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 June 30, 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 August 12, 2014, there were 68,196,824 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 - June 30, 2014 (unaudited) and December 31, 2013	3
	Consolidated Statements of Operations and Comprehensive Loss - Three and Six Months Ended June 30, 2014 and 2013 (unaudited)	4
	Consolidated Statements of Changes in Stockholders' Equity - Six Months Ended June 30, 2014 (unaudited)	4
	Consolidated Statements of Cash Flows - Six Months Ended June 30, 2014 and 2013 (unaudited)	6
	Notes to Consolidated Financial Statements - June 30, 2014 (unaudited)	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	47
Item 4.	Controls and Procedures	47
PART II
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3.	Defaults Upon Senior Securities	48
Item 6.	Exhibits	49
SIGNATURES		50

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)

	June 30, 2014			December 31, 2013
	(unaudited)
ASSETS
Investments:
Rental properties, net	$	744,340		$	390,373
Loans held for investment, net	1,461			1,724
Identified intangible assets, net	4,135			5,182
Assets of discontinued operations	—			88
	749,936			397,367
Cash	182,498			270,323
Restricted cash	5,091			4,456
Due from related parties	1,585			530
Tenant receivables, net	740			573
Deposits	186			141
Accounts receivable - other	10			—
Prepaid expenses and other assets	3,507			1,567
Deferred financing costs, net	5,800			3,602
Goodwill	1,849			—
Total assets	$	951,202		$	678,559
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Mortgage notes payable	$	358,917		$	111,811
Revolving credit facilities	75,586			37,041
Accounts payable	6,555			1,417
Accrued expenses and other liabilities	1,389			2,745
Accrued real estate taxes	4,598			2,117
Due to related parties	1,539			1,718
Tenant prepayments	947			615
Security deposits	2,554			1,826
Distribution payable	2,263			2,222
Total liabilities	454,348			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; 68,052,380 and 66,725,241 shares issued, respectively; and 67,881,990 and 66,667,136 shares outstanding, respectively)	679			668
Convertible stock (“promote shares”; par value $.01; 50,000 shares authorized, issued and outstanding)	1			1
Additional paid-in capital	602,269			590,591
Accumulated other comprehensive (loss) income	(187		)	20
Accumulated deficit	(116,277		)	(74,233		)
Total stockholders’ equity	486,485			517,047
Noncontrolling interests	10,369			—
Total equity	496,854			517,047
Total liabilities and stockholders’ equity	$	951,202		$	678,559

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

3

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share data)

(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
										(Remeasured)
Revenues:
Rental income	$	24,910		$	8,513		$	45,579		$	15,309
Gain on foreclosures	—			—			—			3,460
Interest income	(294		)	61			221			115
Total revenues	24,616			8,574			45,800			18,884
Expenses:
Rental operating	13,280			5,267			25,307			9,875
Acquisition costs	4,035			1,832			6,535			2,518
Foreclosure costs	—			10			—			49
Management fees	2,838			869			4,947			1,646
General and administrative	3,478			1,655			5,772			2,567
Loss (gains) on disposal of assets	21			(1		)	1,648			36
Depreciation and amortization expense	13,820			3,115			24,899			5,884
Total expenses	37,472			12,747			69,108			22,575
Loss before other expenses	(12,856		)	(4,173		)	(23,308		)	(3,691		)
Other (expense) income:
Net gain on dispositions	2,541			—			2,541			—
Gain on forfeiture/redemption of stock	—			1			—			22
Interest expense	(3,157		)	(122		)	(5,896		)	(247		)
Loss from continuing operations	(13,472		)	(4,294		)	(26,663		)	(3,916		)
Discontinued operations:
(Loss) income from discontinued operations	—			(96		)	2			(674		)
Net gain on dispositions	—			3,173			—			3,173
Income from discontinued operations, net	—			3,077			2			2,499
Net loss	(13,472		)	(1,217		)	(26,661		)	(1,417		)
Net loss attributable to noncontrolling interests	2,214			—			1,410			—
Net loss attributable to stockholders	$	(11,258	)	$	(1,217	)	$	(25,251	)	$	(1,417	)
Amounts attributable to stockholders
Loss from continuing operations	$	(11,258	)	$	(4,294	)	$	(25,253	)	$	(3,916	)
Discontinued operations	—			3,077			2			2,499
Net loss attributable to stockholders	$	(11,258	)	$	(1,217	)	$	(25,251	)	$	(1,417	)
Net loss	$	(13,472	)	$	(1,217	)	$	(26,661	)	$	(1,417	)
Other comprehensive loss:
Designated derivatives, fair value adjustment	(149		)	—			(207		)	—
Comprehensive loss	(13,621		)	(1,217		)	(26,868		)	(1,417		)
Comprehensive loss attributable to noncontrolling interests	2,214			—			1,410			—
Total comprehensive loss attributable to stockholders	$	(11,407	)	$	(1,217	)	$	(25,458	)	$	(1,417	)
Weighted average common shares outstanding	67,749			32,408			67,558			28,894
Basic and diluted (loss) income per common share:
Continuing operations	$	(0.17	)	$	(0.13	)	$	(0.37	)	$	(0.14	)
Discontinued operations	—			0.09			—			0.09
Net loss	$	(0.17	)	$	(0.04	)	$	(0.37	)	$	(0.05	)

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

4

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 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	994		9			—	—		9,431			—			—			9,440			—			9,440
Syndication costs	—		—			—	—		34			—			—			34			—			34
Distributions of common stock	333		3			—	—		3,330			—			(3,333		)	—			—			—
Distributions declared	—		—			—	—		—			—			(13,503		)	(13,503		)	—			(13,503		)
Share redemptions	(112	)	(1		)	—	—		(1,117		)	—			43			(1,075		)	—			(1,075		)
Designated derivatives, fair value adjustment	—		—			—	—		—			(207		)	—			(207		)	—			(207		)
Noncontrolling interests retained in the Paladin merger	—		—			—	—		—			—			—			—			18,691			18,691
Deconsolidation of noncontrolling interest	—		—			—	—		—			—			—			—			(6,912		)	(6,912		)
Net loss	—		—			—	—		—			—			(25,251		)	(25,251		)	(1,410		)	(26,661		)
Balance at June 30, 2014	67,882		$	679		50	$	1	$	602,269		$	(187	)	$	(116,277	)	$	486,485		$	10,369		$	496,854

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)
	Six Months Ended
	June 30,
	2014			2013
				(Remeasured)
Cash flows from operating activities:
Net loss	$	(26,661	)	$	(1,417	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Income from discontinued operations	(2		)	(2,499		)
Gain on foreclosures	—			(3,460		)
Loss on disposal of assets	1,648			36
Net gain on dispositions	(2,541		)	—
Depreciation and amortization	24,899			5,884
Amortization of deferred financing costs	566			111
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	(482		)	86
Tenant receivables, net	(167		)	(612		)
Deposits	(113		)	256
Prepaid expenses and other assets	(1,488		)	(1,168		)
Due to related parties, net	(1,764		)	675
Accounts payable and accrued expenses	5,956			2,020
Tenant prepayments	300			(26		)
Security deposits	388			70
Net cash provided by (used in) operating activities of continuing operations	539			(553		)
Cash flows from investing activities:
Proceeds from disposal of properties, net closing costs	10,070			10,043
Property acquisitions	(169,146		)	(63,958		)
Ownership acquisitions	(56,115		)	—
Capital expenditures	(17,208		)	(13,319		)
Principal payments received on loans	195			12
Net cash used in investing activities of continuing operations	(232,204		)	(67,222		)
Cash flows from financing activities:
Proceeds from issuance of common stock	—			128,330
Redemptions	(1,075		)	—
Payment of deferred financing costs	(2,770		)	(247		)
Deferred offering costs	—			2,457
Increase in borrowings	159,874			—
Principal payments on borrowings	(8,291		)	(98		)
Distributions paid on common stock	(4,022		)	(1,922		)
Syndication costs	34			(15,260		)
Net cash provided by financing activities of continuing operations	143,750			113,260
Net cash (used in) provided by continuing operations	(87,915		)	45,485

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)
	Six Months Ended
	June 30,
	2014			2013
				(Remeasured)
Cash flows from discontinued operations:
Net cash provided by operating activities	90			98
Net cash provided by discontinued operations	90			98
Net (decrease) increase in cash	(87,825		)	45,583
Cash at beginning of period	270,323			29,336
Cash at end of period	$	182,498		$	74,919

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

7

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2014

(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, manages the day-to-day operations of the Company. 

Through its private and public offerings, which concluded on December 13, 2013, the Company raised aggregate gross offering proceeds of $645.8 million from the issuance of 64,926,311 shares of common stock, including 276,056 shares purchased by the Advisor. The Company additionally issued 993,803 shares for $9.4 million pursuant to its distribution reinvestment plan since December 31, 2013. The Company's distribution reinvestment plan offering is ongoing.

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 to the consolidated financial statements 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 six months ended June 30, 2014 may not necessarily be indicative of the results of operations for the full year ending December 31, 2014.

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:

8

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

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 (b)	N/A	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	N/A (c)	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")	Affinity at Winter Park	192	Winter Park, FL
RRE Brentdale Holdings, LLC ("Brentdale")	The Westside	412	Plano, TX
RRE Jefferson Point Holdings, LLC ("Jefferson Point")	Tech Center Square	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")	Meridian Pointe	339	Burnsville, MN
RRE Addison Place, LLC ("Addison Place")	Addison Place	403	Alpharetta, GA
PRIP Coursey, LLC ("Evergreen at Coursey Place")	Evergreen at Coursey Place	352	Baton Rouge, LA
PRIP 3700, LLC ("Champion Farms")	N/A (d)	N/A	N/A
PRIP 10637, LLC ("Fieldstone")	N/A (d)	N/A	N/A
PRIP 500, LLC ("Pinehurst")	N/A (d)	N/A	N/A
PRIP 1102, LLC ("Pheasant Run")	N/A (d)	N/A	N/A
PRIP 11128, LLC ("Retreat at Shawnee")	N/A (d)	N/A	N/A
PRIP 6700, LLC ("Hilltop Village")	N/A (d)	N/A	N/A
PRIP 3383, LLC ("Conifer Place")	N/A (d)	N/A	N/A
PRIP Stone Ridge, LLC ("Stone Ridge")	N/A (d)	N/A	N/A
PRIP Pines, LLC ("Pines of York")	N/A (d)	N/A	N/A
PRIP 5060/6310, LLC ("Governor Park")	N/A (d)	N/A	N/A
RRE Chisholm Place Holdings LLC ("Chisholm Place")	Chisholm Place	142	Plano, TX
RRE Berkeley Run Holdings, LLC ("Berkley Run")	Berkeley Run	194	Atlanta, GA
RRE Berkeley Trace Holdings LLC ("Berkley Trace")	Berkeley Trace	165	Atlanta, GA
RRE Merrywood LLC ("Merrywood")	Merrywood	228	Katy, TX

N/A - Not Applicable

(a) - Discontinued operations

9

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

(b) - Sold in 2014

(c) - Subsidiary holds a portion of the Williamsburg parking lot    

(d) - Wholly-owned subsidiary of RRE Charlemagne Holdings, LLC

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. 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. 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 include the accounts of the Company's majority-owned and/or controlled subsidiaries as follows:

Subsidiary	Ownership %	Apartment Complex	Number of Units	Property Location
Springhurst Housing Partners, LLC ("Champion Farms")	70.0%	Champion Farms	264	Louisville, KY
Glenwood Housing Partners I, LLC ("Fieldstone")	83.0%	Fieldstone	266	Woodlawn, OH
KC Pinehurst Associates, LLC ("Pinehurst")	97.5%	Pinehurst	146	Kansas City, MO
KC Pheasant Associates, LLC ("Pheasant Run")	97.5%	Pheasant Run	160	Lee's Summit, MO
KC Retreat Associates, LLC ("Retreat at Shawnee")	97.5%	Retreat at Shawnee	342	Shawnee, KS
Parkhill Partners I, LLC ("Hilltop Village")	49.0%	Hilltop Village	124	Kansas City, MO
FPA/PRIP Conifer, LLC ("Conifer Place")	42.5%	Conifer Place	420	Norcross, GA
DT Stone Ridge, LLC ("Stone Ridge")	68.5%	Stone Ridge	191	Columbia, SC
FP-1, 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 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

10

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

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 six months ended June 30, 2013, the Company recorded a $539,000 impairment charge for one of its loans held for investment (see Note 8 regarding the Heatherwood Note). There were no impairment charges during the three and six months ended June 30, 2014 or during the three months ended June 30, 2013. The impairment charge 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.

11

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

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 during the fourth quarter of each calendar year, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

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 $45.0 million and $344,000 for the 12 months periods ending June 30, 2015 and 2016, respectively, and none thereafter.

12

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

Tenant Receivables

Tenant receivables are stated in the financial statements as 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 June 30, 2014 and December 31, 2013, there were allowances for uncollectible receivables of $30,000 and $86,000, respectively.

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 June 30, 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 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 as their effect would be anti-dilutive.  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.

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:

13

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

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 as of January 1, 2014.

Accounting Standards Issued But Not Yet Effective

In May 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers”, which will replace most existing revenue recognition guidance in GAAP.  The core principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services.  The ASU requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The ASU will be effective for the Company beginning January 1, 2017, including interim periods in 2017, and allows for both retrospective and prospective methods of adoption. The Company is in the process of determining the method of adoption and assessing the impact of this guidance on the Company’s consolidated financial position, results of operations and cash flows.

NOTE 3 – SUPPLEMENTAL CASH FLOW INFORMATION

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

	Six Months Ended
	June 30,
	2014		2013
Non-cash financing and investing activities:
Property and intangibles received on foreclosure of loans held for investment	$	—	$	10,150
Financing provided for disposed property	—		800
Mortgage refinancing	16,000		—
Stock issued from the distribution reinvestment plan	9,441		3,580
Stock distributions issued	3,333		3,798
Cash distributions on common stock declared but not yet paid	2,263		1,183
Investor contributions held in escrow which have converted to common stock	—		2,242
Deferred financing costs and escrow deposits funded directly by mortgage note and revolving credit facility	505		—
Debt assumed	138,327		—
Cash paid during the period for:
Interest	$	4,598	$	140

NOTE 4 – RENTAL PROPERTIES, NET

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

	June 30, 2014			December 31, 2013
Land	$	108,972		$	62,859
Building and improvements	638,799			325,412
Furniture, fixtures and equipment	23,261			17,051
Construction in progress	2,594			827
	773,626			406,149
Less: accumulated depreciation	(29,286		)	(15,776		)
	$	744,340		$	390,373

14

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

Depreciation expense for the three and six months endedJune 30, 2014 was $7.8 million and $14.3 million, respectively. Deprecation expense for the three and six months ended June 30, 2013 was $2.1 million and $4.0 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 June 30, 2014 and December 31, 2013 was $1.9 million. The performing notes were purchased net of discounts and the unamortized accretable discounts totaled $280,000 and $292,000 at June 30, 2014 and December 31, 2013, respectively.

On December 31, 2011, the Peterson Note matured 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 was 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.

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):

	June 30, 2014			December 31, 2013
	Amount		Percent	Amount		Percent
Current	$	1,461	100%	$	1,529	89%
Delinquent:
30−89 days	—		—%	195		11%
90−180 days	—		—%	—		—%
Greater than 180 days	—		—%	—		—%
	$	1,461	100%	$	1,724	100%

15

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

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

	June 30, 2014		December 31, 2013
Loans:
Performing	$	1,461	$	1,529
Nonperforming	—		195
Total	$	1,461	$	1,724

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

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

The Company has individually evaluated each loan for impairment and determined that, as of June 30, 2014, the two loans held for investment were not impaired. 

There were no charge-offs for the six months endedJune 30, 2014.

NOTE 6 – ACQUISITIONS, GOODWILL AND FORECLOSURES

Real Estate Investments

As of June 30, 2014, the Company owned interests in 38 properties, including 10 multifamily properties purchased on January 28, 2014 as part of the Paladin acquisition, discussed below. The Company recognized goodwill as the excess of purchase price over the fair value of the property acquired. 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 has received final appraisals for all recent acquisitions.

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

16

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

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
Merrywood	Katy, TX	6/26/2014	$	32,300	(3)	$	5,579	$	26,033	$	—	$	688	$	62	$	(377	)	$	31,985
Berkeley Trace	Atlanta, GA	5/19/2014	22,250			4,002		17,600		194		453		25		(110		)	22,164
Berkeley Run	Atlanta, GA	5/19/2014	29,500			4,723		23,969		219		588		32		(156		)	29,375
Chisolm Place	Plano, TX	5/5/2014	15,000			1,981		12,383		198		438		36		(31		)	15,005
Evergreen at Coursey	Baton Rouge, LA	3/31/2014	15,613		(8)	3,430		38,041		530		1,080		680		(28,799		)	14,962
Addison Place	Alpharetta, GA	3/28/2014	70,500			6,353		62,249		509		1,389		55		(392		)	70,163
Meridian Pointe	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
Tech Center Square	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
Affinity at Winter Park	Winter Park, FL	6/27/2013	10,100			2,512		6,459		523		606		50		(61		)	10,089
Trailpoint at the Woodlands	Houston, 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 (1)	Hermantown MN	3/21/2012	10,300		(4)	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 (1)	Dayton, OH	5/13/2011	7,100		(5)	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
Vista Apartment Homes (1)	Philadelphia, PA	6/17/2011	12,000		(6)	1,163		9,913		—		535		530		(141		)	12,000
Arcadia at Westheimer (1)	Houston, TX	9/3/2010	7,800		(7)	943		6,599		—		258		—		—			7,800
107th Avenue	Omaha, NE	8/18/2010	225			25		196		—		4		—		—			225

17

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

(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) 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.

(7) 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.

(8) The Company originally acquired a 51.7% interest in the joint venture that owned Evergreen at Coursey. On March 31, 2014, the Company purchased the remaining 48.3% ownership interest of its joint venture partner, bringing the Company's ownership percentage to 100.0%.

Acquisitions

The Company acquired interests in 16 properties during the six months ended June 30, 2014 including the 10 joint venture interests comprising the Paladin acquisition. In order to finalize the fair values of the acquired assets and liabilities, the Company obtained 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. All valuations have been finalized as of June 30, 2014.

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 was 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 contained 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 47.65% membership interest in one of the Paladin joint ventures, FPA/PRIP Governor Park, LLC ("Governor Park"), to FPA Governor Park Associates, LLC for $456,000. The sale price approximated the fair value, therefore no gain or loss was recognized on the transaction.

