How RealtyMogul Performs Due Diligence On Their Investments

In real estate, “due diligence” is the boring-sounding phrase that keeps you from buying a building that
looks charming in photos… and turns out to be held together by optimism, mystery odors, and a roof that
“adds character” (aka leaks like it has a side hustle).

With online real estate investing platforms like RealtyMogul, investors aren’t the ones touring units,
calling zoning departments, or hunting down old permits like a weekend detective. Instead, the platform’s
team does a large portion of the upfront screening and underwriting before a deal ever shows up for investors
to consider. That’s the promise: reduce the noise, increase the signal, and present opportunities that have
already survived a serious inspection of both the sponsor and the property.

Here’s the important reality check (before we get into the fun details): RealtyMogul’s process can be rigorous,
but it can’t remove risk. Real estate can still underperform, markets can shift, expenses can balloon, and
even strong sponsors can get blindsided. Think of due diligence as a high-quality umbrellanot a force field.

What “Due Diligence” Means on RealtyMogul

RealtyMogul describes a structured, formal review process before deals are listed. Their diligence generally
breaks into three big buckets:

• Sponsor diligence: Who is running the deal, and can they execute?
• Property diligence: What is being bought or financed, and what could go wrong?
• Business plan + underwriting: Do the numbers, assumptions, and structure make sense?

And then there’s the “so what?” layer: how the platform packages information for investorsdocuments,
disclosures, and sponsor Q&Aso investors can make their own decision.

Step 1: The Initial Screen (a.k.a. “Not Every Deal Gets a Callback”)

Before a deal is deeply analyzed, it has to fit what RealtyMogul is willing to consider. Their own education
materials describe reasons a deal might be rejected earlysuch as an asset type or business plan they’re not
interested in (for example, certain single-tenant or development strategies), a sponsor that isn’t established
enough, or a market that doesn’t fit what they want to transact in.

This initial screen matters more than it sounds. It’s basically the platform saying, “We’re not trying to be
everything to everyone.” And that’s a good thingbecause a platform chasing every shiny object tends to
eventually collect the kind of surprises nobody wants.

Example: A “Good Deal” That Still Doesn’t Fit

Imagine a sponsor pitches a ground-up development in an exciting neighborhood: cool renderings, trendy coffee
nearby, and a pro forma that assumes rents will rise forever because… vibes. Even if the idea is legitimate,
a platform may pass simply because development carries different risks (construction costs, delays, lease-up
uncertainty) than stabilized or value-add projects.

Step 2: Sponsor Screening (Because the Operator Is Half the Investment)

In syndicated commercial real estate, the sponsor is the engine. A great property with a weak operator can
become an expensive lesson. RealtyMogul’s sponsor screening materials emphasize formalized processes and
checklists to evaluate a sponsor’s track record and resources before they’re qualified to use the platform.

What RealtyMogul Looks At (Sponsor-Level)

• Experience and team depth: Do they have the infrastructure to handle this deal and their existing portfolio?
• Investment track record: Have they executed similar business plans successfully, including taking deals full cycle?
• Financial health and reporting: Are budgeting and financial reporting practices solid and consistent?
• Organizational structure: Who controls what? Who owns meaningful stakes?
• Litigation or red flags: If there’s a history, what is it and what’s the context?

Background Checks, “Bad Actor” Checks, and Reference Checks

RealtyMogul describes running background and criminal checks, along with reference checks, on principals.
They also describe “bad actor” checks (a securities-law concept tied to certain disqualifying events) and note
that reference checks can matter even if background checks come back clean. In other words: “No record” isn’t
the same thing as “great partner.”

Practically, this sponsor diligence is about reducing avoidable risk: fraud risk, repeat-offender behavior,
hidden financial stress, or a pattern of treating investors like optional side characters.

A Sponsor Red Flag That Isn’t a Headline

Not all red flags involve dramatic news. Sometimes it’s boring (and therefore easy to ignore): sloppy reporting,
inconsistent explanations, or evasiveness about fees and controls. That’s why structured sponsor screening and
reference checks can be just as valuable as the big-ticket items.

Step 3: Property Review (Boots on the Ground + Paper Trails)

Once the sponsor clears the sponsor-level screen, the property has to pass scrutiny. RealtyMogul describes four
critical elements when reviewing a property:

1) Boots on the Ground

RealtyMogul says their processes can include visiting certain properties (or a subset, if it’s a fund) to evaluate
whether the property is accurately reflected in the business plan. For certain 1031-eligible investments, they note
that a third-party due diligence report may be reviewed instead of a property visit.

Translation: photos are helpful, but reality is undefeated. A site visit can surface practical issues that don’t
show up in marketing materialstraffic patterns, neighborhood context, property condition, and “the parking lot
feels like a bumper-car arena.”

