the Company's share redemption program are needed for other purposes. These limitations apply to all redemptions, including redemptions sought upon a stockholder's death, qualifying disability or confinement to a long-term care facility.

Distributions

For the three months ended March 31, 2014, the Company paid aggregate distributions of $6.7 million, including $2.0 million of distributions paid in cash and $4.7 million of distributions reinvested in shares of common stock through the Company's distribution reinvestment plan, as follows (in thousands):

Record Date	Per Common Share		Distribution Date	Distribution invested in shares of Common Stock		Aggregate Cash Distribution		Total Aggregate Distribution
December 31, 2013	$	0.033	January 2, 2014	$	1,566	$	656	$	2,222
January 31, 2014	0.033		February 3, 2014	1,575		663		2,238
February 28, 2014	0.033		March 2, 2014	1,571		670		2,241
				$	4,712	$	1,989	$	6,701

On February 4, 2014, the Company's Board of Directors declared cash distributions of $2.2 million ($0.3333 per common share) to stockholders of record as of the close of business on March 31, 2014, which distributions were paid on April 1, 2014.

Since its formation, the Company has declared a total of seven quarterly stock distributions of 0.015 shares each, two quarterly stock distributions of 0.0075 shares each, one quarterly stock distribution of 0.00585 shares each, and two quarterly stock distributions of 0.005 shares each of its common stock outstanding. In connection with these stock distributions, the Company increased its accumulated deficit by $21.0 million as of March 31, 2014.

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2014

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

On February 27, 2014, the Company was the successful bidder at a foreclosure sale of the property collateralizing the Peterson Note. On April 6, 2014, the Company sold its interest in the sheriff's deed for the Peterson Apartment for $195,000 to an unaffiliated purchaser.

On May 5, 2014, the Company purchased a 142-unit multifamily community located in Plano, Texas from an unaffiliated seller for $15.0 million.

The Company has evaluated subsequent events and determined that no events have occurred, other than those disclosed above, which would require an adjustment to the consolidated financial statements.

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LOANS HELD FOR INVESTMENT, NET (Narrative) (Details) (USD $)	0 Months Ended		3 Months Ended				3 Months Ended		0 Months Ended
	Aug. 02, 2011 Loan	Mar. 15, 2011 Loan	Mar. 31, 2014 Loan	Mar. 31, 2013	Dec. 31, 2013	Apr. 18, 2013	Mar. 31, 2014 Peterson Note [Member]	Dec. 31, 2011 Peterson Note [Member]	Apr. 06, 2014 Subsequent Event [Member] Peterson Note [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of nonperforming promissory notes		2
Number of performing promissory notes		2
Purchase price of promissory note		$ 3,100,000
Number of nonperforming promissory notes into forbearance agreement	1
Performing notes - accretable amount			1,900,000		1,900,000
Purchase discount, net			287,000		292,000
Unpaid loan balance								238,000
Sale of interest in Peterson									195,000
Loan made to purchaser						800,000
Number of loans not impaired			2
Loss on property impairment			$ 0	$ 539,000			$ 24,000

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FAIR VALUE MEASURES AND DISCLOSURES (Tables)

3 Months Ended

Mar. 31, 2014

Fair Value Disclosures [Abstract]

Carrying and Fair Values of the Company's Loans Held for Investment, Net, Mortgage Note Payable and Revolving Credit Facility

The carrying and fair values of the Company’s loans held for investment, net, mortgage note payable and revolving credit facilities were as follows (in thousands):

	March 31, 2014						December 31, 2013
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Loans held for investment, net	$	1,746		$	1,746		$	1,724		$	1,724
Mortgage notes payable	$	(249,342	)	$	(248,393	)	$	(111,811	)	$	(110,413	)
Revolving credit facilities	$	(37,041	)	$	(37,041	)	$	(37,041	)	$	(37,041	)