18

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

The allocation of the purchase price for the interests in the 10 Paladin joint ventures, which was completed during the six months ended June 30, 2014, is included below (in thousands):

Multifamily Community Name	City and State	Ownership % at Date of Acquisition		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	%	$	3,168	$	23,464	$	579	$	27,211	$	(16,440	)	$	(3,231	)	$	7,540	$	184	$	7,724
Fieldstone	Woodlawn, OH	83.0	%	1,420		18,472		648		20,540		(15,801		)	(806		)	3,933		140		4,073
Pinehurst	Kansas City, MO	97.5	%	1,250		8,241		290		9,781		(4,219		)	(139		)	5,423		67		5,490
Pheasant Run	Lee's Summit, MO	97.5	%	800		10,798		317		11,915		(6,100		)	(145		)	5,670		82		5,752
Retreat at Shawnee	Shawnee, KS	97.5	%	3,200		14,550		608		18,358		(13,412		)	(124		)	4,822		126		4,948
Hilltop Village	Kansas City, MO	49.0	%	800		4,289		195		5,284		(4,366		)	(468		)	450		36		486
Conifer Place	Norcross, GA	42.5	%	5,040		28,712		1,007		34,759		(28,202		)	(3,768		)	2,789		235		3,024
Stone Ridge	Columbia, SC	68.5	%	1,300		4,612		326		6,238		807			(2,218		)	4,827		44		4,871
Evergreen at Coursey Place	Baton Rouge, LA	51.7	%	3,430		38,041		1,080		42,551		(27,587		)	(7,223		)	7,741		288		8,029
Pines of York	Yorktown, VA	90.0	%	4,464		16,340		715		21,519		(14,629		)	(689		)	6,201		146		6,347
				$	24,872	$	167,519	$	5,765	$	198,156	$	(129,949	)	$	(18,811	)	$	49,396	$	1,348	$	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 in Evergreen at Coursey Place ("Coursey Place") from its joint venture partner for $7.5 million. A summary of the transaction is as follows (in thousands):

Noncontrolling interest assumed	$	7,223
Losses attributable to noncontrolling interest	(191		)
Prepaid insurance	7
Goodwill	501
Transaction expenses	45
	$	7,585

Total goodwill recorded by the Company related to the Paladin acquisition is as follows (in thousands):

Amount of goodwill recorded at date of Paladin acquistion	$	1,348
Buyout of Coursey Place noncontrolling interest	501
Total goodwill	$	1,849

19

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

NOTE 7 - MEASUREMENT PERIOD ADJUSTMENTS

The Company obtains third party appraisals for all of its acquisitions. If the appraisals are not finalized in the period in which the property or interest was acquired, a measurement period adjustment is recorded. The measurement period adjustment for the Deerfield acquisition was finalized during the three months ended December 31, 2013. For the Paladin and Addison acquisitions, which were completed in the three months ended March 31, 2014, the measurement period adjustments were finalized during the three months ended June 30, 2014.

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.      

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 (in thousands):

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

Changes in the Paladin and Addison acquisitions are reflected in the tables below (in thousands):

Paladin

	January 28, 2014 (As initially reported)			Measurement period adjustment (1)			June 30, 2014 (As adjusted)
Land	$	44,292		$	(19,418	)	$	24,874
Building	149,155			18,362			167,517
Personal property	—			3,530			3,530
Intangible assets	5,861			(96		)	5,765
Goodwill	6,412			(5,064		)	1,348
Other net assets (liabilities)	(137,739		)	4,260			(133,479		)
Total net identifiable net assets	67,981			1,574			69,555

(1) Remaining balance ($1.6 million) of measurement period adjustments adjusted the noncontrolling interest balance.

The results of operations for the three and six months ended June 30, 2014 include an additional $867,000 of depreciation and amortization that would have been included in the three months ended March 31, 2014 had the final appraisals for the Paladin properties been received and recorded during that period.

20

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

Addison Place

	March 31, 2014 (As initially reported)		Measurement period adjustment			June 30, 2014 (As adjusted)
Land	$	18,137	$	(11,784	)	$	6,353
Building	51,843		10,406			62,249
Personal property	—		509			509
Intangible assets	520		869			1,389
Total net identifiable net assets	$	70,500	$	—		$	70,500

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 and six months ended June 30, 2014 and 2013 are the operating results of the Heatherwood Apartments and the Town Park Apartments, both discussed below.

      The Company sold the Heatherwood Apartments, which was originally obtained through foreclosure, 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 on April 30, 2013 for $10.3 million and recognized a gain of approximately $3.2 million on disposition.    

The Company sold the Campus Club Apartments on June 16, 2014 for $10.5 million and recognized a gain of approximately $2.5 million on the disposition. In accordance with new accounting guidance for discontinued operations (see Note 2), the Company included the gain in loss from continuing operations on the consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2014.

    The results of discontinued operations are summarized for the three and six months ended June 30, 2014 and 2013 as follows (in thousands): 

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2014		2013			2014		2013
Revenues:
Rental income	$	—	$	275		$	3	$	1,081
Total revenues	—		275			3		1,081
Expenses:
Rental operating	—		185			1		788
Management fees	—		19			—		62
General and administrative	—		167			—		225
Loss on property impairment	—		—			—		539
Depreciation and amortization expense	—		—			—		141
Total expenses	—		371			1		1,755
(Loss) income from discontinued operations	—		(96		)	2		(674		)
Net gain on dispositions	—		3,173			—		3,173
Income from discontinued operations	$	—	$	3,077		$	2	$	2,499
Weighted average common shares outstanding	67,749		32,408			67,558		28,894
Basic and diluted income per common share	$	—	$	0.09		$	—	$	0.09

21

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

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 $26.2 million and $16.7 million as of June 30, 2014 and December 31, 2013, respectively, net of accumulated amortization of $22.1 million and $11.5 million, respectively.  The weighted-average remaining life of the existing rental leases was 8.2 months and 11.6 months as of June 30, 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 and six months ended June 30, 2014 was $6.0 million and $10.6 million, respectively. Amortization of the rental and antennae leases for the three and six months ended June 30, 2013 was $1.0 million and $1.9 million, respectively.

Expected amortization for the rental and antennae leases for the next five years ending June 30, and thereafter, is as follows (in thousands): 

2015	$	3,949
2016	19
2017	17
2018	16
2019	16
Thereafter	118
	$	4,135

NOTE 10 – MORTGAGE NOTES PAYABLE

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

	Balance Outstanding at		Maturity Date	Annual Interest Rate					Interest Expense (3)
							Average Monthly Debt Service		Six Months Ended   June 30,
Collateral	June 30, 2014 (4)								2014		2013
Jasmine at Holcomb Bridge	$	20,298	6/1/2024	1.95	%	(1)	$	106	$	5	N/A
Berkeley Trace	14,322		7/1/2044	3.42	%	(2)	63		5		N/A
Berkeley Run	18,147		7/1/2044	3.42	%	(2)	79		7		N/A
Addison Place	50,000		5/1/2020	3.38	%	(2)	191		19		N/A
Chisholm Place	11,587		4/1/2023	2.66	%	(1)	41		22		N/A
Vista Apartment Homes	8,744		5/1/2017	2.76	%	(1)	38		122		$	66
Cannery Lofts	8,190		9/1/2020	3.45	%	(1)	34		142		N/A
Deerfield	10,530		11/1/2020	4.66	%	(2)	51		247		N/A
Trailpoint at the Woodlands	19,362		11/1/2023	5.02	%	(1)	100		250		N/A
Ivy at Clear Creek	8,586		11/1/2023	5.02	%	(1)	44		111		N/A
Centennial	23,057		1/1/2019	3.60	%	(2)	106		419		N/A
Pinnacle	18,618		1/1/2019	3.60	%	(2)	85		338		N/A
Terrace at River Oaks	14,204		1/1/2022	4.32	%	(2)	71		310		N/A
Champion Farms	16,724		7/1/2016	6.14	%	(2)	85		427		N/A
Fieldstone	16,000		5/1/2016	2.40	%	(1)	70		411		N/A
Pinehurst	4,320		1/1/2017	5.58	%	(2)	39		81		N/A
Pheasant Run	6,452		10/1/2018	5.95	%	(2)	31		158		N/A
Retreat of Shawnee	13,683		2/1/2019	5.58	%	(2)	99		318		N/A
Hilltop Village	4,315		12/1/2018	5.81	%	(2)	33		82		N/A
Conifer Crossing	28,261		9/1/2016	5.96	%	(2)	203		704		N/A
Coursey Place	28,330		8/1/2021	5.07	%	(2)	154		608		N/A
Pines of York	15,187		12/1/2021	4.46	%	(2)	80		297		N/A
	$	358,917

22

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

(1) Variable rate based on one-month LIBOR of 0.15% (as of June 30, 2014).

(2) Fixed rate.

(3) Excludes the amortization of the premium related to the Paladin fair value adjustments which is amortized to interest expense over the term of the related debt.

(4) Includes $1.3 million fair value premium related to the Paladin debt assumed.

Annual principal payments on the mortgage notes payable, excluding the amortization of the fair value adjustments for the debt secured by the properties included in the Paladin acquisition, for each of the next five years ending June 30, and thereafter, are as follows (in thousands):

2015	$	3,980
2016	39,689
2017	40,098
2018	21,157
2019	49,511
Thereafter	203,168
	$	357,603

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. The Company has also guaranteed the completion and payment of costs of completion of no less than $7.0 million of renovations to Addison by July 1, 2018.

For the Fieldstone mortgage, beginning with the calendar quarter ended December 31, 2013, the property must maintain a certain level of debt service coverage.     

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 $25.0 million to $50.0 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 $7.0 million. The Company paid certain closing costs in connection with the Bank of America Credit Facility, including loan fees totaling $413,305. As of June 30, 2014 and December 31, 2013, the Company had outstanding borrowings of $40.1 million and $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 June 30, 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 $27,000 and $35,000 for the three and six months ended June 30, 2014, respectively, 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:

23

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

• 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 unreasonably withheld.

The Company was in compliance with all such covenants at June 30, 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 June 30, 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 June 30, 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 and $135,000 for the three and six months ended June 30, 2014, respectively, in connection with its borrowings under the Jefferson Point Credit Facility.         

The Jefferson Point Credit Facility includes both a debt service coverage covenant and a tangible net worth covenant. The Company was in compliance with all such covenants at June 30, 2014.

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 June 30, 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 June 30, 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 $124,000 and $247,000 for the three and six months ended June 30, 2014, respectively, in connection with its borrowings under the Brentdale Credit Facility.

The Brentdale Credit Facility includes both a guarantor net worth, liquidity and leverage covenant and a property debt service coverage covenant. The Company was in compliance with the guarantor requirements at June 30, 2014. The property debt service coverage covenant is only required to be met after January 1, 2015.

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 June 30, 2014 and December 31, 2013 was approximately $933,000 and $419,000, respectively.  Estimated amortization of the existing deferred financing costs for the next five years ending June 30, and thereafter, are as follows (in thousands):

2015	$	1,321
2016	1,255
2017	1,084
2018	709
2019	554
Thereafter	877
	$	5,800

24

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

NOTE 13 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the changes in each component of accumulated other comprehensive income (loss) for the six months endedJune 30, 2014 (in thousands):

	Net unrealized gain (loss) on derivatives
January 1, 2014	$	20
Unrealized loss on designated derivative	(207		)
June 30, 2014	$	(187	)

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

Substantially all of the receivables from related parties represents escrow funds held by RAI for self insurance. 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 $2.5 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.

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.

25

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

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 earns 4.5% of the gross receipts from our properties, provided for that properties that are less than 75% occupied, the manager receives a minimum fee for the first 12 months of ownership, for performing certain property management and leasing activities. 

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 was 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.  

26

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

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

	June 30, 2014		December 31, 2013
Receivables from related parties:
RAI and affiliates - insurance funds held in escrow	$	1,585	$	530
Payables to related parties:
Advisor:
Expense reimbursements	$	335	$	775
Resource Real Estate Opportunity Manager, LLC:
Property management fees	315		266
Operating expense reimbursements	876		500
Resource Securities, Inc.
Selling commissions and dealer manager fees	—		174
Other	13		3
	$	1,539	$	1,718

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Fees earned / expenses paid to related parties:
Advisor:
Acquisition fees	$	2,262	$	1,200	$	4,985	$	1,800
Asset management fees	$	1,790	$	500	$	3,040	$	914
Disposition fees	$	150	$	116	$	150	$	116
Organization and offering costs	$	—	$	99	$	—	$	203
Overhead allocation	$	564	$	97	$	915	$	198
Resource Real Estate Opportunity Manager LLC:
Property management fees	$	848	$	371	$	1,544	$	784
Construction management fees	$	481	$	—	$	676	$	—
Debt servicing fees	$	2	$	1	$	5	$	1
Resource Securities, Inc.:
Selling commissions and dealer manager fees	$	—	$	5,100	$	—	$	12,100
Other:
Ledgewood	$	71	$	51	$	101	$	82
Graphic Images	$	—	$	111	$	33	$	325

27

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

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 June 30, 2014 and December 31, 2013, no shares of preferred stock were issued and outstanding.

Common Stock

As of June 30, 2014, the Company had issued an aggregate of 68,052,380 shares, 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	$	12,582
Shares issued through primary public offering	62,485,461	622,077
Shares issued through stock distributions	2,132,266	—
Shares issued through distribution reinvestment plan	2,155,426	20,477
Shares issued in conjunction with the Advisor's initial investment, net of 4,500 share conversion	15,500	200
Total	68,052,380	$	655,336

Convertible Stock

As of June 30, 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 June 30, 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
April 2014	—	—	104,334	(2)
May 2014	—	—	104,334	(2)
June 2014	68,778	$9.04	173,112	(2)

(1) All redemptions of equity securities by the Company in the three months ended June 30, 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 and six months ended June 30, 2014.

28

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

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 six months ended June 30, 2014, the Company paid aggregate distributions of $13.5 million, including $4.0 million of distributions paid in cash and $9.4 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	Distributions 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
March 31, 2014	0.033		April 1, 2014	1,576		672		2,248
April 30, 2014	0.033		May 1, 2014	1,574		679		2,253
May 30, 2014	0.033		June 2, 2014	1,578		680		2,258
				$	9,440	$	4,020	$	13,460

On April 25, 2014, the Company's Board of Directors declared cash distributions of $2.3 million ($0.33 per common share) to stockholders of record as of the close of business on June 30, 2014, which were paid on July 1, 2014.

Since its formation, the Company's Board of Directors 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 June 30, 2014.

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.

29

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 2014

(unaudited)

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.

Derivatives (interest rate caps) which are reported at fair value in the consolidated balance sheets are valued by a third-party pricing agent using an income approach with models that use, as their primary inputs, readily observable market parameters. This valuation process considers factors including interest rate yield curves, time value, credit and volatility factors. (Level 2)

The following table presents information about the Company's assets measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as follows (in thousands):

	Level 1		Level 2		Level 3		Total
June 30, 2014
Assets:
Interest rate caps	$	—	$	148	$	—	$	148
	$	—	$	148	$	—	$	148
December 31, 2013
Assets:
Interest rate caps	$	—	$	290	$	—	$	290
	$	—	$	290	$	—	$	290

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):

	June 30, 2014						December 31, 2013
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Loans held for investment, net	$	1,461		$	1,461		$	1,724		$	1,724
Mortgage notes payable	$	(358,917	)	$	(316,489	)	$	(111,811	)	$	(110,413	)
Revolving credit facilities	$	(75,586	)	$	(75,586	)	$	(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. On April 10, 2014, the Company sold its interest in the sheriff's deed for the Peterson Apartments. Accordingly, the Company had adjusted the carrying amount of the note at December 31, 2013 for such impairment. (Level 3)

The fair value of the mortgage notes payable was estimated using rates available to the Company for debt with similar terms and remaining maturities. (Level 3)

The fair values of the revolving credit facilities equal the carrying amounts because the interest rate of each of the credit facilities is variable. (Level 3)

30

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 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 four interest rate caps that were designated as cash flow hedges during 2013 and 2014. 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 three and six months ended June 30, 2014 and 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 and six months ended June 30, 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 June 30, 2014, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (dollars in thousands):

Interest Rate Derivative	Number of Instruments	Notional Amount		Maturity Dates
Interest Rate Caps	4	$	59,833	July 1, 2018 to November 1, 2018

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 in prepaid expenses and other assets on the Balance Sheet as of June 30, 2014 and December 31, 2013 (in thousands):

Asset Derivatives						Liability Derivatives
June 30, 2014			December 31, 2013			June 30, 2014			December 31, 2013
Balance Sheet	Fair Value		Balance Sheet	Fair Value		Balance Sheet	Fair Value		Balance Sheet	Fair Value
Interest rate caps	$	148	Interest rate caps	$	290	—	$	—	—	$	—

31

RESOURCE REAL ESTATE OPPORTUNITY REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

JUNE 30, 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 June 30, 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 six months endedJune 30, 2013.

NOTE 20 – SUBSEQUENT EVENTS

On July 1, 2014, the Company purchased the remaining 2.5% ownership interests of its joint venture partners in the joint ventures that own Pinehurst, Pheasant Run and Retreat at Shawnee, bringing the Company's ownership interest to 100% in each of these properties. The Company paid $1.1 million for these interests.

On July 1, 2014, the Company sold its entire membership interest in Parkhill Partners I, LLC ("Hilltop Village") to JTL Properties, LLC, its joint venture partner in the ownership of Hilltop Village. Hilltop Village is a multifamily apartment complex located in Kansas City, Missouri.

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.

32

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 acquired 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 consists of commercial real estate assets, principally (i) multifamily rental properties  purchased as non-performing or distressed loans or as real estate owned by financial institutions and (ii) multifamily rental properties to which we can add value with a capital infusion (referred to as “value add properties”).  However, we are not limited in the types of real estate and real estate-related assets in which we may invest or whether we may invest in equity or debt secured by real estate and, accordingly, we may invest in other real estate assets or debt secured by real estate assets.  We currently anticipate holding approximately 50% of our total assets in category (i) and 50% of our total assets in category (ii) however that may change depending on market and economic conditions.

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.

The primary portion of our initial public offering commenced on June 16, 2010 and 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 June 30, 2014, we owned interests in a total of 38 multifamily properties. During the three and six months endedJune 30, 2014, we acquired interests in four and 16 multifamily properties, respectively. We also disposed of a property during the three and six months ended ended June 30, 2014. 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.

33

Three Months EndedJune 30, 2014 Compared to the Three Months EndedJune 30, 2013

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

	Three Months Ended
	June 30,
	2014			2013
				(Remeasured)
Revenues:
Rental income	$	24,910		$	8,513
Interest income	(294		)	61
Total revenues	24,616			8,574
Expenses:
Rental operating	13,280			5,267
Acquisition costs	4,035			1,832
Foreclosure costs	—			10
Management fees	2,838			869
General and administrative	3,478			1,655
Loss (gains) on disposal of assets	21			(1		)
Depreciation and amortization expense	13,820			3,115
Total expenses	37,472			12,747
Loss before other expenses	(12,856		)	(4,173		)
Other (expense) income:
Net gain on dispositions	2,541			—
Gain on forfeiture/redemption of stock	—			1
Interest expense	(3,157		)	(122		)
Insurance proceeds in excess of cost basis	—			—
Loss from continuing operations	(13,472		)	(4,294		)
Discontinued operations:
Loss from discontinued operations	—			(96		)
Net gain on dispositions	—			3,173
Income from discontinued operations, net	—			3,077
Net loss	(13,472		)	(1,217		)
Net loss attributable to noncontrolling interest	2,214			—
Net loss attributable to stockholders	$	(11,258	)	$	(1,217	)

Revenues: During the three months ended June 30, 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 in which we owned interests from 17 at June 30, 2013 to 38 at June 30, 2014.

Expenses.  Our rental operating expenses increased for the three months ended June 30, 2014 as compared to the three months ended June 30, 2013 primarily due to an increase in the number of operating properties in which we owned interests. Accordingly, we incurred increased management fees, general and administrative expenses, and depreciation and amortization expenses.  

◦ General and administrative expenses increased by $1.8 million from $1.7 million for the three months ended June 30, 2013 to $3.5 million for the three months ended June 30, 2014, primarily related to the following:

◦ General and administrative expenses increased at the property level from $850,000 for the three months ended June 30, 2013 to $2.2 million for the three months ended June 30, 2014 due to the operation of 21 additional properties in which we acquired interests directly or through foreclosure subsequent to June 30, 2013.

