Best Real Estate Crowdfunding Platforms
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Modified date: August 5, 2020
Crowdfunding for real estate is a way for investors to pool funds to buy property together. It can be used by families, such as siblings, or neighbors, to jointly by property. Or, it can be a great way to invest in real estate without a lot of money. Instead of needing hundreds of thousands, you can invest just a few thousand in an effort to make money on real estate, as you would stock.
Find real estate investment opportunities for every budget with Fundrise
Real estate is considered a solid investment but it is definitely high-risk. But as with any high-risk investment, real estate crowdfunding can also warrant high rewards. If you are considering investing in real estate, these are good platforms to get you started.
What’s Ahead:
Overview of the best crowdfunding platforms
Crowdfunding platform Best for
RealtyMogul Investors ready to move into more advanced real estate projects
Fundrise Serious investors who want to get into real estate with low investment
Streitwise Investors wanting to try Real Estate Investment Trusts (REITs) without accreditation
CrowdStreet Accredited investors
Roofstock Investors wanting to enter the rental market
American app德扑圈官方网址homeowner Preservation Investors wanting to help others
GroundFloor Beginners looking for low-cost investments
RealtyMogul
RealtyMogul offers investments in commercial real estate. The folks behind the website visit each property and review the physical, financial, and legal aspects, as well as meet with the majority stakeholders. What does this mean for you? An investment you can trust as only one in 1,000 investments is accepted into the program.
Since it launched in 2013, RealtyMogul has welcomed nearly 200,000 investors, financed more than $2 billion in 400 commercial real estate projects, and paid out more than $160 million to investors.
Types of investments
RealtyMogul gives you three different investment options:
- Real Estate Investment Trusts (REITs) – REITs allow you to make one investment into a diversified group of properties. This can be property types, geography, or other categories to help you reach your investment goals. By law, REITs must pay out 90% of taxable income to its investors annually. A minimum investment of $5,000 is needed.
- Individual Properties – Also called a Private Placement, these investments call for a single investment by accredited investors. Properties may be offices, mixed-use space, industrial space, multifamily, and flex-space. Minimum investments are between $15,000 and $50,000.
- 1031 exchanges – This tax-deferred exchange allows you to sell a property and reinvest the funds into another property through RealtyMogul. There are no real estate agents involved, no escrow, and no closing costs for the sale of your property. Exchanges allow for investments between $25,000 to $50 million.
Eligibility
You do not need to be accredited to invest in individual properties or to participate in a 1031 exchange. You must be accredited to invest in a REIT, which requires you to earn more than $200,000 per year individual ($300,000 per couple) and have a net worth of more than $1 million. These are not the right investments for someone just starting out. Minimum investments start at $5,000.
The financials
- Fees – It is free to join RealtyMogul and review investment opportunities. You will pay investment fees that vary by transaction.
- Earnings – Funds are transferred directly to your bank, with interest payments typically deposited monthly or quarterly. Annual returns vary between 3 and 14%.
- Liquifying – Once you have invested you cannot liquefy unless you resell your investment in a separate and private transaction.
Visit Realty Mogul to learn more or read our Realty Mogul review.
Fundrise
Fundrise offers investment opportunities in institutional real estate with low-cost options set to gain long-term results. Founded in Washington, D.C. in 2012, Fundrise reviews thousands of properties each year but is very particular about the projects it accepts.
Fundrise has more than 130,000 investors, has financed nearly $5 billion, and has paid out more than $79 million to investors.
Types of investments
There are three different ways to invest with Fundrise:
- Starter – Starter investors get between 5 and 10 diversification projects and need just $500 to begin.
- Core – Core investments will be diversified in 40 or more projects and require just a $1,000 minimum investment.
- Advanced – With $10,000 or more, Advanced investments are diversified across more than 80 projects.
Eligibility
Anyone over the age of 18 and a U.S. citizen or permanent resident may invest. No accreditation is necessary.
The financials
- Fees – You’ll pay a 0.15% annual advisory fee. (This is $1.50 for every $1,000 you invest.) You’ll also pay a 0.85% asset management fee. (This is $8.50 for every $1,000 invested.)
- Earnings – The company has paid out more than $79 million to its investors, with annual returns averaging between 8.7 and 12.4%. You’ll receive your returns quarterly.
- Liquifying – You can request to redeem your shares at any time but redemptions are not guaranteed. You may pay a fee for redeeming shares early.
