RealtyMogul Review 2022: Pros, Cons and How It Compares

RealtyMogul allows both nonaccredited and accredited investors to invest in commercial real estate online. According to RealtyMogul, investors have invested over $700 million to date through its platform, the company has financed over 400 properties valued at more than $4 billion in property value and has a membership base of over 219,000 registered members.

Nonaccredited investors have access to two public, nontraded REITs (though these investors are subject to investment limitations, more on that below), and accredited investors have access to private placement investments as well.

RealtyMogul is best for

• Nonaccredited investors who want access to public, nontraded REITs.

• Accredited investors who want access to private placements.

• Investors interested in real estate beyond publicly traded REITs.

RealtyMogul at a glance

RealtyMogul features you should know

Open to nonaccredited investors: RealtyMogul offers nonaccredited investors access to its public, nontraded REITs, RealtyMogul Income REIT and RealtyMogul Apartment Growth REIT. That said, nonaccredited investors can invest a maximum of 10% of their income or net worth, whichever is more. Accredited investors are able to invest in any of RealtyMogul’s offerings.

Accredited investors are individuals with a net worth, or joint net worth with a spouse, of more than $1 million (excluding their home’s value), or an annual income of more than $200,000 ($300,000 with a spouse) for each of the last two years. Accredited investors must also have the expectation of maintaining that income level going forward. Those with certain professional certificates or credentials may also qualify as accredited investors.

Investments: RealtyMogul offers public, nontraded REITs and private placements. Here are the details on its two REIT products:

• RealtyMogul Income REIT: RealtyMogul Income REIT is an LLC that invests in and manages a portfolio of commercial real estate investments. It is a public, nontraded REIT, which means it is registered with the Securities and Exchange Commission but isn’t traded on stock exchanges like publicly traded REITs are. RealtyMogul Income REIT invests in commercial real estate-related equity and debt assets across several property types, including multifamily, office, industrial, self-storage and retail. This REIT typically pays monthly dividends.

• RealtyMogul Apartment Growth REIT: RealtyMogul Apartment Growth REIT is also a public, nontraded REIT. RealtyMogul Apartment Growth REIT invests in common and preferred equity investments in multifamily apartments and typically pays dividends quarterly. While its historical dividends are lower than RealtyMogul Income REIT, RealtyMogul notes on its site that this REIT also aims to “realize capital appreciation” over time (in other words, gains in share prices).

Private placements are open only to accredited investors and include opportunity zone eligible investments. Most private placements are single property commercial properties or a small portfolio of properties across various property types in the U.S. (including multi-family, office, industrial, self-storage, retail and medical office), though private placement funds can also be offered.

Though the investment minimums vary depending on each deal, they generally range from $25,000 to $50,000. Private placement investments usually have a 3 to 7 year investment time horizon.

Note: Private placements are unregistered securities offerings, which means they are exempt from registration with the SEC. These investments can be risky and illiquid (difficult to sell) as they are not subject to certain regulations and laws that require comprehensive disclosures and protect investors.

High investment minimum: The minimum varies by investment, but the lowest is $5,000. Each investment’s prospectus documents will note its investment minimum.

REIT buyback program: Many real estate crowdfunding platforms are highly illiquid, meaning the money you invest can’t be taken out for a given time frame, typically at least a few years. RealtyMogul does deal in illiquid investments (public, nontraded REITs), but it offers a Share Repurchase Program that may allow shareholders to sell their RealtyMogul Income REIT and RealtyMogul Apartment Growth REIT investments back to RealtyMogul quarterly for a reduced price after the first year. The company cautions that these buybacks are “subject to availability of capital,” however.

RealtyMogul may buy back investments at the NAV per share most recently announced multiplied by the Effective Repurchase Rate. The discount baked in is based on how long you’ve held the investment. You'll receive:

• 98% if you held the investment for one year but less than two.

• 99% if you held the investment for two years but less than three.

• 100% if you held the investment for three years or more.

• 0% if you held the investment for less than a year.

While losing that 1% or 2% from your investment may hurt, the buyback program offers at least some flexibility in an emergency. Still, it’s best to invest money in RealtyMogul that you won’t need for the full period specified in your particular REIT’s liquidation schedule, which outlines when you can sell your shares back to RealtyMogul and for how much.

Potential for high returns: Realty Mogul provides the following information. As with all investments, actual returns vary and there is no guarantee that you will earn a return, or even preserve your initial investment.

• Private placements: According to RealtyMogul, private placements typically distribute on a quarterly basis (for deals with a cash flow component to the investment). The transaction sponsor gives guidance on potential return metrics, which generally ranges from 0% to 10% in average annualized returns, depending on the business plan and investment type.

• RealtyMogul Income REIT: According to RealtyMogul, RealtyMogul Income REIT has paid distributions monthly between 7.7% and 8% annualized since its inception, net of fees.

• RealtyMogul Apartment Growth REIT: Has paid distributions quarterly equating to roughly 4.5% annualized net of fees since Jan. 1, 2018, according to RealtyMogul.

Fees: Each asset class has its own fees, and each investment within those asset classes has more specific fees. Before investing, review each investment’s Offering Circular. Here are some of the typical fees that come with RealtyMogul’s offerings:

• Private placements: This differs by investment and is set by the sponsor of each private placement.

• RealtyMogul Income REIT: 1% annualized of total equity value.

• RealtyMogul Apartment Growth REIT: 1.25% annualized of total equity value.

Customer service: RealtyMogul offers a comprehensive FAQ section and phone and email support from 6am to 6pm PST, Monday - Friday.

Short track record: Real estate crowdfunding is getting more attention today, but beneath the sleek marketing is a relatively new model. RealtyMogul formally launched in 2013, meaning it hasn’t had much time to develop a track record. All investments carry risk, but new platforms may carry new risks. It’s wise to look into real estate crowdfunding in general before you invest in a platform.

» Want to compare other platforms? Read our reviews for Fundrise, DiversyFund, EquityMultiple and Crowdstreet.

Is RealtyMogul right for you?

RealtyMogul offers investors a way into otherwise inaccessible real estate deals with a little more liquidity potential than some other real estate crowdfunding platforms. If you would like to diversify your portfolio and can comfortably meet RealtyMogul’s investment minimums without over-allocating to real estate, RealtyMogul may help you do that.

» Curious about other options? Check out our guide on how to invest in real estate.

RealtyMogul deals mostly in nontraded REITs. These investments are far riskier than publicly traded REITs. If you’re interested in any real estate crowdfunding platform, it’s worth reading this warning from the Financial Industry Regulatory Authority on what to watch for with nontraded REITs.

How do we review real estate platforms?

NerdWallet’s comprehensive review process evaluates and ranks companies that allow U.S. customers to invest in real estate, primarily through non-traded REITs or private equity. Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgements on which ones will best meet your needs. We adhere to strict guidelines for editorial integrity.

We collect data directly from providers through detailed questionnaires, and conduct first-hand testing and observation through provider demonstrations. The questionnaire answers, combined with demonstrations, interviews of personnel at the providers and our specialists’ hands-on research, fuel our proprietary assessment process that scores each provider’s performance across more than 20 factors. The final output produces star ratings from poor (one star) to excellent (five stars). Ratings are rounded to the nearest half-star.

For more details about the categories considered when rating brokers and our process, read our full methodology.