Before the pandemic, I had the opportunity to have lunch with Jilliene Helman, CEO and co-founder of RealtyMogul in San Francisco. During the lunch, I was impressed with Jilliene's focus on long-term profitability. Instead of chasing the most number of deals to boost revenue, Jilliene said she and her team focused on quality over quantity.
What I also liked about her business philosophy was her desire to build a legacy that would hopefully last for years to come. As someone who wants to keep Financial Samurai going for at least another decade, I could relate.
Given it's been a while since we last connected, I thought it would be good to provide an update.
RealtyMogul Overview 2022
RealtyMogul is one of the largest, most recognizable brands in online real estate having been in operations since 2012. RealtyMogul’s platform offers standalone commercial real estate deals for accredited investors. They also offer two diversified non-traded public real estate investment trusts (REITs) for both accredited and non-accredited investors.
RealtyMogul focuses on institutional real estate deals with specific emphasis on “value add” commercial real estate deals, especially multifamily opportunities. This approach has earned RealtyMogul a strong reputation as a thoughtful player that provides Members with an online platform to seek real estate deals with the potential for strong risk adjusted returns.
So far, the Platform has provided over 300 investment opportunities to its Members. The opportunities include over 100 multifamily apartment communities, resulting in excess of $3 billion in total deal capitalization.
The Platform currently has over 220,000 members. Due to strong product market fit, the community is growing rapidly. RealtyMogul has made recent investments in its real estate, marketing, product, and technology teams to continue to increase the number of deals on the Platform and enhance its Members’ experience.
The firm is bullish on the real estate market coming out of the pandemic. So far in 2022, they have connected investors to over $800 million of real estate deals. Here are some of RealtyMogul's new initiatives.
In addition to the standalone commercial real estate opportunities, RealtyMogul also offers investments in two REITs for all investors. From June 2020 through May 2021, 26% of RealtyMogul originated investments were allocated in whole or part to the REITs.
The RealtyMogul Income REIT is a public, non-traded REIT making debt and equity investments in commercial real estate properties diversified by investment, geography, and property type. This REIT’s primary focus is providing monthly income to investors by rigorously evaluating numerous investment opportunities to find those that can support the REIT’s distribution target.
It currently comprises 11 investments across 11 MSAs with a property value of over $270mm based on the 3/31/2021 internal valuation. It has made 55 consecutive monthly distributions. Further, distributions have been between 6.0% and 8.0% annualized based on purchase price.
For the most recent quarter, Q1, 2021, the NAV also increased to $10.22 per share, a 2% increase over Q4 2020.
The RealtyMogul Apartment Growth REIT (MogulREIT II) is also a public, non-traded REIT investing in apartment buildings. It currently comprises nine multifamily investments across 7 MSAs with property value of over $210mm based on the 3/31/2021 internal valuation.
While the REIT has paid income equating to a 4.5% annualized distribution for 13 consecutive quarters, the focus is also on long-term capital appreciation from the renovation and repositioning of the multifamily properties.
For the most recent quarter, Q1, 2021, MogulREIT II’s NAV was $10.65 per share. This represents an increase of 4.8% over Q4 2020.
How RealtyMogul Evaluates Commercial Real Estate Deals
Every deal on the RealtyMogul Platform has been thoroughly vetted. RealtyMogul lives and breathes its core values. The top two values of ‘sleep well at night’ and ‘protect the investor‘ have translated into a comprehensive due diligence approach.
Less than 1% of deals make it onto the Platform. They have a proven track record with members’ investments to date including 17,493 multifamily units, 3621 self-storage units and 6.9 million square feet of commercial – office/industrial/retail properties.
Here is a RealtyMogul case study for a value-add property. It shows how RealtyMogul thinks before acquiring a property and what they do to add value for shareholders.
Questions RealtyMogul Ponders Before Investing
The sponsor: It all starts with working with a great real estate partner. You need to ask whether they have a proven track record in the local market. Then you must determine whether they truly have ‘boots on the ground’ knowledge with experience executing the business plan they are proposing for the property
The market: What are the demographics of the market? What are the trends? Are people moving to or from the local market? What about schools and major employers? What are the comparables in the market, vacancy rates and more?
