Best Real Estate Crowdfunding Platforms

I first entered the real estate market in 2010. South Carolina was a relatively easy place for a 24-year-old to buy a house.

Especially with the help of the first time homebuyers tax credit. Interest rates weren’t the lowest, but banks were giving out loans with very little down.

I consider myself fortunate; it’s harder to buy real estate today. The Housing and Economic Recovery Act of 2008 that established a tax credit for first-time homebuyers no longer exists. Real estate markets in high cost of living areas are extreme.

House hacking is a great way to help build equity, however, it requires a large down payment. Building up a real estate rental property portfolio is harder to do on your own.

Luckily, you can increase your real estate investment exposure with the support of many others. In this post, real estate crowdfunding is explored. Now there is a way to invest in real estate for as little as $500.

Currently, I live in an expensive city and turn to real estate crowdfunding as an investment solution. I cannot afford a full house, so I set up automatic contributions to a few of the following crowdfunding platforms.

What is crowdfunded real estate?

Crowdfunding involves multiple investors coming together to invest in a common interest. By pooling their money together, they are able to make larger purchases thereby increasing their returns.

Crowdfunded real estate involves bringing investors together to fund real estate purchases and or sales.

There are different types of real estate crowdfunding options. Some involve receiving dividends from rental income and others involve the fixing and resale of the property.

Crowdfunded real estate allows investors to purchase expensive properties they would have been unable to buy on their own.

Can you make money crowdfunding real estate?

The short answer to this question is “yes.” However, let’s look at the historical returns of crowdfunded real estate.

According to Fundrise, the annual crowdfunding real estate returns have actually outperformed the stock market over the past few years. The average annualized return for Fundrise crowdfunded investments were:

  • 2014 – 12.25%
  • 2015 – 12.24%
  • 2016 – 8.76%
  • 2017 – 11.44%
  • 2018 – 9.11%

 

fundrise historical performance

Photo credit: https://fundrise.com/historical-performance

 

How much money can you make crowdfunding real estate?

The amount of money you can make in crowdfunding real estate revolves around several factors. One of the biggest factors is the amount of money you invest. The larger the investment, the larger the potential return.

From the table above, you can see that crowdfunded real estate has performed quite well over the past years. Depending on the amount of money you are able to initially or continually invest, the compounding interest and dividends you can make are unlimited.

Creating a starter portfolio of real estate is easier than ever with the option of crowdfunding to avoid having to rely solely on traditional stocks.

Is real estate crowdfunding a good investment?

Real estate crowdfunding is a relatively new investment option. However, the ability to add further diversification to your investment portfolio is something definitely worth looking into.

If you’re primarily invested in stocks and bonds, investing in real estate can be an excellent hedge against the stock market uncertainties. The stock market fluctuates much more than real estate but you have the opportunity to make great returns in the stock market.

Most experts agree that real estate should be a part of every investor’s portfolio. In addition to REITs (real estate investment trusts), crowdfunding now allows everyday investors without a high net-worth to invest in real estate. Real estate can add an extra layer of protection in both good and bad stock market times.

Another great benefit – since crowdfunded real estate involves private funds, investors don’t have to see their account values going up and down every month at the whim of the stock market. That’s a value-added benefit most investments in private real estate funds appreciate.

Being able to invest in funds that have only been available to the 1% offers everyday investors a great opportunity that’s only recently become available.

That’s one of the many reasons we like this strategy.

Real Estate Crowdfunding

In 2012, the JOBS—or, Jumpstart Our Business Startups—act opened a new world to US-based investors. Previously, individuals had been limited to investing in public stocks and bonds.

When it passed, the everyday investor was finally able to invest directly in real estate crowdfunding projects online. For the first time ever, you can now invest like a billion-dollar institution by diversifying into private market real estate investments.

Soon after the law passed, we saw hundreds of crowdfunding real estate platforms pop up online. These real estate crowdfunding sites all have different niches,  goals, and more.

So, a question we often get is: what portal is best for crowdfunding real estate? After all, there are lots of considerations to keep in mind when deciding who to trust with your money, and who will help it grow the fastest.

With that in mind, we set out to find the best crowdfunding real estate portal on the ‘net. However, before we started our search, we had to build a list of criteria to look for when finding the best real estate crowdfunding portal.

