Realty Mogul connects accredited investors to private real estate opportunities online. Find out more about how this online investment service really works, learn more about their requirements, and weigh the pros and cons to decide if Realty Mogul is the right investment tool for you.
Have you been curious about dipping your toe in the investment world, but aren’t sure where to start? Real estate investments are generally one of the safest investments and are straight-forward enough for even novice investors to begin with.
While active investing requires your time and participation (from managing tenants to making repairs), many first-time investors are drawn to more passive forms of investing. Crowdfunding, in particular, allows investors to easily pool their money together to fund real estate investments, granting them a small stake in a company or property.
There are many popular crowdfunding sites, but one of the top names is Realty Mogul. If you’re interested in crowdfunding, we’ll break down how Realty Mogul works, what you’ll need to sign up, and weigh the pros and cons of this service, so you can determine how best to invest your capital.
Realty Mogul Overview
Realty Mogul offers investors a simple way to diversify their investment portfolio by offering them a link to many lucrative real estate investment properties. You won’t invest directly in real estate though — since this is a crowdfunding platform, your money will be pooled together with other investors to instead fund a commercial property.
Types of investment properties typically found on Realty Mogul include multi-family homes, offices, retail establishments, industrial sites, and healthcare complexes. Sometimes flipped properties are also included.
After signing up, you’ll be given access to all available investments, with an overview of each property. You can invest by either: purchasing shares in an LLC or purchasing debt equity. Lastly, there are REIT I and II options available to invest in.
There’s no guarantee on ROI, but some properties offer regular cash flow distributions, while others offer long-term ROI, where you can expect to be paid after ten years (assuming the investment goes well).
Requirements to Invest with Realty Mogul
To invest using the Realty Mogul platform, you must be able to prove that you are an accredited investor. Accredited investors make at least $200,000 annually and have a net worth of $1,000,000 (excluding their residence).
If you meet these criteria, you also must invest a minimum of $1,000.
For beginning investors or those with less cash flow, there are options to participate in REITs instead of private real estate investments. Those who opt for REITs will still need to invest a minimum of $1,000.
Pros of Realty Mogul
There are many benefits a platform like Realty Mogul can offer investors. Here are a few of their best features.
- You can choose to invest in debt or equity - This option allows you to choose whether you’d prefer to be paid sooner at a lower ROI (debt investing) or later at a potentially higher ROI (equity investing).
- You don’t have to seek out great opportunities - Realty Mogul handles this end of the process for you by offering pre-vetted investment options.
- You can invest without managing a property - If being a landlord doesn’t appeal to you, Realty Mogul offers another way to invest.
- You can see performance updates in real-time - The Realty Mogul dashboard shows you the state of your investment at all times.
- You can receive regular cash flow distributions - When investing in debt, you’ll often receive monthly distributions.
- You can handle everything online - Realty Mogul shines at making it fast and easy to invest and monitor your investments, completely online.
In general, Realty Mogul makes passive investing easy and straightforward for investors who meet the criteria.
Cons of Realty Mogul
On the downside, there are some drawbacks to using this service over other similar services or active investment options. Here are some of the main reasons why Realty Mogul might not be right for you.
- You have to be an accredited investor - Yes, REIT options are available to non-accredited investors, but it limits your investment opportunities significantly.
- You can’t sell your shares - There is no secondary market to sell to with crowdfunding (aside from REITs), so you cannot share your stake in a particular real estate venture.
- You might wait a decade to see returns - Depending on the type of investment you choose, you may be waiting up to ten years to see ROI, assuming the property performs well.
- You have little control - Unlike active investing, you have little control over how the property is managed and marketed, leaving your financial fate in someone else’s hands.
Realty Mogul can be a good platform for accredited investors looking to diversify their real estate portfolios, without requiring much involvement. On the other hand, Realty Mogul leaves your investments in someone else’s hands and there’s no guarantee you’ll see your money again, much less collect ROI. In addition, beginning investors will likely not qualify to use Realty Mogul.
Individual investors looking to grow their portfolio might achieve better ROI by investing in properties on their own. Even starting with a few single-family investments could be a better bet than crowdfunding, because you’ll be able to control how the properties are managed. It can also allow for better long-term portfolio growth and expansion to multi-family rental properties. Best of all, you won’t need to share your ROI with other investors.
To learn more about getting started in property investing, let Clever connect you to a qualified agent with investing experience.