EquityMultiple is a real estate crowdfunding platform that allows accredited investors access to professionally-managed commercial real estate through three capital structures.
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EquityMultiple
EquityMultiple is an online real estate crowdfunding company that allows members to invest in professionally-managed commercial real estate with equity, preferred equity, and syndicated debt investments.
It also allows you to lend money to “sponsors” – other investors looking to borrow money – to purchase real estate. Once enough investors support a deal, the sponsor will receive their loan and purchase the property. As the sponsor makes payments on their loan, the investors will receive their return.
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Investor Eligibility
EquityMultiple is only open to accredited investors. This can be defined as:
- 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 varies by project, but it is typically $10,000. There have been some that were as low as $5,000. For investments made through a self-directed IRA, the minimum is $20,000.
Investment Returns
The targeted rate of return will 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
Actual returns will vary and there is no guarantee that you will earn any return.
Distributions are typically paid monthly or quarterly, but this will depend on each investment.
Investment Time Frames
Depending on the type of investment, the target hold period will vary:
- 2 to 5 years for equity investments
- 1 to 3 years for preferred equity investments
- 9 to 24 months for syndicated debt investments
Remember, these assets are not liquid, meaning they cannot be converted into cash easily. If you think you might need the money before the time frame is up, consider other investment options.
EquityMultiple Fees
Getting set up with EquityMultiple and initiating an investment is free, but fees will start incurring over the course of the deal. This all depends on the success of the investment. Here is how it might go:
- 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.
- EquityMultiple also receives 10% of investor profits, after investors have received all of their initial investment back.
- 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).
Bottom Line
EquityMultiple is a great platform for commercial real estate crowdfunding. They are well-financed and are backed by Mission Capital. They ensure their projects are good options, and the fees are fairly reasonable.
Find the best investment promotions here.
(Click here to learn more at EquityMultiple)
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