- Real Estate
EquityMultiple Review -- Vetted commercial real estate investments
EquityMultiple stands out among real estate crowdfunding investment platforms because their main investors and senior leadership come from institutional real estate finance, rather than being VC-funded. Seed funding for the company was provided by Mission Capital (later acquired by Marcus & Millichap) and their co-founders and board of advisors come from the New York real estate finance and law community. They offer fewer investments than some other platforms, but that’s a deliberate choice to take a more curatorial approach to dealflow.
Overall, EquityMultiple is a solid choice for accredited investors looking for a hands-off way to invest in commercial real estate.
EquityMultiple
- Founded: 2015
- Investment Types: Real Estate
- Sectors: Commercial Real Estate, Real Estate, and Multifamily
- Minimum Investment: $5,000
- Advertised Returns: 6-28%
- Must be accredited
Pros
- Strong Commercial Real Estate pedigree
- Mix of short-term notes, debt, equity, and preferred equity offerings
- Detailed due-diligence on investments prior to offering them (accept around 5% of potential deals)
- Responsive customer support
- In-house asset management
Cons
- Generally lower number of active investment compared with some other platforms
- Only open to accredited investors
Overview
This EquityMultiple Review will help you learn more about EquityMultiple's investment offerings, including how the alternative investments on EquityMultiple are structured, and what your potential returns might be. You can read more about the criteria we use to review investment platforms here.
While many of the real estate crowdfunding platforms are VC-backed, EquityMultiple’s primary seed investor was Mission Capital, a traditional commercial real estate financing firm, as well as established finance industry leaders such as Ken Pasternak, founder of Knight Trading. And while many platform founders come from the tech world, EquityMultiple CEO Charles Clinton was a practicing real estate lawyer working in private equity before co-founding EquityMultiple alongside chief investment officer Marious Sjulsen. Yet despite that heritage, and while many other platforms aggressively chase institutional money, EquityMultiple is focusing squarely on individual investors. (After working through several flavors of real estate debt investments, I made my first real estate equity investment through EquityMultiple.)
Hear more from EquityMultiple CEO and co-founder Charles Clinton in our Q&A over on the blog.
Types of investments EquityMultiple offers
EquityMultiple offers a variety of commercial real estate investments, including hotels, multi-family apartment complexes, condo conversions and even some industrial real estate. EquityMultiple is only open to accredited investors, and the the minimum investment is $5,000 (though some offerings have higher minimums).
Since 2021 EquityMultiple has also offered the Alpine Note, a real estate-backed alternate to savings accounts and CDs. As of May, 2023, Alpine Notes come in 3, 6, or 9 month maturities and feature an APY as high as 7.4%. Investors can redeem shares of Alpine Notes early to deploy into other EquityMultiple investments, or can roll over their interest into a subsequent series of the note. According to EquityMultiple, investors have participated in over $100M of Alpine Notes.
What do you get when investing with EquityMultiple?
When you invest through , as with many real estate crowdfunding investment platforms, what you actually receive is a membership interest in what’s known as a special purpose entity, typically an LLC created specifically for the investment. The LLC in turn is what actually holds the equity, preferred equity, or debt interest in the property. For each investment you make with , you’ll receive a separate K1 at tax time to report your share of the income received by the LLC.
How does EquityMultiple make money?
The fees on EquityMultiple vary slightly depending on the type of deal:
Equity Deals
- Placement Fee (EM Commission) usually between 1.5%-3.5% – Paid by Sponsor
- 0.5-1.5% Annual Fee - Paid by Investors Annually
Preferred Equity Deals
- Placement Fee (EM Commission) usually between 1.5%-3.5% – Paid by Sponsor
- 1% spread off total preferred return – Paid (or Accrued) by Investors Monthly
Debt Deals
- Placement Fee (EM Commission) usually between 1.5%-3.5% – Paid by Sponsor
- 1% spread off interest rate – Paid (or Accrued) by Investors Monthly
Potential returns and cashflow
The projected return varies based on the type of investment (for example, debt investments offer lower returns but also lower risk as compared with equity or preferred equity), but EquityMultiple advertises yields between 5.85% and 7.4% for Alpine Notes; cash-on-cash returns in the 8-14% range for debt and preferred equity; and total net return (IRRs) of 18-28%+ for equity deals.
EquityMultiple has recently organized their investments into three “pillars” — Keep, Earn, and Grow, aligned to savings alternatives, income-focused investments, and total return-focused investments.
As with many real estate investments, investors typically receive some form of regular cashflow, such as from interest payments or rental income. The amount and frequency will vary depending on the particular investment, though are usually monthly or quarterly.
Breadth of offerings on EquityMultiple
Browsing past investments, you can see a diverse selection of investments, both in terms of category (multi-family, retail, industrial) as well as geographically. There is typically at least a few investments in each of the Keep, Earn, and Grow pillars at any one time. EquityMultiple is catering to the individual investor (especially those relatively new to real estate) so it’s understandable that they want to limit the choices to avoid overwhelming investors, but it would be great to see more active choices available as they scale up the business
Regulatory framework
EquityMultiple is a Registered Investment Advisor (RIA), which means they are registered with the SEC.
