EquityMultiple Review – Real Estate Investing Platform

7 minutes

We all have heard of it “ Invest in real estate and get more than enough money for your retirement.”

But how do you know in which properties you can invest to drive cash and do you collect scratch to buy lucrative deals?

The truth is, we don’t have enough time to learn the ins and outs of the investment market. That is why we find crowdfunding real estate investment interesting.

This article is about how EquityMultiple helps you to invest in real estate and how well do you use this platform. Let’s find out…

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What is EquityMultiple?

Crowdfunding real estate is a new paradigm and it offers exceptional access to individual investors. EquityMultiple is a new-york based company for real estate crowdfunding launched in February 2015. It represents the evolution in real estate crowdfunding, cutting barriers low for accredited investors while providing advanced resources for a commercial investment firm in a disciplined way. 

The platform lets you build wealth by investing directly in real estate projects. You can make a diversified portfolio with minimums of just $5000 so you can co-invest in the investment firms from all over the country.

EquityMultiple provides three investment types for investors that reach the net worth threshold or certain capital. They are transparent about fees and costs and provide a large network of sponsors as compared to other crowdfunding sites.

 Check out our Real estate guide

How does EqutiyMultiple Work?

It is a real-estate crowdfunding company. EquityMultiple offers the investors to give loan to ‘sponsors’ or to other investors who want to borrow money to buy real estate. The sponsors buy property from the loan when enough investors sign-up for a deal. Investors get returns when sponsors make payments on their loans.

EquityMultiple  Process:

Exclusive Deal Flow

They source investments from across the country organization of battle-tested, experienced real estate firms.

Data-Driven Diligence

They apply exclusive calculations and guaranteeing strategies, choosing only 5% of investments assessed.

360° Execution

A group with real estate exchange experience attempts to secure your principal and maximize the returns.

Sustained Growth

They assemble a differentiated portfolio of cash-flowing and, expertly managed real estate

Features of EquityMultiple:

Syndicated debt

It is a debt backed up by a company that has a long history in investing. That means EquityMultiple offers deals that are less risky and backed by experienced investors too rather than other companies that are direct lenders in all the deals. This feature gives additional security to the investors, so they take less risk while investing.

These deals are relatively shorter than other deals offered by EquityMultiple and last only for six months to 2 years. 

Preferred equity

This feature of EquityMultiple doesn’t involve or be backed up by big business partners but the profit you can get using it is larger than syndicated debt deals. It offers returns of 10-14%. The deals are also shorter for this feature and remain between 1 to 3 years.

Equity 

This feature is the riskiest investment but offers the best reward. You will be the last party to get paid back for your initial investment. The deal ranges for a long time, between 3 to 7 years and gives returns of 14 percent or more.

Short-term notes

The short-term notes investment function in a similar way to a corporate bond in terms of yield. Diversified Notes will be used to help pre-fund certain investments. In exchange for their participation, investors will receive interest payments on a monthly basis.

The first Short Term Note offering will have a term of 180 days, with investors receiving a refund of their principal at the end of the term. Additionally, in the future, they may offer different term lengths, with higher interest rates for longer holds (and vice versa).

Who’s EquityMultiple best for?

To avail of the offering and deals of EquityMultiple, you need to qualify as an accredited investor. You would have to provide some personal and professional information to become an accredited investor. 

Following are the requirements for becoming an accredited investor. You should at least meet one of them:

• A person alone or along with his spouse has a net worth of over $1 million, excluding primary residence.

• An individual having income more than $200000 in each of the recent two years, or over $300,000 income along with his spouse in those years. You should also expect reaching the same level of income in the current year

EquityMultiple Fees 

It charges servicing fees to shareholders on all kinds of investments annually i.e. 1% of invested capital. This fee reimburses EquityMultiple for continuing asset management, tax plans, etc.  

For Equity investments, EquityMultiple holds the right to a percentage of investor's profits. The sharing of profit adjusts EquityMultiple’s encouragement with the investors – both EquityMultiple and investor) earn more when investments perform well. 

EquityMultiple tries to reduce the expenses correlated with investment administration i.e, annual tax/filing and entity formation, etc, by charging annually per investment amount – generally $30 – for consistency. 

Potential returns and cash flow

The platform centers around fixed-rate contributions that convey returns in the 8%–14% APR range and, acknowledges just around 5% of the deals with an in-house guaranteeing group and demanding ingenuity measures. 

Until this point, EquityMultiple's normal yearly return on debt offering and cash-flowing equity is simply over 9%. The management expects this value to increase in the coming years.

Is EquityMultiple legit?

EquityMultiple raised $850,000 in 2015 through seed money and $3 million in august 2018 through bridge funding. Till now, 18 of EquityMultiple’s contributions have been registered for an investor-level internal rate of return(IRR)of between 12% and 17%. EquityMultiple has returned $20.3 million to investors since 2016. It can be said that EquityMultiple is legit.

Can I invest through an IRA with EquityMultiple?

Yes, you can invest through an IRA with EquityMultiple as it is partnered with millennium trust. Although it varies from what you will get from top IRA brokers. Other SDIRA custodians are also fit for this process but mostly you will need to contact EquityMultiple directly. Minimum IRA-funded investments you can make are $20,000 due to additional manpower and management required for the process. 

How Does EquityMultiple Make Money?

 EquityMultiple charges money from the investors as an investment intermediary which is not a flat fee it depends on the type of deal placed. 

Charges for equity deals are:

• 2% placement fee for sponsors
• 0.5-1% fee for investors annually

Fees for preferred equity deals are:

• 2% placement fee for sponsors
• 1% total preferred return paid by investors every month

Fees for debt deals are:

•  2% placement fee for sponsors
• 1% interest rate paid by the investors every month 

Conclusion:

If you are an accredited investor and interested in real estate investment then, EquityMultiple is a good option for you. It’s a partnership with mission capital that gives it a steady stream of deals from which you can choose according to your choice. It has varying frames of returns according to the kinds of debt it offers. 

EquityMultiple is a fast and secure investment opportunity with the lowest minimum of $5000. 

This EquityMultiple review is highly researched. Although it has all the necessary details for this platform, we still recommend taking expert’s advice before making any deal.