Fundrise vs. CrowdStreet: Which is Better?

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Contributor, Benzinga
October 20, 2023

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Real estate crowdfunding has gained popularity among real estate seekers. Fundrise and CrowdStreet are two of the most popular real estate crowdfunding platforms, but these industry giants are far from one and the same.

Read on to learn more about Fundrise and CrowdStreet and how the investing platforms match up.

What is Fundrise?

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Fundrise is an online real estate crowdfunding platform with 500,000 members and over $4 billion in real estate investments since its inception. Anybody can invest with Fundrise — the minimum amount is $10 for a Starter account.

How Does Fundrise Work?

Fundrise allows you to invest in a diversified portfolio of real estate projects, and Fundrise’s teams manage these real estate portfolios. The company is an online real estate investment trust (eREIT), so it trades on the private market.

There are two ways you can make money with Fundrise — through quarterly dividends and appreciation in the value of your investment shares. Dividends are generally distributed following the end of each quarter. You may receive higher dividends when certain underlying properties are sold. The value of your shares is recalculated every quarter or every two quarters.

Fundrise gives you two options to invest — through its Starter Portfolio and Advanced Core Plan.

The Starter plan requires a $10 minimum balance, so it’s popular for beginners. You get a free upgrade to a Basic plan when you invest more than $1,000; Core is $5,000; Advanced requires $10,000; and Premium requires a $100,000 investment.

These plans offer greater diversification and give you access to three types of plans:

  • Supplemental income: This plan lets you make extra cash regularly through dividends. The returns are low but consistent.
  • Balanced investing: This option offers more diversification and relatively modest returns and appreciation compared to the Supplemental Income plan.
  • Long-term growth: Choose this plan if you want solid returns over a long period.

Fundrise’s annual average return for all clients was 4%.

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What is CrowdStreet?

CrowdStreet provides online real estate investment offerings with over 112,000 investors and more than 260 large commercial real estate developers and operators. The platform has invested in over $4 billion of real estate and $1 billion of equity.

The company is headquartered in Portland, Oregon, and has multiple offices across the U.S. The team has a combined experience of 120 years in commercial real estate, online marketing and private equity.

How Does CrowdStreet Work?

CrowdStreet gives you direct access to a variety of vetted commercial real estate opportunities to diversify your portfolio.

There are three ways you can invest with CrowdStreet:

  • Direct investing: You can invest directly in real estate deals on the CrowdStreet marketplace. Design your portfolio deal-by-deal with thorough visibility and documentation available for each opportunity. Most properties require a minimum balance of $25,000 to make a direct investment.
  • Fund investing: Get easy diversification across multiple property types, risk profiles and geographies with a single investment. The minimum account balance requirement is $25,000.
  • Privately managed accounts: A dedicated advisory team will work with you to create a custom investing strategy when you choose a privately managed account. This service is managed by CrowdStreet Advisors LLC, a wholly-owned subsidiary of CrowdStreet Inc. You need a $250,000 minimum starting account balance for this service.

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CrowdStreet Connect, the firm’s portal, helps streamline the fundraising process. It securely hosts all your investment documents. Here are three ways CrowdStreet Connect improves the experience of the user:

  • Seamless UI/UX: CrowdStreet Connect provides a great digital experience by providing an interface that encourages you to invest online.
  • Improved investor communication: The built-in tools allow smooth communication between you and your investors. You can get everything from sharing an offering to providing post-funding documents.
  • Streamlines investor support: Get 24/7 access to your documents from your dashboard and skip the need for service requests.

Similarities Between Fundrise and CrowdStreet

Fundrise and CrowdStreet have four major similarities:

  • Top real estate crowdfunding platforms: They’re both featured among the top platforms in the U.S. to help you make passive real estate investments.
  • Difficult to liquidate: Real estate is a long-term investment, so both Fundrise and CrowdStreet require you to wait longer for returns from converting the assets into cash.
  • Risk: There is a chance you could lose all your money through both platforms.
  • Availability: Fundrise and CrowdStreet are both available to residents in all 50 states.

Differences Between Fundrise and CrowdStreet

Fundrise and CrowdStreet differ in six fundamental areas:

  • Minimum investment: Fundrise requires you to invest a minimum of $10. Most investments on CrowdStreet require at least $25,000.
  • Ideal investor: Fundrise is perfect for non-accredited investors or new investors who want to invest in small amounts. CrowdStreet is for accredited investors or high-net-worth individuals.
  • Tradable asset classes: CrowdStreet deals with 100% commercial real estate. Fundrise is a mix of commercial and residential properties.
  • Investments offered: CrowdStreet offers three different types of investment, while Fundrise offers only portfolio-based investing.
  • Returns: The average internal rate of return (IRR) from CrowdStreet is 18.1% as of 2023. As of 2023, Fundrise produced an overall return for all users of roughly 4%.

The Winner: CrowdStreet

CrowdStreet takes home the gold as the better real estate crowdfunding platform — as long as you have plenty of capital at your disposal. It offers more — superior returns, diversification and a better portal. The platform’s robust marketplace offers high-profit deals and is perfect for real estate investors looking for high-return opportunities for the long haul.

Choose Your Platform

Your choice ultimately boils down to how much you’re willing to invest. Fundrise could be perfect if you’re a new investor wanting to try your hand at real estate. On the other hand, CrowdStreet could be the platform for you if you’re a buy-and-hold investor looking for high returns. You can also check out DiversyFund as an alternative investment option.

Eager for more information about real estate investment trusts (REITs) as a way to buy real estate stock in a commercial investment portfolio? Take a look at Benzinga’s guide to learn how to invest in REITs.

Frequently Asked Questions

Q

Is real estate investing profitable?

A

Yes, real estate investing can be profitable, but you must do your research and choose your investments wisely.

Q

Can you invest in real estate crowdfunding?

A

Yes, real estate crowdfunding allows you to join a pool of investors instead of buying directly.

Q

Should I invest in real estate?

A

Investing in real estate is a decision that depends on factors like financial situation, risk tolerance, and investment goals. It can be profitable due to appreciation, rental income, and tax benefits, but it also comes with risks like real estate market fluctuations and property management challenges. Thorough research and consultation with financial advisors are recommended before making a decision.

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