Best Real Estate Crowdfunding Sites

Looking to get started in the world of real estate investing? Real estate crowdfunding has reduced fees and offers increased diversification for particular investment plans. 

Aside from this, real estate crowdfunding has evolved as a cost-effective way for people to invest in high-quality real estate. 

All of this has contributed towards the growth of the industry. Even in current COVID-19 times, an S&P Global Ratings analysis predicts office real estate investment and REITs will stay in good shape, with a “global GDP contraction of 2.4% in 2020 before a rebound of 5.9% in 2021.”

However, non-accredited investors should be aware of some investment limitations which can make finding the best real estate crowdfunding site a bit more complex.

To help you narrow your search, be sure to look out for sites with the relevant investor accreditation, then consider other aspects like fees, account minimums, and promotions. Oh, and don’t forget to get to grips with all the basics of crowdfunding, too!

To help you navigate the world of real estate crowdfunding, we’ve compiled a list of the best real estate crowdfunding sites. We’ve also created a buyers guide that will help you understand all the basics before you get started.

Best Real Estate Crowdfunding Sites

Not sure which crowdfunding site to go with? We’ve highlighted the best below!

1. Fundrise – Best Overall

Fundrise is an ideal crowdfunding site for real estate for non-accredited investors and in 2019 it reported a net return of 9.47% for investors. It allows you to open an account with a minimum balance of only $500.

The Starter Portfolio invests in a variety of real estate projects across the country. It offers quarterly dividends, not to mention that opportunity to grow your investment.

• Fees: 1%
• Account minimum: $500
• Investor Accreditation Requirement: Open to non-accredited investors
• Promotion: No promotion at this time

Should you make a starting investment of $1,000, you can choose their Core Portfolio where you will have access to some cool investment choices, including: 

• Balanced investing: A focus on a mixture of ways to create long-term returns
• Supplemental income: Focuses on dividend income
• Long-term growth: Focuses on long-term investing with  increased returns

A highlight of Fundrise is its selection of deals and innovation. It created eREIT, and continues to grow and gain momentum since its founding in 2012. Learn more about this in our complete Fundrise review.

With Fundrise, you will gain access to a mixture of real estate investing options, such as:

• New home construction
• Commercial Property
• Apartments

To help combat taxes, Fundrise provides self-directed IRA accounts that allow you to protect your returns from taxes and diversify retirement investments. The popular crowdfunding site also boasts an impressive 5-year track record of returns.

In 2018, when the S&P was selling off, Fundraise continued to do its thing and offer investors positive returns.

To get a better idea of Fundrise, and to see how it differs from global investment giant, Betterment, we wrote a detailed analysis of Fundrise vs. Betterment — putting the top real estate crowdfunding platform head-to-head with a leading robo advisor.

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2. Roofstock – Best for Budget

Roofstock is a leading online crowdsourcing platform, making real estate accessible for millennials. It focuses on single family residential homes up for rent, offering low fees, occupied homes, and is available to non-accredited investors alike. 

• Fees: 0.5% of the contract price or $500
• Account minimum: $0
• Investor Accreditation Requirement: Not required
• Promotion: None

Though there is a huge variety of crowdfunding platforms, Roofstock dominates the single-family rental market at a massive $3 trillion. In January, the platform raised $50 million in a new funding project. 

The idea: both retail and institutional investors can buy and sell homes without making renters leave the property.

Users will have access to over properties in over 40 cities. Those on a budget will be happy to hear there is no minimum deposit required to gain the use of the Roofstock platform. 

Not to mention, you do not need to be an accredited investor to start off with Roofstock, unlike some of the other sites. Buying properties requires interested parties to put down a 20% deposit with the choice of doing this in an IRA.

Figuring out how to invest your money can be hard. Deciding on a manageable budget can be even more difficult. Roofstock is our best crowdfunding site for those on a budget not only because it requires a $0 minimum deposit, but because of its competitive fees, too. The platform charges 0.50% to set up an account.

As a whole, the Roofstock platform is quite clear cut and easy to navigate. It allows you to pinpoint properties based on various factors, like rent, locations, and schools. Should you not be happy with your property for some reason, Roofstock offers a 30-day money back guarantee. See more details in our comprehensive Roofstock review.

