EquityMultiple is one of the most popular real estate-based investment platforms for accredited investors.
It offers pre-vetted investment opportunities, support, and guidance for physicians who want to multiply their hard-earned money.
Let’s explore how EquityMultiple works, its fees, investment options, and everything else you need to decide if it’s the right platform for you.
Key Takeaways
- Fees: Depending on your investment, fees generally lie in the 0.5%-1.5% range, typically around 1%. Additional fees or origination fees may apply.
- Minimum Per Account: $5,000 to $30,000 (investment-dependant).
- Accredited Investors Only: To qualify, you need a net worth of over $1 million if your annual income exceeds $200,000 or your joint yearly income exceeds $300,000 for the last two years.
- Dividends: Monthly or quarterly (investment-dependant).
- Customer Service: Phone, forms, email, live chat.
- Liquidity: Depends on the type of investment, but the shortest cash-out period is three months.
- Target Returns: They vary depending on the type of investment but range from 6% to 14%. Long-term investments can go even higher.
Table of Contents
What Is EquityMultiple?
EquityMultiple is a real estate crowdfunding platform designed specifically for accredited investors.
It lets you invest in professionally managed commercial real estate properties with excellent yields and limited liability.
This NYC-based company has been active since 2015.
Most of its employees come from a private equity background and offer their expertise to investors worldwide.
Since the end of 2015, EquityMultiple’s track record has reached over $379 million in earnings, with well over 48,000 investors.
Their vast success and transparency attracted North America’s top commercial real estate brokerage, Marcus & Millichap, which partnered with EquityMultiple in December 2023.
How EquityMultiple Works
EquityMultiple works with several local real estate firms to identify investment opportunities.
Each potential deal is run through the EquityMultiple algorithms before the professional underwriting team examines it.
Usually, about 5% of real estate opportunities pass this initial screening process.
Once the team has verified that the investment opportunity meets the required standards, it is listed on the platform for users to see.
The listing includes all the information you need to decide whether you’d like to put your money into this commercial real estate investment, such as:
- Property details
- Type of investment
- Minimum contribution to participate in the investment (account minimum)
- Target return
Which Types of Investments Does EquityMultiple Offer?
EquityMultiple offers three general categories of investments: Keep, Grow, and Earn.
Keep
Keep investments are built around short-term cash management.
When you opt for the Keep category, your money goes into Alpine Notes, which finances EquityMultiple’s credit line for real estate investments.
You have three options for how long you want to “Keep” your investment going: three, six, or nine months.
Each duration has a fixed APY (annual percentage yield) of 6.0%, 7.05%, and 7.4%, respectively.
The longer you keep your Alpine Notes, the higher your yield percentage is.
Earn
Earn investments are built around short-term real estate investments that balance yield with quick cash returns.
It’s best for individual investors who want a decent ROI (return on investment) without waiting several years.
The Earn category includes preferred equity, senior debt, and yield-focused real estate funds.
It takes about a year to get your money back, and the target return on your investment is usually between 8% and 14%.
Grow
The final category, Grow, is for those who want long-term real estate investments with high target returns.
EquityMultiple blends crowdfunding with traditional, long-term real estate investing strategies to give more significant returns.
Grow investments usually include real estate funds, high-value individual properties, and EquityMultiple’s unique blend of portfolios.
With this investment strategy, it could take several years to get your money back, but when done correctly, it can be a source of passive income for doctors.
Key Features
Accredited Investors Only
As an individual investor, you may have access to some commercial real estate investments, but only if you’re accredited.
You’ll also need your SSN (Social Security Number), U.S. Tax Identification Number, or EIN (Employer Identification Number) to register.
What Is An Accredited Investor?
To qualify as an accredited investor, you need to have a net worth or a joint net worth (including your spouse) of more than $1 million, excluding the value of your home.
Alternatively, you can qualify if your annual income exceeds $200,000 or your joint yearly income exceeds $300,000 in each of the last two years.
However, you must reasonably expect to make the same annual income for the current year.
Some financial professionals with specific licenses, such as Series 7, 65, or 82, are also considered accredited investors.
Fees
EquityMultiple’s fees range from 0.5% to 1.5%, with the majority being about 1%.