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CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock [Member]	Convertible Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Accumulated Deficit [Member]	Total Stockholders' Equity [Member]	Noncontrolling Interest [Member]
Balance at Dec. 31, 2013	$ 517,047	$ 668	$ 1	$ 590,591	$ 20	$ (74,233)	$ 517,047	$ 0
Balance (in shares) at Dec. 31, 2013	66,667,136	66,667,000	50,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued through distribution reinvestment plan (in shares)	496,135	496,000
Common stock issued through distribution reinvestment plan	4,712	4		4,708			4,712	0
Syndication costs	3			3			3	0
Distributions of common stock	0	3		3,330		(3,333)	0	0
Distributions of common stock (in shares)		333,000
Distributions declared	(6,729)					(6,729)	(6,729)	0
Share redemptions	(342)	0		(396)		54	(342)	0
Share redemptions (in shares)		(46,000)
Designated derivatives, fair value adjustment	(58)				(58)		(58)	0
Acquisition of noncontrolling interests	17,237							17,237
Deconsolidation of noncontrolling interest	(6,912)							(6,912)
Net loss	(13,189)					(13,993)	(13,993)	804
Net income attributable to noncontrolling interests	(804)					(804)	(804)	0
Balance at Mar. 31, 2014	$ 510,965	$ 675	$ 1	$ 598,236	$ (38)	$ (99,038)	$ 499,836	$ 11,129
Balance (in shares) at Mar. 31, 2014	67,450,482	67,450,000	50,000

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RENTAL PROPERTIES, NET

3 Months Ended

Mar. 31, 2014

Real Estate Investments, Net [Abstract]

RENTAL PROPERTIES, NET

RENTAL PROPERTIES, NET

The Company’s investments in rental properties consisted of the following (in thousands):

	March 31, 2014			December 31, 2013
Land	$	125,072		$	62,859
Building and improvements	529,467			325,412
Furniture, fixtures and equipment	16,218			17,051
Construction in progress	1,679			827
	672,436			406,149
Less: accumulated depreciation	(22,130		)	(15,776		)
	$	650,306		$	390,373

Depreciation expense for the three months ended March 31, 2014 and 2013 was $5.9 million and $1.8 million, respectively.

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DISPOSITION OF PROPERTIES (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		0 Months Ended
	Mar. 31, 2014 Property	Mar. 31, 2013 Property	Apr. 18, 2013 Heatherwood Apartments Inkster Michigan [Member]	Apr. 30, 2013 Town Park Apartments [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Discontinued operations, number of properties	2	2
Sale price			$ 1,000	$ 10,300
Gain (loss) on dispositions			31	3,200
Sale price, portion financed by buyer			800
Sale price, portion paid in cash			$ 200

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS (Relationship with Resource Real Estate Opportunity Manager) (Narrative) (Details) (Resource Real Estate Opportunity Manager LLC [Member])	3 Months Ended
	Mar. 31, 2014
Resource Real Estate Opportunity Manager LLC [Member]
Related Party Transaction [Line Items]
Construction management fee percentage	5.00%
Debt servicing fee percentage	2.75%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as follows:

