Passive real estate investing, crowdfunding for real estate, Realty Mogul, impact of passive investing on returns, how to be a passive real estate investor, real estate crowdfunding, how to generate passive income with real estate

1. PASSIVE REAL ESTATE INVESTING
Real estate investing, the simple way.
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Passive Real Estate Investing
Congratulations on taking action and making the first
step in your decision to invest in real estate – getting
educated on real estate investing!
Why Real Estate?
Real estate is a giant industry and accounts for a
substantial part of wealth creation in the world. The US
commercial market is an $11 trillion dollar market and
real estate encompasses almost every property you can
think of including apartment buildings, office buildings,
the strip mall that houses your favorite restaurant and
the hotel you frequent on the California coast.
Fortunes have been made and lost in real estate and real
estate has propelled some individuals to stardom including Donald Trump and Shark
Tank’s Barbara Corcoran.
Real estate is all about transactions, generating cash flow and building value for the
future and for the first time ever, real estate investing can be simple.
Why Should I Invest?
Inflation and Appreciation
Cash is considered by many to be the safest asset because there is no way for you to
lose your investment if that cash is in the safety deposit box down at your local bank or
stuffed under your 10-year old mattress. However, your cash actually loses money each
year if you don’t spend it. It’s the result of this nagging issue called inflation. The
average inflation from 2002-2011 was 2.54%. In 2011, it was 3.16%. If you are sitting in

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cash, you are simply throwing that money away.
This is one reason why people invest in the first
place – rather than working for your money, let
your money work for you.
Real estate is a special asset class that can make
your money work for you because it’s a hedge
AGAINST inflation. While many people dislike
inflation because it makes things like the price of
gas go up, and causes us to spend more money on
things like food, rent and entertainment, real
estate investors LOVE inflation. Not only does inflation tend to cause property values to
increase, but investors can also charge more rent for the buildings they own – making
inflation the double whammy for real estate investors!
Diversification
Many investors allocate their money across a number of different asset classes like cash,
money market accounts, stocks, bonds or even startup investments. Some of those
monies could be very liquid, like cash and stocks, while other monies are less liquid,
invested in CDs, 401ks and Roth or Traditional IRA accounts.
Adding real estate to any portfolio further diversifies your investment portfolio. The
benefit of diversification being if one asset class is not performing well, you don’t have
all your eggs in one basket.
What Kind of Real Estate Investor do I want to be?
There are many different ways to invest in real estate and they can be divided into two
categories: active or passive. Examples of an active real estate investor include buying
properties, fixing them up and selling them or acquiring apartment buildings and
managing the tenants. While both of these strategies can be lucrative, an active real
estate investment can also be time intensive and require you to deal with the hassles of
tenants, toilets and trash. That is where passive real estate investing comes in.

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There are two kinds of passive real estate investing we are going to focus on.
Shorter Term Passive Investing
In the first kind of investment, rather than getting
your hands dirty by buying a property that needs a
lot of rehab, you wait for real estate investors to find
properties they want to fix and lend them the
money to do it. Given the difficult lending
environment for many investment properties,
traditional bank lenders are unwilling to lend on
vacant properties that are being rehabilitated and it
provides an opportunity for the private investor to
step in and benefit. These loans are typically called
first trust deed investments because your interest is secured by the property in first
position. The real estate investor doing the rehab typically brings the down payment
and closing costs to purchase the property, usually 20% or more.
The condition of the property can vary greatly. On the one extreme, the property might
require a deep cleaning, new paint and new carpet while at the other extreme it may
need to be completely gutted, with everything replaced.
In exchange for making these loans, you can expect monthly interest payments and a
final payment at the end of the loan term. Loan terms can range from 6 months to over
1 year and your money is secured by the actual property.
Longer Term Passive Investing
If you are interested in making more long term investments, rather than investing in a
fix and flip, you might prefer to invest in a buy-and-hold property. In this kind of
investment, rather than searching the internet and spending a ton of time trying to find
a great property to invest in, you work with a professional real estate company, also
called a syndicator, who finds a great property. The syndicator allows you to buy equity
in the property side-by-side with the syndicator. That property is acquired and managed

