EquityMultiple Review: Crowdfunding Real Estate Investments Explainedfull disclosure for further information.
If you’re like most people, you may be interested to explore various avenues for financial growth rather than starting a new business. And that’s completely fine — everyone has different goals. Maybe you would like to invest in smaller businesses or startups. Or maybe your goal is simply to see your hard earned money working for you in multiple ways.
Let me share my personal experience with you: crowdfunding is an absolute game-changer! With crowdfunding investing, there are so many options that allow you to achieve these goals! It’s not just about diversifying your investments; it’s also an opportunity to gain access to extraordinary properties that would have been out of reach otherwise.
Have you ever imagined yourself investing in commercial real estate but felt constrained by your available funds? Well, guess what? I’ve got the perfect solution for you! Get ready to embark on an exciting journey into the world of crowdfunding real estate with EquityMultiple. Together, we’ll explore this captivating program that opens up a whole new realm of lucrative possibilities. Are you as excited as I am? Let’s dive right in!
What Is EquityMultiple?
EquityMultiple is a New York based crowdfunding real estate company that allows accredited investors to get into the commercial real estate market by purchasing fractional increments of commercial real estate properties. If you want to invest in real estate, but don’t have $200k or half a million dollars to purchase an entire building, EquityMultiple might be able to help.
What is real estate crowdfunding?
Let’s take just a moment to talk about what real estate crowdfunding is since that is what EquityMultiple does. Real estate crowdfunding is an increasingly popular way to diversify your investment portfolio.
Crowdfunding allows a group of investors the opportunity to pool their money together online so that they can purchase a property (or a part of a property) as a group.
The reason why this method has become so popular is because it allows people who may not have enough money to purchase real estate on their own, but who still want to get in on the action and benefit from the increased stability and returns that come with investing in real estate.
The other reason crowdfunding is becoming more popular is because there are now more platforms available on which you can invest in real estate projects online. Before this happened, investing in real estate meant going through a broker or developer who would handle all aspects of buying and managing the project on your behalf—and this could cost thousands of dollars in fees each year!
Who is an accredited investor?
You may have noticed how we mentioned that EquityMultiple is for accredited investors in the US only, but who is an accredited investor? An accredited investor is someone who has a net worth, or a joint net worth with their spouse of one million dollars or more, not including the value of their home.
Alternatively, an accredited investor is someone who has had an income of $200,000 ($300,000 with a spouse) in each of the last two years, with the expectation that the income will remain the same or higher moving forward. In some cases, people with professional certificates or credentials may be considered accredited investors.
What is the Investment Minimum With EquityMutiple?
The investment minimum with EquityMultiple is $5,000, however, this is the minimum amount of investment required. There are many projects that require a $10,000, 15,000, or even $25,000 investment minimum.
What types of Investments does EquityMultiple Offer?
EquityMultiple has several different investment options for you to choose from and these are fund investing, direct investing, and a saving alternative.
Fund Investing – Fund investing has the highest minimum investment requirement with a $20,000 to $30,000 investment. This is for investors who are looking for a diversification of their asset types. Fund investing with Equity Mobile covers opportunity funds, CRE securities, debt, and equity. Fund investment opportunities have investment terms of 18 months to ten years or more.
Direct Investing – Direct investing allows you to invest in individual properties, these include commercial business spaces and multi-family housing. The investment term can be anywhere from 6 months to 5 years or more. The investment minimum for direct investing is $10,000 or more depending on the property.
Savings Alternative – The savings alternatives are for investors who are just looking for a short-term investment. The savings alternatives are for a period of 3 to 12 months, and the minimum investment is $5,000.
What types of properties are available through crowdfunding?
The investments available on EquityMultiple are mostly focused on commercial real estate assets.
Here are the different types of properties include:
- Data centres
- car washes
- housing for students
- several specialized CRE asset groups, including medical office buildings
Ready to make money from Real Estate?
There are several ways to potentially make money through investing in real estate projects on EquityMultiple.
Here are a few ways:
1. Rental income: Many real estate projects on EquityMultiple are income-producing properties, such as office buildings, apartment complexes, and retail centers. Investors can earn money through their share of the rental income generated by these properties.
2. Capital appreciation: Real estate values can increase over time, which can lead to capital appreciation for investors. If a property is sold for more than its purchase price, investors can potentially earn a return on their investment through their share of the profits.
3. Distributions: Real estate projects on EquityMultiple often provide periodic cash distributions to investors. These distributions can come from rental income or profits generated from the sale of a property.
4. Interest payments: Debt investments on EquityMultiple provide investors with regular interest payments over the term of the investment. These payments can provide a steady stream of income to investors.
What are the Rates of Returns?
The current rate of returns at EquityMultiple is listed on average as about 6% – 18%, however, it is hard to get an accurate picture because many of the investments are in the middle of their terms and haven’t ended yet. Returns are expected to increase as more projects reach their completion dates.
Does EquityMultiple Charge Fees?
Yes, EquityMultiple does have some fees that are charged to their investors. These fees can vary for different investments. However, typically the fees are around 0.5% and 1.5%, and there is a yearly administrative fee that is typically between $30 and $70.
Why is EquityMultiple Better Than Other CrowdFunding Real Estate Services?
Simply put, EquityMultiple is a better choice because they fully vet the properties and sponsors. Additionally, EquityMultiple invests in each project as well, so they have some “skin in the game” so to speak. If their investors lose money, then they do as well.
EquityMultiple also gets the return on their investments after all the other investors and sponsors get theirs.
