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EquityMultiple remains one of the top dogs in the real estate crowdfunding space.
Since launching in 2015, EquityMultiple has delivered an average annualized return of 17%. The platform is professional, customer service is easy to reach, and offers several types of investments depending on your priorities.
If you’re an accredited investor, that is. Only the wealthy can participate, and with high minimum investments at that.
Thinking about investing with EquityMultiple? Here’s what you need to know.
EquityMultiple offers short-term, fixed-interest notes and longer-term, higher-return equity investments.
Boasting a strong track record and an easy-to-reach support team, EquityMultiple offers a reliable, higher-end real estate crowdfunding option. But it's only available to accredited investors and requires high minimum investments.
- High returns
- Strong track record
- Diverse investment options
- Selective underwriting
- Simple platform
- Easy to contact
- Accredited investors only
- High minimum investments
- No liquidity
- Long-term commitment on most investments
- Few investments available at any given time
What Is EquityMultiple?
EquityMultiple is a marketplace that connects passive investors with heavily screened and underwritten real estate investments.
After creating an account, you can view the available investments. These fall into three buckets: Keep, Earn, and Grow (more on those shortly).
All investments revolve around commercial real estate syndications, selected by EquityMultiple from sponsors (commercial investors) who have applied to raise capital for their deals through the EquityMultiple platform.
EquityMultiple makes it easy for you to invest in these deals by offering several options.
How EquityMultiple Works
When EquityMultiple approves a syndication deal, they fund it upfront to close it quickly. Then they turn around and recoup their money by raising funds from investors like you and me.
Actually, they fund the initial investment by borrowing money through their “Keep” notes. These notes pay fixed interest, and EquityMultiple markets them as an alternative to savings accounts. At this time, they offer a three-month note paying 5.5%, a six-month note paying 6.5%, and a nine-month note paying 7%. You can lend EquityMultiple money as a short-term investment, and they use the money as a revolving fund to buy into new syndication deals.
As a nice perk, EquityMultiple lets you redeem your “Keep” note investments early—if you roll them over to another investment on EquityMultiple.
Alternatively, you can invest directly in those syndication deals. You invest as a limited partner, becoming a fractional owner in these deals or funds. Like all real estate syndications, these are longer-term investments, typically two to seven years. EquityMultiple categorizes these as either “Earn” or “Grow” investments.
“Earn” investments focus on paying a high-income yield, and may own secured debts, preferred equity in properties, or simply more income-oriented property investments. “Grow” investments involve commercial real estate properties with high upside potential. These include value-add properties (glorified flips of commercial buildings) and other real estate deals with high potential returns.
Once logged into the platform, you pick and choose investments from those categories to fund.
EquityMultiple has seen plenty of success, and there’s a lot to like about their platform.
Beyond investing passively in real estate, consider the following advantages of investing through EquityMultiple.
Among EquityMultiple’s “Grow” investments that have gone full-cycle, the average return delivered to investors is a whopping 54.32%. That’s pretty impressive!
The income-oriented “Earn” investments have averaged 12.15%, and the “Keep” investments have averaged 5.88%. The weighted average across all investments on EquityMultiple is 17.0%.
Transparent and Strong Track Record
How do I know those average returns? Because EquityMultiple publishes them every quarter.
Check out EquityMultiple’s full track record here.
EquityMultiple has done deals in 167 markets with 116 sponsors. That comes to $464 million in total capital deployed.
In other words, you can find deals all over the country on EquityMultiple’s platform, with plenty of sponsors. That creates plenty of opportunity for you to diversify your real estate holdings.
Some of EquityMultiple’s deals and funds include other types of commercial properties beyond multifamily. Examples include industrial properties, retail, hotels, and more.
And that says nothing of the three different investing categories to help you invest based on your needs and risk tolerance.
Experienced and Selective Underwriting Team
Of the $3.93 billion in deals presented to EquityMultiple by sponsors, only 9.26% even go on to the next round of screening. Only 2% of transactions ever get approved.
This is why EquityMultiple can brag about the returns they’ve delivered to investors on their platform.
Simple Platform for Investing
While most investors consider private equity scary and intimidating, the EquityMultiple platform is pretty simple and straightforward.
You can browse available investments easily and view projected returns and deal summaries. And with a click or two, you can drill down to more detail.
Easy to Contact
EquityMultiple makes it really easy to get in touch with them.
I counted no fewer than six options to reach them, starting with a phone number listed on the footer of every page of their website. They also offer live chat and support email addresses on every page of the site.
Lastly, they provide links to reach them via their Facebook, LinkedIn, and Twitter profiles.
Of course, no platform is perfect, or we’d all be investing there already. Keep the following drawbacks in mind as you consider investing through EquityMultiple.
Accredited Investors Only
Only accredited investors can invest on EquityMultiple’s platform. In other words, if you're a wealthy investor with a net worth of over $1 million or over $200,000 per year in income ($300,000 for married couples), you're in. If not, tough luck.
That knocks out around 90% of American households right off the bat.
High Minimum Investments
EquityMultiple loves to advertise that the minimum investment on their offerings starts at just $5,000. That’s technically true, but only for their “Keep” notes.
Actual properties and funds require much more to invest in, typically $15,000 to $30,000. That’s not trivial, making it harder to spread your money among all those diverse offerings we highlighted above.
Non-Liquid, Long-Term Investments
The “Keep” notes notwithstanding, most of the investments on EquityMultiple require you to commit your money long-term. Think two to five years, with no option to liquidate early.
Few Investments Available at Any Moment
At the time of this writing, EquityMultiple has three “Keep” notes available, three “Grow” investment options, and one “Earn” investment.
So yes, EquityMultiple has done many different deals across hundreds of markets. But at any given time, don’t expect to see an abundance of investing options.
How EquityMultiple Compares
EquityMultiple’s two closest competitors include RealtyMogul and CrowdStreet. All three are excellent options for accredited investors, featuring private real estate syndications with high historical returns but requiring high minimum investments.
CrowdStreet is bigger and a little older, having invested $3.9 billion across over 730 deals. They’ve also beaten EquityMultiple on the average internal rate of return (IRR) delivered to investors at 19.7%.
But CrowdStreet doesn’t offer the short-term, fixed-interest notes that EquityMultiple does, which skew their average returns lower. Read our full CrowdStreet review here for more details.
As for RealtyMogul, I like that they offer REITs for non-accredited investors as an entry ramp for us middle-class plebs. But the best investments on RealtyMogul are still reserved for accredited investors. Check out our RealtyMogul review for more.
Speaking of non-accredited investors, they can invest in short-term notes similar to EquityMultiple’s through Groundfloor. And if you want full liquidity, you can invest in Stairs by Groundfloor for 4% to 6% interest. Best of all, you can start investing with $10 on Groundfloor. Read our full Groundfloor review for more details.
The closest non-accredited investors can get to the funds and commercial properties is probably Fundrise. On the plus side, you can start investing with just $10. But don’t expect any flexibility to pick and choose investment funds or properties until you invest five digits. You can read our full Fundrise review here.
For accredited investors looking to invest in real estate syndications and funds, EquityMultiple is an outstanding option.
You can invest in one place without needing to go out and screen sponsors yourself. Plus, you can invest for as little as $10,000 (up to $30,000) instead of the minimum $50,000 to $100,000 typically needed to invest in real estate syndications.
I also love that EquityMultiple offers short-term notes and that you can roll them into other investments on the platform at any time.
Consider it in the same league as CrowdStreet and RealtyMogul, as another place to scout for promising investments.