Realty Mogul vs CrowdStreet: Best Online Real Estate Investment?

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Realty Mogul vs CrowdStreet

Disclaimer
    Investing Simple is affiliated with Realty Mogul.

    We’ve said it before, but we will say it again: putting money into real estate is a good move for fledgling and experienced investors alike, and a new alternative to investing in the infamously volatile stock market.

    reality mogul vs crowdstreet

    People are waking up and finally seeing the light: passive income is the way to enhance your income while simultaneously allowing you the time (and energy) to devote to other money-makers, such as a day job or side hustle.

    Passive income gives you periodic dividends without any exhaustive effort – all you need is to determine where to invest, open an account, and fund it. Then you can sit back and relax knowing experts are handling the rest for you. And by relax, we mean to get out there and find other ways to raise your personal wealth!

    Crowdfunded real estate investing platforms are rapidly rising in popularity. These are when people pool their money together and buy into real estate projects throughout the country, and it’s well worth taking a look and learning more about it. Today, we will be comparing two popular platforms known as Realty Mogul and CrowdStreet.

    Summary: CrowdStreet vs Realty Mogul

    • Both platforms offer passive exposure to commercial real estate portfolios.
    •  CrowdStreet has a minimum investment of $10,000 versus $1,000 for Realty Mogul. 
    •  Realty Mogul has a number of offerings for non-accredited investors while CrowdStreet has only one. 
    •  With CrowdStreet, the sponsors pay all the fees meaning investors do not pay any fees. 
    • Realty Mogul collects a fee ranging from 0.30% to 0.50% depending on the portfolio you invest in.
    • Both platforms have a liquidity risk that is associated with all private real estate investments.
    •  Investors should have a minimum time horizon of 5 years. 

    What Is CrowdStreet?

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    The flourishing online marketplace called CrowdStreet gives people an avenue for direct equity investment in commercial real estate.

    Commercial real estate has become a hot commodity, and CrowdStreet offers a huge selection of retail, industrial, hotel, multi-family (just to name a few) sites ripe for the picking.

    You can choose from an array of single and multi-property investments, as well as both equity and debt deals. Equity investments in the CrowdStreet marketplace call for buying a passive, minority stake in a hard asset like an apartment complex or retail site. Debt investments mean you are investing in a real estate loan.

    These loans are all backed by collateral, ranging from land to a building itself. One advantage of debt investments is they typically deliver a fixed return.

    How CrowdStreet Works

    The experts at CrowdStreet do all the footwork meticulously – just 2 percent of applicants get the green light and are added to the roster – so you don’t have to research for hours on end. While other crowdfunding platforms charge investors a fee, CrowdStreet makes its money from the third-party sponsors that manage the deals.

    There’s an open conversation between investors and the people in charge of the projects. Rather than being the middleman, CrowdStreet lets people get updates directly from sponsors, which is a big plus for nervous investors.

    According to CrowdStreet publicity materials, they are looking to create a “community” where potential investors can work hand-in-hand with commercial real estate firms, giving them the best chance of success

    CrowdStreet Investments

    1. Direct Investing

    This lets you choose among projects that fit your goals and criteria. It gives potential investors access to high-quality projects that have gone through rigorous screening and represent only the cream of the crop. Investment minimums through direct investing vary by project and sponsor.

    2. Fund Investing

    This interesting option lets you put your money into 30 to 50 projects with a single contribution. It may be perfect for you because of its diversification because you won’t be putting all your eggs in one basket. One important note about fund investing is that it carries a minimum investment of $25,000, so it may be for investors in the major leagues for now.

    3. Managed Investing

    This is the hands-off option because it is a fully-managed service directly investing on your behalf based on your goals and objectives. Managed investing is a personalized portfolio construction from A to Z. But it carries a hefty minimum investment of $250,000, which cuts many potential investors out of the game.

