RealtyMogul Review 2022 | A Real Estate Crowdfunding Investing Platform

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July 25, 2022
By: ADAM K
RealtyMogul

PROS

  • Strong history – In business since 2012
  • Thorough vetting process: 1.1% deals funded
  • Open to non-accredited investors

CONS

  • $5,000 minimum investment
  • Illiquid Investments

At A Glance:

Account Minimum:$5,000 but the minimum amount can vary per investment
Fees:Varies depending on investment, but usually between 1-1.25% per year management fee
Retirement Account Investing:Yes, self-directed IRA
Liquidity Features:For REIT Investments, not individual properties
Investment Options:Individual Property, Income REIT, Growth REIT
Transparency: Regular audits
Due Diligence:Readily available for review
Auto Investing:Available for Income REIT and Growth REIT
Investment Property Type:Commercial Real Estate

Who Should Use Realty Mogul?

RealtyMogul is a good option if

You are serious about real estate investing, given the high minimum investment and limited liquidity options.

RealtyMogul is not a good option if

You are just starting to learn about real estate investing and are not ready to commit a large minimum for an extended time (3-7 years).

What Is RealtyMogul?

RealtyMogul is a real estate crowdfunding platform for accredited and non-accredited investors. RealtyMogul connects investors who want to invest in commercial real estate.

Investors can browse real estate investments, review due diligence materials, and sign legal documents securely online. Once invested, investors have access to an investor dashboard, giving them 24/7 access to watch their money being put to work.

RealtyMogul officially launched in 2013. To date, 175,000 individuals signed up for the platform and invested over $800 Million, financing 400+ properties valued at over $4.7 Billion.

RealtyMogul serves as a platform for project sponsors. In other words, real estate projects are owned and managed by 3rd party companies, but source funding through RealtyMogul’s platform.

The founders of RealtyMogul are Jilliene Helman (current CEO and Georgetown alumna) and Justin Hughes, while the company is headquartered in Los Angles, California.

What Investment Options Does RealtyMogul Offer?

RealtyMogul offers 2 types of investment options: Individuals Properties and REITs. Accredited and non-accredited investors can invest in the RealtyMogul REITs while individual property investing is only open to accredited investors.

Individual Property Investing

  • Open To: Accredited investors only
  • Investment Type: “equity investment”
  • Investment horizon: 3 – 7 years
  • Minimum Investment: $25,000 – $50,000
  • Property Types: office, multifamily, retail, and industrial
  • Distributions: Quarterly (But can vary depending on the investment)
  • Tax Considerations: LLCs can be treated as partnerships for tax purposes. Partnerships generally are not taxed at the entity level and can “pass through” applicable items of income, loss, and depreciation to their members.

Investing in individual properties is only available to accredited investors due to the large investment minimum, concentrated investment risk, and lack of liquidity.

When you invest in an equity opportunity, you are purchasing shares of an LLC as a limited member. Then the LLC, along with the real estate company and other investors, owns a share of a joint venture entity that owns a specific property such as an apartment complex.

A subsidiary typically makes all decisions of the LLC of RealtyMogul. Distributions from equity investments are typically made quarterly but can vary depending on the investment and are not guaranteed.

When you open an account with RealtyMogul, you can browse investments by property types, investment strategy, view sponsor credentials, and the relevant financials of the private placements.

RealtyMogul Investments
You can browse and view the financials of RealtyMogul Private Placements.

REIT Investing

RealtyMogul’s commercial real estate investments REITs are designed to allow investors to spread their investments across multiple properties to provide a higher level of diversification making for a more suitable investment option for non-accredited investors.

Historically, REITs have provided investors with regular income streams, portfolio diversification, and long-term capital appreciation opportunities. REITs can either be publicly traded or private (do not trade on an exchange), but either can qualify as long as they meet specific tax considerations such as distributing 90% of its income to shareholders.

RealtyMogul offers 2 types of REITs – the Income REIT and Apartment Growth REIT. Both REITs have a minimum investment of $5,000 and are open to accredited investors & non-accredited investors.

RealtyMogul Income REIT

  • Minimum Investment: $5,000
  • Distribution Frequency: Monthly
  • Annualized Distribution Rate: 6.00 %
  • Property Type: Diverse
  • Investment Types: Debt and Equity
  • Open To All Investors: Yes
  • Objective: Income generation
  • Trusted: Regular audits performed by Cohn Reznick

The RealtyMogul Income REIT (Real Estate Investment Trust) is a public, non-traded REIT making equity and debt investments in commercial real estate properties diversified by investment type, geography, and property type. The REIT’s objective is to provide monthly income to investors by rigorously evaluating numerous investment opportunities to find those that can support the REIT’s distribution target.

