Last updated Apr. 3, 2023 by Favour Chinaza
Crowdfunding has made its way into real estate investing in the same way it has into mainstream investing and borrowing. This RealtyMogul Review shows it is one real estate investment platform that gives you the opportunity to invest in real estate with as low as $1,000.
RealtyMogul is a real estate crowdfunding platform that brings together investors, real estate investment sponsors, and borrowers to create mutually beneficial real estate investments.
RealtyMogul allows accredited and non-accredited investors to include real estate in their portfolios.
RealtyMogul can help you become a legitimate real estate investor by offering low investment minimums of as low as $1,000 and thoroughly approved real estate projects.
However, not all platforms will suit your investment preferences or expectations.
For example, RealtyMogul is best for real estate investors looking to expand beyond publicly-traded REITs, but it has a complex fee structure that varies by investment.
Read this RealtyMogul review to learn more and see if it meets your needs.
What Is RealtyMogul?
Established in 2012, RealtyMogul is an online real estate investment marketplace. RealtyMogul is a commercial real estate crowdfunding platform that was founded in 2013.
Since 2014, the platform has enabled large and small investors to invest in privately held real estate investment trusts (REITs). It also enables accredited investors to participate in private transactions.
Although investors only need to invest $5,000 at a time, RealtyMogul allows them to fund deals worth millions of dollars.
It introduces ordinary investors to the world of commercial real estate. Another of RealtyMogul’s advantages is that it makes investing simple through a 1031 exchange.
If you need to reinvest the proceeds from the sale of a rental property, you can use a 1031 exchange to invest in RealtyMogul. Simply put, you can defer capital gains on the transaction until you sell your RealtyMogul shares.
This is a great way for someone who wants to become a more passive real estate investor to get started. Always consult a tax professional before engaging in a 1031 exchange.
In some cases, you may be able to invest in a self-directed IRA through RealtyMogul. However, RealtyMogul does not have a specific partner for these investments.
Good Read: RealtyShares Review
How RealtyMogul Works
RealtyMogul allows investors to invest in a variety of commercial real estate investments.
Multi-family dwellings, office buildings, industrial sites, self-storage, retail, and medical buildings are some examples.
Typically, you invest by purchasing shares in a RealtyMogul limited liability company (LLC), which then invests in an LLC or Limited Partnership (LP) that holds title to the real estate.
Investing in this manner reduces overhead for investment sponsors, providing access to more investment opportunities and streamlined distribution and tax reporting via the platform.
The RealtyMogul LLCs are managed by RM Manager, LLC, a wholly-owned subsidiary of RealtyMogul.
The term of specific investments varies according to the investment. For example, equity investments are typically made for three to ten years.
Distributions from equity investments are typically made quarterly or semi-annually.
These are just general guidelines, and it’s critical to remember that distributions on any investment are never guaranteed.
For income tax purposes, an IRS form K-1 reporting the results of each equity investment will be provided annually. In addition, RealtyMogul’s two REIT distributions are reported on IRS form 1099.
RealtyMogul Investments
Realty Mogul is a fast-rising online real estate crowdfunding space. The platform enables accredited and non-accredited investors to invest money in various real estate investments.
Investments such as office space, apartment buildings, industrial sites, retail space, medical buildings, self-storage, or hospitality establishments are all considered. They can all be a simple way to improve your finances right now.
Furthermore, accredited investors can put a single investment into a specific property called “Private Placement.”
Also, both accredited and non-accredited investors are allowed to invest in REITs.
Who Can Invest On RealtyMogul?
RealtyMogul is relatively for non-accredited investors who want to access public, non-traded REITs. However, it is also great for accredited investors who desire to access private placements.
Finally, it is recommended for investors interested in real estate even better than publicly traded REITs.
RealtyMogul, unlike many commercial real estate crowdfunding sites, accepts accredited and non-accredited investors. So if you want to become a real estate mogul, this is also a good place to start.