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3. CrowdStreet – Best for Accredited Investors

CrowdStreet is one of the most experienced and rapidly growing crowdfunding sites, hitting a $1 billion milestone in total online investments by individual investors. Its record of impressive returns and excellent deal flow make CrowdStreet an ideal option for accredited investors. 

In addition to this, investors flock to CrowdStreet for its direct-to-sponsor model.

In other words, you will receive the utmost transparency and clear and efficient communication because you will be in direct contact with the sponsors of the real estate offerings.

• Fees: 0.50% to 2.5%
• Account minimum: $25,000
• Investor Accreditation Requirement: Accredited investors only
• Promotion: None

CrowdStreet conducts rigorous pre-screens for all deals. The firm also has clear sponsor rating designations so investors have a good understanding of who each sponsor is, in addition to all the information you’ll need about the concerned deals.

Once you’ve that you’re an accredited investor, all you need to do is choose an investment and then fund a transaction. CrowdStreet comes out on top when it comes to offering an easy to use system that offers relevant information about the real estate offerings. This can help you save time and dedicate more of it to what’s important: Developing real estate.

The platform consistently offers deals with a minimum investment requirement of $25,000 and project lengths of only 2 years. Typically, deals are 5+ years on other platforms. 

CrowdStreet doesn’t charge investor fees. It’s also worth noting, 70% of CrowdStreet’s revenue comes from deployment fees which are paid by sponsors who want to post investment opportunities in the marketplace. This compensation model potentially creates some conflict between how it makes money and its vetting process – the more sponsors, the more revenue for CrowdStreet.

With CrowdStreet CEO Tore Steen recently named one of the best start up employers by Forbes, this company is in a positive position to continue to bring investors what they need to succeed. We have recently published a CrowdStreet review that comes with more interesting details on this company.

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4. RealtyMogul: Best for Non-Accredited Investors

RealtyMogul is another top crowdfunding site, and in January the company announced over $500 million had been invested in commercial real estate, with a value of over $2 billion. More than $136 million has been redistributed to investors, to date. 

RealtyMogul Founder and CEO, Jilienne Helman makes a point of focusing on high quality deals and long term success, and in January the company partnered with Forge to acquire a property for an innovative workforce housing project.

• Fees: 1% – 1.5%
• Account minimum: $5,000
• Investor Accreditation Requirement: Open to non-accredited investors
• Promotion: None

Mostly, RealtyMogul focuses on investments in the following areas:

• Retail establishments.
• Multi-family residences must be at least a fourplex to qualify.
• Office buildings. 

Investors can sign up to RealtyMogul with only $1,000. 

 The platform’s non-traded REIT, MogulREITs will give you access to both equity possibilities and debt-back investments. MogulREIT l prioritizes retail and commercial properties, and MogulREIT ll prioritizes apartment buildings

As COVID-19 continues to impact the real estate market the company has lowered NAV on Reg-A funds and decreased distributions. In March 2020, the NAV per share for Mogul REIT l lowered from $9.70 per share to $9.45 per share. The NAV per share for MogulREIT ll lowered from $10.42 per share to $9.77 per share.

This represents a lowering of distribution for MogulREIT from the previous rate of 8% on NAV per share of $9.70. The funds are not leveraged, and management credit this for helping them throughout the pandemic.

Most asset classes, apart from Bitcoin and gold, were hit by the COVID-19 crisis. In some ways, both MogulREIT funds seem to be performing better.

Those with a higher investment amount of $5,000 can select individual properties with RealtyMogul. Anyone with less than $5,000 can select one of two REITs, and you can hold it in an IRA, too.

So, how much will you pay? You will pay lower fees with RealtyMogul than with any of its competitors, with a charge of .30% to .50% annually. Our thorough RealtyMogul review brings more details on the company’s pricing.

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5. PeerStreet: Best for Investors with a High Risk Tolerance

PeerStreet is a rapidly growing crowdfunding platform and is the first and largest of its kind.  Its success can be attributed to the company’s product innovation and technology, showcased through its proprietary platform. 

