Q&A With RealtyMogul CEO Jilliene Helman: The Secret Behind Good Deals
New crowdfunding rules came into effect this week, opening up the real estate financing game to all types of investors. With that in mind, Bisnow sat down with RealtyMogul CEO Jilliene Helman, who has been working with real estate crowdfunding since the company's founding in 2013, for her take on the crowdfunding landscape.
Bisnow: Crowdfunding is still relatively young and historically unproven. Is it finding a home within the commercial real estate industry?
Jilliene Helman: Absolutely! We're up to 77,000 investors now. There's definitely a lot of interest. People are excited about it. People want to diversify into real estate. There's been a lot of adoption.
Bisnow: What growth rate are we looking at here; how much is 77,000 over the year before?
Jilliene Helman: You get a couple of thousand new investors on a monthly basis, I'd say.
Bisnow: What's the plan for expansion? Any new deal types or markets you plan to target?
Jilliene Helman: For us it's really just doing more of the same. We focus on cash-flowing commercial real estate and that's really where our bread and butter is—and that will continue to be our bread and butter. So we're not looking to change our investment strategy or credit strategy—just doing more deals, growing the investor database and doing more transactions.
Bisnow: If you look across asset classes, cap rate benchmarks and markets, what's the perfect deal—the sweet spot for you guys?
Jilliene Helman: Our strategy is diversified cash flow—so if a property has existing in-flowing cash flow, if it can generate existing income for our investor database, and there's diversification, meaning if a tenant goes dark, you're not going to lose the full asset.
Bisnow: What's your science behind the sourcing; how do you find these deals?
Jilliene Helman: We really find sponsors. Our sort of secret strategy, if you will, is finding great sponsors. And we look for sponsors who focus on a specific geographic area with a specific property type. So for example, they do apartments in Texas. They do retail in Florida. Self-storage in the Carolinas—whatever it may be, we really look for you to operate in a niche.
Companies like Rexford Industrial; all they do is industrial in California. So they know the industrial market in California better than anyone because that is their bread and butter. By relying on these sponsors to do this, it gives us the opportunity to leverage their in-market expertise.
Bisnow: What's the requirement to become a sponsor, beyond the in-market expertise?
Jilliene Helman: The minimum requirement is $25M in [aggregated] transactions. We run criminal checks, we run background checks, we run credit checks, we look at their historical transactions. We do a lot of diligent research into these sponsors.
Bisnow: Fundrise, one of the other players in the space, recently introduced the eREIT, which has been popular among investors. Do you guys plan on introducing something similar?
Jilliene Helman: I think Fundrise's product is an interesting one—the ability for investors to get broad-based diversification. We encourage a lot of diversification on our platform; we don't want investors to be in a single asset. It's really important to be diversified. We haven't done anything like the eREIT yet, but it's something very interesting for the future. Definitely.