These days, there are many different real estate crowdfunding platforms that potential investors have access to. So, what makes RealtyMogul any different? Founded in 2012 by Jilliene Helman & Justin Hughes, this company is still relatively new (as far as real estate investing companies go).
RealtyMogul specializes in providing both accredited and non-accredited investors with investment opportunities for commercial properties. However, the investing experience is very different between the two classes. In this article, we’ll compare their REIT offerings to their private placement offerings, while also going over the investment specifics.
By the end, you’ll know exactly why RealtyMogul is different (and whether or not you should invest!).
RealtyMogul is Best for…
Non-accredited investors, who can invest via a public, non-traded REIT. Currently, the real estate investing platform has two REITs that both accredited and non-accredited investors can invest in.
RealtyMogul also offers another type of investment—private placement investments—but these are only available to accredited investors. To qualify as an “accredited investor,” one must have a net worth exceeding $1m or an annual income exceeding $200k ($300k for couples).
Realty Mogul’s private placement investments actually perform better than their REIT offerings, but we think accredited investors would be better off utilizing an alternative platform like Crowdstreet instead.
Pros & Cons
Pros:
- Offers both phone and email customer support
- Real estate investment trusts are available for non-accredited investors
- RealtyMogul offers an alternative to the non-existent secondary market (via their buyback program)
Cons:
- The company has a relatively small portfolio of properties for investors to choose from
- High-yield private placements are only offered to accredited investors only
- Investment terms (such as investment fees, investment period, anticipated rates of return, etc.) vary by investment property
Minimum Investment
The minimum investments required by RealtyMoguls are either sort of pricey or fairly cheap, depending on whether you’re an accredited or non-accredited investor.
Non-accredited investors will only be able to invest via a REIT, which has a minimum investment requirement of $5,000. For some everyday investors, this could be quite high, especially when compared to the under-$1,000 initial investment minimums offered by some alternative platforms. However, REITs do have the benefit of offering instant portfolio diversification.
For accredited investors, the investment minimum of $25,000 seems quite reasonable, especially when placed next to the $50k+ minimums often required by the competition. Regardless of whether you’re accredited or not, there’s more to think about than simply the investment minimums.
As with nearly any other type of investment, RealtyMogul charges fees when you invest. You’ll want to take note of these fees when trying to predict the future performance of your investments. Since these fees will be working against any capital appreciation you may gain, expect to receive a slightly lower distribution rate than advertised.
- Private placement management fees vary but average out to around 1%.
- REIT management fees are either 1% or 1.25%.
Investment Opportunities
Non-accredited investors can choose between MogulREIT I and MogulREIT II. The prior REIT offers a consistent cash flow via monthly dividends and focuses primarily on non-residential commercial real estate properties (such as office buildings). This REIT has a lifetime return of 9.21%
MogulREIT II—aiming for capital appreciation over time—focuses on preferred equity investments using multi-family apartment buildings. You can expect to receive quarterly dividends if you opt for this REIT. Since its inception, this REIT has returned 8.59%.
Accredited investors can invest in the REITs as well, but will see much larger returns if they opt for the private placements instead. Private placements are individual properties, which equates to individual investments.
The exact performance varies between single properties. RealtyMogul generally aims for an IRR between 15%-20%, but this is rarely close. For context, their best-performing recent deal achieved a return of 108.5%! However, their worst-performing deal lost 4.3%.
While the returns certainly can be impressive—as mentioned above—accredited investors may see better, more consistent returns if they use an alternative platform instead.
Realty Mogul Review: Closing Thoughts
Many real estate investment platforms are severely limited, sticking only to certain property types. This can alienate potential real estate investors, who see limited real estate opportunities offered by specific platforms (despite the constant activity throughout the real estate markets!).
Fortunately, Realty Mogul isn’t that type of real estate company. Offering REITs for non-accredited investors, private placements for accredited investors, and quality customer service for all, Realty Mogul is certainly diverse in its offerings.
Still, we can only confidently recommend the platform to non-accredited investors, or those who are interested in their REIT offerings. With a history of success—and dividends offered on a monthly or quarterly basis—these seem like quality, consistent investments.
The main attraction for accredited investors is the private placement offerings. Unfortunately, the IRR on these assets is all over the board, making it impossible to tell whether you’ll double your money or lose it all in a matter of years.
While we don’t recommend their private placement offerings, they are currently available, as are their REITs. Whether you’re looking for high-risk, high-reward investments or moderate-but-consistent returns, you can certainly find them on Realty Mogul. Click here to start investing today!
