Assess their risks, liquidity, returns, and timeframes
The minimum investment on RealtyMogul typically ranges from $25,000 to $35,000, depending on the specific investment offering.
Investing through RealtyMogul entails risks like market volatility, economic shifts, and property-specific issues. Investments are illiquid and there's potential for loss of capital.
Investing in Arrived carries risks including market fluctuations, economic factors, and property-specific issues. There's also the potential for loss, and investments are generally illiquid, meaning they can't be easily sold or exchanged for cash quickly.
Investments through RealtyMogul are illiquid, as they are private real estate transactions not traded on public exchanges, and therefore cannot be easily sold or traded. Investors should have a long-term commitment and not expect to resell quickly.
Arrived is designed for long-term investments with limited liquidity options. The Single Family Residential Fund offers share redemption after six months with restrictions. For individual properties, shares are held until the property is sold, typically after 5-7 or 5-15 years. A secondary market for shares is being considered but is not currently available.
Investors on RealtyMogul can expect an overall realized IRR of 20.8% and an overall target IRR of 15.0%. Cash-on-cash returns, IRR, and equity multiples are key metrics provided for each deal.
Arrived investors may earn returns through monthly rental income dividends and property value appreciation upon sale, with historical annual return estimates ranging from 5.5% to 15%, depending on the property type and use of leverage.
Investments on RealtyMogul generally have a hold period ranging from 3 to 10 years, depending on the individual property's business plan and associated financing.
Arrived targets a 5-7 year hold period for Single-Family Residentials and a 5-15 year hold period for Vacation Rentals, emphasizing a long-term investment horizon.
RealtyMogul allows both accredited and non-accredited investors to use its platform. However, only accredited investors can participate in private placement offerings, while both categories of investors may invest in RealtyMogul's managed REITs, subject to certain legal limitations.
U.S. citizens or residents who are at least 18 years old can invest with Arrived, and accreditation as an investor is not necessary.
Commercial real estate assets on RealtyMogul can be volatile, with values affected by economic shifts, interest rates, and market trends. This can lead to fluctuations in investment value and potential financial losses.
Real estate assets on Arrived can be subject to market volatility influenced by economic shifts, interest rates, and local market conditions.
RealtyMogul is regulated by the SEC and must adhere to strict disclosure and filing requirements. The platform's offerings are subject to regular audits to ensure compliance with financial reporting and regulatory standards.
Arrived's offerings are regulated by the SEC, requiring compliance with securities laws and provision of detailed offering circulars to investors. Audits and financial reviews are conducted for transparency.
RealtyMogul's properties are insured against physical damage and loss, but insurance might not cover all risks, such as market volatility or economic downturns. Insurance is a risk mitigation tool, not a guarantee against all potential losses.
Arrived properties are insured against physical damage or loss, but insurance may not cover all risks and does not protect against market volatility, economic downturns, or other investment-related losses.
Investors may receive quarterly distributions, which are not guaranteed in timing or amount and depend on the performance of the investment and terms set by the managing real estate company.
Arrived pays out dividends monthly, with single-family residential properties historically averaging 45 days to lease and vacation rentals taking 3-6 months to start generating income. The first dividend payment for the Single Family Residential Fund is scheduled for February 25th for investments made by December 31st, and it may take up to 60 days to receive the first dividend after investing. Subsequent dividends are paid monthly, near the end of the month.
Investors indirectly pay fees for each investment, which vary by the offering and cover administrative, legal, and management costs. Fee details are disclosed for each opportunity on the platform.
For long-term rentals, Arrived charges an 8% management fee on gross rental income. Vacation rentals incur a 15-25% management fee. Additional fees include a one-time sourcing fee (3.5% for long-term, 5% for vacation rentals), and a quarterly Asset Management Fee (0.25% for the fund, 0.15% for long-term rentals). Other costs may apply for closing, renovation, and operating expenses.
RealtyMogul issues Schedule K-1 forms for individual deals and Form 1099s for REIT investments, made accessible via the investor's dashboard. Dividends from REITs historically have not been qualified for preferential tax rates.
Arrived sends investors a 1099-DIV form by the end of January for tax reporting, and state taxes are based on the investor's state of residence, not the property's location. Vacation rentals are taxed similarly but do not qualify as a REIT.