Best Real Estate Crowdfunding Sites

Real estate crowdfunding is a relatively new way to invest in commercial real estate. Some sites give everyday investors access to assets that have traditionally been reserved for the wealthy. Real estate investment platforms (aka crowdfunding sites) pair developers and other real estate professionals with individual investors who want exposure to real estate—without the hassles of owning, financing, and managing properties.

While real estate crowdfunding is inherently risky, real estate investments can help diversify your portfolio and provide competitive returns. Investopedia evaluated more than two dozen platforms to find the top picks for real estate crowdfunding sites in 2020. Here they are, in alphabetical order.

Best Real Estate Crowdfunding Sites

• CrowdStreet
• DiversyFund
• EquityMultiple
• Fundrise
• PeerStreet
• RealtyMogul

CrowdStreet

• Fees: 0.50% to 2.5% for CrowdStreet funds; other fees vary by offering
• Minimum Investment: $25,000
• Average Annual Returns: 11.5% to 26.4%, depending on the investment
• Total Investor Distributions: $135 million
• Investment Options: Funds, individual deals, and a professionally managed, tailored portfolio
• Accredited Investors Only: Yes

More than 101,000 investors throughout the U.S. have invested on the Crowdstreet platform. Its innovative approach gives direct access to a vetted range of institutional-quality real estate investments. Accredited investors can pick a single property or invest in a fund.

Founded in 2014 and headquartered in Portland, Ore., the company has published more than 447 commercial real estate investment offerings. To date, 33 of those offerings have been fully realized.

DiversyFund

• Fees: 0%
• Minimum Investment: $500
• Average Annual Returns: 11% to 18%, depending on the investment
• Total Investor Distributions: $135 million
• Investment Options: Real Estate Investment Trusts (REITs)
• Accredited Investors Only: No

DiversyFund’s model is unique in the real estate crowdfunding space. Instead of serving as a broker that connects investors with projects, DiversyFund buys, develops, and manages a portfolio of properties, collects the cash flow, and divvies up the profits amongst its investors.

Unlike some crowdfunding platforms, it doesn’t charge any fees. Currently, you can invest in the DiversyFund Growth REIT ($500 minimum) or in the DiversyFund platform itself though Series A round funding ($25,000 minimum; accredited investors only) ahead of the company’s initial public offering (IPO).

EquityMultiple

• Fees: 0.5% on equity investments; other fees vary by offering
• Minimum Investment: $10,000
• Average Annual Returns: 13.7%
• Total Investor Distributions: $24 million
• Investment Options: Institutional commercial real estate; equity, preferred equity, and senior debt; Opportunity Zones, and 1031 exchange investments
• Accredited Investors Only: Yes

EquityMultiple focuses almost entirely on institutional commercial real estate, and it also offers equity, preferred equity, and senior debt investments. The company recently added tax-advantaged real estate investments (Opportunity Zone and 1031 exchange) and fund products to its lineup. Distribution schedules vary by deal and are usually monthly or quarterly.

Fundrise

Fees: 1%
Minimum Investment: $1,000
Average Annual Returns: 8.7% to 12.4%, depending on the investment
Total Investor Distributions: $79 million
Investment Options: eREITs and eFUNDs
Accredited Investors Only: No

Since its launch in 2012, Fundrise has invested in more than $4 billion worth of real estate across the U.S. Today the company manages upward of $1 billion of equity on behalf of more than 130,000 individual investors.4

Fundrise offers three account levels: Core, Advanced, and Premium. There’s a different minimum investment amount at each level, as well as varying investment strategies and potential returns. If you want to redeem your shares within Fundrise’s 90-day introductory period, you can receive your full, initial purchase price.

PeerStreet

Fees: 0.25% to 1%
Minimum Investment: $1,000
Average Annual Returns: 6% to 12%
Total Investor Distributions: $175 million
Investment Options: Real estate debt
Accredited Investors Only: Yes

PeerStreet is an online marketplace where accredited investors can invest in high-quality private real estate loans. Here’s how it works: Your investment gives lenders capital to lend to real estate borrowers, then PeerStreet collects the monthly payments from the borrowers, and you (the investor) get a share of those monthly payments.

You can diversify your portfolio manually or automatically with investments from various locations, lenders, borrowers, asset classes, terms, loan-to-value (LTV) ratios, and rates.

RealtyMogul

Fees: 1% to 1.5%
Minimum Investment: $5,000
Average Annual Returns: 4.5% to 8%
Total Investor Distributions: $160 million
Investment Options: REITs, individual properties (multifamily, office, industrial, self-storage, retail, and medical office), 1031 exchanges
Accredited Investors Only: No

Since its inception in 2013, more than 197,000 investors have joined RealtyMogul to access its REITs and private market offerings. Known for its exemplary due diligence, the company vets every potential property in person and scrutinizes each deal using propriety methods and models.

The company looks for well-leased properties or those with existing leases, and it works only with real estate partners with proven track records and experience managing assets. It does not invest in non-cash-flowing investments, such as raw land or ground-up construction. Investors can choose from three objectives: passive income, growth, and diversification.

What Is Real Estate Crowdfunding?

Crowdfunding is a way to fund a project or venture by pooling small investments from a large group of investors. The idea is that when enough people make small investments, it’s possible to raise substantial amounts of money quickly. One of the most well-known crowdfunding sites is GoFundMe, a platform used to raise money for everything from creative projects to medical bills.8

Real estate crowdfunding raises capital for real estate investments. When developers or real estate professionals find investment opportunities, they may not want to fund the entire investment themselves (or they may not be able to). Thus, they turn to crowdfunding to let individual investors help finance the project. The process enables investors to invest in real estate without having to own, finance, or manage properties.

Source: investopedia.com