Real estate has long been a popular investment in the United States. But there has typically been a high barrier to entry. After all, not everyone is in a position where they can buy a whole property to rent to tenants.
Fortunately, there are several alternative ways to invest in real estate, including house flipping, real estate investment groups (REIGs), and real estate investment trusts (REITs), to name a few.
One of the recent additions to real estate investment is crowdfunding using sites like Fundrise. This website is one of the most popular places for investors to invest in real estate, and it calls itself the ‘future of real estate investing.’
Using Fundrise, you can invest in a diversified portfolio for a low minimum investment. It’s easy to use, open to non-accredited investors, and everything can be done via the website or app.
But it is not the only site of its kind, and there are lots of Fundrise alternatives.
Over the last few years, many other platforms have appeared, allowing users to access real estate investment in various ways and diversify their risk.
In this article, we will look at the most popular alternatives. But first, we’ll look closely at real estate crowdfunding and how to choose a suitable platform.
What Is Real Estate Crowdfunding?
Real estate crowdfunding is relatively new, and it became popular after the JOBS Act was introduced in 2012, which allowed companies to raise funds via small investors.
With this type of investing, investor funds are typically pooled together to invest in properties that would be too expensive for individuals to purchase outright.
Investors can now get access to the sort of properties only high-net-worth investors or accredited investors could invest in previously. They can also invest in real estate using much smaller amounts, sometimes as little as $100 or less.
Real estate crowdfunding is generally seen as a passive investment because the investors are not actively involved in managing the real estate. Instead, they invest their money and receive dividends in return.
How to Choose a Real Estate Crowdfunding Platform Like Fundrise
If you are interested in real estate investing, you can start by exploring the crowdfunding platforms on this list.
However, there are many available, and this list is just a starting point. As such, choosing sites or apps like Fundrise can be a bit overwhelming.
There are a few important factors to consider when you are choosing online real estate investment platforms:
- The minimum investment – Each platform will have a minimum investment. This can range from a few dollars to $10,000 or more. And even when the minimum investment is low, many of the opportunities on the platform may require a larger investment.
- Type of investor – Each platform will specify which type of investors will be accepted, and several platforms will only accept accredited investors.
- Payouts – Different platforms have different payment schedules. Some may pay out monthly while others like Fundrise provide quarterly dividends.
- Fees – Every platform has its own fee structure, and these vary significantly.
- Record – The platforms typically show their average returns. A higher average return will make it a more tempting proposition for investors.
- Liquidity – There is usually a minimum time that you must invest in the platform, which could be a year, five years, or more. If you want to sell shares early, you may be able to do so, but there may be a penalty if, say, you sell your shares before a year or five years have passed. Remember, real estate is usually an illiquid investment, and some platforms will lock you in for longer.
- Risk – Some investments are riskier than others. REITs are typically less risky, but you should have a good understanding of your own risk tolerance.
Using these factors, you can better understand whether the other apps like Fundrise on this list might be suitable for you.
You may decide to invest on a single platform or choose several to diversify your portfolio even more, but make sure you know what you are investing in.
Accredited vs Non-Accredited Investors
One of the reasons Fundrise is popular is that investors don’t have to be accredited. However, some of the online real estate investment platforms on this list only cater to accredited investors.
But what does this mean?
Accredited investors must have a net worth of $1 million or more (this does not include your primary residence) or earned income of over $200,000 a year. These are requirements set by the Securities and Exchange Commission (SEC).
Accredited investors are essentially seen as more sophisticated investors, and they will find they have more investment opportunities available.
Best Fundrise Alternatives
If you are considering investing in real estate and you have already read a Fundrise review, consider this list of alternatives. Then use the factors listed above to determine whether they might be a good choice for your real estate investment.
Crowdstreet is one of the platforms on this list that only accepts accredited investors who are interested in long-term real estate investments. The minimum investment at Crowdstreet is $25,000, but some investments require a lot more, with up to $150,000 being common.
This company focuses on commercial real estate investments with high returns. You can choose individual properties you want to invest in from hotels to apartment buildings and even self-storage complexes. Or you can invest in a fund if you prefer that combines several projects.
You can invest with direct deals using its marketplace or through commercial REITs. Crowdstreet has a good vetting process in place to make sure only high-quality deals get into the marketplace.
Depending on the investment type, you might receive an immediate return via dividends on rental properties, or you may have to wait several years. It’s important to understand that you will need to commit for a long time.
