EquityMultiple Review: Best for Skilled Real Estate Investors
Saving money on equitymultiple review skilled real does not have to be complicated. We rounded up the essentials so you can spend less and skip the guesswork.
Key Takeaways
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- EquityMultiple specializes in private real estate investments, primarily in the mid-market commercial space.
EquityMultiple specializes in private real estate investments, primarily in the mid-market commercial space. It offers a range of opportunities, from senior loans on commercial properties to equity investments in development projects.
In this detailed EquityMultiple review, we’ll examine how the platform works, the types of investments it offers, its fee structure, and the potential returns you can expect. We’ll also compare EquityMultiple with other real estate investment platforms.
4.1/5Summary of our analysis: EquityMultiple offers accredited investors a diverse range of commercial real estate investments. It has a strong track record, yielding a net return of 15% on realized investments since 2015. However, investments are typically illiquid, and fees vary. For investors seeking portfolio diversification who are willing to commit to longer holding periods, EquityMultiple is a viable option. Other alternatives may be more suitable for those seeking liquidity or lower fees. Overall, it's a solid platform for the right investor profile.
Pros:- Low minimum ($5,000) compared to the competition in the accredited investor space.
- Offers several types of commercial real estate investments varying in length, risk and expected returns.
- Allows you to invest in both managed funds and individual projects.
- Fees vary based on investment type.
- Investments are illiquid.
- Has a positive but relatively short track record of performance.
Table of Contents
Toggle10 Things Investors Should Know Before Signing Up
- The 17% rate of return, mentioned on their homepage and throughout their marketing materials, is their performance from 2019 through the end of 2022. This is after fees and expenses, and only accounts for realized investments. Since its inception in 2015, the platform has yielded a net return of 15% on realized investments. Their stated reason for breaking out the returns in this manner is that 2019 is when they formed their investment committee.
- Ongoing investments in EquityMultiple are projected to yield a 13.80% return. This estimate is derived from an annual internal review. If an investment is anticipated to result in a loss. it’s assigned a null rate of return (XIRR) until the total loss is quantified (meaning it’s considered to have no return until the loss amount is confirmed). I asked EquityMultiple about this, and it was stated that 3.7% of their investments on their current balance sheet have an expected principal loss.
- EquityMultiple sets different return targets for various types of deals. The platform aims for a net annual percentage rate (APR) of 7-12% for debt deals. In the case of preferred equity deals, the target is a net current preferred return of 7-12%. For equity deals, the platform seeks a net cash-on-cash return of 6-12% and a net internal rate of return (IRR) in the mid-teens.
- EquityMultiple partners with outside sponsors (typically real estate companies or developers) to present investment opportunities. These sponsors identify and manage real estate projects. After passing EquityMultiple’s evaluation process, the project is listed on the platform.
- EquityMultiple categorizes its investment opportunities into Grow, Keep, and Earn. “Grow” investments are equity investments in larger projects with higher potential returns and longer holding periods. “Keep” investments are typically debt investments that aim to preserve capital while providing consistent income. “Earn” investments are preferred equity and mezzanine debt investments that offer a balance of income and growth potential.
- EquityMultiple charges different fees based on the type of investment. Common equity investments have an annual fee between 0.5% and 1.5% of invested capital and profit participation after achieving a full return of the invested principal and the IRR hurdle. A servicing fee of typically 1% is charged for debt and preferred equity investments. Additionally, all offerings incur an administrative expense, which is typically $30 to $70.
- Investments made through EquityMultiple are generally illiquid due to the absence of a secondary market. You should expect to hold securities until they mature or a liquidation event occurs.
- The minimum investment amount on EquityMultiple can start as low as $5,000, but this varies depending on the specific offering. Typically, the investment minimum falls between $10,000 and $30,000. Once the minimum investment is made, investors can purchase additional shares in increments of $5,000.
- You can choose between investing directly in specific real estate projects or funds. Funds offer a diversified portfolio of various investments across the platform.
- EquityMultiple doesn’t invest alongside you. Their role is to bring qualified investments to the platform.
About EquityMultiple
Since its inception in 2015, EquityMultiple has facilitated over $4.4 billion in real estate investments and returned $298 million to investors.
After signing up for the platform, you can browse various vetted and curated real estate projects from outside sponsors and lenders, each with comprehensive due diligence materials.
An example of an available opportunity on the EquityMultiple platform.EquityMultiple then manages the distribution of returns and keeps you updated on the project’s progress.
Once you’ve chosen a project, you can invest directly online.
The platform offers a variety of investment types, each with its own risk and return profiles. You can invest directly in specific projects or opt for funds that offer a diversified portfolio across various real estate investments.
An example of a fund currently available on EquityMultiple.Types of Investments EquityMultiple Offers
EquityMultiple offers various commercial real estate projects, primarily in the middle market, including office, industrial, hospitality and retail properties.
EquityMultiple divides available investment types into Keep, Earn, and Grow.
- Keep. These accounts, which the platform refers to as savings account alternatives, are diversified short-term debt notes. The target return on these notes is to exceed current rates on certificates of deposit (CD). For example, the six-month
Final Thoughts
The bottom line: a little research on equitymultiple review skilled real goes a long way. Compare your options, watch for seasonal offers, and never pay full price when a better deal is one click away.
Originally published at thewaystowealth.com.
R.J. Weiss
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