9 Best Real Estate Crowdfunding Sites
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Real estate has often been considered a terrific way to build long-term wealth. Everyone needs a place to live, and many businesses need a place to operate. Until recently, investing in real estate has been only for the select few who had significant means. Thanks to real estate crowdfunding sites, many can start investing with as little as $500.
This allows those without the time to manage properties or the means to buy a property the ability to invest in real estate with little money and diversify wealth creation. This article shares the best real estate crowdfunding platforms so you can find which is a good fit.
Best Real Estate Crowdfunding Sites
Crowdfunded real estate has exploded in recent years. There are dozens of companies that make owning real estate a reality for most, but not all will fit your needs.
Before you try to make money in real estate crowdfunding, it’s essential to do your due diligence. Find a platform that works for you and doesn’t overcharge on fees. If you wish, some even offer retirement accounts if that’s a desire of yours.
Fundrise is one of the best real estate crowdfunding services for non-accredited investors. That means anyone can invest through the platform. You can open an account with either $500 or $1,000. For $500, you go into their Starter Portfolio.
The Starter Portfolio invests in a mix of real estate projects throughout the country. You receive quarterly dividends, plus the opportunity for your investment to grow.
If you start with $1,000, you can choose their Core Portfolio. The Core Portfolio provides the following investment choices:
- Supplemental income – focusing on dividend income
- Balanced investing – a mix focusing on long-term wealth creation
- Long-term growth – focuses on higher returns over the long-term
Starting with $1,000 also opens up more investment opportunities, including focusing on a certain sector or geographic area.
Fundrise provides a variety of real estate investing options, including:
- Commercial property
- New home construction
Average annualized returns for 2019 was 9.47 percent, according to the Fundrise site. This is net of their investment fees of .85 percent, which is competitive within the industry.
Investments are made through eREITs, so you invest in a group of properties. Our Fundrise review shares more about the platform.
RealtyMogul is a platform that serves both accredited and non-accredited investors. The platform focuses on commercial real estate, which includes any of the following:
- Office buildings
- Retail establishments
- Multi-family residences must be at least a fourplex to qualify
You can open an account with RealtyMogul with $1,000, making them a realistic way to have real estate in your portfolio. The platform offers both debt-backed investments and equity possibilities through REITs.
Those REITs are known as MogulREIT I and MogulREIT II. The former focuses on commercial and retail properties, while the latter focuses on apartment buildings.
Here is what you can expect to earn through each REIT through dividends:
- MogulREIT I – eight percent annual dividend yield
- MogulREIT II – four and a half percent annual dividend yield, but greater long-term potential
If you invest with at least $5,000 RealtyMogul allows you to select individual properties. Below that amount, you choose one of the two REITs, which you can also hold in an IRA.
RealtyMogul charges lower fees than other real estate crowdfunding sites, charging just .30 to .50 percent annually.
Streitwise is an excellent choice if you’re looking for crowdfunding platforms for non-accredited investors. The site requires a minimum investment of $1,000 and claims ten percent dividend returns.
The platform focuses primarily on retail and commercial buildings for investments. They also have a transparent fee structure, which they say is cheaper than other platforms.
Streitwise charges an upfront three percent fee, and an ongoing two percent management fee. These come out before dividend distribution.
Streitwise is best for those looking for long-term investments. Your money must remain invested for at least five years to receive full redemption value.
You must hold any investment for at least one year, and they offer the option to reinvest dividends if you wish.
Like other crowdfunding real estate investing platforms, investments are in REITs that distribute dividends quarterly. Our Streitwise review shares more about the platform.
Roofstock is a real estate investing marketplace that lets you invest in turnkey rental properties. You only need 20 percent to put down for properties. And, their site is free to join and browse properties.
When you choose to invest, you buy the property outright through the Roofstock platform. These are turnkey properties you buy to rent. You don’t physically manage the property; the platform handles this. They have properties in over 40 markets.
There are no minimums to open an account with Roofstock. You don’t need to be an accredited investor to invest with Roofstock.
The platform may seem like an odd addition to our list, but they also allow you to buy shares in real estate. These will look similar to REITs you’ll find with other services, but are non-public.
Fees are cheaper than you’d typically pay a realtor to locate a property for you. Roofstock charges an account set up fee of .50 percent to open an account.
The Roofstock platform is relatively simple to use and lets you locate properties based on numerous factors, such as locations, schools, and rent. If you’re not satisfied with your property, Roofstock offers a 30-day satisfaction guarantee.
Our Roofstock review shares more about the platform.
PeerStreet is the first on our list for accredited investors. Where PeerStreet sets themselves apart is they invest solely in short-term debt tied to real estate.
If you’re familiar with peer-to-peer lending, PeerStreet is similar to that. It’s a marketplace of loans you get to choose that’s backed by the underlying property. These aren’t commercial properties, but single-family residential properties.
Similar to Fundrise, you can choose your investment style with PeerStreet. They allow you to select specific loans, or you can choose a portfolio based on your investment goals.
Though only for accredited investors, PeerStreet shines in being a low-cost leader among crowdfunded real estate sites. Many platforms charge an annual fee of at least one percent. PeerStreet charges between .25 and one percent.
You can open an account with PeerStreet for just $1,000 and can expect returns of six to nine percent, according to their website.
6. Rich Uncles
Rich Uncles is perhaps the best option for real estate crowdfunding for non-accredited investors if you look strictly at account minimums. While most platforms require $500 or $1,000 to start, you can start investing with as little as $5 with Rich Uncles.
Rich Uncles offers two REITs to choose from. Those are:
- Student Housing REIT
- Commercial Property REIT
The Student Housing REIT requires $5 to start. It focuses on housing local to Division 1 college campuses. The housing must have at least 150 beds and have a 90 percent, or more, occupancy rate.
