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Fundrise vs. CrowdStreet: Which is Better?

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Real estate crowdfunding has gained popularity among real estate seekers. Fundrise and CrowdStreet are 2 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 platforms match up.

What is Fundrise?

Fundrise is an online real estate crowdfunding platform with 500,000 members and $4.7 billion in real estate investments since its inception. Anybody can invest with Fundrise — the minimum amount is $500. 

Commissions
0.85% asset management fee per year
Account Minimum
$500

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 2 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 2 quarters.

Fundrise gives you 2 options to invest — through its Starter Portfolio and Advanced Core Plan.

The Starter plan requires a $500 minimum balance, so it’s popular for beginners. You get a free upgrade to a Core plan when you invest more than $1,000. This plan offers greater diversification and gives you access to 3 types of plans:

  • Supplemental Income: This plan lets you make some extra cash regularly through dividends. The returns are low but consistent. You can expect an annual return of 7.9 to 8.6%.
  • Balanced Investing: This option offers more diversification and relatively modest returns and appreciation compared to the Supplemental Income plan. The projected annual return is anywhere between 8.6 to 10.7%.
  • Long-Term Growth: Choose this plan if you want solid returns over a long period. The returns are typically 9.3 to 12.8%.

Source

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 over $1 billion in marketplace investments and more than $100 million in distributions. 

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.

Commissions
1% – 1.75%
Account Minimum
$10,000

How Does CrowdStreet Work?

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

There are 3 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 also $25,000.
  • Private managed accounts: A dedicated advisory team will work with you to create a custom investing strategy when you choose a private 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.

Source

CrowdStreet Connect, the firm’s portal, helps streamline the fundraising process. It securely hosts all your investment documents. Here are 3 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 4 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 6 fundamental areas:

  • Minimum investment: Fundrise requires you to invest a minimum of $500. 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 3 different types of investment, while Fundrise offers only portfolio-based investing.
  • Returns: The average annual return from CrowdStreet is 25.2%. As of 2019, Fundrise produced a net overall return of 9.47%.
Best For
  • Investors looking for diversification away from stocks
  • Real estate investors interested in new opportunities
  • Accredited investors with lots of capital at their disposal
Best For
  • Small real estate investors
  • Passive investors
  • Long-term investors
  • Beginners
Pros
  • Unique opportunities available
  • Makes real estate accessible and understandable
  • Investors can devote capital to both debt and equity offerings
  • Offers quality education materials and answers to FAQs
Pros
  • Allows small investors to get exposure to commercial real estate
  • Diversification in the real estate sector
  • Goal-oriented investing
  • Relatively low fees
  • 90-day guarantee
Cons
  • Real estate is highly illiquid
  • Most properties require a minimum $25,000 investment
  • You’re limited to what’s on the CrowdStreet Marketplace
Cons
  • Liquidity issues as eREITs and eFunds are not exchange traded

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 simply 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 is perfect if you’re a new investor and want to invest in 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 portfolio? Take a look at our guide to learn how to invest in REITs.

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