◦ Other company level general and administrative expenses increased, primarily related to a $444,000 increase in payroll expense allocated to us by our Advisor.

34

◦ Acquisition costs for the three months ended June 30, 2014 were $4.0 million (primarily related to the acquisition of interests in four properties with an aggregate purchase price of $99.1 million) as compared to acquisition costs of $1.8 million for the three months ended June 30, 2013 (related to the origination of one loan and the acquisition of three properties with an aggregate value of $45.8 million).  

◦ The $2.5 million net gain on dispositions included in other (expense) income for the three months ended June 30, 2014 and the $3.2 million gain on dispositions included for the three months ended June 30, 2013 in discontinued operations reflects the sale of one property in each period.

◦ The $3.0 million increase in interest expense is due to draw downs on our line of credit as well as the borrowings under 12 additional mortgage loans into which we entered subsequent to June 30, 2013.

Six Months EndedJune 30, 2014 Compared to the Six Months EndedJune 30, 2013

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

	Six Months Ended
	June 30,
	2014			2013
				(Remeasured)
Revenues:
Rental income	$	45,579		$	15,309
Gain on foreclosures	—			3,460
Interest income	221			115
Total revenues	45,800			18,884
Expenses:
Rental operating	25,307			9,875
Acquisition costs	6,535			2,518
Foreclosure costs	—			49
Management fees	4,947			1,646
General and administrative	5,772			2,567
Loss on disposal of assets	1,648			36
Depreciation and amortization expense	24,899			5,884
Total expenses	69,108			22,575
Loss before other expenses	(23,308		)	(3,691		)
Other (expense) income:
Net gain on dispositions	2,541			—
Gain on forfeiture/redemption of stock	—			22
Interest expense	(5,896		)	(247		)
Loss from continuing operations	(26,663		)	(3,916		)
Discontinued operations:
Income (loss) from discontinued operations	2			(674		)
Net gain on dispositions	—			3,173
Income from discontinued operations, net	2			2,499
Net loss	(26,661		)	(1,417		)
Net loss attributable to noncontrolling interests	1,410			—
Net loss attributable to stockholders	$	(25,251	)	$	(1,417	)

Revenues: During the six months ended June 30, 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 in which we owned interests from 17 at June 30, 2013 to 38 at June 30, 2014. During the six months ended June 30, 2013, we recorded a gain on foreclosure of $3.5 million for the excess of market value over carrying value at one foreclosed property.

35

Expenses.  Our rental operating expenses increased for the six months ended June 30, 2014 as compared to the six months ended June 30, 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 $2.6 million for the six months ended June 30, 2013 to $5.8 million for the six months ended June 30, 2014, primarily related to the following:

◦ General and administrative expenses increased at the property level from $1.4 million for the six months ended June 30, 2013 to $3.5 million for the six months ended June 30, 2014 due to the operation of 21 additional properties in which we acquired interests directly or through foreclosure subsequent to June 30, 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 $673,000 increase in payroll expense allocated to us by our Advisor.

◦ Acquisition costs for the six months ended June 30, 2014 were $6.5 million (primarily related to the acquisition of interests in 16 properties with an aggregate purchase price of $220.8 million) as compared to acquisition costs of $2.5 million for the six months ended June 30, 2013 (related to the origination of one loan and the acquisition of five properties with an aggregate value of $64.4 million).  

◦ The $2.5 million net gain on dispositions included in other (expense) income and the $3.2 million gain on dispositions included in discontinued operations is due to the sale of one property in each period.

◦ The $5.6 million increase in interest expense is due to draw downs on our line of credit as well as the borrowings under 12 additional mortgage loans into which we entered subsequent to June 30, 2013.

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 $17.2 million during the six months ended June 30, 2014 for capital expenditures primarily related to unit rehabilitations, which included the following (in thousands):

	Capital deployed during the six months ended		Remaining capital budgeted
Property	June 30, 2014
Mosaic	$	1,679	$	1,097
Terrace at River Oaks	1,643		$	4,243
Affinity at Winter Park	1,429		$	1,239
Trailpoint at The Woodlands	1,398		$	2,142
The Westside Apartment Homes	1,323		$	5,168
All other properties	9,736
	$	17,208

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 six months ended June 30, 2014.

36

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.

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 June 30, 2014,an aggregate of 68,052,380 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	$	12,582
Shares issued through primary public offering	62,485,461	622,077
Shares issued through stock distributions	2,132,266	—
Shares issued through distribution reinvestment plan	2,155,426	20,477
Shares issued in conjunction with the Advisor's initial investment, net of 4,500 share conversion	15,500	200
Total	68,052,380	$	655,336

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 $7.0 million. We paid certain closing costs in connection with the Bank of America Credit Facility, including loan fees totaling $413,000. As of June 30, 2014, we had outstanding borrowings of $40.1 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 London Interbank Offered Rate ("LIBOR") plus 3.0% (3.15% at June 30, 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 $27,000 and $35,000 for the three and six months ended June 30, 2014, respectively, 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 unreasonably 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.

37

On December 20, 2013, through a wholly-owned subsidiary, we 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 June 30, 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 June 30, 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 and $135,000 for the three and six months ended June 30, 2014, respectively in connection with our borrowings under the Jefferson Point Credit Facility.

The Jefferson Point Credit Facility includes both a debt service coverage covenant and a tangible net worth covenant. The Company was in compliance with all such covenants at June 30, 2014.

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 June 30, 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 June 30, 2014). We paid certain closing costs in connection with the Brentdale Credit Facility, including loan fees totaling $222,000. We recorded interest expense of $124,000 and $247,000 for the three and six months ended June 30, 2014, respectively, in connection with our borrowings under the Brentdale Credit Facility.

The Brentdale Credit Facility includes both a guarantor net worth, liquidity and leverage covenant and a property debt service coverage covenant. The Company was in compliance with the guarantor requirements at June 30, 2014. The property debt service coverage covenant is only required to be met after January 1, 2015.

Mortgage Debt

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

	Balance Outstanding at		Maturity Date	Annual Interest Rate			Average Monthly Debt Service		Interest Expense (4) for the
									Six Months Ended  June 30,
Collateral	June 30, 2014 (3)								2014		2013
Jasmine at Holcomb Bridge	$	20,298	6/1/2024	1.95	%	(1)	$	106	$	5	N/A
Berkeley Trace	14,322		7/1/2044	3.42	%	(2)	63		5		N/A
Berkeley Run	18,147		7/1/2044	3.42	%	(2)	79		7		N/A
Addison Place	50,000		5/1/2020	3.38	%	(2)	191		19		N/A
Chisholm Place	11,587		4/1/2023	2.66	%	(1)	41		22		N/A
Vista Apartment Homes	8,744		5/1/2017	2.76	%	(1)	38		122		$	64
Cannery Lofts	8,190		9/1/2020	3.45	%	(1)	34		142		N/A
Deerfield	10,530		11/1/2020	4.66	%	(2)	51		247		N/A
Trailpoint at the Woodlands	19,362		11/1/2023	5.02	%	(1)	100		250		N/A
Ivy at Clear Creek	8,586		11/1/2023	5.02	%	(1)	44		111		N/A
Centennial	23,057		1/1/2019	3.60	%	(2)	106		419		N/A
Pinnacle	18,618		1/1/2019	3.60	%	(2)	85		338		N/A
Terrace at River Oaks	14,204		1/1/2022	4.32	%	(2)	71		310		N/A
Champion Farms	16,724		7/1/2016	6.14	%	(2)	85		427		N/A
Fieldstone	16,000		5/1/2016	2.40	%	(1)	70		411		N/A
Pinehurst	4,320		1/1/2017	5.58	%	(2)	39		81		N/A
Pheasant Run	6,452		10/1/2018	5.95	%	(2)	31		158		N/A
Retreat of Shawnee	13,683		2/1/2019	5.58	%	(2)	99		318		N/A
Hilltop Village	4,315		12/1/2018	5.81	%	(2)	33		82		N/A
Conifer Crossing	28,261		9/1/2016	5.96	%	(2)	203		704		N/A
Coursey Place	28,330		8/1/2021	5.07	%	(2)	154		608		N/A
Pines of York	15,187		12/1/2021	4.46	%	(2)	80		297		N/A
	$	358,917

38

(1) Variable rate based on one-month LIBOR of 0.15% (as of June 30, 2014).

(2) Fixed rate.

(3) Includes $1.3 million fair value premium related to the Paladin debt assumed.

(4) Excludes the amortization of the premium related to the Paladin fair value adjustments which is amortized to interest expense over the term of the related debt.

At June 30, 2014, the weighted average interest rate of all our outstanding indebtedness was 3.78% .

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 cash flows from operations, proceeds from debt financing, proceeds from the disposition of assets and, to the extent we co-invest with other entities, capital from any future joint venture partners.     

Operating Properties

As of June 30, 2014, wholly-owned interests in multifamily properties are as follows:

39

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 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")	Affinity at Winter Park	192	Winter Park, FL
RRE Brentdale Holdings, LLC ("Brentdale")	The Westside	412	Plano, TX
RRE Jefferson Point Holdings, LLC ("Jefferson Point")	Tech Center Square	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")	Meridian Pointe	339	Burnsville, MN
RRE Addison Place, LLC ("Addison Place")	Addison Place	403	Alpharetta, GA
PRIP Coursey, LLC ("Evergreen at Coursey Place")	Evergreen at Coursey Place	352	Baton Rouge, LA
RRE Chisholm Place Holdings LLC ("Chisholm Place")	Chisholm Place	142	Plano, TX
RRE Berkeley Run Holdings, LLC ("Berkley Run")	Berkeley Run	194	Atlanta, GA
RRE Berkeley Trace Holdings LLC ("Berkley Trace")	Berkeley Trace	165	Atlanta, GA
RRE Merrywood LLC ("Merrywood")	Merrywood	228	Katy, TX
		8,625

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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
Springhurst Housing Partners, LLC ("Champion Farms")	70.0	%	Champion Farms	264	Louisville, KY
Glenwood Housing Partners I, LLC ("Fieldstone")	83.0	%	Fieldstone	266	Woodlawn, OH
KC Pinehurst Associates, LLC ("Pinehurst")	97.5	%	Pinehurst	146	Kansas City, MO
KC Pheasant Associates, LLC ("Pheasant Run")	97.5	%	Pheasant Run	160	Lee's Summit, MO
KC Retreat Associates, LLC ("Retreat at Shawnee")	97.5	%	Retreat at Shawnee	342	Shawnee, KS
Parkhill Partners I, LLC ("Hilltop Village")	49.0	%	Hilltop Village	124	Kansas City, MO
FPA/PRIP Conifer, LLC ("Conifer Place")	42.5	%	Conifer Place	420	Norcross, GA
DT Stone Ridge, LLC ("Stone Ridge")	68.5	%	Stone Ridge	191	Columbia, SC
FP-1, LLC ("Pines of York")	90.0	%	Pines of York	248	Yorktown, VA
				2,161

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 June 30, 2014 did not exceed the charter imposed limitation.

Distributions

For the six months ended June 30, 2014, we paid aggregate distributions of $13.5 million, including $4.0 million of distributions paid in cash and $9.4 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	Distributions 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
February 4, 2014	0.033		April 1, 2014	1,576		672		2,248
February 4, 2014	0.033		May 1, 2014	1,574		679		2,253
April 25, 2014	0.033		June 2, 2014	1,578		680		2,258
				$	9,440	$	4,020	$	13,460

On April 25, 2014, the Company's Board of Directors declared cash distributions of $2.3 million ($0.33 per common share) to stockholders of record as of the close of business on June 30, 2014, which distributions were paid on July 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 June 30, 2014.

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Our net loss attributable to common stockholders' for the six months endedJune 30, 2014 was $25.3 million and net cash provided by operating activities of continuing operations was $539,000. For the six months endedJune 30, 2014, 4.0% of our distributions were funded from net cash provided by operating activities of continuing operations, 74.8% of our distributions were funded from proceeds from the disposal of one real estate asset and 21.2% of our distributions were funded from proceeds from debt financing. Our cumulative cash distributions and net loss from inception through June 30, 2014 were $30.1 million and $62.7 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.

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.

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We believe that MFFO is helpful in assisting management assess the sustainability of operating performancein future periods and, in particular, after our acquisition stage is 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.    

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 will continue to be funded from the proceeds of debt financing 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 acquisition stage is 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 acquisition stage is 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 and six months ended June 30, 2014 and 2013, respectively.

Stabilized assets during the three and six months ended June 30, 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, Champion Farms, Fieldstone, Berkeley Trace and Berkeley Run. Unstabilized assets during the three and six months ended June 30, 2014 included: Mosaic, One Hundred Chevy Chase Apartments, Jefferson Point, Terrace at River Oaks, Nicollet Ridge, Chisholm Place and Merrywood. 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 and six months ended June 30, 2013 included: 107th Avenue, Arcadia, Vista Apartment Homes, Campus Club, Cannery Lofts, Williamsburg, The Redford, Cityside Crossing, Deerfield, Ivy at Clear Creek , Retreat at Rocky Ridge, Trailpoint at the Woodlands, Nob Hill, and Town Park (which was sold in April 2013). Unstabilized assets during the three and six months ended June 30, 2013 consisted of Mosaic, The Reserve at Mt. Moriah, The Alcove, One Hundred Chevy Chase Apartments and Heatherwood (which was sold in April 2013). 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).  Amounts reported in the table below include adjustments attributable to noncontrolling interests. We expect revenues and expenses to increase in future periods as we acquire additional investments.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Net loss attributable to stockholders – GAAP	$	(11,258	)	$	(1,217	)	$	(25,251	)	$	(1,417	)
Gain on bargain purchase	—			—			—			(3,460		)
Net gain on disposition	(2,541		)	(3,173		)	(2,541		)	(3,173		)
Depreciation expense	7,476			2,133			13,415			3,974
FFO	(6,323		)	(2,257		)	(14,377		)	(4,076		)
Adjustments for straight-line rents	(216		)	(59		)	(370		)	(123		)
Amortization of intangible lease assets	5,387			982			9,606			1,910
Impairment charge	—			—			—			539
Debt premium amortization	44			—			(172		)	—
Acquisition costs	4,035			1,832			6,535			2,518
MFFO	$	2,927		$	498		$	1,222		$	768
Net gain on disposition	2,541			3,173			2,541			3,173
AFFO	$	5,468		$	3,671		$	3,763		$	3,941
Basic and diluted loss per common share - GAAP	$	(0.17	)	$	(0.04	)	$	(0.37	)	$	(0.05	)
FFO per share	$	(0.09	)	$	(0.07	)	$	(0.21	)	$	(0.14	)
MFFO per share	$	0.04		$	0.02		$	0.02		$	0.03
AFFO per share	$	0.08		$	0.11		$	0.06		$	0.14
Weighted average shares outstanding	67,749			32,408			67,558			28,894

	Three Months Ended June 30, 2014									Three Months Ended June 30, 2013
	MFFO and AFFO Attributed to Stabilized Assets			MFFO and AFFO Attributed to Unstabilized Assets			Total			MFFO and AFFO Attributed to Stabilized Assets			MFFO and AFFO Attributed to Unstabilized Assets			Total
Net (loss) income attributable to stockholders- GAAP	$	(8,982	)	$	(2,276	)	$	(11,258	)	$	2,370		$	(3,587	)	$	(1,217	)
Net (gain) loss on disposition	(2,541		)	—			(2,541		)	(3,199		)	26			(3,173		)
Depreciation expense	6,391			1,085			7,476			1,902			231			2,133
FFO	(5,132		)	(1,191		)	(6,323		)	1,073			(3,330		)	(2,257		)
Adjustments for straight-line rents	(214		)	(2		)	(216		)	(59		)	—			(59		)
Amortization of intangible lease assets	4,331			1,056			5,387			644			338			982
Debt premium amortization	44			—			44			—			—			—
Acquisition costs	3,832			203			4,035			561			1,271			1,832
MFFO	2,861			66			2,927			2,219			(1,721		)	498
Net gain (loss) on disposition	2,541			—			2,541			3,199			(26		)	3,173
AFFO	$	5,402		$	66		$	5,468		$	5,418		$	(1,747	)	$	3,671

45

	Six Months Ended June 30, 2014									Six Months Ended June 30, 2013
	MFFO and AFFO Attributed to Stabilized Assets			MFFO and AFFO Attributed to Unstabilized Assets			Total			MFFO and AFFO Attributed to Stabilized Assets			MFFO and AFFO Attributed to Unstabilized Assets			Total
Net income (loss) attributable to stockholders- GAAP	$	(16,247	)	$	(9,004	)	$	(25,251	)	$	3,672		$	(5,089	)	$	(1,417	)
Net (gain) loss on disposition	(2,541		)	—			(2,541		)	(3,199		)	26			(3,173		)
Gain on bargain purchase	—			—			—			—			(3,460		)	(3,460		)
Depreciation expense	11,365			2,050			13,415			3,243			731			3,974
FFO	(7,423		)	(6,954		)	(14,377		)	3,716			(7,792		)	(4,076		)
Adjustments for straight-line rents	(368		)	(2		)	(370		)	(123		)	—			(123		)
Impairment charge	—			—			—			—			539			539
Amortization of intangible lease assets	8,018			1,588			9,606			1,296			614			1,910
Debt premium amortization	(172		)	—			(172		)	—			—			—
Acquisition costs	4,036			2,499			6,535			1,162			1,356			2,518
MFFO	4,091			(2,869		)	1,222			6,051			(5,283		)	768
Net (gain) loss on disposition	2,541			—			2,541			3,199			(26		)	3,173
AFFO	$	6,632		$	(2,869	)	$	3,763		$	9,250		$	(5,309	)	$	3,941

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP.  The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenues and cost and expenses, and related disclosure of contingent assets and liabilities.  On an on-going basis, we evaluate our estimates, including those related to certain accrued liabilities.  We base our estimates on historical experience and on various other assumptions that we believe reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.

For a discussion of our critical accounting policies and estimates, see the discussion in our Annual Report on Form 10-K for the year ended December 31, 2013 under “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies.”

Off-Balance Sheet Arrangements

As of June 30, 2014 and December 31, 2013, we did not have any off-balance sheet arrangements or obligations.

Subsequent Events

On July 1, 2014, we purchased the remaining 2.5% ownership interests of our joint venture partners in the joint ventures that own Pinehurst, Pheasant Run and Retreat at Shawnee bringing our ownership interest to 100% in each of these properties. We paid $1.1 million for these interests.

On July 1, 2014, we sold our entire membership interest in Parkhill Partners, I ("Hilltop Village") to JTL Properties, LLC, our joint venture partner in the ownership of Hilltop Village. Hilltop Village is a multifamily apartment complex located in Kansas City, Missouri.

46

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 June 30, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

47

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 six months ended June 30, 2014 were sold in an offering registered under the Securities Act of 1933, as amended (the "Securities Act").

Redemption of Securities

During the three months ended June 30, 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
April 2014	—	—	104,334	(2)
May 2014	—	—	104,334	(2)
June 2014	68,778	$9.04	173,112	(2)

(1)    All redemptions of equity securities in the three months endedJune 30, 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 June 30, 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.

