It’s no surprise people want to learn how to invest in real estate with the booming market in many parts of the country. Unfortunately, most people can’t afford to purchase an investment property on their own.
Some investing platforms have moved to make real estate investing more straightforward and available to more people through real estate crowdfunding and real estate investment trusts (REITs). RealtyMogul may offer you both of these options, depending on what you qualify for.
Here’s what you need to know about this real estate investment platform so you can decide whether or not it’s a smart fit for your financial goals.
Build a portfolio for your future through institutional quality investments.
- Invest in individual properties or REITs
- Over 212,000 investors have joined
- More than $3.1 billion in property value offered on the platform
What is RealtyMogul?
RealtyMogul was launched in 2013 by Jilliene Helman and Justin Hughes and is headquartered in Los Angeles, California. The company was founded to help make real estate investing easier by using technology.
Since 2013, the company has financed hundreds of properties worth over $3.1 billion. It currently has over 212,000 registered members, and the company has received capital funding from Canaan Partners, Sorenson Capital, and other strategic partners.
|Minimum investment||As low as $5,000|
|Management fees||Vary depending on specific investment but can include:
|Asset classes||Physical real estate, REITs|
|Account types available||
|Best for...||Investors with long-term horizons who want exposure to real estate|
How does RealtyMogul work?
RealtyMogul allows people to invest in two different manners depending on their qualifications and goals. Some investors will fall into the real estate crowdfunding category, while others will be best suited for investing in the REITs.
No matter what you decide to invest in, these assets are illiquid. That means you can’t quickly sell them if you need the money for something else. This is not unique to RealtyMogul. Real estate is generally considered to be illiquid, and this is an important thing to know when you’re learning how to invest in real estate.
RealtyMogul may allow you to sell certain investments back to them after holding them for a certain period, but this option is not guaranteed. Instead, you may have to hold the investment until the underlying property gets sold. For this reason, investors should have a long time horizon and a high risk tolerance in case the investment doesn’t perform as expected.
You also must manage your investments through the company’s website, as they do not offer an iOS or Android app. Your money will be put into a taxable account. You can use an outside, self-directed IRA to invest with RealtyMogul, but it isn’t a feature the service offers directly.
Almost anyone with the $5,000 minimum can invest in RealtyMogul’s two REIT options: The Income REIT and The Apartment Growth REIT. These allow people to invest in real estate, one of the many alternative asset classes, without owning physical property directly.
The Income REIT focuses on diversified real estate investments across many property types and geographies. It aims to make monthly distributions to its shareholders and has done so for 51 consecutive months. This REIT charges a 1% assets management fee each year and a fee of up to 3% of your equity contribution when you sell shares. It also charges other costs depending on the actions on specific investments within the REIT.
The Apartment Growth REIT invests in multifamily properties with a goal of capital appreciation or the increase in the value of the assets in the REIT. It makes distributions quarterly and focuses on specific real estate markets with solid fundamentals and apartment communities. This REIT charges a 1.25% assets management fee each year, a 2% of contract price disposition fee for each property sold, and a fee of up to 3% of your equity contribution when you sell shares.
Real estate crowdfunding platform
The company offers accredited investors the ability to invest in specific real estate properties through its crowdfunding platform. You can qualify as an accredited investor by meeting one of the following requirements:
- Having an annual income of $200,000 as a single person or $300,000 as a couple in each of the two previous years and expect the same for the current year
- Having a net worth, excluding your primary residence, of over $1,000,000
- Have any of the following financial professional licenses: Series 7, Series 65, or Series 82
Available real estate deals usually include multi-family residential real estate such as apartment buildings and commercial real estate investments such as office buildings. The company performs due diligence when reviewing each potential investment property. They evaluate the company acquiring the real estate, the market where the property is located, the property itself, and the operating agreement for the investment.
This includes activities such as:
- Performing background checks
- Evaluating demographics, economic trends, and comparables
- Reviewing the property’s physical condition and business plan
- Considering tenants and rental rates
- Having a RealtyMogul team member visit the property in person
For context, RealtyMogul has only moved forward on 1.1% of over 30,000 potential real estate projects submitted to the platform for consideration.
Once RealtyMogul secures a property, they list it on their site for investors to consider. You can view the investment’s past performance and other important information before investing. Once you find a good fit for you, you can invest in the property by contributing at least the minimum required. The minimum investment for individual properties ranges from $25,000 to $50,000.
Fees vary based on the individual property you invest in. Common fees include administrative fees, legal expenses, and fees to cover reporting and communications. RealtyMogul does not offer a range for these fees.
