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Real estate investing was once considered the type of investing that only investors with deep pockets could afford to take part in. But thanks to real estate crowdfunding, which uses the power of the internet and social media to connect investors to investment properties, less affluent investors have an opportunity to invest in commercial real estate as well.
To help you choose the best real estate crowdfunding sites, we reviewed account minimums, fee structures, returns, and site interfaces of more than a dozen platforms to find our top picks.
Best Real Estate Crowdfunding Sites of 2021
- Best Overall: Fundrise
- Runner-Up, Best Overall: Crowdstreet
- Best for Beginners: DiversyFund
- Best for Accredited Investors: Origin Investments
- Best for Commercial Real Estate: Equity Multiple
Best Overall : Fundrise
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Why We Chose It: Fundrise accepts clients regardless of income or net worth and the company’s low fees and the ability to invest with as little as $500 let individuals invest in real estate without a lot of money upfront.
Only $500 required to open an account
Low fees
Non-accredited investors allowed
Can take years to see a return on investment
Fee structure difficult to understand
Difficult to withdraw funds
Fundrise was founded in 2012 and is headquartered in Washington, D.C. The company has invested in more than $4 billion worth of real estate in the U.S., manages more than $1 billion of equity for more than 130,000 investors, and delivers a 10.11% annualized average return for investments.
Unlike some companies, Fundrise accepts investors regardless of income, allowing anyone to open an account and get started with as little as $500. The company also offers four other plans besides the initial starter plan to choose from: the Basic ($1,000 minimum investment), Core ($5,000 minimum investment), Advanced ($10,000 minimum investment), and Premium ($100,000 minimum investment).
Each upgrade allows you to utilize more portfolio and account features. For example, the Basic plan allows you to create and manage your investment goals while the Core plan offers those features but also provides exposure to eREIT (real estate investment trusts) funds and the ability to customize your investing strategy.
One thing to note with each type of account is that it is somewhat challenging to understand Fundrise’s fee structure. Although fees are initially waived when you get friends to join, you will pay a 0.15% annual advisory fee, a 0.85% annual asset management fee, and possibly development and liquidation portfolio fees.
Runner-Up, Best Overall : Crowdstreet
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Crowdstreet
Why We Chose It: CrowdStreet is one of the better-known real estate crowdfunding sites and has an established track record offering two types of investment funds, allowing you to diversify your portfolio.
Easily see details about investment opportunities right on the website
Choose an individual deal or a portfolio overseen by an investment manager
Easy-to-navigate website with customer support available by chat
Only accepts accredited investors
Large amount of money required to make even a minimum investment
Can take several years to see a return on an investment
Can’t withdraw funds early
CrowdStreet was founded in 2014 and is headquartered in Portland, Oregon. The company has closed on 473 commercial real estate investment offerings and states that approximately 44 of those offerings have been fully realized.
CrowdStreet offers three investment options to choose from:
- Individual deals with real estate investment opportunities that you select
- Diversified funds that allow you to invest in several different vehicles in one fund
- A professionally managed real estate portfolio.
Although the amount can vary, most of CrowdStreet’s funds require a minimum investment of at least $25,000. Fees typically range from 0.50% to 2.5% for funds but can vary with each offering. You can typically expect about 11.5% to 26.4% return, depending on the investment. Total investor distributions are around $135 million.
Note that the company only allows accredited investors, meaning that your individual net worth, or joint net worth (if investing with a partner), must exceed $1 million, or you must have an income of at least $200,000 or a joint income above $300,000, with a reasonable expectation of reaching the same income level in the current year.
Best for Beginners : DiversyFund
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Why We Chose It: DiversyFund is open to non-accredited investors and you can open an account for as little as $500.
Owns and operates its investment properties
Good for first-time investors
No management fees
Limited investment options
Money not available until property sells
No retirement accounts offered
DiversyFund began in 2014 and is headquartered in San Diego. The company operates a little differently than most real estate crowdfunding sites in that it owns and manages the properties directly instead of acting as a broker that joins investors to developers with specific projects.
The company states that they offer investors a 7% preferred return, meaning the company doesn’t take its cut until investors receive 100% of their returns on the initial 7%. It can take several years to see your investment pay off, however, since you won’t see the returns until they sell the property.
The company charges no management fees, which is a plus when you are just starting to invest. It’s also well-suited for those who want to invest in real estate but don’t know a lot about it, since the company handles your money for you and there are no decisions for you to make about which properties to invest in.
Although DiversyFund is a good vehicle for new investors who are just getting their feet wet, they don’t offer retirement accounts if you’re looking for long-term tax benefits.
DiversyFund is currently one of the smaller real estate crowdfunding sites out there with only about 30,000 clients investing over $100 million with the company.
Best for Accredited Investors : Origin Investments
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Origin Investments
Why We Chose It: Origin Investments specializes in Build-to-Core properties, meaning that after the properties are built, they will convert to Class A properties, producing a steady cash flow for investors.