48

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)

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 June 30, 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

49

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.
August 14, 2014	By:	/s/ Alan F. Feldman
		ALAN F. FELDMAN
		Chief Executive Officer
		(Principal Executive Officer)
August 14, 2014	By:	/s/ Steven R. Saltzman
		STEVEN R. SALTZMAN
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

50

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 June 30, 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.
August 14, 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 June 30, 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.
August 14, 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 June 30, 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.
August 14, 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 June 30, 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.
August 14, 2014	By:	/s/ Steven R. Saltzman
		Steven R. Saltzman
		Chief Financial Officer
		(Principal Financial Officer)

XML

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS (Tables)

6 Months Ended

Jun. 30, 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):

	June 30, 2014		December 31, 2013
Receivables from related parties:
RAI and affiliates - insurance funds held in escrow	$	1,585	$	530
Payables to related parties:
Advisor:
Expense reimbursements	$	335	$	775
Resource Real Estate Opportunity Manager, LLC:
Property management fees	315		266
Operating expense reimbursements	876		500
Resource Securities, Inc.
Selling commissions and dealer manager fees	—		174
Other	13		3
	$	1,539	$	1,718

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Fees earned / expenses paid to related parties:
Advisor:
Acquisition fees	$	2,262	$	1,200	$	4,985	$	1,800
Asset management fees	$	1,790	$	500	$	3,040	$	914
Disposition fees	$	150	$	116	$	150	$	116
Organization and offering costs	$	—	$	99	$	—	$	203
Overhead allocation	$	564	$	97	$	915	$	198
Resource Real Estate Opportunity Manager LLC:
Property management fees	$	848	$	371	$	1,544	$	784
Construction management fees	$	481	$	—	$	676	$	—
Debt servicing fees	$	2	$	1	$	5	$	1
Resource Securities, Inc.:
Selling commissions and dealer manager fees	$	—	$	5,100	$	—	$	12,100
Other:
Ledgewood	$	71	$	51	$	101	$	82
Graphic Images	$	—	$	111	$	33	$	325

XML

ACQUISITIONS, GOODWILL AND FORECLOSURES (Acquisitions) (Details) (USD $)	6 Months Ended			0 Months Ended													0 Months Ended		0 Months Ended
	Jun. 30, 2014 Property	Jan. 28, 2014	Dec. 31, 2013	Mar. 06, 2014 FPA/PRIP Governor Park, LLC [Member]	Jan. 28, 2014 Champion Farms	Jan. 28, 2014 Fieldstone	Jan. 28, 2014 Pinehurst	Jan. 28, 2014 Pheasant Run	Jan. 28, 2014 Retreat of Shawnee	Jan. 28, 2014 Hilltop Village	Jan. 28, 2014 Conifer Place	Jan. 28, 2014 Stone Ridge	Mar. 31, 2014 Evergreen at Coursey	Mar. 30, 2014 Evergreen at Coursey	Jan. 28, 2014 Evergreen at Coursey	Jun. 30, 2014 Paladin	Jan. 28, 2014 Paladin Resource Real Estate Opportunity OP, LP [Member] Joint_Venture Unit	Jan. 28, 2013 Paladin Resource Real Estate Opportunity OP, LP [Member] sqft	Jan. 28, 2014 Paladin Multifamily Community [Member] Resource Real Estate Opportunity OP, LP [Member] Property	Jan. 28, 2014 Paladin Office Building [Member] Resource Real Estate Opportunity OP, LP [Member] Property	Jan. 28, 2014 Pines of York
Business Acquisition [Line Items]
Number of properties acquired	16																		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 % at Date of Acquisition					70.00%	83.00%	97.50%	97.50%	97.50%	49.00%	42.50%	68.50%		51.70%	51.70%						90.00%
Land		24,872,000			3,168,000	1,420,000	1,250,000	800,000	3,200,000	800,000	5,040,000	1,300,000	3,430,000		3,430,000	24,874,000					4,464,000
Building and Improvements		167,519,000			23,464,000	18,472,000	8,241,000	10,798,000	14,550,000	4,289,000	28,712,000	4,612,000	38,041,000		38,041,000						16,340,000
Intangible Assets		5,765,000			579,000	648,000	290,000	317,000	608,000	195,000	1,007,000	326,000	1,080,000		1,080,000	5,765,000					715,000
Fair Value of Property		198,156,000			27,211,000	20,540,000	9,781,000	11,915,000	18,358,000	5,284,000	34,759,000	6,238,000			42,551,000	69,555,000					21,519,000
Other Net Assets (Liabilities)		(129,949,000)			(16,440,000)	(15,801,000)	(4,219,000)	(6,100,000)	(13,412,000)	(4,366,000)	(28,202,000)	807,000			(27,587,000)	(133,479,000)					(14,629,000)
Non-controlling interest		(18,811,000)			(3,231,000)	(806,000)	(139,000)	(145,000)	(124,000)	(468,000)	(3,768,000)	(2,218,000)			(7,223,000)						(689,000)
Total Company Equity		49,396,000			7,540,000	3,933,000	5,423,000	5,670,000	4,822,000	450,000	2,789,000	4,827,000			7,741,000						6,201,000
Goodwill	1,849,000	1,348,000	0		184,000	140,000	67,000	82,000	126,000	36,000	235,000	44,000	501,000		288,000	1,348,000					146,000
Fair Valued Assigned		50,744,000			7,724,000	4,073,000	5,490,000	5,752,000	4,948,000	486,000	3,024,000	4,871,000	14,962,000		8,029,000						6,347,000
Total purchase price	$ 51,200,000

XML

RENTAL PROPERTIES, NET (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Investments in rental properties [Abstract]
Land	$ 108,972,000		$ 108,972,000		$ 62,859,000
Building and improvements	638,799,000		638,799,000		325,412,000
Furniture, fixtures and equipment	23,261,000		23,261,000		17,051,000
Construction in progress	2,594,000		2,594,000		827,000
Rental properties, gross	773,626,000		773,626,000		406,149,000
Less: accumulated depreciation	(29,286,000)		(29,286,000)		(15,776,000)
Rental properties, net	744,340,000		744,340,000		390,373,000
Depreciation expense	$ 7,800,000	$ 2,100,000	$ 14,300,000	$ 4,000,000

XML

EQUITY (Preferred Stock) (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Equity [Abstract]
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

XML

ACQUISITIONS, GOODWILL AND FORECLOSURES (Coursey Place) (Details) (Evergreen at Coursey, USD $)	0 Months Ended
	Mar. 31, 2014	Jun. 30, 2014	Mar. 31, 2014
Evergreen at Coursey
Business Acquisition [Line Items]
Ownership interest acquired, percent		100.00%	48.30%
Purchase price	$ 7,500,000
Noncontrolling interest assumed			7,223,000
Losses attributable to noncontrolling interest			(191,000)
Prepaid insurance			7,000
Goodwill			501,000
Transaction expenses			45,000
Fair Valued Assigned			$ 7,585,000

XML

OPERATING EXPENSE LIMITATION WAIVER (Details)	Jun. 30, 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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Rental Property Useful Lives) (Details)	6 Months Ended
	Jun. 30, 2014
Buildings [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)

6 Months Ended

Jun. 30, 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

Changes in the Paladin and Addison acquisitions are reflected in the tables below (in thousands):

Paladin

	January 28, 2014 (As initially reported)			Measurement period adjustment (1)			June 30, 2014 (As adjusted)
Land	$	44,292		$	(19,418	)	$	24,874
Building	149,155			18,362			167,517
Personal property	—			3,530			3,530
Intangible assets	5,861			(96		)	5,765
Goodwill	6,412			(5,064		)	1,348
Other net assets (liabilities)	(137,739		)	4,260			(133,479		)
Total net identifiable net assets	67,981			1,574			69,555

(1) Remaining balance ($1.6 million) of measurement period adjustments adjusted the noncontrolling interest balance.

The results of operations for the three and six months ended June 30, 2014 include an additional $867,000 of depreciation and amortization that would have been included in the three months ended March 31, 2014 had the final appraisals for the Paladin properties been received and recorded during that period.

Addison Place

	March 31, 2014 (As initially reported)		Measurement period adjustment			June 30, 2014 (As adjusted)
Land	$	18,137	$	(11,784	)	$	6,353
Building	51,843		10,406			62,249
Personal property	—		509			509
Intangible assets	520		869			1,389
Total net identifiable net assets	$	70,500	$	—		$	70,500

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GAIN ON FORECLOSURE (Details) (USD $)	3 Months Ended		6 Months Ended		0 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Jan. 22, 2013 Foreclosure [Member]	Jun. 30, 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	$ 0	$ 0	$ 3,460,000		$ 3,500,000

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EQUITY (Redemption of Securities) (Details) (USD $)	6 Months Ended	1 Months Ended
	Jun. 30, 2014	Jun. 30, 2014 Common Stock [Member]		May 31, 2014 Common Stock [Member]		Apr. 30, 2014 Common Stock [Member]
Class of Stock [Line Items]
Total Number of Shares Redeemed		68,778	[1],[2]	0	[1],[2]	0	[1],[2]
Average Price Paid per Share		$ 9.04	[2]	$ 0.00	[2]	$ 0.00	[2]
Cumulative Number of Shares Purchased as Part of a Publicly Announced Plan or Program		173,112	[2]	104,334	[2]	104,334	[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 June 30, 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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MEASUREMENT PERIOD ADJUSTMENTS (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended				0 Months Ended				0 Months Ended	6 Months Ended		3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jan. 28, 2014	Dec. 31, 2013	Jan. 22, 2013 Deerfield	Mar. 21, 2012 Deerfield		Jan. 22, 2013 Deerfield Scenario, Previously Reported [Member]	Jan. 22, 2013 Deerfield Scenario, Adjustment [Member]	Jun. 30, 2014 Paladin	Jan. 28, 2014 Paladin Scenario, Previously Reported [Member]	Jun. 30, 2014 Paladin Scenario, Adjustment [Member]	Jan. 28, 2014 Paladin Scenario, Adjustment [Member]		Jun. 30, 2014 Addison Place	Mar. 28, 2014 Addison Place	Mar. 31, 2014 Addison Place Scenario, Previously Reported [Member]	Mar. 31, 2014 Addison Place Scenario, Adjustment [Member]
Business Acquisition [Line Items]
Purchase price	$ 56,115	$ 0			$ 10,300
Gain on foreclosure									3,393
Land			24,872		1,660	1,660	[1]	1,028	632	24,874	44,292		(19,418)	[2]	6,353	6,353	18,137	(11,784)
Building					11,110			8,592	2,518	167,517	149,155		18,362	[2]	62,249		51,843	10,406
Personal property					500			0	500	3,530	0		3,530	[2]	509		0	509
Intangible assets			5,765		423	423	[1]	680	(257)	5,765	5,861		(96)	[2]	1,389	1,389	520	869
Identifiable net assets			198,156		13,693			10,300	3,393	69,555	67,981		1,574	[2]	70,500		70,500	0
Gain on foreclosure									(3,393)
Goodwill	1,849		1,348	0						1,348	6,412		(5,064)	[2]
Other net assets (liabilities)			(129,949)							(133,479)	(137,739)		4,260	[2]
Noncontrolling interest													1,574	[2]
Additional depreciation and amortization that would have been included, had final appraisals been received and recorded										$ 867		$ 867

[1] The date of acquisition reflects the date the Company acquired the note secured by the property listed.

[2] Remaining balance ($1.6 million) of measurement period adjustments adjusted the noncontrolling interest balance.

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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
	Jun. 30, 2014 Carrying Amount [Member]	Dec. 31, 2013 Carrying Amount [Member]	Jun. 30, 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	$ 1,461	$ 1,724	$ 1,461	$ 1,724
Mortgage notes payable	(358,917)	(111,811)	(316,489)	(110,413)
Revolving credit facilities	(75,586)	(37,041)	(75,586)	(37,041)
Offer for sale of loans held for investment					$ 24

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DERIVATIVES AND HEDGING ACTIVITIES (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014 derivative	Dec. 31, 2013
Derivatives, Fair Value [Line Items]
Number of Instruments	4
Notional Amount	$ 59,833
Liability Derivatives, Fair Value	0	0
Interest Rate Cap [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives, Fair Value	$ 148	$ 290
Cash flow hedges [Member]
Derivatives, Fair Value [Line Items]
Number of Instruments	4	4

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EQUITY (Common Stock) (Details) (USD $) In Thousands, except Share data, unless otherwise specified							6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Private Offering [Member]	Jun. 30, 2014 Public Placement [Member]	Jun. 30, 2014 Stock Dividends [Member]	Jun. 30, 2014 Distribution Reinvestment Plan [Member]	Jun. 30, 2014 Advisor [Member]	Jun. 30, 2014 Private Offering [Member]	Jun. 30, 2014 Common Stock [Member] Private Offering [Member]
Class of Stock [Line Items]
Shares Issued	68,052,380	66,725,241	1,263,727	62,485,461	2,132,266	2,155,426	15,500		68,052,380
Shares converted							4,500
Gross Proceeds	$ 655,336		$ 12,582	$ 622,077	$ 0		$ 200
Gross Proceeds, distribution reinvestment plan						$ 20,477
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01						$ 0.01

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GAIN ON FORECLOSURE

6 Months Ended

Jun. 30, 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 six months endedJune 30, 2013.

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LOANS HELD FOR INVESTMENT, NET (Loans Held for Investments) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Loans Held for Investment [Line Items]
Total loans held for investment, net	$ 1,461	$ 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	1,461	1,529
Percentage of loan to total loans (in hundredths)	100.00%	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	0	0
Percentage of loan to total loans (in hundredths)	0.00%	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)

6 Months Ended

Jun. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Outstanding Interest Rate Derivatives

As of June 30, 2014, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (dollars in thousands):

Interest Rate Derivative	Number of Instruments	Notional Amount		Maturity Dates
Interest Rate Caps	4	$	59,833	July 1, 2018 to November 1, 2018

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 in prepaid expenses and other assets on the Balance Sheet as of June 30, 2014 and December 31, 2013 (in thousands):

Asset Derivatives						Liability Derivatives
June 30, 2014			December 31, 2013			June 30, 2014			December 31, 2013
Balance Sheet	Fair Value		Balance Sheet	Fair Value		Balance Sheet	Fair Value		Balance Sheet	Fair Value
Interest rate caps	$	148	Interest rate caps	$	290	—	$	—	—	$	—

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FAIR VALUE MEASURES AND DISCLOSURES (Assets Measured at Fair Value on a Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate caps	$ 148	$ 290
Assets, fair value	148	290
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate caps	0	0
Assets, fair value	0	0
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate caps	148	290
Assets, fair value	148	290
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate caps	0	0
Assets, fair value	$ 0	$ 0

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DEFERRED FINANCING COSTS (Tables)

6 Months Ended

Jun. 30, 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 June 30, and thereafter, are as follows (in thousands):

2015	$	1,321
2016	1,255
2017	1,084
2018	709
2019	554
Thereafter	877
	$	5,800

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LOANS HELD FOR INVESTMENT, NET (Terms of Loans Held for Investment) (Details) (USD $) In Thousands, unless otherwise specified		6 Months Ended
	Apr. 18, 2013	Jun. 30, 2014 Trail Ridge Note [Member]	Jun. 30, 2014 Heatherwood Note [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Face value	$ 800	$ 1,058	$ 800
Interest rate		7.50%	4.00%
Average monthly payment		$ 8	$ 11

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) (USD $) In Thousands, unless otherwise specified			6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Net unrealized gain (loss) on derivatives [Member]
Accumulated Other Comprehensive Income [Rollforward]
Beginning balance	$ (187)	$ 20	$ 20
Unrealized loss on designated derivative			(207)
Ending balance	$ (187)	$ 20	$ (187)

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IDENTIFIED INTANGIBLE ASSETS, NET (Rental and Antennae Leases) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Goodwill and Intangible Assets Disclosure [Abstract]
2015	$ 3,949
2016	19
2017	17
2018	16
2019	16
Thereafter	118
Total	$ 4,135	$ 5,182

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SUPPLEMENTAL CASH FLOW INFORMATION (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended		12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Non-cash financing and investing activities:
Property and intangibles received on foreclosure of loans held for investment	$ 0		$ 10,150
Financing provided for disposed property	0	800
Mortgage refinancing	16,000	0
Stock issued from the distribution reinvestment plan	9,441	3,580
Stock distributions issued	3,333	3,798
Cash distributions on common stock declared but not yet paid	2,263	1,183	2,222
Investor contributions held in escrow which have converted to common stock	0	2,242
Deferred financing costs and escrow deposits funded directly by mortgage note and revolving credit facility	505	0
Debt assumed	138,327	0
Cash paid during the period for:
Interest	$ 4,598	$ 140

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SUPPLEMENTAL CASH FLOW INFORMATION

6 Months Ended

Jun. 30, 2014

Supplemental Cash Flow Elements [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

SUPPLEMENTAL CASH FLOW INFORMATION

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

	Six Months Ended
	June 30,
	2014		2013
Non-cash financing and investing activities:
Property and intangibles received on foreclosure of loans held for investment	$	—	$	10,150
Financing provided for disposed property	—		800
Mortgage refinancing	16,000		—
Stock issued from the distribution reinvestment plan	9,441		3,580
Stock distributions issued	3,333		3,798
Cash distributions on common stock declared but not yet paid	2,263		1,183
Investor contributions held in escrow which have converted to common stock	—		2,242
Deferred financing costs and escrow deposits funded directly by mortgage note and revolving credit facility	505		—
Debt assumed	138,327		—
Cash paid during the period for:
Interest	$	4,598	$	140

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MORTGAGE NOTE PAYABLE (Summary of Mortgage Notes Payable) (Details) (USD $)			6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Jasmine at Holcomb Bridge	Jun. 30, 2014 Berkeley Trace	Jun. 30, 2014 Berkeley Run	Jun. 30, 2014 Addison Place	Jun. 30, 2014 Chisholm Place	Jun. 30, 2014 Vista Apartment Homes	Jun. 30, 2013 Vista Apartment Homes	Jun. 30, 2014 Cannery Lofts	Jun. 30, 2014 Deerfield	Jun. 30, 2014 Trailpoint at the Woodlands	Jun. 30, 2014 Ivy at Clear Creek	Jun. 30, 2014 Centennial	Jun. 30, 2014 Pinnacle	Jun. 30, 2014 Terrace at River Oaks	Jun. 30, 2014 Champion Farms	Jun. 30, 2014 Fieldstone	Jun. 30, 2014 Pinehurst	Jun. 30, 2014 Pheasant Run	Jun. 30, 2014 Retreat of Shawnee	Jun. 30, 2014 Hilltop Village	Jun. 30, 2014 Conifer Crossing	Jun. 30, 2014 Coursey Place	Jun. 30, 2014 Pines of York	Jun. 30, 2014 London Interbank Offered Rate (LIBOR) [Member]	Jun. 30, 2014 Paladin
Participating Mortgage Loans [Line Items]
Mortgage notes payable	$ 358,917,000	$ 111,811,000	$ 20,298,000	$ 14,322,000	$ 18,147,000	$ 50,000,000	$ 11,587,000	$ 8,744,000		$ 8,190,000	$ 10,530,000	$ 19,362,000	$ 8,586,000	$ 23,057,000	$ 18,618,000	$ 14,204,000	$ 16,724,000	$ 16,000,000	$ 4,320,000	$ 6,452,000	$ 13,683,000	$ 4,315,000	$ 28,261,000	$ 28,330,000	$ 15,187,000
Mortgage loan, maturity date			Jun. 01, 2024	Jul. 01, 2044	Jul. 01, 2044	May 01, 2020	Apr. 01, 2023	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	May 01, 2016	Jan. 01, 2017	Oct. 01, 2018	Feb. 01, 2019	Dec. 01, 2018	Sep. 01, 2016	Aug. 01, 2021	Dec. 01, 2021
Mortgage note, annual interest rate (in hundredths)			1.95%	3.42%	3.42%	3.38%	2.66%	2.76%		3.45%	4.66%	5.02%	5.02%	3.60%	3.60%	4.32%	6.14%	2.40%	5.58%	5.95%	5.58%	5.81%	5.96%	5.07%	4.46%	0.15%
Mortgage loan, average monthly debt service			106,000	63,000	79,000	191,000	41,000	38,000		34,000	51,000	100,000	44,000	106,000	85,000	71,000	85,000	70,000	39,000	31,000	99,000	33,000	203,000	154,000	80,000
Interest Expense			5,000	5,000	7,000	19,000	22,000	122,000	66,000	142,000	247,000	250,000	111,000	419,000	338,000	310,000	427,000	411,000	81,000	158,000	318,000	82,000	704,000	608,000	297,000
Mortgage loan, description of variable rate basis																										one-month LIBOR
Fair value premium on debt assumed																											$ 1,300,000

