“Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.” - Andrew Carnegie
When it comes to returns, many real estate investors make upwards of 9% on their investments, with real estate investmentt trusts (REITs) in 2019 returning 10.5%. That puts real estate investors on par with traditional investors, making equity investing definitely worth considering.
But, generally speaking, investing in real estate is only for accredited investors who have a net worth of over $1 million or meet annual income requirements of at least $200k over 2 or more years. So how are those of us looking to invest in real estate to make money ever going to get to invest in real estate without the money required? It's the chicken or the egg age-old question.
This is why real estate crowdfunding platforms
like RealtyMogul, EquityMultiple, and Fundrise are so promising for individual investors, since they leverage collective buying power to offer you real estate investment options you’d otherwise be unable to access.
Want to get your foot in the door on real estate, here's how you can with RealtyMogul.
What is RealtyMogul?
CEO Jilliene Helman founded RealtyMogul after years of working in wealth management when she realized that her clients who had accrued the most wealth all had one thing in common: They invested in real estate. To address the fact that most novice investors were shut out from real estate investment opportunities, she created RealtyMogul. (Thank you!)
RealtyMogul lets everyday investors access a variety of individual properties and Real Estate Investment Trusts ("REITs")
through a simple user interface and transparent business practices around each type of investment. RealtyMogul even has an in-depth vetting process to make sure that the apartment buildings, commercial real estate, multifamily homes, and office buildings you’re considering are in areas that are likely to net you a positive return.
Especially if you’re someone like myself who doesn’t have very high risk tolerance, it’s nice to know that the real estate projects available to you through RealtyMogul are in areas with a history of above-average performance on the secondary market.
How does Realty Mogul work?
As a crodfunding platform, your money joins with hundreds of others to help fund real estate investments. For example, RealtyMogul's investors – 85 of them, to be exact – were behind raising $1.5 million for a new Hard Rock Hotel
to be constructed in Palm Springs, California. Know what that means? It means those 85 are now invested in one of the hottest hotel properties in the U.S.
To get started with RealtyMogul, you’ll first need to create an account as a personal investor. It’s also worth noting that real estate companies can also use RealtyMogul to raise capital for a project.
When you get to your account creation page, you’ll have to fill out some general information about yourself, including your first and last name, email address, and a valid United States phone number. You also must agree to RealtyMogul’s terms and conditions during this step of the account creation process and can choose to opt-in or opt-out of SMS messaging and updates from RealtyMogul.
You’ll then need to verify your email address before moving on to set up your investment profile and really start digging into the platform. Your main dashboard allows you to view various commercial real estate investments that have undergone RealtyMogul’s due diligence process, make new investments, and track how your investment portfolio is performing.
You can decide whether or not you also want to have your account automatically invest distributions from your equity investments, which are tracked separately in RealtyMogul’s dashboard. The dashboard also gives you access to any messages and correspondence you’ve had with RealtyMogul’s dedicated investor relations team, as well as tax documents when it’s time to file.
In order to invest with RealtyMogul and take full advantage of all of its options, you’ll need to be an accredited investor. That being said, if you’re aren’t an accredited investor, you still have options available to you through the MogulREIT I and MogulREIT II offerings. It’s important to note that there are some legal limitations to how you invest in these REITs, though, so it’s a good idea to reach out to support ahead of time before you make an account if you’re not accredited but want to purchase REITs as an investment.
Overall, the platform is clean and simple to use, making it a great fit for new investors who are mostly focused on how much cash they’ve invested and what the return on that investment has been.
How much does RealtyMogul cost?
While browsing RealtyMogul’s dashboard and creating an account is completely free, you’re going to run into a few different fees and charges when you actually choose to make an investment.
For starters, the minimum amount on the equity investments you’re looking at is going to change depending on what properties you’re considering. That being said, the minimum investment on some options is as low as $5,000. Not exactly best for the new investor but still not nearly as expensive as most REIT's accredited requirements. (If you want a cheaper way in, Fundrise's
minimum is ust $500.)
It’s also worth noting that the fee structure for RealtyMogul is tailored specifically to the different types of securities you’re considering. For example, the fees and charges are different for a real estate loan vs equity investments, and the terms of these deals vary from transaction to transaction. Generally speaking, you’ll have legal, administrative, and management fees associated with each transaction, and RealtyMogul is quite transparent about these fees before you ever decide to commit to an investment.
RealtyMogul has a few features that are definitely worth highlighting. Here are just some of the key components that set RealtyMogul apart from other crowdfunding investment platforms:
Compared to other crowdfunding platforms that are laser-focused on transactions, RealtyMogul focuses on quality, not quantity. As a result, even though more than 30,000 deals have been submitted to the company over its 9-year history, only a little more than 1% of those deals have actually made it to the platform.
RealtyMogul’s due diligence process is extensive and aimed at ensuring that investors get a solid return. Data about the real estate market, the property itself, and the company behind the real estate all get factored into determining whether or not RealtyMogul will let investors access the investment on its platform. As such, you know you’re getting the cream of the crop when you use RealtyMogul for your preferred equity investing.
The real estate investment process requires a lot of forms to be filled out, signed, and submitted in order to run smoothly. RealtyMogul’s simple-to-use online interface streamlines real estate investing significantly. Particularly when it comes to reviewing how your investments are doing and what your current portfolio liquidity is, RealtyMogul’s clear, concise dashboard shines—and is available 24/7.
Anytime you’re dealing with sensitive data and money, it’s critical that the platform you’re using is secure. Thankfully, RealtyMogul’s creators have gone above and beyond in ensuring that the website is secure and will protect your assets and your data. From specialized firewall and encryption approaches to internal and external reviews of all websites, you can rest assured that your data is in good hands with Realty Mogul.