No realized losses since inception
Long track record with no losses
Build-to-Core properties provide a safe and steady flow of income for investors
Minimum investment of $50,000 or more
Risk of denial on redemption request
Origin Investments was founded in 2007 and is headquartered in Chicago. In addition to managing funds, the co-founders have $50 million of their capital tied up in the company, and executives and employees own 90% of the business.
Origin differs from some of the other real estate crowdfunding platforms by buying real estate directly instead of managing REITs. The company focuses on just 11 cities for purchasing their investment properties: Phoenix, Dallas, Chicago, Charlotte, Raleigh, NC, Denver, Houston, Nashville, Orlando, Austin, TX, and Atlanta.
Origin offers two funds for investors. The first, the QOZ Fund, is a tax-advantaged multi-family ground-up development. The second is the IncomePlus Fund consisting of multi-family properties that deliver passive, stable income to its investors. The company states that they have had no realized losses, although they do have the right to deny redemption requests so you should consider investing in their funds as a long-term plan.
Though Origin does list returns on the website, it appears to average between 8% and over 50% IRR, depending on the project. The minimum investment amount varies but is usually somewhere in the neighborhood on $50,000 and only available to accredited investors.
Best for Commercial Real Estate : Equity Multiple
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Why We Chose It: Equity Multiple only focuses on commercial real estate with offerings often starting as low as $5,000.
Minimum investment as low as $5,000 (typically $10,000)
Only focuses on commercial real estate
Return on investment in as little as six months
Only accepts accredited investors
Sign up required to access most information
Fee structure varies by investment
Founded in 2015, Equity Multiple is headquartered in New York, New York, and specifically targets commercial real estate which is historically more lucrative than other types of real estate investments.
The company provides three investing approaches to choose from:
- Direct investing with targeted investments ($5,000 minimum investment but typically $10,000)
- Fund investing with multiple assets and built-in diversification ($20,000 minimum investment)
- Tax-deferred investing with codified tax benefits ($40,000 minimum investment).
Although most of their investment opportunities are for five to 10 years, the company does offer some investments that have a duration period as short as six months. The fee structure is only available by contacting the company and varies depending on the investment which is only open to accredited investors.
Final Verdict
During our research, we found that real estate crowdfunding sites are a good idea for individuals who want to diversify their financial portfolio but minimize the amount of risk they take. While they can provide a good alternative to investing in stocks and bonds, you should prepare to have your money tied up for several years before you see a return on your investment.
While all of our selections have features we like, we found that Fundrise provided a good platform for both new investors and those with more experience. We also like that you can start investing for as little as $500 and you don’t have to get accredited to begin.
Compare the Best Real Estate Crowdfunding Sites
| Site | Minimum Investment | Accredited Investors Only? | Features |
|---|---|---|---|
| Fundrise Best Overall | $500 | No | Accepts clients regardless of net worth or income |
| Crowdstreet Runner-Up, Best Overall | $25,000 | Yes | Easily see opportunities to invest right on the website |
| DiversyFund Best for Beginners | $500 | No | Accepts non-accredited investors and no management fees |
| Origin Investments Best Accredited Investors | $50,000 | Yes | For real estate investors who want passive income and low-risk investments |
| Equity Multiple Best for Commercial Real Estate | $5,000 to $10,000 | Yes | Specifically targets commercial real estate |
Frequently Asked Questions
What Is Real Estate Crowdfunding?
Real estate crowdfunding is a method used by businesses to raise a large amount of money for the development of property by allowing a group of individuals to invest small amounts of capital as an investment to help finance real estate projects. Since investors only invest small amounts, businesses can raise the needed amount of money quickly.
Although not without its risks, real estate crowdfunding allows individual investors to pair with real estate developers and other real estate professionals to invest in real estate without the worry of owning and managing properties.
How Much Do I Need to Start Investing?
The amount you need to invest varies from site to site and the type of property. In some cases, you can invest as little as $500. In other instances, a business could require a minimum investment of $25,000 or even $100,000 to buy in.
Is Real Estate Crowdfunding Safe?
Like any type of investing, real estate crowdfunding comes with risks. Since the sponsor or person responsible for controlling the investment is in charge of how the money is spent, you have no say in how the money is handled once you choose to invest in a project.
Market fluctuations and construction setbacks can also affect the return on your investment. Although most crowdfunding platforms have measures in place to help prevent loss, you should only invest money that you can afford to lose if the project doesn’t go as planned.
Can I Make Money With Real Estate Crowdfunding?
It is possible to make money with real estate crowdfunding. The amount you can make depends on the projected Internal Rate of Return (IRR), a metric used by investors to estimate how much each invested dollar is expected to grow for the period of time it is invested.
You can typically expect to make 10% to 20% or more over your initial investment, but each project is different and the amount of return will vary. Since this type of investment takes time to pay off, you should expect your money to stay tied up for at least three to 10 years.
Methodology
We reviewed a dozen real estate crowdfunding sites before choosing the best ones for our list. We considered how long the company has been in business, the types of investments that they offer, and how much of a return you can expect on your investment. In addition, we looked at the number of fees you can expect to pay and how transparent each company is on reporting its returns and losses.
All of our top choices offer competitive fees, have good reputations in the industry, and are available to both new and seasoned investors.