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NATURE OF BUSINESS AND OPERATIONS (Narrative) (Details) (USD $)	6 Months Ended	42 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Securities Financing Transaction [Line Items]
Entity organized date	Jun. 03, 2009
Common stock issued through distribution reinvestment plan (in shares)	993,803
Common stock issued through distribution reinvestment plan	$ 9,440,000
Common Stock [Member] | Ongoing Public Offering [Member]
Securities Financing Transaction [Line Items]
Proceeds from issuance of stock under private offering	$ 645,800,000
Issuance of common stock (in shares)		64,926,311
Common Stock [Member] | Ongoing Public Offering [Member] | Advisor [Member]
Securities Financing Transaction [Line Items]
Issuance of common stock (in shares)		276,056

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SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

6 Months Ended

Jun. 30, 2014

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

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

	Six Months Ended
	June 30,
	2014		2013
Non-cash financing and investing activities:
Property and intangibles received on foreclosure of loans held for investment	$	—	$	10,150
Financing provided for disposed property	—		800
Mortgage refinancing	16,000		—
Stock issued from the distribution reinvestment plan	9,441		3,580
Stock distributions issued	3,333		3,798
Cash distributions on common stock declared but not yet paid	2,263		1,183
Investor contributions held in escrow which have converted to common stock	—		2,242
Deferred financing costs and escrow deposits funded directly by mortgage note and revolving credit facility	505		—
Debt assumed	138,327		—
Cash paid during the period for:
Interest	$	4,598	$	140

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Wholly Owned Subsidiaries Information

The consolidated financial statements include the accounts of the Company's majority-owned and/or controlled subsidiaries as follows:

Subsidiary	Ownership %	Apartment Complex	Number of Units	Property Location
Springhurst Housing Partners, LLC ("Champion Farms")	70.0%	Champion Farms	264	Louisville, KY
Glenwood Housing Partners I, LLC ("Fieldstone")	83.0%	Fieldstone	266	Woodlawn, OH
KC Pinehurst Associates, LLC ("Pinehurst")	97.5%	Pinehurst	146	Kansas City, MO
KC Pheasant Associates, LLC ("Pheasant Run")	97.5%	Pheasant Run	160	Lee's Summit, MO
KC Retreat Associates, LLC ("Retreat at Shawnee")	97.5%	Retreat at Shawnee	342	Shawnee, KS
Parkhill Partners I, LLC ("Hilltop Village")	49.0%	Hilltop Village	124	Kansas City, MO
FPA/PRIP Conifer, LLC ("Conifer Place")	42.5%	Conifer Place	420	Norcross, GA
DT Stone Ridge, LLC ("Stone Ridge")	68.5%	Stone Ridge	191	Columbia, SC
FP-1, LLC ("Pines of York")	90.0%	Pines of York	248	Yorktown, VA

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 (b)	N/A	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	N/A (c)	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")	Affinity at Winter Park	192	Winter Park, FL
RRE Brentdale Holdings, LLC ("Brentdale")	The Westside	412	Plano, TX
RRE Jefferson Point Holdings, LLC ("Jefferson Point")	Tech Center Square	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")	Meridian Pointe	339	Burnsville, MN
RRE Addison Place, LLC ("Addison Place")	Addison Place	403	Alpharetta, GA
PRIP Coursey, LLC ("Evergreen at Coursey Place")	Evergreen at Coursey Place	352	Baton Rouge, LA
PRIP 3700, LLC ("Champion Farms")	N/A (d)	N/A	N/A
PRIP 10637, LLC ("Fieldstone")	N/A (d)	N/A	N/A
PRIP 500, LLC ("Pinehurst")	N/A (d)	N/A	N/A
PRIP 1102, LLC ("Pheasant Run")	N/A (d)	N/A	N/A
PRIP 11128, LLC ("Retreat at Shawnee")	N/A (d)	N/A	N/A
PRIP 6700, LLC ("Hilltop Village")	N/A (d)	N/A	N/A
PRIP 3383, LLC ("Conifer Place")	N/A (d)	N/A	N/A
PRIP Stone Ridge, LLC ("Stone Ridge")	N/A (d)	N/A	N/A
PRIP Pines, LLC ("Pines of York")	N/A (d)	N/A	N/A
PRIP 5060/6310, LLC ("Governor Park")	N/A (d)	N/A	N/A
RRE Chisholm Place Holdings LLC ("Chisholm Place")	Chisholm Place	142	Plano, TX
RRE Berkeley Run Holdings, LLC ("Berkley Run")	Berkeley Run	194	Atlanta, GA
RRE Berkeley Trace Holdings LLC ("Berkley Trace")	Berkeley Trace	165	Atlanta, GA
RRE Merrywood LLC ("Merrywood")	Merrywood	228	Katy, TX

N/A - Not Applicable

(a) - Discontinued operations

(b) - Sold in 2014

(c) - Subsidiary holds a portion of the Williamsburg parking lot    

(d) - Wholly-owned subsidiary of RRE Charlemagne Holdings, LLC

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	Jun. 30, 2014	Jan. 28, 2014	Dec. 31, 2013	Jun. 30, 2014 Paladin	Mar. 31, 2014 Evergreen at Coursey	Jan. 28, 2014 Evergreen at Coursey
Business Acquisition [Line Items]
Goodwill	$ 1,849	$ 1,348	$ 0	$ 1,348	$ 501	$ 288

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) (USD $) Share data in Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 Distribution	Jun. 30, 2013 Property	Dec. 31, 2013
Asset Impairment Charges [Abstract]
Loss on property impairment	$ 0	$ 0	$ 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 - twelve months ending June 30, 2015	45,000,000		45,000,000
Future minimum rental payments to be received from noncancelable operating leases - twelve months ending June 30, 2016	344,000		344,000
Tenant Receivable [Abstract]
Allowance for uncollectable receivables	$ 30,000		$ 30,000		$ 86,000
Earnings Per Share [Abstract]
Antidilutive securities not included in the diluted earnings per share calculations			50
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%

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RENTAL PROPERTIES, NET (Tables)

6 Months Ended

Jun. 30, 2014

Real Estate Investments, Net [Abstract]

Investments in Rental Properties

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

	June 30, 2014			December 31, 2013
Land	$	108,972		$	62,859
Building and improvements	638,799			325,412
Furniture, fixtures and equipment	23,261			17,051
Construction in progress	2,594			827
	773,626			406,149
Less: accumulated depreciation	(29,286		)	(15,776		)
	$	744,340		$	390,373

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LOANS HELD FOR INVESTMENT, NET (Tables)

6 Months Ended

Jun. 30, 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):

	June 30, 2014			December 31, 2013
	Amount		Percent	Amount		Percent
Current	$	1,461	100%	$	1,529	89%
Delinquent:
30−89 days	—		—%	195		11%
90−180 days	—		—%	—		—%
Greater than 180 days	—		—%	—		—%
	$	1,461	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):

	June 30, 2014		December 31, 2013
Loans:
Performing	$	1,461	$	1,529
Nonperforming	—		195
Total	$	1,461	$	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):

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

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 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 (b)	N/A	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	N/A (c)	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")	Affinity at Winter Park	192	Winter Park, FL
RRE Brentdale Holdings, LLC ("Brentdale")	The Westside	412	Plano, TX
RRE Jefferson Point Holdings, LLC ("Jefferson Point")	Tech Center Square	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")	Meridian Pointe	339	Burnsville, MN
RRE Addison Place, LLC ("Addison Place")	Addison Place	403	Alpharetta, GA
PRIP Coursey, LLC ("Evergreen at Coursey Place")	Evergreen at Coursey Place	352	Baton Rouge, LA
PRIP 3700, LLC ("Champion Farms")	N/A (d)	N/A	N/A
PRIP 10637, LLC ("Fieldstone")	N/A (d)	N/A	N/A
PRIP 500, LLC ("Pinehurst")	N/A (d)	N/A	N/A
PRIP 1102, LLC ("Pheasant Run")	N/A (d)	N/A	N/A
PRIP 11128, LLC ("Retreat at Shawnee")	N/A (d)	N/A	N/A
PRIP 6700, LLC ("Hilltop Village")	N/A (d)	N/A	N/A
PRIP 3383, LLC ("Conifer Place")	N/A (d)	N/A	N/A
PRIP Stone Ridge, LLC ("Stone Ridge")	N/A (d)	N/A	N/A
PRIP Pines, LLC ("Pines of York")	N/A (d)	N/A	N/A
PRIP 5060/6310, LLC ("Governor Park")	N/A (d)	N/A	N/A
RRE Chisholm Place Holdings LLC ("Chisholm Place")	Chisholm Place	142	Plano, TX
RRE Berkeley Run Holdings, LLC ("Berkley Run")	Berkeley Run	194	Atlanta, GA
RRE Berkeley Trace Holdings LLC ("Berkley Trace")	Berkeley Trace	165	Atlanta, GA
RRE Merrywood LLC ("Merrywood")	Merrywood	228	Katy, TX

N/A - Not Applicable

(a) - Discontinued operations

(b) - Sold in 2014

(c) - Subsidiary holds a portion of the Williamsburg parking lot    

(d) - Wholly-owned subsidiary of RRE Charlemagne Holdings, LLC

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. 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. 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 include the accounts of the Company's majority-owned and/or controlled subsidiaries as follows:

Subsidiary	Ownership %	Apartment Complex	Number of Units	Property Location
Springhurst Housing Partners, LLC ("Champion Farms")	70.0%	Champion Farms	264	Louisville, KY
Glenwood Housing Partners I, LLC ("Fieldstone")	83.0%	Fieldstone	266	Woodlawn, OH
KC Pinehurst Associates, LLC ("Pinehurst")	97.5%	Pinehurst	146	Kansas City, MO
KC Pheasant Associates, LLC ("Pheasant Run")	97.5%	Pheasant Run	160	Lee's Summit, MO
KC Retreat Associates, LLC ("Retreat at Shawnee")	97.5%	Retreat at Shawnee	342	Shawnee, KS
Parkhill Partners I, LLC ("Hilltop Village")	49.0%	Hilltop Village	124	Kansas City, MO
FPA/PRIP Conifer, LLC ("Conifer Place")	42.5%	Conifer Place	420	Norcross, GA
DT Stone Ridge, LLC ("Stone Ridge")	68.5%	Stone Ridge	191	Columbia, SC
FP-1, 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 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 six months ended June 30, 2013, the Company recorded a $539,000 impairment charge for one of its loans held for investment (see Note 8 regarding the Heatherwood Note). There were no impairment charges during the three and six months ended June 30, 2014 or during the three months ended June 30, 2013. The impairment charge 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 during the fourth quarter of each calendar year, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

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 $45.0 million and $344,000 for the 12 months periods ending June 30, 2015 and 2016, respectively, and none thereafter.

Tenant Receivables

Tenant receivables are stated in the financial statements as 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 June 30, 2014 and December 31, 2013, there were allowances for uncollectible receivables of $30,000 and $86,000, respectively.

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 June 30, 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 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 as their effect would be anti-dilutive.  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.

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:

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 as of January 1, 2014.

Accounting Standards Issued But Not Yet Effective

In May 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers”, which will replace most existing revenue recognition guidance in GAAP.  The core principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services.  The ASU requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The ASU will be effective for the Company beginning January 1, 2017, including interim periods in 2017, and allows for both retrospective and prospective methods of adoption. The Company is in the process of determining the method of adoption and assessing the impact of this guidance on the Company’s consolidated financial position, results of operations and cash flows.

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ACQUISITIONS, GOODWILL AND FORECLOSURES (Tables)

6 Months Ended

Jun. 30, 2014

Business Combinations [Abstract]

Schedule of purchase price allocation

A summary of the transaction is as follows (in thousands):

Noncontrolling interest assumed	$	7,223
Losses attributable to noncontrolling interest	(191		)
Prepaid insurance	7
Goodwill	501
Transaction expenses	45
	$	7,585

Total goodwill recorded by the Company related to the Paladin acquisition is as follows (in thousands):

Amount of goodwill recorded at date of Paladin acquistion	$	1,348
Buyout of Coursey Place noncontrolling interest	501
Total goodwill	$	1,849

The allocation of the purchase price for the interests in the 10 Paladin joint ventures, which was completed during the six months ended June 30, 2014, is included below (in thousands):

Multifamily Community Name	City and State	Ownership % at Date of Acquisition		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	%	$	3,168	$	23,464	$	579	$	27,211	$	(16,440	)	$	(3,231	)	$	7,540	$	184	$	7,724
Fieldstone	Woodlawn, OH	83.0	%	1,420		18,472		648		20,540		(15,801		)	(806		)	3,933		140		4,073
Pinehurst	Kansas City, MO	97.5	%	1,250		8,241		290		9,781		(4,219		)	(139		)	5,423		67		5,490
Pheasant Run	Lee's Summit, MO	97.5	%	800		10,798		317		11,915		(6,100		)	(145		)	5,670		82		5,752
Retreat at Shawnee	Shawnee, KS	97.5	%	3,200		14,550		608		18,358		(13,412		)	(124		)	4,822		126		4,948
Hilltop Village	Kansas City, MO	49.0	%	800		4,289		195		5,284		(4,366		)	(468		)	450		36		486
Conifer Place	Norcross, GA	42.5	%	5,040		28,712		1,007		34,759		(28,202		)	(3,768		)	2,789		235		3,024
Stone Ridge	Columbia, SC	68.5	%	1,300		4,612		326		6,238		807			(2,218		)	4,827		44		4,871
Evergreen at Coursey Place	Baton Rouge, LA	51.7	%	3,430		38,041		1,080		42,551		(27,587		)	(7,223		)	7,741		288		8,029
Pines of York	Yorktown, VA	90.0	%	4,464		16,340		715		21,519		(14,629		)	(689		)	6,201		146		6,347
				$	24,872	$	167,519	$	5,765	$	198,156	$	(129,949	)	$	(18,811	)	$	49,396	$	1,348	$	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
Merrywood	Katy, TX	6/26/2014	$	32,300	(3)	$	5,579	$	26,033	$	—	$	688	$	62	$	(377	)	$	31,985
Berkeley Trace	Atlanta, GA	5/19/2014	22,250			4,002		17,600		194		453		25		(110		)	22,164
Berkeley Run	Atlanta, GA	5/19/2014	29,500			4,723		23,969		219		588		32		(156		)	29,375
Chisolm Place	Plano, TX	5/5/2014	15,000			1,981		12,383		198		438		36		(31		)	15,005
Evergreen at Coursey	Baton Rouge, LA	3/31/2014	15,613		(8)	3,430		38,041		530		1,080		680		(28,799		)	14,962
Addison Place	Alpharetta, GA	3/28/2014	70,500			6,353		62,249		509		1,389		55		(392		)	70,163
Meridian Pointe	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
Tech Center Square	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
Affinity at Winter Park	Winter Park, FL	6/27/2013	10,100			2,512		6,459		523		606		50		(61		)	10,089
Trailpoint at the Woodlands	Houston, 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 (1)	Hermantown MN	3/21/2012	10,300		(4)	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 (1)	Dayton, OH	5/13/2011	7,100		(5)	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
Vista Apartment Homes (1)	Philadelphia, PA	6/17/2011	12,000		(6)	1,163		9,913		—		535		530		(141		)	12,000
Arcadia at Westheimer (1)	Houston, TX	9/3/2010	7,800		(7)	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) 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.

(7) 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.

(8) The Company originally acquired a 51.7% interest in the joint venture that owned Evergreen at Coursey. On March 31, 2014, the Company purchased the remaining 48.3% ownership interest of its joint venture partner, bringing the Company's ownership percentage to 100.0%.

