Q&A with Jilliene Helman, CEO of RealtyMogul.com and Michael Halloran, Publisher of The FinTech Blog
MH: What’s RealtyMogul.com in one sentence?
JH: RealtyMogul.com is an online real estate investing marketplace that offers individuals access to commercial real estate transactions through private offerings and an online real estate investment trust (REIT).
MH: What can you tell me about your REIT offering?
JH: In 2016, we launched of our first commercial real estate investment trust, MogulREIT I. A REIT is a company that owns or finances real estate.
REITs give their investors the opportunity to participate in large-scale real estate transactions by purchasing shares of the company that owns or finances them. REIT Investors can enjoy regular income, potential capital appreciation, and diversification across geographies, property types, and investment types.
The launch of the REIT allowed us to continue to leverage our technology, experience, data and access to transactions to the benefit of our investors.
With a minimum investment amount of $1,000, the REIT’s primary investment objective is to pay attractive and consistent monthly distributions, to preserve and protect principal, and to offer investors a more balanced and diversified pool of commercial real estate assets nationwide.
MH: What kinds of fees do you charge for your REIT?
JH: Our REIT is a non-traded REIT, which means it is not traded on any stock exchange. Technology has enabled the removal of the middleman and, with it, the average upfront sales commissions of 7%.
MogulREIT I has no upfront selling commissions. And, where traditional non-traded REITs also include an additional 8% in organization and offering costs, MogulREIT I’s costs are significantly less. We charge 3% in combined commissions and upfront costs for MogulREIT I vs. 15%** with similar investments.
Recently, we announced that we can accept investments from self-directed Individual Retirement Accounts (SDIRAs) into our REIT and allow investors to automatically invest their dividends. This provides the possibility to compound returns and makes the REIT even more investor friendly.
Regulation will be key to the development of crowdfunding
MH: It seems like a lot of exciting changes, but for those who aren’t as familiar with RealtyMogul.com, can you summarize how your business works?
JH: With our platform, the investing process is simple and can be done completely online. Investors can browse opportunities and filter by investment type, property or location. Once investors identify a transaction they have an interest in, they can review the entire diligence package and complete the entire transaction online.
MH: Some recent talk in FinTech has been on the new, limited charter “fintech” banking licenses announced recently. RealtyMogul.com as I understand it was enabled by the JOBS Act, correct?
JH: Yes, the JOBS Act, signed into law in 2012, is what gave this space a push and made it all possible. Ever since, there have been many additional regulatory changes to real estate crowdfunding – further proving that the landscape is constantly developing.
Most recently, we saw changes that allowed non-accredited investors to invest in the deals that used to only be available to accredited investors. This may sound like great progress, but there’s still much more to be done.
Regulation will be key to the development of crowdfunding and it is our hope that we will see the SEC and FINRA continue to create new regulations that are more suited to how we conduct business on the internet today but still protect investors.
MH: Good luck presenting at LendIt USA 2017 and thank you for helping advance the debate and promote the role that FinTech can play in real estate finance.
JH: Thanks for letting us share our story with the potential investors and borrowers and those who follow developments in FinTech.
Jilliene Helman is the CEO and Founder of RealtyMogul.com, responsible for overseeing the strategic direction and operation of the business. She is a Certified Wealth Strategist and holds Series 7, 24 and 63 licenses. Previously, she was a Vice President at Union Bank, a unit of one Bank of Tokyo-Mitsubishi UFJ. She has underwritten over $5 billion of real estate and holds a degree in Business Administration from Georgetown University.
Michael Halloran is the Publisher of The FinTech Blog but spends most waking hours as Head of Business Development and Partnerships for MaxMyInterest where he is responsible for the growth of the Max For Advisors program, a solution for financial advisors and their clients to earn a higher yield on cash, obtain broader FDIC coverage and automatically earn more as banks increase their rates. Previously, Michael was with Morgan Stanley where he led its strategic partnership team for the global wealth management group. He was a BA from Brown University and MBA from London Business School.
Interested in seeing Jilliene Helman speak at LendIt USA 2017? It’s not too late to register for tickets. Readers of The FinTech Blog can obtain a discount of 15% by using code FBLOG17USA when they sign up!
** A 2012 study by the Securities Litigation and Consulting Group found a mean selling commission of 7% and organization and offering expenses of 15% among the offerings it reviewed.