Physical property can play an important part in your investment portfolio. The connective power of the internet now makes real estate investing more obtainable — even if you don’t have much capital. Real estate crowdfunding platforms allow you to connect with other investors and pool your money to purchase property for passive real estate income.
Paths previously restricted to accredited investors were opened by new guidelines from the Securities and Exchange Commission (SEC) in 2016. Current rules allow investors to share capital for collective property investment of all types. Check out our guide to learn more about real estate crowdfunding and find the best real estate crowdfunding platforms.
Real Estate Crowdfunding Platforms:
- Best for No Management Fees: DiversyFund
- Best for Commercial Real Estate: CrowdStreet
- Best for REITs: Roofstock
- Best for Rental Properties: Fundrise
- Best for Accredited Investors: Origin Investments
Compare Real Estate Investment Platforms
Best Real Estate Crowdfunding Platforms
Our top picks are web-based companies that have led the surge in real estate crowdfunding.
DiversyFund is a useful tool if you don’t fit the traditional real estate investor mold. You don’t have to be accredited to invest, and you need relatively little capital to begin. The platform is user-friendly with a simple sign-up process.
Register with a minimum of $2,500 invested in $500 increments. Your funds go directly to the privately-traded DiversyFund Growth Real Estate Investment Trust (REIT). The capital is used to develop properties and investors see an average of 11.4% return when properties are sold. Standard brokerage fees are also waived.
Diversyfund provides full transparency on the value of its available properties, which makes things simple for beginners.
CrowdStreet is the largest and most diverse commercial real estate marketplace. It’s a good match if you’re an experienced, accredited investor who doesn’t mind a little risk.
Choose from investment in a managed portfolio or direct access to individual commercial real estate investment opportunities. You can then review and compare deals that meet your own criteria.
A minimum of $25,000 is required and your investment can be much steeper depending on the project. Investments are usually under rigid period terms. The potential for large returns is high, but expect to wait a few years.
Live webinars provide an opportunity for direct access to the project sponsor. The platform also provides numbers and analytical data from past projects so you can compare and consider the potential success of investments.
Roofstock markets itself as a real estate investment industry disruptor. It acts as a liaison between REITs and holding companies to list available properties for individual investors. The company targets investors looking for turnkey rental properties — particularly single-family rental homes (SFR).
Use Roofstock’s custom filters to tailor your search and get notifications when there’s a matching property. You can take a 3D tour of potential properties, look at tenant payment history and local property management options before you buy.
Making an offer is free. Roofstock charges a fee of 0.5% of your contract or $500, whichever is higher. Closing takes 15 days if you pay cash and 30 days if you’re financing. It also offers a 1-year rent payment guarantee. Roofstock is the perfect option for low-risk real estate investment without the extra work of flipping a property.
Fundrise gives you the option of REIT investment regardless of your net worth. You can start with just a $500 commitment, and membership levels increase up to $100,000. Fundrise offers 2 options for investing in one of its private REITs. Its eREIT provides the option to invest in income-generating real estate such as rental properties. The eFund pools capital to purchase, develop and sell properties.
A Fundrise portfolio is made up of qualified offerings regulated by the SEC and must follow strict reporting requirements including annual audits and regular financial reporting. Fundrise is a great platform to diversify through long-term alternative investments with the potential for high returns.
5. Origin Investments
Founded in 2007, Origin Investments is a real estate investment firm that acquires office and multi-family properties in Atlanta, Austin, Charlotte, Chicago, Dallas, Denver, Houston and Raleigh. Origin differs from other firms in its approach — it seeks the highest risk-adjusted returns for its investors by acquiring and managing high-quality real estate opportunities and it takes out the middleman and/or broker.
Origin evaluates demand drivers such as population growth, job growth, rent growth, access to multiple transportation modes and proximity to universities for access to a trained workforce. The innovative firm recently raised $151 million for its Origin Fund III. Funds operate through an LLC structure, which means that all tax benefits (such as depreciation and interest expense) pass through to investors, making it different from an REIT structure (in a REIT structure, the tax benefits are captured at the REIT-level and any income paid out is taxed at the ordinary income rate).
Origin’s offerings are available to accredited investors. Accreditation status is verified upon commitment to an offering.It’s easy to register for an account on Origin’s website. Click the “Sign Up” button in the upper right-hand corner of any page and follow the prompts to register and explore Origin’s offerings. Click “Invest Now” when you’re ready to invest.
Why Real Estate Crowdfunding?
Real estate crowdfunding offers the usual property investment incentives, such as tax breaks and greater diversification. But crowdfunding specifically has some benefits and risks you should be aware of before investing.
- Once inaccessible real estate investment opportunities available to all
- High return potential of at least 15%
- Easy investment portfolio diversification
- Property management and improvement usually handled by sponsor
- Partial insulation from market uncertainty
- Most projects, properties and platforms are still restricted to accredited investors
- Higher risk over a longer period of time
- Average commitment between 5 to 7 years
- Longer wait for return as compared to publicly-traded REITs or rental properties
- Additional fees from platforms or project sponsors, including high fees for liquidating early
Get Involved in Crowdfunding Real Estate
The relatively new world of crowdfunding real estate gives all investors access to opportunities outside of stocks and bonds. Although real estate investment may mean low liquidity, property historically appreciates and provides a likely financial return over time.
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