Just as crowdfunding has come to investing and borrowing, it has also made its way to real estate investing. Realty Mogul ( www.realtymogul.com) is a real estate crowdfunding platform where investors and real estate investment sponsors and borrowers come together to create mutually agreeable real estate investments. Overall, we found Realty Mogul ( www.realtymogul.com) easy to use and convenient and here is our full review.
Realty Mogul is an easy-to-use real estate investment platform that, thanks to its private REITs, allows both accredited and non-accredited investors to take part in potentially lucrative opportunities.
Review Realty Mogul Features
|Account Fees||1-1.25%/year asset management fee|
|Investment Length||6- 120|
To invest with Realty Mogul, you must make a minimum initial investment of $1,000. You can make standard ACH transfers from your bank account for amounts up to $100,000. For amounts that exceed $100,000, you’ll need to use wire transfers. Each investment that you fund will have a specific account number that the platform will use to make sure that the funds go directly into that particular investment opportunity.
Signup process. You start by creating an account. You must first create a password and have your email address confirmed. Then you must certify that you’re an accredited investor, which is to say that you are a sophisticated investor with a net worth of at least $1 million — excluding your primary residence — or have an annual income of at least $200,000. (Note: If you want to invest in just the two MogulREITs — see below — you don’t need to be accredited.) After that, you will enter general information, and you’re in.
Realty Mogul Dashboard Review. The dashboard enables investors to track all of the terms of their investment on the platform. This includes how much money they have invested, active transactions and earnings on those investments.
Review What Is Realty Mogul?
RealtyMogul is an online real estate capital marketplace that began in 2012. The platform was founded by Jilliene Helman and Justin Hughes. Their aim was to disrupt traditional real estate funding 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’s considered a “peer-to-peer” arrangement, involving primarily individuals on both sides of the transaction (although RealtyMogul is also open to institutional participation).
Today, the platform claims more than 185,000 registered members. It has provided capital for more than 375 investments, with capital raised totalling more than $400 million. The platform arranges equity capital for commercial real estate. RealtyMogul is staffed by a team of professionals who have a mix of experience in real estate, finance, and technology.
How Does RealtyMogul Work?
RealtyMogul enables investors to participate in a wide range of commercial real estate investments. Some examples include multi-family dwellings, office buildings, industrial sites, self-storage, retail and medical buildings.
When you invest, you typically do so by purchasing shares in a RealtyMogul limited liability company (LLC) that in turn invests into an LLC or Limited Partnership (LP) that holds title to the real property. Investing in this way minimizes overhead for the investment sponsors and provides access to more investment opportunities, as well as streamlined reporting of distributions and tax information through the platform.
RM Manager, LLC, which is a wholly-owned subsidiary of RealtyMogul, serves as manager of the RealtyMogul LLCs.
The term of specific investments depends on the investment. Equity investments typically range from three years up to 10 years. Equity investments generally pay distributions on a quarterly or semi-annual basis. These are just general rules, and it’s important to understand the distributions on any investment are never guaranteed.
For income tax purposes, an IRS form K-1 will be provided annually for each equity investment, reporting the results of that particular investment. Distributions from RealtyMogul’s two REITs are reported on IRS form 1099.
Review Realty Mogul benefits
- Ease of investment selection
- Quick and easy funding
- 24/7 investment monitoring
- Documents can be executed online
- Quarterly or semi-annual distributions for equity investments; monthly or quarterly distributions for REIT investments
- RealtyMogul provides more investment flexibility than real estate investment trusts (REITs)
- Investments typically do not require capital calls, which are requests for additional capital beyond the initial investment
- Individual investments are “pre-vetted,” which means the platform provides thorough underwriting to determine the viability of each investment
- Invest in both investments (accredited investors only) or two different REITs (all investors)
MogulREIT I Review
In competing with Fundrise’s eREITs RealtyMogul introduced its first REIT in 2016. Called MogulREIT I, the benefits are that accreditation is needed, more asset diversification investing in individual properties, and much lower minimum investment requirement than with a private placement. The minimum amount to invest is $5,000, plus a fee of up to 3% of Equity Contribution and a 1% annual asset management fee.
According to their website “MogulREIT can invest in a variety of property types, including but not limited to, multi-family, office, industrial, self-storage, retail and medical office. The fund can invest in various commercial real estate-related equity and debt securities across these different property types.” So it will be a pool of various property types and not just one section or location around the country.
Unlike other private REITs that have long investment periods without redemptions, RealtyMogul states it will allow redemptions on a quarterly basis. But also noted in the offering circular, there are limits on the total amount of redemptions per year.
MogulREIT II Review (New)
In September 2017, RealtyMogul rolled out another REIT, the MogulREITII. Like the service’s first REIT, MogulREIT II will be open to both accredited and non-accredited investors, giving all investors an opportunity to invest in the real estate market.
The focus of this second REIT is inequity only of multifamily nationwide, which is a particularly hot sector of the market. As RealtyMogul reports, “According to the U.S. Census Bureau’s Housing and Vacancy Homeownership Report, the U.S. apartment market has experienced a strong recovery, as evidenced by the steady drop in vacancies and an average annual effective rent growth of 3.9% per year, between 2010 and 2015.”
Realty Mogul Pros & Cons Review
“Pre-vetted” Investments — RealtyMogul has a thorough underwriting process that evaluates the property, location and the borrower or sponsor for each investment opportunity available on the platform. The vetting extends to the background and criminal checks on the principals involved in the investments and includes the RealtyMogul underwriter stepping foot on each property to evaluate it in person.
Simple Investment Process — There are no capital calls in which you will be required to provide additional capital over and above your initial investment. Instead of additional investment, your investment may be diluted if more money is needed or the transaction requires member loans at a high rate of interest (10%–15%). If member loans are necessary, your equity position in the investment would be subordinated to those member loans, and the loans would have to be paid back before any equity distributions are made.
No Capital Calls — There are no capital calls in which you will be required to provide additional capital over and above your initial investment. Instead of additional investment, your investment may be diluted if more money is needed or the transaction requires member loans at a high rate of interest (10%–15%). If member loans are necessary, your equity position in the investment would be subordinated to those member loans, and the loans would have to be paid back 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 properties, but you have little information and even less control over the individual investments. With Realty Mogul you can invest in individual properties, including those close to your home. In fact, Realty Mogul allows you to be very specific with your real estate investments.
Private REITs — The recently introduced MogulREIT I and II 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 that doesn’t include the value of your personal residence. However, the recently introduced MogulREITs are open to both accredited and non-accredited investors.
Illiquid Investments — There is no secondary market to sell your positions and must hold to maturity, which can typically be 3-7 years.
Realty Mogul Review Summary
RealtyMogul offers a unique opportunity to invest in real estate that’s less involved than buying a property outright on an individual basis, but it is much deeper in scope than investing in real estate through real estate investment trusts (REITs). It’s an opportunity to invest in real estate through a variety of close-to-home investment opportunities.
The disadvantage is that you must be an accredited investor to take part in many of the platform’s deals. However, RealtyMogul’s REITs have a much more open playing field.