I had lunch with Jilliene Helman, Co-Founder and CEO of RealtyMogul. I was impressed with her focus on creating a long-term, sustainable business versus pursuing every real estate deal for growth's sake. This article will discuss how RealtyMogul performs due diligence on their investments.
After COVID, performing strong due diligence is more important than ever. So is having a diversified real estate portfolio given we saw hospitality and office real estate get hurt more than normal.
I'm currently in platform due diligence mode as some of my real estate fund investments are starting to pay out. I expect all $810,000 of my principal invested across 18 investments to be returned by 2023.
In addition to platform risk, one of my main interests as an investor is how a real estate crowdfunding platform performs its due diligence and selects its deals. As a multi-property real estate investor, I am extremely thorough in my due diligence process, even coming up with a new property buying signal.
I want to invest in deals that have already been carefully vetted with a fine tooth comb. Once I make an investment, I want to forget about my investment and enjoy life under the assumption the platform will do everything possible to ensure the deal performs as advertised. Otherwise, what am I paying them a fee for?
Of course not every deal will do well since there are no guarantees in any risk asset. But we need to do the required work before making any investment. Due to the importance of due diligence, I asked Jilliene to write a guest post to share their process at RealtyMogul, one of the leading real estate platforms founded in 2012 after the JOBS Act was passed.
How RealtyMogul Performs Its Due Diligence
As the CEO at RealtyMogul, I have approved over 300 property investments ranging from debt and equity and multifamily, retail, industrial, office, hospitality, self-storage and mobile home parks.
Since 2012, we have continued to refine our due diligence process and learn from our prior investments. Sam also wrote a recent detailed RealtyMogul overview if you want to see more.
General Due Diligence Overview
The start of our due diligence process is a gut check.
Is this a market we want to invest in, with an operating partner we trust and are impressed with, in a property where we think there is an opportunity to make a strong risk-adjusted return?
In about 98% of the deals we see, the answer to this gut check is “no.”
For starters, we automatically decline any requests for financing that are ground-up development, land, international real estate, or hospitality. Those are simply not areas where I am willing to take the risk required.
Assign A Due Diligence Team
Once we have a deal that passes our gut check, the next step is to assign a team to dive in more deeply. We have a talented team of underwriters and asset managers at RealtyMogul that I am incredibly proud of.
Our head of asset management has been with the company nearly five years, so he has seen almost every deal we have ever invested in and helps us to continuously modify our underwriting assumptions based on the actual results of our portfolio. RealtyMogul performs its due diligence with extreme care.
Zero-Based Underwriting
We use an underwriting process that we have internally dubbed “zero-based underwriting.” What this means is that we put aside the financial model from our operating partners and re-build a model from scratch.
We use industry data from CoStar and Axiometrics (two of the largest data providers in commercial real estate) to build our forward-looking projections and we review the actual results of the property over the last few years in addition to reviewing each line item.
For example, are expenses where we expect them to be? Will there be a new tax assessment after we acquire the property that we need to bake into the financial model? Are we properly accounting for replacement reserves to continue to maintain the building over time?
We also prepare revenue assumptions – given the market, do we expect there to be rental growth, and are there other areas where we can generate revenue? (i.e. laundry income or parking income or billing back utilities to the tenants).
Due Diligence Questions
Much of this is about financial data, but we are also digging deep into that market. These are some of the questions we ask:
How has the market performed over the last two decades?
Where were cap rates in the market during the 2008 recession and immediately thereafter, and what are our expectations of vacancy in the event of a downturn?
Understanding the state of jobs in the market is also critical – who are the major employers?
Where do our tenants work and what enables them to pay us rent on time?
Reviewing The Operating Partner (Sponsor)
Once we have a financial model that we believe is rational and we like the results from a risk adjusted return perspective, the next step is to dig into the operating partner and the property management company.
What is their education and experience? Have they had success investing in this market using a similar business plan? Do they have the financial wherewithal to be able to secure competitive debt? How are their reporting capabilities? Are they responsive to our requests for diligence in a timely manner and are they generally somebody that we want to associate ourselves with?
