7 Best Real Estate Crowdfunding Platforms

7 Best Real Estate Crowdfunding Platforms

In a world where virtual investments like crypto increasingly receive media attention for their volatility and uncertain futures, people desire to put their money into something stable and tangible.

Real estate has historically been one of those investments, but the barriers to entry have always been steep—until the emergence of real estate crowdfunding platforms. 

What is Real Estate Crowdfunding? 

With real estate crowdfunding, individuals can pool their money to fund a property investment. Crowdfunding platforms benefit investors by allowing individuals to combine a relatively small amount of money with others so they can collectively fund a real estate investment they otherwise wouldn’t be able to. 

The entity owning the property benefits from crowdfunding by receiving funds they otherwise wouldn’t through traditional investing. 

Real estate crowdfunding can include debt or equity investments. Equity investing occurs when an investor owns a property and receives income through things like rent and profits from selling the property for more than what they paid. 

Debt investing involves loaning money to real estate buyers. Those who loaned their money receive their investment in fixed increments, depending on the loan terms.

What Type of Investors is Real Estate Crowdfunding Best For?

Real estate investing was historically reserved for accredited investors, who, according to the SEC, must fulfill one of the following requirements to be considered accredited. 

  • You have an individual income of more than $200,000 per year in the last two years and expect to maintain the same income level in the current year.
  • You and your spouse jointly have an income of $300,000 per year in the last two years and expect to maintain the same income level in the current year.
  • You have a net worth exceeding $1 million, excluding your primary residence, either individually or jointly with your spouse.
  • You invest on behalf of an entity with at least $5 million in assets or a business in which all the equity owners are accredited investors.

In addition to being accredited, investors need the time, effort, and knowledge available to find a property, conduct all activities related to property management, and take on all the risks of a single property. 

While some real estate crowdfunding platforms do require individuals to be accredited investors, several do not. With these platforms, all investors, accredited or not, can invest in the relatively stable real estate market without the time, effort, and patience previously required.

You might be interested in investing in real estate via crowdfunding, but where do you begin? We’ve rounded up the top seven best real estate crowdfunding platforms in 2022, with some extra honorable mentions. We’ve found something for everyone’s specific financial needs, so read on to get started with your real estate investing journey. 

Best Real Estate Crowdfunding Platforms for 2022

Fundrise: Best for Beginners

Fundrise is an ideal platform for those just getting started in the real estate crowdfunding space. It’s also ideal for people who want a platform to provide increasingly larger investment opportunities as they grow as investors. 

What You Need to Know:

  • Minimum investment: Depends on the chosen account level  

    • Starter–$10
    • Basic–$1,000
    • Core–$5,000
    • Advanced–$10,000
    • Premium–$100,000
  • Recurring management fee: 1.0% annual fee (0.85% management fee plus 0.15% servicing fee)
  • Accredited investors only?: No
  • Property types: Check out their assets page to learn about available property types, including apartment, residential and commercial properties.  

Pros

  • Variety of account levels offers something for everyone.  
  • Relatively stable investing options through private real estate, as opposed to REITs or stocks
  • Diversified portfolio strategy via the soon-to-be-released Innovation Fund

Cons

  • Minimum iPO investment is $1,000
  • Limited customer support services  
  • Lack of complete fee transparency

Fundrise prides itself on being an easy-to-use and low-cost option for those looking to break into real estate crowdfunding. Fundrise uses its commercial software to find and advertise properties to its investors. Utilizing its own software enables Fundrise to charge lower fees, leading to more money in investors’ pockets. 

Fundrise currently has 330,000 investors using its site, a total asset transaction value of $7 billion, and $194 million in net dividends already earned by its investors. The company’s investments are all tangible, private real estate investments, typically more stable than REITs and stocks tied to the stock market’s performance. Also, because the company is investor-owned, Fundrise allows its users to invest in its iPO, or internet public offering.  

While the platform offers something for the beginner up to the seasoned investor, it leaves much of the troubleshooting up to users, as Fundrise has limited customer service assistance. There’s no way to directly speak with a representative if you have an issue—only an email address and troubleshooting articles are on the website. Fundrise’s total fees for individual investments aren’t clearly stated on its website either.  

If you’re a green investor looking to break into the real estate crowdfunding space, Fundrise may be an excellent option. Check out our Good Financial Cents Fundrise Review for more information. 

RealtyMogul: Best for Single Property

If you’re an accredited investor looking to focus on finding and investing in the best single piece of property, RealtyMogul may be for you. 

