What is RealtyMogul?
RealtyMogul was launched in 2013 by Jilliene Helman and Justin Hughes and is based in Los Angeles, California. The company was founded to help make real estate investing easier through the use of technology.
Since 2013, the company has financed hundreds of properties worth more than $3.1 billion. It currently has more than 212,000 registered members and the company has received equity funding from Canaan Partners, Sorenson Capital and other strategic partners.
How does RealtyMogul work?
RealtyMogul allows people to invest in two different ways depending on their qualifications and goals. Some investors will fall into the real estate crowdfunding category, while others will be best suited to invest in REITs.
No matter what you decide to invest in, these assets are illiquid. That means you can't quickly sell them if you need the money for something else. This is not unique to RealtyMogul. Real estate is generally considered illiquid, and this is an important thing to know when learning to invest in real estate.
RealtyMogul may allow you to sell certain investments to them after holding them for a certain period, but this option is not guaranteed. Instead, you may be required to hold the investment until the underlying property is sold. For this reason, investors should have a long-term horizon and a high risk tolerance in case the investment does not perform as expected.
You must also manage your investments through the company's website, as they do not offer an iOS or Android app. Your money will be deposited into a taxable account. You can use a self-directed external IRA to invest with RealtyMogul, but it's not a feature the service offers directly.
Almost anyone with the $5,000 minimum can invest in RealtyMogul's two REIT options: the Income REIT and the Apartment Growth REIT. These allow people to invest in real estate, one of many alternative asset classes, without directly owning the physical property.
The Income REIT focuses on diversified real estate investments across many property types and geographies. Its objective is to make monthly distributions to its shareholders and it has done so for 51 consecutive months. This REIT charges a 1% asset management fee each year and a fee of up to 3% of your capital contribution when you sell shares. It also charges other costs based on the actions on specific investments within the SOCIMI.
The Apartment Growth REIT invests in multifamily properties with the goal of capital appreciation or increasing the value of the assets in the REIT. It makes quarterly distributions and focuses on specific real estate markets with strong fundamentals and apartment communities. This REIT charges an asset management fee of 1.25% each year, a disposal fee of 2% of the contract price for each property sold, and a fee of up to 3% of your capital contribution when you sell shares.
Real estate crowdfunding platform
The company offers accredited investors the ability to invest in targeted real estate through its crowdfunding platform. You may qualify as an accredited investor if you meet one of the following requirements:
- Have an annual income of $200,000 as a single person or $300,000 as a couple in each of the previous two years and expect the same for the current year
- Have a net worth, excluding your primary residence, of more than $1,000,000
- Hold any of the following financial professional licenses: Series 7, Series 65, or Series
Available real estate transactions typically include multi-family residential real estate, such as apartment buildings, and commercial real estate investments, such as office buildings. The Company performs due diligence in reviewing each potential investment property. They evaluate the company acquiring the real estate, the market in which the property is located, the property itself, and the investment operating agreement.
This includes activities such as:
- Do background checks
- Evaluation of demographic data, economic trends and comparables
- Review the physical condition of the property and the business plan
- Considering tenants and rental rates
- Have a member of the RealtyMogul team visit the property in person
For context, RealtyMogul has progressed on only 1.1% of the 30,000+ potential real estate projects submitted to the platform for consideration.
When RealtyMogul secures a property, they list it on their website for investors to consider. You can view past investment performance and other important information before investing. Once you find a good option for you, you can invest in property by contributing at least the required minimum. The minimum investment for an individual property ranges from $25,000 to $50,000.
Fees vary depending on the individual property you invest in. Common fees include administrative fees, legal fees, and fees to cover reporting and communications. RealtyMogul does not offer a range of these fees.
RealtyMogul also offers 1031 exchange opportunities. Some investors may need to quickly invest capital gains from the sale of other real estate to avoid adverse tax consequences. Completing a 1031 exchange allows you to defer capital gains taxes on the sale of your original property. RealtyMogul can support 1,031 transactions ranging in value from $25,000 to $50 million.