Subsidiary	Apartment Complex	Number of Units	Property Location
RRE Opportunity Holdings, LLC	N/A	N/A	N/A
Resource Real Estate Opportunity OP, LP	N/A	N/A	N/A
RRE Charlemagne Holdings, LLC	N/A	N/A	N/A
RRE 107th Avenue Holdings, LLC (“107th Avenue”)	107th Avenue	5	Omaha, NE
RRE Westhollow Holdings, LLC (“Westhollow”)	Arcadia	404	Houston, TX
RRE Crestwood Holdings, LLC (“Crestwood”)	Town Park (a)	N/A	Birmingham, AL
RRE Iroquois, LP (“Vista”)	Vista Apartment Homes	133	Philadelphia, PA
RRE Iroquois Holdings, LLC	N/A	N/A	N/A
RRE Campus Club Holdings, LLC (“Campus Club”)	Campus Club	64	Tampa, FL
RRE Bristol Holdings, LLC (“Bristol”)	The Redford	856	Houston, TX
RRE Cannery Holdings, LLC (“Cannery”)	Cannery Lofts	156	Dayton, OH
RRE Williamsburg Holdings, LLC (“Williamsburg”)	Williamsburg	976	Cincinnati, OH
WPL Holdings, LLC	Williamsburg Parking Lot	N/A	Cincinnati, OH
RRE Skyview Holdings, LLC ("Skyview")	Cityside Crossing	360	Houston, TX
RRE Park Forest Holdings, LLC ("Park Forest")	Mosaic	216	Oklahoma City, OK
RRE Foxwood Holdings, LLC ("Foxwood")	The Reserve at Mt. Moriah	220	Memphis, TN
RRE Flagstone Holdings, LLC ("Flagstone")	The Alcove	292	Houston, TX
RRE Deerfield Holdings, LLC ("Deerfield")	Deerfield	166	Hermantown, MN
RRE Kenwick Canterbury Holdings, LLC ("Kenwick & Canterbury")	One Hundred Chevy Chase Apartments	244	Lexington, KY
RRE Armand Place Holdings, LLC ("Armand")	Ivy at Clear Creek	244	Houston, TX
RRE Autumn Wood Holdings, LLC ("Autumn Wood")	Retreat at Rocky Ridge	196	Hoover, AL
RRE Village Square Holdings, LLC ("Village Square")	Trailpoint at the Woodlands	271	Houston, TX
RRE Nob Hill Holdings, LLC ("Nob Hill")	Nob Hill	192	Winter Park, FL
RRE Brentdale Holdings, LLC ("Brentdale")	Brentdale	412	Plano, TX
RRE Jefferson Point Holdings, LLC ("Jefferson Point")	Jefferson Point	208	Newport News, VA
RRE Centennial Holdings, LLC ("Centennial")	Centennial	276	Littleton, CO
RRE Pinnacle Holdings, LLC ("Pinnacle")	Pinnacle	224	Westminster, CO
RRE Jasmine Holdings, LLC ("Jasmine")	Jasmine at Holcomb Bridge	437	Alpharetta, GA
RRE River Oaks Holdings, LLC ("River Oaks")	Terrace at River Oaks	314	San Antonio, TX
RRE Nicollet Ridge Holdings, LLC ("Nicollet Ridge")	Nicollet Ridge	339	Burnsville, MN
RRE Addison Place, LLC ("Addison Place")	Addison Place	403	Alpharetta, GA

N/A - Not Applicable

(a) - Discontinued operations

All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Rental Properties

The Company records acquired rental properties at fair value. The Company considers the period of future benefit of an asset to determine its appropriate useful life and depreciates using the straight line method.  The Company anticipates the estimated useful lives of its assets by class as follows:

Buildings	27.5 years
Building improvements	3.0 to 27.5 years
Tenant improvements	Shorter of lease term or expected useful life

Impairment of Long-Lived Assets

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for permanent impairment.  This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition.  The review also considers factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors.

An impairment loss will be recorded to the extent that the carrying value exceeds the estimated fair value of a property to be held and used.  For properties held for sale, the impairment loss would be the adjustment to fair value less the estimated cost to dispose of the asset. 

Loans Held for Investment, Net

The Company records acquired performing loans held for investment at cost and reviews them for potential impairment at each balance sheet date.  The Company considers a loan to be impaired if one of two conditions exists.  The first condition is if, based on current information and events, management believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.  The second condition is if the loan is deemed to be a troubled-debt restructuring (“TDR”) where a concession has been given to a borrower in financial difficulty.  A TDR may not have an associated specific loan loss allowance if the principal and interest amount is considered recoverable based on current market conditions, expected collateral performance and/or guarantees made by the borrowers.

The amount of impairment, if any, is measured by comparing the recorded amount of the loan to the present value of the expected cash flows or, as a practical expedient, the fair value of the collateral.  If a loan is deemed to be impaired, the Company records a reserve for loan losses through a charge to income for any shortfall.    

Interest income from performing loans held for investment is recognized based on the contractual terms of the loan agreement.  Fees related to any buy down of the interest rate are deferred as prepaid interest income and amortized over the term of the loan as an adjustment to interest income.  The initial investment made in a purchased performing loan includes the amount paid to the seller plus fees.  The initial investment frequently differs from the related loan’s principal amount at the date of the purchase.  The difference is recognized as an adjustment of the yield over the life of the loan.  Closing costs related to the purchase of a performing loan held for investment are amortized over the term of the loan and accreted as an adjustment to interest income.