However, because each investment is unique, each one has its own fee structure.
You may need to pay additional fees, ranging from $30 to $70 a year, for administrative expenses such as tax document creation and annual filings.
If you decide to go for one of EquityMultiple’s portfolios or real estate funds, you might need to pay an origination fee.
The best way to know exactly how much money in fees you’ll pay is to read the specific disclosure and registration statements.
If you have trouble understanding the breakdown of fees for a specific investment, you can talk to one of EquityMultiple’s representatives, who’ll guide you through the process.
Transparency
EquityMultiple is highly transparent about its fees, liquidity risks, reporting options, and investment strategies.
It clearly presents everything a physician looking to invest in real estate would need to know.
Selection of Investment
EquityMultiple offers different real estate investment options, depending on the timeline and target returns you want, including:
- Alpine Notes: Real estate notes lasting 3-9 months, with a fixed return guaranteed by EquityMultiple.
- Senior Debt and Preferred Equity Investments: They offer a fixed return and are safer than property equity shares. The target returns are lower, but you can get your money back much quicker.
- REITs and EquityMultiple Funds: REITs (Real estate investment funds) and EquityMultiple funds include unique fees, goals, cash-out options, and goals for each opportunity.
- Direct Shares: Long-term equity investment where you can directly buy shares in an investment property. These range from 5-7 years and offer the highest target returns.
Account Minimum
The minimum amount required to open a real estate investment with EquityMultiple depends on your chosen investment.
On average, you’ll need about $10,000 to $30,000, like in the example of the Ascent Income Fund, which requires $20,000.
However, Alpine Notes can be opened with just $5,000.
Liquidity
Liquidity measures how easy it is to turn your assets, or in this case, your real estate investment on EquityMultiple, back into cash.
In other words, it measures how easy it is to get your money back.
Since EquityMultiple works with real estate, it doesn’t offer liquid investments where you can cash out and get your money whenever you want.
You’ll need to stick to the terms of your investment, depending on which of the three investment categories you opt for.
If you’re worried you might need to liquidate your investment quickly, Alpine Notes might be your best bet since they have fast returns of three to nine months.
Also, one month into your investment, you can move your money from an Alpine Note into another type of EquityMultiple investment.
However, you can’t cash out before the Alpine Note duration is over.
The Ascent Income Fund allows you to cash out only after a year from the start of your investment.
Following that one-year point, you also get a cash-out option every six months.
Other projects, such as real estate funds and long-term portfolios, usually have a lock-up period of 5-7 years.
During that time, there is no way to withdraw from the investment or cash out.
Domains and Sectors
EquityMultiple focuses purely on commercial real estate across the United States, including properties such as:
- Office buildings
- Multi-family apartment buildings (single-family projects are excluded)
- Self-storage units
- Other commercial buildings
If you’re interested in investments other than real estate, such as private equity or venture capital, you should consider platforms other than EquityMultiple.
Educational Offerings
Before you invest in any of EquityMultiple’s three categories, make sure to review its extensive educational offerings.
These include short educational articles, case studies, white papers, market insights, a podcast, and a detailed help section.
These tools help you gain as much knowledge as possible so you can stay confident in your investment choices.
EquityMultiple even has live training sessions for its numerous investors to educate them on investment options and strategies.
Customer Support
Customer support is one of EquityMultuple’s core strengths. During business hours (Monday through Friday), you can contact a representative via phone or live chat.
The company doesn’t use an automated chatbot, so you will always get specific, tailored answers to your questions.
They’re also highly responsive to emails and online forms, which you can access via their website.
However, EquityMultiple doesn’t have a mobile app, which can be inconvenient if you don’t have your computer at hand.
Pros & Cons
Pros
- High historic yields and target returns
- Very transparent when it comes to fees and investment risks
- Excellent educational offerings
- Wide selection of commercial real estate investments
Cons
- No mobile app, unlike many real estate investing platforms
- Only allows accredited investors
- Minimal liquidity options
- Commercial real estate options only
Bottom Line
If you’re an accredited investor looking for a commercial real estate investment to add to your portfolio, EquityMultiple is an excellent platform to consider.
It offers short—and long-term investment options with decent target returns, excellent customer support, and transparent fees and requirements.
