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Individual Deals vs. a "REIT”: What's a Good Fit for You?
September 6 | 2016

Individual Deals vs. a REIT

Historically, RealtyMogul.com has offered investors the opportunity to invest in individual real estate deals with low minimum investments. A few weeks ago, we announced the launch of our online Real Estate Investment Trust (REIT), MogulREIT I, to complement the product suite we offer our 80,000 members.

RealtyMogul.com’s online REIT allows you to invest in highly-vetted real estate investments through a fund with a competent strategy, without having to consider each individual deal on your own.

If you’re not sure if you should invest in individual transactions, our online REIT, or both, we’re here to help. Before you decide how to allocate your investments, here’s a run-down of everything you need to know about both individual deals and our new online REIT.

How They’re Similar

You’ll clearly see some major differences between the two types of investments, but before we go there, let’s discuss one very important similarity.

You know that RealtyMogul.com is committed to investor protection. Every single transaction that our team reviews goes through the same stringent underwriting process. It doesn’t matter what type of deal it is or whether it will be available on RealtyMogul.com as an individual transaction or an investment through the REIT. MogulREIT I relies on RealtyMogul.com's staff so you have the same people supporting both products. You will probably see a bit less information presented for assets in the REIT, but fear not! Each property that goes into the fund is underwritten in the same exact way as any other deal.

Now let’s take a look at how the two types of investments differ so you can choose what is best for your portfolio.

Take Your Time and Exercise Control with Individual Deals

Investing in an individual deal gives you the ability to choose exactly which assets you want in your portfolio. You have total control over the selection process. While this can be time consuming, you can use all the materials we provide to perform your own due diligence on each property in addition to ours.

Selecting an individual deal also allows you to pick investments in locations you personally live in or know well, or choose a specific place you feel has major growth potential. As an investor in an individual deal, you also get to select the specific property types you fund. Maybe you want to avoid a certain type of property, or perhaps you’re excited by another (self-storage maybe)?. Individual investments also provide you with the opportunity to select the type of deal, whether it’s joint venture equity, preferred equity, senior debt, or subordinate debt.

Although it will take more money to diversify your portfolio executing this strategy because you will need to invest the minimum amount in each individual transaction, it provides the added benefit of control by allowing you to pick your investments deal by deal.

Diversify Your Portfolio with Our Online REIT

Using an online REIT as part of your investment strategy can be a good idea when you work with an expert team you trust. While you do give up a bit of control by investing in our online REIT compared to an individual deal, you potentially gain some benefits.

Investing in our online REIT is an easy way to diversify your portfolio. There will be a healthy mix of property types in different markets throughout the country. You'll also see both equity and debt deals within the REIT, which means you can earn regular dividends and also enjoy potential capital appreciation.

Another perk with MogulREIT I, is that the investment minimum is just $2,500. It's more liquid, allowing for limited quarterly redemption opportunities. Tax reporting is also streamlined, as you'll only receive one federal form instead of one form for each individual deal that may also include state forms. This allows you to broaden your real estate investments without adding burdens to your tax paperwork.

Additionally, fees are straight forward and easy to understand. It's a fixed structure, so you only have to figure it out once, instead of evaluating each deal's fees. They also could be lower than in some of the individual transactions we offer.

A final benefit with the online REIT is that the REIT has the flexibility to jump on exciting opportunities as needed because the funds can be raised before an asset is identified (unlike individual deals, where the opposite occurs). Being more nimble allows us to actively participate in the market with capital that is ready to deployed.

If you want to learn more about our new online REIT you can visit the investment opportunity pageor the full Offering Circular.

As with any investment, both our individual transactions and our REIT carry risks, and there is never a guarantee of returns or payback of your investment.

Arik Moav
Written by , VP of Finance at RealtyMogul.com

Arik Moav is the VP of Finance at RealtyMogul.com. Before joining RealtyMogul.com, Arik was a part of Amgen’s inaugural Finance and Strategy Leadership Development Program, serving in FP&A and Business Development roles. Prior to that, Arik was the VP of Finance and Business Development at TJH Investments, LLC, a private investment company with a focus on real estate and opportunistic start-up investing.  Arik earned a double BA in Accounting and Economics from Tel-Aviv University and a MBA from UCLA Anderson School of Management.

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