Author Topic: Realty Mogul sponsored deal  (Read 15074 times)

Cindy

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Realty Mogul sponsored deal
« on: May 20, 2019, 02:19:19 PM »
Realty Mogul just opened up a private placement deal where RM itself is the deal sponsor -- a multi-family complex in El Paso.  I spoke with one of their Investor Relations people today and he said it was their first deal where RM is the sponsor and strategically they want to do more.  Cutting out a middle-man external sponsor will enable RM to capture more profit (which is passed on to the investor too via a slightly lower fee structure than other deals).  The person I spoke to was incredibly knowledgeable and helpful, and I left with a good impression of the Realty Mogul.  This particular deal is for accredited investors only with an investment minimum of $35K which is too high for my personal comfort level. That said, RM is adding the property to both of their Mogul REIT I and II portfolios, so you can get investment exposure for a lower minimum investment and not be an accredited investor.

Any thoughts on whether RM as the sponsor is better or riskier than an external sponsor?  On one hand, I'd think that they must be in a good place financially to be able take on this strategy.  And one would think they'd be very responsible as there is more skin in the game for them.  Yet at the same time, they are venture-backed and do not have a sponsorship history compared with other entities. 

Sam

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Re: Realty Mogul sponsored deal
« Reply #1 on: May 20, 2019, 03:30:23 PM »
Thanks for the heads up! Very interesting!

I had a 1.5 hour w/ Jilienne Helman, the founder of RM in SF earlier this year. She is VERY focused on profitability and sustainability of her RM business long term. I was impressed.

Also, they haven't raised new company funding in 4 years, which leads me to believe they are cash flow positive.

Finally, they can't screw up their first sponsored deal. That would be really bad.

Oh, and I like Texas real estate.

Hmmm, seems like a good deal. Can you share the terms?
Regards,

Sam

Cindy

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Re: Realty Mogul sponsored deal
« Reply #2 on: May 21, 2019, 05:49:17 AM »
Thanks for the heads up! Very interesting!

I had a 1.5 hour w/ Jilienne Helman, the founder of RM in SF earlier this year. She is VERY focused on profitability and sustainability of her RM business long term. I was impressed.

Also, they haven't raised new company funding in 4 years, which leads me to believe they are cash flow positive.

Finally, they can't screw up their first sponsored deal. That would be really bad.

Oh, and I like Texas real estate.

Hmmm, seems like a good deal. Can you share the terms?

El Paso multi-family complex.  Estimated 5 year hold period.  15.7%-16.7% target IRR (net after fees).  8% target cash-on-cash annual return. 

I agree Texas real estate seems very attractive.  I also think expanding their business model to include their own sponsored deals seems smart on their end.  It's so important to establish precedent and get a "win" out of the gates on their first one to drive momentum and investor confidence. 

Also, I like the fact that they feel strongly enough about it that they are going to add it to their Mogul REIT portfolios too which have a lower minimum and open to all investors.



Sam

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Re: Realty Mogul sponsored deal
« Reply #3 on: May 21, 2019, 10:07:10 PM »
I'll check in with RM and see if they have any further thoughts.
Regards,

Sam

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Re: Realty Mogul sponsored deal
« Reply #4 on: May 22, 2019, 01:09:21 PM »
I've been with RM since pretty close to their inception.    They've learned from a lot of their own mistakes and that of the other platforms, including RS that just went under.    Their deal flow is much lower, especially now late in the real estate cycle  -- and they're focused more on hitting singles, than knocking them all out of the park.     They do have a few  bad deals on the platform (I'm in one of them for full disclsure) -- and not all have performed to expectation.    Overall though, they've been WAY more professional and accessible to me over the years than RS has been and I'm pretty happy working with them for what its worth.    Your mileage may vary.    ;)


