Is RealtyMogul the Easiest Way to Invest in Commercial Real Estate?
Investing in commercial real estate is an exciting way to multiply your investment in ways that aren’t often possible with small-scale real estate. Here’s how RealtyMogul makes it easy to do.
- Safe investment options
- Disbursement options
- Secure personal data
Commercial real estate and development are excellent business ventures, especially in expanding markets across the country. But is it possible to get involved in large-scale real estate projects without having the funding–and connections–to buy your own property outright?
RealtyMogul proves that it is. This crowdfunding real estate investment company offers an easier alternative to developing properties on your own. You don’t have to deal with the hassles and commitments of managing property, and it makes commercial real estate investing possible for anyone.
Let’s take a look at what RealtyMogul has to offer, who it’s designed for, and whether you should consider investing in a commercial portfolio on their platform.
Many crowdfunding websites promise investors a piece of the pie; however, RealtyMogul has actually succeeded at financing the first crowdfunded hotel in the country. The company famously raised $1.5 million to build the Hard Rock Hotel in Palm Springs, California, easily selling out of its offered shares in the campaign.
Talk about putting your money where your mouth is.
The company, founded in 2012, combines real investors with a solid staff of professionals in the real estate, finance, and investment technology spheres. This combination creates a powerful method for financing projects and getting real estate developments off the ground.
The platform succeeds in many ways when it comes to opening up the world of investing to people who aren’t property development experts. It also allows investors to succeed into the commercial real estate investing world, even if they otherwise wouldn’t have been able to tackle it on their own (either due to financial constraints or lack of knowledge/connections).
RealtyMogul relies heavily on data scientists and proprietary software to identify the best investment opportunities. It uses predictive analysis to understand real estate trends. This should give users peace of mind about the fact that the minds behind RealtyMogul aren’t just shooting in the dark when they introduce funding opportunities.
With RealtyMogul, investors have the opportunity to choose from a roster of investments throughout the country’s biggest cities. Past projects have included hotels, apartment buildings, storage facilities, office buildings, and medical offices.
Investors can execute all legal and financial documents involved with an investment online. In addition, users can enjoy around-the-clock investment monitoring from anywhere using a personal dashboard, which will show their investment’s status, project progress, and return performance.
As for returns, investors typically receive quarterly distributions. They can choose to reinvest or withdraw these.
Signing up on the RealtyMogul platform is free. There are no costs to join, or to browse available investments on the platform once you’ve been verified as an accredited investor. However, once you begin investing in projects, there are fees to take into account.
Each investment will have its own associated fees, which will be shown on the investment page from the onset. This makes it easy to see exactly how much you’ll be paying each year, based on the type of investment you choose (equity versus loans) and the nature of the transaction.
Typically, you can expect to pay a 1% fee to RealtyMogul for asset management and administration. Additionally, there are some one-time fees you may incur with certain investments, as well as REIT fees of 0.50% to 0.60% on average.
Again, be sure to read the fine print on each investment offering before proceeding, to see exactly what kind of fees you’re facing. They will be clearly stated, and some investments have less fees than others.
Related: REITs: Real Estate Investment Trusts
Registering on the RealtyMogul platform is easy and painless. Once signed up, you can immediately browse available projects and begin investing right away.
To register with RealtyMogul, visit their website. There, you’ll need to provide your name, phone number, email address, and let them know why you’re opening an account.
You’ll also need to let RealtyMogul know your current net worth, as well as your expected income this year and your income from the last two years. Why do they need all of this information? Well, the SEC requires that many investments–such as those on RealtyMogul–only be available to accredited investors.
Accredited investors are those who
- Have a net worth of over $1,000,000 (excluding their primary residence), OR
- Make more than $200,000 annually (during this year as well as the last two years), OR
- Have a combined income of over $300,000 with your spouse (this year as well as the last two years) and expect to maintain that income level.
If you don’t meet these requirements, you won’t be able to traditionally invest in RealtyMogul’s commercial investment platform. Don’t fret, though! If you’re a non-accredited investor, you can still invest in the company’s newest products: MogulREIT and MogulREIT II.
Once you’ve confirmed that you do indeed meet the requirements to be an accredited investor, your registration will be complete. You’re now able to browse the platform for available investment opportunities.
Due to the nature of investing, you’ll be required to provide quite a bit of your personal information to RealtyMogul. You might be (understandably) concerned about how that information is kept and protected.
Your personal info may be shared with other parties throughout the investment process. Not only does the company run each potential investor through a KYC (know your customer) database, but they also use anti-money laundering services to ensure that the platform is protected. Your information may also be shared with other third-parties, such as their broker-dealer company and trust/escrow management providers.