Here are our criteria:

  • The crowdfunding portal must be easy to use
  • Must have a solid list of active and closed listings
  • Must have an interesting niche

Then, we set out on our quest to find the best real estate crowdfunding platform. We tested and investigated over 50 different websites, and narrowed our favorites down to just ten of the absolute best.

In this article, we’ll introduce you to our top 10 real estate crowdfunding platforms. Each of these crowdsourcing portals has its own merits and niches, as well as their own downfalls—rest assured that you’ll hear both in this piece.

Note: Some of these websites require you to be an accredited investor—but not all of them. We’ll let you know which ones do, and we’ve given priority to sites that welcome all investors.

In the United States, to be considered an accredited investor, you must meet one of the following criteria:

  • Have a net worth of at least $1,000,000, excluding the value of one’s primary residence
  • Earn an income of at least $200,000 each year for the last two years (or $300,000 combined income if married) and have the expectation to make the same amount this year

Do not worry. Even if you are a non-accredited investor, there are fantastic real estate crowdfunding opportunities available.

Top 11 Real Estate Crowdfunding Platforms

1. DiversyFund

DiversyFund is one of the newest crowdfunding investment companies on the market but they offer some of the best rates and returns. However, when I invest, numbers are great but I pay special attention to their customer service.

This is one of the reasons DiversyFund is on top of the list. DiversyFund has one of the best customer service departments I have encountered in the crowdfunding arena. Being able to get my questions answered quickly is extremely important if I’m going to be investing my hard-earned money with them.

With their great customer services comes impressive low account fees. This investment platform has broken the mold when it comes to account fees. Why? Because they have none. Even the other top multimillion-dollar crowdfunding investment companies charge account fees.

In addition, you can start investing in real estate with only $500!

The other thing I love about DiversyFund is their investment strategy. You see, they only invest in one type of property – multifamily housing. Whey is that important? It’s one of the least risky types of commercial real estate.

DiversyFund takes it one step further. They look for properties that need some work. Don’t worry. We’re not talking about foreclosures. What I mean is they might need a new roof, updated bathrooms or kitchens or a fresh coat of paint.

To meet their strict criteria, properties must be cash flow positive and in a high growth area. Their technology allows them to scan the country to find properties that fit. After a site visit, if the properties are approved, they do the upgrades,

Improved properties allow DiversyFund to increase rents for new tenants and for those with expiring leases. Increase rents increase property values. That means investors make more money when the properties are sold.

DiversyFund Minimum: $500 DiverseyFund is our top ranked crowdfunding company because they only invest in multifamily cash flow positive properties in high growth areas, which is one of the least risky types of real estate. Learn More DiversyFund

 

2. Fundrise

Fundrise is a tech-focused real estate crowdfunding platform. They provide access to real estate investing through eREITs and eFunds, which are essentially diversified portfolios of private real estate assets throughout the United States.

Even better? Some of the listings on the site are available to Fundrise with low minimums of just $500(!). This makes the platform perfect for those just getting into real estate investing and those with only small amounts of capital to invest.

Fundrise even has a quiz that will help you pick the right investments and plans for your financial needs and available capital. You should definitely check out this platform if you’re new to the real estate investing world.

 

Fundrise Fundrise offers crowdsourced real estate investing, most real estate investing platforms are only open to accredited investors, but Fundrise makes it accessible to all investors. Learn More Fundrise

 

3. Crowdstreet

CrowdStreet focuses on giving investors direct access to institutional-quality commercial real estate (CRE) opportunities. The website mostly focuses on commercial projects like retail, office buildings, and multi-family condo buildings.

Even better, the platform gives you all the online tools you need for your real estate investments. Their well-designed platform makes it easy to view all active offerings, as well as projected returns and other related documents. When you’re ready to invest, just e-sign the required documents and send your investment.

CrowdStreet was historically an accredited investor-only platform, but that changed in August 2017 after the platform announced its first offering for non-accredited investors.

Today, the site has a mix of offerings with each having its own minimum investment. The lowest we’ve seen is an accessible $5,000 minimum investment, and the highest being a $50,000 minimum investment geared towards professional investors.

Learn More about CrowdStreet

4. Roofstock

Founded in 2014, Roofstock hangs-it’s-hat on being the first and #1 online marketplace for those interested in investing in single-family rental homes.

Though Roofstock is a relatively young company, they have overseen over $1 billion of completed transactions.

Roofstock realizes the real-estate investing market can be very confusing, so they have sought to develop an entirely online platform that simplifies the process.