The Company may acquire real estate loans at a discount due to the credit quality of such loans and the respective borrowers under such loans.  Revenues from these loans are recorded under the effective interest method.  Under this method, an effective interest rate (“EIR”) is applied to the cost basis of the real estate loan held for investment.  The EIR that is calculated when the loan held for investment is acquired remains constant and is the basis for subsequent impairment testing and income recognition.  However, if the amount and timing of future cash collections are not reasonably estimable, the Company accounts for the real estate receivable on the cost recovery method.  Under the cost recovery method of accounting, no income is recognized until the basis of the loan held for investment has been fully recovered.

Allocation of Purchase Price of Acquired and Foreclosed Assets

The cost of rental properties acquired directly as fee interests and through foreclosing on a loan are allocated to net tangible and intangible assets based on their relative fair values.  The Company allocates the purchase price of properties to acquired tangible assets, consisting of land, buildings, fixtures and improvements, and to identified intangible lease assets and liabilities, consisting of the value of above-market and below-market leases, as applicable, the value of in-place leases and the value of tenant relationships. Fair value estimates are based on information obtained from a number of sources, including information obtained about each property as a result of pre-acquisition due diligence, marketing and leasing activities.  In addition, the Company may obtain independent appraisal reports. The information in the appraisal reports along with the aforementioned information available to the Company's management is used in allocating the purchase price. The independent appraisers have no involvement in management's allocation decisions other than providing market information.

In allocating the purchase price, management also includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up period.  Management also estimates costs to execute similar leases, including leasing commissions and legal and other related expenses, to the extent that such costs have not already been incurred in connection with a new lease origination as part of the transaction.

The Company records above-market and below-market in-place lease values for acquired properties based on the present value (using an interest rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease.  The Company amortizes any capitalized above-market or below-market lease values as an increase or reduction to rental income over the remaining non-cancelable terms of the respective leases.    

The Company measures the aggregate value of other intangible assets acquired based on the difference between (i) the property valued with existing in-place leases adjusted to market rental rates and (ii) the property valued as if it were vacant.  Management’s estimates of value are made using methods similar to those used by independent appraisers (e.g., discounted cash flow analysis).  Factors to be considered by management in its analysis include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions and costs to execute similar leases.

The total amount of other intangible assets acquired is further allocated to customer relationship intangible values based on management’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with that respective tenant.  Characteristics to be considered by management in allocating these values include the nature and extent of the Company’s existing relationships with the tenant, the tenant’s credit quality and expectations of lease renewals (including those existing under the terms of the lease agreement), among other factors.

The Company amortizes the value of in-place leases to expense over the average remaining term of the respective leases.  The value of customer relationship intangibles are amortized to expense over the initial term and any renewal periods in the respective leases, but in no event will the amortization periods for the intangible assets exceed the remaining depreciable life of the building.  Should a tenant terminate its lease, the unamortized portion of the in-place lease value and customer relationship intangibles associated with that tenant would be charged to expense in that period.

The determination of the fair value of assets and liabilities acquired requires the use of significant assumptions with regard to current market rental rates, discount rates and other variables.  The use of inappropriate estimates would result in an incorrect assessment of the purchase price allocations, which could impact the amount of the Company’s reported net income.  Initial purchase price allocations are subject to change until all information is finalized, which is generally within one year of the acquisition date.

Goodwill

The Company records the excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed as goodwill. Goodwill is not amortized but is tested for impairment at a level of reporting referred to as a reporting unit on an annual basis, during the fourth quarter of each calendar year, or more frequently, if events or changes in circumstances indicate that the asset might be impaired.

Noncontrolling Interest

Noncontrolling interests are presented and disclosed as a separate component of stockholders' equity (not as a liability or other item outside of stockholders' equity). Consolidated net income (loss) includes the noncontrolling interests’ share of income (loss). All changes in the Company’s ownership interest in a subsidiary are accounted for as stockholders' equity transactions if the Company retains its controlling financial interest in the subsidiary.