In addition to these questions, we run background, criminal, and credit reports on our operating partners. We are looking for any adverse items to get a decent read of their character based on their history.
Once our underwriting and asset management team has performed their deep dive, they draft an underwriting memo and present it to our Chief Investment Officer, Chris Fraley, and me.
Chris has been in commercial real estate for over 20 years. He was formerly a partner at Rockwood Capital, which manages over $8 billion in assets, and I feel so grateful to have him by my side analyzing real estate investments and helping determine if the potential risk adjusted returns of each deal are appropriate for our platform.
Regular Investment Committee Meetings
At our investment committee meetings, Chris and I drill into the specifics of the transaction. We ask dozens of questions to ensure we understand the risks, potential mitigants of the deal, and the history and track record of the operating partner.
In many instances, Chris and I will meet with the operating partner or will have already met with them in the past. We believe it is critical to get to know our partners on a personal level.
If Chris and I approve the transaction at investment committee, it is a considered a contingent approval which can still be overturned by the results of the site visit.
Kick The Sheet Rock
At RealtyMogul, we step foot on every single property that we invest in. This may be different than our competitors, but we cannot fathom putting a deal up on our platform that somebody from our team has not inspected in person.
There are so many unknowns when you analyze real estate from an Excel file and a PDF. You must see and touch and feel real estate to really understand the intricacies of it.
Related: Why The Housing Market Won't Crash Any Time Soon
Final Approval By Committee
Once the site visit is done, the lead underwriter will re-present the deal for formal investment committee approval. Our investment committee is unanimous – Chris and I both must agree that a deal will move forward. If a deal is going to be invested in out of one of our MogulREITs, there are additional team members who then get involved in the approval process.
In the case of MogulREIT I ($291M in assets, 18 investments, 4,630 investors), our Portfolio Manager must approve and in the case of MogulREIT II ($139M in assets, 7 investments, 1,660 investors), our independent Board of Directors must approve.
After the proposed deal passes this rigorous due diligence process, it is exclusively listed on our platform for our members to invest in. Both MogulREITs are open for non-accredited investors.
RealtyMogul Performs For Its Investors
RealtyMogul was founded in 2012, and while I wish I could say that all 300+ investments we have made have performed as expected, some transactions have exceeded projections, others have trailed projections, with the rest performing as expected.
While this is the nature of investing in real estate, we actively manage every investment through our asset management team to help operators mitigate problems and communicate to the investors important information about the deal during its hold period.
Prior to the close of any investment, we negotiate collectively on behalf of our investors for certain controls and rights that enable us to step in and point an investment in the right direction if things are going awry.
In some instances, we may have the right to force a sale of an investment if we think that is in the best interest of investors. But some transactions simply get off to a slow start – one of the things we have noticed, particularly in multifamily investing, is that it can take a bit longer for our operating partners project to start renovations.
It is unrealistic to assume that you may be able to renovate and re-lease a unit very soon after you acquire the property. Given our accumulated experience from prior deals, this is now one of many learnings informing how we underwrite new deals.
Related: Invest In Long-Term Trends: The Heartland Of America Looks Good
RealtyMogul Performs Due Diligence Carefully
Investor Protection is our top goal at RealtyMogul and I believe that our rigorous due diligence process facilitates this. Through our platform, we can finally level the real estate investment playing field by providing commercial real estate investment opportunities to everyone, instead of just to those with specialized knowledge, the right connections, or access to large amounts of capital.
Our members have direct access to our exclusive list of institutional-quality real estate offerings, and I am extremely proud of our team’s investment track record.
Consider joining over 220,000 RealtyMogul investors who trust our due diligence process and deep experience to provide thoroughly vetted commercial real estate investments.
– Jilliene, Co-Founder & CEO
Disclaimer: Financial Samurai is an affiliate for RealtyMogul and RealtyMogul compensates Financial Samurai for generating leads. Securities are offered through North Capital Private Securities, member FINRA/SIPC. RealtyMogul performs to the best of its abilities.