Here are the pros and cons of investing with EquityMultiple
1. High-quality real estate investments: EquityMultiple gives you access to some of the best real estate opportunities out there. They carefully select projects with experienced sponsors and attractive returns, ensuring you invest in top-notch properties.
2. Diversification made easy: With EquityMultiple, you can diversify your portfolio across different investment options. Their three pillars—Keep, Earn, and Grow—let you choose from a range of products, each with its own risk and return characteristics. It’s a smart way to manage risk and get stable returns.
3. User-friendly platform: Investing in real estate is a breeze with EquityMultiple’s user-friendly interface. Whether you’re on your desktop or mobile, you can easily browse investment opportunities, track your investments, and find essential details about each property. It’s designed to make your life easier.
4. Rigorous due diligence and asset management: EquityMultiple’s dedicated team conducts thorough due diligence on all investments. They review sponsors, financial statements, and property data to ensure only the best opportunities make it to the platform. Plus, their asset management team takes care of everything from start to distribution, keeping you informed along the way.
5. Competitive fees with transparency: EquityMultiple’s fees are competitive and transparent. They charge an annual management fee of just 0.5% on your invested capital, with no hidden charges. You will always know exactly what you’re paying, giving you peace of mind.
1. Limited investment choices: EquityMultiple carefully curates its investment opportunities, which can be a drawback for investors looking for a wide range of options that align with their specific needs and risk tolerance.
2. High minimum investment: The platform requires a minimum investment of $5,000 or more, which may pose a challenge for smaller investors who want to access higher-quality opportunities.
3. Limited liquidity: Typically, real estate investments on EquityMultiple are illiquid, meaning investors have to hold their investments for the entire project duration. However, since 2021, the platform has introduced The Alpine Note Series, which offers shorter-term options (3, 6, and 9 months) and serves as an alternative to savings accounts. This has attracted a significant number of new investors.
4. Accreditation requirements: Currently, EquityMultiple is only open to accredited investors who meet specific income and net worth criteria. However, the platform has announced plans to expand into the non-accredited market in 2023 during their WeFunder campaign, as mentioned here: https://wefunder.com/equitymultiple
How Do I Get Started Investing With EquityMultiple?
To start investing with EquityMultiple you will need to visit their website here. Once you are there you can open an account and confirm your email address. Now you will need to verify your identity by providing your address, phone number, employer, and the number of years that you have been with your employer.
Now it’s time to create your investor profile, where EquityMultiple will ask about your experience with investing, and what your investment goals are. After completing your application, you can submit it and EquityMultiple will verify that you are an accredited investor. If your application is accepted you can start investing!
EquityMultiple doesn’t currently offer a mobile app, but here’s the good news: their website is mobile-friendly! This means you can enjoy the full functionality of their platform wherever you have internet access. So, you can stay connected and make the most of their services on the go!
You can see your portfolio from the dashboard and it will show you all kinds of information. You can see your capital balance, your returns, distributions, and earnings. You can also see investments that you have exited, what your returns were, your distributions, and annualized returns. Additionally, you can see your current and past year’s earnings, as well as a neat graphic about where your funds are invested.
What if I’m not in the US? Can I still participate in crowdfunding?
If you are in Canada and would like to invest in crowdfunding, there are also several platforms that offer investment opportunities in commercial real estate projects. While each platform has its own investment minimums, fee structures, and investment opportunities, here are a few examples of companies in Canada that are comparable to EquityMultiple:
1. FrontFundr – FrontFundr is a crowdfunding platform that allows investors to invest in private companies, including real estate projects. The platform offers a variety of investment opportunities, including equity and debt investments.
2. Addy Invest – Addy is a Canadian real estate crowdfunding platform that allows investors to invest in fractional ownership of real estate properties. The platform offers a variety of investment opportunities in commercial and residential real estate projects across Canada, allowing investors to participate in real estate ownership with a minimum investment of just $1.
3. NexusCrowd – NexusCrowd is a real estate crowdfunding platform that offers debt and equity investments in commercial real estate projects in Canada. The platform works with experienced real estate developers to offer investment opportunities to individual investors.
4. DealSquare – DealSquare is a digital private placement platform that offers investment opportunities in a variety of asset classes, including real estate. The platform allows investors to access private placements and investments in a streamlined, digital format.
Crowdfunding gives people who might not normally have enough capital to invest in real estate the chance to do so. Investing in real estate is a great way to diversify your investments outside of traditional investments.
The real estate market is extremely hot right now, especially when it comes to investments like multi-family properties. Investing in real estate can be a viable long-term strategy for building wealth and generating passive income. It offers several potential benefits, such as potential appreciation in property value, rental income, tax advantages, and diversification of your investment portfolio. However, it also comes with its own set of challenges and risks.
Have you ever invested in real estate through crowdfunding? I would love to hear about your experience and any tips you might have for others who are considering this type of investment. Share your thoughts and insights in the comment box below!
Disclosure: I’m not a financial expert, so the information provided in this post is simply intended to serve as general information. The information presented should not be considered investment or financial advice. It is crucial that you conduct thorough research and speak with a qualified financial advisor before making any investing decisions. Please be aware that I might have a personal stake in any of the projects or crowdfunding platforms mentioned in this post, which could lead to a conflict of interest. It’s important to note that investing in real estate comes with risks, and there is no guarantee of earning a return on your investment. Investors should carefully review the offering documents for each investment opportunity and perform their own due diligence before investing.