EquityMultiple Review - Real Estate Crowdfunding Formed by Industry Experts
If you want to invest in real estate, you’re no longer limited to the properties you find and manage on your own. Sites like EquityMultiple make investment crowdfunding easier than ever.
- Strong support system
- Free to browse
- Low fees
While EquityMultiple isn’t the only crowdfunding real estate investment site around, it is unique in many ways. Let’s take a look at what the company offers to investors, how it can transform your passive investment opportunities, and what you can expect to spend on the venture.
If you’ve been in the personal finance arena for any period of time, you’ve likely heard all about real estate investing and how it can transform your life. Done right, real estate can result in passive income that can not only boost your budget now but also provide for you well into retirement. But, of course, jumping into real estate as an investment isn’t easy or worry-free.
EquityMultiple seeks to change that.
Unlike some other real estate crowdfunding websites out there–which were developed by techies who simply drifted into the real estate market–EquityMultiple was formed by industry experts. Their team also includes leading professionals in real estate investment, private equity, law, finance, and technology, offering users both guidance and peace of mind in their investment ventures.
In fact, it’s the only online investing platform to be developed by an existing real estate company (Mission Capital). The point? These guys already knew their stuff, long before they decided to form the platform. The fact that the company has already closed over $75 million in real estate transactions is further testament to their success.
EquityMultiple makes it easy for investors, new or seasoned, to focus their efforts across all facets of commercial real estate. Their platform allows you to diversify your portfolio with various markets, asset classes, and even project types. The crowdfunding aspect also means that you can get in on projects that you otherwise wouldn’t be able to tackle on your own–the average side hustle investor couldn’t afford to, say, invest in a retail space like a strip mall. However, with a company like EquityMultiple, they can.
While EquityMultiple makes it easy for big and small investors to jump into commercial real estate, there are some requirements. For example, each investor allowed on the platform needs to be accredited.
This means that you will need to self-certify that you’re an accredited investor before you’ll be able to invest in any projects on the website. EquityMultiple will want to know how you’re qualified, asking questions about your assets and net worth, whether you’re investing as an individual or a corporation.
For individual investors, you will need to have a net worth (alone or combined with your spouse) of at least $1,000,000. This cannot include your primary residence as an asset, so be sure to take that into account. Trusts, organizations, or corporations will need to declare a net worth of at least $5,000,000 before they will be allowed to invest on the platform.
Each project on the EquityMultiple platform is different. In fact, a unique LLC is formed for each deal funded, meaning that your investment is actually a purchase of ownership interests. This means that, as a partial owner, you’re entitled to your fair share of the profits (and even the losses) that the LLC encounters.
EquityMultiple claims to be very judicious in the projects that they allow on the platform for funding. In fact, they only approve around 5% of the proposed projects, leaving you to choose from the best investments that are likely to succeed.
Once you register on the platform and confirm your accreditation, you will be able to browse the available projects on the site. You can choose between different types of real estate investment types and asset classes, diversifying your portfolio however you see fit. (You may want to note, though, that the site doesn’t offer any opportunities for you to invest in REITS.)
Next, you’ll link your chosen bank account in order to fund your investment. This account will also be used for your regular ACH distributions once the project gets underway.
The minimum investment through EquityMultiple is $10,000, and investments range in length from as short as 12 months to as many as 120 months.
To-date, EquityMultiple boasts average returns of just over 9%, making it a great opportunity for investors interested in the commercial real estate market. Just like any other great investment, though, it doesn’t come free.
One of the great things about EquityMultiple is that they are transparent about their fees, and make it easy for you to account for them from the jump. For instance, projected returns listed on potential projects already take the platform’s fees into account. So, if you’re browsing through projects to invest in and see an expected return of, say, 15%, this already accounts for EquityMultiple’s fees and management costs. You don’t have to worry about being surprised by the final cut.
You can expect to pay a 0.5% annual fee to the platform once you make your first equity investment. This fee goes toward tax prep, investor reporting, and other administrative needs. In addition to that, investors will also pay a fee of 10% of profits on each project. This fee is reasonable, and keeps the platform well-funded and incentivized to continue finding lucrative deals for investors to consider.
There’s a bit of a process to go through before you can actually start investing through EquityMultiple.
The first step is to set up your account. This is pretty straightforward: simply provide your email address, create a password, and confirm your email.
The next step is to pre-qualify your account. EquityMultiple users are required to be financially secure and meet certain criteria–i.e. be accredited investors–prior to viewing current investment opportunities on the platform. This isn’t uncommon among investment platforms.
“To complete your registration with EquityMultiple and begin investing, you must qualify as an accredited investor whose investment goals and experience are suitable for the types of investments found on our platform. To determine your eligibility, we must collect basic information on your financial situation, how best to contact you, and your investment goals and experience.”
Confirming your eligibility can be done online, and takes about three minutes, according to the site.
Verify your accredited investor status in seconds.
Once you choose the qualifications that apply to you, you’ll also need to verify your identity. This includes providing your phone number, address, employment info, and investment background.