Pros and cons of RealtyMogul
- Accredited investors can invest in specific properties
- Due diligence has been conducted on all properties
- REITs are available to non-accredited investors
- RealtyMogul offers to buy back certain investments after a specified period
- You must be an accredited investor to invest in a specific property
- Higher minimum investments for REITs ($5,000) and individual property ($25,000 to $50,000) compared to other investment apps.
- Investments cannot be easily sold to recover funds at any time
- Complex and sometimes high fees
Who can open an account with RealtyMogul?
Non-accredited investors can open a RealtyMogul account and invest in the company's two REIT options, The Income REIT and The Apartment Growth REIT, with a minimum investment of $5,000. You must be an accredited investor to access RealtyMogul's full list of investment options.
RealtyMogul can be a smart choice for accredited investors who want to choose the properties they want to invest in. These investors are likely to have substantial investment portfolios and may invest through RealtyMogul to diversify their portfolio.
If you do not have accredited investor status, you may still be looking to diversify your portfolio, and you may want to consider using RealtyMogul's REITs to achieve that diversification. However, the $5,000 minimum investment required by RealtyMogul's REITs means investors must have a substantial portfolio size to avoid putting too much of their portfolio into real estate.
How much can you make with RealtyMogul?
Figuring out how to invest is a risky business, no matter what you choose to invest in. When you invest in illiquid assets such as those offered by RealtyMogul and real estate in general, you take on greater risk because you cannot easily sell them. assets
By doing so, potential returns will be possible with RealtyMogul. Historically, Income REIT has made annual distributions of 6.00% of NAV (Net Asset Value), after deducting fees. Historically, Apartment Growth REIT has made annual distributions of 4.50% of NAV net of fees. Despite this trend, RealtyMogul says these distributions are subject to change at their discretion and returns are not guaranteed.
Performance of a specific property will depend on the property, location, schedule, property management, etc. These factors cannot be accurately predicted in advance because real estate values are constantly changing as the economy changes.
FAQs about RealtyMogul
Is RealtyMogul legit?
RealtyMogul is a legitimate company and a legitimate way for accredited investors to invest in individual properties. Non-accredited investors may invest in RealtyMogul's REITs. The company launched in 2013 and has received over $600 million in investor funding. The company has also raised venture capital from various partners.
How does RealtyMogul make money?
RealtyMogul makes money from the fees they charge for managing the investments offered on the platform. These fees can take different forms depending on the specific investment. For example, The Income REIT charges a 1% asset management fee and The Apartment Growth REIT charges a 1.25% asset management fee. Both REITs charge a disposition fee of up to 2% of the contractual sales price of each property sold in the REIT.
How does RealtyMogul make money?
Whether real estate is a good investment right now depends on you, your financial goals, and the property in question. Real estate markets are also driven by local factors. This means that an investment in San Francisco, California may yield very different results than an investment in Indianapolis, Indiana. You should weigh all the factors that will help you decide whether the particular investment you are considering is a good investment at this time.
How to open a RealtyMogul account
If you want to open a RealtyMogul account, it's free and easy. You must create an account, verify your email address, and provide basic information about yourself. You must also share your income, net worth, employment information, and investment preferences.
After completing the initial questionnaire and opening your account, you can invest in The Income REIT or The Apartment Growth REIT. To view RealtyMogul's full suite of investment opportunities, you should speak with a RealtyMogul representative by calling the number listed. This allows the company to verify your status as an accredited investor before giving you access to these investment options.
Other investing platforms to consider
If you want to invest in real estate but RealtyMogul isn't a good fit, you might want to consider Fundrise or EquityMultiple.
Fundrise is on our list of best investment apps for good reason. It allows you to invest in its own eREITs and eFunds and does not require you to be an accredited investor. You can start investing in the starter plan for $10, which is much lower than RealtyMogul's $5,000 minimum for their REITs. Read our Fundrise review for more details.
EquityMultiple works with reputable real estate investors to help them invest in professionally managed commercial properties instead of residential real estate. Minimum investment starts at $10,000 for its direct investment model and goes up to $40,000 for its tax-deferred investment options. EquityMultiple allows you to select a specific commercial property you want to invest in or choose a more diversified fund investment model. Read our EquityMultiple review for more details.
- Invest in individual properties or REITs
- Over 212,000 investors have joined
- $3.1 billion worth of properties available
- Each property is thoroughly vetted