EquityMultiple Review 2024: Real Estate Investing Made Simple

This EquityMultiple review was last updated on 01/01/2024.

---

EquityMultiple is a real estate crowdfunding platform that connects accredited investors to high-quality, pre-vetted commercial real estate investment opportunities.

The company partners with experienced lenders and real estate companies around the United States to source deals for its platform investors.

It thoroughly vets each sponsor and proposed market opportunity, seeking attractive risk-adjusted target returns for investors. Exhaustive due diligence is performed on each project to determine which deals are qualified for their platform investors. Less than 10% of deals analyzed are listed on the platform. 

From this curated set of heavily scrutinized properties, EquityMultiple opens the investment opportunity to its investors, who are given ample information to perform another layer of analysis before investing. 

Target rates of return range from 6% to 17%+ over durations of 6 months to five years. 

EquityMultiple Returns

EquityMultiple can no longer publicly disclose long-term investor returns due to securities regulations.

But investors who open an account have access to all historical return data. There’s no obligation to invest if you open an account. 

Since its founding, investors have deployed more than $570 million on the platform in 167 distinct markets. 

EquityMultiple is now providing return information based on the three investment types — Keep, Earn, and Grow.

• Keep — Savings account alternatives. Compelling rates, shortest terms.
• Earn — Commercial Rea Estate (CRE) investments offering current yield, payment priority, and a relatively short term. An income focus.
• Growth — CRE investments offering significant upside potential. Take your real estate portfolio to the next level.

I invested $20,000 on the platform into a multifamily apartment/retail complex in May 2022.

Once the investment begins to mature, I’ll update this review with my EquityMultiple reviews and experience investing on the platform. 

I also invested $10,000 into an Alpine Note product in late 2022 which paid off in June 2023.

Learn more at EquityMultiple

EquityMultiple 2024 Review for Investors

The EquityMultiple platform is for accredited investors looking to increase their investment portfolios’ overall risk/return profile by investing in syndicated real estate deals.

Investors should have significant capital available for long-term investments. Syndicated real estate investment deals may have durations greater than five years with limited or no liquidity.

The commercial and large multi-family real estate markets have significant advantages over single-family residential or small multi-family deals.  

EquityMultiple deals are typically valued anywhere from a few hundred thousand dollars to a hundred million dollars or more. EquityMultiple investors typically fund a fraction of the money for a greater syndication deal. 

Here’s a quick video synopsis that explains it very well:

How it Works

EquityMultiple has a national network of real estate companies seeking opportunities across different property types. They evaluate each project and partially invest with their own funds, aligning their interests with EquityMultiple investors and providing the first layer of diligence.

National and regional lenders with significant experience, real estate companies operating in thriving primary markets, and sponsors with a proven record of meeting and exceeding return projections.

This network is bolstered by a unique real estate partnership.

EquityMultiple is the only online investing platform backed by an established real estate company, Mission Capital, a leading national real estate capital markets firm.

After vetting the project Sponsor, EquityMultiple evaluates the market and key metrics. Before entering the next phase, each deal must pass a proprietary due diligence process.

Key metrics include properties in strong markets with current cash flow and value-add projects with construction components and aggressive business plans.

For projects that survive initial due diligence, we stress test underwriting assumptions, review key legal documents and third-party reports and consider transaction structure. A select few are presented on our platform.

What You’re Investing in

EquityMultiple offers a range of property types, including multifamily, office, and industrial, and a range of investment structures, including debt, preferred equity, and equity.

All real estate deals are unique. But each deal receives the same rigorous vetting process. Once the diligence is completed, the opportunity is introduced to investors on the platform.

When you invest in a particular deal, you’re purchasing an ownership interest in the deal-specific LLC, which in turn invests into the underlying project. 

As part owner of the LLC, the investor is entitled to a share of income or losses generated by the underlying investment. This structure provides an important layer of protection for investors, as it helps insulate each investment from financial issues related to other investments or the parent company.

Should EquityMultiple become insolvent as a company, the LLCs are designed to continue to exist independently even if their parent company files for bankruptcy. 

