The most flexible crowdfunding for accredited investors?

The equity multiple remains one of the top dogs in the real estate crowdfunding arena.

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Since its launch in 2015, equity multiple has given an average annual return of 17%. The platform is professional, customer service is easy to reach, and offers a wide range of investment types based on your preferences.

If you are an accredited investor, that is. Only rich people can participate, and that too with a high minimum investment.

Are you thinking of investing with Equity Multiple? Here’s what you need to know.

What is equity multiple?

EquityMultiple is a marketplace that connects passive investors with heavily vetted and underwritten real estate investments.

You can view available investments after creating an account. These fall into three buckets: Keep, earnAnd Grow (More on those shortly).

All investments revolve around commercial real estate syndications, which are selected by Equity Multiple from sponsors (commercial investors) who have applied through the Equity Multiple platform to raise capital for their deals.

Equity Multiple makes it easy for you to invest in these deals by providing multiple options.

How Equity Multiple Works

When EquityMultiple approves a syndication deal, they provide money upfront to close it quickly. Then they turn around and collect their money from investors like you and me.

Rather, they finance the initial investment by borrowing money through their “keep” notes. These notes pay fixed interest and are marketed by Equity Multiple 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 Equity Multiple money as a short-term investment, and they use the money as a revolving fund to buy into new syndication deals.

As a nice advantage, the EquityMultiple lets you redeem your “keep” note investments early – if you roll them into another investment on the EquityMultiple.

Alternatively, you can invest directly in those syndication deals. You invest in these deals or funds as a limited partner, becoming a partial owner. Like all real estate syndications, these are long-term investments, typically two to seven years. The equity multiple classifies these as “earn” or “growth” investments.

“Earnings” investments focus on paying a high-income yield, and may be secured debt, preferred equity in properties, or simply owning more income-oriented property investments. “Grow” investments include commercial real estate assets with high potential. These include value-added properties (great flips of commercial buildings) and other real estate deals with high potential returns.

Once you log in to the platform, you choose investments from among those categories to fund.

EquityMultiple Pro

Equity Multiple has seen a lot of success and there is a lot to like about their platform.

In addition to passively investing in real estate, consider the following benefits of investing through equity multiples.

high returns

Among EquityMultiple’s “Grow” investments, which have gone full cycles, the average return delivered to investors is 54.32%. This is very impressive!

Income-oriented “Earn” investments averaged 12.15%, and “Keep” investments averaged 5.88%. The weighted average of all investments on the EquityMultiple is 17.0%.

Transparent and strong track record

How can I know those average returns? Because EquityMultiple publishes them every quarter.

Check out the complete track record of Equity Multiple here.

Diversity

Equity Multiple has deals in 167 markets with 116 sponsors. Total deployed capital is $464 million.

In other words, you can find deals all over the country with tons of sponsors on Equity Multiple’s platform. This creates ample opportunities for you to diversify your real estate holdings.

Some equity multiple deals and funds include other types of commercial properties beyond multifamily. Examples include industrial properties, retail, hotels, and more.

And that doesn’t say anything about the three different investment categories that help you invest based on your needs and risk tolerance.

Experienced and selective underwriting team

Only 9.26% of deals worth $3.93 billion submitted to EquityMultiple by sponsors make it to the next round of screening. Only 2% of transactions get cleared.

This is the reason Equity Multiple can brag about the returns offered to investors on its platform.

Simple platform for investment

While most investors find private equity to be scary and intimidating, the Equity Multiple platform is very simple and straightforward.

You can easily browse available investments and view estimated returns and deal summaries. And with a click or two, you can access more details.

easy to contact

EquityMultiple makes it really easy to contact them.

I counted at least six options for reaching them, starting with the phone number listed at the footer of every page on their website. They also provide live chat and support email addresses on every page of the site.

Finally, they provide links to reach them through their Facebook, LinkedIn, and Twitter profiles.

Equity Multiple Cons

Of course, no platform is perfect, otherwise we would all be investing there already. Keep the following drawbacks in mind when you consider investing through equity multiples.

Accredited Investors Only

Only accredited investors can invest on Equity Multiple’s platform. In other words, if you are a wealthy investor with a net worth of more than $1 million or an income of $200,000 per year ($300,000 for married couples), you are included. If not, tough luck.

This immediately affects about 90% of American families.

high minimum investment

Equity Multiple likes to advertise that the minimum investment on their offering starts at only $5,000. This is technically true, but only for his “keep” notes.

Much more is required to invest in real properties and funds, typically $15,000 to $30,000. This is no mean feat, making it difficult to spread your money among all the diverse offerings we’ve highlighted above.

Non-liquid, long term investment

Despite the “hold” notes, most investments on an equity multiple require you to have your money in place for the long term. Think two to five years, with no early settlement option.

Some investments are available at any given time

At the time of this writing, Equity Multiple has three “Keep” Notes available, three “Grow” investment options and one “Earn” investment.

So yes, Equity Multiple has many different deals across hundreds of markets. But don’t expect to see an abundance of investment options, any time soon.

How does the equity multiple compare

Two of EquityMultiple’s closest competitors include RealtyMogul and CrowdStreet. All three are excellent options for accredited investors, including private real estate syndications with high historical returns but high minimum investment requirements.

CrowdStreet is older and a bit older, having invested $3.9 billion across more than 730 deals. They have also beaten EquityMultiple in terms of providing investors an average internal rate of return (IRR) of 19.7%.

But CrowdStreet doesn’t offer short-term, fixed-interest notes like the EquityMultiple, which drags down their average returns. Read our full CrowdStreet review here for more details.

As far as RealtyMogul goes, I like that they offer REITs for non-accredited investors as a gateway for us middle-class folks. But the best investments on RealtyMogul are still reserved for accredited investors. Check out our RealtyMogul review for more details.

For non-accredited investors, they can invest in short-term notes similar to equity multiples through Groundfloor. And if you want complete liquidity, you can invest in Stairs by Groundfloor at 4% to 6% interest. The best part is that you can start investing from as little as $10 on Groundfloor. Read our full Groundfloor review for more details.

The closest non-accredited investors can access funds and commercial properties are potentially fundraised. On the positive side, you can start investing with as little as $10. But don’t expect any flexibility in choosing investment funds or assets, unless you are investing five figures. You can read our full Fundrise review here.

final thoughts

For accredited investors looking to invest in real estate syndications and funds, Equity Multiple is an excellent option.

You can invest in one place without having to go out and check sponsors. Plus, you can invest as little as $10,000 (up to $30,000) instead of the minimum $50,000 to $100,000 typically required to invest in real estate syndication.

I also like that Equities offers multiple short-term notes and that you can add them to other investments on the platform at any time.

Put it in the same league as CrowdStreet and RealtyMogul as another place to look for promising investments.