00:00:02
I'm here with Timothy Lee the Chief
00:00:03
Information officer of realy Mogul who's
00:00:06
here to talk to us about his real estate
00:00:08
crowdfunding company welcome thank you
00:00:11
Dad so real estate crowdfunding has been
00:00:15
taking off in the last few years can you
00:00:17
tell me what's the attraction well the
00:00:19
attraction first and foremost is we
00:00:21
essentially de democratize the way that
00:00:23
we invest in real estate um three years
00:00:26
ago before the jobs act it was not
00:00:27
possible for somebody to go on go online
00:00:29
and pitching five 10 $20,000 into a real
00:00:32
commercial uh uh property deal as a
00:00:35
passive investor after jobs act it made
00:00:38
it easier for us to raise Equity money
00:00:42
uh online uh to facil facilitate numbers
00:00:45
of uh commercial real estate
00:00:47
transactions um we made it easy we made
00:00:49
it transparent and uh individuals can
00:00:52
invest in actual properties as opposed
00:00:54
to a pull of um properties within the re
00:00:59
so how does realy mogle work well realy
00:01:02
Mogul is an online platform um uh that
00:01:05
caters to passive and active investors a
00:01:09
uh retail investor a passive investor go
00:01:11
online and choose uh from a variety of
00:01:14
different property types we we have
00:01:16
multif family uh student housing office
00:01:19
space retail centers for people to
00:01:21
choose from and it's really easy to
00:01:22
invest um you can pitch in as little as
00:01:26
$5,000 um and you own a real piece of
00:01:28
real estate we make the we make the
00:01:30
process very easy and fast and
00:01:32
transparent you can go online make an
00:01:34
investment track your portfolio
00:01:36
performance and we send you all the
00:01:38
paperwork you need and we take care of
00:01:39
all the back in process on top of all uh
00:01:42
we pull all the investors together
00:01:43
behind a LLC and we negotiate on your
00:01:46
behalf with all the rights uh a real
00:01:49
property owner will have um so it
00:01:51
protects the crowd and also give us
00:01:53
control over the property property's
00:01:55
performance so tell me about the
00:01:57
technology on your platform and how does
00:02:00
that uh democratize the real estate
00:02:03
market in your view yeah that's a great
00:02:05
question the the the technology that we
00:02:07
use is is is fascinating um there are
00:02:10
tons of data out there on Commercial
00:02:11
Real Estate uh anywhere from um tracking
00:02:15
rental performance uh to sales records
00:02:17
and things of that nature and we pull
00:02:18
all those data together and make the
00:02:20
best decision we can possibly make uh
00:02:22
data side uh we have some of the best uh
00:02:25
commercial real estate Underwriters uh
00:02:27
in the country working uh for realt
00:02:29
mogul our chief credit officer has tons
00:02:31
of experience at JP Morgan Chase um and
00:02:34
we have tons of people at real tmo.com
00:02:36
that has many many years of real estate
00:02:39
and finance experience
00:02:42
um the technology um
00:02:45
is is is a combinations of Big Data
00:02:50
marketing online marketing technology
00:02:52
and uh a really fascinating uh
00:02:55
crowdfunding platform technology that we
00:02:57
build in house um it it allow us to
00:03:00
uh uh get the crowd together distribute
00:03:03
the funds manage the assets um and keep
00:03:07
track of all the transactions and you
00:03:08
can log in anytime and look at your
00:03:10
perfor portfolio performance um and
00:03:13
track it uh online for property owners
00:03:16
what is the advantage of going to a real
00:03:18
estate crowdfunding site versus a
00:03:21
traditional lender right um the property
00:03:23
owners or the sponsors uh uh has a great
00:03:27
advantage of coming to realy MoGo and
00:03:29
that's what realy .c is uh is really uh
00:03:31
different from Banks and traditional
00:03:33
lenders what we do is we do full stack
00:03:35
uh financing and what that really means
00:03:37
is that we will uh raise the equity
00:03:39
portion of the uh the the commercial
00:03:41
deal on your behalf on the property
00:03:42
owner's behalf um and we will also give
00:03:46
you uh access to debt so you come to us
00:03:49
with um a small percentage of the equity