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by the syndicator and, as an investor, you are entitled to a share of the cash-flow from
rents as well as a share of the proceeds when the property is
eventually sold. These investments tend to be longer in
length, at 3-5 years.
Which Investment is Right for Me?
In order to determine which type of investment is right for
you, you want to decide how long you want to be invested
and how much risk you feel comfortable taking.
Timing
Before you decide to invest in real estate or any other asset class (stocks, bonds, etc.)
you need to be comfortable with the investment time horizon. While stocks can be very
liquid, real estate is a more illiquid investment. While some real estate investments
could be as short as a few months, like a first trust deed investments where you are
loaning money for a real property, other investments, like purchasing equity with a
syndicator, could last 5 years or longer. The shortest investments are typically called
flips while a longer term investment strategy is buy-and-hold.
Risk
Similar to being comfortable with the investment time horizon for an investment, you
need to understand and be comfortable with the risks of the investment. First and
foremost, no investment is ever guaranteed – be it in the real estate markets, the bond
markets, the stock market, or any other market. Most often, the riskier an investment,
the higher the annual return, as the investor should be compensated for taking on
increased risk. So, as always, do your due diligence, proceed with caution, and Buyer
beware.
Some risks that can and do occur in real estate are vacancies – not enough tenants to fill
all the space in the property - unexpected maintenance - such as the need for a new

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roof or new plumbing, - or a decline in property values – similar to what happened in
the Great Recession.
How Can I Reduce Risk?
Loan to Value Ratio: One of the most important
metrics in real estate investing is the loan to value
ratio. When you think about a bank, they typically
will not loan more than 80% of the value on a
residential home. In the event the economy
changes and home prices drop, this gives them a
cushion if they need to foreclose on the property.
The same is true for real estate investors. Leaving
a cushion in the investment allows you to account
for unforeseen changes in the economy or
unforeseen changes in the property, such as a higher vacancy rate with a buy-and-hold
investment.
Title: One of the risks in real estate investing is a “clouded” title. When you invest, you
want to be sure that the title is free of any outstanding litigation or liens. If you are
investing in loans, such as first trust deed investing, it is important that you are in first
position and there are no other lenders who have claim to the property before you.
Working with a reputable title company and a partner who can help with all the
administrative work can be beneficial if you do not have experience doing this yourself.
Know the players: Like any type of investing, you want to be comfortable with who you
are investing with. Ask questions and request information about their background. You
may even be able to look them up on LinkedIN and see if you share connections in
common.
The Benefits of Passive Investing
Unlike active investing where you have to find great investment properties, monitor the
property and deal with tenants, toilets and trash, the passive investor works with a

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partner and allows them to do the dirty work. While there is a fee for this service, there
is also a promise that you will never get a broken toilet call
at 3am and nearly all of the administrative functions,
including title searches, escrow, applying for loans, dealing
with banks, inspectors, appraisers and pest control will be
100% eliminated.
When Is The Right Time To Invest in Real
Estate?
The short answer is now and never. Now, if you
understand the complexities of the market and never, if
you do not. Real estate can produce great returns, but the
investments must meet your individual risk profile and be suitable for your financial
situation.
I’m Ready To Invest in Real Estate. Now what?
If you’re interested in passive real estate investing, the first step is to find a great
partner. Realty Mogul is one such partner and we’d be delighted to share with you
insider access to pre-vetted real estate investments. Rather than spending time trying
to do due diligence on hundreds of properties, why not spend time to do that diligence
on one or two that have already been pre-vetted for you? Even better, you can get
access with as little as $5,000 and sign all of your legal paperwork securely online. We
also give you access to an investor dashboard to watch how your money is working for
you. Never has passive real estate investing been so easy.
With Realty Mogul, you have the resources, guidance and opportunity to really get
invested in the real estate market. Now it is your chance to take control and become
the next real estate mogul.
Thanks for reading, and we can’t wait to see you in the marketplace.

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Disclosure
All investment information contained in this docuemnt has been secured from sources Realty Mogul, Co.
believes are reliable, but we make no representations or warranties, expressed or implied, as to the
accuracy of the information. The views, opinions, conclusions, and other information expressed in this
document are not given or endorsed by Realty Mogul, Co. unless otherwise indicated by an authorized
representative independent of this document. Realty Mogul, Co. accepts no liability for the content of
this document, or for the consequences of any actions taken on the basis of the information provided,
unless that information is subsequently confirmed in writing. Realty Mogul, Co. recommends that you
consult with a Financial Advisor, Attorney, Accountant, and any other professional that can help you to
understand and assess the risks associated with any investment opportunity.