2) Property Reports & Insurance

RealtyMogul describes reviewing applicable reports such as environmental, zoning reports, property condition reports,
planned insurance coverage, and when available, an appraisal.

These reports are where a lot of “silent risks” live. Environmental findings, zoning restrictions, deferred maintenance,
and insurance gaps can turn a supposedly predictable investment into a chaos-themed spreadsheet.

3) Comparable Properties

RealtyMogul describes analyzing comparable properties, including historical sales values and leasing comps, as part of
their diligence. Comps help answer: Are revenue assumptions reasonable? Are rent growth projections grounded? Is the exit
price fantasy or plausible?

4) Location and Economic Drivers

Location isn’t just a map pinit’s an ecosystem. RealtyMogul describes digging into location to understand key economic
drivers and why tenants would want to rent at the property. That can include employers, population trends, supply pipelines,
transportation, and neighborhood momentum (or lack thereof).

Step 4: Underwriting the Business Plan (Including “Zero-Based Underwriting”)

Most real estate deals arrive with a sponsor’s pro formabasically a forecast of income, expenses, financing, and projected
returns. The tricky part is that pro formas can be optimistic without technically being “wrong.” This is where underwriting
discipline matters.

Reviewing Key Assumptions

RealtyMogul describes reviewing key assumptions for reasonableness using experience and third-party data sources, including
comparing assumptions to market comps (like rents and leasing conditions) to “sense check” the business plan.

Proof of Debt Commitment (Because Financing Can Make or Break the Deal)

RealtyMogul describes reviewing potential debt terms, interest rate assumptions, and reserves as part of evaluating sources
and uses of capital. In plain English: they want to see that financing isn’t hand-waved into existence.

Fees, Compensation, and Alignment

Fees aren’t automatically badprofessionals should get paid. The real question is: are fees clearly disclosed, and do they
create perverse incentives? RealtyMogul says they review management fees and compensation levels and whether they’re transparently disclosed.

Exit Strategy (No, “Sell for More” Isn’t a Strategy)

RealtyMogul describes reviewing the projected hold period and exit strategy in light of possible market conditions. That’s
important because real estate exits are where fantasy meets interest rates. A great plan includes contingencies: what happens if
cap rates expand, leasing slows, or refinancing terms get tighter?

Investment Committee Review

RealtyMogul’s educational material describes that once a deal passes initial screening, it must pass through an investment committee
approval process. At that stage, they describe doing a deep dive in due diligence and underwriting, including property visits, “zero-based
underwriting,” and negotiating the structure of the deal.

“Zero-based underwriting” is the concept of rebuilding the analysis from scratch to reduce bias and avoid blindly inheriting the sponsor’s assumptions.
It’s like redoing the math homework yourself before copying someone else’s answersbecause the “someone else” might be very confident and very wrong.

Step 5: Legal Review, Disclosures, and the “Read the Docs” Reality

RealtyMogul describes reviewing core legal documents and evaluating whether conflicts of interest have been disclosed. They also emphasize that investors
should review the relevant offering documents for each investmentmaterials like private placement memoranda, operating agreements, subscription agreements,
and other disclosures that describe fees, conflicts, and risks.

This matters because the legal documents are where investor protections (or the lack of them) show up: voting rights, reporting requirements, fee schedules,
distributions, removal provisions, transfer restrictions, and what happens if things go sideways.

Step 6: Transparency for Investors (Webinars, Q&A, and Consistent Deal Presentation)

RealtyMogul describes presenting sponsor materials in a consistent format across deals so investors can compare opportunities more easily. They also describe
facilitating sponsor webinars so investors can hear directly from the sponsor, with the webinar posted along with a transcript, plus answers to recurring questions.

That investor-facing layer is underrated. A platform can do a lot of diligence, but investors still need clarity. A well-run Q&A can reveal more than a
polished deckespecially when the questions get specific:

• What assumptions drive the base-case returns, and what breaks them?
• What capex is planned, and what’s the contingency if costs rise?
• How is the sponsor compensated, and when?
• What happens if refinancing is expensive or unavailable?

How Diligence Differs for RealtyMogul’s REITs vs. Individual Marketplace Deals

RealtyMogul offers multiple ways to invest, including REIT products and individual offerings. Their REIT diligence materials describe a broad underwriting process
involving comprehensive financial, structural, operational, and legal diligence, and they frame their REIT process around four focus areas: property diligence,
geographic diligence, real estate company diligence, and third-party reports.

For investors, the practical difference is this:

• Individual deals: You can dig deep into one specific asset and sponsor (and concentrate risk).
• REIT approach: Diligence happens across a portfolio strategy, with diversification and ongoing managementbut still with real estate and liquidity risks depending on the product structure.

Either way, diligence is about identifying risk, pricing it appropriately, and structuring the investment so it has a fighting chance of meeting expectations.

