What is a “Pledge” for an Investment Opportunity?

What is a “Pledge” for an Investment Opportunity?

Tags

We often field questions from new investors on the RealtyMogul platform about what pledging into an investment opportunity means, so we thought it would be helpful to share what pledging means as well as define the other stages of an investment opportunity on the RealtyMogul platform.

As you browse the RealtyMogul website as a registered user, you may notice different investment offerings in different stages:  Open for Pledging, Open for Investment, or Waitlist. Here is what each stage means:

Open for Pledging

Pledging is a process we use at RealtyMogul to take indications of interest from investors in an investment prior to the actual funding of that transaction. The pledge is non-binding, meaning there is no commitment to the investment by creating a pledge. We use this Pledging function to accomplish a few goals: 1) Pledging allows us to gauge interest in an offering prior to taking actual funds, so we have a stronger degree of confidence that the capital commitment may be successfully funded; 2) Importantly for you, as the investor, the pledging process allows you to hold your funds in your own accounts longer, avoiding “cash drag”. We call for funding on transactions only when we are very to close to the actual closing date on that property investment, and/or the date investment returns may start accruing for you. Pledging allows your funds to remain in your own interest-bearing accounts for a longer period of time, instead of sitting dormant in an escrow account waiting sometimes 30-60 days for closing; 3) Specific to MogulREIT offerings at RealtyMogul, these investments may occasionally go into the Open for Pledging stage if we are currently at cash capacity relative to invested property assets. We want to ensure invested dollars in the REITs are, as readily as possible, invested in accruing underlying property investments and not sitting idle due to a cash imbalance.

The process for funding a pledge begins with an email notification from our team letting you know that your pledge has been opened for investment. At that time, funds will be taken on a first come, first served basis. We typically continue to take funds exclusively from pledged investors until we reach capacity in the transaction, hence giving pledged investors priority to get in on an investment ahead of others. In the event we do not reach capacity strictly from pledged investors, the investment moves into the next stage, Open for Investment.

Open for Investment

Open for Investment is exactly as it sounds. This stage of a transaction means we are taking investment dollars essentially in real time. If you initiate an investment in the Open for Investment stage, the last step of your process is the actual funding of the investment. Private placement offerings in individual properties (available to accredited investors only) typically go into the Open for Investment stage only if there is a small amount of remaining capacity in the offering after the pledged investors have been given a chance to invest. The MogulREIT offerings may go in and out of Open for Pledging versus Open for Investment stages depending on cash capacity in each offering at a given time.

Waitlist

This stage is also rather self-explanatory. If an investment reaches full capacity, either during the Open for Pledging or Open for Investment stage, the offering moves to the Waitlist stage to prevent further pledges or investments. You are welcome to place yourself on the waitlist and should any investment capacity become available in the offering, our Investor Relations team will reach out to you in the order that you joined the waitlist. There is no obligation to invest once contacted.

Hopefully, that explains the various investment opportunity stages you may encounter while investing on the RealtyMogul platform. Should you have any further questions concerning this process or other topics, please feel free to reach out to us at investor-help@realtymogul.com.