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The REIT Champion: RealtyMogul CEO Jilliene Helman on Building a $2B Fund, the Entrepreneur ‘Disease,’ and How Climate Change Could Impact Your Investments

She launched RealtyMogul in 2013. Since then, more than 180k people have used the company to invest collectively.

11 Minute Read

Jilliene Helman is all about the Real Estate Investment Trust, or REIT. She is the 32-year-old CEO of RealtyMogul, an LA-based commercial real estate investing platform with over $2B in assets.  

It works like this: With as little as $1k to invest, customers join a group of other investors on commercial real estate properties studied by RealtyMogul, getting paid back in monthly or quarterly dividends if the property is successful.  

Helman quit her corporate job as VP of wealth management for Union Bank after noticing that all of her wealthiest clients were involved in real estate investing.

She launched RealtyMogul in 2013 to make real-estate investments possible for the masses. Since then, more than 180k people have used the company to invest collectively, earning more than $120m in distributions.

In 2015, Helman was named to the Forbes “30 Under 30” list––and later to Inman’s 100 Top Real Estate Leaders in the US.

We sat down with Helman to discuss how she built her company and what wealth-building strategies she relies on. We also discussed unmet market gaps in commercial real estate, and tips for navigating an older, male-dominated industry as a young female founder.

Takeaways:

  • The biggest opportunity for real-estate investors is to look to invest in geographies where weather will be desirable in 10+ years due to climate change.
  • Other opportunities include modular housing and shared living spaces. 
  • To receive $60k in annual income with RealtyMogul, you would need to invest roughly $760k, based on historical data (and obviously, that’s not guaranteed).

Most startups pivot, but you never had to pivot. Why was that?

We’ve done minor pivots but conceptually the core concept hasn’t changed at all. The core concept is to give more people access to real-estate investment. A tremendous amount of wealth has been generated in real estate over generations in this country. We started with that core truth—real estate is a very big market and you’ve got a lot of people who want to invest but historically have been unable to. You’ve also got a lot of tech savvy and self-directed people who come on our website and want to do transactions on their own. Those trends played out––and, as a result, we didn’t have to pivot the business model.

How did you know when you had product-market fit?

When we crossed about $100m invested, I felt my first sigh of relief. It was $10m, then it was $100m. The next bar for me is a billion in actual capital invested. We have invested about $2B of real estate but we haven’t invested a billion of capital yet. 

When we hit $100m, my eyes sort of got excited and said, people really want us. There’s really a need for this… We’re paid to invest, we’re paid to provide investors with investments. And when you put out $100m, that’s a pretty big interesting number, right? There’s not that many people in the country who can say that they are helping people invest to the tune of over a hundred million dollars.

A lot of funds don’t make it off the ground, let alone raise $10 or $20m. So that was a big milestone for us. But we were very cautious. We were building the business slowly, intentionally. And we were doing that because we only want to invest as much as we can find investment opportunities that we really like and that we want to back.

Did you have any “oh sh*t” moments or mistakes or trouble that you ran into?

There’s little ones all the time. We haven’t made any stupid mistakes but I guess if it was anything it would be hiring the wrong person. A company is only as good as its culture of individuals rowing and operating together. You can always make a bad hire. They may not be a bad human being, it just may not be the right fit for the organization. I’ve made bad hires in my career. I learned from it and I try to remediate that as best I can. But we haven’t had any major issues. We’re heavily regulated and haven’t had any compliance issues. A lot of our competition has dealt with some pretty significant compliance issues. We try to operate as best we can every day.

Have you ever run into a barrier as either a female founder or as a young founder in an older industry?

The reality is I probably have, and I just ignore it. I mean my thing on gender and age is it’s going to be harder for me cause I’m a female. It’s going to be harder for me because I’m younger, so I’m just going to have to work harder. 

My philosophy has always been hustle harder, and it gives me an opportunity to have to pitch more people and have to ask for what I want, and whom I pitch and how I communicate. The curse is an opportunity, which maybe it means that I’m too positive and kind of putting a spin on it. But I’m sure it happens. I think probably the age one is a bigger one than gender for me.

A lot of female entrepreneurs have a really challenging time raising venture capital. I didn’t have that experience. Well, that’s not entirely true. Like in venture capital I didn’t have that experience. But in our seed round I did. But I don’t know if it was me being a woman or just the idea being quite outlandish at the time. When I went to raise our first million dollars in our seed round, I had over 100 meetings. And if I was a guy, would I have had less than 100 meetings? I have no idea. But when I moved and started raising venture capital, and raised our Series A, and raised our Series B, I really didn’t experience gender discrimination… It’s been harder to be a female in the real estate world than it has in the venture capital world for me.

