When it comes to investing, a lot of people consider the real estate market to be the most lucrative market out there.
This is because the return on investment could be huge, especially if the property you invested in appreciates in value.
You can even earn regular cash flow from it if you lease the property. Though this is possibly one of the most lucrative investments you can make, not everyone can invest in the real estate market.
One of the main reasons for this is the huge capital needed to invest in the real estate market. Then there’s also the money you will need to keep the property in tip-top shape.
Fortunately, there are opportunities available for you to invest in the real estate market without the need to purchase the entire property.
One such company that offers this kind of opportunity is called RealtyMogul. It’s an online marketplace for real estate, which brings together investors, borrowers, and sponsors.
It’s basically a platform where you can participate in various real estate investments without the need to purchase the actual whole property, only a share of it.
But is this opportunity offered by RealtyMogul really legit? Or is it a scam that you should be wary of?
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RealtyMogul Offers a Legit Opportunity To Invest in the Real Estate Market
RealtyMogul is a real estate crowdfunding site which brings together investors, borrowers, and sponsors for investment opportunities.
It is basically an online real estate capital marketplace where borrowers can raise capital for the real estate projects from several investors who are willing to invest.
As an investor, you can choose from various real estate investment opportunities in the marketplace. The beauty of this is that you won’t have to fund the entire investment, as you can choose to just buy a share.
From what I’ve seen so far, I can say that the opportunity that RealtyMogul offers is legitimate. The company will really provide an opportunity to invest in shares of real estate investments.
So you won’t have to worry about spending huge amounts of money just to invest in the real estate market. Of course, this doesn’t mean there aren’t any issues or problems with this opportunity.
Chief among the issues is that you can only participate fully if you are an accredited investor. You also have to consider that this type of investment is illiquid.
You’ll also see that the investment opportunities they offer aren’t as widespread. Some investment opportunities will require a higher investment amount.
I’ll discuss these issues in more detail as we progress further in this review of RealtyMogul.
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Who Uses RealtyMogul?
RealtyMogul is designed for two types of people with one being real estate developers that are in need of more capital for their projects. The other type is accredited investors who are looking for other ways to invest in the real estate market other than the usual channels.
For developers needing to borrow capital, RealtyMogul provides them that opportunity. The company allows them to gather the needed capital for their project through the crowdfunding platform.
For investors, the company offers you an opportunity to invest in the real estate market without the need to purchase the actual property.
You can choose to just invest in shares of the property at much lower capital. The beauty of this opportunity is that it is also available to non-accredited investors, though opportunities will be limited.
In the next section, I’ll discuss in more detail how RealtyMogul works and the fees that you’ll need to pay when you invest in the opportunities that they are offering.
How Does RealtyMogul Work?
RealtyMogul is an online real estate marketplace that brings together borrowers, investors, and sponsors to create new investments.
As an investor, you are basically given an opportunity to invest in real estate by participating in the crowdfunding platform.
You can choose to invest in the entire property or just invest in a share of it and you just pay the necessary fees for the transaction.
RealtyMogul offers a variety of real estate investments that you can participate in, including hospital establishments, office buildings, multi-family dwellings, and many more.
As mentioned above, investing in this company means you are basically purchasing a share of the RealtyMogul Limited Liability Company.
The company then invests in the Limited Partnership or the LLC that holds the title of the property. If the investment is in equity, terms usually last for about 3 to 10 years.
If the investment is in debt, then the terms are 6 months to 1 year. You can choose to invest partially in debt investments or invest in it completely.
If you invest in the whole loan, you become responsible for the cost of any foreclosure in case the borrower defaults.
Now to participate in this type of investment, you need to be an accredited investor, meaning you are an individual or an entity that is capable of taking on increased risk associated with certain investments.
The good news is that RealtyMogul has an investment that is available to non-accredited investors, and that is their MogulREIT I and MogulREIT II.
REIT I will invest in a variety of property types, including office, industrial, multi-family, self-storage, retail, and many more. REIT II will focus mostly on multi-family apartment properties.
For the minimum investment requirement, when it comes to opening an account, most investments only require $1,000. There are some investments that will require at least $5,000.
As for the account fees, these will range between 0.30% to 0.50% a year, depending on the account you will open with the company.