Investment Structures

EquityMultiple offers three primary types of real estate investment deals. 

Debt

Most debt investment offerings on EquityMultiple will be secured by the underlying real estate or by an interest in the property-owning entity. Investors do not participate in the upside of the project.

In the event of a senior loan investment, foreclosure may be available as a remedy for failure to pay.

Target returns range from 7%-12%, and deals last from 6 to 24 months.

Preferred Equity

Preferred equity investments off investors a fixed monthly or quarterly payment with the potential for some limited upside gains. 

These types of investments are not secured but do offer priority of payment. In other words, investors will typically be entitled to receive a preferred return and return principal before the common equity investors or sponsors.

Total target preferred returns range from 11%-17%, and deals last from 1 to 3 years.

Equity

Common equity investments offer the potential for uncapped upside but a significantly higher risk of principal loss because debt holders and preferred equity holders (if any) are generally entitled to be paid before common equity holders receive payment.

Investors are on the same economic terms as the sponsors and other deal participants, aligning returns with overall deal success.

Target internal rates of return (IRR) are expected to be 14%+, and deals last from 2 to 5 years.

EquityMultiple Review: Three Ways to Invest

EquityMultiple offers three ways to invest in real estate. 

1. Direct Investments

Direct investments are the most common form of investment on the platform. Most of this EquityMultiple review focuses on this type.

This is when you buy directly into one property and own only a portion of one specific entity. 

Minimum investments are between $10,000 and $20,000

2. Funds

EquityMultiple now offers investment funds that allow you to invest in a diversified mix of properties through one investment. These funds invest in properties with varying sponsors, strategies, geography, and capital structures. 

The properties are pre-vetted and already closed. 

Target IRR returns are from 12%-20% with varying yields and holding periods. 

The minimum investment on EquityMultiple multiple asset funds is $20,000 to $25,000, depending on the fund. 

3. Alpine Notes

EquityMultiple offers a short-term, high-yield investment product for idle cash. The company has branded these as Alpine Notes.

Alpine Notes have shorter term durations, usually around six months. That makes them more liquid than other real estate investments but offer much higher yields than traditional high-yield cash savings accounts. 

Though not risk-free like an FDIC-insured bank account, the Alpine Notes are designed to offer compelling yields and “first loss protection”.

First, loss protection is a built-in safety/insurance feature that places more risk on EquityMultiple than on investors. 

EquityMultiple will purchase a small portion of the aggregate notes issued in this series in a first-loss position. This means that upon an occurrence of default, the notes held by EquityMultiple will only receive payments after all other investors receive all principal and interest.

The notes are secured by multiple real estate investments, including loans and special purpose vehicle or joint venture interests or participation in other platform properties. 

Interest payments accrue and compound monthly, but are not paid until the end of the investment period. 

These notes automatically roll over both the principal and the accrued interest into the subsequent series of Notes.

Investors can choose to opt out of the automatic rollover up to 10 business days before maturity and will receive their accrued interest and original principal at maturity. 

Branded as a “savings alternative”, Alpine Notes are not a savings account. They are a debt product used to pre-fund platform deals. EquityMultiple is not a bank, and Alpine Notes are not FDIC-insured. 

Due Diligence

A unique aspect of real estate crowdfunding is the multiple layers of due diligence. First, the sponsoring lending or real estate company analyzes several deals to find a lucrative opportunity. 

EquityMultiple evaluates each sponsor. The company looks at past performances on previous real estate deals. Once determined a suitable partner, EquityMultiple then performs another layer of due diligence on a proposed deal. 

Each property is analyzed for market strength, comparable properties, and financials in addition to the sponsor’s background. EquityMultiple typically passes on 90% of deals. 

Individual investors should then perform a final layer of due diligence independently and raise questions if they identify any data gaps. Deal information is available via secure login to the EquityMultiple website.

Investors also usually have the opportunity to ask direct questions to the sponsors.

Diversification

Proper diversification investing in real estate on the EquityMultiple platform requires a relatively large sum of money. The minimum deals can be as low as $5,000 to get started. However, most require a $10,000 investment minimum.