Non-accredited investors are welcome to participate in the site’s proprietary REITs.
Individual “equity opportunities” can be purchased by accredited investors.
Investors can purchase a share of an LLC through equity opportunities. The LLC is then the owner of a specific property.
These investments are extremely volatile. Therefore, you should not expect to receive your funds until the project has been completed and the LLC has dissolved.
To qualify as an accredited investor, you must meet one of the following requirements:
- You have earned more than $200,000 in the last two years. (Or a joint income of more than $300,000 in the previous two years.)
- You have a fortune of over $1 million (excluding the value of your residence).
- You have a trust with assets worth more than $5 million.
- Don’t mind a longer holding
period for property investments
- Are comfortable paying investment fees in the 1% to 2% range
- Have at least $5,000 to start investing in real estate online
Furthermore, RealtyMogul allows investors to access inaccessible real estate deals with a bit more liquidity than some real estate crowdfunding platforms.
So, suppose you’re interested in diversifying your portfolio and can comfortably reach RealtyMogul’s investment minimums without over-allocating to real estate.
In that case, the platform may help you do that instead of looking for real estate agents or wondering how much real estate agents make in a year from you.
RealtyMogul deals primarily in non-traded REITs. These investments tend to be riskier than publicly traded REITs. But suppose you’re interested in investing in any real estate crowdfunding platform.
In that case, you should study warnings from the Financial Industry Regulatory Authority on the factors to look out for with non-traded REITs.
Getting Started with RealtyMogul
When you sign up with RealtyMogul, they will ask you a series of questions to determine whether you are an accredited or non-accredited investor.
Your accreditation status determines the platform’s real estate projects you can invest in. From there, you can browse the investment options on their website.
You can look through the various options to learn about the estimated return, current funding, estimated hold period, property type, and minimum required investment.
Then, choose an investment before you fund your account with the amount you intend to invest. You can also choose to receive your distributions as income or reinvest them.
Furthermore, depending on the type of investment, you can receive monthly or quarterly distributions.
The dashboard on RealtyMogul allows users to track the performance and distributions of their investments.
Furthermore, the platform generates and emails investment reports and quarterly and annual tax documents to update you on the required information.
RealtyMogul Review: Features
REITs
This is a great place to start if you are looking for where to find the best real estate and REITs ETFs. REITs are one of RealtyMogul’s key commercial real estate investments. The platform offers two funds: Mogul REIT I and Mogul REIT II.
Both investments have a $5,000 minimum, but their objectives, distribution rates, and frequencies vary.
The MogulREIT I investment is a public, non-traded REIT, meaning it doesn’t trade on a stock exchange (even though it’s registered with the US Securities and Exchange Commission).
RealtyMogul says this fund has the objective of delivering consistent monthly
RealtyMogul has two types of REITs:
MogulREIT I – offers a variety of commercial properties—MogulREIT II – specializes in multi-family houses.
You can use a retirement account to invest in the above REIT types. However, they charge a higher minimum investment if you invest with a retirement account.
For example, retirement account investing offers a minimum investment of $5,000, whereas non-retirement accounts provide a minimum of only $1,000.
Retirement
RealtyMogul allows you to buy REIT shares with any SDIRA retirement fund.
Furthermore, you can have RealtyMogul automatically reinvest any distributions, but you must first enroll in its distribution reinvestment plan.
You can also fund your SDIRA with money from a 401(k), 403(b), or another qualified retirement account.
Private Placement
With this investment, you can purchase shares in RealtyMogul limited liability company (LLC).
That LLC will invest in a limited partnership (LP) or an LLC that holds the title of the actual real estate.
Don’t be bothered by the multiple layers of LLC investment. It only helps the investment sponsors minimize their overhead while offering access to more investment opportunities.
RealtyMogul streamlines its distribution report throughout the platform by providing LLC shares.