What Are People Saying about RealtyMogul?
The majority of reviews and comments about RealtyMogul have been positive. A lot of them say that the company offers a good opportunity for people to invest in real estate.
The beauty of this opportunity is that you can invest in the real estate market without the need to actually own the property.
This also means that you’ll have less involvement, making this a more passive type of investment. Of course, this doesn’t mean that there aren’t any problems or issues with this opportunity.
As mentioned above, there are some issues and the first one is that you can only enjoy what the company fully offers if you are an accredited investor.
It’s a plus that they provide investment options for non-accredited investors, but it’s unfortunate that the full investment option is only available to accredited investors.
Though there is a valid reason for this as these real estate investments will usually require huge amounts of capital. So you need to be an accredited investor first if you want to gain access to the other investment opportunities the company offers.
Another issue is that the investment opportunity that RealtyMogul offers is not really that widespread. Sure, they have properties available all over the country, but you’ll notice that most of them are concentrated within the state that the company’s offices are located.
Though the company’s minimum investment requirement is only $1,000, there are some investments that will require at least $5,000. Some of the investment options will be relatively expensive, which means you’ll be required to put up a lot of money.
The company also doesn’t have a flat rate of fees for their investment accounts. So you really need to read the fine print properly and do your calculations to see how much you are really paying in annual fees.
You also have to consider that real estate is not a liquid asset. Like purchasing an actual property, selling the shares you bought from RealtyMogul won’t be easy.
So you have to make sure that the money you will put in here is something that you won’t need immediately.
You can’t just invest today then request for your money back the following week because you need it. The company doesn’t have a secondary market available, so you’ll have to hold on to your investment until maturity.
What I Like about RealtyMogul
Now that we know what RealtyMogul is and what they are offering, it’s time to discuss what I like about this investment opportunity.
- The first thing that I like about RealtyMogul is that they provide investment options to non-accredited investors. This is a big plus as a lot of opportunities like this one only serves accredited investors. So the fact that this company also has investment options for non-accredited investors is big.
- I also like that RealtyMogul doesn’t have capital calls, which means the company won’t call you asking for more capital above the initial investment you put in. What the company will do instead is to dilute your investment if more money will be needed. The company might also ask for a higher interest rate on members loans.
- Another thing that I like about RealtyMogul is that they provide you with options of automatically reinvesting your returns or withdrawing them. This is good because you basically have the freedom to dictate what to do with your gains. You can choose to withdraw it and use it elsewhere or reinvest it so your possible returns could increase.
What I Dislike about RealtyMogul
Of course, not everything about RealtyMogul is good and dandy, as there are also other things about this opportunity that I don’t really like.
- The first thing that I don’t like about RealtyMogul is that the investment opportunities they offer are not really that widespread. Though they do have properties available for investing in other areas, most of them are concentrated within the areas near the two offices of RealtyMogul. Though I understand why this is the case, it would still be better if property investments weren’t concentrated in several areas only.
- I also don’t like that RealtyMogul doesn’t have a flat rate of annual fees available. You’ll have to carefully read about and consider the fees that you need to pay annually for the account you want to open. Ask questions if you need to. You have to make sure you are aware of how much you will have to pay in fees so you can calculate properly how much your net returns will be.
Do I Recommend RealtyMogul?
After learning more about RealtyMogul and what they can really bring to the table, I can say that this is an opportunity that is worth checking out.
The cons with this opportunity are really not enough to justify avoiding this altogether. The company provides you with a great opportunity to invest in the real estate market without the need to spend a lot of money.
You also don’t have to be an accredited investor to invest in some of the options that RealtyMogul offers, like their MogulREITs. So this is a big plus.
However, I would still caution you about other concerns with this type of investment. One, real estate is not a liquid investment, so don’t expect to get back your money easily when you need it. RealtyMogul doesn’t have a secondary market, so you have to wait for the maturity before you can get your money.
Lastly, though the possibility of earning big is there, it’s important that you still prepare for the scenario where your investment doesn’t work out.
Remember, there’s really no guarantee in investing, so you can never really know how an investment will turn out.
The only thing you can is to just do your research, study the investment properly and invest with money that you are okay to lose. In this way, you won’t feel the financial burden regardless of what happens to your investment.