Several years ago, I had lunch with Jilliene Hellman, CEO and Founder of RealtyMogul in San Francisco. Back then I was impressed with her in-depth knowledge of commercial real estate. Further, I liked her focus on building a sustainable business versus having a “growth at any cost” type of mentality.
Given it's been a while, I thought it would be a good idea to do another deep-dive into RealtyMogul's platform. For investors looking to earn passive real estate income, a lot has changed in the past couple of years for the better.
RealtyMogul Overview 2022
Founded in 2012, RealtyMogul is one of the original real estate investing platforms.
RealtyMogul members have collectively invested over $875 million into $5.2 billion of real estate nationwide, including 34,000+ apartment units (since inception and as of April 30, 2022).
Just in case you’re not familiar with the platform, it offers investment opportunities for both accredited and nonaccredited investors.
Here’s what you’ll gain access to as as a member:
Get access to a wide variety of institutional-quality deals
Deals listed by real estate companies (or “Sponsors”) on the platform have included apartment buildings, office, retail, industrial, self-storage and more.
You can also invest in two non-traded Real Estate Investment Trusts (REITs). More details on these below.
Transparent, straightforward financials
The Sponsors offering the deals listed on the platform provide you with detailed financials – plus, you can attend a live Q&A webinar to get your questions answered – so that you can choose the deals that are right for you.
Get the help you need when you need it
If you're an accredited investor (as defined by the SEC), RealtyMogul matches you with your own dedicated Investor Relations Representative… yes, a real, live human being you can speak to when you have questions about using the platform. You can call, email, or make an appointment using an online calendar system to chat by phone at a later date.
Elevate your real estate investing knowledge
On their website, you’ll find a Knowledge Center containing ton of step-by-step articles explaining the ins and outs of commercial real estate investing to help you sharpen your investing acumen.
New Platform Improvements Over The Past Two Years
Over the past two years, RealtyMogul has improved its website for better functionality and user experience.
You can now sort deals based on property type, investment timeline, projected return metrics and other criteria.
Also, on each deal page you can click to set up an appointment with an Investor Relations Representative for any questions regarding using the platform.
Here's an example of what their new deal page looks like (this is the deal that was most recently posted to the platform):
In addition, you can now view the returns generated from past investments. The increased transparency is greatly appreciated.
They’ve recently rolled out a new page on their website called Past Investments, where you can sort and see performance for the asset classes you are interested in.
Returns On Latest Deals
Since I last took a deep dive look, several more deals have gone full cycle (meaning the properties have sold and all distributions have been paid to investors) with strong returns.
Here are the last 3 deals that have gone full cycle:
In case you’re not familiar with IRR (internal rate of return), it’s the expected annual rate of return that the deal is expected to potentially generate, taking into account the time value for money.
As you can see from the screenshot above, the lowest IRR on the last 3 deals to close on the platform was 15%. And the highest? 109.7%! (As of May 5, 2022.)
Growing Variety Of Deals On RealtyMogul Platform
Real estate companies have used the RealtyMogul platform to raise capital for a wide variety of deals.
Individual deals that have been featured on the platform include:
- Apartment buildings
- Office
- Retail
- Industrial
- Ground-up development
- Self-storage
- Cold storage
- Mobile home parks
- Student housing
The three most common asset classes provided on the RealtyMogul Platform are multifamily, office, and retail.
It’s also interesting to note that RealtyMogul also has a wholly owned subsidiary, RM Communities, that is its direct acquisition arm that also brings deals to the platform.
RM Communities focuses on multifamily. As a result, it's able to consistently bring these deals to the platform, further enabling access to this asset class to RealtyMogul members.
RealtyMogul continues to look for Sponsors that can bring interesting, diverse deals to the platform.
RealtyMogul REITs
Another change at RealtyMogul over the last two years is that they've renamed their two REITs to better highlight their individual investment strategies. In addition, they’re also now sharing the last consecutive 12 months’ return of both REITs.
Income REIT
The Income REIT (formerly MogulREIT I) targets a mix of both debt and equity investments, with the goal being to generate interest and pay investors monthly cash distributions (though distributions are not guaranteed).
Here are recent stats on the Income REIT’s performance from RealtyMogul’s website:
66 consecutive monthly distributions to investors, very nice!
The Apartment Growth REIT
The Apartment Growth REIT (formerly MogulREIT II) is more focused on long-term appreciation. The REIT contains value-add multifamily properties, where the business plan projects that most of the money is made when they’re sold.
The REIT also aims to pay cash distributions to investors, but on a quarterly basis (though distributions are not guaranteed).
