Real estate can be a great way to diversify your investment portfolio. However, most people assume it requires thousands of dollars upfront to get started. Luckily, that’s not the case. Real estate crowdfunding platforms allow investors the chance to invest in real estate without a lot of cash.
But while real estate crowdfunding can be a great way to diversify your portfolio, finding a platform that fits your goals is critical. To help, we’ve reviewed dozens of platforms and picked the best for you to consider.
Our recommendations
Best for beginners
Best for beginners
Fundrise
Minimum investment
Fees
1.00% per year (0.15% advisory fee, plus 0.85% asset management fee)
Why we like it:
Fundrise is an excellent choice for new investors because of its low $10 minimum investment for brokerage accounts. The minimum for individual retirement accounts (IRAs) is $1,000. Through its different investment options, you can choose an investment that best fits your goals.
Available plans include supplemental income, balanced investing, long-term growth, and venture capital. If you are unsure which plan is most suitable, you can take a quiz to find out. If you want to take things further, you can sign up for Fundrise Pro for $10 per month. Fundrise Pro lets you customize your investment plan and access additional data to help support your investment decisions.
Pros & cons:
Pros:
- Low $10 minimum investment
- Ability to make quarterly redemptions
- Significant diversification through its four plans
Cons:
- Penalties assessed for early redemption
- Customer service can be difficult
Best for experienced investors
Best for experienced investors
CrowdStreet
Minimum investment
$25,000
Fees
Varies based on the deal
Why we like it:
CrowdStreet mainly focuses on offering accredited investors high-risk, high-reward opportunities. Because of this, it’s better suited for more experienced investors looking for undervalued commercial real estate where they have direct access to the sponsors. Most deals require a minimum investment of $25,000; however, some require up to $100,000.
CrowdStreet has a strict vetting process for choosing investments. Only a small portion of potential investments make the cut. Many investors appreciate this because it reduces some of the due diligence they need to do themselves. Unfortunately, this highly selective process also limits the investment options available.
Pros & cons:
Pros:
- Direct access to real estate sponsors
- Strict investment vetting process
- Can invest through a self-directed IRA
Cons:
- The vetting process creates limited investment choices
- Only available to accredited investors
- High minimum investment
Best for rental properties
Best for rental properties
Arrived
Minimum investment
$100
Fees
Long-term rentals: 3.5% sourcing fee, plus 0.15% quarterly AUM fee; Vacation rentals: 5% sourcing fee, plus 5% gross rent fee and variable property management fees
Why we like it:
For access to long-term or vacation rentals without buying an entire property, look no further than Arrived. Its platform allows you to invest in fractional shares of these properties with as little as $100. You can invest in individual homes or a fund, which includes many different properties.
Investors benefit from rental payments (minus fees) and the appreciation of the property once it’s sold. Arrived has a manager for each investment property, making it a solid passive investment option.
Pros & cons:
Pros:
- Low $100 minimum investment
- The Single Family Residential Fund offers quarterly redemptions
- Open to non-accredited investors
Cons:
- Complicated fee structure
- Newer platform without a lengthy history
Best for rental properties
Best for rental properties
Groundfloor
Minimum investment
$10
Fees
No fees to invest
Why we like it:
Instead of owning individual real estate properties, Groundfloor allows you to own a property’s debt. The platform connects investors with borrowers who require short-term real estate loans, lasting anywhere from a few months to a couple of years.
You loan the money, then later get it back with interest. This model is similar to other peer-to-peer loan platforms. However, the debt on Groundfloor investments is secured by the property, reducing the overall risk.
Dozens of investments are usually available, and each is assigned a grade from A to G, representing its risk and potential return. Groundfloor claims its average return has been 10% since it was founded in 2013.
Pros & cons:
Pros:
- A low minimum investment of $10
- You can choose to have your investment automatically diversified over multiple investments
- Investments are backed by the property
- No fees for investors
Cons:
- Borrowers can default at any time
- No early redemption option
Best for commercial real estate
Best for commercial real estate
RealtyMogul
Minimum investment
$5,000
Fees
1% to 1.25% management fees (additional fees may apply); Income REIT has a 4.5% maximum fee, and Apartment Growth REIT has a 4.75% maximum fee
Why we like it:
Founded in 2012, RealtyMogul is one of the older and more established real estate crowdfunding platforms available. Investors can access individual commercial real estate projects and multiple real estate investment trust (REIT) funds. Individual projects are only available to accredited investors, whereas the REITs are accessible to everyone.
One of the most significant drawbacks for REIT investors is the lockup period. While you can redeem your shares after 12 months, you won’t be eligible for full redemption until you reach three years.
Pros & cons:
Pros:
- Multiple investment options are available
- Potential for high rate of return
Cons:
- Only accredited investors can invest in individual properties
- $5,000 minimum investment
Best for alternative assets
Best for alternative assets
YieldStreet
Minimum investment
$10,000
Fees
0% – 2% (varies by investment type)
Why we like it:
Yieldstreet is an excellent option for investing in debt and equity real estate and other income-generating alternative assets. These include private credit, short-term notes, art, legal cases, and more. The company has more than 450,000 investors and an average annualized return of 9.6% since 2015.