With age, people want to understand how many recessions you’ve been through. And I’ve only been through one. I was working in banking in the 2008 recession. So I saw that recession unfold, our bank performed incredibly well. I saw the culture there that created that performance in a downturn and it was a conservative culture. And so there are elements of me as a human being that were modeled, as a sort of young, impressionable employee at that time. They were modeled from those recession days. So a lot of guys in real estate want you to say you’ve been through two or three recessions, and I can only say I’ve been through one, but there’s some bias on the age side.

How do you overcome that bias?

Ignore it and keep going. Or acknowledge it and keep going. I mean, that’s not my fight. My fight is not getting more women to do anything. It’s not to say that I don’t care about it. I do care about it, but that’s not my fight today. My fight today is to show up every single day for her employees and her clients, and be a great example of a female CEO that goes out in the world and does something great. That is kind of my calling and my way to help the women’s movement, if you will. You just have to keep going. 

Everyone has something. Everyone has a story, whether it’s a family issue, or adversity—some people are worse off than others. Some people’s stories are harder to overcome than others, but if you’re an entrepreneur you have no choice but to just keep going.

Turning gears towards investing—for someone in their twenties who wants a path to wealth, what would be some principles that have worked well for you personally?

No. 1 would be invest in what you know. When I was 25 years old, I stopped messing in the stock market and I started investing pretty much exclusively in real estate through a variety of different channels. I have very little money in the stock market today. I have some of my retirement in a Vanguard 2040 fund or something, but outside of that I don’t play the markets and don’t day trade. I don’t have much exposure to the stock market because that’s not my expertise. My expertise is real estate. So I invest the majority of my personal capital into real estate.

The other big one is learn. In your 20s, it’s a great time to learn and make mistakes and figure stuff out. No matter what advice I give or how many books you read, until you have some of those firsthand experiences, it won’t resonate as deeply. So get in the game. And that could be in the stock market, it could be through crowdfunding, given that there’s low minimums––or read quarterly reports and learn.

But then the other big thing is diversification. In your 20s, if you’re diversifying with $20k and $30k vs. if you become an accredited investor and you’re diversifying with $4m or $5m, learn the art of diversifying and making sure that you’re never over-allocated to one thing. And that’s an interesting thing for me to say because I’m grossly over-allocated in real estate personally. But I’m not over-allocated in any one single project, even though I personally am over-allocated in the asset class. That’s what I know and what I understand. It’s where I’m comfortable. It’s where all my connections are, but I’m certainly diversified across that industry.

What would you say to someone in their 30s, maybe early 40s, where they start to have $50-100k in the bank and they had to invest. How would you recommend using that money?

A lot of it depends on what their goals are. If you want to buy a house in the next two years, keep it in cash. If you want to not touch that money for the next 10 years, I would invest in real estate and do it 10 grand at a time or something like that, so you never have more than a 10% allocation, ideally at all. Sometimes in my personal portfolio, I go 15-20% but it’s because I really understand it. But I think 10% across any one transaction for most people may even be too much, sort of the absolute max. But it just depends on how long you need the money.

I’d never want anyone investing with us who needs that cash. We’re not a good investment option for the short-term. If you want over the next couple of decades to generate wealth and go through cycles, that’s the kind of money that we look to manage on behalf of clients. But you can also play in the public markets. If you need liquidity, public markets are a place to get that liquidity. So it just depends on the need of the individual. The right strategy for your investment portfolio is very individualized.

How would you coach someone through the decision to invest in real estate in their neighborhood vs. something online like RealtyMogul?

There’s two pieces to that. One is your time and two is your knowledge and expertise. How much time do you want to devote to it? We have people who have invested millions of dollars with us and they devote very little time to it. If you have the time and you want to actively manage and have tenants calling you when there’s an issue, and the toilet’s overflowing, and a gate’s broken, and the laundry machine is down, do it yourself. 

The other piece of it is how much knowledge and experience you have. If you’re buying a duplex on your own, the advantage to that is there’s not going to be any fees. You’re not paying a third party like us to help with the acquisition, the asset management, and the property managers—there’s a lot of work involved. 

Real estate tends to be pretty time intensive if you’re going to buy it on your own. But a lot of people I see buy real estate on their own, they don’t do an amazing job. So it really depends on your time and the expectation.

If you never made RealtyMogul and you’re looking at the real estate industry with what you know now, what kind of businesses would you start, or what trends or market gaps would you take advantage of?

