Real Estate Crowdfunding: The Top 7 Platforms to Consider

Real estate crowdfunding platforms are a popular option for investing in real estate without buying individual properties. But until recently, real estate crowdfunding​​ wasn’t something you could easily do. Companies couldn’t publicly solicit investors to invest in private real estate projects. Instead, they had to rely on their personal connections to gather investors.

This changed when Congress passed the Jumpstart Our Business Startups Act (JOBS Act) in 2012. After this law passed, companies could now advertise these investment opportunities publicly. Although the law didn’t likely intend to enable real estate crowdfunding sites to begin operating, the result allowed this to happen.

Several sites exist that provide different opportunities for potential investors. We’ve included platforms for accredited and non-accredited investors, each with different requirements, returns, and holding periods.

How we evaluate products

Choosing the right real estate crowdfunding platform is a big decision. To choose the platforms for our site, we considered the following:

• Whether you needed to be an accredited investor; we tried to include a good mix of both
• The minimum investment required
• The minimum required holding period and options for early redemption
• The overall fees
• The potential returns

We did not evaluate all products/services in the category.

The best real estate crowdfunding sites

• Crowdstreet
• DiversyFund
• Fundrise
• EquityMultiple
• GROUNDFLOOR
• RealtyMogul
• PeerStreet

Platform	Great for	Accredited Investor?
Crowdstreet1 <p>CrowdStreet, Inc. (“CrowdStreet”) offers investment opportunities and financial services on its website. Broker dealer services provided in connection with an investment are offered through CrowdStreet Capital LLC (“CrowdStreet Capital”), a broker dealer registered with <a href="https://www.finra.org/#/">FINRA</a> and a member of <a href="https://www.sipc.org/">SIPC</a>.</p> <p>Investing in commercial real estate entails substantive risk. You should not invest unless you can sustain the risk of loss of capital, including the risk of total loss of capital. All investors should consider their individual factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. Direct and indirect purchase of real property involves significant risks, including without limitation market risks, risks related to the sale of land and risks specific to a given property, which could include the potential for property value loss, potential for foreclosure, changes in tax status and fees, and costs and expenses associated with management of such properties. All investors should consider risks specific to that given property prior to investing.</p> <p>We calculate IRR, or Internal Rate of Return, for individual realized deals based on the aggregate investor cash flows, utilizing the XIRR function in Microsoft Excel and with reference to the effective capital contribution dates of each individual investor as recorded in the CrowdStreet Management Console and the date of distribution as recorded in the CrowdStreet Management Console (which may vary from the actual date invested or the actual date the issuer made the distribution). The aggregate IRR of all realized deals is based on aggregated cash flows of individual realized deals, as described above, and similarly calculated utilizing the XIRR function. IRR figures listed on this page are net of the most onerous fees charged to clients of CrowdStreet Advisors, LLC, our registered investment advisor subsidiary; an investor’s actual IRR on a realized investment may differ. We utilize a consistent methodology for calculating returns. However, in most cases, the applicable issuing entity provides the distribution information used for our IRR calculations. While we take reasonable steps to verify this information, we cannot guarantee its accuracy. Please reference our website performance page for more information.</p>	Experienced investors	Required
DiversyFund	Diversification	Not required
Fundrise	Smaller investments	Not required
EquityMultiple	Good investment selection	Required
GROUNDFLOOR	Debt investments	Not required
RealtyMogul2 <p>Past performance does not guarantee future results and there is no guarantee that the REIT will make distributions. Investing in the REIT’s common shares is speculative and involves substantial risks. The “Risk Factors” section of the offering circular contains a detailed discussion of risks that should be considered before you invest.</p>	Private placement investments	May be required
PeerStreet	In-depth analysis	Required

7 real estate crowdfunding sites

Just as you can invest with one of several traditional brokerage firms, several real estate crowdfunding sites exist. Each offers its unique twist on real estate crowdfunding.

Some cater to accredited investors who meet certain net worth or income requirements, whereas others offer options for nonaccredited investors. Similarly, they may focus on different portions of the real estate market or different geographic areas.