Yieldstreet is available to both accredited and non-accredited investors. Accredited investors have access to all the platform’s investment products. Non-accredited investors, on the other hand, can only invest in the Yieldstreet Alternative Income Fund.
Pros & cons:
Pros:
- Access to alternative investments besides real estate
- Solid historical returns
- All assets go through a four-step vetting process
Cons:
- $10,000 minimum investment
- The volume of investments can vary
- Non-accredited investors can only invest in the Yieldstreet Alternative Income Fund
Best for selection of investments
Best for selection of investments
DLP Capital
Minimum investment
$200,000
Fees
2% annual management fee, plus 20% of future profits if targets are reached
Why we like it:
DLP Capital isn’t an option for everyone because of its $200,000 minimum investment and accredited investor status requirements. However, four different real estate debt and equity funds give investors access to a wide range of investments, targeting an annual return between 9% and 13%.
The DLP Housing Fund and the DLP Building Communities Fund invest in rental properties, including single and multi-family houses, mobile homes and camps, and self-storage facilities. The two debt funds, meanwhile, focus on different types of real estate loans.
Pros & cons:
Pros:
- Annual redemption for equity funds and quarterly redemptions for debt funds
- Transparent fees
- Legacy planning available
Cons:
- High minimum investment of $200,000
- Unable to pick individual deals
- Only available to accredited investors
Best for farmland
Best for farmland
AcreTrader
Minimum investment
$10,000
Fees
0.75% annual management fee, plus closing costs and a commission when entire properties are sold
Why we like it:
While many real estate crowdfunding platforms focus on residential and commercial real estate, AcreTrader is different. It gives accredited investors access to farmland. Investors earn a return from annual cash rent payments from farmers and the appreciation of land values over time. The initial investment will fluctuate based on the deal, with minimum investments typically ranging between $15,000 and $40,000. However, some deals can have higher investment requirements.
Due to AcreTraders’ strict selection process, the number of investment opportunities can fluctuate. Less than 5% of the offers it considers make it through its vetting process.
One of the more significant downsides to AcreTrader is that investments are very illiquid. The company has discussed creating a secondary market for investors to sell their shares. However, until that happens, you must wait until the farm is sold, which can range from a few years to a decade.
Pros & cons:
Pros:
- AcreTrader handles farm management, making this a true passive investment
- Reasonable fees
- Strict vetting process by AcreTrader
Cons:
- Only available to accredited investors
- Higher minimum investment requirements
- Highly illiquid investment
Best real estate crowdfunding platforms compared
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1.00% per year (0.15% advisory fee, plus 0.85% asset management fee) |
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CrowdStreet |
Varies based on the deal |
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Long-term rentals: 3.5% sourcing fee, plus 0.15% quarterly AUM fee; Vacation rentals: 5% sourcing fee, plus 5% gross rent fee and variable property management fees |
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Groundfloor |
No fees to invest |
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RealtyMogul |
1% to 1.25% management fees (additional fees may apply); Income REIT has a 4.5% maximum fee, and Apartment Growth REIT has a 4.75% maximum fee |
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YieldStreet |
0% – 2% (varies by investment type) |
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DLP Capital |
2% annual management fee, plus 20% of future profits if targets are reached |
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AcreTrader |
0.75% annual management fee, plus closing costs and a commission when entire properties are sold |
Methodology
To select the best possible real estate crowdfunding platforms, we looked at dozens of options and considered several different factors. This included the selection of investments, liquidity, fees, transparency, and educational resources. We also dug into the fine print of each platform to make sure all the information was available to anyone thinking about investing.
How to choose the right real estate crowdfunding platform
When choosing the right real estate crowdfunding platform, there are many things to consider. Our team has spent countless hours researching different platforms to find the best options. Here are some of the most important things you should pay attention to.
Fees
Fees are the most crucial factor when choosing a crowdfunding platform. High fees can significantly impact your overall return. When comparing different crowdfunding platforms, ensure you’re comfortable with their fees.
Holding period
Real estate is a long-term investment, meaning your money is usually illiquid once invested. Some real estate crowdfunding platforms allow you to liquidate your investments quarterly or yearly. However, others have a multi-year holding period.
Investment selection
It’s essential to consider your investment choices with each platform. Some platforms only allow accredited investors to invest in individual deals, with everyone else just having access to the platform’s real estate investment fund. Also, because most crowdfunding platforms have an in-depth vetting process for deals, there may be times when no investments are available.
Minimums
The minimum investment amount will fluctuate significantly from one platform to another. Before signing up, understand the amount of cash you’ll need to commit to each deal.
How to open an account with the right real estate crowdfunding platform
Once you’ve found the right real estate crowdfunding platform for your needs, the next step is to open and fund your account. This process can vary by platform but typically entails the following steps.
- Sign up for an account: Provide the platform with all the necessary information to open your account, including your name, date of birth, email address, and physical address. You’ll also need to provide government-issued ID to verify your identity.
- Provide financial information: If the platform is limited to accredited investors, this is where you’ll verify your status. If all investors are welcome, you’ll need to provide your social security number and complete a “know your client” survey.
