Crowdfunding is a game-changer for investors who want to diversify their real estate dollars without plunging too much money into different whole projects. And, RealtyMogul is one of those investment opportunities that make this process insanely easy. This article is a detailed RealtyMogul review.
RealtyMogul is one of the best real estate crowdfunding platforms today for mostly accredited investors. RealtyMogul has distributed over $100M, have 180K members, and have funded over $2B across 300 properties so far.
Headquartered in Los Angeles, RealtyMogul has branched out to commercial real estate deals all across the country. RealtyMogul is for non-accredited investors and accredited investors. They have the MogulREIT I and MogulREIT II if you want to buy a portfolio of real estate crowdfunding deals.
RealtyMogul Review: Why It’s A Great Platform
There are several reasons why RealtyMogul is a great real estate crowdfunding platform.
1: RealtyMogul does their due diligence
Many critical pieces of information are reviewed before investment opportunities are approved and opened up to investors.
RealtyMogul provides due diligence on behalf of their investors. Here are five core criteria they consider during the due diligence process.
A) The Real Estate Company
The first thing that one should look at when analyzing an investment is the real estate company involved in the project. This is also known as a “sponsor,” who is an individual or real estate company that will acquire the real estate and execute on a business plan.
B) The Market
The second thing we review when looking at a real estate investment is the market of the property. Realtors often say that the only thing that matters is “location, location, location” and not without good reason.
C) The Asset
While the real estate company and the market are both important, so too is the asset, or the property itself. It is important to review not just whether it is the right time in the real estate cycle, but also whether it is a good time to purchase the asset. The asset is so key to the investment that at RealtyMogul we do an in-person site visit for every investment.
D) Capital Structure
When investing in commercial real estate, the capital structure must be looked at closely as it directly impacts the return.
Moreover, real estate companies can further complicate the capital structure of a transaction by adding a combination of a second lien, preferred equity or mezzanine debt as a layer of capital in between the senior mortgage and the common equity. The terms of each of the slices of capital have material impacts on the others.
E) Risk and Return
The last, but not least (and arguably the most important), thing that an investor should look at when determining whether to invest in an opportunity is the risk/return of the project.
Once it is determined that each of the elements of a transaction are on point, on balance and strong enough to accomplish the stated investment goals, it is worth considering making an investment in the opportunity.
2: RealtyMogul Investor Benefits Are Top Notch
Real estate investors all get solid benefits through RealtyMogul, which further makes these folks a reliable source of potential wealth.
For example, RealtyMogul offers:
1) Pre-Vetted Investments — Less than 10% of the deals first shown on the Realty Mogul make it through to their platform for their investors. The vetting goes through the sponsors history, track record, and individual backgrounds. This is to ensure deals have the highest chance of providing a positive return.
2) An Easy Process To Invest — Real estate crowdfunding is taking off largely due to its ease of investing. Realty Mogul’s platform allows investors to thoroughly analyze a deal with the research provided. An investor can view pictures, videos, and even ask the sponsors questions before making an investment.
3) Opportunities That Are More Focused Than REITs — A publicly traded REIT generally has dozens, if not hundreds, of properties in its portfolio. Publicly-traded REITs are also more volatile than stocks, as we saw in the the March 2020 downturn. It’s harder to invest in specific areas of the country with a public REIT. Real estate crowdfunding with Realty Mogul allows you to be much more surgical in your investments.
4) A Low Investment Minimum – Instead of coming up with a $200,000 downpayment for a median-priced San Francisco or NYC property and borrowing $1,000,000, you can invest as little as $10,000 in a property on the Realty Mogul platform to gain exposure.
3: RealtyMogul Makes Real Estate More Accessible
With RealtyMogul, investors can diversify their real estate investments through a wide range of opportunities available around the country. These opportunities include commercial real estate projects that would normally set individual investors back 10s of millions of dollars.
Through the power of crowdsourcing, RealtyMogul provides more opportunities for more people. Which in turn brings potentially lucrative real estate investments within reach of the average investor.
Investment examples include:
- multi-family dwellings,
- office buildings,
- industrial sites,
- self-storage,
- retail,
- medical buildings, and
- hospitality establishments
RealtyMogul enables typical investors to invest in single-family properties that are bought for the purpose of rehabilitation and flipping. Just about any property can be invested in as long as it is not used as a primary home or as a secondary residence.
4: RealtyMogul Simplifies The Investment Process
With RealtyMogul, investors typically purchase shares in a Realty Mogul limited liability company (LLC) that turns around and invests that money 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 through the platform.
Loan investments are generally 6-12 months, while equity investments are anywhere from three years up to 10 years. Equity investments generally pay distributions on a quarterly basis, while debt investments pay monthly.
These are just general rules. The distributions on any investment are never guaranteed.
5: RealtyMogul Is Proven
Since their founding in 2012, Realty Mogul has distributed over $100M, has 170K members, and has funded over $2B in property deals.
What’s interesting to note is that as of 2H2020, Realty Mogul has not raised any additional venture capital money, yet they are still growing. This means to me that Realty Mogul has found a way to be more self-sustainable as they focus on quality, not quantity. Unlike other platforms, they are not growing at any price and are focused on the bottom line.
Given they have higher barriers for whom they do business with, it feels like they really are focused on hitting singles and doubles instead of home runs, which is more in line with how I like to operate my own business.
Why Real Estate Is My Favorite Asset Class
Real estate is one of the best ways to build long term wealth due to inflation, leverage, utility, and tax benefits. Unlike P2P lending, there’s a physical asset behind real estate crowdfunding.
And in case of downward market fluctuations, investors can always work something out with the sponsor.
I own three physical properties in San Francisco, Honolulu, and Lake Tahoe. Combined, they generate over $200,000 in annual gross rental income. I’ve also invested $810,000 in real estate crowdfunding in the heartland of America. Valuations are cheaper and net rental yields are higher.
Big companies like Google are spending tens of billions to expand away from the expensive coasts. Employees are also fleeing the coasts for more affordable living thanks to technology.
RealtyMogul Review Conclusion
RealtyMogul makes real estate investments accessible and easy for accredited investors and non-accredited investors a like. The platform has started in 2012 when the JOBS Act passed. The CEO is a long-term business person who is focused on profitability and growth.
About the Author: Sam worked in investing banking for 13 years. He received his undergraduate degree in Economics from The College of William & Mary and got his MBA from UC Berkeley. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $250,000 a year in passive income. He spends time playing tennis and taking care of his family. Financial Samurai was started in 2009 and is one of the most trusted personal finance sites on the web with over 1.5 million pageviews a month.