What You Need to Know:

  • Minimum investment: 

    • $5,000 for individual property investments
    • $5,000 for REITs 
  • Recurring management fee: Usually 1.0%–1.25% annual fees
  • Accredited investors only?: Yes for single properties, no for REITS
  • Property types: Office, residential, single-family, and others 

Pros

  • Two REIT options to invest in focused on income and growth
  • Options for accredited and non-accredited investors
  • Trustworthy platform, evident by its A+ ranking with the BBB

Cons

  • Requires a high minimum investment. 
  • High management fees and limited fee transparency
  • No secondary market for investments, making them illiquid

RealtyMogul’s beginning was inspired by a realization from its founder, Jilliene Helman. While working in wealth management, Jilliene’s experience with her clients showed her three things: 

  1. Real estate investors were her wealthiest clients.
  2. There was no connection between her clients’ level of income and the amount of time they worked.
  3. Her clients prioritized real estate investing for its ability to earn them passive income. 

Thus, RealtyMogul was created to allow investors access to the real estate market and gain wealth through passive income strategies. 

RealtyMogul currently has over 245,000 investors, over $950 million in investments, and $5.5 billion worth of potential deals currently listed on its site. 

RealityMogul offers various investment options, including several property types and REITs available to accredited and non-accredited investors. Additionally, the platform’s Better Business Bureau’s A+ ranking provides the assurance investors need to know they are utilizing a trustworthy site. 

RealtyMogul’s initial investment costs are steep—investors will need $5,000 to join the platform. Additionally, the company’s fee structure isn’t easy to navigate and depends widely on the investment. RealityMogul’s investments are also relatively illiquid, meaning investors won’t see a return on their investments until maturity, which could take upwards of three to five years. 

Investors wanting to utilize a trustworthy platform to find their ideal single piece of real estate should look to RealtyMogul for assistance. Check out our review of RealityMogul to learn more. 

DiversyFund: Best for Building a Portfolio Over Time 

If you’re a non-accredited investor looking to grow your real estate investment portfolio gradually, DiversyFund may be right for you. 

What You Need to Know:

  • Minimum investment: $500 
  • Recurring management fee: Not available on website
  • Accredited investors only?: No
  • Property types: REITs (multi-family properties)

Pros

  • Relatively low minimum investment compared to other crowdfunding platforms. 
  • Good option for non-accredited investors 
  • Completely automated, making investing simpler

Cons

  • Few investment choices 
  • Long investment timeline of at least five years 
  • Lack of information on its website  

DiversyFund offers a wealth-building, diverse portfolio to average investors. With DiversyFund, you don’t have to be an accredited investor or have thousands of dollars to invest in real estate. With a minimum of $500, you can invest in a multi-family REIT using DiversyFund. 

The platform is completely automated, taking the guesswork out of investing in real estate. DiversyFund is great for everyday investors, especially those who aren’t accredited or don’t want to spend a lot of time learning the ins and outs of real estate investing.

DiversyFund does have a limited amount of investment options—it only offers multi-family property REITs. Additionally, investments take at least five years to see returns, which means those investing with DiversyFund should anticipate sitting tight for a while before realizing any gains from their investments. DiversyFund’s website also doesn’t include much information about how the company works. 

If you’re a non-accredited investor looking for a simpler way to access the real estate market and gradually grow your portfolio, DiversyFund may be for you. 

Roofstock: Best for Single Family Homes 

Roofstock is an ideal investment platform for accredited investors who want to invest in single-family properties. 

What You Need to Know:

  • Minimum investment: $5,000
  • Recurring management fee: Marketplace fee to buyers ($500 or 0.5% of the purchase price, whichever is greater)
  • Accredited investors only?: Yes 
  • Property types: Single-family rentals

Pros

  • Variety of ownership structures to invest in 
  • Investments monitored by property managers 
  • IRA investment option 

Cons

  • Minimum investment timeline of five years 
  • Only accredited investors 
  • No mobile app

Roofstock was founded to simplify single-family rental investing by making it as easy as possible for investors to enter the market.  

Roofstock offers its accredited investors a variety of ownership structures to invest in, including individual accounts, joint accounts, limited liability companies, corporations, revocable trusts, irrevocable trusts, and limited partnerships. All Roofstock’s assets are managed by an asset manager and a property manager, taking these burdens off the investor and saving time. Roofstock boasts its ability to allow investors the benefits of passively investing in real estate without the headache of property management. 

Roofstock enables investors to use an IRA as the title holder to their investment, a unique retirement investing strategy not offered by many other crowdfunding platforms. It also supports a 1031 exchange program, enabling investors to substitute one property for another while putting off paying capital gains taxes on the investment.  

Some downsides of Roofstock include the patience required to see any returns, which may take at least five years. The platform is also limited to accredited investors and doesn’t currently offer a mobile app. 

If you’re an accredited investor looking to break into the single-family home market, but you don’t want the headache of actually managing the property yourself, Roofstock can be a great option for you. 

Cadre: Best for Multiple Investment Styles

Cadre seeks to be a one-stop shop for all things real estate investing.