- Fund the account: Once your account has been activated, you’ll need to fund it so you can make investments. This can typically be done by linking your bank account or through a wire transfer.
Alternatives to real estate crowdfunding platforms
If you decide that real estate crowdfunding isn’t for you, here are some alternatives, including other real-estate investment opportunities.
- REITs: You can purchase a publicly-traded REIT through your online brokerage account without going through a crowdfunding platform. Also, many mutual funds and exchange-traded funds (ETFs) invest in the real estate asset class.
- Fine art and collectibles: Fine art and other collectibles like wine, sports memorabilia, and comics have become a popular asset class in recent years. There several ways of successfully investing in art. For example, Masterworks allows you to invest in blue-chip artwork, and Vinovest enables you to invest in fine wines.
- Peer-to-peer lending: Another form of crowdfunding popular with investors is peer-to-peer lending. P2P Platforms like Prosper or Lending Club allow you to lend money to individuals in exchange for a specific interest rate.
- Cryptocurrencies: Crypto has been one of the hottest investments over the past five years. However, investing in cryptocurrencies can be highly speculative and risky. You can invest in individual coins or through a crypto ETF, which will give you more diversification.
More about the best real estate crowdfunding platforms
What is real estate crowdfunding?
Real estate crowdfunding helps both investors and real estate sponsors. Investors can gain access to the real estate asset class without large amounts of capital upfront. Its also a more passive investment than say, house-flipping or owning a rental property. Sponsors can use crowdfunding to raise money for individual projects. Instead of looking for cash from one investor, they can raise smaller amounts of money from many different investors.
How does real estate crowdfunding work?
Real estate sponsors turn to crowdfunding platforms to raise money for projects. Through online financial technology, investors can pool their money together to purchase an investment. This spreads the risk between all investors and reduces the cash each person needs to commit.
The money is typically paid into a REIT that owns the properties being invested in. The REIT then makes dividend payments to the investors through the crowdfunding platform. If the property is sold, the group of investors will typically be paid any gains minus fees.
Benefits of real estate crowdfunding
Real estate crowdfunding provides investors with several benefits. Notable advantages include:
- Diversification: Instead of investing in a single property, crowdfunding allows you to invest smaller amounts across several properties. This helps create a more diversified portfolio of real estate holdings.
- Accessibility: Crowdfunding platforms open real estate to investors who may only have a few hundred dollars to invest. In the past, private real estate deals were only available to the wealthy. Now they are much more accessible.
- Less work: Most crowdfunding platforms pick out the best options, narrowing down the choices for you. And the real estate is managed for you, so you don’t have to worry about property maintenance, collecting rent, and so on.
Risks associated with investing in real estate crowdfunding
Even though real estate crowdfunding platforms offer many benefits, ensure you’re aware of the following risks:
- Higher fees: Fees vary from one platform to the next and some platforms can charge significantly more than if you were to invest in a simple REIT fund. Before investing, ensure you fully understand the fees and that they align with your goals.
- Due diligence limitations: Most crowdfunding platforms market their product to inexperienced real estate investors looking to invest in the asset class. Unfortunately, most of these investors don’t know how to properly do their due diligence on a specific real estate investment. This can increase the investment risk.
- Platform risk: There is always the risk that the crowdfunding platform you choose will close its doors, and you’ll lose your investment. That’s why it’s important to research each platform and choose one with a lengthy track record of success for investors.
Requirements to open a real estate crowdfunding account
The requirements to open a real estate crowdfunding account will vary from one platform to the next. You will typically need to provide your legal name, physical address, email address, a copy of your government-issued ID card, and your social security number.
If you open an account as an accredited investor, you must provide the necessary documents to prove your eligibility. Once your account has been approved, you’ll need to fund it with at least the minimum investment set by the crowdfunding platform.
TIME Stamp: Crowdfunding makes it easier to invest in real estate
Real estate crowdfunding has opened doors for people looking to diversify their investments in real estate without being required to purchase physical properties. However, with the increased popularity comes an overwhelming number of crowdfunding platforms to consider. Our guide can help you pick the best real estate crowdfunding platform for your needs.
Frequently asked questions (FAQs)
What is the average return on crowdfunding for real estate?
The average return for crowdfunding real estate can fluctuate from one platform to the next and significantly between quarters. Annual returns have typically been between 2% and 20%. How much you earn depends on various factors, including the risk profile of the investment and fees and the economic environment and demand for the type of real estate being invested in.
How much money do you need to invest in real estate crowdfunding?
The amount needed to invest in real estate crowdfunding varies from one platform to the next. Some require as little as $10, while others require $200,000 or more.
How do I mitigate risks when investing in real estate crowdfunding?
The best way to manage your risk is through diversification. Instead of investing in a single real estate deal, invest in several. That way, if one defaults or takes a loss during the year, the others can help protect your overall return.
Is it safe to invest in real estate crowdfunding?
There are many benefits to investing in real estate crowdfunding. However, like any other investment, it doesn’t come without risk. Do your due diligence on any platform before you invest.
The information presented here is created by TIME Stamped and overseen by TIME editorial staff. To learn more, see our About Us page.