Who is RealtyMogul best for?
While there’s a lot to celebrate about RealtyMogul, the platform and its features aren’t for everyone. Here’s who will likely get the most out of using RealtyMogul:
Individual investors who aren’t accredited
If you’re a non-accredited investor looking to grab a piece of the real estate investment pie, RealtyMogul is right up your alley. Offering both MogulREIT I and MogulREIT II investment options, RealtyMogul lets you quickly and effectively spread your investment dollars across multiple properties in order to mitigate risk and increase your chance of maximizing your return. Many times, you need a million-dollar net worth or high-paying job in order to qualify for real estate investment opportunities, but Realt Mogul’s REITs are a great option for anyone, regardless of income.
Investors looking for a way to diversify passive income
If you’re interested in generating passive income, investing in real estate and REITs is a great way to boost your returns. As such, many investors who’ve already invested in traditional stock and bond options will find a lot to like in the options RealtyMogul offers them, especially thanks to the due diligence process which helps take some of the risks out of making choice yourself.
Who shouldn’t use Realty Mogul?
Investors who want lots of options
As has been mentioned multiple times throughout this review, RealtyMogul has an extremely rigorous due diligence process. While this means that the properties you’re considering as an investor are likely high quality, it does take some element of choice off the table. If you want a platform that isn’t as limited in the options it gives you as a real estate investor, you’re probably better off with a different platform than Realty Mogul.
Currently, you can only have a RealtyMogul account if you’re based in the United States. As such, if you live overseas and are interested in getting into real estate investing, you’re going to need to look into other options online.
Pros & cons
- Easy to use. Everything about the platform’s user interface is crisp and clean, making it simple and intuitive to navigate. Even when it comes to reviewing fees and due diligence data, RealtyMogul’s commitment to transparency makes it almost effortless.
- Due diligence process. RealtyMogul only accepts about 1.1% of the properties submitted to it.
- Low minimum investments. If you don’t have a lot of working capital, you’ll appreciate that some properties will let you get started investing for as little as $5,000.
- Still must be accredited to get full benefit. While RealtyMogul does give non-accredited investors the opportunity to invest in REITs, if you’re really serious about getting in on the real estate investment game, you’ll need to be accredited to access other commercial properties through the platform.
- Only available in the United States. You must live in the U.S. and the real estate investments are based in the U.S.
RealtyMogul vs. Fundrise vs. Crowdstreet
RealtyMogul isn’t the only crowdfunding real estate investment option on the market. Here’s how RealtyMogul stacks up compared to two popular competitors: Fundrise and Crowdstreet.
|Private placements for REITs||Yes||Yes||No|
and RealtyMogul are the most similar between the above three options; however, it’s worth noting that RealtyMogul’s due diligence process is much more intense than Fundrise’s approach. That being said, with similar annual fees for management costs and lower minimum investments, if you don’t have much working capital to invest at all, Fundrise might be a better option if you have higher risk tolerance.
Crowdstreet doesn’t offer private placement REITs (also known as private REITs), which means that all of the REITs offered on the platform are subject to regulations by the SEC. Even so, the lack of an annual fee may be worth it for investors who are able to meet the minimum investment amount of $25,000.
Who can invest on Realty Mogul?
As long as you live in the United States and are over the age of 18, you’re eligible to invest using RealtyMogul. That being said, if you want to invest in something beyond Realty Mogul’s REITs, such as some of their private placements, you’ll need to be an accredited investor, which involves meeting a few different income and net worth requirements.
Is investing through Realty Mogul safe?
From a data security standpoint, investing through RealtyMogul is exceptionally safe and secure. RealtyMogul takes data security seriously and uses a multilayered approach to ensure that customers’’ data is protected at all times.
From an investment standpoint, there is always some element of risk when you invest in a stock, bond, or real estate property. That being said, the returns on real estate investments have historically been quite good, so if you aren’t completely risk-averse you’ll likely find that real estate investment is no less “dangerous” than other investment options in your portfolio.
What sorts of properties make up an equity investment?
RealtyMogul’s equity investments come from a wide range of places throughout the world of real estate. Just a few of the types of properties making up the equity investments available on the platform include industrial properties, self-storage, offices, and multi-family homes, among others.
The bottom line
The real estate market has been a major aspect of many people’s wealth generation over the past few decades. That being said, for a long time, the requirements of accreditation as an investor have prevented all but the wealthy to really tap into real estate investing as a form of wealth building. Crowdfunding platforms like RealtyMogul aim to change that.
While it’s true that you may not have the ability to invest in all of RealtyMogul’s options unless you’re leveraging a higher amount of capital and can qualify as an accredited investor, there’s still value in getting in now as an individual. For starters, RealtyMogul has low minimums, meaning that you only need as little as $5,000 to start investing in REITs.
It’s also worth noting that REITs are a great way of diversifying your real estate investment since you’re spreading your money out across multiple properties to lower your risk. Especially when coupled with the extensive process real estate companies are put through before being accepted to RealtyMogul’s platform, you can have a reasonable belief that you will make a nice return on your investment when using RealtyMogul.
Ultimately, which crowdfunding platform to use as an investor is completely up to you, and there are certainly competitors on the market with looking at. Even so, RealtyMogul’s strong focus on helping others build wealth through making real estate investing clear, transparent, and streamlined certainly makes it worthy of your consideration. Particularly if you don’t have a lot of money to invest and want to take advantage of the expert analysis at the heart of RealtyMogul’s platform, there are plenty of reasons to create an account. You can learn even more about RealtyMogul on their website, which has an extensive knowledge base and FAQ section worth checking out for free before you even press “Sign Up.”