Real estate crowdfunding platforms have been springing up all over the internet. Not only are they a convenient way to invest in real estate, but these services also give you the option to invest in highly specialized properties. For example, you can choose to invest in funds or real estate investment trusts (REITs) that act as mutual funds for real estate. These can hold multiple properties in a single fund or trust.
|Account Fees||1%/year||None||1-1.25%/year asset management fee|
With many of these platforms, you also have the option to invest in individual real estate properties. In some cases, this may mean taking the entire position in a small property. In others, it may involve a slice of ownership or a piece of a loan on a particular property. That's the advantage with real estate crowdfunding platforms: You have the choice as to how you want to invest. You can even choose the type of properties, including commercial or residential.
Three of the most popular real estate crowdfunding platforms are Fundrise, RealtyMogul and Crowdstreet. Which is the best of the three — and where should you invest your money — if you're considering getting into real estate crowdfunding?
Let's drill down into all three platforms and see which may work best for you.
About FundriseFundrise, you do so using eREITs and eFunds. These are proprietary investments unique to Fundrise, which means they're not publicly traded REITs or funds. You can invest in them only through Fundrise, since they're not available on public exchanges or markets. eREIT investments focus on income, while eFunds center on growth.
Whether you invest in eREITs or eFunds, you'll be investing in commercial real estate. However, it's also possible to invest in single-family residential properties. Because of the choice of investment vehicles, you can either earn steady income, enjoy long-term capital growth, or a mix of the two. The funds may also be set up as either debt (mortgage) investments, equity investments, or preferred equity.
- Low Minimum
- Low Fees
- No Accreditation
About Realty MogulRealty Mogul also offers you the opportunity to invest in REITs. But you can also invest in private real estate investment placements. These are both higher risk and carry potentially higher rewards.
With Realty Mogul, you'll have the choice to select specific properties to invest in. As income is received, you'll have the option to either take it as a distribution or reinvest it back into the real estate transaction.
Realty Mogul investments are in apartment buildings, as well as office and retail space. The company has a strict vetting process to minimize the risk of any particular investment. However, if you're going to invest in private placements, you must be an accredited investor.
- "Pre-vetted" Investments
- Simple Investment Process
- No Capital Calls
About CrowdstreetCrowdstreet is a real estate peer-to-peer (P2P) marketplace, bringing real estate investors together with real estate project sponsors. It's high-risk investing, and like Realty Mogul, it requires you to be an accredited investor.
Investments center on a wider variety of properties that are available with the other two platforms. For example, investments are available in retail, office, industrial, mixed-use and multifamily apartment houses. But Crowdstreet also has investments in hospitality, senior housing, and storage facilities.
As with Realty Mogul, you'll have the option to invest in REITs and individual properties. Investments can be in either common (or joint venture) equity, preferred equity, or mezzanine (or second-position) debt. However, the minimum investment required for this platform is higher than the other two.
How Are They the Same?
All three brokerages offer many features. First, let's take a look at how they're similar.
|Limited Liquidity||Real estate crowdfunding investments are long term in nature and typically can't be liquidated until the deal pays out.|
|Potential to Lose Money||True with all three platforms.|
|IRA Accounts||Offered by all three platforms.|
|Customer Service||All three platforms are available only during regular business hours.|
How Are They Different?
Let's take a look at the areas where Fundrise, Realty Mogul and Crowdstreet differ.
|Platform Purpose||Fundrise and Realty Mogul invest in both commercial and residential properties. Crowdstreet invests only in commercial.|
|Accredited Investor Requirement||You must be an accredited investor to use Crowdstreet. Realty Mogul offers some investments that are only for accredited investors and others that are open to all.|
|Investments Offered||Fundrise offers REITs and eFunds. Realty Mogul offers REITs and private placements. Crowdstreet offers investments in individual properties only.|
|Fees||Fundrise charges 1% on its REITs and Funds. Realty Mogul charges 1% to 1.5% on REITs. Crowdstreet has no fee.|
|Availability||Fundrise and Crowdstreet are available in all 50 states. Realty Mogul doesn't indicate availability.|
|Income Distributions||Fundrise income distributions are monthly. Realty Mogul are monthly or quarterly. Crowdstreet distributions are monthly or less frequently, depending on the type of investment.|
Features Unique to Fundrise
Fundrise is available in all 50 states. Not all real estate crowdfunding platforms are. The eREIT and eFunds also let you invest in a mix of commercial real estate and small residential properties. You can choose one fund for steady income and another for capital appreciation. In the case of the latter, your investment won't pay out until the underlying property is sold.
Features Unique to Realty Mogul
Realty Mogul offers REITs, just like Fundrise does. But it also offers private placements in individual properties. With Realty Mogul you can invest in commercial properties, specifically apartment buildings, office buildings and retail space. Or you can invest in individual residential real estate. But to invest in its private placement deals, you must be an accredited investor.