Here is some more information based on my experience and few others in other forums. RealtyMogul REIT’s are not as good as FundRise and Streitwise. If you are looking to invest in REIT, go for fundrise. Here are the list of downsides so far..
MogulREIT 1 – There is a 3% transaction fee. This doesn’t exist in fundrise.
8% return is okay, not better than other crowdfunding platforms.
NAV has decreased. Folks invested for the long run got hit by this.
MogulREIT 2 – This fund is supposedly for capital growth. So far nothing has happened. The yield is at 4.5% which is very low. Not sure when the growth will be passed on to investor.
Overall, Fundrise has been lot more consistent with their dividends and less fees. I would highly recommend to look at Fundrise for REITs. If you are looking for private placements, that’s a different game altogether.
I have invested in realty mogul, realty shares and recently crowdstreet. I invested 50k in a Brooklyn on realty mogul that is facing delays. Part of their strategy is buying out tenants and that isn’t going as planned. They have suspended distributions but that was small. They are trying to sell. The communications to investors on RM is good. I have 85k total with RM
Realty shares investments are good. One development deal with is a debt deal. They just got extended financing but distributions are consistent. Two multi family deals are performing.
I have 80k invested there
Just invested in crowdstreet. I like there non spv structure and how they are just a platform to facilitate transactions. They are also diversified in that they provide a platform for developers to buy and create their own website. They have diversified revenue streams which make me think they at least have a higher probability of sticking around. I just invested 75k in a hotel deal.
Alok,
When did you make the investment into the Brooklyn deal? Due to recent changes to rent control laws in NYC, your Brooklyn investment is likely worth zero and the business plan is no longer viable.
DTG
I’ve had success with Fundrise, but my investments in RealtyShares have made me very nervous to put more $$ into real estate crowdfunding platforms. I have an equity investment with RS that seems to be heading towards a catastrophic end…..here is the most recent update
“Despite working closely with the sponsor for a better outcome for this investment, we were unable to secure additional capital or a higher sale price for this property. The sale of Student Housing at College Town closed on May 10th for $8,000,000. Remaining proceeds from the sale are expected to be distributed within 90 days after the close. We will provide additional details as soon as the final closing statement is available but we anticipate an 80%-90% loss on your investment.”
Just wanted ppl to be aware that not all Real estate crowdfunding deals are butterflies and roses…sometimes the sh*t can hit the fan.
Can you elaborate on the deal? Equity or debt? What was the purchase price, etc?
From what you wrote, the deal seems fine. Need some more information. And also, why did you invest in the deal? What were the key attractive points and what was the reason for failure?
I’ve been in RealtyMogul REIT I for over two years. Yes, it pays 8% monthly…however, it’s not actually 8% after they deduct fees – it’s closer to 5-6% (I have just over $17K invested w/ reinvesting dividends and the total value is under $17K, about $425 less than the what I have invested; so I’ve made $2363 in returns, but the value is only $1926). I’m happy with the returns and feel like it’s a safe investment, but I am concerned how this will perform if/when there is a recession or pullback in the realty markets.
I also have money in RealtyShares, which concerns me. I recently invested in Fundrise.
Good info Sam. Always enjoy reading your stuff!
There is a 3% transaction fee when you buy into mogul REIT 1. Are you saying there are other fees out side of this one time fee?
Well, there’s not really an additional fee, but the price per share tends to vary. When I first bought it was $10/share and the share was worth $10. Then the share prices started varying (I believe it’s currently at $9.70). Unlike a mutual fund or stock, the share price is $10 at purchase but is only worth what they set the share price at (as mentioned, it’s currently $9.70). They advertise an 8% return, which may be true, but you’re not getting 8%, it’s closer to 5%.
Our one-time offering cost of 3% does not reduce the annualized distribution by that amount. Instead, it directly reduces the Net Asset Value per share (NAV) by 3%. Our annualized distribution rate based upon purchase price (i.e. net of the offering costs) has been between 7.76% – 8% since inception. Alternatively, the rate at which distributions have been paid based upon the NAV has been between 8% – 8.25%.
