Real estate crowdfunding is a great opportunity for investors who wish to diversify their portfolio. This type of investing allows those to be involved within the real estate sector without having to put in a large amount of capital. In this article, we highlight our recommendations for the best real estate crowdfunding platforms for investors of all levels.
Quicklook: Best Real Estate Crowdfunding Platforms
- RealtyMogul — Best for Passive Investors
- CrowdStreet — Best for Accredited Investors
- Fundrise — Best for Non-Accredited Investors
- DiversyFund — Best for No Fees and REITs
- EquityMultiple — Best for Commercial Real Estate
Table of Contents:
- 5 Best Real Estate Crowdfunding Platforms
- What Is Real Estate Crowdfunding?
- How Does Real Estate Crowdfunding Work?
- What to Consider With Real Estate Crowdfunding Platforms
- Is Real Estate Crowdfunding Right for You?
- Frequently Asked Questions
5 Best Real Estate Crowdfunding Platforms
Here we recommend our top five picks of reputable real estate crowdfunding platforms. We encourage you to look at these platforms and find which one is most suitable for your investment needs and goals.
RealtyMogul is a highly reputable real estate crowdfunding platform that bridges the gap between investors and high quality real estate investments. This platform provides a wide range of investment options such as REITS, individual properties, and 1031 private placements. Even though entry into some of these projects depends if the investor is accredited, RealtyMogul offers non-accredited investors great investment opportunities as well.
- Can use self-directed IRA to invest
- Passively invest into various real estate options
- Low fees & has high target rates of return
- Non-accredited investors can utilize REIT products
- REIT buyback program
- Account minimum of $5,000
- Fee structure can vary depending on investment type
Fees: 1% to 1.25% for management fees
Minimum Investment: $5,000 account minimum
Investment Options: REITs, individual properties, 1031 private placement investments
Average Annual Returns: 5% to 19%
Only Accredited Investors: Not only for accredited investors. Accredited investors are defined as those who make 200k a year or a couple that has a joint annual salary of 300k.
CrowdStreet is a highly integrated management platform that is best suited for accredited investors’ needs. It has more than 250 large commercial real estate developers and more than 100k subscribers on the platform. They have standard real estate opportunities in addition to new assets such as data centers, charter schools, and other community investments.
- Wide variety of investment opportunities (spanning from single property to funds)
- Institutional quality offers
- Direct investments & IRA accessibility
- User friendly platform with live support
- Educational resources & quality deal flow
- Accredited investors only
- High account minimum and high minimum investments
- No early withdrawals
Fees: .5% to 2.5%
Minimum Investment: $25,000
Investment Options: Individual deals, funds, and community investments
Average Annual Returns: 11.5% to 26.4%
Only Accredited Investors: Yes
Fundrise is best for investors who are just starting off in their real estate investment journey. This platform allows non-accredited investors to start expanding their portfolio in an easy and accessible way. Fundrise is a great option for investors who wish to be an active investor.
- Offers REITs, interval funds, or eFunds to non-accredited investors
- Active investors with a long-term outlook
- Open to investors of all levels (offers an advanced and basic accounts)
- IRA accounts available and offers low investment minimums
- User friendly website
- Has illiquid investments
- Complex fee structure
- Higher level investments require the investors to do in-depth research
Fees: .15% advisory fee and .85% asset management fee
Minimum Investment: $10 to $100,000 depending on account level
Investment Options: REITs, Interval funds, or eFunds
Average Annual Returns: 7.42% to 12.42%
Only Accredited Investors: No
This option is great for investors who are specifically looking for platforms with no fees and want to invest directly in the project. Unlike the other platforms mentioned above, which connect the investor to the project, DiversyFund manages their own investment projects. Meaning extra research on the company is not required since DiversyFund is the developer, owner, and manager of these properties.
- No management fees
- Has a mobile app investors can use to on the go
- Low minimum investment
- Grants access to ongoing commercial real estate projects
- Non-accredited investors can participate in these investments
- Limited amount of investment choices
- Early withdrawals are not allowed
- Lack of transparency
Fees: 2% to 8% on developer fees, no management fee
Minimum Investment: $500
Investment Options: REITs
Average Annual Returns: 10% to 20%
Only Accredited Investors: No
This option is best for accredited investors who want to focus on investing in commercial real estate. In comparison to other only accredited platforms, EquityMultiple offers equity, preferred equity, and senior debt investment options. This is a great platform for those who are looking for a wide selection of specialized investments.
- High returns on senior debt (7-15%), preferred equity (7-15%), and common equity (5-12%)
- Variety of holding periods of investment options
- User friendly platform
- Wide selection of investment options
- High rates of return
- For accredited investors only
- Fee structure varies depending on investment option
- High minimum investment
Fees: .5% to 1.5%
Minimum Investment: $5,000 to $10,000 depending on investment
Investment Options: Common equity, preferred equity, senior debt, institutional commercial estate, opportunity zones, and 1031 exchanges
Average Annual Returns: 10% to 14.5%
Only Accredited Investors: Yes
What Is Real Estate Crowdfunding?
In short, real estate crowdfunding is when a pool of investors contribute and raise capital for a real estate project. By doing this, the investors become shareholders in the property meaning they will be getting a portion of the profits made.
This is a great option for investors who wish to invest into the private real estate market but do not have the capital to fully purchase an investment property.
How Does Real Estate Crowdfunding Work?
Investors contribute capital into a pool fund for a company’s new real estate project. For most platforms the minimum contribution to enter the fund is around $500 however, it depends on the project and platform. Once the capital goal is reached, these funds are given to the company in order to support the project.
What to Consider With Real Estate Crowdfunding Platforms
There are some key components to consider when looking to invest into real estate crowdfunding platforms. These characteristics can enhance or dampen your investment experience.
They include: fees associated, investment options available, account minimums, and the platform’s credentials.
There can be hidden costs associated with a crowdfunding platform so it is important to know all the fees associated prior to making a large investment. These fees can include commission or take a percentage if the investor wishes to withdraw any profits. By knowing this information upfront you will be able to make a better informed investment decision.
Investment Options Available
Highly profitable real estate projects can be hard to find, so using a platform with a large variety of options ensures that an investor is not missing out on any potential opportunities. This allows investors to have more flexibility in their investment options.
Account Minimums or Minimum Investments
Some platforms require account minimums when joining which can be an unexpected expense for new investors. Additionally, some companies require an entry fee to become a shareholder in their new projects. Prior to investing, you should be aware of any minimum capital requirements made by each platform.
No one wants to put their money in an unsecured platform. Looking for a platform that has an extensive amount of credentials and safety protocols is crucial prior to investing your money. New investors can seek out these credentials through external resources that suggest or review these platforms.
Is Real Estate Crowdfunding Right for You?
In this article we highlight the fundamentals of real estate crowdfunding and offer recommendations of the top 5 platforms for both accredited and non-accredited investors. In short, investing is a personal journey and to make sure your needs are met, a financial advisor can help advise you in your investment decisions. Read more about how to get started with a financial advisor here.
Frequently Asked Questions
Similar to any other financial investments, it is possible to lose your money.
If you are looking to fund individual deals CrowdStreet would be a better option for your needs. However, Fundrise is a great option for those looking to invest less in a diversified REIT option.
Similar to other trading platforms, there is a risk where a crowdfunding site can shut down due to lack of cash flow from new investors. However, with our recommendations, all of these options have shown to be safe and take their investors’ security very seriously.
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