Furthermore, Private Placement gives you more control over your investment choice than with a REIT. More so, you can invest in the individual properties that interest you.
RealtyMogul’s additional role on these projects includes everything from criminal background checks of the agreement involved in the investments to boots-on-the-ground inspection of the property.
The Apartment Growth REIT
RealtyMogul launched another REIT, the Apartment Growth REIT, in September 2017.
The Apartment Growth REIT, like the service’s first REIT, will be open to both accredited and non-accredited investors, allowing all investors to invest in the real estate market.
This second REIT focuses solely on multi-family equity inequity across the country, a particularly hot market sector.
According to RealtyMogul, “the US apartment market has experienced a strong recovery, as evidenced by the steady drop in vacancies and an average annual effective rent growth of 3.9% per year, between 2010 and 2015.”
The Income REIT
RealtyMogul launched its first REIT in 2016, competing with Fundrise’s eREITs.
The income REIT offers the advantages of not requiring accreditation, greater asset diversification through investment in individual properties, and a much lower minimum investment requirement than a private placement.
The minimum investment is $5,000, plus a 3% equity contribution fee and a 1% annual asset management fee.
“Income REIT can invest in a variety of property types, including but not limited to multi-family, office, industrial, self-storage, retail, and medical office,” according to their website.
Across these different property types, the fund can invest in various commercial real estate-related equity and debt securities.”
As a result, it will be a pool of various property types rather than just one section or location across the country.
Unlike other private REITs with long investment periods with no redemptions, RealtyMogul states that redemptions will be permitted every quarter.
However, as stated in the offering circular, the total number of redemptions per year is limited.
Why Choose RealtyMogul?
RealtyMogul Fees
RealtyMogul is a free-to-join platform and costs investors zero registration fees. However, individual investments offered on the platform can charge their fees.
The amount you’ll pay varies (based on the deal’s details), but overall they’re typical of what you’d expect from a crowdfunding platform.
To invest with RealtyMogul, you must make a $5,000 minimum initial investment. Annual management fees typically range from 1% to 1.25%, with additional REIT fees available.
Standard ACH transfers from your bank account are permitted for amounts up to $100,000. Wire transfers are required for amounts greater than $100,000.
Each investment you fund will be assigned a unique account number that the platform will use to ensure the funds are directed to the appropriate investment opportunity.
Lower Investment Minimum
RealtyMogul aims to keep its platform accessible and reliable to many investors. So unlike other real estate crowdfunding platforms that require $10,000, $25,000, or $50,000, you can get started here with as little as $1,000.
High Return Potential
Unlike some crowdfunding platforms, RealtyMogul has a shorter track record. But according to the site, private placement investors may get returns as high as 10%, whereas REIT investors may grab returns in the 4% to 8% range.
Flexibility
Typically, investing in crowdfunded real estate offers less flexibility than buying exchange-traded funds or stocks through a Robo-advisor or brokerage.
That’s because these properties usually have longer holding periods. However, accredited investors with RealtyMogul are allowed to choose the individual properties they wish to invest in based on their goals and needs.
Transparency
The RealtyMogul website is simple to use, and information about the platform’s operation is readily available.
The Help section contains answers to the most frequently asked questions. However, you must first create an account to review the finer points of individual offerings on the site and the RealtyMogul REITs.
No Capital Calls
Some crowdfunding platforms request more funds (in other words, ask investors to come up with more funds). However, except for single investors on a loan who are solely responsible for the foreclosure costs if the borrower defaults, RealtyMogul does not do this.
The User Experience
The signup process at RealtyMogul is straightforward. However, verifying your accredited investor status requires an extra step or two because you must speak with someone over the phone during the signup process.
If you have any problems, please contact customer service via phone or email.
How Much Can You Make with RealtyMogul?
Learning how to invest money is a risky endeavor regardless of what you choose to invest in.
When you invest in illiquid assets, such as those offered by RealtyMogul and real estate, you take on additional risk because the assets cannot be easily sold.