    Pros of CrowdStreet

    • No investor fees, which is unusual for this type of platform.
    • It is #1 for commercial real estate volume and commercial real estate variety.
    • There is substantial and flourishing investment volume.
    • Offers one of the largest selections of commercial real estate in the industry. Gone are the days when you went and physically viewed projects. These are options across the entire U.S., which means you can pick and choose your market based on location.
    • Expect to be shopping for a long time before making a choice, and be sure to write down your long and short-term goals ahead of time. This will help you from becoming quickly overwhelmed by the choices offered.

    Cons of CrowdStreet

    • Minimum investments of $25,000 are significantly above the industry average. Compare that figure with an average of $10,000 for comparable platforms.
    • No secondary market to sell, meaning you need to commit to the duration of the loan or investment time horizon.
    • At this time, only one CrowdStreet project is available for non-accredited investors.

    Even if you don’t have this minimum investment in your wallet (or bank account), it’s worth it to look around the CrowdStreet site to get a handle on what’s out there as far as trends.

    One of the crucial reasons you may want to get a hand in the real estate investment game is they are frequently are set up to deliver a steady cash flow via dividends distributed to investors on a monthly, quarterly or annual time frame.

    How To Invest With CrowdStreet

    1. Look through and compare active offerings on the marketplace. At this point, you should have a written list of your investment goals. Find some that will meet your needs and expectations.
    2. Submit an offer after selecting a project, as well as the amount you are able to invest, and submit your investment offer via a secure online portal.
    3. Once they approve your offer, all that’s left to do is fund your investment, and you are officially a stakeholder in a specific commercial real estate project.
    4. Monitor progress through a personal investor dashboard during the span of the investment period. CrowdStreet will post project updates, investment performance vs. targets and other docs on the dashboard.

    CrowdStreet aims to make you a wiser investor via online articles and charts showing the hottest new trends in commercial real estate investing. You will get weekly market insights and the latest offerings in your inbox.

    A well-organized Learning Center offers new ideas and education on a wide array of topics with blogs, infographics, videos and more. You can also filter the type of content you’d like to view to avoid the annoyance of articles you have no interest in. CrowdStreet churns out new updates on a regular basis.

    What Is Realty Mogul?

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    If you’re looking for more diverse choices, Realty Mogul is another crowdfunded option that broadens the list of offerings to both commercial and residential real estate projects.

    Commercial sites include plazas, shopping centers, marketplaces, and offices. Residential properties may include multi-family housing units like condo or apartment complexes.

    Realty Mogul experts want people to remember you need to build wealth for their future, and commercial real estate is one of the most popular non-traditional asset classes for retirement investing. An investment in real estate carries with it the potential for long-term appreciation, along with regular, consistent cash flow.

    When you combine this with the tax write-offs of a qualified retirement plan, it makes good sense to plan for retirement through real estate investments, no matter how old you are right now.

    How Realty Mogul Works

    Through the Realty Mogul platform, you will have the opportunity to put your money into real estate opportunities online through a private, secure website. Investors can browse investments, review due diligence materials and sign legal documents securely online. Once invested, you will have access to an investor dashboard, giving you 24/7 access to watch how your money is working for you.

    How successful has Realty Mogul proven itself to be? To date, people have invested over $400 million through Realty Mogul, financing more than 300 properties valued at over $2 billion.

    Realty Mogul experts are constantly on the lookout for diversified, multi-tenant, centrally located, cash flow producing properties.

    Put to rest any worries you may have about projects being legit and a sound investment. Realty Mogul has an investment team that puts every project under the microscope, checking it against hundreds of data priorities. Every deal is put to the test against the most conservative financial models and requires unanimous approval from an investment committee, whose members have collectively transacted more than $5 billion in real estate.

    Realty Mogul Investments

    With a minimum investment of just $1,000, this may be the perfect entry platform for newbies to the world of real estate investment. Investment lengths start at just 6 months and range out to a high of 120 months. This lets you make your investment decisions specifically based on your own long and short-term goals.

    According to company press statements, the founding principles of Realty Mogul are in response to the knowledge that real estate has provided whole generations of investors with wealth. However, it has historically been reserved for those with specialized knowledge, the right connections, and access to great amounts of capital. This has kept investing in commercial real estate out of reach for most – until a few years ago.