Visit Fundrise to learn more or read our Fundrise review.
stREITwise
stREITwise invests in commercial property found in smaller markets. The company, which launched in 2017, currently has properties in Minnesota, Oregon, California, New Mexico, Texas, Virginia, Missouri, Illinois, Indiana, and Ohio. Six additional states are being reviewed as potential markets.
Types of investments
Unlike others on this list, your investment in stREITwise is only available for REITs, which makes this company less a crowdfunding platform than you think.
Eligibility
No accreditation is necessary, even though stREITwise is providing REIT opportunities. However, restrictions for unaccredited investors include investing 10% or less of your annual income or 10% less of your net worth, whichever is greater. Investors must be 18 and older. You can start investing with as little as $1,000.
The financials
- Fees – There are two fees you’ll pay using stREITwise. The first is your initial fee to set up your investment, which is capped at 3%. Management fees on your account is a flat 2%. There are no transaction fees.
- Earnings – The average return on investment is 9.8% with earnings paid quarterly.
- Liquifying – You must stay invested for a full year. After a year, you have quarterly opportunities to redeem your investment.
Visit Streitwise to learn more or read our Streitwise review.
CrowdStreet
Another commercial real estate investing platform called CrowdStreet was launched in 2014. Since it began, $135 million has been paid out through 420 different commercial properties. The company has raised more than $1 billion with an expected return rate of 24%. That’s an excellent rate but investors are required to invest a minimum of $25,000. Some investment choices require up to $100,000.
Unlike other platforms, CrowdStreet is a bit more complicated. Rather than the company serving as the managers of properties, investors may serve as managers and sponsors and work with other investors.
Types of investments
There are three ways to invest through CrowdStreet:
- Funds and Vehicles – As with other platforms, you will make your investment and be put into multiple properties for a diversified portfolio.
- Individual Deals – You can pick the deals you want to invest in, rather than with a platform that picks for you. This way, you can build your own portfolio and diversify as you’d like.
- Tailored Portfolios – You can use the services provided in Private Managed Accounts, which is a subsidiary of CrowdStreet. Your advisors can customize your investment and manage your account.
Eligibility
Investors on CrowdStreet must be accredited, which means earning $200,000 individually or $300,000 joint, with more than $1 million net worth. Sponsors are heavily vetted, as well — only 5% of those who have applied are accepted.
The financials
- Fees – Fees vary based on the investments you make. You could pay as low as .50% to as high as 2.5% project fees. You could also pay management fees, financing fees, and transaction fees.
- Earnings – Unlike others with more specific payouts, the investments with CrowdStreet payout are dependent on a choice of equity, debt, or hybrid investments.
- Liquifying – It’s very difficult to liquify your assets on CrowdStreet. This is for people who are in it for the long haul.
Visit CrowdStreet to learn more or read our CrowdStreet review.
Roofstock
Roofstock allows you to invest in rental properties, giving you a chance to get your feet wet on the process of renting single-family app德扑圈官方网址homes. Since launching, Roofstock has surpassed $2 billion in property transactions and Roofstock is now available in 25 states.
Simplifying the process of buying app德扑圈官方网址homes to rent, Roofstock properties are all certified. This means they’ve passed a rigorous vetting and review process including a property inspection and property valuation including a rental market analysis to ensure that the properties are priced fairly. Plus the biggest perk is that most of the properties listed on Roofstock already have renters in place.
Types of investments
There are three different options for owning rental property through Roofstock:
- Roofstock Marketplace – This platform truly gives you access to purchasing a rental property, giving you all the details of the property, from the school districts and neighborhoods to interior photos and layouts. You make an offer on the property and if it is accepted, you are now the proud owner of a rental property.
- Roofstock One – This gives you a chance to fully own or fractionally own property, and have it managed by Roofstock.
- Roofstock Platform Services – For larger investors, this service can help you build and scale your portfolio of rental properties.
Eligibility
Anyone over the age of 18 can purchase a property, as long as you have the cash to invest.
The financials
- Fees – For all accepted offers, Roofstock takes 0.5% of the contract price or $500, whichever is greater. Management fees are applied if you select the management programs, but you will not pay any management fees until the property is rented. Fully managed investment programs start at $5,000.
- Earnings – As soon as you close on a property, you will begin earning rental income. Unlike other crowdfunding platforms, you are given a 30-day money-back guarantee, as well as guaranteed rent if properties are vacant. Beginning 45 days after a property is ready to rent, you begin earning rent.
- Liquifying – There is a six-month hold period before you can liquify, as long as you own 90% or more in the property. Fractional interest investors are offered a 92.5% price on fair market value.