Through Roofstock, even first-time real-estate investors can feel comfortable.

Roofstock proves to be an attractive option for real estate investors across the country.

Learn More about Roofstock

5. Alpha Investing

Alpha Investing takes a unique approach to real estate crowdfunding: they provide a concierge service, giving you direct access to a private manager and exclusive access to real estate crowdfunding awesome deals.

The concierge service is special because each investor has direct contact with a principal at the firm. These principals are available to speak directly about any issue, so you’ll never be left in the dark if you have questions or need clarification on an investment.

Do note that Alpha Investing is exclusive to accredited investors and requires a phone interview before you can invest. Not all will be approved either, so be sure you meet all requirements before signing up for an interview.

6. PeerStreet

PeerStreet focuses on residential debt, so you’ll be primarily investing in single-family projects like homes and storefronts. However, they also get the occasional condo building or other multi-family real estate crowdfunding projects.

The crowdsourcing platform partners with major lenders and provide the platform to get the funding. Gets high marks in the industry for transparency and excellent management.

PeerStreet is open to all investors and has a $1,000 minimum investment. Typically, you’ll find loans with 6-36 month durations and 6-9% returns, according to their team. This makes the platform perfect for those just getting into the real estate crowdfunding space.

PeerStreet If you are interested in high quality real estate investments, PeerStreet is the marketplace for you. Learn More PeerStreet

7. RealCrowd

RealCrowd connects investors with projects backed by large real estate funds and syndicators. Many of the listings on the platform are commercial, for example, they currently have a number of hotels seeking investment on their platform.

Do note that the company has relatively high minimum investments. You’ll generally see minimums of $25,000 to $50,000, and the site is heavily geared towards accredited and institutional investors.

Further, unlike others on this list, RealCrowd focuses on long-term investments. Many of their offerings have hold times over five years, making this a great long-term opportunity for passive income with high returns.

8. AlphaFlow

Want to invest in multiple real estate offerings at once? If so, AlphaFlow is just what you need. On this real estate crowdfunding platform, just make one investment and AlphaFlow will invest your money for you into multiple offerings on its website.

Think of AlphaFlow as your personal investor for real estate investments. The platform will invest your money across a minimum of 75 real estate offerings around the web, so you’ll make maximum returns and substantially reduce risk.

The platform has a solid track record too. As of this summer, AlphaFlow has a portfolio of nearly 700 investments across 31 U.S. states. It has a net return of 8.40%, which is pretty great considering you’re investing in multiple properties at once.

9. RealtyMogul

RealtyMogul is one of the first companies to enter the real estate crowdfunding market. The platform offers a little bit of everything: from mobile homes to multi-family condo buildings and retail spaces. And to make matters even better, they have a minimum investment of just $1,000 on most offerings.

The crowdfunding platform is open to all individual investors, so anyone can take advantage of their awesome deals so long as you meet the income requirements of $200,000 per year or more.

10. 1031 Crowdfunding

1031 Crowdfunding is a newer competitor in the real estate crowdfunding space. Nearly all of their offerings are commercial, with a focus on retail, hotels, and even self-storage. However, there is also an assortment of multi-family homes available for investment too.

The crowdfunding vets all investments on the platform, and its team has over 60 years of combined experience in the industry. So far, they’ve raised over $1.3 billion dollars and has over $2 billion in combined real estate transactions.

But what makes 1031 different than the rest of the portals? Simple: 1031 has a second product called 1031 Insurance. Use this platform to a way to guarantee that all of your exchange funds are invested in a replacement property rather than taxed for capital gains.

After all, why pay taxes when you can keep your hard-earned money working for you?

11. Patch of Land

Patch of Land aims to be the real estate crowdfunding platform for everyone. They offer low minimums for accredited investors that are just getting started with real estate investing. Most investments have loan durations of just 12 to 24 months.

Browsing through Patch of Land’s offerings list, you’ll see a focus on single-family homes in big cities and tourist-focused areas like Chicago, New York City, and even smaller cities in Hawaii.

All of the platform’s deals are thoroughly vetted by the company’s underwriters before being listed, so you can invest without worry. In fact, Patch of Land co-invests in all of its active offerings to provide that extra confidence boost.

Are you an accredited investor?

