EquityMultiple: Commercial Real Estate Crowdfunding For Modern Investors

EquityMultiple is a real estate crowdfunding platform that gives accredited investors access to professionally-managed commercial real estate through three capital structures: equity, preferred equity and syndicated debt. The company was formed by industry experts and is backed by Mission Capital Advisors, a leading national real estate capital markets firm. Thus far, EquityMultiple has closed over $80 billion in real estate transactions.

Alternatives to EquityMultiple include Origin Investments, DiversyFund, Fundrise, Streitwise and CrowdStreet.

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EquityMultiple

EquityMultiple is an online real estate crowdfunding company that lets members invest in professionally-managed commercial real estate in the form of equity, preferred equity and syndicated debt investments. The platform offers the opportunity to lend money to “sponsors” – other investors looking to borrow money – to purchase real estate. When enough investors go in on a deal, the sponsor gets their loan and purchases the property. Investors receive their return as the sponsor makes payments on their loan.

Before the offer goes online, EquityMultiple performs background checks and due diligence on the sponsor’s previous projects, does a neighborhood evaluation of the investment property, and takes the deal to their partner, Growth Capital Services, who helps decide how much risk is involved in the project.

Investor Eligibility

Equity Multiple is open to accredited investors only, which is defined by:

• An individual with a net worth (or joint net worth with a spouse) of more than $1 million, excluding primary residence value, or
• An individual with an annual income of over $200,000 (or $300,000 with a spouse) in each of the past two years, with the expectation of maintaining that income in the future.

Investment Minimum

The investment minimum, which varies by project, is typically $10,000, although we’ve found ones as low as $5,000. The minimum for investments made through a self-directed IRA is $20,000.

Investment Returns

EquityMultiple’s targeted rates of return depend on the type of investment:

• 6% to 12% for equity investments
• 7% to 12% for preferred equity investments
• 7% to 12% for syndicated debt investments

Of course, actual returns will vary and there is no guarantee that you will earn any return.

Typically, distributions are paid monthly or quarterly. But, again, this will depend on each investment.

Investment Time Frames

Target hold period will vary by type of investment:

• 2 to 5 years for equity investments
• 1 to 3 years for preferred equity investments
• 9 to 24 months for syndicated debt investments

Keep in mind, these assets are not liquid. If you think you might need the money before the time frame is up, we suggest you consider other investment options.

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EquityMultiple Fees

Registering for an EquityMultiple account, browsing investment opportunities and initiating an investment is free. However, fees are charged over the course of the deal, depending on the success of the investment. Here’s how it breaks down:

1. Once an equity investment has been made, EquityMultiple charges a small annual fee (typically 0.5% of the aggregate amount invested) which is paid periodically to cover ongoing investor reporting, tax preparation and communications relating to the investment.
2. EquityMultiple also receives 10% of investor profits, after investors have received all of their initial investment back.
3. For preferred equity and debt investments, EquityMultiple typically charges a service fee in the form of a “spread” between the interest rate being paid by the loan sponsor and that being paid to investors (typically 1% of the invested capital).

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Bottom Line

EquityMultiple’s commercial real estate crowdfunding opportunities gives accredited investors a simple way to diversify their portfolios. The company is well-financed and secure with Mission Capital in their corner. Their projects have been vetted by their professional team, and their fees are quite reasonable.

Find the best investment promotions here.

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