Online marketplaces open for real estate investments.
You don't need to dream of owning a glorious skyscraper in New York. The vision of real estate ownership has been expanded to allow small (and large) investors the opportunity to choose the location and type of real estate investment property for their portfolio. Before the Jumpstart Our Business Startups Act went into effect in 2013, real estate investors were limited to owning property outright or buying publicly traded real estate investment trusts, or REITs. Since then, the crowdfunding sphere, in which investors pool their money to buy multifamily units, commercial property or bundles of single-family homes, has exploded. A real estate crowdfunding platform is an investment platform that allows individual investors to invest in real estate investment properties usually reserved for the wealthy. These platforms allow for more accessibility to real estate investments. Here are the seven top real estate crowdfunding platforms.
Fundrise is the place to invest in private real estate for beginners with no accreditation required. Fundrise takes a value investing approach, investing in assets that increase in value over the long run, offering eREITs, a trademarked term for the type of REITs that the company offers. Investors pay a 0.15% annual investment advisory fee, which goes toward running and managing the platform; other fees may apply. Fundrise requires a low minimum of $500 with its "Starter Portfolio" to begin investing. You can move to other account levels if you want to invest more over time. The way it works is the Fundrise team finds, obtains and manages a diversified portfolio of real estate projects located in the U.S. that you invest in. Then, you might be paid through quarterly dividend distributions and investment appreciation as your investment shares grow in value over time; dividend payouts aren't always guaranteed.
CrowdStreet is an online commercial real estate investing platform mostly accessible to accredited real estate investors. The minimum investment varies for each investment opportunity; however, the majority of offerings on this platform require a $25,000 minimum. Asset classes range from hospitality, industrial, medical office, multifamily, retail and self-storage, among several others. CrowdStreet brings investors selective, institutional-like investment opportunities. According to CrowdStreet's website, only a small fraction of deals make it through to CrowdStreet's marketplace. "Our Capital Markets team is on the ground in every region of the U.S., looking for the best sponsors with the highest quality deals. Thousands of deals are discussed, hundreds are formally reviewed and form there, but in the end about 5% make it to the CrowdStreet Marketplace," says Tore Steen, CEO and co-founder of CrowdStreet. As of February 2020, CrowdStreet claims it hit more than $1 billion for commercial real estate deals through its online crowdfunding platform.
The PeerStreet marketplace allows real estate investors and lenders to work together in creating real estate loans. PeerStreet Pocket accounts are available to accredited PeerStreet investors, with an investment minimum of $1,000 as an initial deposit. Like investing in equities, PeerStreet clients can pick and choose which properties to fund and build a customized real estate lending portfolio. The way it works is PeerStreet sources its loans from its network of private lenders and brokers and facilitates those loans for retail and institutional investors. As of February 2020, PeerStreet has transacted more than $3.5 billion in deals.
RealtyMogul offers institutional-like commercial real estate deal offerings to both accredited and nonaccredited investors. RealtyMogul takes a traditional growth strategy suitable for "buy and hold" real estate investors looking to generate passive income through real estate investments including office, retail and apartment buildings, among others. The RealtyMogul team is composed of seasoned professionals with experience ranging from real estate, technology and finance. Apart from investing in individual properties, the platform also offers public, nontraded REITs, called MogulREITs, for income and growth. "Accredited and nonaccredited investors may invest as little as $5,000 in the platform's diversified REITs, including a multifamily-focused fund," says Jilliene Helman, CEO of RealtyMogul. The company has invested more than $500 million into commercial real estate properties worth more than $2 billion.
EquityMultiple is a commercial real estate investing platform that boasts total historical returns of more than 14%. Among the properties it underwrites and evaluates, EquityMultiple only selects 5% of those investments, according to the company's website. Starting with $10,000, investors can gain access to private market commercial real estate and invest in professionally managed properties. "Our team takes a bottom-up approach on every deal, working on behalf of our investors to mitigate unforeseen risks, protect principal, communicate with the sponsor and any other stakeholders involved, and ultimately pursue the best returns," says Charles Clinton, CEO and co-founder of EquityMultiple. The company's platform presents investment opportunities along with reporting and analytics for every investment property.
DiversyFund is an online real estate investing platform, which offers the Growth REIT that invests in multifamily real estate for the everyday investor. The fund uses a growth strategy designed to build wealth within about five years. With an investment minimum of $500, you can access, invest in and monitor the ongoing real estate projects. With this platform, DiversifyFund is both the developer and sponsor. Its REIT buys multifamily properties with up to 200 units across the U.S. and renovates them. Over time, the property appreciates. Once the property has been sold, DiversyFund will sell the assets and liquidate them to investors.
Yieldstreet makes alternative investments accessible to individual investors that were previously exclusive to a small percentage of investors. By diversifying a portfolio with alternative investments of multiple asset classes, including real estate, investors can generate passive income and grow wealth. "As of January 2021, commercial real estate represents approximately 30% of the committed (assets under management) at Yieldstreet," says Mitch Rosen, senior director, head of real estate at Yieldstreet in New York City. There are several investment options on Yieldstreet depending on your individual goals and level of experience. Its multiasset class fund, the Yieldstreet Prism Fund, allows investors to pool a minimum of $1,000 to invest in this single fund. Rosen says this fund is a way for investors to get a diversified allocation across the various investments Yieldstreet makes in one investment option. According to Yieldstreet, more than 50% of first-time investors on the platform invest in the Prism Fund. Accredited investors can typically build their custom portfolio with a minimum of $5,000.
The top real estate crowdfunding platforms: