Investing in real estate through crowdsourcing or REITs is possible with RealtyMogul, but not everyone is suited to this kind of investing. There is no surprise that individuals are interested in learning how to invest in real estate, given the expanding market in many regions of the United States. Sadly, most people are unable to acquire an investment property on their own.
By utilizing real estate crowdfunding and real estate investment trusts, a number of investing platforms hope to broaden access to real estate investing (REITs). Both of these alternatives may be available to you, depending on your qualifications. Whether this real estate investing platform is a good fit for your financial objectives depends on how much information you have about it.
What is RealtyMogul all about?
When Jilliene Helman and Justin Hughes established RealtyMogul in 2013, it was located in Los Angeles. Investing in real estate might be complicated, but because of the company’s use of technology, it’s become a lot simpler.
As of January 2013, the firm had funded over $3.1 billion worth of a real estate. As of right now, it has over 212,000 users that have signed up, and the firm has received finance from Canaan Partners, Sorenson Capital, and several strategic partners.
How is RealtyMogul structured?
RealtyMogul has two ways for consumers to invest, based on their credentials and ambitions. Others choose to engage in REITs or real estate crowdfunding, while others prefer to invest in private equity.
Regardless of what you choose to invest in, these assets are unable to be exchanged for cash. As a result, you won’t be able to immediately sell them if you need the money for another purpose. This is not a problem exclusive to RealtyMogul. When you’re studying how to invest in real estate, it’s critical to keep in mind that real estate is typically thought to be illiquid.
After a specific amount of time, RealtyMogul may allow you to sell back some of your investments, but this option is not guaranteed. When the property is sold, you may be forced to hang on to your investment until then. That’s why long-term investors need a high level of risk tolerance in case their investment doesn’t pan out as predicted.
Aside from that, the firm does not have an app for iOS or Android devices. Your money will be deposited into a tax-deferred account. RealtyMogul accepts investments from self-directed IRAs, although this isn’t an option the company provides directly to customers.
The minimum investment for RealtyMogul’s two REIT alternatives, the Income REIT and the Apartment Growth REIT, is $5,000. Almost anyone may invest in these two options. One of the alternative asset types, real estate, maybe invested in without the need for direct ownership.
Income REIT invests in a variety of property kinds and regions, allowing it to diversify its portfolio. Monthly dividends have been paid to shareholders over the past 51 months. Each year, this REIT charges a 1% asset management fee, and when you sell shares, you may be charged up to 3% of your equity investment. Other fees are assessed based on the activities taken with respect to certain REIT investments.
With a focus on the long-term growth of the REIT’s assets, Apartment Growth REIT makes investments in multifamily buildings. It distributes quarterly and focuses on certain real estate markets and apartment communities with excellent foundations. Each year, this REIT charges a 1.25 percent asset management fee, a 2 percent of contract price disposal fee for each property sold, and a cost of up to 3 percent of your equity investment when you sell shares.
A platform for real estate crowdfunding
Accredited investors can make investments in real estate using the company’s crowdfunding platform. There are a number of ways to become an accredited investor, including the following:
- A single person or a couple making $200,000 or $300,000 a year in the past two years and expecting to do so again this year
- To be worth more than $1,000,000 without including the value of your home
- Have one or more of the following licenses in the field of financial management: Series 7, Series 65, or Series 82: which is your favorite?
A wide range of business and residential properties are available for purchase, including apartment complexes and commercial properties such as office buildings. When evaluating a possible investment property, the organization conducts a thorough investigation. There is an evaluation of the firm that is buying the property, the market in which it is located, and the property itself.
You could do the following, for instance.
- The process of doing background investigations.
- Comparing and analyzing data on demographics, the economy, and comparables
- Taking a look at the property’s physical condition and business strategy
- Taking into account potential renters and current rental prices
- Bringing a member of the RealtyMogul team to the property
To put things in perspective, just 1.1 percent of the over 30,000 potential real estate projects submitted to RealtyMogul have gone ahead to the next round of review.