You can also set up a custom investment strategy, and the experts at Crowdstreet will invest on your behalf. This requires a minimum investment of $250,000.
Crowdstreet has a good record for high returns, and the current internal rate of return (IRR) is 17.5%. The fees you will pay depend on the property you invest in. There is typically an acquisition fee and then an annual management fee, usually no more than 2%.
DiversyFund is one of the main competitors to Fundrise. One of the things that makes it popular is that it has a low minimum investment of $500, and it is also open to all types of investors.
Several types of real estate investment are available at DiversyFund, including commercial and multi-family units. It focuses on properties that will likely appreciate after purchase, and it does this by purchasing properties, renovating them over five years or more, and then flipping them.
It specializes in the multifamily real estate market, including apartment complexes with over 100 units. With these Multi-Family REITs, investors receive cash returns and a capital gain when the property is sold.
DiversyFund makes it very easy to invest in apartments, and it is an easy way to start investing in real estate with a low investment. But it is illiquid and a long-term investment because the holding period is about five years.
Overall, DiversyFund is a well-known crowdfunding platform with a good reputation. You will pay a 2% management fee every year, but there may be additional developer fees.
3. Arrived Homes
Arrived Homes has a very low minimum investment of $100, and it makes it easy to invest in rental properties and vacation rentals without any hassle.
Non-accredited investors can invest here, and you can invest in individual properties or buy shares in rental properties rather than invest in REITs. When the property is rented, you get a proportionate amount of the cash flow.
It has properties in various markets all over the USA, making it a good way to get exposure to other markets. It’s easy to start, and there is no hassle involved because Arrived Homes vets the property and carries out all the checks first.
It only launched in 2019, so it is still quite new, but it has proven itself to be a good way to earn steady passive income from rent, while you can also benefit from property appreciation.
There is a one-time sourcing fee plus a quarterly AUM (assets under management) fee. Rental properties have historically paid between 3% and 7.2% annual returns on investment.
Read our Arrived Homes review.
Groundfloor requires a very small minimum investment of just $10, making it an accessible way to invest in real estate. Its focus is on residential real estate and caters to all types of investors.
This company focuses on fix-and-flips with projects lasting from three to 18 months. This makes it a good option for anyone interested in fixer-uppers.
This asset class is typically unavailable to the public because of the large investment and amount of work involved. But Groundfloor does the work for you, including selecting properties and finding contractors.
Its focus is on debt-based investing. It offers secured real estate debt of up to 18 months, making it a very different model from the others here. It essentially lends loans to house flippers, so you are not investing in properties. Instead, you are helping to fund loans that are secured against properties.
You can choose the loans you want to fund with different interest rates and risk levels. Or you can invest money, and GroundFloor will lend it for lower returns. There is a higher minimum investment of $1,000 for this option.
Besides having a low minimum investment, it is also popular for investors looking for short-term investments. However, debt investing is often seen as riskier than equity investing.
If the borrower goes bankrupt, you probably won’t get all your money back. That being said, it can lead to high annual returns, which can make it a tempting investment.
RealtyMogul requires a minimum investment of $5,000, and it is open to any investor. It focuses on both commercial and residential real estate, and it is a good option for individuals looking for institutional quality investments in real estate.
It has two REITs open for any investors, and both require a minimum investment of $5,000.
The Income REIT pays out a monthly dividend at an annualized rate of between 6% and 8%. It focuses on assets that generate income instead of growth-focused investments, including retail space, office buildings, and multifamily properties. The LTM return is currently 10.28%.
The Apartment Growth REIT allows investors to earn passive income. It has a lower rate than the Income REIT but also focuses on capital appreciation. It only invests in residential apartment buildings, and the LTM return is currently 17.52%.
You can sell back shares after a year if you want for a small penalty, but there is no penalty after three years. It also has annual management fees of between 1% and 1.25%.
While Fundrise focuses on residential real estate, Streitwise focuses on commercial and mixed-use properties. The minimum investment is $5,000, and it is open to any investors.
It offers the chance to invest in REITs containing a collection of different properties. The company uses the money to buy real estate and develop it, and REITs pay dividends, making them good income-producing assets and providing you with an easy way to invest in real estate.
Streitwise tends to stay away from higher-priced markets like New York and focuses on more second-tier cities instead.
It is a good option if you want to generate passive income with good returns and diversify your portfolio.
This is a suitable option for a long-term investment of five years or longer, and it claims to have a 9.2% dividend average. As for fees, it charges 2% annually. But the high minimum investment may be too much for some investors, especially when compared to other platforms on the list.