This REIT if a newer offering by Rich Uncles, starting in 2018, and offers a six percent annual dividend, paid monthly.
The Commercial Property REIT has a higher minimum requirement of $500. This is their original investment option and focuses on retail buildings for investments.
Rich Uncles does not charge fees to buy investments. They charge when you sell a holding. Those fees are:
- Owned less than a year – three percent administrative fee
- One – two years – two percent administrative fee
- Two – three years – one percent administrative fee
- Owned more than three years – no administrative fee
When buying commercial properties, Rich Uncles only does so with 50 percent equity, therefore reducing risk. The one drawback to Rich Uncles is you’re only able to invest in the Commercial Property REIT if you live in 24 states.
If you live outside that region, a choice like Fundrise would be better.
7. Patch of Land
Patch of Land is one of the legacy platforms for crowdfunded real estate investing, starting in 2012. While the site does have a low minimum requirement of $5,000, they only allow accredited investors.
The Patch of Land platform works similar to PeerStreet as they’re a lending marketplace. Investors lend money to real estate developers wanting to improve and rehab residential and commercial properties.
Loans mature between one to three years, and Patch of Land takes between one and two percent of the distributions made to investors. You can expect to earn up to 12 percent on one-year loans, according to their site. That is among the best rates and returns you can find.
EquityMultiple is a newer crowdfunding real estate investment marketplace that is only for accredited investors. Investors can open an account with as little as $5,000, and the site offers both debt and equity investments.
EquityMultiple sets itself apart by approving a small number of loan requests, just ten percent according to their site. This helps ensure a lower level of defaults for investors. Properties can include anything from hotels to self-storage facilities.
The platform charges competitive fees, .50 percent in administrative fees plus ten percent of all profits. Investments range between one and ten years. You can expect to earn as much as 17 percent, according to their site.
AlphaFlow is the final on our list and only accepts accredited investors. The platform also has the largest minimum investment on our site, coming in at $10,000, and investments range from one to four years.
AlphaFlow offers both debt and equity REITs, with all being in residential real estate. They take your investment and places your cash in up to 100 properties, and they actively manage your investment from there.
Think of it as the real estate equivalent to an actively managed mutual fund.
The site claims a return possibility of up to nine percent. You can withdraw earnings, or reinvest them to increase return potential. AlphaFlow charges one percent in fees, which is competitive within the market.
Why Crowdfunded Real Estate?
Traditionally, the real estate investing market requires significant sums of money or the ability to manage properties.
Crowdfunding lowers that barrier of entry so you can invest in small amounts and not deal with physically managing a property. Real estate crowdfunding platforms allow you to pool investments with others to finance buying a property or properties.
This gives you the ability to invest in real estate on a limited budget. Companies operate differently, but some allow you to start investing with as little as $500 or $1,000. This allows most to build wealth outside the market and grow their wealth.
Accredited Investors vs. Non-Accredited Investors
Not every real estate crowdfunding site will work for all investors. Investors fall into two categories, accredited and non-accredited.
You must meet one of the following requirements to qualify as an accredited investor:
- Have a net worth of at least $1 million
- Earn at least $200,000 per year
If you don’t meet one of those requirements, you are a non-accredited investor. There’s nothing wrong with that classification, but not all platforms accept non-accredited investors.
One other factor to consider with crowdfunded real estate is many funds are illiquid. This provides the benefit of increased dividends, but they’re not liquid, and returns are taxable.
Various platforms offer the ability to invest in an electronic real estate investment trust (eREITs). Think of this as a basket of properties. REITs were the only way to invest in real estate for many years.
They’re publicly traded, and you can invest in them today. eREITs, on the other hand, are usually privately held and available through crowdfunding sites.
Investing in crowdfunded real estate is like any other investment. There are risks involved, and you can lose money. On the positive side, real estate is one of the best passive income ideas to pursue.
Here are a few must-follow tips whenever you’re considering real estate investments:
Diversification is key. Real estate is a terrific way to diversify your portfolio. Just like you diversify stock market holdings, you want to consider the same with real estate.
This includes considering both commercial and residential properties, as well as debt and equity holdings.
Do your own research. Investing requires research. Do your due diligence to ensure a property fits your risk profile and needs. Platforms provide offering circulars for each property, which is your best place to start for research.
Don’t overlook retirement. Many real estate crowdfunding sites allow you to invest through a self-directed IRA. This can be an effective way to shield dividend income from taxes, plus it adds valuable diversification.
Consider investing in multiple platforms. Each platform is different. You may want to invest in multiple platforms to add necessary diversification and access various properties.
Benefits of Crowdfunding
Thanks to technology, it’s possible to invest in crowdfunded real estate. This presents several benefits, including:
- Passive income
- Growing long-term wealth
- Helping those who may need a property
- No need to physically manage properties
- Low barrier to entry to invest
- Potential tax benefits
- Transparency from the property management
Additionally, in certain instances, real estate is one of the better recession-proof industries to consider when trying to invest during an economic downturn.
Each situation is different, but many of the above provide solid opportunities for most. Do keep in mind that most opportunities are illiquid investments, but that’s the case with real estate investing as a whole and not strictly an issue with crowdfunding platforms.
Investing in real estate has often been something only available to those with means. That is no longer the case with the growth of crowdfunding real estate sites. You can invest at virtually any income level, allowing you to create long-term wealth.
Illiquidity aside, real estate provides an opportunity for building wealth without a lot of upfront time or financial investment.
Do you currently invest in real estate? Other than investing, how else are you growing your wealth?
Other Investing Options to consider
John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.
Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.
Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.
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