Realty Mogul vs REIT 2024: Which real estate platform is better?

Factor 1: Investment Strategy

Realty Mogul

Realty Mogul is an online crowdfunding real estate platform that allows individual investors to pool their funds and directly invest in commercial and residential properties. Realty Mogul offers both equity and debt investment opportunities in various property types, such as multifamily, retail, office, and industrial real estate. The platform carefully vets and selects each investment, ensuring a curated portfolio of high-quality assets.

By investing through Realty Mogul, investors can diversify their portfolios across multiple property types and geographical locations, reducing their risk exposure. Additionally, Realty Mogul allows for both short-term and long-term investment strategies, depending on the individual investment opportunities offered.

REITs

Real Estate Investment Trusts (REITs) are companies that own, operate, or finance income-producing real estate properties. By investing in a REIT, you gain diversified exposure to real estate assets without the need for direct property ownership. REITs can be publicly traded on stock exchanges or privately held, and they typically focus on specific property sectors such as retail, industrial, or residential real estate.

One significant advantage of REITs is the mandatory distribution of 90% of their taxable income to shareholders in the form of dividends. This requirement ensures a steady income stream for investors, making REITs an attractive option for income-oriented investors.

Factor 2: Accessibility and Liquidity

Realty Mogul

Realty Mogul typically requires a higher minimum investment than REITs, with most investment opportunities requiring a minimum of $5,000 to $25,000. This higher threshold may be prohibitive for some investors, particularly those just starting their real estate investment journey.

Additionally, investments made through Realty Mogul are generally less liquid than REITs, as they involve direct ownership in individual properties. Investors should expect longer holding periods, often ranging from five to ten years, depending on the specific investment. While Realty Mogul does offer a secondary market for selling investments, liquidity is not guaranteed and can be limited.

REITs

REITs offer greater accessibility and liquidity compared to Realty Mogul, primarily due to their presence on stock exchanges. Publicly traded REITs can be bought and sold on the stock market just like any other stock, allowing for easy investment and divestment. This higher liquidity makes REITs a more attractive option for investors who may require access to their funds more quickly or wish to rebalance their portfolios more frequently.

The minimum investment required for REITs is generally lower than Realty Mogul, as investors can purchase as little as one share of a REIT stock. This lower entry barrier makes REITs more accessible for a broader range of investors, including those with smaller investment budgets.

Factor 3: Potential Returns and Risk

Realty Mogul

Investing through Realty Mogul can potentially offer higher returns compared to REITs, as investors directly participate in the property’s income generation and appreciation. Realty Mogul investments typically generate returns through rental income, interest payments (for debt investments), and property appreciation upon sale. However, these higher potential returns come with an increased level of risk, as investments are tied to the performance of individual properties rather than a diversified portfolio of assets.

REITs

REITs generally provide more consistent returns in the form of dividends, as they are required to distribute 90% of their taxable income to shareholders. While the potential for capital appreciation exists with REITs, their primary focus is on generating steady income for investors. This income-focused approach may make REITs a more attractive option for conservative investors or those seeking a regular income stream.

It’s essential to understand that both Realty Mogul and REIT investments carry inherent risks associated with the real estate market, such as economic downturns, changes in interest rates, and property-specific issues. Investors should carefully consider these risks before committing to either investment option.

Realty Mogul vs REIT: Our Summary

When comparing Realty Mogul and REITs, both investment options have unique strengths that cater to different investment styles.

Realty Mogul is an excellent choice for investors seeking direct exposure to individual properties and the potential for higher returns. The platform’s curated investment opportunities and diversification across property types make it an attractive option for investors looking to participate more actively in the real estate market. However, investors should be prepared for higher minimum investments and longer holding periods.

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REITs, on the other hand, provide diversified exposure to real estate assets and offer higher liquidity due to their presence on stock exchanges. With a focus on generating consistent income through dividends, REITs are an appealing option for income-oriented or conservative investors. The lower minimum investment requirements also make REITs more accessible to a broader range of investors.

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