Roofstock has a focus on residential real estate, and it is open to all investors. This is not a crowdfunding platform. Instead, it makes the process of investing in rental properties easy.
You can access thousands of properties on the platform and then buy a fraction of the property or buy a whole property. It focuses on single-family rentals (SFR), and you can invest in real estate anywhere. In addition, it offers a property management service if you want to enjoy a more passive income.
Accredited investors also have the option of investing in the Roofstock One model, where you can purchase shares of properties that Roofstock owns.
The platform has excellent transparency and provides information on everything you should know before investing in a property. It provides information on schools, neighborhoods, home inspections, rents, expenses, cap rates, and more, so it is easier to make a decision about investing in real estate. Properties also have to pass a Roofstock inspection to be listed, giving you peace of mind.
You can buy and sell turnkey rental properties via the platform. For marketplace buyers, there is a fee of 0.5% or $500, whichever is higher. For sellers, the fee is 3% or $2,500, whichever is higher.
Yieldstreet is an SEC registered investment advisor (RIA) that issues securities, so most of the investors must be accredited. However, there are some opportunities for non-accredited investors too.
The focus is on commercial real estate, but there are many other types of investment to choose from, including consumer debt, fine art, and other assets.
It is a good place to invest in income-generating assets, and the opportunities are backed by collateral. The yields range from 7% to 15% over the years it has been operating, and payments are made monthly or quarterly. Some investments are also for short periods of as little as six months, but they go up to five years.
If you want access to alternative asset classes with a low correlation with the stock market, Yieldstreet is a good option. But investments are illiquid and are mostly for accredited investors.
There is a $2,500 minimum investment for the Yieldstreet Prism Fund and Short Term Notes, but most other minimum investments start at $10,000. It also charges annual management fees that range from 1% to 4%.
EquityMultiple requires a $5,000 minimum investment, and it is only for accredited investors. Its main focus is commercial real estate, and you can invest in individual properties rather than just portfolios.
An experienced team vets the investment properties first, and various options are available like preferred equity, senior debt, and opportunity funds. The risk varies, as do the returns. The commitment length also varies, but it can be as short as six months.
As well as the high minimum investment, the fee varies and can be complex. However, it boasts high returns, with a Historical Net Rate of Return of 18.7%, and it provides an accessible way to access commercial real estate.
The minimum investment at AcreTrader varies, but it is usually between $10,000 and $20,000. The focus of AcreTrader is farmland investments, and it is only for accredited investors.
It offers two ways to make money. Firstly via the increase in land value and secondly via annual cash rent payments. Investment terms are a minimum of three years.
Farms have performed well over the last few decades, making them a tempting option for investors. AcreTrader has a good due diligence process, and farms are carefully vetted, but it has fairly limited investment options.
Overall, it offers a simpler way to invest in farmland with good annual returns so you can diversify your portfolio. Returns vary depending on the investment, but it has an average annual return of 11.0%.
Real Estate Investing FAQs
Do you have any questions about real estate crowdfunding sites like Fundrise? Here are a few questions and answers.
Can you lose money on Fundrise?
There is always a risk when you are investing, and the same is true when you invest using Fundrise. There is no guarantee that you will make money, and you can also lose money. As always, it’s important that you only invest money you can afford to lose.
Which is better: Fundrise or Yieldstreet?
It depends on what type of investment you are interested in. Yieldstreet offers more diverse investments beyond real estate but has more opportunities for accredited investors. It also has a higher minimum investment, which may or may not make it a good fit for you.
How is Fundrise different from a REIT?
Normal REITs are traded publicly, but the REITs on Fundrise are private. They are called public non-traded REITs, or eREITs, and they are more illiquid but they are also simpler and require a smaller minimum investment.
Is Fundrise passive income?
Yes, Fundrise is considered a good way to make passive income on your investment because you use the platform to invest in an asset that generates income. However, your income is reliant on the investment team. As such, you have less control, but you don’t have to do anything.
Who owns Fundrise?
Fundrise was founded in 2012, and the parent company is Rise Companies Corp.
There are many ways to invest in real estate, and crowdfunding is becoming increasingly popular. It is an especially popular option for people who do not have a huge amount of money to invest and who want to invest in real estate without having to buy a property.
Fundrise is the largest such platform in the USA, but there are other online real estate investment platforms available. Take a look at the sites on this list and decide which is the best for you, depending on the type of investment you want to make.
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