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About 13 years ago, you’d be hard-pressed to find anyone willing to invest in real estate. Certainly, there were deals to be made, but the fear of a complete collapse of the housing market hovered around the entire financial system like a dense fog.
The dust eventually did settle, and 2012 brought us the JOBS act, which allowed crowd-funded real estate companies to enter the market.
Offering prospective investors access to both real estate investment trusts (REITs) and individual property investment opportunities, one of these companies is RealtyMogul.
Let’s discuss RealtyMogul so you can find out if they’re a good fit for your portfolio.
What Is RealtyMogul?
Founded in 2012, RealtyMogul is a crowd-funded real estate company located in sunny Los Angeles. Their goal is to connect prospective investors with institutional-quality real estate investment assets.
They also offer two REIT funds for those interested in broader real estate exposure.
How Does RealtyMogul Work?
RealtyMogulfocuses on offering highly researched commercial real estate investment opportunities to its investors.
Their individual property investments come from all across the continental US in the form of office buildings, multi-family, retail, and industrial spaces.
However, there are a few restrictions to these offerings, so RealtyMogul also provides REITs that also focus on commercial real estate across a larger portfolio than single properties.
RealtyMogul Features and Benefits
When you first navigate to their slick website, it’s clear that RealtyMogul is serious about simplicity. Let’s get into what it’s like to invest with RealtyMogul.
Open to Non-Accredited Investors
There was mention above that investing in individual properties with RealtyMogul has requirements.
We’ll get into what an accredited investor is in the next section, but for those simply interested in broadly adding real estate to their portfolio (non-accredited investors), RealtyMogul offers two REIT funds that are both public non-traded REITs, and each has specific goals.
Access to Private Market Offerings
To start this section off, you should know that you must be an accredited investor as specified by the SEC to invest in RealtyMogul’s private market offerings.
To qualify as an accredited investor, you must have an annual income of at least $200,000 for the last two years or $300,000 if you’re married. You also qualify if you have a net worth of over $1 million, individually or jointly.
If you do qualify as an accredited investor, then you will be able to access the listings from your platform once you log in.
RealtyMogul gives qualifying investors access to institutional-grade real estate investments in the form of
Gain Exposure to Real Estate
RealtyMogulprovides options for those who are new to real estate or those who would like to access truly institutional-grade real estate investments.
While the minimum investment is quite a bit higher than other crowd-funded real estate companies, the RealtyMogul makes it incredibly simple to add real estate exposure to your portfolio.
Easy Sign-up Process
Signing up for a profile is incredibly easy – only three steps!
After that, investing is fairly simple, but it involves the usual detailed personal information, signature of several disclosures and investment documents, and then a waiting period when your money is in limbo between your bank and RealtyMogul.
Auto Invest
“Auto invest” is available for investors in either of the two REITs. This feature allows investors to click fewer buttons and makes sure the process is as seamless as possible.
Thorough Due Diligence Process
Each property added to their listings is carefully scrutinized before it even reaches investor platforms.
According to their website, they’ve received over 30,000 property listing submissions since 2012. Of those, only 337 have been offered to their customers in their 9 years of business.
RealtyMogul sends a team member to each property to put eyes on the condition and conduct due diligence to ensure investors are getting what is advertised.
RealtyMogul Fees
When investing in individual properties, fees can vary, so be sure you review the fine print on each one.
Typically, RealtyMogul’s fees are around 1%. MogulREIT I carries a 1% fee on total equity, and MogulREIT II carries a 1.25% fee on total equity.
RealtyMogul Investment Options
MogulREIT I
The first REIT is called MogulREIT I. It has a minimum investment of $5,000, and its allocation is described as diverse.
Here are some facts about MogulREIT I (as of Jun 2021):
- Return: Annualized distribution of 6.00% distributed monthly
- Portfolio: 11 properties, $273MM asset value, over 6,000 investors
- Property allocations: 57.2% multi-family, 36.4% office buildings, and 6.4% retail
- Goal: Cashflow from both debt and equity investment in commercial real estate properties
MogulREIT II
The other REIT is called MogulREIT II. It also has a minimum investment of $5,000, and it only contains apartment buildings.
The goal of this REIT is capital appreciation, meaning the REIT manager will target properties that are in desirable locations, but that could benefit from cosmetic improvements or other upgrades.
This provides opportunities for increased rents and overall resale value. The goal might be capital appreciation, though the fund also has cash flow assets.
Here are some facts about MogulREIT II (as of Jun 2021):
- Return: Annualized distribution of 4.50% distributed monthly
- Portfolio: 9 properties, $214MM asset value, 2,400 investors
- Property allocations: 57.2% multi-family, 36.4% office buildings, and 6.4% retail
- Goal: Capital appreciation from property improvement combined with some cash flow
Individual Properties
The listings vary, of course, and the minimum investment is also higher at $25,000 to $50,000, depending on the property.
Even if you do not qualify as an accredited investor, you can still log in to find available properties, minimum investment, target hold period, and other valuable information.
If you’re new to this sort of investing, the website also provides helpful tips under some information on each listing to explain what it all means.
1031 Exchanges
RealtyMogul offers these exchanges for those investors who have just sold real estate investments and would like to re-invest in real estate.