Revenue Recognition

The Company recognizes minimum rent, including rental abatements and contractual fixed increases attributable to operating leases, on a straight-line basis over the term of the related lease and includes amounts expected to be received in later years in deferred rents.  The Company records property operating expense reimbursements due from tenants for common area maintenance, real estate taxes and other recoverable costs in the period in which the related expenses are incurred.

The specific timing of a sale is measured against various criteria related to the terms of the transaction and any continuing involvement associated with the property.  If the criteria for gain recognition under the full-accrual method are not met, the Company defers gain recognition and accounts for the continued operations of the property by applying the percentage-of-completion, reduced profit, deposit, installment or cost recovery methods, as appropriate, until the appropriate criteria are met.

Tenant Receivables

Tenant receivables are stated in the financial statements at amounts due from tenants net of an allowance for uncollectible receivables.  Payment terms vary and receivables outstanding longer than the payment terms are considered past due.  The Company determines its allowance by considering a number of factors, including the length of time receivables are past due, security deposits held, the Company’s previous loss history, the tenants’ current ability to pay their obligations to the Company, the condition of the general economy and the industry as a whole.  The Company writes off receivables when they become uncollectible. 

Deferred Offering Costs

Through March 31, 2014, the Advisor has advanced $4.6 million on behalf of the Company for the payment of public offering costs consisting of accounting, advertising, allocated payroll, due diligence, marketing, legal and similar costs.  A portion of these costs was charged to equity upon the sale of each share of common stock sold under the public offering.  Similarly, a portion of the proceeds received from the sales of shares in the Company's public offering was paid to the Advisor to reimburse it for the amount incurred on behalf of the Company.  Deferred offering costs represent the portion of the total costs incurred that have not been charged to equity to date. As of March 31, 2014 and December 31, 2013, $4.6 million and $4.2 million, respectively, have been reimbursed to the Advisor.  

Income Taxes

To maintain its REIT qualification for U.S. federal income tax purposes, the Company is generally required to distribute at least 90% of its taxable net income (excluding net capital gains) to its stockholders as well as comply with other requirements, including certain asset, income and stock ownership tests.  Accordingly, the Company generally will not be subject to corporate U.S. federal income taxes to the extent that it annually distributes at least 90% of its taxable net income to its stockholders.  If the Company fails to qualify as a REIT, and does not qualify for certain statutory relief provisions, it is subject to U.S. federal, state and local income taxes and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year in which it fails its REIT qualification.  Accordingly, the Company’s failure to qualify as a REIT could have a material adverse impact on its results of operations and amounts available for distribution to its stockholders.

The dividends-paid deduction of a REIT for qualifying dividends to its stockholders is computed using the Company’s taxable income as opposed to net income reported on the financial statements.  Generally, taxable income differs from net income reported on the financial statements because the determination of taxable income is based on tax provisions and not financial accounting principles.

The Company may elect to treat certain of its subsidiaries as a taxable REIT subsidiary (“TRS”). In general, the Company’s TRSs may hold assets and engage in activities that the Company cannot hold or engage in directly and generally may engage in any real estate or non-real estate-related business.  A TRS is subject to U.S. federal, state and local corporate income taxes.  As of March 31, 2014 and December 31, 2013, the Company had no TRSs.

The Company evaluates the benefits from tax positions taken or expected to be taken in its tax return. Only the largest amount of benefits from tax positions that will more likely than not be sustainable upon examination are recognized by the Company.  The Company does not have any unrecognized tax benefits, nor interest and penalties, recorded in its consolidated financial statements and does not anticipate significant adjustments to the total amount of unrecognized tax benefits within the next 12 months.

The Company is subject to examination by the U.S. Internal Revenue Service and by the taxing authorities in other states in which the Company has significant business operations.  The Company is not currently undergoing any examinations by taxing authorities.

Earnings Per Share

Basic earnings per share are calculated on the basis of the weighted-average number of common shares outstanding during the year.  Basic earnings per share are computed by dividing income available to common stockholders by the weighted-average common shares outstanding during the period.  Diluted earnings per share take into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted to common stock.