Any information you transmit through their website will be kept secure by certain safeguards. These are, according to RealtyMogul, up to par as far as industry standards go, though they aren’t very specific about how your info is protected:
We limit access to the personal information we have about you to those employees who have a legitimate business need to access such information. In keeping with industry standards and practices, we maintain appropriate physical, electronic and procedural safeguards and controls to protect your information. The Site is built upon a secure infrastructure with multiple layers of protection, and we use industry-standard encryption technologies to safeguard your information.
The RealtyMogul website is mobile-friendly. This makes it easy to sign up, browse investment opportunities, and view your user dashboard while on the go.
There is no mobile app available through RealtyMogul, however, so you’ll need to use your device’s browser.
You will have 24/7 access to new and existing investments through RealtyMogul’s website. If you need help from a real person, though, their customer service team is available.
You can email them directly through the Support button on their website if your question isn’t pressing. If you need help faster, you can give them a call at their LA HQ offices, or even stop in for some in-person assistance.
Pros and Cons
No platform is perfect. Here are of the upsides and downsides of using RealtyMogul for your investment portfolio.
- Safe investment options: All available projects have been thoroughly vetted to ensure that they are low-risk to investors, so you never feel like you’re going in blind.
- Low minimum investment: Project investment minimums start as low as $1,000, making it easy for anyone to get started.
- Disbursement options: You have the choice to withdraw your returns on the investment, or have them automatically reinvested.
- Secure personal data: RealtyMogul doesn’t sell your personal information, and any information they share with their partners is encrypted, kept secure, and only used for investment management purposes.
- Easy to use platform: The RealtyMogul online platform makes it incredibly easy to see your investments at a quick glance, and know exactly where you stand. In seconds, you can view the progress of your projects, amount invested, disbursements received, fees paid, and more.
- Non-accredited investors have options, too: If you’re not an accredited investor, you’ll only have two choices on the platform: MogulREIT I and MogulREIT II. These are still great opportunities with low risk levels and low investment minimums, however, and not all real estate crowdfunding platforms will even provide options for non-accredited investors.
- Investments aren’t liquid: Since you’re buying shares of an LLC when you invest through RealtyMogul, your investment isn’t considered liquid. If you need to recoup your investment before the completion of the project, you may be able to sell your shares privately. However, this isn’t guaranteed.
- Investment opportunities aren’t as widespread: RealtyMogul was started in Los Angeles before opening another headquarters in Atlanta. While they offer investment opportunities nationwide, you’ll find that the majority of them are grouped around those two HQ locations.
- Variable fees: There is no flat-rate fee for using RealtyMogul. This means that you’ll need to carefully read the fine print of each and every investment you consider, to know exactly how much it will cost you.
There are many other crowdfunding real estate investment platforms available today, giving you many options for where to put your money. They are all somewhat similar, though they may offer different fee structures, minimum investment requirements, and disbursement schedules.
One of my favorite alternatives to RealtyMogul right now is CrowdStreet. Like RealtyMogul, CrowdStreet is only available to accredited investors and their criteria is similar to that of RealtyMogul. CrowdStreet focuses on commercial real estate projects you can directly invest in and some of them have a double-digit expected return. Note that these are long-term investments, so you have to be willing to tie your money up for a bit, but the rewards can be incredibly fruitful. Check out our full review of CrowdStreet for more information.
Another alternative–and one that doesn’t require you to be an accredited investor–is Streitwise. It’s a public, non-traded real estate investment trust that invests in income generating commercial property. With an investment of $5,000, you can earn dividends paying between 8% and 9% per year, net of investment expenses. And making the investment even more attractive is the potential to earn capital appreciation as the underlying properties are sold. For more information, check out our full review of Streitwise.
Other platforms include:
If you’re looking to make the leap into commercial real estate investing, but aren’t quite sure how to get your foot in the door, RealtyMogul is a great place to start. The platform makes it easy to begin building a lower-risk, real estate-based portfolio–even if you have no idea what you’re doing. Their well-vetted and promising projects are easy to evaluate and help eliminate the risk of your investment.
RealtyMogul is also great if you don’t have tens of thousands to invest (but also, if you do!). Most of their projects have low investment minimums, allowing you to get started with as little as $1,000. Their fees are reasonable and the platform is easy to use, too.
Whether you’re an accredited, non-accredited, or institutional investor, RealtyMogul has a project option for you. They make it easy to pick equity or loan investments that suit your budget and risk tolerance, no matter why you’re making the jump into commercial real estate.
RealtyMogul is an attractive option for anyone interested in investing in real estate loans and equity.
The company offers a very simple investment process, as a whole. It removes many of the complicated barriers that prevent people from exploring the potential of owning commercial real estate. Investors using RealtyMogul get the thrill of investing personally in high-profile properties with the ease of managing paper assets.
If you’ve ever considered investing in commercial properties but don’t have the knowledge, experience, or tons of cash (you may think) you need to do so, RealtyMogul.com is probably worth a look.