What is RealtyMogul and how does it work?
RealtyMogul is an online platform for investing in commercial real estate. It functions by pooling funds from a large number of investors to purchase commercial properties such as apartment buildings, office spaces, and retail centers. the company provides a way for individual investors to participate in real estate investments that are typically reserved for institutional investors or high-net-worth individuals.
The platform conducts due diligence on potential investment properties and, once acquired, handles the ongoing management and operation of the properties. Investors can invest in individual properties or diversify their portfolio by investing in a Real Estate Investment Trust (REIT). These REITs own and manage a collection of properties, providing investors with exposure to a variety of real estate assets. Investments made through RealtyMogul are generally illiquid and intended for investors with a long-term investment horizon.
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How risky is RealtyMogul?
3/5— Moderate Risk
Investing through RealtyMogul carries inherent risks similar to those involved in any real estate investment. These include market fluctuations, changes in economic conditions, and risks specific to individual properties such as occupancy rates, property management challenges, and changes in real estate market values.
Additionally, investments in private real estate are not liquid, meaning that they cannot be easily sold or traded and investors should be prepared for the long-term nature of the investment.
While RealtyMogul conducts due diligence on each investment offering and employs various strategies to manage risk, the performance of real estate investments is never guaranteed. Investors should be aware that they could lose part or all of their initial investment.
How liquid is RealtyMogul?
1/5— Minimum Liquidity
The investments offered through RealtyMogul involve private real estate transactions across the United States and are not publicly traded on stock exchanges.
Consequently, these investments are considered illiquid, meaning they cannot be easily sold or traded. Investors should approach these opportunities with a long-term perspective, without the expectation of being able to resell their investment quickly.
How volatile is RealtyMogul?
3/5— Moderate Volatility
The assets on RealtyMogul, consisting primarily of commercial real estate, can experience volatility due to various factors such as economic conditions, interest rate changes, and local market trends.
These fluctuations can affect property valuations and may pose a risk, particularly for those seeking short-term gains, as adverse market changes can lead to a decrease in investment value.
Investors should be prepared for the potential of financial losses due to market volatility.
What is the average rate of return for RealtyMogul?
15.0 %— High Return
Investors on RealtyMogul can expect varying returns, with an overall realized internal rate of return (IRR) of 20.8% and an overall target IRR of 15.0%.
However, it's important to note that returns on investments are not guaranteed, and investors bear the risk of loss.
The returns are based on three metrics:
- Cash-on-cash return: This is the average annual yield on the invested capital. For instance, an 8% cash-on-cash return on a $100,000 investment would aim to distribute an average of $8,000 per year over the investment's life, excluding property sale proceeds.
- IRR (internal rate of return): This measures the annualized return on investment, accounting for cash flows throughout the investment's life and the timing of these cash flows, as well as any final sale or property appreciation.
- Equity multiple: This is the total return on investment, calculated by summing all cash flows and sale proceeds, then dividing by the total amount invested. An equity multiple of 2x, for example, indicates that the investment has doubled the initial amount invested.
What is the minimum investment amount for RealtyMogul?
Typically ranging from $25,000 to $35,000, the minimum investment amount for participation in RealtyMogul's opportunities varies and is determined by the real estate company associated with each specific investment. These thresholds are established to match the investment scale and structure of the offerings available on the platform.
What is the investment time horizon for RealtyMogul?
The time horizon for investments on RealtyMogul typically ranges from 3 to 10 years.
This expected hold period is the time during which investors are engaged with the investment until the property is either sold or recapitalized, allowing for investor liquidation.
The specific hold period for each property is influenced by the property's business plan and any debt financing involved. For a comprehensive understanding of the hold period associated with each investment, it is crucial for investors to review the offering documents provided for each opportunity on the platform.
Who can invest in RealtyMogul?
Investment opportunities on the platform are open to both accredited and non-accredited investors, though the availability of certain investments may vary depending on investor accreditation status.
Accredited investors, as defined by SEC regulations, are eligible to participate in private placement offerings by real estate companies on the platform.
Both accredited and non-accredited investors have the opportunity to invest in RealtyMogul's Real Estate Investment Trusts (REITs), which are managed by an affiliate of RealtyMogul, although there may be legal restrictions that apply.
