A Powerful Real Estate Investing Platform
EquityMultiple founders and partners Charles Clinton and Marious Sjulsen promise to make it easy for investors to focus on the full spectrum of commercial real estate. This is whether they’re seasoned or not. However, is their investing platform all it’s cracked up to be? We did some digging in this Equity Multiple Review, so you don’t have to.
Equity Multiple Review: Overview
EquityMultiple is a crowdfunding platform for the commercial real estate market. It distinguishes itself from other real estate crowdfunding platforms by allowing investors to try their hand at all areas of commercial real estate. This means an investor can diversify their portfolio through various markets and assets. This includes different commercial property types.
The crowdfunding approach allows investors to be a part of projects more significant in scope than most could afford independently. EquityMultiple claims it has put $39.2 million in the hands of the investor. The platform is different in that it offers equity and preferred equity and senior debt investments.
EquityMultiple focuses on the benefits of blending their range of experience in the real estate industry. This includes finance, private equity, technology, and law.
They also speak of a collective vision for harnessing technology to transform real estate investment. Their objective is to use tech to help investors access private transactions. They also aim to streamline the entire process of real estate investing. The aim is to practice due diligence and strongly believe in being transparent. They have a commitment to robust underwriting, as well as support for investors.
The team at EquityMultiple conducts a heavy vetting process that happens in two parts. Commercial real estate professionals conduct the first phase of the process. This stage includes:
- Pro forma analysis
- Rental comp data
- Local market fundamentals
- Cap rate sensitivity
- Deal dynamics
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Equity Multiple Review: How Does EquityMultiple Work?
What’s their specialty?
EquityMultiple isn’t just your average online marketplace for real estate investing. The company works with some of the top sponsors in the biz to offer you solutions. They specialize in debt, equity, and preferred equity.
Its name is from the finance term “equity multiple.” This term refers to the amount of money you get back versus the amount you originally invested. They have a target minimum of approximately $500,000 per deal. But they’ve also closed equity deals in the range of $6 million.
What do I need to tap in?
In order to take advantage of EquityMultiple’s platform, you’ll need to be financially secure. This is defined by their terms and meet certain other criteria. Furthermore, you’ll need a minimum of $5,000 to invest. They will also want some background on your investment goals, along with your experience. Also. you must be an accredited real estate investor.
Once you’ve opened an account, EquityMultiple makes it easy for you to get cash via ACH transfers. You’ll also be able to see regular updates about how your assets are performing and invest.
What is the user interface like?
EquityMultiple also has an intuitive website that lets you ask questions. You can even get hold of a live person if need be.
Additionally, they have an intuitive dashboard that displays the information required by investors in order to evaluate potential opportunities.
Before a sponsor is accepted, they must show tax returns and any papers associated with the progress of the deal. In the name of transparency, an investor can also access these documents. They can burrow into reports as much as necessary. EquityMultiple allows self-directed IRA investments. The platform’s Investor Relations team assists in these situations.
Equity Multiple Review: Is EquityMultiple Legit?
Simplifying real estate and making it accessible and transparent is why Clinton and Sjulsen began EquityMultiple. They’ve been featured in Forbes, Huffington Post, Entrepreneur.com, Bloomberg, and Marketwatch. According to their website, they have a return rate of 14.5% and over 3.6 billion in assets. On top of that, they’ve put 63.2 million back into the hands of accredited investors.
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Equity Multiple Review: EquityMultiple Fees
They offer a breakdown of their fees as follows:
Investor Fees And Expenses:
Servicing Fee
EquityMultiple charges investors a yearly service fee which is about 1% of the capital that’s been invested. They put this money towards items like continuous management of assets, as well as reporting and record-keeping. It also helps cover associated expenses like income tax prep.
Profit-Sharing
EquityMultiple gets a cut of investor profits for certain investments. Equity investments would fall under this category. However, they stipulate that this only after investors have been paid back the total amount of their principal investment.
The crowdfunding platform’s team views profit sharing as an incentive for all parties. Additionally, they feel that profit-sharing promotes a robust selection process.
Expenses
EquityMultiple is upfront about the miscellaneous expenses that go hand in hand with the administrative side of investments. This includes yearly tax prep, forming an entity, and necessary yearly filings that the venture requires.
The company does a good job of keeping these charges to a minimum and generally charges a flat yearly fee for an investment of around $30.00.
Sponsor Fees & Expenses
On top of investor fees, the platform also charges upfront fees for origination and placement. These fees are usually covered by the borrowing party however they are pulled from investment proceeds.
They are viewed as transaction-related expenses. EquityMultiple uses these fees to help cover the cost of sourcing and screening investments, as well as their structuring.
They also use these funds to find accredited investors—individuals who have a net worth (joint or solo) of more than $1 million, a yearly income of over $200,000 (or $300,000 with a spouse) in the past two years and the current year, or those with specific professional credentials.
Equity Multiple Review: Investing With EquityMultiple
The platform offers three different approaches to investment. Most people select the approach that matches up with their investment objectives. Other investors choose to diversify across all three.
Fund Investors
- They are built-in diversification and multiple assets/asset classes.
- This type of investment is best for investors who are looking to diversify right away.
- It employs the following strategies: debt, equity, CRE securities, and “opportunity funds.”
- This investment type has a target duration of between eighteen months and over ten years.
Direct Investing
- Direct Investing is for individual investors who want to build their real estate portfolio and increase their net worth. Especially if, they want to do it a single property at a time.
