- Features: 4/5
- Ease of Signup: 5/5
- Investment Minimum: 3/5
- Return Potential: 3/5
- Fees: 3/5
- Customer Service: 4/5
September 9, 2022
- Features: 4/5
- Ease of Signup: 5/5
- Investment Minimum: 3/5
- Return Potential: 3/5
- Fees: 3/5
- Customer Service: 4/5
Accredited investors who prefer to invest in private companies
- Available for both accredited and non-accredited investors
- Easy to use
- No capital calls
- High account minimum
- Complex fee structures
If you’re looking for a way to invest in real estate without having to buy or manage a property yourself, RealtyMogul may be the solution for you—this online platform allows everyday investors to pool their money and invest in commercial real estate. But is RealtyMogul a safe platform worth your investment?
In this RealtyMogul review, we’ll take a look at what RealtyMogul is, how it works, and what kind of return potential you can expect. We’ll also compare it to some of its alternatives to help you make the best decision for your needs.
What Is RealtyMogul?
Founded in 2012 by Justin Hughes and Jilliene Helman, RealtyMogul is an online real estate investment platform for online crowdfunding seeking to upend conventional real estate financing.
The process of bringing together investors, borrowers, and investment sponsors to make new investments is known as crowdsourcing. As a result, it’s seen as a “peer-to-peer” arrangement, with persons on both sides of the transaction playing a major role (although RealtyMogul is also open to institutional participation).
With more than 185,000 users currently registered on the platform, it has raised more than $400 million in money, which has been used to fund more than 375 investments. Equity capital for commercial real estate is arranged by the platform.
RealtyMogul is staffed by a team of professionals who have a mix of experience in real estate, finance, and technology.
The Way RealtyMogul Works
If you’re still asking “what is RealtyMogul and how does it work,” we’ll explain it this way—investors can take part in a variety of commercial real estate investments through RealtyMogul. Multi-family homes, office buildings, industrial locations, self-storage facilities, retail establishments, and healthcare facilities are a few investment examples.
You typically make investments by buying stock in a RealtyMogul limited liability company (LLC), which then makes investments in an LLC or Limited Partnership (LP) that’s the legal owner of the real estate. In addition to giving investors access to more investment choices and streamlining the reporting of payouts and tax data through the platform, investing in this way reduces administrative costs for investment sponsors.
Many investors wonder—is RealtyMogul worth it? To answer this question, we’ll take a closer look at the main features RealtyMogul offers so you can decide whether it’s the right choice for you.
Ways to Invest with RealtyMogul
RealtyMogul offers the following investing options:
RealtyMogul’s MogulREIT I and II are both key commercial real estate investment funds the platform offers. The minimum investment amount for both products is $5,000, but they have different goals, payout percentages, and frequency of payouts.
The MogulREIT I investment is a public, non-traded REIT, which means that despite being registered with the US Securities and Exchange Commission, it doesn’t trade on a stock exchange. According to RealtyMogul, the goal of this fund is to increase and repay your capital contributions while making regular monthly cash dividends.
Additionally, this fund has a monthly distribution rate, so you’ll get returns every month. It mostly invests in multi-family homes and offices and has an annual payout rate of 6–8%.
MogulREIT II fund has a quarterly distribution frequency and a 4.50% annual distribution rate, so returns are paid out every three months. According to the website, the MogulREIT II fund seeks long-term capital growth on its investments.
RealtyMogul reviews claim this fund aims to make consistent and alluring cash payouts, investing only in properties with several families. The fund now has 2,400 investors, nine investments, and a $211 million total asset value.
If you’re seeking for a more diverse portfolio of investments with a greater yearly payout rate, the MogulREIT I fund might be a better choice. However, MogulREIT II is preferable for investors seeking steady capital growth from a single class of investments—multi-family properties—over time.
Finally, both REITs let you use RealtyMogul’s auto-invest function if you prefer a hands-off strategy. Your money is regularly invested for you through this tool.