1. Crowdstreet

Platform details

• Accredited investor status: Required
• Minimum investment: $25,000 or more

Crowdstreet is a platform for experienced investors with a lot of capital and who reached accredited investor status.¹ <p>CrowdStreet, Inc. (“CrowdStreet”) offers investment opportunities and financial services on its website. Broker dealer services provided in connection with an investment are offered through CrowdStreet Capital LLC (“CrowdStreet Capital”), a broker dealer registered with <a href="https://www.finra.org/#/">FINRA</a> and a member of <a href="https://www.sipc.org/">SIPC</a>.</p> <p>Investing in commercial real estate entails substantive risk. You should not invest unless you can sustain the risk of loss of capital, including the risk of total loss of capital. All investors should consider their individual factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. Direct and indirect purchase of real property involves significant risks, including without limitation market risks, risks related to the sale of land and risks specific to a given property, which could include the potential for property value loss, potential for foreclosure, changes in tax status and fees, and costs and expenses associated with management of such properties. All investors should consider risks specific to that given property prior to investing.</p> <p>We calculate IRR, or Internal Rate of Return, for individual realized deals based on the aggregate investor cash flows, utilizing the XIRR function in Microsoft Excel and with reference to the effective capital contribution dates of each individual investor as recorded in the CrowdStreet Management Console and the date of distribution as recorded in the CrowdStreet Management Console (which may vary from the actual date invested or the actual date the issuer made the distribution). The aggregate IRR of all realized deals is based on aggregated cash flows of individual realized deals, as described above, and similarly calculated utilizing the XIRR function. IRR figures listed on this page are net of the most onerous fees charged to clients of CrowdStreet Advisors, LLC, our registered investment advisor subsidiary; an investor’s actual IRR on a realized investment may differ. We utilize a consistent methodology for calculating returns. However, in most cases, the applicable issuing entity provides the distribution information used for our IRR calculations. While we take reasonable steps to verify this information, we cannot guarantee its accuracy. Please reference our website performance page for more information.</p> Investors have the option to choose individual commercial real estate deals or invest in real estate funds.

Crowdstreet covers the gamut of commercial real estate including retail, shopping centers, office and industrial complexes. Unlike other platforms, Crowdstreet is not a middleman; you deal directly with the sponsors, and the minimums can get as high as $100,000.

While there’s no guarantee on how much you may earn, Crowdstreet posts an investor internal rate of return that provides an estimate of how much you may earn on any given investment.

The downside is since you invest directly in commercial properties, your investment is highly illiquid, which means you should only invest what you can be without.

Visit Crowdstreet | Read our Crowdstreet review.

2. DiversyFund

Platform details

• Accredited investor status: Not required
• Minimum investment: $500

Unlike Crowdstreet, you don’t need to be an accredited investor to invest on DiversyFund. You only need $500 to invest, but there is a 2% annual asset management fee to consider. Most of the properties on DiversyFund are apartment complexes with the potential for appreciation and cash flow.

DiversyFund’s mission is to purchase undervalued multifamily properties, professionally manage them, and use a value-add strategy to build long-term appreciation. The company structures its investment as a real estate investment trust (REIT) with a 4-6 year hold requirement, 12-15 and target investments.

The downside of DiversyFund is that it doesn’t pay out dividends, rental income, or other cash flow.

Read our full DiversyFund review

3. Fundrise

Platform details

• Accredited investor status: Not required
• Minimum investment: $10

Fundrise allows everyday investors to start investing in the real estate sector with as little as $10. The company focuses on providing investments that contain high-quality assets, including debt and equity investments in commercial, residential, and other types of real estate.

The types of investments you can make depend on how much money you have set aside. Simple investments in registered products, or products offered on markets, start at the $10 mark. If you want to access private funds, such as eREITs, you need at least $5,000 to get started. Fundrise does offer some accredited offerings, but you need an initial minimum investment of $100,000 to access these opportunities.

All investments are diversified across several funds, each of which are professionally managed, but like any of the crowdfunding sites on this list, your investment is illiquid.

Read our full Fundrise review

4. EquityMultiple

Platform details

• Accredited investor status: Required
• Minimum investment: $5,000

EquityMultiple lets accredited investors invest in professionally managed commercial real estate. EquityMultiple evaluates potential investment opportunities, selecting only 5% of the opportunities they consider.

The platform offers various investment options:

• Short-term diversified notes
• Senior debt
• Preferred equity
• Value-added equity

Like most platforms on this list, the holding periods average three to five years, but they offer a few very short-term notes for more liquidity. Every investment has different fees, but on average, expect to pay around 1% annually.