Schedule of goodwill

Total goodwill recorded by the Company related to the Paladin acquisition is as follows (in thousands):

Amount of goodwill recorded at date of Paladin acquistion	$	1,348
Buyout of Coursey Place noncontrolling interest	501
Total goodwill	$	1,849

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EQUITY (Tables)

6 Months Ended

Jun. 30, 2014

Equity [Abstract]

Schedule of Shares Issued

As of June 30, 2014, the Company had issued an aggregate of 68,052,380 shares, 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	$	12,582
Shares issued through primary public offering	62,485,461	622,077
Shares issued through stock distributions	2,132,266	—
Shares issued through distribution reinvestment plan	2,155,426	20,477
Shares issued in conjunction with the Advisor's initial investment, net of 4,500 share conversion	15,500	200
Total	68,052,380	$	655,336

Schedule of Redemption of Securities

During the three months ended June 30, 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
April 2014	—	—	104,334	(2)
May 2014	—	—	104,334	(2)
June 2014	68,778	$9.04	173,112	(2)

(1) All redemptions of equity securities by the Company in the three months ended June 30, 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 six months ended June 30, 2014, the Company paid aggregate distributions of $13.5 million, including $4.0 million of distributions paid in cash and $9.4 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	Distributions 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
March 31, 2014	0.033		April 1, 2014	1,576		672		2,248
April 30, 2014	0.033		May 1, 2014	1,574		679		2,253
May 30, 2014	0.033		June 2, 2014	1,578		680		2,258
				$	9,440	$	4,020	$	13,460

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ACQUISITIONS, GOODWILL AND FORECLOSURES (Real Estate Investments) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended		0 Months Ended			0 Months Ended		0 Months Ended		0 Months Ended		0 Months Ended						0 Months Ended			0 Months Ended		0 Months Ended		0 Months Ended		0 Months Ended		0 Months Ended		0 Months Ended		0 Months Ended		0 Months Ended								0 Months Ended												0 Months Ended				0 Months Ended
	Jun. 30, 2014 Property	Jan. 28, 2014	Jun. 26, 2014 Merrywood		Jun. 26, 2014 Merrywood	May 19, 2014 Berkeley Trace	May 19, 2014 Berkeley Trace	May 19, 2014 Berkeley Run	May 19, 2014 Berkeley Run	May 05, 2014 Chisolm Place	May 05, 2014 Chisolm Place	Mar. 31, 2014 Evergreen at Coursey		Jun. 30, 2014 Evergreen at Coursey	Mar. 31, 2014 Evergreen at Coursey	Mar. 30, 2014 Evergreen at Coursey	Jan. 28, 2014 Evergreen at Coursey	Mar. 28, 2014 Addison Place	Jun. 30, 2014 Addison Place	Mar. 28, 2014 Addison Place	Dec. 20, 2013 Meridian Pointe	Dec. 20, 2013 Meridian Pointe	Dec. 16, 2013 Terrace at River Oaks	Dec. 16, 2013 Terrace at River Oaks	Oct. 25, 2013 Jasmine at Holcomb Bridge	Oct. 25, 2013 Jasmine at Holcomb Bridge	Sep. 30, 2013 Centennial	Sep. 30, 2013 Centennial	Sep. 30, 2013 Pinnacle	Sep. 30, 2013 Pinnacle	Sep. 09, 2013 Tech Center Square	Sep. 09, 2013 Tech Center Square	Jul. 25, 2013 Brentdale	Jul. 25, 2013 Brentdale	Jun. 27, 2013 Affinity at Winter Park	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	Jun. 17, 2011 Vista Apartment Homes		Jun. 17, 2011 Vista Apartment Homes		Sep. 03, 2010 Arcadia at Westheimer		Sep. 03, 2010 Arcadia at Westheimer		Aug. 18, 2010 107th Avenue	Aug. 18, 2010 107th Avenue
Business Acquisition [Line Items]
Number of properties	38
Number of properties acquired	16
Fair value of the net assets acquired:
Purchase Price			$ 32,300	[1]		$ 22,250		$ 29,500		$ 15,000		$ 15,613	[2]					$ 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	[3],[4]		$ 5,500	$ 14,425	$ 2,275	$ 2,050	$ 41,250	$ 7,100	[5]	$ 11,400	$ 12,000	[3],[6]			$ 7,800	[3],[7]			$ 225
Rental property:
Land		24,872			5,579		4,002		4,723		1,981				3,430		3,430		6,353	6,353		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	[3]	1,660	1,202	1,949	775	1,000	3,223	160		4,073			1,163	[3]			943	[3]		25
Building and Improvements		167,519			26,033		17,600		23,969		12,383				38,041		38,041			62,249		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]		3,865	11,676	1,124	2,609	35,111	7,913		5,235			9,913	[3]			6,599	[3]		196
Furniture, Fixture and Equipment					0		194		219		198				530					509		1,016		491		587		198		97		584		798	523	697	30	28	41	500	[3]		20	37	39	30	1,007	200		262			0	[3]			0	[3]		0
Intangible Assets		5,765			688		453		588		438				1,080		1,080		1,389	1,389		1,008		669		859		1,090		928		667		1,199	606	704	436	670	505	423	[3]	423	413	763	337	123	1,909	609		1,558			535	[3]			258	[3]		4
Other Assets					62		25		32		36				680					55		36		48		37		24		20		23		52	50	40	2	8	7	1	[3]		54	49	16	14	49	35		272			530	[3]			0	[3]		0
Other Liabilities					(377)		(110)		(156)		(31)				(28,799)					(392)		(107)		(63)		(161)		(190)		(147)		(59)		(317)	(61)	(170)	(89)	(127)	(101)	(4)	[3]		(13)	(68)	(90)	(14)	(274)	0		0			(141)	[3]			0	[3]		0
Fair Valued Assigned		$ 50,744			$ 31,985		$ 22,164		$ 29,375		$ 15,005				$ 14,962		$ 8,029			$ 70,163		$ 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	[3]		$ 5,541	$ 14,406	$ 2,201	$ 3,762	$ 41,025	$ 8,917		$ 11,400			$ 12,000	[3]			$ 7,800	[3]		$ 225
Valuation period	12 months
Ownership percentage in joint venture																51.70%	51.70%
Ownership interest acquired, percent														100.00%	48.30%

[1] 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.

[2] The Company originally acquired a 51.7% interest in the joint venture that owned Evergreen at Coursey. On March 31, 2014, the Company purchased the remaining 48.3% ownership interest of its joint venture partner, bringing the Company's ownership percentage to 100.0%.

[3] The date of acquisition reflects the date the Company acquired the note secured by the property listed.

[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] 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.

[7] 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.

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EQUITY (Convertible Stock) (Details) (USD $)	6 Months Ended
	Jun. 30, 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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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Investments:
Rental properties, net	$ 744,340	$ 390,373
Loans held for investment, net	1,461	1,724
Identified intangible assets, net	4,135	5,182
Assets of discontinued operations	0	88
Investments	749,936	397,367
Cash	182,498	270,323
Restricted cash	5,091	4,456
Due from related parties	1,585	530
Tenant receivables, net	740	573
Deposits	186	141
Accounts receivable - other	10	0
Prepaid expenses and other assets	3,507	1,567
Deferred financing costs, net	5,800	3,602
Goodwill	1,849	0
Total assets	951,202	678,559
Liabilities:
Mortgage notes payable	358,917	111,811
Revolving credit facilities	75,586	37,041
Accounts payable	6,555	1,417
Accrued expenses and other liabilities	1,389	2,745
Accrued real estate taxes	4,598	2,117
Due to related parties	1,539	1,718
Tenant prepayments	947	615
Security deposits	2,554	1,826
Distribution payable	2,263	2,222
Total liabilities	454,348	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; 68,052,380 and 66,725,241 shares issued, respectively; and 67,881,990 and 66,667,136 shares outstanding, respectively)	679	668
Convertible stock (“promote shares”; par value $.01; 50,000 shares authorized, issued and outstanding)	1	1
Additional paid-in capital	602,269	590,591
Accumulated other comprehensive (loss) income	(187)	20
Accumulated deficit	(116,277)	(74,233)
Total stockholders’ equity	486,485	517,047
Noncontrolling interests	10,369	0
Total equity	496,854	517,047
Total liabilities and stockholders’ equity	$ 951,202	$ 678,559

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Principles of Consolidation) (Details)	6 Months Ended
	Jun. 30, 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 (b)
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]
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	Affinity at Winter Park
Number of Units	192
Property Location	Winter Park, FL
RRE Brentdale Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	The Westside
Number of Units	412
Property Location	Plano, TX
RRE Jefferson Point Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Tech Center Square
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	Meridian Pointe
Number of Units	339
Property Location	Burnsville, MN
PRIP Addison Place, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Addison Place
Number of Units	403
Property Location	Alpharetta, GA
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
RRE Chisolm Place Holdings LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Chisholm Place
Number of Units	142
Property Location	Plano, TX
RRE Berkeley Run Holdings, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Berkeley Run
Number of Units	194
Property Location	Atlanta, GA
RRE Berkeley Trace Holdings LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Berkeley Trace
Number of Units	165
Property Location	Atlanta, GA
RRE Merrywood LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Apartment Complex	Merrywood
Number of Units	228
Property Location	Katy, TX
Springhurst Housing Partners, LLC [Memeber]
Subsidiary or Equity Method Investee [Line Items]
Ownership percentage in joint venture	70.00%
Apartment Complex	Champion Farms
Number of Units	264
Property Location	Louisville, KY
Glenwood Housing Partners I, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Ownership percentage in joint venture	83.00%
Apartment Complex	Fieldstone
Number of Units	266
Property Location	Woodlawn, OH
KC Pinehurst Associates, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Ownership percentage in joint venture	97.50%
Apartment Complex	Pinehurst
Number of Units	146
Property Location	Kansas City, MO
KC Pheasant Associates, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Ownership percentage in joint venture	97.50%
Apartment Complex	Pheasant Run
Number of Units	160
Property Location	Lee's Summit, MO
KC Retreat Associates, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Ownership percentage in joint venture	97.50%
Apartment Complex	Retreat at Shawnee
Number of Units	342
Property Location	Shawnee, KS
Parkhill Partners I, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Ownership percentage in joint venture	49.00%
Apartment Complex	Hilltop Village
Number of Units	124
Property Location	Kansas City, MO
Conifer Place
Subsidiary or Equity Method Investee [Line Items]
Ownership percentage in joint venture	42.50%
Apartment Complex	Conifer Place
Number of Units	420
Property Location	Norcross, GA
DT Stone Ridge, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Ownership percentage in joint venture	68.50%
Apartment Complex	Stone Ridge
Number of Units	191
Property Location	Columbia, SC
FP-1, LLC [Member]
Subsidiary or Equity Method Investee [Line Items]
Ownership percentage in joint venture	90.00%
Apartment Complex	Pines of York
Number of Units	248
Property Location	Yorktown, VA

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities:
Net loss	$ (26,661)	$ (1,417)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Income from discontinued operations	(2)	(2,499)
Gain on foreclosures	0	(3,460)
Loss on disposal of assets	1,648	36
Net gain on dispositions	(2,541)	0
Depreciation and amortization	24,899	5,884
Amortization of deferred financing costs	566	111
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	(482)	86
Tenant receivables, net	(167)	(612)
Deposits	(113)	256
Prepaid expenses and other assets	(1,488)	(1,168)
Due to related parties, net	(1,764)	675
Accounts payable and accrued expenses	5,956	2,020
Tenant prepayments	300	(26)
Security deposits	388	70
Net cash provided by (used in) operating activities of continuing operations	539	(553)
Cash flows from investing activities:
Proceeds from disposal of properties, net closing costs	10,070	10,043
Property acquisitions	(169,146)	(63,958)
Ownership acquisitions	(56,115)	0
Capital expenditures	(17,208)	(13,319)
Principal payments received on loans	195	12
Net cash used in investing activities of continuing operations	(232,204)	(67,222)
Cash flows from financing activities:
Proceeds from issuance of common stock	0	128,330
Redemptions	(1,075)	0
Payment of deferred financing costs	(2,770)	(247)
Deferred offering costs	0	2,457
Increase in borrowings	159,874	0
Principal payments on borrowings	(8,291)	(98)
Distributions paid on common stock	(4,022)	(1,922)
Syndication costs	34	(15,260)
Net cash provided by financing activities of continuing operations	143,750	113,260
Net cash (used in) provided by continuing operations	(87,915)	45,485
Cash flows from discontinued operations:
Net cash provided by operating activities	90	98
Net cash provided by discontinued operations	90	98
Net (decrease) increase in cash	(87,825)	45,583
Cash at beginning of period	270,323	29,336
Cash at end of period	$ 182,498	$ 74,919

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DISPOSITION OF PROPERTIES AND DISCONTINUED OPERATIONS (Results of Discontinued Operations) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Revenues:
Rental income	$ 0	$ 275	$ 3	$ 1,081
Total revenues	0	275	3	1,081
Expenses:
Rental operating	0	185	1	788
Management fees	0	19	0	62
General and administrative	0	167	0	225
Loss on property impairment	0	0	0	539
Depreciation and amortization expense	0	0		141
Total expenses	0	371	1	1,755
Income from discontinued operations	0	(96)	2	(674)
Gain (Loss) on Disposition of Business	0	3,173	0	3,173
Income from discontinued operations, net	$ 0	$ 3,077	$ 2	$ 2,499
Weighted average common shares outstanding (in shares)	67,749	32,408	67,558	28,894
Discontinued operations (in dollars per share)	$ 0.00	$ 0.09	$ 0.00	$ 0.09

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IDENTIFIED INTANGIBLE ASSETS, NET (Tables)

6 Months Ended

Jun. 30, 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 June 30, and thereafter, is as follows (in thousands): 

2015	$	3,949
2016	19
2017	17
2018	16
2019	16
Thereafter	118
	$	4,135

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REVOLVING CREDIT FACILITY (Details) (USD $)	3 Months Ended		6 Months Ended			0 Months Ended	3 Months Ended	6 Months Ended			0 Months Ended	3 Months Ended	6 Months Ended			0 Months Ended	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	May 23, 2013 Bank of America [Member] Revolving Credit Facility [Member]	Jun. 30, 2014 Bank of America [Member] Revolving Credit Facility [Member]	Jun. 30, 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]	Jun. 30, 2014 PNC Bank [Member] Revolving Credit Facility [Member]	Jun. 30, 2014 PNC Bank [Member] Revolving Credit Facility [Member]	Dec. 31, 2013 PNC Bank [Member] Revolving Credit Facility [Member]	Dec. 20, 2013 PNC Bank [Member] Revolving Credit Facility [Member]	Dec. 27, 2013 U.S. Bank [Member] Revolving Credit Facility [Member]	Jun. 30, 2014 U.S. Bank [Member] Revolving Credit Facility [Member]	Jun. 30, 2014 U.S. Bank [Member] Revolving Credit Facility [Member]	Dec. 31, 2013 U.S. Bank [Member] Revolving Credit Facility [Member]	Dec. 27, 2013 U.S. Bank [Member] Revolving Credit Facility [Member]	Jun. 30, 2014 Repayment Guarantee [Member]	Jun. 30, 2014 Repayment Guarantee [Member] U.S. Bank [Member] Revolving Credit Facility [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 guaranty																					7,000,000	6,500,000
Line of credit facility collateral amount							102,000,000	102,000,000
Line of credit facility, current borrowing capacity							7,000,000	7,000,000
Payment of deferred financing costs			2,770,000	247,000		413,305					75,000					222,000
Revolving credit facilities	75,586,000		75,586,000		37,041,000		40,100,000	40,100,000	1,500,000			12,500,000	12,500,000	12,500,000			23,000,000	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
Extension fee percentage								0.25%										0.25%
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%	3.15%				2.15%	2.15%				2.10%	2.10%
Interest expense	3,157,000	122,000	5,896,000	247,000			27,000	35,000				68,000	135,000				124,000	247,000
Minimum tangible net worth to maintain, percent of outstanding principal amount of credit facility							200.00%	200.00%
Minimum tangible net worth to maintain							20,000,000.0	20,000,000.0
Minimum unencumbered liquid assets to maintain, market value							$ 5,000,000.0	$ 5,000,000.0
Minimum unencumbered liquid assets to maintain, market value, percent of outstanding principal amount of credit facility							20.00%	20.00%

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FAIR VALUE MEASURES AND DISCLOSURES

6 Months Ended

Jun. 30, 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.

Derivatives (interest rate caps) which are reported at fair value in the consolidated balance sheets are valued by a third-party pricing agent using an income approach with models that use, as their primary inputs, readily observable market parameters. This valuation process considers factors including interest rate yield curves, time value, credit and volatility factors. (Level 2)

The following table presents information about the Company's assets measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as follows (in thousands):

	Level 1		Level 2		Level 3		Total
June 30, 2014
Assets:
Interest rate caps	$	—	$	148	$	—	$	148
	$	—	$	148	$	—	$	148
December 31, 2013
Assets:
Interest rate caps	$	—	$	290	$	—	$	290
	$	—	$	290	$	—	$	290

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):

	June 30, 2014						December 31, 2013
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Loans held for investment, net	$	1,461		$	1,461		$	1,724		$	1,724
Mortgage notes payable	$	(358,917	)	$	(316,489	)	$	(111,811	)	$	(110,413	)
Revolving credit facilities	$	(75,586	)	$	(75,586	)	$	(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. On April 10, 2014, the Company sold its interest in the sheriff's deed for the Peterson Apartments. Accordingly, the Company had adjusted the carrying amount of the note at December 31, 2013 for such impairment. (Level 3)

The fair value of the mortgage notes payable was estimated using rates available to the Company for debt with similar terms and remaining maturities. (Level 3)

The fair values of the revolving credit facilities equal the carrying amounts because the interest rate of each of the credit facilities is variable. (Level 3)

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MORTGAGE NOTE PAYABLE (Tables)

6 Months Ended

Jun. 30, 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		Maturity Date	Annual Interest Rate					Interest Expense (3)
							Average Monthly Debt Service		Six Months Ended   June 30,
Collateral	June 30, 2014 (4)								2014		2013
Jasmine at Holcomb Bridge	$	20,298	6/1/2024	1.95	%	(1)	$	106	$	5	N/A
Berkeley Trace	14,322		7/1/2044	3.42	%	(2)	63		5		N/A
Berkeley Run	18,147		7/1/2044	3.42	%	(2)	79		7		N/A
Addison Place	50,000		5/1/2020	3.38	%	(2)	191		19		N/A
Chisholm Place	11,587		4/1/2023	2.66	%	(1)	41		22		N/A
Vista Apartment Homes	8,744		5/1/2017	2.76	%	(1)	38		122		$	66
Cannery Lofts	8,190		9/1/2020	3.45	%	(1)	34		142		N/A
Deerfield	10,530		11/1/2020	4.66	%	(2)	51		247		N/A
Trailpoint at the Woodlands	19,362		11/1/2023	5.02	%	(1)	100		250		N/A
Ivy at Clear Creek	8,586		11/1/2023	5.02	%	(1)	44		111		N/A
Centennial	23,057		1/1/2019	3.60	%	(2)	106		419		N/A
Pinnacle	18,618		1/1/2019	3.60	%	(2)	85		338		N/A
Terrace at River Oaks	14,204		1/1/2022	4.32	%	(2)	71		310		N/A
Champion Farms	16,724		7/1/2016	6.14	%	(2)	85		427		N/A
Fieldstone	16,000		5/1/2016	2.40	%	(1)	70		411		N/A
Pinehurst	4,320		1/1/2017	5.58	%	(2)	39		81		N/A
Pheasant Run	6,452		10/1/2018	5.95	%	(2)	31		158		N/A
Retreat of Shawnee	13,683		2/1/2019	5.58	%	(2)	99		318		N/A
Hilltop Village	4,315		12/1/2018	5.81	%	(2)	33		82		N/A
Conifer Crossing	28,261		9/1/2016	5.96	%	(2)	203		704		N/A
Coursey Place	28,330		8/1/2021	5.07	%	(2)	154		608		N/A
Pines of York	15,187		12/1/2021	4.46	%	(2)	80		297		N/A
	$	358,917

(1) Variable rate based on one-month LIBOR of 0.15% (as of June 30, 2014).

(2) Fixed rate.

(3) Excludes the amortization of the premium related to the Paladin fair value adjustments which is amortized to interest expense over the term of the related debt.

Annual Principal Payments on the Mortgage Note Payable

Annual principal payments on the mortgage notes payable, excluding the amortization of the fair value adjustments for the debt secured by the properties included in the Paladin acquisition, for each of the next five years ending June 30, and thereafter, are as follows (in thousands):

2015	$	3,980
2016	39,689
2017	40,098
2018	21,157
2019	49,511
Thereafter	203,168
	$	357,603

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OPERATING EXPENSE LIMITATION

6 Months Ended

Jun. 30, 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 June 30, 2014 were in compliance with the charter imposed limitation.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS (Narrative) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
RAI [Member]
Related Party Transaction [Line Items]
Insurance pool, amount of losses covered	$ 2.5
Catastrophic insurance, amount of losses covered	$ 85.0
Advisor [Member]
Related Party Transaction [Line Items]
Agreement term (in years)	1 year
Percentage acquisition fee paid to advisor (in hundredths)	2.00%
Monthly asset management fee, percent	0.08333%
Debt disposition fee, as a percentage of the contract sales price (in hundredths)	2.75%
Debt financing fee, percent	0.50%
Maximum reimbursement limit on gross offering proceeds, percent	2.50%
Resource Real Estate Opportunity Manager LLC [Member]
Related Party Transaction [Line Items]
Property management fee, percent	4.50%
Occupancy, percent	75.00%
Term for which Manager receives minimum property management fee if properties are less than 75% occupied	12 months
Construction management fee, percent	5.00%
Debt servicing fee, percent	2.75%
Resource Securities, Inc. [Member]
Related Party Transaction [Line Items]
Maximum selling commission to be paid, percent	7.00%
Maximum dealer manager fee to be paid, percent	3.00%
Dealer-manager fees reallowed to participating brokers, percent	1.00%

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NATURE OF BUSINESS AND OPERATIONS

6 Months Ended

Jun. 30, 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, manages the day-to-day operations of the Company. 

