MB 075: How to Harness the Power of Crowdfunding Even If You're a Newbie - With Jilliene Helman, CEO of RealtyMogul

Yes, crowdfunding is out of reach for the average newbie syndicator. But if you’ve got a great deal and a willingness to hustle, it is possible to partner with a larger real estate company and take advantage of the capital available through crowdfunding. Platforms like Realty Mogul are looking for sponsors with a track record, so if you don’t have one—find someone who does. Jilliene Helman is the CEO of Realty Mogul, the premiere online marketplace for real estate investing. The platform employs cutting-edge technology to connect its network of 130,000 registered investors looking for passive investments in commercial real estate with established real estate companies looking to acquire and operate commercial properties. Realty Mogul is a marriage of Jilliene’s affinities for financial services and technology. She founded the company in 2013 to take advantage of the opportunities around crowdfunding afforded by the JOBS Act. Today she discusses why Realty Mogul chose to focus on the commercial space, the types of investments the platform offers, and the Realty Mogul definition of a good deal. Learn about the evolution of the crowdfunding industry, and heed Jilliene’s advice about partnering for aspiring syndicators. Key Takeaways [2:33] How the crowdfunding industry has evolved Started five years ago with passage of JOBS Act Has become more and more mainstream Began with donation-based sites (e.g.: Kickstarter, Indiegogo) Evolved into investment-based crowdfunding (i.e.: commercial real estate) Since 2013, Realty Mogul has raised $300M online Will continue to grow, scale Over $1B in invested capital through crowdfunding this year alone Provides investors access to private transactions [3:55] Why Realty Mogul chose to focus on the commercial space Huge opportunity in single-family space early on (2013-2015) Banks off-loading residential properties Not easy to make money doing fix and flips Chose to focus on existing properties, tenants and cashflow Less risky than vacant residential property being renovated [4:54] The types of investments Realty Mogul offers Joint venture (common) equity investments Paid last (riskiest part of capital stack) Gets piece of appreciation Preferred equity investments Paid before joint venture equity Receives flat, pre-negotiated rate (doesn’t get any of appreciation) Mezzanine debt investments Senior mortgage debt investments [6:54] What Realty Mogul is looking for in a sponsor Don’t do business with first-time sponsors History, track record of success Real estate company with experience in market, property type Investors want to work with sophisticated real estate companies Typically don’t work with solo operators Looking for full-time sponsors with own company, employees Serious and professional about execution in investing in real estate  [8:34] Jilliene’s advice for aspiring syndicators Do a transaction Raise capital from friends, family Add value, build a track record [10:12] Jilliene’s guidance around partnering with a larger real estate company to employ crowdfunding If have solid deal, no reason you can’t partner Will have to pay real estate company Won’t have control of transaction Realty Mogul requires one sponsor to have final say [11:47] What Realty Mogul defines as a good deal Every deal is different Focus on cashflowing real estate (existing tenants) Majority of deals are Class B assets in secondary markets Look for opportunity to value-add 7-8% average cash-on-cash