Intro — EquityMultiple's History
Co-founded in early 2015 by a real estate lawyer and a veteran of the private equity field, EquityMultiple has been a big player in the real estate crowdfunding scene for quite some time. EquityMultiple differs from other laissez-faire “marketplace” platforms (such as Yieldstreet) in that it does not merely offer investments to accredited investors, but also manages them in-house until they exit; this gives the company “skin in the game,” as they have a vested interest in seeing their offerings perform well.
Apart from that crucial distinction, how does EquityMultiple measure up against other crowdfunding platforms on the market? Let’s take a closer look. EquityMultiple is also notable for undeniably having the most finance bro name in the industry. And that’s saying something.
Key Features
EquityMultiple exclusively offers investment options to accredited investors under what they call three “pillars”: Keep (yield-focused cash management tools), Earn (investments focused on near-term income), and Grow (investments focused on growth). These offerings are facilitated by Rule 506(b) of the Securities Act of 1933, meaning that offerings can only be presented to accredited investors with whom they establish a “substantive relationship.” EquityMultiple also employs industry-standard security measures to protect user data and transactions.
One highly distinguishing feature of EquityMultiple is their in-house due diligence and asset management, conducted by a subsidiary company called EMIP Investment Partners. The extra mile EquityMultiple goes to ensure performance sets them apart from competitors who throw their users to the wolves, so to speak.
Investment Opportunities
EquityMultiple offers a range of investment options across the capital stack, including:
- Equity Investments: Ownership stakes in commercial properties.
- Preferred Equity: Higher claim on assets and earnings than common equity.
- Senior Debt: Loans secured by real estate assets.
- Short-Term Notes: Yield-focused cash management tools with no fees.
Fee Structure
The fee structure varies by investment but typically includes:
- Annual Management Fee: Ranges from 0.5% to 1.5%.
- Administrative Fees: $30-$70 annually.
- Placement or Origination Fees: Assessed to the sponsor, not the investor.
- Note that EquityMultiple’s short-term notes, called “Alpine Notes,” have no fees.
Minimum Investment
The minimum investment starts as low as $5,000 for some offerings. Generally, EquityMultiple minimums sit within the $5,000 to $15,000 range.
User Experience
EquityMultiple offers an easy-to-use platform where accredited investors can quickly sign up, self-certify their accreditation status, and start reviewing investment opportunities. The platform lacks a mobile app, although the website is optimized for use on mobile devices.
Customer Support
EquityMultiple’s Investor Relations team provides customer support via phone, email, and chat from Monday to Friday, 9 a.m. to 6 p.m. Eastern. The company is known for providing more personalized support relative to other crowdfunding platforms, and maintains an ethos of transparency in its communications with investors.
Investor Testimonials
Common Praise
- Ease of access and streamlined process ("I have been an investor for close to 3 years and have been very impressed by the quality of their deal flow, the attention to detail, and the ease of use of the product")
- Helpful and responsive investor relations (“Investment relations team was very responsive when I asked them questions,” “The communication and customer service from EquityMultiple is excellent. They provide clear updates on my investments,” “The best investor relations team I have ever worked with. Communication regarding deals and investments is seamless between the firm and the investor,” "Their monthly video conferences are both educational and informative”)
Common Complaints
- Reporting issues (“Areas for improvement including ongoing reporting/updates and timely availability of tax documents, but I do understand that some of this is out of their control and they are in the hands of the sponsors”)
Similar Real Estate Crowdfunding Platform Comparison
EquityMultiple vs. RealtyMogul
Both platforms have a $5,000 minimum, but RealtyMogul also serves non-accredited investors. RealtyMogul offers publicly traded REITs and individual properties, while EquityMultiple focuses on institutional-level real estate. RealtyMogul's fees are generally higher.
EquityMultiple vs. CrowdStreet
CrowdStreet has a higher minimum investment requirement, starting at $25,000. CrowdStreet does not charge investors directly, but has higher sponsor fees. Both platforms offer similar types of investments, but those with larger capital to invest may prefer CrowdStreet (if they’re not dissuaded by the serious fraud allegations against that platform’s sponsors.) EquityMultiple has historically performed more thorough vetting and due diligence than CrowdStreet.
EquityMultiple vs. Yieldstreet
Unlike EquityMultiple, Yieldstreet is not exclusively focused on real estate—it offers other alternative investments such as fine art, private credit, cryptocurrencies, structured notes, transportation, etc. Defaults on some of these investments, including ships, have led Yieldstreet to be sued by the SEC for misleading investors. EquityMultiple has not attracted similar crackdowns due to its compliance with SEC regulations and thorough sponsor vetting.
Track Record
- 116 sponsor/operator partners
- $430M distributed to investors
- $9.3B total capitalization
EquityMultiple also provides their investor community with a full investment-level track record containing details on the performance of all their past offerings.
Scoring EquityMultiple
Platform Details
- Years in Operation: 9
- Minimum Investment: $5,000
- Types of Investments Offered: Equity, Preferred Equity, Senior Debt, Short-Term Notes
- Accreditation Requirement: Yes
User Experience
- Ease of Use: 4 Stars ... EquityMultiple offers an easy-to-use platform with a streamlined process for reviewing and investing in opportunities.
- Account Setup: 4.5 Stars ... Quick sign-up process with self-certification for accreditation status.
- Customer Support: 4.5 Stars ... Known for more personalized support compared to other platforms, with availability via phone, email, and chat during business hours.
Investment Experience
- Investment Options: 4 Stars ... Offers a range of real estate investment options, including equity, preferred equity, senior debt, and short-term notes.
- Returns: 4 Stars ... The platform's "skin in the game" approach suggests a vested interest in performance, and the company publishes a track record with all of its past investments’ performance. Many investors report good returns on specific investments, though performance will vary.
- Risk Management: 4.5 Stars ... EquityMultiple manages investments in-house until exit and is known for thorough vetting and due diligence.
Platform Transparency
- Disclosure of Information: 4.5 Stars ... EquityMultiple maintains an ethos of transparency in communications with investors and provides clear updates on investments. Its track record is very easy to find.
- Fee Structure: 4 Stars ... Fees are clearly outlined, with some offerings (like Alpine Notes) having no fees.
Overall Rating — 4 Stars
- Summary: EquityMultiple stands out in the real estate crowdfunding space with its hands-on approach to investment management and commitment to transparency. The platform's focus on accredited investors and institutional-level real estate offerings makes it an attractive option for more sophisticated investors looking for diversified real estate exposure.
- Pros: In-house management of investments, broad range of real estate investment options, strong customer support and investor relations, transparent communication, and thorough due diligence process.
- Cons: Limited to accredited investors, lack of a mobile app (although the website is mobile-optimized)
- Would Recommend? Yes, for accredited investors seeking a more hands-on, transparent approach to real estate crowdfunding and additional layers of due diligence.
Conclusion
EquityMultiple has established itself as a reputable player in the real estate crowdfunding space. To further improve its standing, the platform could consider continuing to refine its user experience and reporting. If it maintains its focus on thorough vetting and transparent communication, EquityMultiple is well-positioned to continue attracting sophisticated real estate investors.
(An EquityMultiple ad from 2023.)