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Realty Mogul raises $9M for crowdfunding real estate

Realty Mogul is a marketplace where accredited investors can pool their money to buy property

Financial trends and news by Steven Loeb
March 27, 2014 | Comments
Short URL: http://vator.tv/n/35ee

Whenever there's lottery fever, people will sometimes ask what I would do if I won all that money. The obvious answers are: one, I'd never ever work another nine to five day in my life. Second, I'd travel everywhere I've ever wanted to go (Australia here I come!). The rest would be probably invested in the market, or perhaps real estate.

But what do I know about owning real estate? I wouldn't even know how to find out about where to buy it, forget about what would involved in actually doing it!

If I ever do win millions from the lotto, I will have to thank Realty Mogul for simplifying the process for finding properties, and purchasing them online.

Now the company has now raised a significant new round of funding, a $9 million Series A, it was announced on Thursday. The round was led by Canaan Partners.

Realty Mogul had previously raised over $1 million in seed funding from a variety of angel investors, including David Rose, the CEO of Gust and the founder of New York Angels; Gordon Stephenson, co-founder of Real Property Associates; Matthew Grodin, Managing Director at Spectrum Group Management; and Brian Esquivel, a Senior Investment Analyst with NorthMarq Capital.

Operational since March 2013, Realty Mogul is an online marketplace for real estate investing, where investors can pool their money together to put property.

Here's how it works:

All a user has to do is sign up for an account, which is free. The site is currently open to accredited and international investors; an accredited investor is individual who has an income of at least $200,000 per year or a net worth of $1 million. 

Once they are verified, users can browse the marketplace, and learn about specific investment, and get information that includes estimated length of the investment, estimated annual return, property and location information and a profile for any companies or individuals involved in the investment.

Once the user finds a suitable property, they can sign the legal paperwork online, and then submit payment for their investment either via check or wire. Then they wait for it to clear, which Realty Mogul keeps them up to date on via both email and the investor dashboard.

"If someone is looking for direct real estate investment, be it an apartment buolding in their local community, or a retail shopping center or an office bulinding in a market they are bullish around, we have provide opportunities in various investments,"  Jilliene Helman, the CEO and co-founder of Realty Mogul, told me in an interview. "Customers learn very detailed information about each tranaction."

The new money, she told me, will go toward "bringing more dealflow to the marketplace."

"A lot of companies will talk about democraztizing access to capital," Helman said. "We will scour the country to find dealflow for our customers."

The money will also go toward investing in the technology, including additions to the investor dashboard with the "objective to make it simple and streamlined."

Lastly, the money will also go toward hiring people on the "client care" side of the business.

"We pride ourselves on picking up phone at any time, but that requires ppl," said Helman. "We want to make sure that we give investors the best customer service."

How many people will be hired depends on how fast the company grows.

While others companies might be trying to give investors similar opportunities, there are two ways that Realty Mogul stands out:

First, it is currently the largest by number of properties, and it operates in 14 different states. Second is its focus on income and cash flow.

"We have returned more capital than any other crowdfunding company," said Helman. – "We are focused on cashflow, which reduces risk, and helps investors get cash out of the system."

In the end, Realty Mogul has a big vision: "to change the way the world invests in real estate."

Helman told me that she realizes that this sounds pretty lofty to most people, so the company is going to "take it one bite at a time," and "walk before we run."

"We have a model whereby any consumer can come and make an investment immediately," she said. "This is important in building the user experience because the way it used to be you had to hang out at the country club and be a part of old boys network. You couldn’t do it from your living room and people had never had access before."

Now the company is giving those people a chance to participate in a way they never could before. 

So far, the Beverly Hills-based Realty Mogul has over 7,000 users. Individual investors in the Realty Mogul marketplace have invested $14.6 million in 58 properties in 14 states. In the last year alone, Realty Mogul underwrote over $1.5 billion in real estate.


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