EquityMultiple is a young real estate crowdfunding website that’s recently been making headlines in the industry.
They have picked up a lot of speed, with investments on the platform having tripled since the end of Q2 of 2016.
With this blog post, I’m going to review their platform and give you an in-depth look at the pros and cons of using their website.
We’ll take a look at who can invest in real estate online, how it works, things that should be on your radar, and much more.
If you’re looking to learn more about this emerging industry as a whole, go and check out my book, Real Estate Crowdfunding Explained on Amazon.
There is a paperback and a kindle version available.
1. Overview of EquityMultiple
Equity Multiple is a real estate crowdfunding website that you can use to invest in Regulation D 506(c) offerings.
In simple terms, this means that you can use the platform to invest in debt and equity-based commercial real estate deals.
You an easily diversify across different deal types. These variables include:
- Debt and Equity
- Asset Classes
- Markets
- and more.
It’s important to recognize that your experience on the platform is going to vary based on the TYPE of asset class that you’re interested in.
What do I mean by that?
As a real estate investor, the pros segment your investor behavior “type” based on your appetite for RISK and REWARD.
If you want to use the maximum measures available to curb any downsides that could arise as a result of your investment, then you’d be interested in Syndicated Debt, also known as fixed-income investments.
Syndicated Debt investments on EquityMultiple take the form of loans that are secured by real estate. This means you’ll get a lot of downside protection, and be the first to make money on a deal, but you won’t experience “upside” returns.
Now… upon reading that, if you’re like, “Well, that’s cool, but I want higher returns.”
You’ll be more interested in a preferred equity deal, where you’ll receive fixed monthly or quarterly returns with a fixed portion of the overall project’s upside.
You won’t get as good returns as a strict equity deal, but you’ll have preferred status, meaning that you’ll get access to returns before an equity investor or the sponsor.
Finally, if you’re more like ME and you’re an all-in kinda guy or gal, then you’re gonna want to look into a strict equity deal on EquityMultiple. You’ll enjoy uncapped upside if the deal goes well.
2. What are the pros of EquityMultiple?
Looking through this crowdfunding platform, one of the aspects that stood out to me was their partnership with Mission Capital, a traditional real estate capital firm.
This relationship gives them access to deal flow, investors, and other partnerships that can help strengthen the offerings on their platform.
They also have a strong team, with a background in law, finance, and real estate.
Right away, this signals that you’re going to gain access to a bunch of new offerings that usually, you wouldn’t have access to. Past deals include:
Along with discovering new deals, you can also breathe a sigh of relief knowing that all of these deals go through a strict vetting process.
The deals go through due diligence, stress test underwriting assumptions, and the market/company is analyzed.
This means that the platform is only accepting about 5% of the total applications.
Lastly, not every real estate crowdfunding platform offers both debt, equity, and preferred equity deals, so this is also a benefit in my eyes.
It makes it easier to diversify across a bunch of different asset classes to spread out your overall risk. You’ll also get exposure to more opportunities and rapidly gain experience as a real estate investor.
3. What are the cons of EquityMultiple?
While I’m coming to like this site, there are also some noticeable drawbacks with this crowdfunding platform that I want to point out.
I want to give you a full and accurate picture so that you can make an informed decision as you’re entering the real estate crowdfunding industry.
First of all, EquityMultiple is limited to accredited investors, meaning that a typical retail investor can’t use the platform.
An accredited investor is someone who either:
- Has a net worth of $1 million (excluding their house)
- Earn at least $200,000 per year (for the last two years)
There are some other terms that can apply to you if you’re married. Basically, you need to be someone who can afford an investment loss, should it arise. Under Regulation D 506(c), the platform must verify your accredited investor status.
EquityMultiple has not yet stated if they intend to make use of Regulation A+ or Title III of the Jobs Act to expand their offerings.
Another big drawback to this crowdfunding platform is that, to my knowledge, they mostly focus on commercial real estate investment offerings.
If you were hoping to invest in fix and flip or residential real estate, this isn’t the website for you.
Finally, these guys are the new kids on the block. There are other more established companies in the industry, so we’ll have to see how they fair among the competition.
4. Should you invest on EquityMultiple?
Having considered everything, there is ONE thing that stood out in my mind.
The way that this platform structures crowdfunding deals, they set up a separate LLC for every offer. The members of the LLC then share in the profits accordingly.
Why is this important?
Because… if EquityMultiple goes out of biz, then your investment is protected. It’s not tied to their platform or services.
The fact that a separate LLC is set up to manage the deal means that outside factors will not impact your individual investment. You’ll share in the profits and losses normally.
Given the recent growth of this platform and the strong management, team, I think it’s worth it to check out their website and poke around (which is free).
Just remember, you need to be an accredited investor to invest (and prove it).
The investment minimums start at $5,000. These guys were nice enough to set up a special link for CrowdCrux fans, so if you wanna check them out, I’ll paste it here.
This is an affiliate link and there are affiliate links in this post. If you sign up, I earn a very tiny commission at no expense to you.
If you want to gain a bit more information about other real estate crowdfunding platforms, I have a TON of information out there.
Not only do I have a book available in Amazon entitled Real Estate Crowdfunding Explained, but I also have set up a dedicated website with some great info.
Finally, I was getting a lot of frequently repeated questions from readers on this topic. I was having to answer them one by one.
To help out, I’ve set up a comprehensive online course that walks you through some of the MAJOR websites in this niche and gets you up to speed on how it all works.
Once you enter your email address, you’ll start getting emails from me!
By the way, if you want, you can respond to any of them. I can’t promise I’ll always answer, but I’ll read them!
Thanks for checking out my blog. Hope this post was helpful. Peace!