You can view the MogulREIT I distribution history in this link here – MogulREIT I Distribution History (https://www.realtymogul.com/sites/default/files/io/mri_distribution_history_4.pdf). It may also be helpful to review our NAV guide to understand how NAV may fluctuate over time for debt and equity non-traded REITs – What to Expect with Net Asset Value (NAV). https://www.realtymogul.com/sites/default/files/io/guide_to_the_nav_1.pdf
Please note that the annualized distribution rate is not a guarantee or projection of future returns, and the Manager may in the future declare lower distributions or no distributions at all. While the Manager is under no obligation to do so, the annualized distribution rate assumes that the Manager will declare distributions in the future similar with the distribution disclosed herein.
If you’d like more information, please reach out to us at info@realtymogul.com.
I have invested in realtymogul after reading this blog. Here is my experience so far. I have invested in bot REIT and the individual properties. It’s only been less than a year but here is my take so far..
– The returns are in inline with what’s been advertised for individual properties and REITs.
– There is a dedicated person you can talk to and bounce off ideas and understand your investments.
– They provide good amount of information on the investment with clear breakdown on investment strategy and exit plan.
cons:
– I was hoping that individual investors get to participate more on the upside potential. One of the properties I invested in got sold for 27% profit but only about 5% got passed down to individual investors.
– no one knows how these would perform in a recession.
It sounds like you invested in a debt deal (which does not participate in the actual project returns) vs equity (which does). I think your post illustrates a very important take away, these are relatively sophisticated investments and a potential investor needs to be very confident that they understand all of the nitty gritty of their investments.
A poster a little later down didn’t want to read all the agreements, you absolutely need to not only read but also understand the entire agreement.
I have invested in an equity project. I am not sure how the equity returns work but only a small portion of the gains are passed to the investors. I am not sure if the bulk of the returns go to the sponsor or realty mogul itself.
Sam, I’ve met Jilliene and she has a good head on her shoulders. And what she’s built at RM is very impressive.
I’ve been in the RE & SMB private debt space for 15 years and here are a few thoughts on RM. I’m not knocking the model (which I realize does both debt and equity), but I think you and your investors may take interest in the following:
– While I did invest with other marketplace originators (Funding Circle, LC, Prosper, others), I personally have never invested in RM or other online RE lenders because this group has never been willing to share loan performance data. RM states this is because of the regulators, and I understand that the RM is privately held, but this is a major roadblock.
– Other reasons for not wanting to invest: 1) dollar amounts would need to be larger to move the needle, thus higher exposure 2) your investment is NOT secured by real estate, and I’m weary of fractionalized loans/equity interests 3) better to buy RE property directly or, if debt, be the beneficiary of the Note and the secured party on the Deed of Trust. If things go south, I have a clear path to the RE asset to protect my principal.
– The above outline is well written, but most points are common practice in the RE investment/debt world. I should hope that lenders like RM are kicking the tires of each property!
– RM’s underwriting parameters remain opaque. To be fair, I haven’t looked at any offerings in a while, so perhaps RM has opened the kimono a bit. But, how are the properties valued? BPO or bone fide commercial appraisals? Can investors review the appraisal? Are financials from the sponsor & guarantors provided? If the property doesn’t service debt, what ability does the sponsor have to carry the payments? What is the maximum LTV tolerance (I remember some very high LTVs)? How does RM adjust pricing for risk? Are reserves ever set aside? Etc. At the end of the day, as an investor you’re having to go in blindly and just “trust” RM’s u/w process. I’m willing to take on some risk, but I firmly believe any investment at this level requires a “trust but verify” approach.
– The RM seems to be built on financing value-add plays. How does RM protect its investors in the event there’s a downturn and the sponsors can’t realize a profitable exit (sale) or can’t refinance?
– Also, it’s worth asking: What steps is RM taking to avoid the same outcome as RealtyShares?
One of the things I pay attention to his funding. According to public records, RM has not taken any new funding since 2015. To me, this means that they are operating at a private because most private VC backed companies need to raise money every 18-24 months.
Perhaps a new round of funding is coming, but after four years of not raising money, I would think that they are at least cash flow break even.
Let’s see if they respond regarding their operations. But the performance results can be found on their platform.