Sam

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Re: Realty Mogul sponsored deal
« Reply #5 on: May 22, 2019, 10:27:16 PM »
I've been with RM since pretty close to their inception.    They've learned from a lot of their own mistakes and that of the other platforms, including RS that just went under.    Their deal flow is much lower, especially now late in the real estate cycle  -- and they're focused more on hitting singles, than knocking them all out of the park.     They do have a few  bad deals on the platform (I'm in one of them for full disclsure) -- and not all have performed to expectation.    Overall though, they've been WAY more professional and accessible to me over the years than RS has been and I'm pretty happy working with them for what its worth.    Your mileage may vary.    ;)

Good to know. Any thoughts on this first sponsored El Paso deal?
Regards,

Sam

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Re: Realty Mogul sponsored deal
« Reply #6 on: May 23, 2019, 10:02:12 AM »
Good to know. Any thoughts on this first sponsored El Paso deal?

Well, I'm a bit torn to be honest.    I had a conversation with one of their IR folks about another deal that they did -- and in that one, they had reduced the debt to about 60% -- and the rationale was that this late in the cycle they were being much more conservative.    So for this one, at ~76% debt, I was a bit surprised.    They must be pretty confident in the tenant base and occupancy -- nothing else really stands out to me.      I also agree with you, Sam, that this is probably a pretty safe deal given that its their first one.    They've staked their reputation on it.    I'm still mulling it...      What do you think about it?

Nosferatu_FL

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Re: Realty Mogul sponsored deal
« Reply #7 on: May 23, 2019, 02:23:51 PM »
Tough lessons learned from RS.  I'm being a lot more cautious where I deploy cash now.
Hopefully the other platforms learned lessons in the process.

Anyone Know much about Carde.  cadre.com
sounds like they buy the deals then sell them to investors.  They have some big names associated with them
like Peter Thiel and Mark Cuban. 

Sam have you heard of these guys?
 

Sam

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Re: Realty Mogul sponsored deal
« Reply #8 on: May 23, 2019, 07:57:54 PM »
Cadre is big.

GS and Jared Kushner backed too.

But I have no experience with them.

I do have a guest post from RM’s CEO on due diligence I’ll be posting. Pretty insightful.
Regards,

Sam

Money Ronin

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Re: Realty Mogul sponsored deal
« Reply #9 on: May 31, 2019, 11:03:54 AM »
Traditional real estate private equity funds have required $100K or more to invest.  Do you know how Realty Mogul is able to open up to smaller investors?  Is it higher fees, smaller projects, or what?  It seems the admin cost for them would be higher to service many small investors.  Maybe Sam had an article on this but I missed it.

Nosferatu_FL

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Re: Realty Mogul sponsored deal
« Reply #10 on: June 17, 2019, 12:12:14 PM »
Cadre is big.

GS and Jared Kushner backed too.

But I have no experience with them.

I do have a guest post from RM’s CEO on due diligence I’ll be posting. Pretty insightful.

Thanks Sam.  I'm waiting for now to see how things work out with Rs before I put any new $$ into crowdfunding.  so far things are not looking good.

Cheezus

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Re: Realty Mogul sponsored deal
« Reply #11 on: June 17, 2019, 03:15:01 PM »
Cadre is big.

GS and Jared Kushner backed too.

But I have no experience with them.

I do have a guest post from RM’s CEO on due diligence I’ll be posting. Pretty insightful.

Thanks Sam.  I'm waiting for now to see how things work out with Rs before I put any new $$ into crowdfunding.  so far things are not looking good.

Same here.  These are the same positive stories that we heard about Realty Shares, too.  And even though they seem to be going through with managing the properties, it's a disaster.  I'm, unfortunately, on Linda Terrace with RS and just got an email today basically telling us to expect a total loss.....  The idea of putting money in to deal like this again seems absolutely insane to me at this point.  Between sponsors stealing tens of thousands of dollars from me and questionable platforms, who knows?  I am heavily invested in Fundrise and feel good about it, but it's going to be a long time before I'd ever consider individual sponsors/deals again.  I'm waiting for investments in PeerStreet and RS to mature and cash out and I'll be done with them for now.