- Invest in a portfolio of diverse, commercial real estate properties without the responsibility for management.
- Access passive income streams as well as the potential for capital appreciation.
- Invest as a non-accredited investor with as little as $5,000.
RealtyMogul is one of the original online real estate crowdfunding platforms for US investors. And unlike many of their competitors, it is open to both accredited and non-accredited investors looking to invest money into real estate without taking physical ownership of the property.
Interested in how this fractional real estate investment service works? Find out
Inside this review
What is RealtyMogul?
RealtyMogul is an online real estate marketplace that uses a crowdfunding investment strategy. Founded in 2012 by Justin Hughes and Jilliene Helman, the company brings together investors, borrowers, and sponsors to create new investment vehicles for accredited and non-accredited investors.
This "peer-to-peer" model involves parties on both sides of the real estate transaction, and it's also open to institutional investors. Since its inception, the platform is approaching 200,000 users, allocating capital to over 375 real estate investment deals.
RealtyMogul has more than $400 million in assets under management, arranging equity capital for commercial real estate deals. RealtyMogul has a strong management team with experience in finance, real estate, and technology.
Who can invest?
RealtyMogul is open to both accredited and non-accredited US investors. However, it does accept international clients, provided they structure a legal entity in the US to facilitate the investment. With this strategy, the international investor meets reporting requirements. It allows investors to set up legal structures that protect investment capital and mitigate tax exposure.
Investors that don't want the hassle of being a landlord over a second property can benefit from investing with RealtyMogul. You get access to capital growth on the investment and the cash flow generated by the property.
RealtyMogul achieves this goal with Real Estate Investment Trusts (REITs) as its investment vehicle of choice. REITs are a collection of managed real estate investments overseen by the RealtyMogul team. Essentially, the REIT is a portfolio of properties, offering investors returns through cash flow dividends and capital appreciation. The company provides two REITs, the MogulREITs I and II.
Interested in REITs? Find out more about how you can use them to diversify your investment portfolio in this guide.
How does it work?
RealtyMogul has an impressive track record, with only one investment ever failing in its history. However, the company learned from the experience, and it now only invests in properties generating cash flow, with a strong outlook for capital appreciation.
RealtyMogul focuses on low-risk investments, predominantly in the multifamily housing market. This strong market segment offers investors the best investment potential in all economic conditions, as seen by the company's outstanding performance during the COVID-19 pandemic.
The company's two REIT products have proven track records, and investors have the chance to invest in income or growth properties, as well as a stake in multiple real estate deals.
They also offer standalone deals for accredited investors, many of which start at a minimum investment of $25,000 to $50,000. Alternatively, the REITs offer minimums as low as $5,000 to start.
MogulREIT I
The MogulREIT I invests in a portfolio of fully managed commercial real estate deals. The non-traded status of the REIT means it's open to the public for investment, but the company doesn't trade on the stock market like other REITs.
The MogulREIT I specializes in investing in commercial real estate deals focusing on debt and equity assets across several real estate markets, including commercial properties, multi-family homes, offices, retail outlets, and self-storage units.
The MogulREIT I pays its investors a monthly dividend. Historically, MogulREIT I has delivered a return of between 7.7% and 8% annually, net of fees, since its founding.
MogulREIT II
This publicly non-traded REIT invests in preferred and common equity investments in multifamily units. It pays dividends to investors quarterly, with returns slightly lower than those offered by the MogulREIT I product.
However, while dividends are lower, the assets under management experience stronger capital appreciation than the investments held in MogulREIT I. MogulREIT II paid investors with quarterly distributions of around 4.5% annually since its inception on Jan. 1, 2018.
Fees
Each REIT and product offering from RealtyMogul has an individual fee schedule. Private placements incur a 1% management fee, while MogulREIT I has a 1% management fee on the total equity value. MogulREIT II charges a 1.25% fee based on the total equity value in the portfolio.
RealtyMogul also charges a 1% administrative fee for investor reporting and processing distributions.
Investors into the company's REIT products also need to pay a disposition fee equating to 2% of the contract sales value for every asset sold.
The company also charges fixed income, debt, and preferred equity asset fees of 0.5% for its performing investments based on the principal balance and accrued interest, and 1% on non-performing assets based on the original deal value. These charges are for the administration and servicing of loans and investments.
How to sign up
Visit the company's official website to sign up for RealtyMogul investments. As an accredited investor, you can dive right into the standalone deals, with minimum investments ranging from $25,000 to $50,000.
Non-accredited investors can buy into either of the REIT products for a $5,000 investment. RealtyMogul also provides automatic monthly investments into its REITs, starting at $250 per month.
Pros & cons
Pros
- Access to REITs for non-accredited investors, unlike several of their competitors.
- Provides opportunity for passive income and capital appreciation.
- Diversified portfolio of assets across the US.
- Professional due diligence on all deals.
- Auto-investing starting at $250 per month.a
Cons
- High minimum investment amounts ($5,000 investment for non-accredited investors).
- Complex fee structure.
- Public non-traded REITs are somewhat illiquid investments.
- Limited operating history and short track record.
Alternatives
- PeerStreet. A crowdfunding platform featuring investment opportunities in real estate loans.
- Streitwise. A real estate REIT platform with minimum investments starting at $1,000.
- LendingHome. Invest in real estate loans and bridge financing deals for accredited investors only.
- Fundrise. A crowdfunded real estate site that offers investment into private real estate deals.
Verdict
RealtyMogul is an excellent way to access institutional-quality real estate investments. You get access to diverse, non-residential properties which have been extensively diligenced by the RealtyMogul team and provide opportunities for both passive income and capital appreciation. Non-accredited investors can benefit from lower minimum investment amounts and monthly auto-investing.
Public non-traded REITs do come with risks though, as they are illiquid, trade infrequently, and have higher fee structures than other investments.
If you already have a diversified investment portfolio and are looking to expand into commercial real estate without the hassle of management, RealtyMogul is a solid option.