A property that has been secured by RealtyMogul can then be listed on its site for investors to review. Before you invest, you may see how the investment has performed in the past as well as other relevant data. After finding a suitable fit, you can invest in the property by giving the minimal amount necessary. Individual property investment goes from $25,000 to $50,000.
Each property has its own set of fees, and they may be rather substantial. Administrative, legal, and reporting and communications costs are among the most common. These fees are not set in stone by RealtyMogul, thus there is no price range.
RealtyMogul also allows for 1031 swaps. To minimize tax penalties, some investors may need to invest rapidly in capital gains from other real estate sales. Your original property can be sold without having to pay capital gains taxes if you successfully complete a 1031 exchange. Anywhere from $25,000 to $50 million in value can be accommodated by RealtyMogul’s 1031 exchange services.
RealtyMogul’s pros and cons
- Accredited investors are allowed to make particular investments in certain types of assets.
- All properties have been thoroughly vetted.
- Non-accredited individuals can invest in REITs.
- Invested funds can be repurchased by RealtyMogul after a specified length of time.
- To invest in some properties, you must be a qualified investor.
- When compared to other investing applications, REITs require a higher minimum investment ($5,000) and individual properties require a higher minimum investment ($25,000 to $50,000).
- It’s difficult to get your money back if you invest in something that can’t be simply sold.
- Complicated and occasionally expensive costs
Who qualifies for a RealtyMogul account?
There is a $5,000 minimum investment required to create a RealtyMogul account for non-accredited investors to participate in the two REIT alternatives offered by the firm, The Income REIT and The Apartment Growth REIT. You must be an accredited investor in order to access all of RealtyMogul’s investing opportunities.
With RealtyMogul, accredited investors may pick and choose the properties they wish to invest in. To diversify their investment portfolios, these investors may go to RealtyMogul for a new source of income. There is a $5,000 minimum investment required to create a RealtyMogul account for non-accredited investors to participate in the two REIT alternatives offered by the firm, The Income REIT and The Apartment Growth REIT. You must be an accredited investor in order to access all of RealtyMogul’s investing opportunities.
With RealtyMogul, accredited investors may pick and choose the properties they wish to invest in. To diversify their investment portfolios, these investors may go to RealtyMogul for a new source of income.
Real estate investment trusts (REITs) are an excellent way to diversify your portfolio if you don’t have accredited investor status. Although the $5,000 minimum investment needed by RealtyMogul’s REITs means investors must have a substantial portfolio size to avoid placing too much of their portfolio into real estate,
How much money can you earn on RealtyMogul?
Whatever you spend your money on, it’s a dangerous endeavor, regardless of the outcome. Even more, the risk is taken when you invest in illiquid assets, such as the ones offered by RealtyMogul and real estate in general.
Then, RealtyMogul may be able to provide returns. Annualized payouts of the Income REIT have generally been 6.00 percent of NAV (net asset value) after fees have been deducted. Historically, the Apartment Growth REIT has distributed 4.50 percent of NAV net of fees every year. Despite this tendency, RealtyMogul notes that these distributions can be changed at their discretion and returns are not guaranteed.
When it comes to the return on certain properties, factors such as the property’s location and time frame, the management of the property, and more all have a role. As the economy changes, real estate values fluctuate, making it hard to fully forecast these aspects in advance.
How to create an account with RealtyMogul
It’s free and simple to establish a RealtyMogul account. Your email address must be verified before you can create an account and enter some basic information about yourself. It’s also important to disclose your financial status and investing choices.
The Income REIT or the Apartment Growth REIT may be purchased once you have completed the introductory questionnaire and opened an account. A representative from RealtyMogul can help you see the company’s comprehensive investment options if you call them at the phone number shown on this page.’ Having this information helps the firm to verify that you are an accredited investor before providing you with these investment opportunities.