- The target duration is between 6 months and 5+ years.
- Investors must make a minimum investment of 10k.
- Strategies employed include debt, common equity, and preferred equity.
Tax-Deferred Investing
- This approach is best for investors who have significant recent capital gains —or they expect to in the future.
- It has a target duration of 5 to 10 + years.
- It requires a minimum investment of $40k.
- Strategies include Opportunity Zone and 1031 exchange.
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EquityMultiple Review: Pros & Cons
EquityMultiple Pros
- The platform has relatively low minimums for real estate investing. Although the most common investment is $10,000, investors can find opportunities for as little as $5,000.
- Access to commercial real estate investments across a wide variety of markets. Additionally, accredited investors can investigate opportunities in debt and preferred equity and equity, all on a single platform.
- EquityMultiple’s website is easy to navigate.
- Excellent customer support and customer service.
- Investors have the possibility of a high rate of return on their investments.
- The rate of return on your debt investments on EquityMultiple appears less volatile and consistent than other options.
- Availability of fund options. EquityMultiple works with experienced fund managers from across the U.S. to prioritize fund structures. Moreover, this helps an accredited investor to diversify.
- EquityMultiple works with a real estate advisory firm, Mission Capital. The firm is experienced and well-financed, not to mention endlessly connected in the real estate market.
- The approach to real estate investments offers a high rate of return on your investment.
- EquityMultiple 1031 exchanges and preferred equity investments.
- An attractive monthly preferred return of 1% total spread is possible.
- While EquityMultiple doesn’t offer a guarantee that an investment will yield a return at all, debt preferred equity investments and preferred equity investments pay out to investors pretty regularly—either monthly or quarterly, depending on the specific investment deal.
- EquityMultiple has a helpful glossary of terms.
EquityMultiple Cons
- The platform is only available to accredited investors
- The minimum real estate investment to participate in EquityMultiple is relatively high.
- When new offerings come available, they can sell out quickly. However, EquityMultiple has two available perpetual fund options. Their goal is to add more later in 2021.
- The fee structure is quite complex and varies depending on real estate investment type. The origination fee goes to EquityMultiple, not the investor.
- EquityMultiple also receives 10% of the profits on common equity investments at exit of the investment. However, this is after you’ve recovered your initial investment.
- Investor fees. EquityMultiple has a yearly asset fee of between 0.5% and 1.5%. However, this is a standard rate for the industry.
- If you’re in it for the short term, this option might not be the best option for you. After all, platforms like this aren’t the best for investors with short-term cash flow issues.
- The platform is only available to U.S citizens with a Social Security Number or those authorized to work in the United States.
Equity Multiple Review: Is investing with Equity Multiple Right for Me?
You may want to consider EquityMultiple if you want to dip your toe into commercial real estate but don’t have the means to go it alone or necessarily know where to start.
Here’s where real estate crowdfunding platforms can be an excellent resource. Additionally, the projects you have access to have already been vetted, which may lower your risk.
However, you don’t have to go it alone, which is especially attractive when you’re new to the game. Moreover, splitting the costs with co-investors via EquityMultiple can make good fiscal sense, depending on your situation.
Even though a real estate crowdfunding platform can help you on your path, ensure that you’ve got options, like a robust life insurance policy that you can potentially use as capital to shore up your investment.
EquityMultiple is ready and armed to assist individual investors and real estate companies. In addition, they can be a great resource when it comes to figuring out your asset management.
However, it’s still imperative that you do your own due diligence to assess your risk.
Equity Multiple Reviews by Real Estate Investors
The best way to evaluate a real estate crowdfunding platform is by checking out its track record. You will need to do your due diligence when choosing which real estate investments are worth your while.
Check out these reviews of the platform from various investors in the space:
Geoff—entrepreneur:
“When you’re a small fish, such as myself, in a large fishbowl of investors, it is so refreshing to be able to participate in multiple offerings with minimum investment amounts.”
Colin Webb, Orthodontist:
“My main objectives are growth and passive income. I invest in securities and other growth investments of course, but personally, I’m more interested in investing in rental properties and real estate deals that have the potential to create a massive stream of passive income.”
Gabriel Morris, Digital Marketing Entrepreneur:
“Why real estate? I like investing in assets where the probability of the asset going to zero is close to zero. It is possible to find plenty of non-new construction deals where the worst-case scenario is not overly grim.”
While real estate isn’t the top priority for everyone’s portfolio, those who have ambitions to unleash their investment powers seem to have found the platform a critical tool in their arsenal.
Final Word: Is EquityMultiple Worth It?
If you’re looking to invest in real estate and are okay with not being able to access your money for the holding period, EquityMultiple could be worth checking out. Not only are they in partnership with a highly respected real estate firm, but the company also hand-selects every investment opportunity.
Additionally, the platform is backed by powerhouse real estate capital services firm Mission Capital.
But, real estate crowdfunding isn’t the same as investing in a REIT. The platform is geared towards the accredited investor, and the deals tend to be more sophisticated.
Before you sign up, keep in mind that investment always entails an element of risk. However, they only accept 10% of all deals they receive. They recognize that not every deal is a great deal.
If you want to take the next steps with real estate transactions or deals, learn how to handle investment opportunities, or get insight into the types of investments you should be looking at, EquityMultiple may be a great option.
If you found our EquityMultiple Review helpful, check out some of our other reviews. The Stock Dork offers real-world assessments of some of the top investment platforms and software options.
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