If you’re an accredited investor, you can make specific investments in individual properties. You can choose among office, multi-family, retail, and industrial properties if you meet the accredited investor requirement. These investments have three to seven-year investment durations, with minimums ranging from $25,000 to $50,000.
1031 Exchange Private Placements
Using 1031 exchanges, investors can postpone paying federal capital gains taxes by exchanging their investment properties for comparable real estate properties.
RealtyMogul’s 1031 features enable investment amounts ranging from $25,000 to $50 million as well as options for monthly income.
Not all properties are excluded from 1031 exchange eligibility—according to reviews of RealtyMogul, as long as you have direct ownership of the underlying real estate asset, your property is qualified.
You can use any SDIRA retirement funds from RealtyMogul to buy shares of its REITs. Additionally, RealtyMogul allows you to automatically reinvest any distributions, although you must first enroll in the plan.
Transferring money from a 401(k), 403(b), or other eligible retirement plan is another way to finance your SDIRA.
*Note: Check our article about 401k vs pension and learn what’s the difference!
Private Market Offerings
RealtyMogul provides a variety of direct investment options ranging from commercial to multi-family homes. The options for investing are either preferred equity investments or debt investments, and you must normally be an accredited investor to make these investments.
In January 2022, RealtyMogul had four packages available for pledging, while three others were on a waitlist. Each offering’s target IRR, target cash on cash, target equity multiple, target holding time, minimum investment, and other details are all readily available.
If you’re wondering “is RealtyMogul Automatic Investing worth it,” you should know that once you’ve made your initial investment in one of RealtyMogul’s REITs, you can use its auto investment program to continuously purchase additional shares. The bare minimum recurring monthly investment is $250, and a fantastic method to steadily build your interests in commercial real estate over time is to take part in the car investing program.
The REITs owned by RealtyMogul are non-traded and privately held, which typically means your money is permanently sequestered. However, after investing for a year, RealtyMogul does offer to buy back shares once every quarter (at the current share price). As a result, these REITs have medium-term liquidity, but they’re not liquid over the short term.
It should be noted you must wait three years before you can access all of your initial investment. The various repurchase rates you’ll get based on when you redeem your shares are shown in the table below.
|Under a year||Not permitted|
|3 years or more||100%|
Many reviews of RealtyMogul assure the RealtyMogul website is simple to use, and we found there’s plenty of information available on how the platform functions. In the Help area, it’s simple to discover answers to the most typical queries. However, to analyze the specifics of each deal on the website and the RealtyMogul REITs, you must first register an account.
Buying stocks or ETFs through a brokerage or Robo-advisor often gives more freedom than investing in crowdfunded real estate due to the fact certain qualities typically have longer holding times. However, accredited investors with RealtyMogul have the option to select certain properties they want to invest in based on their requirements and objectives.
|Ways to Invest with RealtyMogul||4.5/5|
|Private Market Offerings||4/5|
Ease of Signup
The process of signing up is really easy. Providing your name, contact information, and email address is the first step. Additionally, you must inform RealtyMogul if you’re an accredited investor, after which you can set up a strong password for login.
Institutions and individuals can both use the platform, but the benefits are greater for accredited investors. Nevertheless, the requirements can be demanding—you must fulfill one of the requirements listed below:
- Have a net worth of at least $1 million, not including your current home.
- Your annual income must either be $200,000 this year or an average of $150,000 for the last two years.
- Possess a trust with $5 million or more in assets.
Privately held, non-traded REITs are open to investments from non-accredited investors, which implies your money will be permanently frozen. Accredited investors, on the other hand, might choose to invest in equity possibilities.
Simply put, investors can purchase a stake in an LLC that’s the owner of a certain piece of property. These investments often have a long time horizon and provide limited liquidity. Before you may withdraw your money, you must wait until the LLC is dissolved or the project is finished.