However, potential returns with RealtyMogul may be possible. After fees, the income REIT has historically made annualized distributions of 6.00% of NAV (net asset value).
Historically, the Apartment Growth REIT has made annualized distributions of 4.50% of NAV net of fees. Despite this trend, RealtyMogul states that these distributions are subject to change and that returns are not guaranteed.
The return on specific properties will vary according to the property, its location, the timeline, how the property is managed, and other factors.
These factors are impossible to predict accurately in advance because real estate values fluctuate with the economy.
RealtyMogul Review: Pros and Cons
Like any other real estate investment platform, RealtyMogul has advantages and disadvantages.
Therefore, it is good to note this before making a decision. Below are the pros and cons of RealtyMogul to be aware of before opening an account.
Pros
- Zero fees to join and low fees for most investments offered on the program.
- You can get started by investing as low as $5,000
- The platform is open to both accredited and non-accredited investors.
- Accredited investors are permitted to invest in private placements. On the other hand, non-accredited investors can choose from one of the two REITs.
- Redemption program accessible for REIT investors.
- Investment has high return potential.
- Typically, investments do not necessitate capital calls, which are requests for additional capital above and beyond the initial investment.
- Individual investments are “pre-vetted,” which means that the platform conducts extensive due diligence to determine the viability of each investment.
- Invest in both types of investments (accredited investors only) or two distinct REITs (all investors)
- Selection of investments made simple
- Quick and simple funding
- Investing is monitored 24Documents can be completed online.
- Equity investments are made quarterly or semi-annually; distributions for REIT investments are made monthly or quarterly.
Cons
- The minimum investment of $5,000 can still be too high for some non-accredited investors.
- Fewer deals are offered compared to some real estate investment platforms.
- Some investments require a minimum of up to $50,000, above the industry average.
- Short track record.
RealtyMogul Alternatives
EquityMultiple
Instead of investing in residential properties, EquityMultiple works with accredited real estate investors to help them invest in professionally managed commercial properties.
The minimum investment for their direct investing model is $10,000, which can go as low as $40,000 for tax-deferred investing options. EquityMultiple allows you to invest in specific commercial properties or a more diversified fund investing model.
Fundrise
Fundrise is our favorite option for investing in real estate with little money because it only costs $10 to get started. You are paid in quarterly dividends, and there is a 1% management fee. There is also a secondary market for shares, which helps to increase liquidity.
CrowdStreet
CrowdStreet is another excellent option, but most opportunities are only available to accredited investors, and the minimum investment is $25,000. CrowdStreet offers real estate investing through individual deals, real estate funds, and tailored portfolios.
Streetwise Retail Advisors
If you want to generate dividend income, Streitwise is a great option. Since 2017, it has paid more than 8% in dividends, and the $5,000 minimum is the same as RealtyMogul.
Is RealtyMogul the Right Fit For You?
RealtyMogul is unquestionably a surefire way to broaden your investment options, or even if you want to use real estate to look for ways to get extra money without another real job.
Furthermore, because it offers commercial real estate investing, the platform allows you to diversify your portfolio even if you already invest in real estate.
RealtyMogul is ideal for non-accredited investors seeking access to publicly traded, non-traded real estate investment trusts and accredited investors looking to add private placements to their portfolios.
Another feature distinguishing RealtyMogul from its competitors is its wide range of investment opportunities.
Even if you do not want to invest in REITs, you can still benefit from the potential of individual properties and private placements if you meet the accreditation requirements.
The only thing preventing you from investing is the high investment minimums. But, to earn big, you must invest big — but not more than you can afford to lose.
Good Read: How to Become a Real Estate Agent in 5 Easy Steps
Bottom Line
Real estate can be a good addition to your portfolio if you want to diversify your investments and create a hedge against inflation. RealtyMogul can help you start investing in real estate without purchasing a rental property.