So far 17 out of 18 of my RS investments are performing according to plan. 1 is underperforming, but is still expected to provide a positive return. That ratio is pretty good in my book.
What are some platforms you are pleased with? How much have you invested with them? And what is your return so far?
Re: performance, are you talking about the historical returns of Mogul Reit I and II? What I was referring to was the loan and equity investment book since inception, on a loan by loan (or equity) deal basis. Perhaps RM is able to share this with investors now. Frankly, I think all marketplace originators should, because not doing so sort of makes me feel that they have something to hide. For this space to grow, real transparency is needed…That said, if the loan book is somewhere on the investor portal and I missed it, please let me know!
I can really only address my experience with debt, I haven’t done any RE equity investing through a platform (again, I prefer to invest directly in the real estate, not through a platform). The loan book reveals a lot. What is the net yield (less c/o’s and servicing) for each vintage? If more recent vintages have a lower net yield, what are the drivers (ie. yield compression, which is understandable, or higher c/o’s)? If RM has changed its u/w parameters, are the new policies working?
It’s great to hear that 17 of 18 of your deals are performing. But it all depends on how long you’ve been investing. If less than 6 -12 months, it may be premature to think that all deals will continue to perform. It’s much more relevant if you’ve been investing for years, have been reinvesting proceeds & exits, and the 17 of 18 are performing. It would be great if you could elaborate.
Re: funding, it’s encouraging that RM hasn’t recently taken any VC money, which I consider to be the least “sticky” for this biz model (ie. see RealtyShares, Bond St, Able Lending, Dealstruck). I assume at this point that they fund their deals from retail investors and probably have a LOC with one or more banks to fund deals and operations. But, retail investors and the banks behind the LOC may be unwilling to fund new transactions if the performance isn’t there. This is why deal performance is so critical.
To properly answer your question about which platforms I’ve been pleased with, I need to provide some context. I’ve underwritten slightly less than 100 online platforms, across a multitude of alternative asset classes, both for personal investment and my firm’s account. During the early stages in 2013-2016 we met with several CEOs and their cap markets teams. Back then, marketplace lenders were serious about creating a viable model that aligned both investor (realistic, higher returns commensurate with the risk) and borrower (cheaper financing, or even any financing when previously to fintech no financing was available at all) interests well. They were also vehemently opposed to taking money from or partnering with banks, which had abandoned many borrowers. The whole idea was to displace banks so that borrowers/entrepreneurs/innovators would have access to new sources of capital.
Today, some marketplace lenders can’t survive without bank partnerships and worse, some have wanted to emulate banks. Many of the visionary founders are gone, replaced with folks who have a shorter term outlook. Strategy in some cases is driven more by valuation targets; the model delivers definitely less value to retail investors and arguably less value to the borrower (approving hi-rate loans the borrower can’t afford).
Investor yields on some of these platforms are lower while credit risk has increased. Yield compression, primarily driven by an oversupply of debt, is a major problem. If you’re a retail investor, it doesn’t really make a lot of sense to participate, especially in the consumer space. Why invest in a fractionalized, unsecured consumer loan today to earn 4-6% net when there are other less risky assets that earn a similar return?
Well, I’m digressing. Here are the platforms have delivered the sustained net returns I was more or less looking for. Funding Circle. Sofi is another. Square Capital, but only available at an institutional level.
Getting back to RM, I initially dismissed RE platforms but I’m more curious about them now. Jilliene’s background in RE is a big plus because some other founders *have no RE experince*. And RM has been at it for at least 5-6 years, which is relevant although during a period of asset appreciation and improved borrower/sponsor incomes. I do like that RM provides a lengthy writeup on a case by case basis. I’m beating a dead horse, but I would be much more inclined to invest if I could get more details on performance.
Thanks for your thoughts.
If you login to RealtyMogul, you will see a tab for past investments under the invest navigation. They share the actual returns for every deal that has gone full cycle.
I met with Funding Circle in SF several years ago. They had some huge returns then based on some home run private company deals. But I think they’ve since dried up?
Thank you for sharing such wonderful insight on your investment due diligence process.
