Realty Mogul Review: Should You Invest In Real Estate?

Realty Mogul is a real estate investing platform that offers access to private placements as well as several non-traded real estate investment trusts (REITs). Using Realty Mogul, investors who meet certain criteria can invest in numerous real estate deals, either through REITs or individual deals. As an investment provider, Realty Mogul hasn’t produced great returns, but it can be a good option for wealthy investors who want to diversify their investments and make passive returns.

What is Realty Mogul?

Realty Mogul is a real estate management company—a “sponsor” in real estate parlance. The company finds, vets, structures, and executes real estate investment deals while opening them up to investors who want to participate.

Using a platform like Realty Mogul, investors can find and invest in a large number of real estate deals—all of them private deals which they wouldn’t normally find or have access to. Investors can invest in many deals at once, and their investments are totally passive—they don’t have to do anything in terms of managing properties.

In addition to individual deals (or “private placements”), Realty Mogul also packages some deals into its own non-traded real estate investment trusts (REITs). These REITs allow investors to invest as little as $5,000 in a large number of deals, so they have less risky in any one deal.

Before reading any further, you should know that you have to be an accredited investor in order to participate in some of the deals that are available on the platform. If you aren’t an accredited investor, you may still be able to invest in some deals, but how much you can invest may be limited based on your net worth or annual income.

Also, when you invest through Realty Mogul, you don’t actually own the property you’re investing in. Instead, you invest in a fund that owns one or more properties. So, if something happens to the fund, you don’t have an interest in the property that you can fall back on. You could actually lose your entire investment.

Realty Mogul’s offerings

Realty Mogul has two big offerings that investors can use: REITs and private placements.

In terms of REITs, the company offers two different options—one for growth and the other for income. Both REITs are non-traded—meaning you can’t invest in them through a broker like ETrade; you can only get access by investing directly with Realty Mogul.

Of course, this also means that investors can only redeem their shares when Realty Mogul allows—they can’t access cash as quickly as if they invested in traded REITs, mutual funds, or ETFs.

In addition to its REITs, Realty Mogul also offers investors access to private placements—small private investments in specific real estate deals. You can see all of the available deals on the company’s website.

One thing to note is that, whether you invest in one of Realty Mogul’s REITs or a private placement, what you’re buying is equity in a fund—not a direct interest in a property.

Income REIT

Income REIT focuses on generating income for investors. The REIT invests in debt in various real estate deals. The fund has a minimum investment of $5,000. Non-accredited investors can also invest but may be limited in terms of how much they can invest, based on their net worth or income.

Apartment Growth REIT

This is Realty Mogul’s growth REIT. The fund invests in equity in various real estate deals, mostly in multifamily apartment buildings. Like Income REIT, this REIT is available to both accredited and non-accredited investors. However, non-accredited investors may be limited in how much they can invest.

Private Placements

In addition to its REITs, Realty Mogul also gives investors the option of investing in specific real estate projects. These deals are called private placements—they’re small, private offerings that aren’t publicly available.

Using private placements, users can invest in individual properties that are designed to produce a mix of growth and income.

However, these deals are only available to accredited investors—usually people with a net worth of $1 million or more.

Features

Aside from the investments it offers, Realty Mogul doesn’t offer many extra features. The one big extra is that Realty Mogul serves both sides of real estate transactions: investors and real estate companies.

While investors can use Realty Mogul to invest in various real estate projects, real estate companies can use Realty Mogul to apply for financing for their next project.

Returns

Realty Mogul’s historical returns vary by investment but aren’t really that great. Income REIT has returned about 6% to investors and Apartment Growth REIT has returned about 4.5%. Private placement returns aren’t publicly available but vary from property to property.

Fees and expenses

Realty Mogul’s management fee is about average for the industry, but the company’s total costs are a bit higher than other real estate crowdfunding platforms.

• Management fee: 1% - 1.5% per year
• Organization fee: ~3% paid at start of fund
• Disposition fee: ~2% whenever a property is sold from the fund’s portfolio

Who Realty Mogul makes sense for

In truth, Realty Mogul won't make much sense for a lot of investors. The company’s fees are higher than a lot of other real estate investing platforms and the historical returns aren’t all that great.

But, if you’re a wealthy, sophisticated investor, who already owns some investment properties and has invested in REITs and/or private placements before, Realty Mogul may be a good option for you to diversify your portfolio.

If you meet these criteria, Realty Mogul might make sense for you:

• You have a net worth of $1 million or more
• You’ve invested in private placements before
• You want to be a completely passive investor
• You’re able and willing to review offering memorandums
• You’re willing to accept lower returns for greater diversity

Pros & cons of Realty Mogul

Pros:

• Can invest all online
• Both REITs and private placements available
• Investors can invest in individual deals

Cons:

• Some deals have reportedly encountered problems (tenants quit paying)
• Some deals are only for accredited investors
• Non-accredited investors may have investment limited
• Fees are higher than some other crowdfunding platforms

How to invest

Investing in Realty Mogul is pretty simple and straightforward—all you have to do is go to the company’s website and set up an account. If you’re investing cash or non-qualified assets, you can make the investment directly online.

Depending on what you’re investing in, you may also have to go through a process to certify with Realty Mogul that you are an accredited investor eligible to invest in certain deals.

Realty Mogul also allows investors to invest using qualified (IRA) assets, although this can be a bit more complicated. In order to invest with Realty Mogul using an IRA, you first have to set up a self-directed account, which also involves additional fees.

Frequently Asked Questions:

What is Realty Mogul and what type of investments does it offer?

Realty Mogul is a real estate management company that offers investors the opportunity to participate in real estate investment deals. It primarily offers two types of investments: non-traded real estate investment trusts (REITs) and private placements. The REITs are designed for income or growth, allowing investors to invest in a diverse portfolio of real estate deals, while private placements are specific, small, private offerings focused on individual properties, mainly available to accredited investors.

Who can invest with Realty Mogul and are there any restrictions?

Investments through Realty Mogul are available to both accredited and non-accredited investors, but with certain restrictions. While non-accredited investors can participate in some deals, the amount they can invest may be limited based on their net worth or income. Accredited investors, generally those with a net worth of $1 million or more, have access to a broader range of investment opportunities, including private placements.

What are the expected returns and fees associated with Realty Mogul investments?

Returns on investments with Realty Mogul vary: the Income REIT has historically returned about 6% to investors, and the Apartment Growth REIT about 4.5%. Returns from private placements are not publicly available and vary by property. Realty Mogul charges a management fee of 1% to 1.5% per year, with additional fees including an organization fee of approximately 3% at the start of a fund and a disposition fee of about 2% whenever a property is sold from the fund’s portfolio.

What makes Realty Mogul a suitable investment platform for certain investors?

Realty Mogul is ideal for wealthy, sophisticated investors who seek to diversify their investment portfolios through real estate. It is particularly suited for those who are completely passive investors, have prior experience with private placements, and are willing to accept lower returns for greater diversity. The platform serves as an avenue for investors to participate in real estate deals that they might not have access to otherwise.

What are the advantages and disadvantages of investing with Realty Mogul?

Pros of investing with Realty Mogul include the ability to invest online in both REITs and private placements, and the opportunity for investors to participate in individual deals. However, there are cons, such as higher fees compared to other crowdfunding platforms, some deals being available only to accredited investors, and investment limitations for non-accredited investors. Additionally, there have been reports of problems with some deals, such as tenants failing to make payments.