Just as crowdfunding has come to investing and lending, so has real estate investing. RealtyMogul is a real estate crowdfunding platform where investors and real estate investment sponsors and borrowers come together to create mutually acceptable real estate investments. Overall, we found it easy to use and convenient in this RealtyMogul review.
RealtyMogul is an easy-to-use real estate investment platform that enables accredited and non-accredited investors to participate in potentially profitable opportunities through its private REITs.
What Is RealtyMogul?
Realty MogulRealtyMogul is an online real estate capital market started in 2012. The platform was founded by Jillian Helman and Justin Hughes. Their goal was to disrupt traditional real estate financing by developing an online crowdfunding site.
Crowdfunding is the process of bringing together investors, borrowers and investment sponsors to create new investments. In this way, it is considered a peer-to-peer transaction, primarily involving individuals on both sides of the transaction (although RealtyMogul is open to institutional participation as well).
Today, the platform has more than 185,000 registered members. It has provided capital for more than 375 investments with more than $400 million in committed capital. The platform arranges equity capital for commercial real estate. RealtyMogul has a team of professionals with a combination of real estate, finance and technology backgrounds.
|Account Fees||1-1.25%/year asset management fee|
|Time Commitment||6 Months|
|Offering Types||Debt, Equity, Preferred Equity, Direct Ownership|
|Property Types||Commerical, Residential, Single Family, Foreign Investors|
|Regions Served||50 States|
How Does RealtyMogul Work?
RealtyMogul allows investors to participate in a wide range of commercial real estate investments. Some examples include apartment buildings, office buildings, industrial sites, self-storage, retail, and medical buildings.
When you invest, you typically do so by buying shares in a RealtyMogul limited liability company (LLC), which in turn invests in an LLC or limited partnership (LP) that owns the property. In this way, investments minimize costs for investment sponsors and provide more investment opportunities, as well as simplified reporting of distributions and tax information through the platform.
RM Manager, LLC, a wholly owned subsidiary of RealtyMogul, serves as the manager of RealtyMogul LLC.
The specific investment period depends on the investment. Capital investments typically range from three to 10 years. Equity investments typically pay quarterly or semiannual distributions. These are just rules, and it's important to understand that distributions from any investment are never guaranteed.
For income tax purposes, an IRS Form K-1 will be issued each year for each capital investment, reporting the results of that investment. Distributions from RealtyMogul's two REITs are reported on IRS Form 1099.
- Ease of investment selection
- Easy and fast financing
- Investment monitoring 24/7
- Documentation can be done online
- Quarterly or semi-annual distributions of capital investments. monthly or quarterly distributions for REIT investments
- RealtyMogul provides more investment flexibility than real estate investment trusts (REITs)
- Investments generally do not require capital requirements, which are additional capital requirements beyond the initial investment
- Individual investments are “pre-screened”, meaning the platform provides a comprehensive assessment to determine the viability of each investment.
- Invest in two investments (accredited investors only) or two different REITs (all investors)
The Income REIT
Competing with Fundrise eREITs, RealtyMogul introduced its first REIT in 2016. The benefits of being called The Income REIT are that accreditation is required, more asset diversification by investing in individual property, and a much lower minimum investment requirement than a placement. private. The minimum investment is $5,000 plus an equity fee of up to 3% and an annual asset management fee of 1%.
According to its website, “Income REITs may invest in a variety of property types, including but not limited to multi-family, office, industrial, self-storage, retail and medical office. The Fund may invest in various commercial real estate-related debt and equity securities in these various types of properties.” Therefore, it will be a group of different types of properties and not just one section or location across the country.
Unlike other private REITs that have long investment periods with no redemptions, RealtyMogul claims it will allow redemptions every quarter. But the offer circular also noted that there are limits on the total number of annual rebates.
The Apartment Growth REIT
In September 2017, RealtyMogul launched another REIT, the Apartment Growth REIT. As the service's first REIT, The Apartment Growth REIT will be open to accredited and non-accredited investors, allowing all investors to invest in the real estate market.