I’ve looked into investing on a real estate crowdfunding platform a couple of years ago. But the one turn off and why I didn’t ultimately put money in is the level of review required on each deal on the platform, especially the LLC Agreement. Those agreements are hundreds of pages long and are probably unique for each investment. If I want to make 10 investments (by reviewing 20 or 30), that is a very time consuming ask (especially reviewing the LLC Agreement assuming you get comfortable with the platform’s due diligence process).
I’m not sure if your LLC Agreement for each individual investment is standardized (and can highlight the changes on non-standard terms).
While we understand it can be time-consuming to review our offering documents, we always encourage prospective investors to read the operating agreement and subscription agreement before making a decision to invest. We also encourage prospective investors to consult with their legal and tax advisers before investing. We believe this structure provides potential benefits for our investors. Investors are typically purchasing shares in a Realty Mogul Limited Liability Company (“LLC”) that in turn invests into an LLC or Limited Partnership (“LP”) that holds title to the real property.
By investing in a Realty Mogul LLC, it minimizes overhead for the real estate companies who work with RealtyMogul and allows us to access more investment opportunities for investors. It also allows for streamlined reporting, distributions, and tax documentation through the RealtyMogul platform.
I am new to real estate investing; whats the benefit of investing in Reality Mogul or realty shares vs just buying a RIET index fund like VNQ ?
I believe FS has done a write-up on the difference, but in a nutshell it is this: one works directly with real estate developers and there are less middle man or transaction costs the other is investing in a company, which will be tied more with the stock market.
Both have pros and cons.
Here’s a thorough write-up on the topic: Deciding On Whether To Invest In REITs or Real Estate Crowdfunding
I invest in both. Public REITs for more broad exposure, and currently 18 REC deals for more specific exposure.
Some of the questions that might come up as an investor (lender?) are: Can you choose to invest in any one individual project? What is the loan to value ratio on these loans (LTV)? Rate of default(s)? Is there a correlation between default(s) and LTV’s? What has been the investor ROI in general? If interest is paid on a monthly basis how is that interest payment treated tax wise? If principal and gain (hopefully) is paid at the close of the invested proceeds, how is that gain treated? Just curious
Each individual deal with have data on the real estate project and its expected financial returns. There are also mainly debt and equity deals. Each deal is different for different objectives and investment desires.
What I want is a platform that does all the heavy lifting of vetting each deal before it makes it on the platform or into their eREIT, and then investors on the platform can try and pick the best of the best.
I decided back in 2016/2017 that I would invest in a fund so that a committee who vetted the deals could pick hopefully the best of the best as I do other things and get smarter on the space. So far, the fund is performing well.
Interesting process on the zero based underwriting. Sounds like a smart way to do it. I also like how they do onsite visits for every property. That’s an absolute no brainer. There’s so much you can pick up and sense just by walking through a property that you simply can’t get a feel for on paper alone. Thanks for the insights into RealtyMogul’s due diligence process. The more due diligence the better imo when it comes to investing.
Can we get more specifics on the 300 investments you have made? Specifically, How many of the 300 did perform as expected? How many did not? How many outperformed? I think that’s a reasonable question to ask and would hope you would know that number. Thank you.
I’m curious to know and asked them as well. RM said they need to get approval from the regulators to comment. Not sure if they will.
I can’t imaging investing with any company like this without knowing the numbers. Curious how you overcame that without knowing? I wouldn’t expect the number of failures to be 0 but if half the deals they have done failed or underperformed then it would not be wise, in my opinion.
Sure, I’m still doing my due diligence and have not invested with them yet. I’m doing do diligence on platform and on the investments themselves. I want to hear from other people on the how their investments have done. I don’t expect every single investment to be a homerun or a winner.
Are there some investments that have provided you guaranteed returns and you would only invest based on these guaranteed returns? If so, can you please share them?
Every single investment I’ve made has risk involved. And I do the best I can to do my work to try to make winning investments.