EquityMultiple emphasizes their role in curating and selecting investments, stating that they accept only around 5% of proposed deals. While that should not be a substitute for your own due diligence before making any investment, it is a different approach than some other platforms offering similar investments, and which function more like marketplaces.
This review was first published on 24 March 2017, and last updated on 26 May 2023.
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Active Offerings from EquityMultiple
EquityMultiple is pleased to offer investors an opportunity to invest in our improved Alpine Note product. The Alpine Note is a short-term alternative savings product, offering a target APY of 6.9%* over a 6-month term (the “Alpine Notes”).
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EquityMultiple is pleased to offer investors an opportunity to invest in our improved Alpine Note product. The Alpine Note is a short-term alternative savings product, offering a target APY of 5.85%* over a 3-month term (the “Alpine Notes”).
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EquityMultiple is pleased to offer investors an opportunity to invest in our improved Alpine Note product. The Alpine Note is a short-term alternative savings product, offering a target APY of 7.4%* over a 9-month term (the “Alpine Notes”).
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Invest in the PODS Industrial Portfolio, a fully leased 154K square foot (“SF”) industrial portfolio with a nationally established tenant, PODS, through three-time repeat sponsor, Ultimate Realty (the “Sponsor”).
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Invest in Forest at Fenwick, a 94% occupied, 80-unit multifamily property in the high income, Charleston suburb of John’s Island, South Carolina (the “Property” or “Forest at Fenwick”) from two time repeat Sponsor Rowan Capital (the “Sponsor”).
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Invest in Express Car Wash, an opportunity to capture fixed returns through the financing and development of a new express car wash in Los Angeles, CA. STG Capital Partners (the “Sponsor” or “STG”) is an experienced local developer whose principals have over 20 years in the industry, having operated, advised or brokered over 50 car washes.
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Moody Road Industrial, renovated in 2019, is a 167,000 square foot warehouse and manufacturing space that is located in Enfield, CT. This opportunity is a junior interest in a first mortgage loan to facilitate the acquisition and lease up of an industrial facility. Sponsored by Twin Peaks Asset Management who has a combined track record of closing 75+ transactions, including over $1B of total transaction volume, is focused on obtaining a single tenant to sign a long-term lease and exit the investment through refinancing the loan at a lower cost with a local or regional bank.
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Invest in a first mortgage loan position that will facilitate the acquisition and repositioning of two campground resorts located in Middlesex, NY and Tamaqua, PA. The Properties benefit from strategic positioning as they are located under a three-hour drive from New York, Pennsylvania and D.C, representing over 40M in population concentration.
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EquityMultiple would like to present Cottage Gardens - Greensboro, NC, a 176-unit multifamily property built in 1960. VanRock, the Sponsor, will be acquiring the property at a 16% discount to comparable sales and is looking to upgrade all units at lease renewal and perform light renovations that include: installing new kitchen cabinets, laminating kitchen tops, installing high end sinks, and installing high efficiency fixtures. The light renovations will take place within the first 18 months.
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EquityMultiple is pleased to offer a majority LP equity investment to facilitate the acquisition and gut renovation of 799 Manhattan Avenue, a 6-unit multifamily building with ground-floor retail in the Greenpoint neighborhood of Brooklyn, NY. Greenpoint is a highly desired neighborhood with a tight residential market, close proximity to Manhattan, and rapidly rising rents. PEAK Capital Advisors (PEAK), the sponsor, is acquiring the property at a significant discount to comparable properties. Since the property is vacant, PEAK can immediately begin implementing the business plan which it has executed on 56 other, similar properties in NY already.
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Greater Orlando Small Bay Industrial is being acquired by a four time repeat Sponsor at EquityMultiple, Ultimate Realty. This 43.9k SF multi-bay industrial property is located in Orlando, FL and consists of three fully occupied buildings in Kissimmee, part of the Orlando, FL market. The portfolio is fully occupied by 17 tenants who are sole proprietorships and small businesses. These tenants require a hybrid office and industrial configuration like this property provides. The weighted average leasing term is approximately twelve months. Upon Lease expirations, the Sponsor will seek to either extend in place leases at current market rates or pursue new tenants at market. There are several potential tenants on the waitlist for a multi-bay/small industrial type space. The Sponsor believes renewals at market should be prevalent given the limited availability of alternative options in the market, paired with the Tenant Improvement investments made by the tenants to adapt the leased space to their specifications.
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EquityMultiple is pleased to offer a $3.5M investment in our first diversified portfolio offering (the “Investment” or the “Portfolio”). The Portfolio is tailored to provide diversification and focus on appreciation and upside potential. The Portfolio comprises two multifamily assets, an industrial property and a luxury hotel located in four of the top 10 largest MSAs. All four assets present a return profile that fits both our thesis and the current focus of our investor network. All four assets have been recently acquired and the respective sponsors’ business plans are well underway.
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