Apart from this, PeerStreet has grown because it expanded its products to include long-term real estate debt through its Residential for Rent program. This is a loan document generation software product that incorporates increased loan types into an automated investment feature. Better yet, the software boasts an extremely low $100 minimum.

• Fees: 0.25 – 1.0% setup fee
• Account minimum: $1,000
• Investor Accreditation Requirement: Required
• Promotion: None

Like Fundraise, investors choose their investment style. Then you choose certain loans, or alternatively you can select a portfolio that meets your investment goals. You will also have access to IRA accounts to help protect your returns from taxes.      

Accredited investors will be interested in PeerStreet’s debt-only investments as they have an increased capital stack. Simply put, debt investors will be the first paid, followed by equity investors. In terms of fees, you will pay in the range of 0.25% to 1%.

Those looking to open an account with PeerStreet can do so for only $1,000 with an expected return of 6 to 9%, as stated by the platform itself.

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A Guide to Real Estate Crowdfunding

We’ve put together a short guide to help you understand all the basics of crowdfunded real estate.

What is Crowdfunded Real Estate?

The idea of real estate crowdfund investing is to make investing in the real estate market more accessible by lowering the barrier of entry and eliminating the pain of dealing with the property management. 

Due to the due diligence on each real estate deal, sponsors must apply to be listed on the crowdfunding platform, then the platform crowdfunds capital from other investors.

Crowdfunding platforms give investors the luxury of investing in real estate without the hassle of tenants, expansions, remodelling, and of course, the continuous maintenance of the property.

How Do You Use Crowdfunding in Real Estate?

Real estate crowdfunding utilizes the power of social media to link up investors with property investments. It is not too dissimilar to equity investing in that investors can buy their way into a property and gain a share. This gives investors increased access to capital they may never have had.

What Does it Mean to be an Accredited Investor?

Below we explain what exactly the difference is between an accredited and a non-accredited investor.

Accredited vs. Non-Accredited Investors

Crowdfund investing has managed to give investors access to commercial real estate deals that were previously only available to super-high net worth investors or institutional investors. 

Although this may be the case, some crowdfunding sites still ask that you are an accredited investor. What does this mean? You will need to meet the following criteria to qualify as an accredited investor:

• Hold a net worth of $1 million or more
• Earn a minimum of $200,000 annually

Anyone that doesn’t meet this criteria is not considered an accredited investor, but a non-accredited investor.

Something else to take into consideration with crowdfunded real estate is that a lot of funds are illiquid – this means that they can take anywhere from 6 up to 36 weeks to pay up.

For this reason, you should make sure that you understand the liquidity of an investment before you take the leap. If you’re happy to invest your money longer term to gain compound then you will appreciate this.

Many platforms allow investors to invest in eREITs. These are electronic real estate investment trusts and can be thought of as a portfolio of properties that concentrate on specific regions ie. the South, NorthEast, Coasts. 

Alternatively, you can consider, among other things, a publicly traded REIT. This exposes you to the real estate market but in a less focused way.

Investor Limitations for Real Estate Crowdfunding

Although in 2016 the SEC made a regulatory amendment to allow non-accredited investors to participate in the crowdfunded market, there were some investment limits imposed, too. Non-accredited investors have restrictions on how much they can invest yearly, based on your income and net worth.

Those earning less than $107,000 annually, or with a net worth of less than this, can invest up to either the greater of $2,200 or the lesser of 5% of either your net worth or income.

The reason the SEC imposes these limits is to curtail the risk for non-accredited investors who might not know a sufficient amount about crowdfunding, or investing overall. Limiting the investing amount also limits how much you could potentially lose.

However, after many online investment platforms made recommendations to the SEC to loosen restrictions more updates to the regulation is expected this year.

Can You Lose Money in a REIT?

When investors put money into REIT trust, there is always an element of risk. This is why it’s important to; do thorough research, assess the best real estate crowdfunding sites, and go into it with a strong understanding of the housing market and the deal you are investing in.

What is the Difference Between Fundrise and a REIT?

Mainly, the difference between a Fundrise investment and a Real Estate Investment Trust (REIT) investment is this:

 Those investing in Fundrise invest directly into commercial real estate, while those investing in a REIT are investing in a corporation that takes your money and invests it into real estate for you.

