Real estate crowdfunding has been around for over a decade, with the first platforms opening in 2006. Today there are many Real estate crowdfunding Platforms to choose from, but which one is best for your needs? RealtyMogul offers equity-based investments, while PeerStreet and Fundrise offer debt-based investments.
The top Real Estate Crowdfunding sites can be found here!
Fundrise is a Real Estate Crowdfunding Platform that lets investors buy into commercial and residential properties. Investors can choose to invest in large-scale developments, or they can pick some of the smaller projects on the site like a coffee house or fitness center.
Fundrise offers two types of investment:
- Equity Investments – These investments are made with equity stakes where Fundrise invests money from its own balance sheet to purchase property and then sells shares at a future date for a profit.
- Debt Investments – This type of Real estate crowdfunding platform is based on debt financing, which is raised by selling bonds through an issuance process managed by third-party broker-dealer JMP Securities Inc (JMS). Shareholders will be repaid their original capital plus interest payments over time out of the income generated by the Real estate.
Investors are able to invest in a diversified portfolio consisting of equity and debt investments or just one type of investment on these top real estate crowdfunding platforms.
CrowdStreet allows investors to purchase shares in commercial, residential, mixed-use properties across several states with low minimums starting at $100 per share for Real Estate Crowdfunding Platforms. Investors can also choose between different types including Income Investments (based on monthly rental income) and Appreciation Investments which is based on Net Asset Value growth within a certain timeframe. This Real estate crowdfunding platform does not offer any pre-determined returns but they do have team members who monitor each property’s performance so that if something were to happen like an earthquake, investors are notified.
- Enhance your portfolio with real estate investments
- Search through various investment opportunities
- Invest in high-quality real estate deals
- All transactions are done electronically and it is easy to pull up all of the details about each deal
This Real estate crowdfunding platform is very similar to the others in that they offer a low minimum investment at $100 per share for Real Estate Crowdfunding Platforms with no pre-determined return rates, but Peerstreet does have two other big differences from its competitors:
Investors can invest as little as $25 or up to millions of dollars depending on how much risk you want to take (equity). No matter what amount an investor invests, they will be given voting rights and access to quarterly earnings reports which provides transparency into each property’s performance. Unlike most Real estate crowdfunding platforms like Fundrise where one could only purchase shares from properties being developed by their company, PeerStreet offers stocks created by third parties.
- Gain access to affordable opportunities that are not available to the general public
- Build your own real estate portfolio with a variety of properties
- Invest in PeerStreet loans
- Invest as little as $1,000
RealtyMogul offers two types of Real Estate Crowdfunding Platforms, one where the investor buys an equity stake in a property and another that’s more like lending money. With their first Real Estate Crowdfunding Platform, you buy shares of properties with no mortgage as well as smaller stakes in bigger deals. They also offer loans through their second Real Estate Crowdfunding platform which are paid back over time to investors.
- Invest in real estate without experience
- Have a team with decades of combined experience to help you
- Get access to exclusive deals and opportunities that are unavailable anywhere else
- Access your profits from any device, anytime
Investors can join Real Estate Crowdfunding Platforms by buying shares in properties and businesses. The minimum investment is $500, but because Real Estate Crowdfunding Platforms are still a new concept, there’s no telling what the future holds for this type of investing as well as how much investors will be able to earn.
- 100% Differentiated Investment Strategy
- Diverse Pool of Investments with Low Risk
- Professional Management and Ongoing Support
- Monthly Returns with the Flexibility to Withdraw Funds at Any Time
Did you know that Diverse Financial offers interest-bearing accounts? They do! And they also offer Real Estate Crowdfunding Platforms through their site which allow people who have money saved up to invest it with them in one of their properties or projects. When an investor joins Real estate crowdfunding platforms through Diverse Fund, they have two options: buy into a specific property or business, or buy into a Real Estate Crowdfunding Platform’s portfolio as part of the Diverse Fund team.
Interest-bearing accounts are offered for those who want to make their money work on autopilot and Real Property Crowdfunding Platforms allow people with money saved up to invest it in one of their properties.
- Get in before the crowds and invest with the first 200 units U.S. multifamily real estate
- Gain access to growth strategies others are restricted from
- Invest for as little as $500, rather than thousands of dollars at a time
- Diversify your investments between many projects and markets
Yieldstreet is a Real Estate Crowdfunding Platform that rounds up money from friends, family or anyone through their platform. Investors are rewarded with quarterly payments of between six and seven percent on the investments they make – even if projects don’t fully succeed.
- Diversify your portfolio with alternative investments
- Real estate as part of a balanced and diverse portfolio
- The low entry point for individual investors
- Passive income opportunities
Real Estate Crowdfunding FAQs
What Is Real Estate Crowdfunding?
Real estate crowdfunding is the new way for small investors to participate in real estate investments. Real Estate Crowdfunding makes it possible for individuals with just a few hundred dollars, or even less than $100, to invest and reap returns on those investments.
What Real Estate Investments Can Be Funded Through Real Estate Crowdfunding?
Regardless of the type of investment, you have in mind– residential developments or multifamily buildings – there are many types of Real estate projects that can be funded through Real Estate Crowdfunding platforms. These include everything from historic rehabs to retail space conversion projects.
How Does Crowdfunding Work in Real Estate?
Real Estate Crowdfunding Platforms connect investment opportunities with funding, most of which come in the form of equity or debt financing. Here’s how it works:
Sponsor acquires, manages, and sells an investment property – The sponsor takes legal ownership over buildings/land that they want to sell and agrees to turn back over profits at some point in time
The platform connects sponsors with interested investors- The platform explains deals to potential investors and handles regulatory issues such as SEC registration before collecting funds from investors on behalf of the sponsor.
Investors contribute funding in exchange for profit share – Investors send money to the Real Estate Crowdfunding Platform and they give an investor a percentage of ownership in return, which helps them share profits from sale when the property is sold.
Investors may also contribute funding with no promise of profit – Investors who send money to Real Estate Crowdfunding Platforms without any expectation for a profit take on more risk because there are no guarantees that their investment will pay off even if sponsors sell properties at the market rate.
How Can You Start in Real Estate Crowdfunding?
The Real Estate Crowdfunding Process:
– Real estate crowdfunding is a relatively new phenomenon, so there’s not much precedent to go on. There are no guarantees that an investment will pay off even if sponsors sell properties at the market rate—investors take on more risk because they have less of a guarantee than with traditional investments
– Investors should research each platform carefully and pay close attention to how deals are vetted before committing money and time
– Real estate crowdfunding may be most appropriate for investors who can afford some losses or want higher yields (in exchange for taking on more risk) in their portfolio rather than looking for stable income from dividend stocks. The rewards could be tremendous but the potential loss greater too. For instance, RealtyMogul reports that the average return from their investments is 12.03%
The Real estate crowdfunding platforms listed above offer a great way to diversify your portfolio, but they are not for the inexperienced investor who might be scared of taking risks and losing their money or someone who is looking for immediate returns. Real estate investing can take time before it starts producing profits which these real estate crowdfunding platforms don’t provide so if you’re an experienced investor with some cash on hand, then this type of investment may be right up your alley!