Through its private and public offerings, which concluded on December 13, 2013, the Company raised aggregate gross offering proceeds of $645.8 million from the issuance of 64,926,311 shares of common stock, including 276,056 shares purchased by the Advisor. The Company additionally issued 993,803 shares for $9.4 million pursuant to its distribution reinvestment plan since December 31, 2013. The Company's distribution reinvestment plan offering is ongoing.

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 to the consolidated financial statements 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 six months ended June 30, 2014 may not necessarily be indicative of the results of operations for the full year ending December 31, 2014.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Jun. 30, 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	68,052,380	66,725,241
Common stock, outstanding (in shares)	67,881,990	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

6 Months Ended

Jun. 30, 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 $25.0 million to $50.0 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 $7.0 million. The Company paid certain closing costs in connection with the Bank of America Credit Facility, including loan fees totaling $413,305. As of June 30, 2014 and December 31, 2013, the Company had outstanding borrowings of $40.1 million and $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 June 30, 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 $27,000 and $35,000 for the three and six months ended June 30, 2014, respectively, 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 unreasonably withheld.

The Company was in compliance with all such covenants at June 30, 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 June 30, 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 June 30, 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 and $135,000 for the three and six months ended June 30, 2014, respectively, in connection with its borrowings under the Jefferson Point Credit Facility.         

The Jefferson Point Credit Facility includes both a debt service coverage covenant and a tangible net worth covenant. The Company was in compliance with all such covenants at June 30, 2014.

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 June 30, 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 June 30, 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 $124,000 and $247,000 for the three and six months ended June 30, 2014, respectively, in connection with its borrowings under the Brentdale Credit Facility.

The Brentdale Credit Facility includes both a guarantor net worth, liquidity and leverage covenant and a property debt service coverage covenant. The Company was in compliance with the guarantor requirements at June 30, 2014. The property debt service coverage covenant is only required to be met after January 1, 2015.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 12, 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	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		68,196,824

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DEFERRED FINANCING COSTS

6 Months Ended

Jun. 30, 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 June 30, 2014 and December 31, 2013 was approximately $933,000 and $419,000, respectively.  Estimated amortization of the existing deferred financing costs for the next five years ending June 30, and thereafter, are as follows (in thousands):

2015	$	1,321
2016	1,255
2017	1,084
2018	709
2019	554
Thereafter	877
	$	5,800

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SUBSEQUENT EVENTS (Details) (Subsequent Event [Member], USD $) In Millions, unless otherwise specified	0 Months Ended
	Jul. 01, 2014
Subsequent Event [Member]
Subsequent Event [Line Items]
Ownership interest in joint ventures, percent acquired	2.50%
Payment to acquire interest in joint venture	$ 1.1

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Revenues:
Rental income	$ 24,910	$ 8,513	$ 45,579	$ 15,309
Gain on foreclosures	0	0	0	3,460
Interest income	(294)	61	221	115
Total revenues	24,616	8,574	45,800	18,884
Expenses:
Rental operating	13,280	5,267	25,307	9,875
Acquisition costs	4,035	1,832	6,535	2,518
Foreclosure costs	0	10	0	49
Management fees	2,838	869	4,947	1,646
General and administrative	3,478	1,655	5,772	2,567
Loss (gains) on disposal of assets	21	(1)	1,648	36
Depreciation and amortization expense	13,820	3,115	24,899	5,884
Total expenses	37,472	12,747	69,108	22,575
Loss before other expenses	(12,856)	(4,173)	(23,308)	(3,691)
Other (expense) income:
Net gain on dispositions	2,541	0	2,541	0
Gain on forfeiture/redemption of stock	0	1	0	22
Interest expense	(3,157)	(122)	(5,896)	(247)
Loss from continuing operations	(13,472)	(4,294)	(26,663)	(3,916)
Discontinued operations:
(Loss) income from discontinued operations	0	(96)	2	(674)
Net gain on dispositions	0	3,173	0	3,173
Income from discontinued operations, net	0	3,077	2	2,499
Net loss	(13,472)	(1,217)	(26,661)	(1,417)
Net loss attributable to noncontrolling interests	2,214	0	1,410	0
Net loss attributable to stockholders	(11,258)	(1,217)	(25,251)	(1,417)
Amounts attributable to stockholders
Amounts attributable to stockholders	(11,258)	(4,294)	(25,253)	(3,916)
Discontinued operations	0	3,077	2	2,499
Other comprehensive loss:
Designated derivatives, fair value adjustment	(149)	0	(207)	0
Comprehensive loss	(13,621)	(1,217)	(26,868)	(1,417)
Comprehensive loss attributable to noncontrolling interests	2,214	0	1,410	0
Total comprehensive loss attributable to stockholders	$ (11,407)	$ (1,217)	$ (25,458)	$ (1,417)
Weighted average common shares outstanding (in shares)	67,749	32,408	67,558	28,894
Basic and diluted (loss) income per common share:
Continuing operations (in dollars per share)	$ (0.17)	$ (0.13)	$ (0.37)	$ (0.14)
Discontinued operations (in dollars per share)	$ 0.00	$ 0.09	$ 0.00	$ 0.09
Net loss (in dollars per share)	$ (0.17)	$ (0.04)	$ (0.37)	$ (0.05)

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ACQUISITIONS, GOODWILL AND FORECLOSURES

6 Months Ended

Jun. 30, 2014

Business Combinations [Abstract]

ACQUISITIONS, GOODWILL AND FORECLOSURES

ACQUISITIONS, GOODWILL AND FORECLOSURES

Real Estate Investments

As of June 30, 2014, the Company owned interests in 38 properties, including 10 multifamily properties purchased on January 28, 2014 as part of the Paladin acquisition, discussed below. The Company recognized goodwill as the excess of purchase price over the fair value of the property acquired. 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 has received final appraisals for all 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
Merrywood	Katy, TX	6/26/2014	$	32,300	(3)	$	5,579	$	26,033	$	—	$	688	$	62	$	(377	)	$	31,985
Berkeley Trace	Atlanta, GA	5/19/2014	22,250			4,002		17,600		194		453		25		(110		)	22,164
Berkeley Run	Atlanta, GA	5/19/2014	29,500			4,723		23,969		219		588		32		(156		)	29,375
Chisolm Place	Plano, TX	5/5/2014	15,000			1,981		12,383		198		438		36		(31		)	15,005
Evergreen at Coursey	Baton Rouge, LA	3/31/2014	15,613		(8)	3,430		38,041		530		1,080		680		(28,799		)	14,962
Addison Place	Alpharetta, GA	3/28/2014	70,500			6,353		62,249		509		1,389		55		(392		)	70,163
Meridian Pointe	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
Tech Center Square	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
Affinity at Winter Park	Winter Park, FL	6/27/2013	10,100			2,512		6,459		523		606		50		(61		)	10,089
Trailpoint at the Woodlands	Houston, 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 (1)	Hermantown MN	3/21/2012	10,300		(4)	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 (1)	Dayton, OH	5/13/2011	7,100		(5)	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
Vista Apartment Homes (1)	Philadelphia, PA	6/17/2011	12,000		(6)	1,163		9,913		—		535		530		(141		)	12,000
Arcadia at Westheimer (1)	Houston, TX	9/3/2010	7,800		(7)	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) 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.

(7) 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.

(8) The Company originally acquired a 51.7% interest in the joint venture that owned Evergreen at Coursey. On March 31, 2014, the Company purchased the remaining 48.3% ownership interest of its joint venture partner, bringing the Company's ownership percentage to 100.0%.

Acquisitions

The Company acquired interests in 16 properties during the six months ended June 30, 2014 including the 10 joint venture interests comprising the Paladin acquisition. In order to finalize the fair values of the acquired assets and liabilities, the Company obtained 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. All valuations have been finalized as of June 30, 2014.

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 was 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 contained 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 47.65% membership interest in one of the Paladin joint ventures, FPA/PRIP Governor Park, LLC ("Governor Park"), to FPA Governor Park Associates, LLC for $456,000. The sale price approximated the fair value, therefore no gain or loss was recognized on the transaction.

The allocation of the purchase price for the interests in the 10 Paladin joint ventures, which was completed during the six months ended June 30, 2014, is included below (in thousands):

Multifamily Community Name	City and State	Ownership % at Date of Acquisition		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	%	$	3,168	$	23,464	$	579	$	27,211	$	(16,440	)	$	(3,231	)	$	7,540	$	184	$	7,724
Fieldstone	Woodlawn, OH	83.0	%	1,420		18,472		648		20,540		(15,801		)	(806		)	3,933		140		4,073
Pinehurst	Kansas City, MO	97.5	%	1,250		8,241		290		9,781		(4,219		)	(139		)	5,423		67		5,490
Pheasant Run	Lee's Summit, MO	97.5	%	800		10,798		317		11,915		(6,100		)	(145		)	5,670		82		5,752
Retreat at Shawnee	Shawnee, KS	97.5	%	3,200		14,550		608		18,358		(13,412		)	(124		)	4,822		126		4,948
Hilltop Village	Kansas City, MO	49.0	%	800		4,289		195		5,284		(4,366		)	(468		)	450		36		486
Conifer Place	Norcross, GA	42.5	%	5,040		28,712		1,007		34,759		(28,202		)	(3,768		)	2,789		235		3,024
Stone Ridge	Columbia, SC	68.5	%	1,300		4,612		326		6,238		807			(2,218		)	4,827		44		4,871
Evergreen at Coursey Place	Baton Rouge, LA	51.7	%	3,430		38,041		1,080		42,551		(27,587		)	(7,223		)	7,741		288		8,029
Pines of York	Yorktown, VA	90.0	%	4,464		16,340		715		21,519		(14,629		)	(689		)	6,201		146		6,347
				$	24,872	$	167,519	$	5,765	$	198,156	$	(129,949	)	$	(18,811	)	$	49,396	$	1,348	$	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 in Evergreen at Coursey Place ("Coursey Place") from its joint venture partner for $7.5 million. A summary of the transaction is as follows (in thousands):

Noncontrolling interest assumed	$	7,223
Losses attributable to noncontrolling interest	(191		)
Prepaid insurance	7
Goodwill	501
Transaction expenses	45
	$	7,585

Total goodwill recorded by the Company related to the Paladin acquisition is as follows (in thousands):

Amount of goodwill recorded at date of Paladin acquistion	$	1,348
Buyout of Coursey Place noncontrolling interest	501
Total goodwill	$	1,849

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LOANS HELD FOR INVESTMENT, NET

6 Months Ended

Jun. 30, 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 June 30, 2014 and December 31, 2013 was $1.9 million. The performing notes were purchased net of discounts and the unamortized accretable discounts totaled $280,000 and $292,000 at June 30, 2014 and December 31, 2013, respectively.

On December 31, 2011, the Peterson Note matured 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 was 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.

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):

	June 30, 2014			December 31, 2013
	Amount		Percent	Amount		Percent
Current	$	1,461	100%	$	1,529	89%
Delinquent:
30−89 days	—		—%	195		11%
90−180 days	—		—%	—		—%
Greater than 180 days	—		—%	—		—%
	$	1,461	100%	$	1,724	100%

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

	June 30, 2014		December 31, 2013
Loans:
Performing	$	1,461	$	1,529
Nonperforming	—		195
Total	$	1,461	$	1,724

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

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

The Company has individually evaluated each loan for impairment and determined that, as of June 30, 2014, the two loans held for investment were not impaired. 

There were no charge-offs for the six months endedJune 30, 2014.

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DERIVATIVES AND HEDGING ACTIVITIES

6 Months Ended

Jun. 30, 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 four interest rate caps that were designated as cash flow hedges during 2013 and 2014. 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 three and six months ended June 30, 2014 and 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 and six months ended June 30, 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 June 30, 2014, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (dollars in thousands):

Interest Rate Derivative	Number of Instruments	Notional Amount		Maturity Dates
Interest Rate Caps	4	$	59,833	July 1, 2018 to November 1, 2018

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 in prepaid expenses and other assets on the Balance Sheet as of June 30, 2014 and December 31, 2013 (in thousands):

Asset Derivatives						Liability Derivatives
June 30, 2014			December 31, 2013			June 30, 2014			December 31, 2013
Balance Sheet	Fair Value		Balance Sheet	Fair Value		Balance Sheet	Fair Value		Balance Sheet	Fair Value
Interest rate caps	$	148	Interest rate caps	$	290	—	$	—	—	$	—

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Jun. 30, 2014

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the changes in each component of accumulated other comprehensive income (loss) for the six months endedJune 30, 2014 (in thousands):

	Net unrealized gain (loss) on derivatives
January 1, 2014	$	20
Unrealized loss on designated derivative	(207		)
June 30, 2014	$	(187	)

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IDENTIFIED INTANGIBLE ASSETS, NET

6 Months Ended

Jun. 30, 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 $26.2 million and $16.7 million as of June 30, 2014 and December 31, 2013, respectively, net of accumulated amortization of $22.1 million and $11.5 million, respectively.  The weighted-average remaining life of the existing rental leases was 8.2 months and 11.6 months as of June 30, 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 and six months ended June 30, 2014 was $6.0 million and $10.6 million, respectively. Amortization of the rental and antennae leases for the three and six months ended June 30, 2013 was $1.0 million and $1.9 million, respectively.

Expected amortization for the rental and antennae leases for the next five years ending June 30, and thereafter, is as follows (in thousands): 

2015	$	3,949
2016	19
2017	17
2018	16
2019	16
Thereafter	118
	$	4,135

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IDENTIFIED INTANGIBLE ASSETS, NET (Narrative) (Details) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Finite-Lived Intangible Assets [Line Items]
Identified intangible assets, net	$ 4,135,000		$ 4,135,000		$ 5,182,000
Weighted average remaining life (in months)			8 months 6 days		11 months 18 days
Amortization expense	6,000,000	1,000,000	10,600,000	1,900,000
Acquired in-place leases [Member]
Finite-Lived Intangible Assets [Line Items]
Identified intangible assets, net	26,200,000		26,200,000		16,700,000
Accumulated amortization	22,100,000		22,100,000		11,500,000
Antennae Leases [Member]
Finite-Lived Intangible Assets [Line Items]
Annual expected amortization expense through 2025	$ 16,000		$ 16,000

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MEASUREMENT PERIOD ADJUSTMENTS

6 Months Ended

Jun. 30, 2014

Accounting Changes and Error Corrections [Abstract]

MEASUREMENT PERIOD ADJUSTMENTS

MEASUREMENT PERIOD ADJUSTMENTS

The Company obtains third party appraisals for all of its acquisitions. If the appraisals are not finalized in the period in which the property or interest was acquired, a measurement period adjustment is recorded. The measurement period adjustment for the Deerfield acquisition was finalized during the three months ended December 31, 2013. For the Paladin and Addison acquisitions, which were completed in the three months ended March 31, 2014, the measurement period adjustments were finalized during the three months ended June 30, 2014.

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.      

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 (in thousands):

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

Changes in the Paladin and Addison acquisitions are reflected in the tables below (in thousands):

Paladin

	January 28, 2014 (As initially reported)			Measurement period adjustment (1)			June 30, 2014 (As adjusted)
Land	$	44,292		$	(19,418	)	$	24,874
Building	149,155			18,362			167,517
Personal property	—			3,530			3,530
Intangible assets	5,861			(96		)	5,765
Goodwill	6,412			(5,064		)	1,348
Other net assets (liabilities)	(137,739		)	4,260			(133,479		)
Total net identifiable net assets	67,981			1,574			69,555

(1) Remaining balance ($1.6 million) of measurement period adjustments adjusted the noncontrolling interest balance.

The results of operations for the three and six months ended June 30, 2014 include an additional $867,000 of depreciation and amortization that would have been included in the three months ended March 31, 2014 had the final appraisals for the Paladin properties been received and recorded during that period.

Addison Place

	March 31, 2014 (As initially reported)		Measurement period adjustment			June 30, 2014 (As adjusted)
Land	$	18,137	$	(11,784	)	$	6,353
Building	51,843		10,406			62,249
Personal property	—		509			509
Intangible assets	520		869			1,389
Total net identifiable net assets	$	70,500	$	—		$	70,500

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DISPOSITION OF PROPERTIES AND DISCONTINUED OPERATIONS

6 Months Ended

Jun. 30, 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 and six months ended June 30, 2014 and 2013 are the operating results of the Heatherwood Apartments and the Town Park Apartments, both discussed below.

      The Company sold the Heatherwood Apartments, which was originally obtained through foreclosure, 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 on April 30, 2013 for $10.3 million and recognized a gain of approximately $3.2 million on disposition.    

The Company sold the Campus Club Apartments on June 16, 2014 for $10.5 million and recognized a gain of approximately $2.5 million on the disposition. In accordance with new accounting guidance for discontinued operations (see Note 2), the Company included the gain in loss from continuing operations on the consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2014.

    The results of discontinued operations are summarized for the three and six months ended June 30, 2014 and 2013 as follows (in thousands): 

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2014		2013			2014		2013
Revenues:
Rental income	$	—	$	275		$	3	$	1,081
Total revenues	—		275			3		1,081
Expenses:
Rental operating	—		185			1		788
Management fees	—		19			—		62
General and administrative	—		167			—		225
Loss on property impairment	—		—			—		539
Depreciation and amortization expense	—		—			—		141
Total expenses	—		371			1		1,755
(Loss) income from discontinued operations	—		(96		)	2		(674		)
Net gain on dispositions	—		3,173			—		3,173
Income from discontinued operations	$	—	$	3,077		$	2	$	2,499
Weighted average common shares outstanding	67,749		32,408			67,558		28,894
Basic and diluted income per common share	$	—	$	0.09		$	—	$	0.09

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MORTGAGE NOTE PAYABLE

6 Months Ended

Jun. 30, 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		Maturity Date	Annual Interest Rate					Interest Expense (3)
							Average Monthly Debt Service		Six Months Ended   June 30,
Collateral	June 30, 2014 (4)								2014		2013
Jasmine at Holcomb Bridge	$	20,298	6/1/2024	1.95	%	(1)	$	106	$	5	N/A
Berkeley Trace	14,322		7/1/2044	3.42	%	(2)	63		5		N/A
Berkeley Run	18,147		7/1/2044	3.42	%	(2)	79		7		N/A
Addison Place	50,000		5/1/2020	3.38	%	(2)	191		19		N/A
Chisholm Place	11,587		4/1/2023	2.66	%	(1)	41		22		N/A
Vista Apartment Homes	8,744		5/1/2017	2.76	%	(1)	38		122		$	66
Cannery Lofts	8,190		9/1/2020	3.45	%	(1)	34		142		N/A
Deerfield	10,530		11/1/2020	4.66	%	(2)	51		247		N/A
Trailpoint at the Woodlands	19,362		11/1/2023	5.02	%	(1)	100		250		N/A
Ivy at Clear Creek	8,586		11/1/2023	5.02	%	(1)	44		111		N/A
Centennial	23,057		1/1/2019	3.60	%	(2)	106		419		N/A
Pinnacle	18,618		1/1/2019	3.60	%	(2)	85		338		N/A
Terrace at River Oaks	14,204		1/1/2022	4.32	%	(2)	71		310		N/A
Champion Farms	16,724		7/1/2016	6.14	%	(2)	85		427		N/A
Fieldstone	16,000		5/1/2016	2.40	%	(1)	70		411		N/A
Pinehurst	4,320		1/1/2017	5.58	%	(2)	39		81		N/A
Pheasant Run	6,452		10/1/2018	5.95	%	(2)	31		158		N/A
Retreat of Shawnee	13,683		2/1/2019	5.58	%	(2)	99		318		N/A
Hilltop Village	4,315		12/1/2018	5.81	%	(2)	33		82		N/A
Conifer Crossing	28,261		9/1/2016	5.96	%	(2)	203		704		N/A
Coursey Place	28,330		8/1/2021	5.07	%	(2)	154		608		N/A
Pines of York	15,187		12/1/2021	4.46	%	(2)	80		297		N/A
	$	358,917

(1) Variable rate based on one-month LIBOR of 0.15% (as of June 30, 2014).