Are REITs Affected by the Stock Market?

Yes, REITs are correlated to the stock market in so far as they trade on major exchanges in the public market. This means that they are exposed to the same conditions that result in the price of stocks increasing or decreasing in value.

Are REITs Riskier than Stocks? 

Although many thrive in the stock market, according to a study on the rate of return in the real estate crowdfunding market, the real estate market performed better than the stock market, in addition to exposing investors to less risk.

According to a Fundrise report on its historical performance, it produced an average annualised return of 9.47% in 2019.

The Pros & Cons of Real Estate Crowdfunding 

Although crowdfunded real estate platforms offer many benefits, including accessibility, and a diversified portfolio, it also has several risks, should you not perform due diligence.

What are the Risks of Real Estate Crowdfunding?

While there is no doubt potential for building a passive income with crowdfunding, like any investment type, it does come with some risks. Therefore, gaining a full understanding of where exactly your money is going is crucial.

Here we’ve outlined some top tips to keep if you plan on investing in real estate.

1. Ensure That All Your Investments Are Diverse.

Don’t just buy a few real estate crowdfunded deals, aim for a minimum of 5 individual deals, ideally 10, to add to your portfolio. You can do this simply by investing in an eREIT or fund.

2. Do Your Research.

Read through every document carefully and understand all the risks you will be exposed to.

3. Ensure That You Have the Liquidity Necessary.

Real estate crowdfunding is not as liquid as other markets. You will need to invest money in real estate crowdfunding long term so make sure that you won’t need your money for the duration of the loan or investment.

4. Think About Investing in Two Platforms.

With so much selection of real estate crowdfunding sites, also comes so much variety in platform features and what they can offer you. Investing in several platforms might not be a bad idea to give you more access to property types and give you more diversification.

What Are the Benefits of Real Estate Crowdfunding?

The key to building great wealth is to invest for the long-term. Owning real estate has proven to be one of the best ways to build wealth for the everyday person.

Building strong wealth usually requires some type of long term investing. Investing in real estate has been shown to be a good way of building wealth for the ordinary Joe.

Let’s look at some benefits to real estate crowdfunding:

• Diversification of real estate and your portfolio as a whole
• Potential for a higher passive income
• The hassle of managing a property is removed
• Accessible market
• Pre-vetted deals

Is Money From Crowdfunding Taxable?

Yes, money earned from crowdfunding is taxable. In general, any proceeds earned through crowdfunding need to be reported as income the same year you earn them. IRA accounts are a great way of saving for the long-term while reaping the tax benefits, too. 

If reducing your tax burden is a priority for you, consider looking into tax-loss harvesting, to learn about tax-saving benefits that may be available. 

Do Reits Do Well in a Recession?

REITs in the US have outperformed the S&P 500 year on year by more than 7% since 1991, and have proved to offer downside protection in recessions. This has strengthened the value of lease-based revenues in volatile or uncertain conditions, making them a good bet during the current COVID-19 pandemic, and its drastic impact on the U.S. economy.

How Do I Become a Crowdfunding Investor?

To get started on your crowdfunding journey, you should start by doing some due diligence on the crowdfunding company. You can look at the date each company prepares, but in reality, you should take it further and look at the following:

• How long has the company been around?
• Does the company have a strong strategy? Are you happy with its approach?
• Is the company transparent? Can you easily access the details of its past deals?
• Has it had many defaults? Do you know why these happened?
• Are fees transparent and do they line up with your budget?
• What due diligence does the company do on each deal before it is accepted on the crowdfunding platform? Is there a strong pre-vetting process? How are sponsors on the platform qualified?
• Does the company put its own money into deals or are they pre-fund any deals? Are institutional investors a part of its client base?
• Do the managers and members have a good understanding of and experience in the real estate industry?
• The market is very saturated with crowdfunding startups at the minute, find out how your money will be protected if you invest in a company that goes bankrupt.

This list of questions should help you narrow down your search for the best real estate crowdfunding sites to make it a little less overwhelming for you. Once you’ve narrowed down your search, you will know how to analyze the opportunities open to you.