Reclassifications

Certain amounts in the prior year financial statements have been reclassified to conform to the current-year presentation. The impact of the reclassifications made to prior year amounts are not material and did not affect net income (loss).

Adoption of New Accounting Standard

early adopted the following accounting standard during 2014 which had a material impact on its consolidated financial position, results of operations and cash flows:

Accounting Standards Issued But Not Yet Effective

In April 2014, the Financial Accounting Standards Board, or FASB, issued authoritative guidance to change the criteria for reporting discontinued operations. Under the new guidance, only disposals representing a strategic shift in a company's operations and financial results should be reported as discontinued operations, with expanded disclosures. In addition, disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify as a discontinued operation is required. The Company

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EQUITY (Convertible Stock) (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Equity [Abstract]
Convertible stock shares outstanding (in shares)	50,000	50,000
Convertible stock, par value (in dollars per share)	$ 0.01	$ 0.01
Convertible stock held by advisor and affiliated persons (in shares)	49,063
Convertible stock held by outside investors (in shares)	937
Percentage on original share price (in hundredths)	100.00%
Percentage non-compounded annual return (in hundredths)	10.00%
Aggregate percentage return (in hundredths)	10.00%

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ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables)

3 Months Ended

Mar. 31, 2014

Equity [Abstract]

Components of Accumulated Other Comprehensive Income

The following table presents the changes in each component of accumulated other comprehensive income for the three months ended March 31, 2014 (dollars in thousands):

	Net unrealized gain (loss) on derivatives
January 1, 2014	$	20
Unrealized loss on designated derivative	(58		)
March 31, 2014	$	(38	)

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2014

Related Party Transactions [Abstract]

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In the ordinary course of its business operations, the Company has ongoing relationships with several related parties. 

Relationship with RAI

The Company's properties participate in an insurance pool with other properties directly and indirectly managed by RAI. RAI holds the escrow funds related to the insurance pool on its books. The insurance pool covers losses up to $3.0 million. Catastrophic insurance would cover losses in excess of the insurance pool up to $85.0 million. Therefore, unforeseen or catastrophic losses in excess of the Company's insured limits could have a material adverse effect on the Company's financial condition and operating results.

Relationship with the Advisor

In September 2009, the Company entered into an advisory agreement (the “Advisory Agreement”) pursuant to which the Advisor provides the Company with investment management, administrative and related services.  The Advisory Agreement was amended in January 2010 and further amended in January 2011.  The Advisory Agreement has a one-year term and renews for an unlimited number of successive one-year terms upon the approval of the conflicts committee of the Company's board of directors.  The Company renewed the advisory agreement for another year on September 15, 2013. Under the Advisory Agreement, the Advisor receives fees and is reimbursed for its expenses as set forth below:

Acquisition fees. The Company pays the Advisor an acquisition fee of 2.0% of the cost of investments acquired on behalf of the Company, plus any capital expenditure reserves allocated, or the amount funded by the Company to acquire loans, including acquisition expenses and any debt attributable to such investments. 

Asset management fees. The Company pays the Advisor a monthly asset management fee equal to one-twelfth of 1.0% of the higher of the cost or the independently appraised value of each asset, without deduction for depreciation, bad debts or other non-cash reserves.  The asset management fee is based only on the portion of the costs or value attributable to the Company’s investment in an asset if the Company does not own all or a majority of an asset and does not manage or control the asset.  

Disposition fees. The Advisor earns a disposition fee in connection with the sale of a property equal to the lesser of one-half of the aggregate brokerage commission paid, or if none is paid, 2.75% of the contract sales price. No properties were sold during the three months ended March 31, 2014 and 2013 and, therefore, no disposition fees were earned in either period.

Debt financing fees. The Advisor earns a debt financing fee equal to 0.5% of the amount available under any debt financing obtained for which it provided substantial services.

Expense reimbursements. The Company also pays directly or reimburses the Advisor for all of the expenses paid or incurred by the Advisor or its affiliates on behalf of the Company or in connection with the services provided to the Company in relation to its public offering, including its ongoing distribution reinvestment plan offering.  This includes all organization and offering costs of up to 2.5% of gross offering proceeds.