A big one, and this is like stupid obvious, but people aren’t totally executing against it because it’s really hard—is climate change. If you have a long-term trajectory in real estate, climate change is going to really be scary in another 10, 15 years from now. And so to be investing in markets that are expected to have the lowest impact as a result of climate change, that’s where it’s really hard. No one really knows. But at least avoid the markets where it’s going to be really bad. So climate change is a big one.

Another one that’s really interesting to me is micro units. We’re looking at a project right now that has micro units. But I think what’s even more interesting to me than micro units is shared living units––this concept where you have a four- or five-bedroom apartment or townhome, not a traditional home, but something you can buy in bulk and you have multi-generational families living together. You see that being culturally relevant specifically in Hispanic cultures and Asian cultures, where multi-generations live together and there’s not a lot of non-single family home product that address that. So I think that one’s pretty interesting.

Another one I think is interesting is modular construction—actually creating homes in factories and delivering them and installing them in 30 days. I mean that’s absolutely transformative.

Another one on kind of the not-for-profit side is using shipping containers to build homes for the homeless. It’s a very cheap way to house folks that really can’t afford a place to live. And that’s one that I feel is an incredible idea to solve a major issue that we’re dealing with in our country. And it hasn’t been thoroughly executed yet. There’s still folks working on it. 

Going back to the climate change idea, could you attach that to real estate more granularly? How does a real estate project help with climate change?

What I’m talking about there is geography. When we make decisions on what geographies we want to invest in, we want to be really careful about what’s going on with climate change. If a market today gets to 120 degrees, where’s that market going to be in 10 years? Is that summer now 135 degrees, and people can’t actually live there? And if winter gets 30 below today and in 10 years it’s 50 below, can people actually inhabit that place? And if people can’t really inhabit these places in the heat of the summer and in the dead cold of the winter, what happens to the real estate value?

So thinking really strategically around markets, I don’t think climate change is priced into cap rates right now. That’s the big idea. I don’t think that there’s a true differential from a cap rate basis on investing in a market that I don’t expect in 10 years to have a really significant impact based on climate change, and a market that in 10 years I think will fare a lot better.

There’s an arbitrage opportunity there. That being said, it’s really hard to figure out. Because obviously the extreme markets are easy, right? If it gets to negative 30 in a market and 120, you know we’re not going to invest in that market. On the flip side, we just invested in a market where it gets over a hundred degrees in the summer already, but there’s zero humidity. 

So I look at that and I go, OK, that reminds me of kind of Palm Springs. Palm Springs today is already getting 120, 130, but I can hang outside of the pool. And that’s OK. If that was a market with 100% humidity, that wouldn’t be possible. People couldn’t live there anymore. It’s understanding humidity, it’s understanding the patterns of hurricanes. It’s understanding which markets have been hit with these insane cold fronts and assuming that 10 years from now it’s going to be worse. There’s a decent amount of guesswork in that, but I think as a theme, it’s really interesting to me.

What is your advice for entrepreneurs who want to get started in commercial real estate?

Make sure that you’re detail oriented, right? You make money and lose money in commercial real estate based on dollars and cents. The difference between operating a multi-family apartment building very well and not very well literally comes down to dollars and cents. So I think that it’s an industry that is at least in only the analysis side an industry that is very well staffed by entrepreneurs who are detail oriented.

But in entrepreneurship in general, get started. Realize that every day you just have to do something. You have to be a doer if you’re an entrepreneur. But my core piece of advice to people in general is figure out if you have the disease. I’ve talked about entrepreneurship as a disease. If you don’t have the disease, don’t wish that you had it. Entrepreneurship is the best thing and the worst thing that I’ve ever done in my life. It’s brought me tremendous joy and tremendous sadness and pain. And I wouldn’t change it. I’m an entrepreneur. I have the disease, I have to be an entrepreneur. I don’t know what else to be,  That’s just who I am.

But if you don’t have the disease, don’t be upset about that. The people who are working in companies who are either entrepreneurial within the company or who are just great executors and operators, they’re as important to this mission as I am to this mission, probably more important. It’s easy to set a vision. It’s damn hard to execute it.

There’s a lot of great entrepreneurs out there that you can get behind and learn a tremendous amount from. But if you are an entrepreneur, and you have that disease, get started. Every day, do something. You can’t go a day without doing something. Even on the weekends. When we started our company, I worked seven days a week, and I’m proud of that. I don’t do it anymore because thankfully I don’t have to, but I’m always plugged in. And I think that you just have to do something every single day to get the momentum, to get the ball rolling, to figure things out, to learn to shift. But just do something.

This conversation was condensed for brevity and clarity.

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