00:03:53
um maybe 2 3% and we will raise the
00:03:55
additional 98% part of that is equity
00:03:58
that we will raise from the crowd and
00:03:59
the the other part is uh debt that we
00:04:01
will hook you up with the institutional
00:04:03
buyer so you get the whole Service uh in
00:04:06
one stop and for investors you know what
00:04:09
kind of return could they reasonably
00:04:11
expect as well as what kind of risk are
00:04:14
they undertaking in terms of right the
00:04:16
default rate of the properties right
00:04:18
that's a great question um the most of
00:04:21
our deals are Equity deals uh these are
00:04:23
pref Equity mezanine loans um uh let me
00:04:26
start over most of our deals are Equity
00:04:28
deals um there are pref Equity deals and
00:04:31
also JV Equity deals these Equity deals
00:04:33
are essentially down payments in terms
00:04:36
of a a single family home mortgage um
00:04:39
high risk but it does uh uh uh have the
00:04:43
potential to to give you a higher return
00:04:45
um typically and historically we've
00:04:48
we've seen anywhere from um averaging of
00:04:52
a 6 to 12% maybe even higher um on our
00:04:55
Equity deals and these deals are tend to
00:04:57
be two to three year hold
00:05:00
and um on the on the out on the exit the
00:05:03
owner could choose to uh either sell the
00:05:06
property or refinance um our deal out so
00:05:09
to speak um the the other component of a
00:05:12
equity investment is that you also get a
00:05:14
cash C cash cash on cash return and what
00:05:17
that means is uh the rent that you will
00:05:19
collect on this property you also get a
00:05:21
distribution on a quarterly basis uh as
00:05:24
a um as a cash flow cash flowing um uh
00:05:28
return on the investment
00:05:30
so what kind of properties do you invest
00:05:32
in anything that is uh not single family
00:05:36
home so we're talking about hundreds of
00:05:38
units of um multif Family Apartments
00:05:40
retail centers uh office space scener
00:05:44
housing student housing um or even um
00:05:47
storage units so we invest everything in
00:05:50
um in around commercial real estate type
00:05:52
of properties so how are you different
00:05:55
from a Reit mhm the biggest difference
00:05:57
is realy moo.com
00:06:00
offers um full transparency you know
00:06:03
exactly what which property you're going
00:06:05
to be investing in uh so you see the
00:06:06
property will give you all the glory
00:06:08
details about the property the
00:06:10
performance and the management team um
00:06:12
versus a reed Reed is more of a blind
00:06:15
poll of funds right you put your money
00:06:17
in you don't necessarily know which
00:06:20
property what kind of property is going
00:06:21
into um and it's hard to get your money
00:06:23
out in a read uh with with real too.com
00:06:27
product you know exactly what it is that
00:06:29
you're investing it you are a true owner
00:06:31
of that property and you get your money
00:06:33
out in 2 three years so the real estate
00:06:35
crowdfunding market is getting very very
00:06:37
crowded how are you standing out the way
00:06:40
we stand out is building trust
00:06:43
transparency and
00:06:46
um have develop special relationship
00:06:48
with our investors um these reton
00:06:51
investors come to us um with their
00:06:53
heart- earn money these are doctors
00:06:55
software Engineers uh partners of their
00:06:57
firms and we want to take care of their
00:06:59
in M um one of our uh guiding principles
00:07:03
is investor protection everything we do
00:07:05
is around investor investor protection
00:07:08
um the the I believe the only way that
00:07:11
we can we're going to stand out is
00:07:12
protect our investors make the right
00:07:14
investment um provide the right returns
00:07:17
for our investors and um and don't bet
00:07:21
on things that we don't believe in do
00:07:24
you see a ShakeOut coming I really don't
00:07:25
see a ShakeOut um in many ways this
00:07:28
industry is brand new we've only only
00:07:30
been around for two and a half years and
00:07:31
so does many of our competitors uh we're
00:07:33
we're just in the early endings of this
00:07:35
game
00:07:36
um uh truth be told all of the uh
00:07:40
legislations and uh laws are still being
00:07:43
developed and vetted out by the SEC and
