October 3, 2018

RealtyMogul Review: Is It Good?

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RealtyMogul offers real estate investing for both accredited and non-accredited investors for a minimum of $5,000. Read on to learn more.

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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 or non-accredited investor to use RealtyMogul. Keep reading to see if the platform is right for you.

Who Can Invest With RealtyMogul

RealtyMogul has real estate investing opportunities for both accredited and non-accredited investors.

Non-accredited investors can invest in RealtyMogul's REIT offerings. Accredited investors can also get access to private placements.

An accredited investor means:

  • Having an annual income of over $200,000 per individual ($300,000 per couple), OR
  • Having a net worth of at least $1,000,000 (excluding your home)

What's the Minimum Investment Required?

All investors can invest in the Mogul REIT I and Mogul REIT II offerings. These require a minimum investment of $5,000 for both retirement and non-retirement accounts.

You can add funds only in increments of $1,000.

This minimum investment is pretty high and may not be accessible to beginner investors.

Even though the REIT offerings don't have accreditation or income requirements, there are still some limitations. You cannot invest more than 10% of your annual income or net worth (whichever is greater).

So for example, if your annual income is $45,000 (and your net worth is about the same), you won't be eligible to invest with RealtyMogul because the $5,000 minimum is greater than 10%.

How Does RealtyMogul Work?

RealtyMogul is an online real estate crowdfunding platform. Investors pool their funds for real estate companies to purchase properties.

Once you create an account, you'll be able to view the real estate investment opportunities.

RealtyMogul's REIT offerings are available to all investors. You invest in a portfolio of properties along with many other investors. RealtyMogul chooses the real estate investments and manages the properties.

You have these two REIT choices.

  • Mogul REIT I: A diversified portfolio of different commercial projects (retail, office, industrial). The main objective is to receive consistent monthly dividends.

  • Mogul REIT II: Focuses on multifamily apartment buildings. The main objective is to realize returns by appreciation in value over the long term.

For private placement 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.

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).

The fees are different for each investment. Once you find an investment that interests you, make sure you read the offering circular to understand the designated fees.

Mogul REIT II has an asset management fee of 1%, while Mogul REIT II's is 1.25%. There may be other fees as well, including:

  • Acquisition fee
  • 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.

How Long is the Investment?

Real estate isn't a liquid asset. Keep this in mind as you look at the opportunities on RealtyMogul.

If you invest in either of the Mogul REIT offerings, RealtyMogul offers a Share Repurchase Program. Every quarter, you have the opportunity to sell your shares back to RealtyMogul at a slightly reduced price. It depends on how long you've had your investment.

  • First year: No repurchase allowed
  • 1 -2 years: 98%
  • 2 - 3 years: 99%
  • 3+ years: Full price

If you invest directly as an accredited investor, your money is tied up until the loan is paid off or the equity position matures.

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

  • High minimum
    The $5,000 minimum investment may be high for new investors. If you don't have that much to invest, look into Fundrise or DiversyFund instead. These platforms only require $500 minimum.

  • 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

Fundrise
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.

 RealtyMogulFundrise
 Visit SiteVisit Site
 

RealtyMogul

Fundrise

SPECIAL OFFER
Access Private Market Offerings - Learn More

SPECIAL OFFER
Starter Plan - Learn More

 

Benefits and Features

Annual Fee
1% - 1.5%
1% management fee
Minimum Deposit
$5,000
$500
DividendsMonthly or quarterly payouts or auto reinvestChoose quarterly payouts or auto reinvest
Investment TypesCommercial, multifamily, office, industrialCommercial, single family, industrial
Wealth RequirementsNon-accredited investors are eligible to invest in the REIT offerings; Accredited investors have access to all investments on RealtyMogul
None
 Visit SiteVisit Site

Starter Plan

 Terms Apply. Offering Circulars

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.

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