Since its inception in 2016, The Income REIT has distributed 67 months of consecutive distributions to approximately 6,500 investors totaling roughly $18.5 million. Anyone can invest in RealtyMogul’s Income REIT with a minimum of just $5,000, regardless of their income or net worth.

The Income REIT is an excellent option if you are looking to generate income while having peace of mind that this REIT has had strong performance since 2016.

RealtyMogul Apartment Growth REIT

  • Minimum Investment: $5,000
  • Distribution Frequency: Quarterly
  • Annualized Distribution Rate: 4.50%
  • Property Type: Multifamily
  • Investment Types: Common & Preferred Equity
  • Open To All Investors: Yes
  • Investment Goal: Growth potential and income
  • Trusted: Regular audits performed by Cohn Reznick

The Apartment Growth REIT is a public, non-traded REIT that invests in apartment buildings in resilient markets that can offer current income and solid growth potential. The REIT’s primary objective is to realize capital appreciation in the value of its investments over the long term through the renovation and repositioning of the multifamily properties and pay attractive and stable cash distributions to stockholders.

Since its inception, The Growth REIT has distributed 16 months of consecutive distributions to approximately 2,700 investors totaling approximately $4.mm. Anyone can invest in RealtyMogul’s Growth REIT with a minimum of just $5,000, regardless of their income or net worth.

The Growth REIT is better suited for individuals who are looking for a blended approach consisting of income and capital appreciation.

How Do I Open An Account With RealtyMogul?

Opening an account and investing is seamless and straightforward.

Step 1) Complete your account profile at RealtyMogul.com. The process is very quick.

Step 2) Select your investment. Once you join, you have access to current eligible investments. Investment details are presented with key information.

Step 3) Once you are ready to invest, complete your transaction online in a few minutes.

Step 4) Track your investments. In the investment dashboard, track your total invested value and distributions. You will also receive quarterly investment reports and annual tax documents through this portal.

RealtyMogul Investor Dashboard
RealtyMogul Investor Dashboard

REIT Share Repurchases

If you invest in a RealtyMogul REIT, you can sell them back after meeting certain conditions. There are no share repurchase programs available currently for individual property investing.

  • Repurchase base price per share is the most recently announced NAV per share
  • Repurchases are made quarterly upon written request at least 30 days before the end of the quarter

Repurchase Rate:

  • 98% if you held the investment for one year but less than two.
  • 99% if you held the investment for two years but less than three.
  • 100% if you held the investment for three years or more.
  • 0% if you held the investment for less than a year.

For Example: If you held the investment for 1.5 years and the NAV per share is $100, you will get back $98.00.

Real estate, in general, is an illiquid investment with a long-term investing horizon, so offering liquidity is helpful in the case of an emergency.

Investment Due Diligence

RealtyMogul has a thorough vetting process – to date, only 1.1% of opportunities have been funded.

The company has a 3-pronged approach in its vetting process and makes its due diligence documents readily available.

Background. Background and criminal checks are conducted to identify areas of concern or pending lawsuits.

Experience. All assets the company previously acquired are examined and compared to the proposed project to check if the sponsor has had similar experiences in the past.

References. The company acquires references from lenders, investors, and business associates to ensure there are no red flags.

As an individual, I appreciate that the company is incredibly transparent in its due diligence process.

Fees Explained

When real estate crowdfunding platforms mention fees, they are usually referring to their monthly asset management fee. RealtyMogul has a 1% annualized asset management fee, paid monthly for its Income and Growth REIT.

This means you would pay approximately .0.83% per month in fees. All distributions quoted by RealtyMogul are net of fees.

Fees vary for individual property investing.

The Bottom Line: Is RealtyMogul Worth It?

RealtyMogul only has 2 REIT strategies and its private placements are available to accredited investors only. So, if you are looking for a personalized investment strategy, a better option is Fundrise which has a minimum investment of just $10 and you can invest in multiple REITs and funds with varying strategies.

However, if you are just getting started in real estate investing, it may be overwhelming when a platform has too many options – making RealtyMogul a better option. Plus RealtyMogul’s Income REIT has a strong track record with 67 consecutive months of returns since 2016.

Alternatives To RealtyMogul

If you’re looking for an alternative to RealtyMogul, There are a few competitors in the crowdfunding real estate space.

FeaturesRealtyMogulGroundfloor Fundrise
Minimum Investment$5,000$10$10
Fees1 – 1.25%None (Investor Pays)1%
Investment OptionsPrivate Placement & REITsResidential Real EstateVaries
Open ToAll investorsAll investorsAll investors
Available PromotionsNoneNoneNone

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