What Investors Should Do With This Information (Your “Second Layer” Diligence)

Even if a platform’s diligence is strong, investors still benefit from doing their own review. A helpful mindset:
assume the deal can work, then ask what has to go right for it to work. If the answer is “a lot,” demand a return that matches that riskor pass.

A Practical Investor Checklist

• Read the offering documents: especially fees, conflicts, reporting, and risk factors.
• Stress-test the assumptions: what if rent growth is flat, vacancy rises, or expenses jump?
• Understand leverage: loan terms, reserves, covenants, and refinancing risk.
• Evaluate sponsor alignment: do they have meaningful capital at risk, and are incentives tied to performance?
• Ask “what could go wrong?” out loud: because silence is where surprises hide.

Conclusion: Diligence Is the FilterNot the Finish Line

RealtyMogul’s due diligence approach, as described publicly, is built to screen sponsors, scrutinize properties, validate assumptions with data and third-party reports,
and run deals through structured underwriting and investment committee review before investors ever see them. They emphasize sponsor background and reference checks,
property visits (or third-party reports in some cases), review of environmental/zoning/condition materials, comps analysis, debt and fee review, and a focus on transparent
investor information through consistent presentation and sponsor Q&A.

The result isn’t a guaranteeit’s a curated pipeline. For investors, the smartest move is to treat platform diligence as a strong starting point, then layer on your own
review based on your goals, timeline, and risk tolerance. If that sounds like work… yes. But it’s the kind of work that can save you from learning expensive lessons
the hard way. And your future self will thank you (probably quietly, from a beach, because that’s how future selves operate).

Investor Experiences: What It’s Like in the Real World (An Extra 500+ Words)

Let’s talk about the part nobody puts in a spreadsheet: the experience of watching due diligence unfold as an investorespecially on a platform where you’re
not the one scheduling inspections or calling a property manager to ask why the water bill looks like it’s funding a small aquarium.

A typical investor experience often starts with a deal page that looks clean and organized: a summary, a business plan, projected returns, and a list of documents.
That’s when you realize something both comforting and slightly intimidatingsomeone did a lot of work before you arrived. You’re seeing the “after” photo, not the messy
kitchen renovation where diligence happens.

The first feeling is usually curiosity: “Okay, what is this deal actually trying to do?” A value-add multifamily plan, for example, might propose renovating units and
increasing rents. Sounds simple until you start asking investor-style questions: How many units? What’s the renovation budget per unit? Are similar renovated units nearby
actually getting those rents? And what if the market cools halfway through renovations? That’s where platform-provided comps, assumptions, and third-party reports become
more than paperworkthey’re your reality anchor.

Then comes the document phase. Investors often find themselves toggling between the “high-level story” (the deck) and the “fine print” (the offering documents). The deck
tells you what’s exciting; the legal docs tell you what’s enforceable. That contrast can be clarifying. The story might say “targeted distributions,” while the risk factors
remind you distributions aren’t guaranteed. The story might say “conservative leverage,” while the docs reveal refinancing timelines and the real consequences of interest-rate
changes. It’s less glamorous than scrolling photos of the propertybut it’s where investor confidence is built.

One of the most useful experiences can be the sponsor webinar and Q&A. Investors tend to listen for two things that can’t be faked forever:
competence and candor. Competence shows up when a sponsor can explain the plan without hiding behind buzzwords. Candor shows up when they
can discuss risks without acting like you just insulted their favorite sports team. The best sponsor answers sound like: “Here’s what we’re assuming, here’s what we’re
watching, and here’s what we’ll do if it doesn’t go perfectly.” The worst answers sound like: “Nothing can possibly go wrong, because we’re amazing.” (History has not been
kind to that second group.)

Investors also experience the “decision tension” that comes with curated deals: if a platform filters heavily, the deals may feel more crediblebut that can also tempt you
to outsource your judgment. A healthy investor experience includes pausing to ask: Does this fit my risk tolerance? Am I comfortable with illiquidity? Do I already
have too much exposure to one property type or one geographic region? Platform diligence doesn’t answer those questions for you, because they’re personal.

Finally, there’s the post-investment experience: updates, reporting, and the reality that real estate is a slow story. It rarely moves like the stock market. It’s more like
a TV series where plot twists happen in quarterly episodes, not every five minutes. A good platform experience tends to include consistent communicationupdates that explain
what changed, why it changed, and what the plan is next. And a realistic investor learns to appreciate boring updates. “Occupancy stable, renovations on budget, expenses in line”
is the kind of “boring” that pays.

In other words: the investor experience around due diligence is less about finding a perfect deal and more about building a repeatable processreading docs, stress-testing
assumptions, listening carefully, and choosing opportunities that match your goals. The platform can do heavy lifting, but the final liftdeciding what’s right for youstill
belongs to the person clicking “invest.” (And yes, your mouse deserves a tiny medal for that responsibility.)