To invest in the REITs available on the platform, you’ll need to contribute a minimum amount of $5,000. However, depending on your kind of investment, criteria change, as the investment minimum varies from one investment type to another. For instance, private placements involve required amounts far higher than the REITs.
Moreover, you have to be aware of the fees involved. Although no fee is required for joining the platform, there are certain fees associated with investments, which you can read more about below.
“Is RealtyMogul safe?” is a question that concerns every investor. However, like all investments, there’s no assurance you’ll see a return or even keep your initial investment safe. Actual results also vary, and you should have different return expectations based on your investment type:
Often disbursed on a quarterly basis, according to RealtyMogul (for deals with a cash flow component to the investment). Depending on the business plan and type of investment, the transaction sponsor provides advice on prospective return metrics, which typically vary from 0% to 10% in average annualized returns.
RealtyMogul Income REIT
RealtyMogul claims that since its establishment, RealtyMogul Income REIT has paid distributions on a monthly basis that range between 7.7% and 8% annualized, net of fees.
RealtyMogul Apartment Growth REIT
According to RealtyMogul, since January 1, 2018, REIT II has paid distributions on a quarterly basis, which equates to about 4.5% yearly net of costs.
Generally, you’ll pay an annual management fee that’s somewhere between 1% to 1.25%. In some cases, there may also be additional REIT fees. When it comes to private placements, the commission varies significantly from project to project. The magnitude of the investment is just one of several variables that will affect the final charge.
RealtyMogul also says covering Organization, Offering, and Other Operating Expenses can require up to 3% of equity contributions.
On the website, you can find a lot of useful information including instructional videos and in-depth articles on how to use the platform. You may also discover information about REITs and retirement investments.
Customers can contact the support team by phone ((877) 977-2776), email (email@example.com), or live chat.
RealtyMogul reviews claim the customer service representatives are knowledgeable and amiable, but you might need to wait a little bit to connect with them.
Next, we’ll provide a short comparison of RealtyMogul with its three main competitors: FarmTogether, Fundrise, and RoofStock.
|RealtyMogul||REIT products are available to non-accredited investors||Investment fees vary and can be complex||Accredited investors who prefer to invest in private companies|
Read the full review of FarmTogether here
|By pooling investments together, investors can earn higher returns||No mobile app available||Investors interested to invest in agricultural real estate|
|Fundrise||Provides greater liquidity than owning your own real estate property.||The platform may restrict withdrawals during market downturns||Long-term investment|
|RoofStock||No minimum deposit||Doesn’t provide passive or automated investment options for non-accredited investors||Investors who want to buy or sell actual rental properties|
RealtyMogul is a great option if you want more control over the properties you invest in. Additionally, the platform offers a variety of REITs you can invest in to help diversify your real estate holdings, even to non-accredited investors.
RealtyMogul Review: Conclusion
Through RealtyMogul, it’s less complicated to invest in real estate through than it is to buy a home outright on an individual basis. Nevertheless, its reach is significantly wider than that of real estate investment trusts (REITs)—there are numerous local investment options that allow you to invest in real estate.
The drawback is that you can’t participate in many of the deals on the site unless you’re an approved investor. However, RealtyMogul’s REITs have a wider range of investment options.
The public, non-traded RealtyMogul Income REIT and RealtyMogul Apartment Growth REIT are accessible to non-accredited investors, but they can only contribute a maximum of 10% of their earnings or net worth, whichever is greater. On the other hand, any offering from RealtyMogul is open to accredited investors.
You can start by creating an account, but you first need to make a password and validate your email address. You must then declare if you’re an accredited investor, which means you’re an experienced investor with a net worth of at least $1 million, excluding your permanent residence. From there, you’ll be able to easily navigate the simple-to-use website to find out the details of all the offers and choose your investment option.
In our RealtyMogul review, we need to clarify that RealtyMogul currently doesn’t offer a mobile app, but you can access the site from the mobile browser.