Real estate investing is a popular way to diversify your portfolio. However, many people have no interest in owning or managing individual rental properties themselves.
Real estate crowdsourcing platforms like EquityMultiple allow investors to benefit from rental income without all the hassles of property ownership. EquityMultiple gives you the ability to invest in commercial real estate (CRE) around the U.S. for as little as $10,000 per project.
In this article, we'll share what EquityMultiple is, the pros and cons of opening an account, and what sort of investor is most likely to benefit from their services.
Invest in professionally managed real estate with as little as $10,000.
- An intuitive online account you can access any time
- Decades of commercial real estate experience
- Less historical volatility than stocks or REITs
What is EquityMultiple?
EquityMultiple is a real estate investing platform that enables investors to buy into commercial real estate projects throughout the U.S. Investments can be made as equity, debt, or through a fund.
While many of its competitors invest in a variety of real estate projects, EquityMultiple focuses exclusively on institutional commercial real estate. It is also one of the few real estate crowdsourcing platforms that offer investors the choice of equity, preferred equity, and senior debt investments. Additionally, it now offers tax-advantaged real estate investments through Opportunity Zone credits and 1031 Exchanges.
EquityMultiple offers services to both sides of transactions. Not only does it offer projects for accredited investors to invest in, but lenders, sponsors, and fund managers can also use their services to reach more customers.
EquityMultiple is based in New York City, New York, and was founded by Marious Sjulsen and Charles Clinton in 2015. Its team of experts has over $75 billion in combined transaction experience. So far, the company has over $3 billion in assets and has returned more than $78 million to investors. It has provided total historical returns of 14.5%. However, it’s important to remember that past performance is not an indicator of future results.
|Asset classes||All investments are in institutional commercial real estate in the form of:
|Account types available||
|Best for...||High net worth investors who want to invest in professionally managed commercial real estate without the day-to-day responsibilities of ownership.|
What does EquityMultiple offer?
For those interested in investing money in real estate, EquityMultiple offers fractional interests of commercial real estate investments through debt, equity, or funds. Investors are able to select individual projects and purchase a stake in them for as little as $10,000 per project. The platform uses proprietary algorithms and underwriting methodologies to perform due diligence and analyze potential investments. It selects just 5% of the real estate deals that it evaluates.
EquityMultiple is not a real estate investment trust (REIT). As a crowdfunding and asset management platform, EquityMultiple allows investors to select which investments they want to put their money into. This is different from a REIT that combines investors' money and makes investment decisions on their behalf. Investors with EquityMultiple have more control over their money and are able to evaluate individual opportunities before investing in them.
EquityMultiple focuses on commercial real estate investments. The expected returns on your investments vary depending on the property and the form of your investment. EquityMultiple sets target forecast ranges that projects must meet to appear on its platform. These are the forecasted returns for the various types of investments found on EquityMultiple:
- Debt: 7% to 12% annual return
- Preferred Equity: 6% to 12% current preferred return; 10% to 18% total preferred return
- Common Equity: Internal rate of return of 10% to 24%
- Funds: Depends on the fund strategy
Projects that are cash-flowing provide distributions on a monthly or quarterly basis. Typically, these investments fall in the debt and preferred equity categories.
Types of properties offered by EquityMultiple
If you’re investigating how to invest in real estate without actually owning and operating properties, then EquityMultiple could be a smart solution. The investments found on EquityMultiple focus on commercial real estate properties.
The available property types include:
- Car wash
- Opportunity Zones
- Data centers
EquityMultiple offers both Opportunity Zone and 1031 Exchange opportunities on its platform, which not many real estate investing platforms can claim. These tax-advantaged investment offerings typically require a larger minimum amount and may not always be available for investment.
Opportunity Zones are areas designated by the state and federal government that receive three distinct tax advantages. Investors can avoid paying capital gains on recently sold investments until a deferred date in the future; they can reduce that tax payment by 10%; and they could pay as little as zero taxes on these investments if they are held for 10 or more years.
Investors who sell an investment property and want to reinvest the proceeds through a 1031 Exchange may also do so if there are opportunities available. This process also defers capital gains taxes on the eligible amount reinvested. If there are no 1031 Exchange-eligible properties available in the marketplace, investors are encouraged to contact EquityMultiple to discuss future possibilities.
Minimum investment amount
Investments with EquityMultiple start at $10,000 per project and typically range from $10,000 to $30,000. The actual minimum amount for each project varies and is determined by the project's sponsor.
Typically, additional shares are in increments of $5,000 above the minimum. So, for example, if a project has a minimum of $30,000 for six shares, the cost to purchase a total of seven shares would be $35,000.
The fees charged by EquityMultiple vary depending on the type of investment you've chosen.
- Equity investment fees range from 0.5% to 1.5%
- Debt and preferred equity investments are typically 1%.
- Fund fees vary depending on the fund and are disclosed upfront.
- Each account is also charged an administrative fee of $30 to $70 per year.
Because EquityMultiple offers a variety of investment options, the timeframes to maturity will vary based on which path you choose and the specific investments you select.
- Fund investing in a diversified collection of properties has a target duration of 1.5 to 10+ years.
- Direct investments in specific properties are targeted at 6 months to 5+ years.
- Tax-deferred investments like Opportunity Zones have a duration of 5 to 10+ years.