Features Unique to Crowdstreet
You must be an accredited investor to invest with Crowdstreet. This platform offers the option of investing in REITs and individual properties. However, what makes this platform unique is the wider variety of properties you can invest in. In addition to retail and office buildings and large apartment complexes, you can invest in senior housing, hotels, storage facilities, and mixed-use properties.
Minimum Initial Investment
Fundrise requires a minimum initial investment of $1,000 for a single note or investment in an eREIT or eFund.
Realty Mogul's minimum investments vary depending on the type of investment you're making. For example, the minimum on REITs is $1,000. But the minimum for an IRA account is $5,000. Private placements are specific to each individual investment. They can range from a low of $15,000 all the way up to more than $50,000. This will depend on the type of investment, the number of investors and the size of the position you want to take in the deal.
Since Crowdstreet offers such a wide variety of investments, investment minimums are in a wide range. They can be anywhere from $10,000 to as much is $50,000.
Fundrise charges an annual fee of 1% of your investment in its eREITs and eFunds.
Realty Mogul fees, once again, depend on the type of investment you are making with the platform. The fee for REITs ranges between 1% and 1.5% and is based on the amount of your investment. For private placements, the fees will depend on the terms of the individual deal.
Crowdstreet charges no fee for its investments.
With Fundrise you'll be investing in either REITs or funds, rather than participating directly in individual investments. This lets you hold a portfolio of properties that can include both commercial and single-family residential properties. And as already stated, you have a choice to invest for either income, growth or a mix of both.
Realty Mogul offers private placement investments, which means you can invest in individual properties. You can also decide how much you want to invest in each property. These are longer-term investments, generally ranging from three to seven years in term before you'll be paid back your initial investment and any investment gains.
Crowdstreet also offers private placement investments. But it offers a wider variety of investments than Realty Mogul, extending to many different property types. For example, if you want to invest in senior citizen's housing or storage facilities, Crowdstreet gives you those options.
Fundrise customer service is somewhat limited. It's available by email, but phone access may be available if you join the service.
Realty Mogul can be contacted by phone or email during regular business hours.
Customer service with Crowdstreet is available by phone and email, Monday through Friday, from 8:30 a.m. to 5:00 p.m., Pacific Time.
Fundrise offers two-factor authentication as an optional security feature. It also uses bank-level security by encrypting investor information with what it calls an “AES bit symmetric key.” All connections to the platform are always encrypted over “https” with transport layer security (TLS).
Realty Mogul's platform security is quite extensive. The site uses firewalls and encryption to protect both the transmission and storage of data. It also uses multistage testing of the operability of products and features before making them available to users. Monitoring of the system infrastructure to detect weaknesses and potential intrusions is ongoing. Realty Mogul also performs both internal and external reviews of public and nonpublic internet sites and services.
Crowdstreet limits access to personal information to employees who have a legitimate business need for it. The platform maintains commercially reasonable physical, electronic and procedural safeguards and controls to protect information. The website provides a secure infrastructure with multiple layers of protection and uses industry-standard encryption technologies.
Who Are They Best For?
- Fundrise is best suited to the investor looking to achieve a balanced mix of both income and growth through their real estate investing activities. The income option is well suited to anyone looking for immediate cash flow. However, if you add growth to your investment portfolio mix, you'll need to wait until the underlying investments are sold. This holds risk in both tying up your money for a very long period of time and the possibility that some investments may not rise in value over time. You'll need the risk tolerance to accept that.
- Realty Mogul will work best for investors who have a strong appetite for high-risk/high-reward investments. You'll also need to be prepared to invest your money for several years before you'll see a return of both your initial investment and any profits on that activity. And of course, you'll need to qualify as an accredited investor for some of its investments.
- Crowdstreet works much like Realty Mogul in offering an opportunity to invest in individual real estate investments. It's also the best choice if you're looking to invest in less conventional properties such as storage facilities, hotels, and senior citizens' complexes. It's best for the real estate investor who is looking for investments in a specific real estate sector. And to use Crowdstreet, you must be an accredited investor.
Which Is the Best?
There's something of a progression among these three real estate investment platforms.
- Fundrise offers funds and REITs that can provide income, growth or a combination of both. It's best suited for investors who are looking for either income or a combination of growth and income.
- Realty Mogul also offers REITs, but private placements as well. It gives you a choice of investing in multiple properties through a REIT or taking positions in individual properties. Its most unique feature, when compared to the other two platforms, is the ability to invest in single-family residential properties.
- Finally, Crowdstreet also offers investments in individual properties. It doesn't offer investments in single-family residential properties but provides a wider variety of investments in specific commercial real estate sectors.
While we feel that Fundrise will work best for the largest number of investors due to its combination of low minimum initial investment requirements and the availability of both funds and REITs, we're giving top honors to Crowdstreet.
Yes, it's for more sophisticated investors, but for the person who is looking for true high-reward/high-risk investments in the widest variety of property types, it stands above the other two. And did we mention no investor fees?