There’s a new option on the scene for those who are keen to invest in real estate, including self-storage properties: crowdfunding. Even if you’ve heard of this investment opportunity, you may have questions about what it is, how it works and how you can take advantage of it.
For insight, “Inside Self-Storage” recently turned to Jilliene Helman, CEO and co-founder of Realty Mogul. A Certified Wealth Strategist, Helman has underwritten more than $1 billion of real estate and was previously a vice president at Union Bank, where she spent time in wealth management, finance and risk management. She holds Series 63 and Series 7 licenses and has a degree in business from Georgetown University.
Realty Mogul is an online marketplace that allows accredited investors to pool money online and buy shares of pre-vetted investment properties, allowing them to become equity holders in real estate opportunities that were historically difficult to access. Through the use of the Web platform, investors can browse and screen real estate investments, view investment details and sign legal documents.
In December, Realty Mogul announced the first-ever crowdfunded self-storage facility. Through a private placement traditionally offered only to larger institutional investors, the platform helped raise $1 million to convert an existing self-storage property in Fayetteville, N.C., to a StoreSmart-branded facility.
Curious to see if crowdfunding might open investment doors for you? Read what Helman had to share.
How does crowdfunding work?
Crowdfunding can be applied across many industries. As the word itself implies, it allows individuals to pool together funds to invest in an opportunity.
Realty Mogul is crowdfunding for real estate, a marketplace for accredited investors to pool money online and buy shares of real property like office buildings, apartment buildings and retail centers. It partners with private real estate companies to source deal flow and curates all of the investments. The companies then have access to a broader capital pool and tools to do investor reporting, investor communication and distributions.
With which types of investors does crowdfunding work?
Today, Realty Mogul works with accredited investors as defined by the SEC. An investor must meet certain threshold requirements: He must have a minimum annual income of $200,000 or a net worth of at least $1 million. Once approved as an investor, an individual can invest seamlessly through the Realty Mogul platform.
What can investors expect?
Realty Mogul gives investors tools to browse investments, do due diligence and invest online. They also have 24/7 access to an investor dashboard to watch how their investments are performing. Investors can diversify across property types, geographies and transaction types.
How can crowdfunding open the door to new investors in the self-storage industry?
Investors can gain access to sponsors and deal flow that they never had access to before, at a much lower minimum investment amount.
How might this type of investing change the storage-ownership landscape?
Currently, the real estate landscape for self-storage is very fragmented. If you look at big companies in self-storage ownership, they own a very small percentage of the total self-storage companies out there. This means there is room for acquisitions, room for growth, and room for new investors into the space.
Any time a new source of capital comes into a space, it has the opportunity to impact that space. Through crowdfunding, an entirely new group of investors can be introduced into self-storage.
Does Realty Mogul have plans for future self-storage crowdfunding investments? If so, will it be in Arizona or other states as well?
Absolutely. As a national platform providing both debt and equity capital for self-storage sponsors, Realty Mogul has plans for future self-storage crowdfunding investments all over the country.
What predictions do you have for self-storage crowdfunding?
Self-storage is an increasingly understood and appreciated segment of the real estate market. Our investors have a real appetite for it. As crowdfunding grows, expect additional capital flowing into the space.
How does the exit strategy for a crowdfunded self-storage investment differ from that of that of other self-storage properties?
It doesn’t. Just like before the Internet opened up crowdfunding, exit strategies will vary on a deal-by-deal basis. While one sponsor may choose to hold an investment for three years, another could choose to hold an investment for seven-plus years. The important thing is communication. Investors are made aware of the projected timeline for an exit and any changes in plan, should they occur.
How can potential investors find crowdfunding opportunities in the storage industry?
Through sites like www.realtymogul.com, which offers self-storage opportunities.