It’s Not Easy to Make it onto the Platform Today
Here is a list of the steps our affiliated broker-dealer, RM Securities takes before a deal is approved for the platform.
What is “Vetting” an Investment and What Does it Mean for You?
Every deal on the RealtyMogul platform goes through a formal review process with our affiliated broker-dealer, RM Securities. RM Securities has formalized processes to evaluate deals listed on the platform.
Review of the Real Estate Company
Review of the Real Estate Company
RM Securities conducts diligence of the real estate company and it’s principals to assess the manager’s skill and experience to successfully complete the business plan
Detailed Background Check
RM Securities conducts background and criminal checks along with reference checks for the principals of the real estate company
Track Record and Communications
While the volume of experience is important, a track record of reasonable success in executing similar business plans, including bringing a deal full cycle, is also a consideration. RM Securities also looks for real estate companies that engage in appropriate budgeting and financial reporting.
Review of the Property
Four critical elements when reviewing the property
Boots on the Ground
Our processes include visiting certain properties (or a subset of properties if it’s a fund) to evaluate whether the property is accurately reflected in the business plan.1
Property Reports & Insurance
The RM Securities team reviews applicable and available reports, including environmental, zoning reports, property condition reports, planned insurance coverage, and, when available, an appraisal.
Review of Comparable Properties
Analyzing comparable properties including historical sales values and leasing comps is a component of RM Securities’ diligence
Location
The RM Securities team digs into the location, looking for an understanding of key economic
drivers and why tenants would want to rent at the property.
drivers and why tenants would want to rent at the property.
1 Please Note – for certain properties eligible for 1031 exchange investments, a third party due diligence report is reviewed in lieu of a property visit
Review of the Business Plan
The real estate company owns the business plan and underlying assumptions. The RM Securities team reviews the business plan and underwriting to dive into:
Key Business Assumptions: The RM Securities team draws on years of experience and 3rd party data sources to review the key assumptions in the plan for reasonableness. For example, the team reviews comparables to other properties that have been rented in the market to sense check the business plan
Proof of Debt Commitment: The team reviews the potential debt terms, interest rate assumptions and reserves as part of an evaluation of the sources and uses of capital
Management Fees and Compensation: The team reviews the fees and compensation levels, including whether they are transparently disclosed.
Planned Exit Strategy: The team also reviews the projected hold period and exit strategy in light of possible market conditions
Key Business Assumptions: The RM Securities team draws on years of experience and 3rd party data sources to review the key assumptions in the plan for reasonableness. For example, the team reviews comparables to other properties that have been rented in the market to sense check the business plan
Proof of Debt Commitment: The team reviews the potential debt terms, interest rate assumptions and reserves as part of an evaluation of the sources and uses of capital
Management Fees and Compensation: The team reviews the fees and compensation levels, including whether they are transparently disclosed.
Planned Exit Strategy: The team also reviews the projected hold period and exit strategy in light of possible market conditions
Information
The RM Securities team is committed to empowering the investor by providing transparent, detailed information so that you can make an informed decision.
Core Legal Documents: The team will review the offering documentation and will evaluate whether conflicts of interest have been disclosed.
Project Overview: The team is committed to presenting the Sponsor’s materials in a manner that is consistent across deals and easily consumed by the members on our platform.
Sponsor Webinar and Feedback: The team facilitates a webinar with the Sponsor so you can hear first hand from the Sponsor about the investment opportunity. This webinar is then added to the website along with a transcript and often any additional, recurring questions that come in from investors are answered by the Sponsor.
Core Legal Documents: The team will review the offering documentation and will evaluate whether conflicts of interest have been disclosed.
Project Overview: The team is committed to presenting the Sponsor’s materials in a manner that is consistent across deals and easily consumed by the members on our platform.
Sponsor Webinar and Feedback: The team facilitates a webinar with the Sponsor so you can hear first hand from the Sponsor about the investment opportunity. This webinar is then added to the website along with a transcript and often any additional, recurring questions that come in from investors are answered by the Sponsor.
Learn More about Real Estate Investing
Article
1031 Exchange - Article
What Is a 1031 Exchange and Why Is It Important?
If an individual exchanges one investment property for another via a 1031 exchange, they may be able to defer capital gains or losses that they would otherwise have to pay at the time of sale.
Article
1031 Exchange - Article
How to Do a 1031 Exchange Right the First Time
A 1031 exchange is a tax strategy that allows investors to sell an investment property in exchange for another property, then defer capital gains from the sale. If you do a 1031 exchange wrong, you pay unanticipated taxes on your property.
Article
1031 Exchange - Article
Understanding DSTs, TICs
and U.S. Code § 1031
and U.S. Code § 1031
We explore 1031 Exchange vehicles such as Delaware Statutory Trusts (DSTs) and Tenancy-In-Common (TICs), discuss important considerations for DSTs, and the tax benefits that 1031 exchanges can have for commercial real estate investors.