Metrics to Consider When Choosing a Crowdfunding Service

Not to point out the obvious, but when you’re comparing company deals, making sure you’re comparing apples to apples. Don’t compare equity deals with debt deals because they are totally different fruits.

Single-family deals are not the same as multi-family deals. Residential deals are not the same as commercial deals, etc.

Here are some quick pointers to look out for when screening a deal on real estate crowdfunding sites. This is not an exhaustive list and additional research should be done where you see necessary. None-the-less, this list will help you get on your way.

1. Trends and the Local Market Demographics

The location is key in real estate investing. For every opportunity you consider, looking for the concerning report outlining an unbiased look at the property’s location. A report by JP Morgan shows that there is a wide variation in the level of housing prices and in their change since 2006. 

While it shows a variation of mortgage debt across states, it also notes that, “high prices are less correlated with mortgage debt and more concentrated in supply-constrained areas.”

In addition, there are several risk factors that predict the likelihood of a housing price correction including areas with rapid price growth. For example, over the past 5 years, Las Vegas and central California have experienced rapid price growth and should be monitored.

Look carefully at all the data available to you for the concerned location, and don’t underestimate it.

2. Long Term Investing

Be aware of the holding period for the individual deal, this should be projected specifically. This is the length of time that it will take for you to be repaid, starting from when you invest.

On average, holding periods for real estate crowdfunding sites can range from 3 to 7 years. You will be paid the initial investment plus interest once the real estate sponsor sells or ends the deal.

3. Net Cash Flow and Projected Pro Forma

When it comes to crowdfunding deals, distributions are expected. Look to the documents to clarify when to expect your payout, and how much it should be.

Generally, payouts are a result of positive cash flow. This will come from rent paid, income from the sale of the property, or refinancing proceeds. Business plans for real estate crowdfunding should outline the expected timeline for income and expenses on a projected pro forma.

4. Internal Rate of Return (IRR) and Cash-on-Cash Return Targets

One of the most frequently used metrics in real estate crowdfunding is the internal rate of return. It is also the simplest to use when comparing deals.

What is IRR? It’s the annual rate of earnings on an investment. Usually, this is expressed as a percentage range. (eg. 10%-12%). This is how it is calculated:

Let’s assume you invest $10,000 into a deal and there is a projected IRR of 10% per year. Your holding is for 3 years.

Are REITs a Good Investment? 

Historically, we have seen REITs deliver competitive returns, based on steady, high dividend income and long-term capital appreciation. While they may seem similar in this sense, it’s important to note that REITs and stocks differ in a number of ways.

As REITs have a low correlation with other assets they are also a great way to diversify your portfolio, helping to minimize risk and increase returns. To help you get a better idea of crowdfunding, Fundera have compiled a statistics overview of crowdfunding that are worth checking out. 

What to Consider Before You Start

The best crowdfunding sites are more or less dependent on your personal tastes. With so much variety in the platforms available today, you will need to figure out a few key questions to help you find the right one for you.

• First off, are you an accredited investor? Most crowdfunding sites (not all) require you to be an accredited investor to participate in their deals. If you’re not accredited then try looking at a platform that offers a private REIT, like Streitwise.
• What is your budget? Crowdfunding sites can require a minimum investment of anywhere from $0 to $50,000.
• What is your preferred timeline? Real -estate deals can range a couple months to a couple years.
• What property type are you considering? Would you like to invest in commercial real estate or residential? Some sites give you the option of both.
• Are you interested in debt or equity? Again, if you’re unsure, some platforms do give the option of both. As you may know, different types of investments have different levels of risk, reward and time, which are all related. With debt and equity, the risk, time range and tax benefits will vary depending on which you choose.

Finding it confusing trying to figure out which crowdfunding site is the best one for you? We’ve reviewed our top five, based on returns, quality of deals, platform health, innovation, and management, to help get you one step closer to hitting your investment goals.

A Summary: Real Estate Crowdfunding

Due to the sheer volume of real estate crowdfunding sites on the market these days, each with their own niche, fees, audience, and sometimes locations, the best real estate crowdfunding site for you is completely dependent on your own needs, budgets and liquidity levels.

Use the list we’ve provided, in conjunction with the information we’ve given, to help you carefully analyze the sites, and their offerings, and choose the best one for your financial situation.