RealtyMogul also offers the opportunity for 1031 exchanges. Some investors may need to quickly invest capital gains from other real estate sales to avoid adverse tax consequences. Completing a 1031 exchange allows you to defer capital gain taxes on the sale of your original property. RealtyMogul can support 1031 exchanges ranging in value from $25,000 to $50 million.
Pros and cons of RealtyMogul
- Accredited investors can invest in specific properties
- Due diligence completed on all properties
- REITs available to non-accredited investors
- RealtyMogul offers to buy back certain investments after a specific period
- Must be an accredited investor to invest in specific properties
- High minimum investments for REITs ($5,000) and individual properties ($25,000 to $50,000) compared to other investing apps
- Investments cannot be easily sold at any time to recoup funds
- Complicated and sometimes high fees
Who can open an account with RealtyMogul?
Non-accredited investors can open a RealtyMogul account and invest in the company’s two REIT options, The Income REIT and The Apartment Growth REIT, which have $5,000 minimum investments. To access RealtyMogul’s complete list of investment options, you’ll need to be an accredited investor.
RealtyMogul may be a smart option for accredited investors looking to cherry-pick the properties they want to invest in. These investors likely have significant investment portfolios and may use an investment through RealtyMogul to diversify their portfolio.
If you don't have accredited investor status, you may still be looking into how to diversify your portfolio, and you may consider using RealtyMogul’s REITs to achieve that diversification. However, the $5,000 minimum investment required by RealtyMogul’s REITs means investors need to have a significant portfolio size to avoid putting too large of a portion of their portfolio into real estate.
How much can you make with RealtyMogul?
Figuring out how to invest money is a risky venture no matter what you choose to invest in. When you invest in illiquid assets, such as those offered by RealtyMogul and real estate in general, you’re taking even more risk because you cannot easily sell the assets.
That said, potential returns could be possible with RealtyMogul. The Income REIT has historically made annualized distributions of 6.00% of NAV (net asset value) after fees have been subtracted. The Apartment Growth REIT has made annualized distributions of 4.50% of NAV net of fees historically. Despite this trend, RealtyMogul says these distributions can change at their discretion and returns are not guaranteed.
The return on specific properties will depend on the property, its location, the timeline, how the property is managed, and more. These factors are impossible to predict accurately in advance as real estate values are constantly changing as the economy changes.
FAQs about RealtyMogul
Is RealtyMogul legit?
RealtyMogul is a legitimate company and a legit way for accredited investors to invest in individual properties. Non-accredited investors can invest in RealtyMogul’s REITs. The company launched in 2013 and has received over $600 million in investor funds. The company has also raised venture capital from several partners.
How does RealtyMogul make money?
RealtyMogul makes money from the fees they charge to manage the investments offered on the platform. These fees may take several forms depending on the specific investment. For instance, The Income REIT charges a 1% asset management fee, and The Apartment Growth REIT charges a 1.25% asset management fee. Both REITs charge a disposition fee of up to 2% of the contract sales price on each property sold within the REIT.
Is real estate a good investment right now?
Whether real estate is a good investment right now depends on you, your financial goals, and the property in question. Real estate markets are driven by local factors, as well. This means an investment in San Francisco, California, could yield very different results than one in Indianapolis, Indiana. You must analyze all factors to help you determine whether the specific investment you’re considering is a good investment at the current time.
How to open a RealtyMogul account
If you want to open a RealtyMogul account, it’s free and easy. You have to create an account, verify your email address, and provide basic information about yourself. You also have to share your income, net worth, employment information, and investment preferences.
Once you finish the initial questionnaire and complete your account opening, you can invest in The Income REIT or The Apartment Growth REIT. To view RealtyMogul’s full suite of investment opportunities, you’ll have to speak with a RealtyMogul representative by calling the provided phone number. This allows the company to verify your accredited investor status before giving you access to these investment options.
Other investing platforms to consider
If you want to invest in real estate but RealtyMogul isn’t a good fit, you may want to consider either Fundrise or EquityMultiple.
Fundrise is on our list of the best investment apps for a good reason. It allows you to invest in their proprietary eREITs and eFunds and doesn’t require you to be an accredited investor. You can start investing at the starter plan with as little as $10, which is much lower than RealtyMogul’s $5,000 minimum for its REITs. Read our Fundrise review for more details.
EquityMultiple works with accredited real estate investors to help them invest in professionally managed commercial properties rather than residential properties. The minimum investment starts at $10,000 for their direct investing model and as low as $40,000 for tax-deferred investing options. EquityMultiple allows you to pick specific commercial properties you want to invest in or choose a more diversified fund investing model. Read our EquityMultiple review for more details.
- Invest in individual properties or REITs
- Over 212,000 investors have joined
- $3.1 billion worth of properties available
- Each property is thoroughly vetted