Read our full EquityMultiple review

5. GROUNDFLOOR

Platform details

• Accredited investor status: Not required
• Minimum investment: $10

GROUNDFLOOR has one of the lowest initial minimum investments of the real estate crowdfunding sites at just $10. This platform offers short-term, high-yield real estate debt investments originated by GROUNDFLOOR. As an investor, you get to choose which real estate projects you want to invest in, which allows you to diversify if you wish.

GROUNDFLOOR offers a few options for real estate investors, including:

• LROs: These are real estate debt investments for high-yield, short-term investments. They work best for short-term investors looking for opportunities with no fees.
• Notes: The notes have higher rates than T-Bills and give your portfolio some diversification along with short-term stability.
• IRA: These are real estate debt investments to help you save for retirement with minimal fees and opportunities for short-term gains.

Read our full Groundfloor review

6. RealtyMogul

Platform details

• Accredited investor status: Not required for REITs /required for private placement investments
• Minimum investment: $5,000

RealtyMogul offers two classes of investments for investors to consider.² <p>Past performance does not guarantee future results and there is no guarantee that the REIT will make distributions. Investing in the REIT’s common shares is speculative and involves substantial risks. The “Risk Factors” section of the offering circular contains a detailed discussion of risks that should be considered before you invest.</p> The company offers two REITs: Income REIT and Apartment Growth REIT. Each has a $5,000 minimum investment and different objectives to provide options to potential investors.

Private placement investments may include multifamily, office, industrial, self-storage, retail, and medical office buildings. These have higher minimums, such as $25,000 or more. Accredited investors can invest in both, whereas nonaccredited investors can invest only in RealtyMogul REITs.

Read our full RealtyMogul review

7. PeerStreet

Platform details

• Accredited investor status: Required
• Minimum investment: $1,000

PeerStreet allows accredited investors to invest in real estate debt backing specific properties. You can invest in several types of loans with different terms, loan strategies, and other factors. In total, this investment platform provides hundreds of data points for you to analyze.

Investors can choose automated investing to ensure you have a guaranteed spot in new loans, or you can view opportunities yourself, managing your portfolio as you see fit.

Pros and cons of real estate crowdfunding

Pros

• Lower investment than purchasing a property: Traditional real estate investing requires you to pay cash or take out a mortgage on a property, which is typically a costly endeavor. Real estate crowdfunding could allow you to begin investing with as little as $10.
• Avoid managing properties: Crowdfunding takes property management out of your hands. Although you may be able to select which properties you invest in, you don’t have to pick tenants or deal with late-night phone calls if the air conditioner stops working.
• Diversify your investment portfolio: Crowdfunding could let you invest in several properties with lower minimums to diversify your portfolio, rather than investing all of your money in a single rental property. REITs and managed portfolios are also options to diversify across real estate asset classes or multiple properties.
• Earn dividends: REITs are structured in a way that requires them to pay out a large portion of their net income in dividends, which could provide income to investors.

Cons

• Can be an illiquid investment: Many real estate crowdfunding sites offer investments that are not publicly traded. If you need to liquidate your portfolio, these investments may not be able to be sold quickly. Even if you can sell them, you might have to pay fees to cash out early.
• May have to be an accredited investor: Several real estate crowdfunding sites require you to be an accredited investor to invest in specific opportunities. If you do not meet the income or net worth requirements, you cannot invest with these platforms.
• Risks related to the real estate market: Real estate has risks just as with any other asset class. The real estate market crash of the early 2000s showed real estate prices could drop significantly in a short period.
• Potentially high minimum investment: Some crowdfunding websites have investment minimums as low as $10. However, other investment options require $100,000 or more to start.

FAQ

Who didn't make our list

There are many more real estate crowdfunding sites to consider, some that didn’t make our list, including:

• CollabHome: CollabHome is a crowdfunded student housing real estate platform. Through CollabHome, you can co-own an income-generating student housing property for as little as $500. This platform has fewer investment properties and they typically take a long time to fund since they aren’t as well known.
• Arrived: This platform for accredited and non-accredited investors allows fractional share investment of residential and vacation properties. The platform requires a minimum investment of $100, but has limited rental properties available and the fees are often high. Read our review to learn more.

Bottom line

Becoming a real estate investor doesn’t have to involve purchasing a property on your own. Instead, you can take part in crowdfunded real estate investments. Investing in this way is often less expensive than buying individual properties, and it could be an excellent way to build a diversified portfolio.

However, crowdfunded real estate may not be the best investment option for everyone. If you’re interested in exploring alternatives, check out our guide on how to invest in real estate.