Then, you’ll need to add information about the entity you’ll use for your investing, whether it be an LLC, trust, corporation, or sole proprietorship. You can also link your bank account at this time. Once complete, you’ll be able to view the current investment offerings and start building your portfolio.
It can be concerning to hand over so much personal information to a company, especially when all of that info is transmitted online. But EquityMultiple takes your security seriously, and goes to great lengths to protect any data that you hand over.
EquityMultiple has bank-grade protocols in place that safeguard your information during transmission and storage. Their systems pass FDIC and retail banking compliance tests, and everything is encrypted with state-of-the-art technology.
EquityMultiple does not offer a mobile app at this time. However, their website is mobile browser-friendly, and you won’t have any trouble setting up an account, confirming your identity/eligibility, and browsing investment offerings from your phone or tablet.
As you go through the setup and investment process, you’ll likely see live chat prompts pop up on the right side of your screen. If you have any questions and want to chat with a real person, you can use this screen to ask away. According to the site, their team typically responds to your inquiries within a few hours.
You can also email EquityMultiple at any time, or contact their customer service department by phone from 9am to 6pm EST.
So, why would–or wouldn’t–EquityMultiple be the right place to choose your real estate investments?
- Formed by industry pros: EquityMultiple wasn’t just someone’s great investing idea--the company was founded by people who have decades of experience in the real estate investment market. In fact, it’s the only online investment platform created by an existing real estate company.
- They have a strong support system: Their team includes law, finance, and technology pros, among others.
- Free to browse: You won’t pay a penny to establish an account, confirm your eligibility, or browse available investment offerings.
- Low fees: Once you begin investing, you can expect to pay a low 0.5% annual fee.
- Secure personal data: EquityMultiple keeps your data secure with up-to-date technology and bank-grade security protocols.
- Investment offerings are strongly vetted: According to EquityMultiple, only about 5% of proposed projects are actually approved and placed on the site for investors.
- Wide range of investment options: Investment offerings on the platform range from as little as 12 months all the way to 120 months.
- Fees on profits: In addition to the 0.5% annual fee that you’ll pay, you will also need to hand over 10% of all profits realized through your investments on the site. While this is still a reasonable fee, it does add up.
- Higher starting investment: Some other real estate investment platforms have initial investment options starting as low as $1,000. However, with EquityMultiple, you’ll need to invest at least $10,000 to begin.
- High net worth requirement: In order to be approved to invest through the platform as an accredited investor, you’ll need to show that you have a net worth of at least $1,000,000. This cannot include your primary home.
- No REITS: If you’re looking to put your money in Real Estate Investment Trusts (REITS), you’ll need to look elsewhere: EquityMultiple doesn’t offer these options.
Real estate crowdfunding platforms are all the rage these days, and with good reason. If you feel that EquityMultiple isn’t right for you, you have other options to choose from. These include companies like
- Fundrise – Invest in eREITs and eFunds with low minimum.
- PeerStreet – For accredited investors. Diversify across a large number of loans with minimum investment of $1,000.
- RealtyMogul – Open to everyone: accredited, non-accredited and institutional investors. Choose between real estate loans or equity investments.
- LendingHome – For accredited investors. Invest in mortgages manually or via the Auto Invest tool based on your selected strategy.
- Streitwise – Not a real estate crowdfunding platform, but a public, non-traded real estate investment trust (REIT) that invests in income generating commercial properties. You don’t need to be an accredited investor, and with just $1,000, you can earn annual dividends of 8% to 9% (net of investment expenses) as well as long-term capital appreciation.
Each platform has their own unique set of guidelines and investment minimums. This means that if you have a lower net worth, or only want to invest a couple thousand dollars, you can still find the company that meets your needs.
If you’re considering jumping into commercial real estate–but either don’t know where to start or don’t have the cash available to invest independently–a crowdfunding platform is a great resource. It allows you access to vetted commercial projects and opportunities, as well as the chance to share the investment responsibility with others (as well as the profits, of course).
There are a few reasons that EquityMultiple might not be right for you. The minimum investment is $10,000 which, while not exceptionally high, might exclude some beginner or hesitant investors who aren’t ready to commit so much money. You also must be an accredited investor in order to join the platform; if your net worth (sans your primary residence) isn’t $1,000,000 or more, you are excluded.
As long as you meet those requirements, though, EquityMultiple could be an excellent place for you to get your feet wet in the world of real estate investing–complete with reasonable fees and carefully-selected opportunities.
EquityMultiple is a great place to start if you want to invest in commercial real estate, but don’t have the experience–or capital–to do so on your own.
The platform provides investors with projects that have been properly vetted by their industry-professional team. Their fees are reasonable, they are transparent about expenses, and you can rest assured that the company is both well-financed and secure with Mission Capital at its back. Plus, it provides everyday investors, like you and me, with a way to jump into the commercial real estate market, which we probably wouldn’t be able to do independently.
Interested in learning more about EquityMultiple and seeing if the platform is right for your commercial real estate investments? You can check out their website here, and even sign up to begin investing.