00:07:45
the Congress um uh as as soon as
00:07:49
tomorrow there's new piece of
00:07:51
legislation will will allow non
00:07:53
accredited investor to start investing
00:07:54
in these uh crowdfunding platforms so
00:07:56
everything's brand new to us and we are
00:07:58
constantly uh analyzing what's coming
00:08:00
down the pike uh as far as regulation
00:08:03
goes and um I I really don't see a
00:08:06
ShakeOut anytime soon it's just it's
00:08:08
it's fascinating to see how the industry
00:08:10
is it's just starting to to to take off
00:08:14
most of the deals that you guys have
00:08:15
done are on Equity financing side versus
00:08:18
set is there a reason for that yeah
00:08:20
absolutely um it's easy to get a
00:08:22
mortgage let's just use the uh the
00:08:23
signal family home as an example uh you
00:08:26
can Walt into any big banks at Walts
00:08:28
Fargo Chase and get a mortgage you have
00:08:29
the down payment but it's hard to get
00:08:31
the down payment you have to save you
00:08:32
have to um you you have to save for that
00:08:35
20% if you will um a lot of the sponsors
00:08:38
of property owners don't have that kind
00:08:39
of cash laying around they're spread
00:08:41
pretty thin or they don't want to use
00:08:42
our cash um so that's what we come in
00:08:45
and that's why you see a lot of equity
00:08:46
deals a lot of down payment deals if you
00:08:48
will um they come in with 2% we come in
00:08:50
with 18% both of us go to the bank with
00:08:53
our 20% and we buy the property and get
00:08:55
the mortgage so you see a lot more
00:08:57
Equity deals than debt deals
00:08:59
um and the other aspects of it is that
00:09:02
Equity deals does typically on average
00:09:05
give you a better return um you are the
00:09:07
true owner of the property you get again
00:09:09
cash on cash uh rent money and also on
00:09:12
the out if the property performs so you
00:09:15
bought it for a million you sold it for
00:09:16
1.5 you get the additional profit
00:09:19
distributed
00:09:21
proportionately and can you talk about
00:09:23
some of the tax implications of that yes
00:09:26
there's a um we we we is tax season so
00:09:30
right now we're processing k1s for our
00:09:32
our investors um the the was what's
00:09:36
interesting right now is that real toogo
00:09:37
just launched a brand new product it's a
00:09:39
1031 exchange uh uh platform uh where
00:09:42
there's a whole lot of benefits in uh in
00:09:44
a 1031 exchange so what that really
00:09:46
means is that if you um if you have a
00:09:49
property uh and you want to reinvest
00:09:51
that money to avoid uh to avoid capital
00:09:53
gains tax uh you can roll that into a
00:09:56
Delaware statuary trust or DST 1031
00:09:59
property and what that really means is
00:10:01
that you can take the profit spread them
00:10:03
into one or multiple properties and keep
00:10:05
on growing your money without paying uh
00:10:08
capital capital gains tax right off the
00:10:10
bat um so there are there are tons of
00:10:12
benefits and even even on a common
00:10:13
Equity or JV Equity deal um you could
00:10:17
depreciate the property just like you
00:10:18
would buying a single family investment
00:10:21
home on your tax returns so there's
00:10:23
numbers of benefits and on top of it all
00:10:26
it's just good to have investment uh
00:10:28
commercial real estate portion of your
00:10:29
investment sorry portion of your
00:10:31
investment in commercial real estate so
00:10:33
what's next for your company we're
00:10:35
growing really fast um we closed our
00:10:37
serious B funding in July of 2015 of $35
00:10:40
million in total we raised close to $42
00:10:43
million in the past two years we're po
00:10:45
to grow um we have over 70 employees uh
00:10:50
Nationwide we have we have offices in
00:10:51
San Francisco New York LA and uh Atlanta
00:10:55
and Houston we're growing um we are
00:10:58
putting more and more PL uh properties
00:11:00
and products on our platform we've been
00:11:03
attracting hundreds if not thousands of
00:11:05
investors um on on a monthly basis so
00:11:08
far there are 7 73,000 uh members at
00:11:12
realm.com constantly convert deals and
00:11:14
making Investments thank you for joining
00:11:16
us today thank you for the
00:11:28
opportunity
00:11:29
[Music]
