Modiv Review 2021: Pros, Cons and How It Compares

Modiv, formerly known as Rich Uncles, offers a REIT that holds income-producing industrial, retail and office real estate.
Kevin VoigtNov 8, 2021

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Our Take

4.0

NerdWallet rating 

The bottom line: With a minimum investment of $1,000, Modiv provides an affordable entree for investors looking to expand their portfolio into real estate investing and potentially earn monthly dividend payments from rental income. But investors should know that 3% of their initial investment goes directly to fees.

Modiv

Modiv

Fees

3%

of investment goes toward costs

Account Minimum

$1,000

Promotion

None

no promotion available at this time

Pros & Cons

Pros

  • Access to commercial real estate investments.
  • $1,000 minimum to begin investing.
  • Open to non-accredited investors.
  • Share repurchase program available.

Cons

  • Highly illiquid investments.
  • Unable to choose among commercial projects.
  • Limited investment choices.

Compare to Similar Brokers

Fundrise
DiversyFund
CrowdStreet
NerdWallet rating 
NerdWallet rating 
NerdWallet rating 
Fees

1%

other fees may apply

Fees

$0

management fee

Fees

0.50% to 2.5%

for funds; project fees vary

Account Minimum

$10

Account Minimum

$500

Account Minimum

$25,000

Promotion

Advisory fee waiver

for 12 months

Promotion

None

no promotion available at this time

Promotion

None

no promotion available at this time

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Full Review

Modiv is a crowdsourced real estate company that allows investors to invest in commercial properties through a real estate investment trust, called a REIT. Modiv was formerly known as Rich Uncles.

The company's REIT is publicly registered but non-traded, which means it is not publicly traded on an exchange, but it is required to register and submit an annual audit with the Securities and Exchange Commission. This gives greater transparency than some other real estate investments — but it’s important to remember that because the REIT isn’t sold on a public exchange, shares can be harder to sell and their value can be more difficult to assess than publicly traded REITs. (Learn more about investing in REITs.)

Modiv is best for:

  • Investors looking for a low-cost entry into real estate investing.

  • Investors who don’t need their cash back for years.

  • Investors looking for potential monthly income.

Modiv at a glance

Investor requirements

Modiv is open to accredited and nonaccredited investors.

Investment minimum

$1,000 initial investment; $100 for subsequent investments.

Redemption options

Shares must be held for a minimum of six months to be eligible for repurchase. Following that:

  • Shares held for less than two years: Repurchase price is 98% of the most recent NAV price.

  • Shares held for two or more years: 100% of the most recent NAV price.

Repurchase is not guaranteed, and is subject to monthly and quarterly limitations.

Fees

No management fee, but 3% of gross proceeds may go toward organization and offering costs. Other fees may apply.

Investment selection

Publicly registered, non-traded REIT with 38 retail, office and industrial tenants across a range of states.

Website ease of use

This is our judgement of how easy it is to find critical information on the Modiv website, including platform fees, account minimum and redemption options (if offered).

Investment transparency

This is our judgement of how easy it is to find critical information about investment offerings, including investment fees, risks, risk mitigation efforts, the process for vetting investments and how investment returns are distributed to investors.

Customer support options

Phone and email, Monday-Friday, noon-8 p.m. Eastern time.

Modiv features you should know

Low minimum investment: While some online real estate investment sites such as CrowdStreet have minimum investments of $25,000, Modiv’s minimum investment requirement is only $1,000 — a more affordable choice, especially for beginning investors. Subsequent investments must be $100 or more, and the REIT is open to both accredited and nonaccredited investors.

Investment properties: Modiv, based in Newport Beach, California, currently operates 38 single-tenant income-producing properties across states including California, Florida, Texas, Pennsylvania and Ohio. The properties range from retail locations (such as gas stations, Dollar General stores and fast food restaurants) to office complexes for companies such as Williams-Sonoma, Gap and engine-manufacturer Cummins Inc. There are also several industrial tenants, including a global distribution hub for manufacturing conglomerate 3M.

The range of companies leasing in Modiv's portfolio is diverse, and as those tenants pay rent, the REIT distributes dividends to investors on a monthly basis. There is also a possibility for investors to receive a 13th dividend, an extra dividend paid to reward investors in years when the investment performance exceeds the dividend coverage ratio.

Modiv also holds quarterly earnings calls, similar to publicly traded companies, to update investors.

Fees: Modiv doesn't charge management fees, but 3% of the gross proceeds can be used to pay for organization and offering costs, which means only 97% is actually invested. This effectively functions as a 3% upfront fee.

Investments can be funded through an IRA: You can open a self-directed IRA through Modiv's partner, Forge Trust, to invest in the REIT through an IRA.

Investor requirements: Unlike some other real estate platforms, Modiv does not require investors to be accredited. (The SEC defines an accredited investor as having a net worth of more than $1 million or having annual income in each of the last two years of at least $200,000 for individuals, or $300,000 for couples who file joint tax returns.) However, you must invest the minimum initial requirement of $1,000, and subsequent investments must be $100 or more.

» Read more about how to invest in real estate

Share repurchase agreement: Real estate investments are long-term propositions, and non-traded REIT investments typically have less liquidity than traditional stock market investments. Modiv offers a share repurchase agreement for investors who want to take cash out sooner than expected.

After a six-month mandatory holding period, shares may be eligible for repurchase subject to monthly and quarterly limitations. The share repurchase price for shares held for less than two years is 98% of the most recent NAV per share, meaning there's the equivalent of a 2% fee. The repurchase price for shares held two years or more is 100% of the most recent NAV price, with no reduction for the repurchase. More details are available in the company's Offering Circular, provided on its website.

Note that the program is not guaranteed, and it's possible that there will not be sufficient cash to meet all repurchase requests made. That means the company has the discretion to repurchase fewer shares than requested. Indeed, Modiv suspended its share repurchase program in March 2020 at the start of the COVID-19 pandemic. It was not the only real estate platform that did so.

» Compare before investing: Best real estate crowdfunding platforms

Is Modiv right for you?

Modiv offers the opportunity to invest in a diverse collection of commercial retail estate properties across industries and states, at an affordable price for the average investor. As a triple net lease fund, the property expenses are on the tenants rather than the investors — a definite plus. Its share repurchase program is a comfort in the highly illiquid world of real estate investing, but it’s important to remember that market conditions may still lock you into your investment.

There are other options for investing in real estate, including publicly traded REITs, which can be valued, bought and sold more easily than non-traded REITs. There are also REIT mutual funds, which offer investors a diversified real estate portfolio without the trouble of evaluating individual REIT investments.

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