(2) Fixed rate.

(3) Excludes the amortization of the premium related to the Paladin fair value adjustments which is amortized to interest expense over the term of the related debt.

(4) Includes $1.3 million fair value premium related to the Paladin debt assumed.

Annual principal payments on the mortgage notes payable, excluding the amortization of the fair value adjustments for the debt secured by the properties included in the Paladin acquisition, for each of the next five years ending June 30, and thereafter, are as follows (in thousands):

2015	$	3,980
2016	39,689
2017	40,098
2018	21,157
2019	49,511
Thereafter	203,168
	$	357,603

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. The Company has also guaranteed the completion and payment of costs of completion of no less than $7.0 million of renovations to Addison by July 1, 2018.

For the Fieldstone mortgage, beginning with the calendar quarter ended December 31, 2013, the property must maintain a certain level of debt service coverage.

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MORTGAGE NOTE PAYABLE MORTGAGE NOTE PAYABLE (Narrative) (Details) (Payment guarantee, USD $) In Millions, unless otherwise specified	Jun. 30, 2014
Payment guarantee
Guarantor Obligations [Line Items]
Guaranty for completion and payment of costs of completion (no less than)	$ 7.0

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DEFERRED FINANCING COSTS (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
DEFERRED FINANCING COSTS [Abstract]
Accumulated amortization, deferred finance costs	$ 933	$ 419
2015	1,321
2016	1,255
2017	1,084
2018	709
2019	554
Thereafter	877
Deferred financing costs, net	$ 5,800	$ 3,602

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MORTGAGE NOTE PAYABLE (Annual Principal Payments on the Mortgage Note Payable) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014
Debt Disclosure [Abstract]
2015	$ 3,980
2016	39,689
2017	40,098
2018	21,157
2019	49,511
Thereafter	203,168
Total	$ 357,603

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DISPOSITION OF PROPERTIES AND DISCONTINUED OPERATIONS (Tables)

6 Months Ended

Jun. 30, 2014

Discontinued Operations and Disposal Groups [Abstract]

Results of Discontinued Operations

The results of discontinued operations are summarized for the three and six months ended June 30, 2014 and 2013 as follows (in thousands): 

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2014		2013			2014		2013
Revenues:
Rental income	$	—	$	275		$	3	$	1,081
Total revenues	—		275			3		1,081
Expenses:
Rental operating	—		185			1		788
Management fees	—		19			—		62
General and administrative	—		167			—		225
Loss on property impairment	—		—			—		539
Depreciation and amortization expense	—		—			—		141
Total expenses	—		371			1		1,755
(Loss) income from discontinued operations	—		(96		)	2		(674		)
Net gain on dispositions	—		3,173			—		3,173
Income from discontinued operations	$	—	$	3,077		$	2	$	2,499
Weighted average common shares outstanding	67,749		32,408			67,558		28,894
Basic and diluted income per common share	$	—	$	0.09		$	—	$	0.09

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LOANS HELD FOR INVESTMENT, NET (Recorded Investment, Credit Quality Indicator) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 1,461	$ 1,724
Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,461	1,529
Nonperforming [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 0	$ 195

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EQUITY

6 Months Ended

Jun. 30, 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 June 30, 2014 and December 31, 2013, no shares of preferred stock were issued and outstanding.

Common Stock

As of June 30, 2014, the Company had issued an aggregate of 68,052,380 shares, 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	$	12,582
Shares issued through primary public offering	62,485,461	622,077
Shares issued through stock distributions	2,132,266	—
Shares issued through distribution reinvestment plan	2,155,426	20,477
Shares issued in conjunction with the Advisor's initial investment, net of 4,500 share conversion	15,500	200
Total	68,052,380	$	655,336

Convertible Stock

As of June 30, 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 June 30, 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
April 2014	—	—	104,334	(2)
May 2014	—	—	104,334	(2)
June 2014	68,778	$9.04	173,112	(2)

(1) All redemptions of equity securities by the Company in the three months ended June 30, 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 and six months ended June 30, 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 six months ended June 30, 2014, the Company paid aggregate distributions of $13.5 million, including $4.0 million of distributions paid in cash and $9.4 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	Distributions 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
March 31, 2014	0.033		April 1, 2014	1,576		672		2,248
April 30, 2014	0.033		May 1, 2014	1,574		679		2,253
May 30, 2014	0.033		June 2, 2014	1,578		680		2,258
				$	9,440	$	4,020	$	13,460

On April 25, 2014, the Company's Board of Directors declared cash distributions of $2.3 million ($0.33 per common share) to stockholders of record as of the close of business on June 30, 2014, which were paid on July 1, 2014.

Since its formation, the Company's Board of Directors 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 June 30, 2014.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2014

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

On July 1, 2014, the Company purchased the remaining 2.5% ownership interests of its joint venture partners in the joint ventures that own Pinehurst, Pheasant Run and Retreat at Shawnee, bringing the Company's ownership interest to 100% in each of these properties. The Company paid $1.1 million for these interests.

On July 1, 2014, the Company sold its entire membership interest in Parkhill Partners I, LLC ("Hilltop Village") to JTL Properties, LLC, its joint venture partner in the ownership of Hilltop Village. Hilltop Village is a multifamily apartment complex located in Kansas City, Missouri.

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		6 Months Ended			0 Months Ended
	Aug. 02, 2011 Loan	Mar. 15, 2011 Loan	Jun. 30, 2014 Loan	Dec. 31, 2013	Apr. 18, 2013	Apr. 06, 2014 Peterson Note [Member]	Dec. 31, 2011 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			280,000	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

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FAIR VALUE MEASURES AND DISCLOSURES (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Assets Measured at Fair Value on a Recurring Basis

The following table presents information about the Company's assets measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as follows (in thousands):

	Level 1		Level 2		Level 3		Total
June 30, 2014
Assets:
Interest rate caps	$	—	$	148	$	—	$	148
	$	—	$	148	$	—	$	148
December 31, 2013
Assets:
Interest rate caps	$	—	$	290	$	—	$	290
	$	—	$	290	$	—	$	290

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):

	June 30, 2014						December 31, 2013
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Loans held for investment, net	$	1,461		$	1,461		$	1,724		$	1,724
Mortgage notes payable	$	(358,917	)	$	(316,489	)	$	(111,811	)	$	(110,413	)
Revolving credit facilities	$	(75,586	)	$	(75,586	)	$	(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)	993,803	994,000
Common stock issued through distribution reinvestment plan	9,440	9		9,431			9,440
Syndication costs	34			34			34
Distributions of common stock	0	3		3,330		(3,333)	0
Distributions of common stock (in shares)		333,000
Distributions declared	(13,503)					(13,503)	(13,503)
Share redemptions	(1,075)	(1)		(1,117)		43	(1,075)
Share redemptions (in shares)		(112,000)
Designated derivatives, fair value adjustment	(207)				(207)		(207)
Noncontrolling interests retained in the Paladin merger	18,691							18,691
Deconsolidation of noncontrolling interest	(6,912)							(6,912)
Net loss	(26,661)					(25,251)	(25,251)	(1,410)
Balance at Jun. 30, 2014	$ 496,854	$ 679	$ 1	$ 602,269	$ (187)	$ (116,277)	$ 486,485	$ 10,369
Balance (in shares) at Jun. 30, 2014	67,881,990	67,882,000	50,000

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RENTAL PROPERTIES, NET

6 Months Ended

Jun. 30, 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):

	June 30, 2014			December 31, 2013
Land	$	108,972		$	62,859
Building and improvements	638,799			325,412
Furniture, fixtures and equipment	23,261			17,051
Construction in progress	2,594			827
	773,626			406,149
Less: accumulated depreciation	(29,286		)	(15,776		)
	$	744,340		$	390,373

Depreciation expense for the three and six months endedJune 30, 2014 was $7.8 million and $14.3 million, respectively. Deprecation expense for the three and six months ended June 30, 2013 was $2.1 million and $4.0 million, respectively.

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DISPOSITION OF PROPERTIES AND DISCONTINUED OPERATIONS (Details) (USD $)	3 Months Ended		6 Months Ended		0 Months Ended			0 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Apr. 18, 2013 Heatherwood Apartments	Apr. 30, 2013 Town Park Apartments	Apr. 30, 2014 Town Park Apartments	Jun. 16, 2014 Campus Club Apartments	Jun. 16, 2014 Campus Club Apartments
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Sale price					$ 1,000,000		$ 10,300,000		$ 10,500,000
Gain (loss) on dispositions	0	3,173,000	0	3,173,000	(31,000)	3,200,000		2,500,000
Sale price, portion financed by buyer					800,000
Sale price, cash					$ 200,000

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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		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Related Party Transaction [Line Items]
Receivables from related parties	$ 1,585		$ 1,585		$ 530
Payables to related parties	1,539		1,539		1,718
Resource America, Inc. and Affiliates [Member] | Insurance fund held in escrow [Member]
Related Party Transaction [Line Items]
Receivables from related parties	1,585		1,585		530
Advisor [Member] | Expense Reimbursements [Member]
Related Party Transaction [Line Items]
Payables to related parties	335		335		775
Advisor [Member] | Acquisition Fees [Member]
Related Party Transaction [Line Items]
Fees earned / expenses paid to related parties	2,262	1,200	4,985	1,800
Advisor [Member] | Asset Management Fees [Member]
Related Party Transaction [Line Items]
Fees earned / expenses paid to related parties	1,790	500	3,040	914
Advisor [Member] | Disposition Fees [Member]
Related Party Transaction [Line Items]
Fees earned / expenses paid to related parties	150	116	150	116
Advisor [Member] | Organization and Offering Cost [Member]
Related Party Transaction [Line Items]
Fees earned / expenses paid to related parties	0	99	0	203
Advisor [Member] | Overhead Allocation [Member]
Related Party Transaction [Line Items]
Fees earned / expenses paid to related parties	564	97	915	198
Resource Real Estate Opportunity Manager LLC [Member] | Property Management Fees [Member]
Related Party Transaction [Line Items]
Payables to related parties	315		315		266
Fees earned / expenses paid to related parties	848	371	1,544	784
Resource Real Estate Opportunity Manager LLC [Member] | Expense Reimbursements [Member]
Related Party Transaction [Line Items]
Payables to related parties	876		876		500
Resource Real Estate Opportunity Manager LLC [Member] | Construction Management Fees [Member]
Related Party Transaction [Line Items]
Fees earned / expenses paid to related parties	481	0	676	0
Resource Real Estate Opportunity Manager LLC [Member] | Debt Servicing Fees [Member]
Related Party Transaction [Line Items]
Fees earned / expenses paid to related parties	2	1	5	1
Resource Securities, Inc. [Member] | Selling Commission and Dealer Management Fees [Member]
Related Party Transaction [Line Items]
Payables to related parties	0		0		174
Fees earned / expenses paid to related parties	0	5,100	0	12,100
Other Related Party [Member]
Related Party Transaction [Line Items]
Payables to related parties	13		13		3
Ledgewood P.C. [Member]
Related Party Transaction [Line Items]
Fees earned / expenses paid to related parties	71	51	101	82
Graphic Images LLC [Member]
Related Party Transaction [Line Items]
Fees earned / expenses paid to related parties	$ 0	$ 111	$ 33	$ 325

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Principles of Consolidation

The consolidated financial statements include the accounts of the Company's majority-owned and/or controlled subsidiaries as follows:

Subsidiary	Ownership %	Apartment Complex	Number of Units	Property Location
Springhurst Housing Partners, LLC ("Champion Farms")	70.0%	Champion Farms	264	Louisville, KY
Glenwood Housing Partners I, LLC ("Fieldstone")	83.0%	Fieldstone	266	Woodlawn, OH
KC Pinehurst Associates, LLC ("Pinehurst")	97.5%	Pinehurst	146	Kansas City, MO
KC Pheasant Associates, LLC ("Pheasant Run")	97.5%	Pheasant Run	160	Lee's Summit, MO
KC Retreat Associates, LLC ("Retreat at Shawnee")	97.5%	Retreat at Shawnee	342	Shawnee, KS
Parkhill Partners I, LLC ("Hilltop Village")	49.0%	Hilltop Village	124	Kansas City, MO
FPA/PRIP Conifer, LLC ("Conifer Place")	42.5%	Conifer Place	420	Norcross, GA
DT Stone Ridge, LLC ("Stone Ridge")	68.5%	Stone Ridge	191	Columbia, SC
FP-1, LLC ("Pines of York")	90.0%	Pines of York	248	Yorktown, VA

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 (b)	N/A	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	N/A (c)	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")	Affinity at Winter Park	192	Winter Park, FL
RRE Brentdale Holdings, LLC ("Brentdale")	The Westside	412	Plano, TX
RRE Jefferson Point Holdings, LLC ("Jefferson Point")	Tech Center Square	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")	Meridian Pointe	339	Burnsville, MN
RRE Addison Place, LLC ("Addison Place")	Addison Place	403	Alpharetta, GA
PRIP Coursey, LLC ("Evergreen at Coursey Place")	Evergreen at Coursey Place	352	Baton Rouge, LA
PRIP 3700, LLC ("Champion Farms")	N/A (d)	N/A	N/A
PRIP 10637, LLC ("Fieldstone")	N/A (d)	N/A	N/A
PRIP 500, LLC ("Pinehurst")	N/A (d)	N/A	N/A
PRIP 1102, LLC ("Pheasant Run")	N/A (d)	N/A	N/A
PRIP 11128, LLC ("Retreat at Shawnee")	N/A (d)	N/A	N/A
PRIP 6700, LLC ("Hilltop Village")	N/A (d)	N/A	N/A
PRIP 3383, LLC ("Conifer Place")	N/A (d)	N/A	N/A
PRIP Stone Ridge, LLC ("Stone Ridge")	N/A (d)	N/A	N/A
PRIP Pines, LLC ("Pines of York")	N/A (d)	N/A	N/A
PRIP 5060/6310, LLC ("Governor Park")	N/A (d)	N/A	N/A
RRE Chisholm Place Holdings LLC ("Chisholm Place")	Chisholm Place	142	Plano, TX
RRE Berkeley Run Holdings, LLC ("Berkley Run")	Berkeley Run	194	Atlanta, GA
RRE Berkeley Trace Holdings LLC ("Berkley Trace")	Berkeley Trace	165	Atlanta, GA
RRE Merrywood LLC ("Merrywood")	Merrywood	228	Katy, TX

N/A - Not Applicable

(a) - Discontinued operations

(b) - Sold in 2014

(c) - Subsidiary holds a portion of the Williamsburg parking lot    

(d) - Wholly-owned subsidiary of RRE Charlemagne Holdings, LLC

All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with 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 during the fourth quarter of each calendar year, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

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 as 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. 

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 June 30, 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 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.

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:

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 as of January 1, 2014.

Accounting Standards Issued But Not Yet Effective

In May 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers”, which will replace most existing revenue recognition guidance in GAAP.  The core principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services.  The ASU requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The ASU will be effective for the Company beginning January 1, 2017, including interim periods in 2017, and allows for both retrospective and prospective methods of adoption. The Company is in the process of determining the method of adoption and assessing the impact of this guidance on the Company’s consolidated financial position, results of operations and cash flows.

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EQUITY (Distribution Reinvestment Plan and Distributions) (Details) (USD $)	6 Months Ended	0 Months Ended						6 Months Ended				0 Months Ended
	Jun. 30, 2014 Distribution	Jan. 02, 2014 Record Date December 2013 [Member]	Feb. 03, 2014 Record Date January 2014 [Member]	Mar. 03, 2014 Record Date February 2014 [Member]	May 01, 2014 Record Date April 2013 [Member]	Apr. 01, 2014 Record Date April 2013 [Member]	Jun. 02, 2014 Record Date May 2013 [Member]	Jun. 30, 2014 Dividend Distribution One [Member] Distribution	Jun. 30, 2014 Dividend Distribution Two [Member] Distribution	Jun. 30, 2014 Dividend Distribution Three [Member] Distribution	Jun. 30, 2014 Dividend Distribution Four [Member] Distribution	Jul. 01, 2014 Subsequent Event [Member] Record Date March 2014 [Member]
Securities Financing Transaction [Line Items]
Per Common Share		$ 0.03333	$ 0.03333	$ 0.03333	$ 0.033	$ 0.033	$ 0.033					$ 0.33
Distributions Invested in Shares of Common Stock	$ 9,440,000	$ 1,566,000	$ 1,575,000	$ 1,571,000	$ 1,574,000	$ 1,576,000	$ 1,578,000
Aggregate Cash Distribution	4,020,000	656,000	663,000	670,000	679,000	672,000	680,000					2,300,000
Total Aggregate Distribution	13,460,000	2,222,000	2,238,000	2,241,000	2,253,000	2,248,000	2,258,000
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

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

6 Months Ended

Jun. 30, 2014

Equity [Abstract]

Components of Accumulated Other Comprehensive Income (Loss)

The following table presents the changes in each component of accumulated other comprehensive income (loss) for the six months endedJune 30, 2014 (in thousands):

	Net unrealized gain (loss) on derivatives
January 1, 2014	$	20
Unrealized loss on designated derivative	(207		)
June 30, 2014	$	(187	)

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 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

Substantially all of the receivables from related parties represents escrow funds held by RAI for self insurance. 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 $2.5 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.

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 earns 4.5% of the gross receipts from our properties, provided for that properties that are less than 75% occupied, the manager receives a minimum fee for the first 12 months of ownership, for performing certain property management and leasing activities. 

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 was 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):

	June 30, 2014		December 31, 2013
Receivables from related parties:
RAI and affiliates - insurance funds held in escrow	$	1,585	$	530
Payables to related parties:
Advisor:
Expense reimbursements	$	335	$	775
Resource Real Estate Opportunity Manager, LLC:
Property management fees	315		266
Operating expense reimbursements	876		500
Resource Securities, Inc.
Selling commissions and dealer manager fees	—		174
Other	13		3
	$	1,539	$	1,718

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Fees earned / expenses paid to related parties:
Advisor:
Acquisition fees	$	2,262	$	1,200	$	4,985	$	1,800
Asset management fees	$	1,790	$	500	$	3,040	$	914
Disposition fees	$	150	$	116	$	150	$	116
Organization and offering costs	$	—	$	99	$	—	$	203
Overhead allocation	$	564	$	97	$	915	$	198
Resource Real Estate Opportunity Manager LLC:
Property management fees	$	848	$	371	$	1,544	$	784
Construction management fees	$	481	$	—	$	676	$	—
Debt servicing fees	$	2	$	1	$	5	$	1
Resource Securities, Inc.:
Selling commissions and dealer manager fees	$	—	$	5,100	$	—	$	12,100
Other:
Ledgewood	$	71	$	51	$	101	$	82
Graphic Images	$	—	$	111	$	33	$	325