Therefore, to invest in five properties, you’d likely need at least $50,000. 

For easier diversification, you can invest in a Fund for a $20,000 minimum and get access to multiple diversified properties for one contribution and a single tax filing document. 

All on one platform, investors can diversify across markets, asset types, cash flow profiles, and debt and equity investments. 

Learn more at EquityMultiple

EquityMultiple Review: Sample Deal

The detailed information available to investors for transparency and due diligence is at the top of all real estate crowdfunding platforms that I’ve evaluated.

Below is a sample deal of a recently available property on the platform.

This opportunity is for a mezzanine debt loan that is supplementing a larger lender in developing a to-be-built 63-unit luxury condominium in Downtown Brooklyn, New York.

The borrower is an institutional real estate development company with several similar deals in its history. 

Investors will earn 10% monthly interest with a target hold of 26 months. As in all deals, distributions are paid via ACH directly into the investor’s bank account.

The property is in a prime location with a strong sales market for luxury condominiums. The minimum to invest is $20,000.

Here’s a video highlighting more about the deal. 

Fees

Fees are charged throughout each deal and largely depend on the investment’s success. Fees are structured this way better to align the interests of EquityMultiple and its investors.

Once an equity investment has been made, EquityMultiple charges investors an annual fee of 0.5% of the total investment amount. This fee 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 capital back.

Debt and preferred equity investment fees are structured differently. For these types of deals, EquityMultiple typically takes a servicing fee in the form of a “spread” between the interest rate paid by the sponsor and the investor.

They also charge an origination fee and other charges typically associated with initiating a real estate loan or preferred equity investment.

Additional fees to investors may be assessed in the event of a default.

Account Types

Investors can invest on the EquityMultiple platform through different account types, including individual accounts, self-directed IRAs, an LLC, LP, or trusts.

EquityMultiple has partnered with Millennium Trust for Self-directed IRA services. 

Taxes

Investments are taxed based on the type of account used by the participant. During tax filing season, investors will receive tax forms for tax reporting.

For direct equity deals, investors will typically receive a form K-1. For debt, preferred equity investments, and Alpine Notes, you’ll be issued either a form 1099 or form K-1.

Equity deals may require filing a return in the state in which the investment resides. 

This article does not contain tax advice. I am not a CPA or attorney. Consult your own for advisement. But bear in mind these investments may trigger additional filing requirements, including forms and out-of-state filings.

Handling of Defaults

All investments carry risk. Investing in individual real estate debt and equity carries a significant risk of default. Do not invest in EquityMultiple if you cannot withstand total investment losses.  

In the event of a sponsor default, the remedies will vary according to the investment structure and the negotiated remedies of that particular investment.

According to the FAQs:

In general, EquityMultiple and its affiliate will have limited cure rights and may be able to replace the manager in certain limited circumstances. EquityMultiple or its affiliate will, in its sole discretion, exercise the available remedies as it deems necessary to protect the best interests of investors.

Screenshot from My Personal EquityMultiple Account

I invested $20,000 into a direct equity deal in May 2022. The investment is still maturing, but I can provide some details and share a screenshot from my personal account. 

I’ve had an EquityMultiple account since about 2018, but this was the first deal in a location I knew well. The property is in a strong location with a lot of foot traffic, in an area I used to frequent as a 20-something bar-goer. 

It’s a mixed-use property that combines retail and residential apartments. The deal includes two separate buildings across the street from each other.

I learned about the deal through an email from EquityMultiple, then quickly logged into my account to see the details. 

Due to regulations, I’m unable to disclose the property name, address, or financial specifics.

The target IRR is 16% -18 % and I receive quarterly distributions. The first two distributions were below the target annual yield of 8%, but as the property stabilizes, I should see higher distributions. 

The property manager is still filling vacancies and investing in parking and workout equipment improvements.

I receive quarterly property updates about occupancy rates, retail contract developments, and capital improvements. 

In late 2022, I had a chance to visit the property and had dinner at the restaurant occupying retail space in the building. It was a good experience, and I appreciated that I could own a small slice of the building and see the tenant thriving. 