I’d love to hear about your wedding Investments and your investment criteria. Thanks
We are on the same page. I wouldn’t expect no risk either. In fact, I would be skeptical if they said they had 0 underperforming assets. I started reading your blog a couple of years ago and decided to start getting passive income. In two years I have bought two real estate properties. The more I learn about real estate the less I like about stocks. I have high income capabilities and do not want to be distracted with tenants though. My last deal I might have slightly overpaid for a 3/2 in Atlanta area but move in ready high quality tenants have helped me stay focus. The idea of buying into these deals intrigues me so that is why I was asking about the fail rate.
Unfortunately, we aren’t allowed to discuss the specifics of our transactions to the general public since past performance is not indicative of future performance. RealtyMogul members that are accredited investors gain access to see how all of our previous investments have performed. If you’d like more information, please reach out to us at info@realtymogul.com.
I’ll wait to see if I actually get any of my money back from RealtyShares before dipping into crowdfunding again. Looks like a number of their deals may be heading for foreclosure… so much for due diligence on their part.
How much responsibility do you put on yourself when investing if you lose money? And how much do you put the responsibility on the platform?
Were you expecting all deals to pay their forecasted returns?
Whenever I make an investment, I assume various loss scenarios because I know there is no such thing as a risk-free investment besides cash and treasury bonds.
I invested $10K in Realtyshares last October – just before they stopped taking new investments. I’m not sure what’s going on with it. When I log in all it shows is $10K and there’s been no movement up or down. I thought I had done my ‘due diligence’ but obviously didn’t know they were about to close up shop. I’m hoping to get the money back – at a minimum.
My primary hesitation is Realty Mogul’s willingness to invest in the extremely predatory area of mobile home parks. Yes they can be a cash cow, but the practices that are generally employed to the detriments of their residents are generally awful (constant rent and utility hikes with the threat of booting them off the site or repossessing the mobile home). I’m curious as to why they won’t consider single family residences or assisted living facilities. I imagine nowhere near the returns.
I was wondering about assisted living places being immediately red-lined as well. It is likely there will be a large demand in this area over the next twenty years-more so than there may be in single family houses.
RealtyMogul has provided our investors with the opportunity to invest in mobile home parks alongside various fund operators in the past. These funds are aimed at acquiring and repositioning under-valued and under-managed mobile home parks in the U.S. Buying underperforming real estate and improving the management of those assets is a common goal of all investors. Our fund operators seek to create value for our investors through the most efficient and ethical practices. Our team has written about the potential benefits of investing in mobile home parks. You can read more about mobile home park investing through this article that we posted to our Knowledge Center – Introduction to Mobile Home Investing.
We’ve also originated single-family residential loans throughout our history. However, this is a market that we are no longer participating in due to a less than favorable risk/reward profile, in our opinion. Here’s an article from our Knowledge Center that discusses our decision to move away from single-family residential loans – The Market Pushed Us Out of Residential Fix and Flip.
We are also open to investing in well positioned and established independent senior-living communities with stable operating histories throughout the United States. However, we have not yet found any opportunities in that space that meet our underwriting requirements. If you’d like more information, please reach out to us at info@realtymogul.com.
I recently invested in MogulReit II, as I felt more comfortable with RealtyMogul than any of the other sites, and wanted to diversify from equities.
The vehicle hasn’t stuck it’s first NAV yet, so I’m not sure how returns will look. While I had been optimistic, the cautious tone in their recent quarterly update makes me worry that first print won’t be pretty. (This article similarly references the troubles with getting partners to execute on schedule). On a longer time horizon, I’m still excited about the service and asset class.
Nice additional insight to Realty Mogul, Sam. I’ve been considering them for a while, although I haven’t placed any additional money into real estate crowdfunding since Realty Shares. Instead, I’ve opted to choose some private syndications. I do like hearing Realty Mogul “steps into every property they own”! I get a bit wary when a fund gets too big and they don’t really know what they’re holding. Perhaps I’ll give them a shot!
Yeah, knowing that they kick the sheetrock for each deal is encouraging. It helps remove any online marketing smoke and mirrors and makes sure the selling points they see online match realty. I go visit many open houses for this purpose every month to make sure the data I see matches what I see in real life.