Reimbursements also include expenses the Advisor incurs in connection with providing services to the Company, including the Company’s allocable share of costs for Advisor personnel and overhead, out of pocket expenses incurred in connection with the selection and acquisition of properties or other real estate related debt investments, whether or not the Company ultimately acquires the investment.  However, the Company will not reimburse the Advisor or its affiliates for employee costs in connection with services for which the Advisor earns acquisition or disposition fees.

Relationship with Resource Real Estate Opportunity Manager

Resource Real Estate Opportunity Manager, LLC (the “Manager”), an affiliate of the Advisor, manages the Company's real estate properties and real estate-related debt investments and coordinates the leasing of, and manages construction activities related to, some of the Company’s real estate properties pursuant to the terms of the management agreement with the Manager.

Property management fees. The Manager is entitled to specified fees upon the provision of certain services, including construction management fee and property management/debt servicing fees.  

Construction management fees. The Manager earns a construction management fee of 5.0% of actual aggregate costs to construct improvements, or to repair, rehab or reconstruct a property.

Debt servicing fees. The Manager earns a debt servicing fee of 2.75% on payments received from loans held by the Company for investment.  

Expense reimbursement. During the ordinary course of business, the Manager or other affiliates of RAI may pay certain shared operating expenses on behalf of the Company. 

Relationship with Resource Securities

Resource Securities, Inc. (“Resource Securities”), an affiliate of the Advisor, served as the Company’s dealer-manager and was responsible for marketing the Company’s shares in the primary portion of its public offering.  Pursuant to the terms of the dealer-manager agreement with Resource Securities, the Company paid Resource Securities a selling commission of up to 7% of gross primary offering proceeds and a dealer-manager fee of up to 3% of gross primary offering proceeds.

Resource Securities reallowed all selling commissions earned and up to 1% of the dealer-manager fee as a marketing fee to participating broker-dealers.  No selling commissions or dealer-manager fees are earned by Resource Securities in connection with sales under the distribution reinvestment plan.  Additionally, the Company could reimburse Resource Securities for bona fide due diligence expenses.

Relationship with Other Related Parties

The Company has also made payment for legal services to the law firm of Ledgewood P.C. (“Ledgewood”).  Until 1996, the Chairman of RAI was of counsel to Ledgewood.  In connection with the termination of his affiliation with Ledgewood and its redemption of his interest, the Chairman continues to receive certain payments from Ledgewood.  Until March 2006, a current executive of RAI was the managing member of Ledgewood.  This executive remained of counsel to Ledgewood through June 2007, at which time he became an Executive Vice President of RAI.  In connection with his separation, this executive is entitled to receive payments from Ledgewood through 2013. 

The Company utilizes the services of a printing company, Graphic Images, LLC (“Graphic Images”), whose principal owner is the father of RAI’s Chief Financial Officer.  

The fees earned / expenses paid and the amounts payable to such related parties are summarized in the following tables (in thousands):

	March 31, 2014		December 31, 2013
Receivables from related parties:
RAI and affiliates	$	54	$	530
Payables to related parties:
Advisor:
Acquisition fees	$	952	$	—
Expense reimbursements	228		775
Resource Real Estate Opportunity Manager, LLC:
Property management fees	269		266
Operating expense reimbursements	362		500
Resource Securities, Inc.
Selling commissions and dealer manager fees	—		174
Other	15		3
	$	1,826	$	1,718

	Three Months Ended March 31,
	2014		2013
Fees earned / expenses paid to related parties:
Advisor:
Acquisition fees	$	2,723	$	555
Asset management fees	$	1,250	$	406
Organization and offering costs	$	—	$	103
Overhead allocation	$	351	$	101
Resource Real Estate Opportunity Manager LLC:
Property management fees	$	696	$	413
Construction management fees	$	229	$	—
Debt servicing fees	$	—	$	1
Resource Securities, Inc.:
Selling commissions and dealer manager fees	$	—	$	5,100
Other:
Ledgewood	$	30	$	31
Graphic Images	$	33	$	133