Typically, your investments are illiquid until the project reaches maturity or there is a liquidation event. Therefore, investing with EquityMultiple is best for accredited investors with a longer time horizon, and who don’t have cash flow concerns when it comes to the money they are investing.
Types of accounts
EquityMultiple allows several different account ownership types, such as individual, joint, self-directed IRA, and trusts.
Individual and joint accounts are available. Joint account holders are required to sign a limited power of attorney authorizing the primary account holder to make all decisions regarding their account.
Self-directed IRAs (SDIRA) are available as well. EquityMultiple partners with Millennium Trust and Alto to act as the custodian on these investments. The company is able to work with other SDIRA custodians on a case-by-case basis.
Once you've set up your personal account, you can also create an account for your LLC, limited partnership entity, or trust to invest with EquityMultiple. But before you can invest on behalf of any of these entities, you'll need to provide appropriate information and documentation to verify the entity.
Mobile app and online accounts
EquityMultiple does not yet have a mobile app. However, its website is mobile-friendly and provides full-functionality wherever you have internet access. This means you can easily access your account from the browser on your desktop, tablet, or smartphone and have the same experience and access to account information.
In your online account, you can browse past and current investment opportunities, then invest if available projects meet your investment criteria. You'll also be able to view earnings tables on your investments and a breakdown of your individual investments. Investor support and educational materials are also available.
Pros and cons of EquityMultiple
- Focuses on institutional-quality commercial real estate
- Allows you to invest through a Self-directed IRA, LLC, limited partnership, or trust
- Tax-advantaged investment options are available
- Restricted to accredited investors
- Minimum investment of $10,000 per project
- All real estate investing in general lacks liquidity
Who can open an account with EquityMultiple?
EquityMultiple is open to individual investors who are accredited and have a Social Security number or EIN. Entities and trusts are also eligible to invest in EquityMultiple, so long as each entity owner or trust beneficiary also qualifies as an accredited investor. This rule is waived for entities if it has total assets of at least $5,000,000.
While EquityMultiple requires that investors are accredited, it does not request verification of this status. Investors must self-certify that they meet eligibility requirements when opening an account and before each investment.
You can open a taxable brokerage account individually or jointly with EquityMultiple. Investing through a self-directed IRA is also an option.
Because of these requirements, EquityMultiple is best suited for high net worth investors. These investors should be looking for passive investments in commercial real estate that is professionally managed.
How much can you earn with EquityMultiple?
EquityMultiple has been in business since 2015, so it has a relatively short performance history during a low-interest-rate environment. The company states that its total historical performance is a 14.5% return. Take note that this is not an annual return, but a total return since the investment platform’s inception.
While this number might look appealing, it’s important to remember that investing in stocks, bonds, real estate, and other asset classes is inherently risky. It is possible to lose money, and there are no guarantees that past performance will continue into the future.
Your individual investment returns will vary depending on which properties you choose to invest in, the timeline for those investments, and your personal risk tolerance.
FAQs about EquityMultiple
Is EquityMultiple legit?
Yes, EquityMultiple is a legitimate company that has been involved in billions of dollars of real estate transactions and has a respectable track record. Its investors have participated in over $3.2 billion of commercial real estate transactions with a total historical return rate of 14.5%. To date, more than $78 million has been distributed back to investors. All investments on the EquityMultiple platform are handled by Growth Capital Services, which is a registered broker-dealer and member of FINRA and SIPC.
How does EquityMultiple make money?
EquityMultiple makes money by charging fees on your investments. The fees vary depending on the structure of the project you invest in and typically range from 0.5% to 1.5%. Additionally, it charges a small administrative fee each year.
Is real estate a good investment right now?
Real estate has historically had a low correlation to stock and bond investing while providing attractive risk-adjusted returns. Many real estate investors will tell you that you can make money in real estate whether the market is going up or down. If you are looking for portfolio diversification, dollar-cost averaging a portion of your assets into real estate over time can be a wise investment choice. Nobody can predict the immediate future of real estate returns, so it is best to take a long-term view of your investments.
How to open an EquityMultiple account
If you want to open an account with EquityMultiple, it takes just a few minutes. You'll need to provide the following information during the account opening process:
- Email and phone number
- Residency status
- Accredited investor eligibility
- Employment details
- Investment experience and objectives
When you are ready to invest in an EquityMultiple project, you must first self-certify that you still meet accredited investor eligibility requirements. You can then fund your account by linking your bank account, mailing a check, or wiring money from your bank. Wiring money is generally the fastest because funds may arrive the same day. Linking your bank account requires verification with two micro-deposited and can take 1 to 3 days. Mailing a check tends to take the longest.
Other investing platforms to consider
Fundrise offers real estate investing in a diversified portfolio of properties starting with a minimum investment as low as $10. Additional account features and investment options become available as you grow both your experience and portfolio size. Fundrise could be a smart choice for investors who want to start with a smaller initial investment but who also want access to more options as they increase their portfolios. Read our Fundrise review for more details.
Crowdstreet is similar to EquityMultiple because you must be accredited to invest in commercial real estate through its platform. With Crowdstreet, you can invest in a diversified fund of properties, select individual properties yourself, or work with an advisor who will select properties on your behalf. Because investment minimums vary based on the project and are generally $25,000 or more, Crowdstreet is best suited for experienced real estate investors. Read our Crowdstreet review for more details.