Groundfloor Alternatives

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Contributor, Benzinga
February 27, 2023

Real estate investing can be a lucrative way to build wealth, but it can also be a daunting and expensive process, especially for those just starting out. A number of alternative real estate investing platforms offer investors the opportunity to invest in real estate with smaller investments, including Groundfloor, a platform that allows non-accredited investors to participate directly in real estate renovation loans on a fractional basis. This article explores five alternatives to Groundfloor, their pros and cons and what sets them apart from traditional real estate investing.

These real estate investing platforms offer investors access to real estate projects with smaller investments, often starting as low as $10. They give investors an opportunity to diversify their investment portfolios and can provide access to properties that are otherwise out of reach for the average person.

Fundrise

  • Fundrise
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    Beginner Real Estate Investors
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Fundrise is a real estate investing platform that allows investors to invest in a diversified portfolio of private real estate assets. The platform provides two types of investment products: eREITs and eFunds. eREITs are real estate investment trusts (REITs) that invest in income-generating properties, while eFunds focus on development and appreciation. Here are the pros and cons of investing with Fundrise.

Pros:

  • Low minimum investment: Investors can get started with as little as $10, making it accessible to a wide range of people.
  • Diversification: Fundrise offers a diverse portfolio of real estate investments across different property types and geographic locations.
  • Professional management: Fundrise's team of experienced real estate professionals actively manages the portfolio and makes investment decisions on behalf of investors.
  • Low fees: Fundrise charges an annual management fee of 0.85%.

Cons:

  • Illiquidity: Fundrise investments are illiquid, meaning they cannot be easily bought or sold on the open market.
  • Limited access to projects: The platform only offers a limited selection of projects.
  • Limited control: Investors have little control over which specific projects their money is invested in.

Roofstock

Roofstock is a real estate investing platform that allows investors to buy and sell single-family rental properties. The platform offers a marketplace of vetted properties, complete with detailed information on the property's history, condition and expected rental income. Here are the pros and cons of investing with Roofstock.

Pros:

  • Access to rental properties: Roofstock offers investors access to a wide range of rental properties across the United States, with many properties already generating rental income.
  • Detailed property information: The platform provides detailed property information, including inspection reports, rental history and estimated rental income, making it easy for investors to make informed decisions.
  • Low fees: Roofstock, one of the most affordable real estate investing platforms, charges a transaction fee of just 0.5% of the purchase price.
  • Professional management: Investors can choose to use Roofstock's professional property management services.

Cons:

  • Limited control: Investors have limited control over the management of their rental properties, as they must rely on Roofstock's property management services.
  • High upfront costs: Investing in rental properties requires a significant upfront investment.
  • Property-specific risk: Investing in a single property can be risky, as the success of the investment is tied to the performance of that specific property.

CrowdStreet

CrowdStreet is a real estate investing platform that offers investors access to private real estate investments. The platform provides a wide range of investment opportunities, including commercial properties, multifamily properties and development projects. Here are the pros and cons of investing with CrowdStreet.

Pros:

  • Diverse investment opportunities: CrowdStreet offers a wide range of investment opportunities, allowing investors to choose from different types of commercial properties, multifamily properties and development projects.
  • Professional management: The platform's team of experienced real estate professionals actively manages the portfolio and makes investment decisions on behalf of investors.
  • Low fees: CrowdStreet charges an annual management fee of 1%, making it a cost-effective option for real estate investing.
  • Liquidity: Unlike some other real estate investing platforms, CrowdStreet investments can be sold on a secondary market, providing investors with some liquidity.

Cons:

  • High minimum investment: CrowdStreet's minimum investment is $25,000, which may not be accessible to all investors.
  • Limited control: Investors have limited control over which specific projects their money is invested in, as the platform's management team makes investment decisions on behalf of investors.
  • Limited access to projects: The platform only offers a limited selection of projects.

Streitwise

Streitwise is a real estate investing platform that focuses on investing in commercial real estate properties, primarily office buildings. The platform aims to provide investors with consistent, long-term returns through the acquisition, management and disposition of high-quality office properties. Here are the pros and cons of investing with Streitwise.

Pros:

  • Diversification: Streitwise's portfolio is diversified across different office properties and locations, reducing investment risk.
  • Professional management: The platform's experienced management team actively manages the portfolio and makes investment decisions on behalf of investors.
  • Low fees: Streitwise charges an annual management fee of 2%.
  • Liquidity: Streitwise investments can be sold on a secondary market, providing investors with some liquidity.

Cons:

  • Limited access to projects: The platform only invests in commercial office properties.
  • High minimum investment: Streitwise's minimum investment is $1,000.
  • Limited control: Investors have limited control over which specific office properties their money is invested in.

Arrived Homes

Arrived Homes is a real estate investing platform that allows investors to invest in single-family rental properties in markets with high demand for rental housing. The platform's investment strategy is focused on acquiring and managing single-family homes in desirable neighborhoods, with the goal of generating stable, long-term rental income for investors. Here are the pros and cons of investing with Arrived Homes.

Pros:

  • Diversification: Arrived Homes' portfolio is diversified across single-family homes and markets, reducing investment risk.
  • Professional management: The platform's experienced management team actively manages the portfolio and makes investment decisions on behalf of investors.
  • Low fees: Arrived Homes charges an annual management fee of 1%.
  • High-quality properties: The platform focuses on acquiring high-quality, well-maintained properties in desirable neighborhoods, which can attract high-quality tenants and generate stable rental income.

Cons:

  • Limited access to projects: The platform only invests in single-family rental properties, which may not be suitable for all investors.
  • Limited control: Investors have limited control over which specific properties their money is invested in.
  • Limited liquidity: Arrived Homes investments are illiquid, meaning they cannot be easily bought or sold on the open market.

Final Thoughts on Groundfloor Alternatives

A number of alternative real estate investing platforms offer investors access to real estate projects with smaller investments. These platforms provide investors with a range of options, from investing in commercial office properties to short-term loans secured by real estate. While each platform has its pros and cons, they all offer an opportunity for investors to diversify their portfolios and potentially earn attractive returns. It's important for investors to do their due diligence and consider the risks and benefits of each platform before investing.

When choosing a real estate investing platform, it's important to consider your investment goals, risk tolerance and investment horizon. For example, if you're looking for a low-risk investment with steady returns, you may want to consider investing in a REIT. On the other hand, if you're willing to take on more risk for potentially higher returns, you may want to consider investing in a loan platform like Groundfloor.

It's also important to consider the fees associated with each platform. While many alternative real estate investing platforms offer lower fees than traditional real estate investments, it's still important to understand the costs involved.

The key to successful real estate investing is to do your research, diversify your portfolio and invest for the long term. By considering your options and selecting the platform that best meets your needs, you can potentially earn attractive returns and build a successful real estate portfolio.

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