Alpine Note Review
Overview of EquityMultiple
EquityMultiple is a real estate investment platform tailored for accredited investors, offering access to private-market commercial real estate. Launched in 2015, the platform prides itself on a meticulous vetting process, accepting only about 5% of the deals they evaluate. Their approach is more akin to a private equity shop rather than a robo-advisor, making it suitable for investors who are comfortable with conducting their own due diligence.
NOTE: the Alpine Note is Righteous Money’s only investment in EquityMultiple to date. So far, no complaints at all and plenty of reasons to like it.
Alpine Note: An Entry Point
The Alpine Note is one of EquityMultiple's more approachable investment options. It falls under their "Keep" pillar, which focuses on short-term notes with fixed maturities and annual percentage yields (APYs). These notes are designed to offer a stable return, making them an attractive starting point for new investors on the platform.
As of 5/24/24, the advertised rate for the Alpine Notes is:
3-month Notes: 6.10% APY
6-month Notes: 7.15% APY
9-month Notes: 7.50% APY
Not bad! These Notes are not FDIC insured, and they are not backed by the U.S. government. But it is fair to compare these rates to CDs and treasury notes. These days, rates on the 9 month Alpine Note are in the neighborhood of two percentage points above the 10-year T-bill yield.
A few other notes on Alpine Notes:
They basically function like a corporate bond as far as I can tell. But specifically, the capital from Notes finances other real estate deals on their platform so that they can more efficiently deliver capital for those deals. Sounds like kinda sketchy financial engineering. However, Alpine Notes have had zero late payments or defaults so far, so hard to argue with the structure.
Fee-free to investors.
Investors can “roll over” from an Alpine Note investment to another deal on EquityMultiple after 30 days. You can also roll over from the Note into another series of Alpine Note at maturity, so in theory an investor can achieve compounding returns.
OK… seems like a pretty good idea.
Basecamp: Enhanced Accessibility
EquityMultiple has introduced a limited-time offering called Basecamp, available at equitymultiple.com/basecamp. This version of the product is designed to be extra accessible for new investors, featuring lower minimum investment requirements and simplified investment processes. Basecamp aims to provide a more inclusive entry point into real estate investing, making it easier for investors to get started without the high capital typically required.
Basecamp is only available to first-time investors. Tragically, I missed the boat on this. The terms are pretty sweet:
3 month term
9% rate
Just a $1K minimum
Strengths of EquityMultiple
So what about EquityMultiple more generally? A few quick things they talk about a lot in their materials:
Experienced Team: The platform is backed by a team with a strong background in real estate finance and investing. This expertise translates into a higher confidence level in their deal selection and management process.
Diverse Investment Options: EquityMultiple offers a range of investment types categorized into three pillars—Keep, Earn, and Grow—catering to different risk appetites and return profiles. This variety allows investors to tailor their portfolios according to their financial goals.
Investor Relations: The platform is praised for its responsive customer service. Investors report positive experiences in getting their queries addressed by knowledgeable representatives.
Transparency: EquityMultiple is relatively transparent about its performance, with an all-time net IRR of 15% and a more recent figure of 17% since 2019. They also disclose that about 5.81% of deals have lost money, providing a realistic picture of potential risks.
EquityMultiple Drawbacks
High Minimum Investments: Many of the investment opportunities on EquityMultiple come with relatively high minimum investment requirements, which may be a barrier for smaller investors. However, the Basecamp initiative addresses this concern by offering lower minimums and making the platform more accessible.
Complexity for Novices: The platform’s focus on detailed deal analysis can be overwhelming for beginners. Unlike more automated platforms, EquityMultiple requires investors to be more hands-on in their investment decisions.
No Auto-Investing Features: Unlike some of its competitors, EquityMultiple does not offer auto-investing or auto-allocation tools, which could be a disadvantage for investors looking for a more passive investment approach.
That said, Alpine Note does a pretty good job giving investors an end-around to these drawbacks. Specifically:
The minimum for Basecamp is only $1,000 (and the standard Alpine Note minimum is $5,000, much less than you typically see with real estate crowdfunding platforms.)
Righteous Money's Verdict
Righteous Money rates EquityMultiple’s Alpine Note highly, giving it a score of 4.5 out of 5. (You can review the full EquityMultiple review here.) The Alpine Note stands out as a great place to start. All investments in the real estate crowdfunding space entail risk. Some of those risks are poorly described and understood. Alpine Notes seem like a good antidote to this: the minimums are low, the terms are short, and the “backstopping” is pretty solid. This is a recommended place to start when it comes to these novel real estate investing options for individuals.
Conclusion
EquityMultiple’s Alpine Note is a commendable entry point for investors seeking stability within the realm of real estate investing. The introduction of Basecamp further enhances the platform's accessibility, making it a viable option for new investors. The platform’s professional approach and diverse range of options make it a solid choice for those ready to navigate its higher barriers to entry and more complex investment landscape.