Pros, Cons, and Who Should Set up an Account | Ezine Daddy

Personal Finance Insider writes about products, strategies and tips to help you make wise decisions with your money. We may receive a small commission from our partners like American Express, but our reports and recommendations are always independent and objective. The conditions apply to the offers listed on this page. Read our editorial standards.

account minimum

$5,000 (minimum can also be between $10,000 and $30,000)

fees

varies; typically 0.5% (EquityMultiple also charges an annual management fee of $30-$70)

investment types

Institutional commercial real estate, equities, preferred stock and senior debt

account minimum

$5,000 (minimum can also be between $10,000 and $30,000)

fees

varies; typically 0.5% (EquityMultiple also charges an annual management fee of $30-$70)

investment types

Institutional commercial real estate, equities, preferred stock and senior debt

advantages

  • Low fees
  • Option to invest in institutional commercial real estate, equity, preferred stock and senior debt
  • Multiple property types
  • Self-directed IRAs available

Disadvantages

  • Only accepts accredited investors

More information

  • Consider it if: You are an accredited investor looking to invest at least $5,000 in commercial real estate.

rating

Is EquityMultiple right for you?

Established in 2015, EquityMultiple is a commercial real estate platform serving accredited investors (individuals holding at least


net worth

of $1 million or $200,000 annually or $300,000 for couples).

The platform also offers investors the opportunity to build wealth through self-directed IRAs, LLCs, Trusts, LPs, and joint accounts. As of January 1, 2022, EquityMultiple has returned $176.2 million to investors.

EquityMultiple vs. RealtyMogul

While EquityMultiple and RealtyMogul have the same minimum account requirements ($5,000), there are some key differences between the platforms. The first is that EquityMultiple only serves accredited investors while RealtyMogul serves both accredited and non-accredited investors.

Another thing to consider is investment types and fees. Both EquityMultiple and RealtyMogul offer commercial real estate, but EquityMultiple is a better choice for accredited investors looking for professionally managed institutional-grade real estate, equity and debt investments. RealtyMogul offers multiple REITs, individual properties and more.

EquityMultiple vs. CrowdStreet

EquityMultiple and CrowdStreet both only offer real estate investments for accredited investors. However, the platforms differ in terms of account minimums, fees, and investment options.

You’ll likely pay more to get started with CrowdStreet since the minimum requirement (which can be $100,000 for some products) is $25,000. However, CrowdStreet doesn’t charge for buying shares in its deals and funds — but sponsors typically pay between 1% and 5%, and customized portfolios cost investors 2.5%.

EquityMultiple, on the other hand, is best suited for accredited investors who are starting with lower minimum requirements and want to invest in institutional commercial real estate, equity and more. It has a minimum requirement of $5,000, but minimum requirements can also range from $10,000 to $30,000 depending on the offer.

Ways to invest with EquityMultiple

EquityMultiple offerings are divided into three strategies:

  • fund investment: This investment approach has the highest minimum requirement. Minimum amounts start at $20,000 and go up to $30,000. It is best suited for those looking for diversification across multiple investment types. EquityMultiple targets debt, equities, opportunity funds and CRE securities with this approach. Also, it has an investment life of 1.5 to 10+ years.
  • direct investment: With minimum amounts starting at $10,000, this approach caters to investors who prefer to focus on individual properties. EquityMultiple’s target duration for this strategy ranges from six months to five (or more) years and is biased towards debt, preferred stock and common stock.
  • Saving alternative: This strategy is perfect for investors who want shorter maturities. EquityMultiple relies primarily on diversified, short-term bonds with investment terms of between three and nine months. This approach also has the lowest minimum requirements, as you can start with as little as $5,000.

In terms of returns, leverage strategies generate 7-12% per year. Preferred equity strategies currently have a preferred return of 6-12% and an overall preferred return of 10-18%. Common equity strategies have an internal rate of return of 10-24% and fund returns vary.

Potential investors should also note that joining EquityMultiple does not give you access to publicly traded REITs. In terms of his fund strategies and diversification approach, he invests primarily in untraded REITs and real estate funds (untraded REITs cannot be publicly traded in the market).

EquityMultiple: Is it trustworthy?

EquityMultiple currently has a NR (“No Rating”) with the Better Business Bureau. BBB ratings typically range from A+ to F, but the bureau says it doesn’t have enough information to issue a rating on the real estate platform.

BBB ratings reflect the bureau’s opinion of how well a company interacts with its customers, taking into account factors such as the nature of the business, length of business, history of customer complaints, licensing and government actions, advertising issues and more.

However, it’s still important to do your research before setting up an account. This is because the bureau’s reviews do not guarantee any performance or reliability.

EquityMultiple’s record is free of any major lawsuits or scandals. The platform’s BBB profile also shows that no complaints have been filed.

EquityMultiple: Frequently Asked Questions (FAQ)

What is EquityMultiple?

With EquityMultiple you can invest in professionally managed commercial real estate. The platform’s investment opportunities include institutional commercial real estate, senior debt, equities and preferred stock. Also, you can invest through Self-Directed IRAs, LLCs, LPs, Trusts, and Joint Accounts.

Is EquityMultiple only for accredited investors?

Yes. EquityMultiple currently only serves accredited investors.

What does it take to be an accredited investor?

To qualify as an accredited investor, you must either have a net worth of at least $1 million or be earning $200,000 per year ($300,000 for couples).

Leave a Comment