October 3, 2018

RealtyMogul Review: Is It Good?

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Real estate investing isn't just for the rich and famous. You can use crowdfunding platform RealtyMogul starting with as little as $1,000.

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RealtyMogul lets you diversify your investments, create an additional income stream, and take advantage of lucrative returns in the commercial real estate market.

You won't invest directly in the real estate with RealtyMogul. Instead, you pool funds with other investors to buy commercial real estate property. Choose from:

  • Office sites
  • Retail facilities
  • Medical buildings
  • Multifamily homes
  • Industrial sites.

You can be an accredited investor or non-accredited investors to use RealtyMogul. Keep reading to see if the platform is right for you.

What's the Minimum Investment Required?

Let's start with how much you need to invest with RealtyMogul, as this could make a big difference in whether you look into it or not.

Before you worry about money, though, you have to determine if you are an accredited or non-accredited investor. Accredited investors have a minimum net worth (excluding their home) of $1,000,000. They also can prove they made at least $200,000 per year for the last two years in income.

If you don't meet those requirements, don't worry, there are still options at RealtyMogul for you. Your focus will be on the Mogul REIT I and Mogul REIT II, rather than private real estate investments.

No matter which category you fall under, you need a minimum investment of $1,000.

How Does RealtyMogul Work?

RealtyMogul operates as an online platform. It's similar to other crowdfunding or peer-to-peer platforms. In other words, it's a virtual place for investors and real estate companies to match up. The investors provide the funds and the real estate companies provide investment opportunities.

For non-REIT deals, which are only available to accredited investors, investors must go through the accreditation verification process prior to investing. RealtyMogul then approves or denies the request based on the findings.

Once approved, you'll see the real estate investment opportunities on RealtyMogul after logging into your account.

Once you decide to invest, you invest in one of the following ways:

  • Invest in Mogul REIT I: You invest in a portfolio of properties along with other investors with the REIT. You don't pick and choose the real estate investments made with the proceeds - RealtyMogul makes those decisions.

  • Invest in Mogul REIT II: You invest in multifamily apartment buildings throughout the United States that have high occupancy rates and value-added opportunities.

Understanding Liquidity: Real estate isn't a liquid asset. Keep this in mind as you look at the opportunities on RealtyMogul. If you invest directly as an accredited investor, your money is tied up until the loan is paid off or the equity position matures.

If you invest in either of the Mogul REIT offerings, you have a little more liquidity, as RealtyMogul offers the Share Repurchase Program, which occurs quarterly. RealtyMogul may purchase your shares back if there is adequate capital to do so at the time.

What Are the Fees?

RealtyMogul isn't very transparent with their fees until you invest. You are free to browse the available listings for no charge (after creating an account).

Once you find an investment that interests you, make sure you read the fine print to understand the designated fees. The fees include the typical acquisition, refinancing, and construction fees, plus:

  • Administrative
  • Legal
  • Reporting
  • Communication costs

How Are the Returns?

While the properties offered on the RealtyMogul platform are pre-vetted, there's no guarantee of return. No one can properly predict how the market will react or how a borrower will handle his or her debt.

Each investment within RealtyMogul has a different rate of return, which you can decipher when reading the provided documents.

Reasons We Like RealtyMogul

  • Less legwork
    While you should always do your own research, RealtyMogul handles a lot of the due diligence on each deal.
    Each investment is "pre-vetted." In other words, the RealtyMogul professionals do an initial review of the property, the borrower, and the location.

  • No capital calls
    Some crowdfunding platforms call for more capital (in other words, ask investors to come up with more funds). RealtyMogul doesn't do this, with the exception of single investors on a loan who are wholly responsible for the foreclosure costs, should the borrower default.

  • Invest without being a landlord
    Becoming a landlord involves a lot of risk, responsibility, and capital. RealtyMogul makes it possible to invest without a large amount of capital, less responsibility, and lower risk.

  • Options for non-accredited investors
    If you don't have the net worth or income to be considered accredited - you still have options to invest in real estate. The non-publicly traded REITs offer a diversified portfolio in real estate investments, giving you the opportunity to invest in real estate without the large capital expenditure.

  • Access to Updates
    You can log into your RealtyMogul account 24/7 for updates on the status of your real estate investment. You can check on current, upcoming, and past distributions, upcoming milestones, or review your rate of return on an investment.

  • Offerings for quick cash flow
    While they can't avoid all uncertainty, their due diligence process eliminates any ground-up developments or properties that may take a few years before becoming profitable.

  • Regular distributions
    Mogul REITs distribute profits on a monthly or quarterly basis.

  • Online transactions
    RealtyMogulsends electronic legal documents securely to you. Then you transfer funds via ACH transfer or wire transfer. This helps streamline the process, getting your money invested faster and your returns starting sooner.

Reasons You May Want to Look Elsewhere

  • Limitations for non-accredited investors
    This may make it harder for many investors to enjoy the benefits of real estate investing outside of the REIT portfolio options.

  • Investments aren't liquid
    You can't sell your part in the real estate crowdfunding to the secondary market because there isn't a secondary market. The only exception is for REITs through the Share Repurchase Program.

  • Equity investments could tie up your assets
    They are also the last asset class to get paid, which may leave you without a return if the investment falls through.

How It Compares

Investors who are interested in real estate but don't have the net worth to be an accredited investor can invest with Fundrise.

The platform offers REIT investments, diversifying your funds into a variety of real estate markets. You can get started with a minimum $500 deposit.

Bottom Line

If you are an accredited investor and don't want the responsibility of owning and managing properties directly, RealtyMogul may provide the resource that you need. It costs nothing to set up an account and browse the available investments.

Compare this option with Fundrise, a platform that invests only in REITs and doesn't provide funds directly for specific real estate opportunities.

As always, read the fine print. Don't get lured in by high rates of return without understanding the full impact of the fees charged upfront as well as on an annual basis throughout the investment period.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

More from CreditDonkey:

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