This second REIT's focus is solely on multifamily inequality across the country, a particularly hot segment of the market. As RealtyMogul reports, “The U.S. housing market has seen a strong recovery, evidenced by a steady decline in vacancies and annual average effective rent growth of 3.9% over the period, according to the U.S. Census Bureau's Home Ownership and Vacancies Report. 2010 and 2015
To invest in RealtyMogul, you must make a minimum initial investment of $5,000. Annual management fees typically range from 1% to 1.25%, and you may also pay additional REIT fees.
You can make standard ACH transfers from your bank account up to $100,000. For amounts over $100,000, you must use wire transfers. Each investment you fund will have a unique account number that the platform will use to ensure that the funds go directly to that investment opportunity.
RealtyMogul Signup process
You start by creating an account. First you need to create a password and confirm your email. Next, you must verify that you are an accredited investor, which means you are a sophisticated investor with a net worth of at least $1 million without your primary residence, or have an annual income of at least $200,000. (Note: If you only want to invest in two REITs, see below, you don't need to be accredited.) After that, you'll enter the general information and you'll be logged in.
RealtyMogul dashboard. The dashboard allows investors to track all the terms of their investment on the platform. This includes how much money they have invested, active trades, and the returns on those investments.
If you want more control over the properties you invest in, RealtyMogul is a great option. And the platform still has a variety of REITs you can invest in to help diversify your real estate portfolio.
That said, RealtyMogul is one of many real estate crowdfunding platforms. And some alternatives are superior depending on the amount of money you want to invest or the return you're looking for.
|Account Fees||1%/year||None||2% annual management fee|
Fundrise is our favorite alternative if you're looking to invest in real estate on the cheap, as you only need $10 to get started. You are paid quarterly dividends and there is also only a 1% management fee. And there is a secondary stock market that helps increase liquidity.
CrowdStreet is another great alternative, but most features are only available to accredited investors and there is a $25,000 minimum.
Finally, Streitwise is a great alternative if you're interested in generating dividend income. It has paid over 8% in dividends since 2017, and the $5,000 minimum is the same as RealtyMogul.
- “Pre-screened” investments. RealtyMogul has a comprehensive underwriting process that verifies the property, location and borrower/sponsor of every investment opportunity available on the platform. The investigation extends to background and criminal checks on the principals involved in the investments and includes a RealtyMogul subscriber walking by each property to personally appraise it.
- Simple investment process. there are no capital calls where you have to provide additional capital on top of your initial investment. Instead of additional investment, your investment may be reduced if more money is needed or if the deal requires member loans at a high interest rate (10%-15%). If member loans are required, your equity position in the investment will be subject to those member loans and the loans must be repaid before any equity distributions are made.
- No Capital Calls – There are no capital calls where you have to provide additional capital beyond your initial investment. Instead of additional investment, your investment may be reduced if more money is needed or if the deal requires member loans at a high interest rate (10%-15%). If member loans are required, your equity position in the investment will be subject to those member loans and the loans must be repaid before any equity distributions are made.
- Greater control than REITs – When you invest in a REIT, you are investing in a portfolio of real estate, but you have little information and even less control over individual investments. With RealtyMogul, you can invest in individual properties, including those close to home. In fact, RealtyMogul allows you to be very specific with your real estate investments.
- Private REITs. recently introduced income REITs and housing growth REITs allow non-accredited investors to invest in real estate.
- Accredited Investor – You must have an annual income of at least $200,000 (or $300,000 for a couple) or a net worth of more than $1 million, and this does not include the value of your personal residence. However, recently introduced REITs are open to both accredited and non-accredited investors.
- Illiquid Investments – There is no secondary market to sell your positions and they must be held to maturity, which can typically be 3-7 years.
RealtyMogul offers a unique opportunity to invest in real estate that is less involved than buying real estate on an individual basis. However, it goes much deeper in scope than investing in real estate through real estate investment trusts (REITs). This is an opportunity to invest in real estate through a variety of home investment opportunities.
The downside is that you need to be an accredited investor to participate in many of the platform's transactions. However, RealtyMogul's REITs have a much more open playing field.