Here are some recent stats on the Apartment Growth REIT’s performance:
It’s paid investors cash distributions for 17 quarters in a row.
Many of the properties in the two REITs were once offered as individual deals on the platform, so if you’re not an accredited investor and can’t invest in individual deals yet, the REITs may be an attractive option for you.
Also, many of RealtyMogul’s members who are accredited are invested in both individual deals and the REITs, so if you’re accredited, you can also do both, too.
Real Estate Core Values
I had the chance to connect with Jilliene Hellman, RealtyMogul’s founder and CEO, and it’s clear that she’s focused on continuing to build a value-driven company.
Jilliene said, “People talk about real estate as being all about location, location, location. But for us, it’s all about people, people, people. We strive to work with people who are great at what they do and who genuinely care about creating value for investors.”
Team happiness is actually RealtyMogul’s #1 most important success metric. According to Jilliene, the company invests heavily in creating a world-class company culture, knowing this will trickle down and result in fully engaged, white glove service for real estate companies and investors alike.
Ready to view deals? Click here to see the latest investment opportunities on the platform.
Disclaimer: I worked with RealtyMogul to write this post with the latest information and updates. The views shared are my own. RealtyMogul is a Financial Samurai sponsor and supporter of my creative endeavors.
Thanks Sam! Great read. I actually looked into their self storage investment. I pledged. What are your thoughts in that space?
Self storage is a more defensible asset class. But like all investments, it depends on the operator and the terms. I didn’t see their specific one. I have one self storage investment in my fund that is doing fine.
Hi sam are non-u.s residents allowed to invest? And how do they tax distributions to foreigners? Thanks
I invested in RM REIT and private placements. I wouldn’t recommend their REIT as the performance is subpar compared to VNQ or fundrise platforms. I am comparing the data for the last 3 years. Their private placements are kind of lottery. Both of the private placements I invested in didn’t distribute any $ so far Vs the proforma of 9% cash on cash. The advisor keeps saying they have the cash but not distributing it due to COVID uncertainity. I am not completely bought into it but I could be pleasantly surprised if they meet the proforma at the end of the sale.
IRR is tricky. it does not represent the actual return. Only Fundrise shows the return as a percentage on amount invested. A 14% IRR means nothing to me. I cannot remember the crowdfunding organization that shows actual return as 1.4x, or 1.8x an investors return on capital for whatever the holding period was. That figure is a much better way to express return.
Sam, did Jilliene have any words about multifamily investing in this high inflationary, increasing interest rate environment? CAP rates have compressed over the last several years, and they really don’t have much more compression left (in my opinion). Property values have skyrocketed, as have rents. What does she predict about the next several months and few years? Thanks in advance!!
I’ll get some commentary on the next post on the subject and where they are looking for opportunity. Stay tuned!
I do worry about the markets that have risen the fastest, that also have the largest upcoming supply eg Austin, Nashville, Dallas, Houston. Phoenix seems iffy now too.
https://www.financialsamurai.com/cities-most-at-risk-of-a-housing-downturn/
The cities that outperform may very well be the international superstar cities again, like NYC and SF.
I’ve been using RM as my main real estate vehicle for two years, and think it’s great. I appreciate the conservative underwriting and the fact that an assigned IR person answers all my questions.
I don’t think that they offer access to 1031 exchanges at this time. Are there any crowdfunding real estate platforms that offer access to 1031 exchange deals?
I’ll check with them and revert. Offering deals for 1031 exchange would really be great for tax purposes, especially for those property owners like myself who want to simplify life.
I would gladly exchange one of my paid off rental properties into a diversified fund.
Re 1031 exchanges, so far I’ve found that only some private funds and multi family syndicates offer 1031. If you are investing in oil and gas royalties, they too take 1031s.
I don’t want to recommend specific platforms as I haven’t personally used them. However, I did consider some of the Delaware Statutory Trust (DST) options about 2 years ago.
I think if you research that you might find an option to consider.
I was doing a 1031 and wanted to have a backup option just in case I couldn’t identify a suitable property to acquire.
I’ve heard of RealtyMogul but haven’t followed them very closely. The REC space has definitely been growing a lot over the last several years though. $875 million invested in $5.2 billion of real estate is great progress.
I like being able to diversify in properties outside of my local area without having to deal with any of the maintenance and tenant management. Haven’t heard of an Apartment REIT before so that’s an intriguing investment to see. I tend to prefer REITs versus having to research and select individual deals. And I also like the prospect of receiving quarterly distributions.