What You Need to Know:

  • Minimum investment: $25,000
  • Recurring management fee: Yes, but the amount varies by investment
  • Accredited investors only?: Yes
  • Property types: Apartment, hotel, industrial, and other properties 

Pros

  • Data-driven approach to finding investments 
  • Wide variety of properties to invest in
  • Greater liquidity than other platforms 

Cons

  • High minimum investment 
  • No 1031 exchanges 
  • Three to eight-year waiting period for investments 

Founded by Ryan Williams to offer investors greater access to commercial real estate investing, Cadre’s data-driven approach enables its platform to source the most attractive real estate investment options in the most sought-after markets in the United States. 

Cadre allows its investors to realize returns through a wide variety of investments. These include property deals, Cadre Funds (a portfolio diversification strategy), and the Cadre Secondary Market (which enables participants to buy and sell real estate shares).  

Cadre currently has over $5 billion in total transactions, a rate of return of over 27%, and over $338 million in gross distributions to investors.  

Cadre’s downsides include its high barrier to entry—accredited investors will need at least $25,000 to get started. There are also no 1031 exchange options, and property deals can take anywhere from three to eight years to see returns. 

If you’re an accredited investor with a lot of money to invest and want to see quicker returns than traditional real estate investing, Cadre may be the best option.

AcreTrader: Best for Farmland

Folks looking to invest in farmland should check out AcreTrader.

What You Need to Know:

  • Minimum investment: $15,000 – $40,000
  • Recurring management fee: 0.75% asset management fee 
  • Accredited investors only?: Yes
  • Property types: Farmland

Pros

  • Highly selective farmland offerings
  • High returns (7.0%–9.0%)
  • Self-directed IRA options for investing 

Cons

  • Unique risks associated with farmland
  • Investment periods of five to ten years 
  • Lack of liquidity 

AcreTrader’s mission is to provide direct access to farmland investments. AcreTrader chooses its farmland through an extensive underwriting process, enabling users to invest in the most sought-after farmland possible. 

Historically, farmland was a problematic asset to invest in due to extensive research, administrative tasks, and property management. AcreTrader’s tool eliminates those burdens, enabling investors to yield passive income returns with farmland.   

Using AcreTrader, investors purchase shares equal to 1/10 of an acre in the enterprise that owns the farm. That piece of land is chosen in a highly selective process to ensure that the investment will realize the 7.0%–9.0% returns AcreTrader boasts. AcreTrader also has self-directed IRA investment options for accredited investors looking to utilize AcreTrader’s platform. 

AcreTrader’s downsides include the inherent risks associated with investing in farmland, including the land’s subjectivity to adverse weather conditions, the seasonable nature of crops, and government policies that could affect land’s market value.

Additionally, farmland investments may take anywhere from five to 10 years to see returns, so investors in AcreTrader need to ensure they are committed to this platform for the long haul. Farmland is also a highly illiquid investment, so AcreTrader’s platform users won’t be able to opt for an early return. 

If you’re an accredited investor looking to invest in farmland but need someone to research which farmland to choose, AcreTrader may be a great platform for you.  

Fund That Flip: Best for Fix-and-Flip Investments

Fund That Flip is a unique platform for individuals looking to invest in residential house flipping.  

What You Need to Know:

  • Minimum investment: $5,000
  • Recurring management fee: 1.0%–3.0%
  • Accredited investors only?: Accredited investors only 
  • Property types: Single or multi-family residential real estate 

Pros

  • Up to 11% investment returns 
  • Very rigorous underwriting process
  • Offer bridge loans, allowing borrowers to get funding as quickly as five to seven days

Cons

  • House flipping is inherently risky
  • Minimum investment is a bit high 
  • Must be accredited 

Fund That Flip utilizes extremely highly selective underwriting, only accepted 6.0%–8.0% of all potential real estate investments. The chosen projects are managed by a seasoned team of redevelopers, so investors know that their projects have the highest chance of seeing a return. Fund That Flip boasts up to 11% returns for its investors.

Additionally, Fund That Flip offers bridge loans to its borrowers to help further fund redevelopment efforts. 

House flipping is inherently risky, but Fund that Flip reduces some of that risk by doing the underwriting and sourcing work itself. All investors must be accredited, and only 8.0% of loan applicants to this platform are approved, making it difficult for just anyone to join. 

If you’re a real estate investor looking to break into the house flipping market but don’t want to deal with the headaches of finding a redeveloper and a property to flip yourself, Fund That Flip may be a great option. 

Other Real Estate Crowdfunding Platforms to Consider

While we’ve mentioned our favorite real estate crowdfunding platforms, there are many other worthy sites to choose from. Here are a few of our honorable mentions: 

HappyNest

HappyNest prides itself on enabling everyone who wants to join the real estate market to do so. HappyNest’s investments are unique because they involve investing in net lease (triple-net) agreements. With these agreements, renters pay some or all expenses associated with using the property, including maintenance, insurance, and taxes. 