Visit Roofstock to learn more or read our Roofstock review.
American app德扑圈官方网址homeowner Preservation
Like Roofstock, American app德扑圈官方网址homeowner Preservation (AHP) helps you invest in single-family app德扑圈官方网址homes, but in this platform, you are providing a loan to app德扑圈官方网址homeowners to help app德扑圈官方网址homeowners who have defaulted on their mortgages. With your investment, you are helping them make their payments and keep their app德扑圈官方网址home by purchasing their mortgages at heavily discounted prices. Once app德扑圈官方网址homeowners are caught up, the loans are sold to new loan companies at a higher price for an investment.
Yes, you may be helping someone, but at a big risk. And selling the loans to others? It’s not exactly a solid premise. Still, you can get started with just as little as $100 and the company has been in operation since 2008.
Types of investments
There is only one investment type: contributing to the purchase of failing mortgages.
Eligibility
AHP originally was open to only accredited investors but opened in 2016 to all investors over the age of 18.
The financials
- Fees – There are no fees to invest.
- Earnings – You will earn returns monthly. Investors are paid first and if any funds remain, AHP keeps the profits. All of your money is returned by the fifth anniversary of your investment — hopefully. If for any reason the mortgage is not paid and purchased, you might not get your funds back.
- Liquifying – Liquifying depends on the offer in which you invested, and AHP makes all effort for liquidity but cannot guarantee it.
GroundFloor
You can also invest very little in real estate using the platform GroundFloor. Providing short-term loans to those in need of residential loans, GroundFloor needs very little from investors. Only 5% of those who apply for the loans you are providing pass the rigorous inspection to help keep your risk down.
Types of investments
You’ll be investing in single-family, residential properties. Because GroundFloor is a loan company, it owns the properties and you will not earn any equity through your investment, only the interest.
Eligibility
You can invest with as little as $10, and you do not need to be accredited. (However, $10 will not give you great returns on your investment).
The financials
- Fees – There are no fees to invest.
- Earnings – Loans are set for 12 to 18 months, so you’ll get your repayment and investment within an average of six to nine months. GroundFloor touts 10% or higher consistent returns.
- Liquifying – Liquifying depends on the offer in which you invested, and GroundFloor makes all efforts for liquidity but cannot guarantee it.
Overview of the best online crowdfunding platforms
Crowdfunding platform Types of investment offerings Minimum investment Average returns Accreditation
RealtyMogul Commercial properties; equity $5,000 3% – 14% Depends on type
Fundrise Institutional properties; equity $500 12.4% No
stREITwise Commercial properties; equity $1,000 (average) 9.8% No
CrowdStreet Commercial properties; equity $25,000 24% Yes
Roofstock Rental properties; debt
As little as you’d like, but offers must be accepted Rental price set by you No
American app德扑圈官方网址homeowner Preservation Residential loans; debt $100 N/A No
GroundFloor Residential loans; debt $10 10% No
How I came up with this list
There aren’t a ton of real estate crowdfunding sites like there are with some other investments, so I wanted to make sure I offered the best of best. So, I took a look at the ease of which the websites work, customer reviews, and I made sure all of the companies have a low-entry investment requirement.
This list is a great entry for new investors as well as those looking to expand their portfolios.
What is the difference in crowdfunding investments?
You can choose equity investments or debt investments.
- Equity investments – These give you a stake in the property and make you a shareholder. When a property is sold, the equity profit is split amongst investors. This also means if property sells without equity, you may not get any return on investment. These work best for long-term investments.
- Debt investments – These make you, the investor, a lender to a property owner. You get the set interest rate of the mortgage loan and receive steady returns with less risk. These work best for short-term investments. You will not have any equity returns.
What is an accredited investor?
An accredited investor is defined by the Securities and Exchange Commission (SEC) as someone who has a total income that exceeds $200,000 if filing independently, or $300,000 if filing as a couple. Either a single or joint filing investor also has to have a net worth over $1 million. Some investments are required by the SEC to only accept investments from accredited investors.
How do I fund my investment?
Each online platform requires you to connect your bank account. This allows you to deposit and/or wire funds, as well as for the platform to transfer dividends to your account.
Most platforms accept funds within a few days but some may take a couple of weeks. Once the funds are accepted and the closing is complete, you will receive documentation and be able to sign forms electronically.
Summary
Real estate crowdfunding can be an excellent way to diversify your portfolio and invest in real estate. It comes with high risk, but also high rewards, and allows you to invest with very little funds to get you started.
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