Suppose you are a non-accredited investor with at least $5,000 to invest or an accredited investor seeking private placements. In that case, you can take the next step and open an account with RealtyMogul today.
RealtyMogul provides a unique opportunity to invest in real estate that is less involved than purchasing a property outright.
Nonetheless, it has a much broader scope than investing in real estate through real estate investment trusts (REITs). Instead, it’s a chance to invest in real estate through local investment opportunities.
The disadvantage is that many of the platform’s deals require you to be an accredited investor. RealtyMogul’s REITs, on the other hand, have a much more level playing field.
Frequently Asked Questions
Q: Is RealtyMogul legit?
RealtyMogul is a legitimate company that offers accredited investors a legitimate way to invest in individual properties. However, RealtyMogul’s REITs are open to non-accredited investors. The company was founded in 2013 and has raised over $600 million in venture capital. Several partners have also contributed venture capital to the company.
Q: How does RealtyMogul make money?
RealtyMogul makes money by charging fees to manage the investments available on the platform. Depending on the investment, these fees may take several forms. The income REIT, for example, charges a 1% asset management fee, while The Apartment Growth REIT charges a 1.25% asset management fee.
Q: Is real estate a good investment right now?
It depends on you, your financial goals, and the property in question whether real estate is a good investment right now. Local factors also influence real estate markets.
As a result, an investment in San Francisco, California, may produce very different results than one in Indianapolis, Indiana. Therefore, you must consider all factors to determine whether your particular investment is good at this time.
Q: Is RealtyMogul Better Than Fundrise?
RealtyMogul is better than Fundrise. Alternatives to Fundrise include CrowdStreet, Roofstock, Streitwise, and RealtyMogul. For example, RealtyMogul is a popular way for investors to access commercial real estate. Members can access direct deals and REITs through the platform.
Its REITs have a $5,000 minimum investment and are also available to non-accredited investors. Some impressive deals on platforms such as CrowdStreet and RealtyMogul are not available on Fundrise.
Q: What Is the required Minimum Investment for RealtyMogul?
The Income REIT (formerly MogulREIT I) and The Apartment Growth REIT (formerly MogulREIT II) are open to all investors. However, for both retirement and non-retirement accounts, a minimum investment of $5,000 is required. This minimum investment is quite high and may be out of reach for inexperienced investors.
Q: Can You Invest $1000 in Real estate?
You can invest in real estate for as little as $1000 using the REITs available on RealtyMogul. Real estate investment trusts (REITs) are one of the best ways to invest $1000 and are suitable for beginners. A REIT pools investor funds to buy real estate properties.
By investing, you would become a shareholder who would receive dividends from the funds generated by these properties. Investing in REITs is comparable to investing in mutual funds or stocks.
Q: Can you Invest In Real Estate With Little Money?
“House hacking” is one method of investing in real estate with little money. For example, you can buy an investment property and use it as your primary residence. Ideally, you should ensure that the total rental income is sufficient to cover all ownership expenses, including taxes, vacancy, and insurance.
Q: Is RealtyMogul Trustworthy?
RealtyMogul is a reliable, safe, and secure platform registered with all the necessary licenses to offer financial services. It is a legitimate company offering a legit way for accredited and non-accredited investors to invest in individual properties.
Q: Who Can Invest in RealtyMogul?
Accredited investors can invest in any of RealtyMogul’s investments. Accredited investors have a net worth, or joint net worth with their spouse, of $1 million or more (excluding the value of their home) or an annual income of $200,000 or more ($300,000 with a spouse) for the previous two years.
Q: How Long Has RealtyMogul Been Around?
In 2012, RealtyMogul was set up. Helman and Justin Hughes started it, and its main office is in Los Angeles, California. It is a place where sponsors and borrowers can connect with individual and institutional investors who want to invest in real estate.
In the meantime, RealtyMogul has given more than 175,000 investors a total of $100 million