The specific location: The old adage of location, location, location is still true. But you have to dig deeper. What is the physical condition of the property, quality of the tenants, length of their leases and longer term infrastructure plans around the site?
The asset class: How risky is the asset class and are you comfortable with the level of risk? RealtyMogul has stayed away from hospitality in recent years which served them well during the pandemic. They focus more on multifamily and industrial, which are lower risk asset classes. You need to ensure that the risk profile works for you and your portfolio.
Projected Returns: How well scrubbed are the proforma numbers? Has a downside case been run? What is most important to you – equity upside or passive income? RealtyMogul shares the numbers very transparently so you can evaluate what makes sense for your personal financial situation.
Just as important, RealtyMogul is also transparent about past performance on every investment. Investors can see the IRR of each individual deal that has gone full-cycle on the past investment page.
Commercial Real Estate Outlook Post COVID-19
With strong product-market fit, RealtyMogul is bullish about the future. They are seeing strong demand from investors to diversify their portfolios into institutional quality real estate investments. Further, they are also seeing strong demand from real estate sponsors looking for a robust Platform to raise equity for value add and development opportunities.
The Platform continues to be extremely picky about the deals it places on its website. RealtyMogul’s conservative DNA means they have stayed away from hospitality. Instead, they’ve focused on multifamily and industrial, where they have the strongest belief these asset classes are well poised for the future.
RealtyMogul is also seeing its investor base reduce the time to make their first investment on the Platform and return multiple times to make subsequent investments. These are further indicators the Platform is meeting the needs of investors.
Geographic Areas Of Focus: Gateway Cities
RealtyMogul has teams across the country looking for the right opportunities with robust projected risk-adjusted returns. They are specifically focused on high growth Southern markets like Atlanta, Charlotte and Dallas and select opportunities in the Midwest. The heartland of America is where they are focused.
RealtyMogul is also always searching for the right opportunities in the large gateway cities. They look for the sub-markets within these cities that are experiencing attractive dynamics such as high rent growth and favorable demographic shifts. These cities, such as Miami and Los Angeles also attract global investors which may increase the likelihood of a successful exit.
Gateway cities are urban metro areas that act as the foundation and hub for the economic industry for the state, region, or country. Originally these cities were seen as a “gateway” into the American dream, especially for immigrant families, because of access to reliable work and housing for residents.
Below is a map highlighting the investment opportunities on the RealtyMogul Platform.
RealtyMogul And The Future
RealtyMogul believes real estate is an important part of a diversified portfolio and aims to make real estate investing as simple as a few clicks of a button. With a nine-year track record of running RealtyMogul.com, they’ve accomplished this and look forward to offering even more investments in the future to their Members.
As a long-term driver of wealth creation, real estate should be thought of as a long term investment – with investments typically having a hold period of 3-10 years. For investors, it starts with determining the right allocation into real estate. Then evaluate whether you want to invest in a REIT or individual property and take the time to do your own due diligence.
RealtyMogul also has an investor relations team standing by as they pride themselves on white-glove service – a unique differentiator from other platforms. As an investor, you should ask the tough questions and get comfortable with the opportunities before making an investment.
Ultimately, RealtyMogul wants investors to invest with confidence and be able to live RealtyMogul’s #1 value of sleeping well at night. Sign up and explore what RealtyMogul has to offer.
At the time of this post, there are multifamily offerings in Atlanta (GA), Austin (TX), Creve Coeor (MO), Marietta (GA), and Los Angeles (CA). There is also an industrial opportunity in North Las Vegas (NV) as well as the two REITs.
This article is for informational purposes only. It should not be regarded as a recommendation, an offer to sell, or a solicitation of an offer to buy any security. Any investment information contained herein has been secured from sources RealtyMogul believes are reliable. But we make no representations or warranties as to the accuracy of such information and accept no liability therefor. No part of this email is intended to be binding on RealtyMogul or to supersede any issuer offering materials.
Investment opportunities on the RealtyMogul Platform are speculative and involve substantial risk. You should not invest unless you can sustain the risk of loss of capital, including the risk of total loss of capital. Past performance is not necessarily indicative of future results. For additional information on risks and disclosures visit https://www.realtymogul.com/investment-disclosure.