Top Crowdfunding Sites for Real Estate
Real estate has burst onto the crowdfunding scene
Crowdfunding was made popular by sites like Kickstarter and Indiegogo and that’s probably what you think of when you think of crowdfunding. The reality is that crowdfunding is not just for fun gadgets and clever entertainment. In fact, real estate has also become a big crowdfunding market. Trillions of dollars of institutional capital are invested in real assets like apartment buildings and shopping malls, and a good chunk of this capital flows online to these real estate crowdfunding sites.
Based in Los Angeles, RealtyMogul works with individual and institutional investors to help borrowers and sponsors connect to capital. It was one of the first crowdfunding sources on the scene back in 2013.
This is not blind investing. Realty Mogul personally visits every property and works solely with partners with proven strategies. They deal predominantly with properties that are already leased. They work with both accredited and non-accredited investors, although the options for non-accredited investors are limited to REIT funds. Minimum investments vary with project, but can be as small as $5000.
With time horizons of five years, Fundrise and its crowd have invested tens of millions of dollars into real estate properties, including the iconic new World Trade Center.
The focus here is not just on acquiring properties but on improving them. Fundrise's goal is to purchase properties for less than what it would likely cost to replace them. They have over 75 years of experience as a team. You can invest here for as little as $500 and the vetting process is topnotch. Only about 5% of proposals received by Fundrise is accepted.
Non-accredited investors are welcome, but they might not have access to the full scope of Fundrise's offerings.
Invest as little as $25,000 in CrowdStreet's professionally managed real estate deals. Founded by CEO Tore Steen and VP of Business Development Darren Powderly in 2014, CrowdStreet has posted 379 commercial investment properties in its marketplace with an average hold period of 1.9 years. Currently CrowdStreet is only open to accredited investors, and they have invested more than $870 million using the platform.
The site comes with a nice array of online tools, and expert help is available if you need it. There's no fee to join the CrowdStreet marketplace, and all opportunities have been thoroughly vetted.
Groundfloor’s investments are focused on real estate entrepreneurs who have been vetted by the firm and seek funding for their projects. Groundfloor funds the loan, converts it to a security called an LRO, and investors choose which LROs to participate in. Founded in 2013, Groundfloor welcomes both accredited and non-accredited investors. In fact, investors can get started with as little as $10.
According to the company, to date typical venture loans to real estate entrepreneurs have returned about 10% in time horizons as short as six to 12 months.
Built on its founders' collective $3 billion in institutional real estate investing experience, RealCrowd emerged from the prestigious Y Combinator incubator program.
If you don't like too much risk, this could be the source for you. RealCrowd deals only with companies that don't need your money. They must have at least 10 years' experience and at least $50 million in transactional histories. They can close without your funds. So why would they work with RealCrowd? For access to its network of investors.
One downside is that RealCrowd deals typically require a $25,000 to $50,000 minimum investment and you must be an accredited investor to invest.
Patch of Land was founded by two brothers who wanted to help communities that suffered under the real estate crash of the early 2000s. It's a peer-to-peer marketplace that matches investors with investment opportunities. These opportunities are short term and high yield.
The focus here is on projects that traditional lenders will sniff at and turn away from. One downside is that it works with only accredited investors.
Investors on AHP purchase pools of distressed mortgages, all backed by real estate, from across the U.S., often at deep discounts. They don't make direct investments in property. If you have a heart and would like to help homeowners avoid foreclosure and rabid debt collectors, this could be a good opportunity. They have a proven track record of over 10 years' experience. You can invest for as little as $100 and investments are open to accredited and non-accredited investors alike.
Crowdfunding Real Estate Is Not Risk-Free
Like any type of investment, real estate crowdfunding can be heavily influenced by the economy and the housing market. These sites all tend to have solid management and good track records, but be sure to read the FAQs on each site for the finer details about how they work.