HappyNest can keep costs down and provide access to all investors. All it takes is $10 and a 0.04% monthly asset management fee—plus a willingness to wait at least three years—to see investment returns. 

CrowdStreet

Crowdstreet offers a variety of debt and equity investments in various property types, including multifamily, retail, office, industrial, and land. The minimum investment is a steep $25,000, and fees may be required depending on the opportunity. However, Crowdstreet prides itself on the ability to grant investors access to previously inaccessible real estate markets. 

PeerStreet

PeerStreet is a crowdfunding platform for real estate debt investing. Investors provide capital to borrowers in real estate, who pay interest every month on their loans. PeerStreet investors then receive a part of the monthly interest on the loan payments. There is a $100 minimum investment, with management fees around 1.0% of loan fees, but you must be accredited to participate with the platform. 

EquityMultiple

EquityMultiple’s unique value proposition lies in its team of experts, who have over $75 billion in transactions under their belt and provide asset management through the entire investment process. Their technology is also easy to use. 

This platform, reserved for accredited investing in commercial real estate, requires a minimum investment of $5,000. Fees for common equity investing are 0.5%–1.5%, and debt and preferred equity fees are 1.0%. 

Jamestown Invest

Jamestown Invest has over 80,000 investors and $13.2 billion in assets under management.  A platform for accredited and nonaccredited investors, Jamestown Invest requires a minimum of $2,500 to begin investing in its commercial real estate offerings, including office, retail, and mixed-use spaces in the United States. 

Bottom Line – Choosing the Best Real Estate Crowdfunding Site

There are a host of real estate crowdfunding options for all investors, investment types, investment amounts, and accreditation statuses. Your personal investor profile and desired real estate investing outcomes determine the best real estate crowdfunding option. 

While each platform is different, they all create a more accessible real estate market. While investing always comes with a certain amount of risk, real estate investing has traditionally been considered more stable.

Historically, its barriers to entry were high due to relatively high property costs and the time and effort needed to find and manage a property. With crowdfunding platforms, those barriers are reduced, making the real estate market more accessible for investors. 

Best Real Estate Crowdfunding Companies

Company Property Types Minimum Investment Annual Management Fees Accredited Investors Only
AcreTrader Farmland $15,000 0.75% Yes
Cadre Apartments, hotels, industrial properties $25,000 Varies Yes 
CrowdStreet Multifamily, retail, office, industrial, and land $25,000 Varies Yes
DiversyFund REITs $500 Not available No
EquityMultiple Commercial $5,000 0.5%–1.5% Yes
Fundrise Apartment, residential, commercial $10 1.0% No
FundThatFlip Single or multi-family residential  $5,000 1.0%–3.0% Yes
HappyNest Pandemic and internet resistant businesses $10 0.04% (monthly) No
Jamestown Invest Office, retail, and mixed-use spaces $2,500 Varies No
PeerStreet Real estate debt $100 1.0% Yes
RealtyMogul Office, residential, single-family $5,000  Varies Yes for single properties; No for REITs 
Roofstock Single-family rental $5,000 $500 or 0.5% of purchase price Yes 

Best Real Estate Crowdfunding Platforms FAQ

How should I pick a real estate crowdfunding platform?

First, determine if you are an accredited or nonaccredited investor. Next, decide how much money you’re willing to invest and how long you’d like it tied up. Using the above chart as a guide, choose a platform based on your specific criteria. 

What are the common costs and fees for real estate crowdfunding?

Real estate crowdfunding has several associated costs, including but not limited to the initial investment cost, account-opening fees, and asset management fees. Initial investments can range from $10 to tens of thousands or more.

Account opening fees usually fall within 0.25%–1.0%, and management fees can have a fixed rate of anywhere from 0.5% to 2.0%. 

What are the risks of real estate crowdfunding platforms?

Ultimately, crowdfunding platforms are tied to real estate assets with inherent risks. While platforms make it easier to search through properties, good investments are still challenging to find. Like anything online, there is a necessary amount of due diligence on the investor’s part to ensure that the platform is legitimate. 

What is the minimum amount needed to invest in real estate?

With crowdfunding platforms, individuals can invest in real estate for as little as $10, although most of these platforms require at least $500–$1,000 to get started. Check out our resource for ideas on investing in real estate with any budget. 

How can I invest in real estate with less than $5,000?

Some crowdfunding platforms allow you to invest less than $5,000 in real estate, including Fundrise, DiversyFund, and Jamestown Invests. In addition, you can use self-directed IRA funds or REITs to invest. Both options often enable you to invest less than $5,000. 

The post 7 Best Real Estate Crowdfunding Platforms appeared first on Good Financial Cents®.

Website:

Leave a Reply

Your email address will not be published.