Is RealtyMogul regulated or audited?
RealtyMogul operates within a regulatory framework that includes oversight by the Securities and Exchange Commission (SEC). The investments offered are subject to regulations that govern private placements and public offerings of securities. As such, RealtyMogul must comply with specific disclosure and filing requirements to offer investment opportunities to the public.
The company's offerings are also subject to audits and compliance checks to ensure adherence to financial reporting standards and investment regulations. These audits are typically conducted by independent accounting firms, and the results are made available to investors as part of the transparency and trust-building process.
Is RealtyMogul insured?
As with most real estate investment platforms, RealtyMogul's properties are generally insured to protect against a range of physical damages and losses that could affect the property's value and operational viability.
It is important to note, however, that insurance policies have specific coverage limits and exclusions, and may not cover every possible event or loss. For instance, market volatility, economic downturns, and certain extraordinary events might fall outside the scope of standard insurance policies.
Investors should understand that while insurance serves as a risk mitigation tool for some scenarios, it does not provide protection against all potential risks, nor does it guarantee the preservation of investment value in the face of every challenge.
Does RealtyMogul distribute payouts?
Investors may receive distributions from the investments they participate in, which are typically sent to the same bank account used for the original investment.
The frequency and amount of these distributions are not guaranteed and vary based on the specific investment's performance and the discretion of the managing real estate company.
Distributions are often made on a quarterly basis for equity investments in deals that generate cash flow.
What are the annual fees for RealtyMogul?
When members invest, they indirectly incur fees associated with each investment. These fees are determined by the real estate company offering the investment and vary based on the investment type and transaction nature.
Fees typically cover administrative and legal costs, as well as ongoing reporting and communications for the investments. The specific fee structure for each investment is disclosed by the real estate companies on the RealtyMogul platform, reinforcing the company's commitment to transparency.
How do I handle my investments in RealtyMogul?
The platform itself manages the various aspects of asset management for the investor, including property acquisition, management, and any eventual sale or recapitalization.
Investors participate by providing capital and receive potential returns based on the performance of their investments.
However, they do not manage the properties directly. Instead, they rely on RealtyMogul's expertise and oversight to handle the day-to-day management and strategic decision-making for the assets in which they have invested.
How does RealtyMogul get taxed?
The company provides tax documentation to its investors for each investment. For individual deals offered by real estate companies, or "Sponsors," on the platform, investors will receive a Schedule K-1 form. The Sponsors aim to deliver K-1s by the standard tax filing deadline of April 15th, and these forms are made available through the investor's dashboard.
For investors in the two RealtyMogul Real Estate Investment Trusts (REITs), the company issues Form 1099s, which are typically available by the end of January for the previous tax year and are also posted on the investor's dashboard.
Regarding the nature of dividends, RealtyMogul explains that qualified dividends are subject to preferential tax rates, often lower than regular income tax rates, but based on the historical operations of their REITs, dividends issued have not been qualified. If any qualified dividends are paid, they will be reported accordingly.
How many investors are on RealtyMogul?
RealtyMogul boasts a community of over 280,000 members who have collectively made more than 37,000 investments. The company has seen 229 of its total investments fully realized, with more than $1.1 billion in capital invested.
This substantial sum includes a variety of investment types such as common equity, fixed income, residential debt, and loans originated for sale. Through these investments, the company has facilitated the acquisition and management of real estate nationwide valued at over $7 billion.
The capital invested encompasses different categories, including equity investments in real estate companies and funds, preferred equity, senior and mezzanine debt for commercial real estate acquisitions or refinancing, and residential debt investments tied to the financing of single-family home acquisitions, improvements, renovations, and sales. It also includes non-fractionalized loans sold to institutional buyers.
Who is the CEO of RealtyMogul?
The CEO of RealtyMogul is Jilliene Helman, who is also one of the company's founders. Helman has a background in finance and real estate, and has been recognized for her leadership and innovative contributions to the industry.
She co-founded RealtyMogul with the vision of making real estate investment more accessible to a broader range of investors through the use of technology. Her efforts and the platform's growth under her leadership have earned her accolades and features in various business and industry publications.