This provides accredited investors with a way to defer capital gains on those real estate sales, assuming they were done so at a profit.
Talk with an accountant before you choose this strategy, as the rules are very complicated.
How to Sign up for RealtyMogul
The sign-up process involves only four steps.
- Personal information
- Estimated income for the current year and income for the two prior years
- Email verification
- That’s it!
Once you’ve got a profile, you can access your dashboard, where you’ll monitor your active investments and the open investments (under the “Invest” tab)) where you can peruse the open listings.
To invest in either of the two REITs or the individual listings, you will need to provide more personal information, declare an amount you wish to invest, and sign all of the usual documentation to start the investment process.
RealtyMogul Pros and Cons
Pros:
- Easy to Use Platform: Slick and simple to understand, the dashboard is very user-friendly and provides a snapshot of your portfolio and easy access to all of your profile needs
- Robust Vetting Process for Investments: The company uses complex datasets and feedback from team member on-site inspections to verify whether an investment is up to par.
- Various Withdrawal Options: Accessible from either the website or mobile app, you can choose to have your disbursements automatically withdrawn to cash or re-invested.
- Personal Information Protected: All potential investors are run through a Know Your Customer database, and anti-money-laundering services ensure both you and the company are protected.
- REIT Investments Open to Non-Accredited Investors: Non-traded REITs offer excellent real estate diversity to average investors.
- High Rates of Return: RealtyMogul’s REITs offer investors high-quality real estate portfolios with a long track record of higher-than-average disbursements.
Cons:
- High Investment Minimums: While some REITs are as cheap as their quoted stock price, RealtyMogul requires one of the highest minimums for their standard REIT.
- Fees Are Confusing: Unless you’re investing in the diversified REIT, the fees change and require reading the fine print. Be sure to fully understand the fees associated with your desired listing before investing or reach out to RealtyMogul’s customer service with questions.
- Little Historical Performance Data: Attuned investors might be able to dig into old deals and monitor performance, but individual property listings are not tracked by the website.
- Illiquid Investments: There can be hefty penalties if you try to withdraw your money before the stated target hold period. RealtyMogul is best for people who won’t mind leaving their money for at least the minimum hold period of between 3 and 7 years.
How Does RealtyMogul Compare to Other Real Estate Investing Platforms?
#1. DiversyFund vs. RealtyMogul
Diversyfund also has the lowest account minimum investment of $500. While the fees might look lower on the surface, they can range from 2% to 8%, depending on the project.
There is also no early withdrawal, meaning Diversyfund offers less liquidity than RealtyMogul. That said, DiversyFund is best for new investors looking to try out real estate investing and want a low fee experience.
>> Learn More:Full DiversyFund Review
#2. RealtyMogul vs. Fundrise
The most notable differences between RealtyMogul and Fundrise are that the latter has a far lower minimum investment of $1,000, and the fee structure is quite a bit simpler and, in some cases, lower.
However, Fundrise does not have individual property listings like RealtyMogul does as it offers a more eREIT-focused investment style.
>> Learn More: Full Fundrise Review
#3. CrowdStreet vs. RealtyMogul
Crowdstreet’s minimum investment is well-known as one of the highest for the industry at $25,000 and no early withdrawal.
Crowdstreet also has only one offering for non-accredited investors. However, they do boast a higher deal flow than RealtyMogul, potentially lower fees, and more transparency about their deal history.
Frequently Asked Questions
Is RealtyMogul a Good Investment?
RealtyMogulis a great choice for slightly more discerning investors. It’s a good idea to have at least $5,000 on hand that you are certain you won’t need for the foreseeable future.
Even though they did have a deal that fell apart in their past, losing investors their money, they’ve taken steps to avoid such a problem in future deals.
Is RealtyMogul Safe and Secure?
The website and mobile app themselves are secure. However, prospective investors should know that there is both developer risk and structural risk.
Developer risk comes from the deals themselves, and deals can fall apart on the execution side of the project.
RealtyMogul itself could experience issues, and investor money’s safety is deeply complex as it depends heavily on how the deals are structured, who has the money, etc.
That said, RealtyMogul is still one of the best ways for consumers to invest in real estate.
How Do I Withdraw Money from RealtyMogul?
This also depends on where you invested. If you are a REIT investor, you can only withdraw after the first year at a 2% penalty, though if you hold for a full three years, you can withdraw all of the money and disbursements.
If, however, you invested in an individual property, these are extremely illiquid, and investments are usually locked in until the project is completed.
How Are RealtyMogul Investments Taxed?
Taxes are fairly simple if you’re a REIT investor. These are only taxed at regular income tax levels via a 1099-DIV at the end of the year.
If you invested in an individual property or properties, it might behoove you to consult an accountant because taxes can include several different forms, which are provided at the end of the year or as dictated by the IRS.
Bottom Line: RealtyMogul Review
RealtyMogul doesn’t necessarily cater to beginner real estate investors. However, the platform itself is easy enough to understand that any investor could easily navigate and put money in one of the REIT offerings. This is a strong position to be in.
The slick website is also a huge help to new customers, and competitive fees help broaden the pool of prospective investors.
While the deal flow of their individual properties might not be as high as competitors, they have a strong track record of good offerings and excellent online resources to help those new to real estate find quality investments.