Some real estate crowdfunding sites require that you be an accredited investor. We defined ‘accredited investor’ above, but to review, you must:

  • Earned $200,000 in annual income ($300,000 for joint investors) for the last two years with the expectation that you’ll earn the same or more this year, or,
  • Have a net worth over $1,000,000, individually or jointly, excluding their primary residence.

The requirement exists because the SEC wants to ensure people investing in unregistered securities can afford to lose it. Additionally, the accredited investor requirement assumes that the person can do due diligence on their own.

For many investors, that bar might be too high.  If you are not an accredited investor and want to invest in real estate through a crowdfunded platform, there are options.

Best Crowdfunding for Non-Accredited Investors

DiversyFund: DiversyFund is qualified by the SEC to offer investment opportunities to everyone. Any US resident, unaccredited or accredited, over the age of 18 can currently invest with only $500!

Fundrise: Any US resident over the age of 18 can invest with only $500!

RealtyMogul: Both accredited and non-accredited investors are eligible to invest in the MogulREIT I and MogulREIT II

CrowdStreet: August 2017, CrowdStreet opened its first ever investment offering open to all U.S. based investors.

 

Fundrise vs. DiversyFund

Fundrise and DiversyFund are quickly becoming the two top competitors in the real estate crowdfunding space. An honest Fundrise review compared to DiversyFund is necessary to see the differences:

Fundrise account fees:

Investment advisor fee – 0.15%
Asset management fee – 0.85%

Additional acquisition fees range from 0% – 2%.

Even at 3%, the Fundrise fees are far below what the traditional private equity fund fees opened to accredited investors charge.

 

DiversyFund account fees:

No platform fees.

 

Fundrise Investments:

Three separate investment platforms.

  • Supplemental income
    • The primary fund investments are in debt real estate assets
  • Balanced
    • Invested in both debt and equity real estate assets.
  • Long term growth
    • No investment in debt assets. They only buy hard assets.

 

DiversyFund Investments:

  • The team believes (and historical returns confirm) that the safest and best performing commercial real estate investments are value-add multi-family units.

 

In Closing

There’s no doubt that real estate crowdfunding is shaking up modern investment portfolios. With re-urbanization on the rise, there’s no doubt that more and more of these websites will pop up over the next few years to fund new apartment buildings, retail, and more.

Luckily, in the online real estate market, you can now invest in real estate through crowdfunding with as little as $500. Whether you want to be a landlord or not, it’s worth considering crowdfunded real estate as a way to diversify your investing strategy.

Grant Sabatier

Creator of Millennial Money and Author of Financial Freedom (Penguin Random House). Dubbed "The Millennial Millionaire" by CNBC, Grant went from $2.26 to over $1 million in 5 years, reaching financial independence at age 30. Grant has been featured in The New York Times, Wall Street Journal, BBC, NPR, Money Magazine and many others. He uses Personal Capital to manage his money in 10 minutes a month.

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Posted in: Real Estate

9 Comments
    Todd at Invested Wallet
    Posted Oct 12 2018
    Great list and info Thomas! I think one you are missing though is GroundFloor, I've been a big fan since they opened to all states a few months back. I know a few people doing well on it too.
      Thomas Minter
      Posted Oct 12 2018
      Thanks, Todd! I haven't invested with GroundFloor yet. Once I check it out and put some money into it, I'll return and write a review post. Stay tuned!
    Tony Aluve
    Posted Oct 12 2018
    I know people who have invested with stREITwise as a non-accredited option and have been pretty happy.
      Thomas Minter
      Posted Oct 12 2018
      It would be great to learn more! Send over details!
    FundKo
    Posted Oct 13 2018
    Real estate is the best investment I must say. And, you have such a useful list of best real estate crowdfunding platforms. You are missing these two in your list: 1st: Prodigy Network and 2nd is iFunding.
      Thomas Minter
      Posted Oct 16 2018
      So many fantastic options out there. Send over your success stories with these platforms!
    Tony Aluve
    Posted Oct 19 2018
    Sure, I invested with streitwise back in November and have had 10% dividends every quarter and the fees have been the lowest I've seen (3% up-front management fee / 2% annual fee) giving me the best returns so far from the ones I've tried.
    Zac Chastain
    Posted Nov 20 2018
    You should update this post as RealtyShares is shutting down (not making any more investments). I've had good luck with them over the past year with both debt and equity investments so I was sad to hear this news.
      Thomas Minter
      Posted Nov 20 2018
      Updated.

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