    Pros of Realty Mogul

    • Monthly or quarterly dividend distributions.
    • Investment options are clear and easier to understand than some similar platforms.
    • They check in around the clock to monitor projects.
    • You can manage and complete all documents for transactions online.
    • User-friendly with frequent project updates.
    • Invest in both loans and equity investments.
    • Variety of options for non-accredited investors.

    Cons of Realty Mogul

    • Some, but not all, investments are limited to accredited investors only.
    • Crowdfunded real estate is an illiquid investment, and Realty Mogul is no exception.

    How To Invest With Realty Mogul

    When you create an account with Realty Mogul, you will need to answer some questions to pinpoint your goals for real estate investments. Are you looking for returns in the shorter term to meet a specific need, such as a down payment, or do you plan to reinvest some of the dividends you’ve earned into new projects?

    Investors can purchase equity investments in both commercial and residential real estate, as well as real estate debt investments. Realty Mogul offers multiple investment vehicles, however, some are only accessible to accredited investors.

    An accredited investor is someone who has a recognized level of income, net worth, or professional experience allowing them to invest in higher-risk securities that may not be registered with traditional securities laws.

    Mogul REIT I

    One option is MogulREIT I, a public, non-traded Real Estate Investment Trust (REIT) that gives you debt and equity investments in commercial real estate properties diversified by investment, geography and property type. It is open to any investors and not limited to accredited investors. The REIT’s primary focus is providing monthly income to investors by fastidiously evaluating numerous investment opportunities. They design REITs to allow investors to spread funds across multiple properties, creating higher levels of diversification.

    Historically, REITs have provided investors of all types with regular income streams, diversification of their portfolio, and long-term capital appreciation opportunities. REITs fall under a class required to distribute 90 percent of all taxable income to investors on a yearly basis.

    There are currently more than 4,600 investors in this REIT, with 17 investments for a total of $289 million. The end results? The REIT has distributed between 7.76 percent and 8 percent annualized returns based on the purchase price. That’s a slam dunk.

    Mogul REIT II

    MogulREIT II is a public, non-traded REIT for apartment buildings. It is open to any investors and not limited to accredited investors. It is set up for appreciation and income through investments in equity in multifamily apartment buildings. Although Realty . Mogul has paid income equaling a 4.5 percent annualized distribution to investors in MogulREIT II, the focus is also on long-term capital appreciation. This comes about from renovating, upgrading and repositioning the multi-family properties, which ups their net worth.

    Projects have included complexes in Texas, Brooklyn, and Chicago. They are adding more on a regular basis!

    The main differences between this two public, non-traded REITs are in the small details of their key investment objectives.

    MogulREIT I’s goal is to pay consistent monthly cash distributions through diversified investments into multiple commercial property types. This REIT invests your money into the debt, preferred equity and equity of these properties.

    MogulREIT II was designed by the company to realize capital appreciation in the value of group investments over the long term and to pay attractive and stable cash distributions to stockholders. This REIT exclusively invests in multi-family properties in the form of equity or preferred equity.

    Private Placements

    Realty Mogul also offers a variety of private placement investments. These private placements are limited to accredited investors only. For the most part, all private placement offerings are slightly different within Realty Mogul. Some may have investment minimums as well as lock-up periods for your initial investment.

    The Verdict

    Whether you like CrowdStreet or Realty Mogul, we highly recommend you do your homework, determine your short and long-term goals, find the capital and get into some form of crowdsourcing, sooner rather than later.

    Both CrowdStreet and Realty Mogul give you access to commercial real estate investments.  Realty Mogul has a significantly lower minimum at just $1,000 versus the minimum investment of $10,000 for CrowdStreet.

    Realty Mogul has a few options for non-accredited investors while CrowdStreet has just one project currently available.  One area where CrowdStreet shines is the fee structure. The investors pay nothing in fees. Instead, the deal sponsors pay the fees.

    Overall, both platforms offer solid options for getting exposure to commercial real estate.  We do have to lean towards Realty Mogul, however, as the minimum to start is significantly lower. 

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