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Intro — RealtyMogul's History
Though not nearly as big as, say, Fundrise or Yieldstreet, RealtyMogul is a somewhat prominent player in the real estate crowdfunding space, offering both accredited and non-accredited investors the opportunity to invest in commercial, residential, and industrial properties. Founded in 2012 and headquartered in Los Angeles, RealtyMogul established itself when the industry was young, and now boasts over $1 billion invested and more than 280,000 members. Despite its strong market presence, investor reviews reveal a mixed bag of experiences, particularly concerning liquidity, customer service, and fee structure. We’re here to shed light on how RealtyMogul stacks up against the competition, which is getting fiercer by the day.
Key Features
Like Yieldstreet, RealtyMogul offers investment options for both accredited and non-accredited members, with availability varying by investment type. Their REIT products are open to non-accredited investors, but due to SEC regulations, only accredited members are allowed to participate in private placement offerings from real estate companies (or "Sponsors") on the platform. These offerings are made available under the Rule 506(c) exemption from registration.
It’s useful to note here how RealtyMogul compares to CrowdStreet and EquityMultiple. Much like RealtyMogul, CrowdStreet has historically done more “direct-to-sponsor” deals, whereas EquityMultiple carries out their deals via a special purpose vehicle (intermediary entity), which is part and parcel of structuring, vetting, and managing deals on the behalf of investors.
EquityMultiple has shown the most consistent variety in the share of deals that are debt/preferred equity/common equity due to their “Keep, Earn, Grow” framework. RealtyMogul, by contrast, focuses primarily on equity investments.
Investment Opportunities
RealtyMogul offers a variety of investment options, including:
- Income REITs, focused on generating monthly income through a diversified portfolio of commercial and residential properties.
- Growth REITs, aimed at long-term capital appreciation, primarily through multi-family residential properties.
- Individual Properties, available only to accredited investors—these include office buildings, retail spaces, industrial properties, and more.
- 1031 Exchange Properties, designed for experienced investors looking to defer capital gains taxes.
Fee Structure
RealtyMogul's fee structure varies by investment type:
- Income REIT: Organizational and offering costs capped at 3%, asset management fee of 1%, and a servicing fee of 0.5% for debt and preferred equity.
- Growth REIT: Similar to the Income REIT but with a 1.25% asset management fee.
- Individual Properties: Typically involve a 1% asset management fee, with additional fees depending on the specific investment.
Minimum Investment
- Non-Accredited Investors: $5,000 for REITs.
- Accredited Investors: $25,000 for individual properties.
User Experience
RealtyMogul's platform is moderately user-friendly, though it is currently desktop-only and lacks a mobile app. The dashboard provides real-time updates on investments, distributions, and performance metrics. RealtyMogul employs industry-standard security measures, including data encryption and secure login protocols, to protect user information and transactions.
Customer Support
RealtyMogul offers customer support via phone, email, and social media. However, reviews indicate mixed experiences, with some users praising the support while others criticize its clarity.
Investor Testimonials
Common Praise
- Ease of access ("The platform is easy to use")
- Investor relations (“Their customer service is professional and responsive”)
Common Complaints
- Liquidity concerns — extremely slow process to retrieve funds (“Yes, it does feel like they are holding your money hostage,” “You will not get your money back for many many years”)
- Performance variability — some users report lower-than-expected returns, particularly during economic downturns (“Fees are high. Growth rates are mediocre”)
- Occasionally vague communication ("Smooth talkers tell you about a convoluted system about how they are required to give your money back, of course they don’t explain that when you invest")
Similar Real Estate Crowdfunding Platform Comparison
RealtyMogul vs. Fundrise
Fundrise has a much lower investment minimum of $10. However, it has no investments that are exclusively available to accredited investors, making it less suitable for high-net-worth individuals.
RealtyMogul vs. EquityMultiple
In addition to having a lower investment minimum of $5,000 for its accredited-only offerings, EquityMultiple may be a better option for accredited investors seeking less convoluted fee structures. EquityMultiple also offers a wider variety of investment options, including short-term notes.
RealtyMogul vs. Yieldstreet
Unlike RealtyMogul, Yieldstreet is not exclusively focused on real estate — it has offered other alternative investments such as fine art, private credit, cryptocurrencies, structured notes, transportation, etc. Yieldstreet’s REITs have an investment minimum of $10,000, making them less accessible than RealtyMogul’s REITs.
Is There Reason To Be Suspicious of RealtyMogul?
Although RealtyMogul has largely avoided the serious legal troubles that have plagued some of its competitors, it has faced scrutiny over the performance of certain individual property investments, particularly during economic downturns when real estate values dip. We suggest being wary and doing your due diligence.
Track Record
- $224m total realized investment amount
- 232 total realized investments
- 18.3% overall realized IRR
- 15.1% overall target IRR
The above figures are from September 2024. RealtyMogul also breaks down their track record by investment type, investment strategy, and geographic region.
Scoring RealtyMogul
Platform Details
- Years in Operation: 11
- Minimum Investment: $5,000 for REITs, $25,000 for individual properties
- Types of Investments Offered: Debt, Equity, Preferred Equity, REITs, 1031 Exchange Properties
- Accreditation Requirement: Yes for individual properties, no for REITs
User Experience
- Ease of Use: 3.5 Stars ... RealtyMogul offers a user-friendly web interface but lacks a mobile app.
- Account Setup: 4 Stars ... The registration process is straightforward, and non-accredited investors are permitted to invest in REITs.
- Customer Support: 4 Stars ... Moderately responsive support team and extensive educational resources.
Investment Experience
- Investment Options: 3 Stars ... Focused on real estate, offering REITs and individual properties for diversification, though the range of options could be bigger.
- Returns: 3.5 Stars ... Returns can vary, and some funds have underperformed during market downturns.
- Risk Management: 4 Stars ... RealtyMogul employs reasonable due diligence and provides transparent reporting, although economic fluctuations can impact performance.
Platform Transparency
- Disclosure of Information: 3 Stars ... RealtyMogul is relatively transparent about its investment opportunities, providing detailed information on each property, although some investors have reported a lack of timely updates on underperforming investments.
- Fee Structure: 3 Stars ... Fees are on the high side, ranging from 1-2%.
Overall Rating — 3.5 Stars
- Summary: RealtyMogul offers a robust platform for real estate crowdfunding with a diverse range of investment options and a solid track record of returns. However, high fees, illiquidity, and occasional issues with customer support and transparency can be drawbacks for some investors.
- Pros: Diverse investment options across multiple property types and sectors, access to both accredited and non-accredited investors, solid historical returns.
- Cons: High fees and variable fee structure, illiquid investments with long holding periods, limited options for non-accredited investors, occasional issues with customer support and transparency.
- Would Recommend? Yes, but with reservations. RealtyMogul is suitable for investors who are comfortable with long-term, illiquid investments and can tolerate the associated risks and fees.
Conclusion
As a platform, RealtyMogul is intended for experienced investors wanting to dip their toes into real estate crowdfunding, and offers a decent variety of investment options and a user-friendly interface. That said, potential investors should be aware of the high fees and long wait times for retrieving investments. The platform is best suited for investors who are comfortable with long-term, illiquid investments and who have the patience to navigate their myriad of complexities.
We think RealtyMogul has the potential to improve its standing by offering more investment options, simplifying its fee structure, providing more timely updates on investments, and doing better due diligence.
(A video featuring the CEO of RealtyMogul, Jilliene Helman, explaining the company's due diligence process.)