I’ve also invested an additional $10,000 into an Alpine Note since taking this screenshot. My total investment in EquityMultiple properties is now $30,000.

Can Non-Accredited Investors Invest on EquityMultiple?

Not yet. 

However, non-accredited investment products are in the pipeline. 

Regulatory hurdles make it more difficult to move into the non-accredited market. However, CEO & Co-Founder Charles Clinton has indicated offering a product to non-accredited investors is within its mission to democratize real estate investing and offer a new product in the future. 

EquityMultiple Stock: Series B Funding Round on WeFunder

EquityMultiple offered its platform investors the opportunity to invest in the company itself on WeFunder in late 2022. 

A so-called “early-bird” opportunity offered shares at a $75 million valuation.

It previously completed a seed funding round in 2020 at a $32 billion valuation, according to Charles Clinton’s comments on a WeFunder webinar.  

EquityMultiple Review 2024: Comparison to Other Real Estate Crowdfunding Platforms

EquityMultiple is for accredited investors only.

That means an individual or married couple must have a net worth of at least $1,000,000 (excluding the value of their primary residence). Or, have an income of at least $200,000 each year for the last two years for a single person or $300,000 combined for a married couple. 

If you are not an accredited investor, I recommend other real estate crowdfunding platforms such as Fundrise or Realty Mogul.

While EquityMultiple empowers investors to participate in higher risk, higher reward opportunities, Fundrise’s investments are in eREITs and eFunds. 

This means several real estate properties are lumped into each fund. Investing in eREITs gives you broader diversity, more stability, and lower long-term returns. eREITs are different than traditional REITs you find trading on the stock market because they are non-traded. 

Their prices do not fluctuate based on the markets. 

Read more: Fundrise review.

RealtyMogul also provides non-traded REITs to non-accredited investors. However, they also provide individual real estate opportunities along the lines of EquityMultiple. 

Read more: How to Invest in Real Estate Crowdfunding

What is Real Estate Crowdfunding?

Congress passed the Jumpstart Our Business Startups Act (JOBS) in 2012, which set the foundation for equity crowdfunding.

Equity crowdfunding is similar to more established crowdfunding on sites such as Kickstarter but allows for the exchange of equity for early investments.

The JOBS Act has created more options for early-stage companies to raise money, including crowdfunding and mini-IPOs, also known as Reg A+ IPOs. Companies can raise up to $50,000,000 per fund via Regulation A of the JOBS Act.

Websites like SeedInvest, WeFunder, and StartEngine now make it easy to buy speculative equity stakes in very early-stage companies.

Real estate crowdfunding was not the primary intent of the JOBS Act. However, it has seen the most growth.

Since the passing of the JOBS Act, at least 100 real estate crowdfunding sites have emerged because the opportunity is so big. But the top-tier companies do most of the volume. In addition to EquityMultiple, other significant platforms include Realty Mogul, CrowdStreet, and Fundrise.

The potential for real estate crowdfunding is huge. These platforms are quickly taking a share of the real estate project funding landscape. But crowdfunding is still in its infancy. Now, high-quality commercial and multifamily residential real estate investments, once reserved for wealthy individuals and established companies, are available to ordinary investors.

Learn more at EquityMultiple

Conclusion – EquityMultiple Review 2024

The bottom line is that if you are an accredited investor and want to add higher risk/return investments to your portfolio, EquityMultiple is a good place to invest.

It’s geared toward more sophisticated investors. Participants in any deal should be capable of analyzing properties and financials before committing capital. 

EquityMuliples empowers investors to invest alongside professionals and reap the rewards of broad market access and stringent due diligence.

I hope this EquityMultiple review has increased your knowledge about the platform. Please contact me directly if you need clarifications on this article. 

Learn more at EquityMultiple

Note: Investing in individual real estate properties through a crowdfunding site such as EquityMultiple carries significant risk. Only invest money you can afford to lose. Please perform due diligence before committing any money to any investment opportunity. The EquityMultiple platform is for accredited investors only until otherwise noted. The author is an affiliate partner with EquityMultiple and may be compensated if you open an account and invest with EquityMultiple.