Back in the old days, investing in real estate was no mean feat. But these days you can gain exposure to the property sector with much less hassle using the best real estate crowdfunding sites.
When the JOBS Act was passed in 2012, the floodgates opened to allow investors pool money to invest in previously inaccessible deals.
Before that time, you would usually have had to be classified as an accredited investor before getting access to institutional grade property deals.
Now you can choose among residential sector investments, commercial deals, private REITs, and you can even buy property 100% online!
So among the many platforms that cater to real estate investors, which are the best real estate crowdfunding sites?
Rich Uncles:
Commercial Real Estate Crowdfunding
Rich Uncles earns a spot among the best crowdfunding sites because for as little as $500 you can gain exposure to the real estate sector.
Where Rich Uncles shines is its use of leverage, or lack thereof.
Unlike some companies that embrace high levels of debt, which can boost returns in good markets but amplify losses during downturns, Rich Uncles sticks with a conservative approach by keeping loan-to-value ratios no greater than 50%.
So investors who are more conservative by nature will find Rich Uncles more appealing than rival companies that take on greater debt and may be more susceptible to Fed rate hikes.
Rich Uncles focuses on commercial real estate so investors can take comfort knowing that rental payments are made by brand name tenants like Chase Bank and Williams Sonoma, who are probably less likely to default than an average residential tenant.
| RICH UNCLES SPOTLIGHT | |
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InvestorMint Rating 4.5 out of 5 stars |
via Rich Uncles secure site |
Commercial real estate tenants are also subject to triple-net lease terms that transfer the obligations of taxes, maintenance, and insurance to tenants.
Plus, Rich Uncles pays regular dividends to investors looking for cash flow and a steady stream of predictable income payments.
Best Residential Real Estate Platform:
Roofstock
Roofstock provides a unique way for non-accredited investors to gain access to the residential property market and earn passive income.
Before Roofstock came along, you would have had to roll up your sleeves if you wanted to buy a residential single-family home.
The job of scouting a home, applying for a loan from a bank, running financial projections, finding a tenant, and collecting rental payments would all have landed on your shoulders.
Where Roofstock earns brownie points is in simplifying that process from start to finish so you can literally purchase an investment property 100% online.
And better yet, the property is cash flow positive from day one because Roofstock finds homes that are already rented so you don’t have to wait for days, weeks, or even months to find suitable tenants.
| ROOFSTOCK SPOTLIGHT | |
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InvestorMint Rating 5 out of 5 stars |
via Roofstock secure site |
Roofstock handles all the nitty gritty details that most investors wish they could avoid.
For example, Roofstock negotiates the list price of the property. And Roofstock finds and screens certified property managers.
Unlike some of the other real estate crowdfunding sites that issue you shares in a company that in turn owns residential or commercial property, you literally own the residential single-family unit when you purchase via Roofstock.
And you can select from a wide variety of homes nationwide that Roofstock grades by neighborhood.
So, if you want to buy a home near a great school district in a neighborhood with low crime rates, and features great amenities, you can be confident that Roofstock does the due diligence to save you the hassle.
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Real Estate For
Accredited Investors:
Origin Investments
Unlike many of the best real estate crowdfunding platforms that sprung up after the 2012 JOBS Act, Origin Investments earned its investing stripes before it became fashionable to pool investor funds and deploy them into property deals.
Based in Chicago, Origin Investments targets multi-family units and office space in high growth markets across the country, such as Atlanta, Austin, Charlotte, Chicago, Dallas, Denver, Houston, and Raleigh.
Origin Investments restricts investment opportunities to accredited investors, who have a minimum net worth of $1 million excluding a primary residence or two consecutive years of income exceeding $200,000.
A minimum $100,000 is required to invest in one of the geographically diversified portfolios.
| ORIGIN INVESTMENTS SPOTLIGHT | |
InvestorMint Rating 5 out of 5 stars |
via Origin Investments secure site |
Origin Investments imposes a 70% loan-to-value limit so conservative investors can take comfort knowing that the high debt levels which became so famous during the 2007-09 real estate downturn are not relied on to boost returns excessively.
Along with a transparent fee schedule, access to institutional grade real estate, and the opportunity for passive income returns, investors get access around the clock 24/7 to an online dashboard that displays investment performance, historical returns, fees and projections.
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Top Real Estate
Crowdfunding Platforms:
RealtyShares
Like Rich Uncles, RealtyShares has a clear focus on commercial real estate opportunities for non-accredited investors.
But unlike Rich Uncles, RealtyShares operates as a platform that connects companies in need of real estate financing with investors who can pool assets together to buy a share of a real estate project.
But don’t think just any ambitious investment company can get on the platform.
What makes RealtyShares one of the top real estate crowdfunding platforms is the extensive screening and due diligence the team conducts to vet managers and deals.
Each deal is selected and underwritten by a team of investment professionals.
And the range of private deals available includes multi-family, offices, and fix-and-flips.
| REALTYSHARES SPOTLIGHT | |
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InvestorMint Rating 4 out of 5 stars |
via RealtyShares secure site |
At RealtyShares, you will need a minimum of $5,000 to get started and can earn passive income on a quarterly basis.
You can even invest from a retirement account, such as an IRA, so you can potentially earn tax-free or tax-deferred returns.
Invest In
Real Estate Crowdfunding
With Fundrise
Real estate crowdfunding vs REITs, which is better?
With Fundrise, you don’t have to make the choice because two private real estate investment products are on offer:
- eREIT
- eFund
The eREIT gives you direct access to diversified private market commercial real estate assets that are professionally managed while the eFund is designed as a tax-efficient investment vehicle that provides access to a diversified portfolio of for-sale housing units.
Fundrise shines when it comes to low fees and low minimums.
The management fees and advisory fees combined amount to 1% annually while the minimum investment amount is $500.
You can invest via a taxable account or a retirement account.
What sets Fundrise apart from most other leading real estate crowdfunding sites is that you receive a 90-day guarantee so if you are not happy with your investment, Fundrise will buy it back within that time period subject to some terms and conditions.
Investors can expect, though are not guaranteed to receive, distributions quarterly so Fundrise may be a good fit for income-seekers.
| FUNDRISE SPOTLIGHT | |
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InvestorMint Rating 4.5 out of 5 stars |
via Fundrise secure site |
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Real Estate
Crowdfunding Companies:
LendingHome
LendingHome is in some ways similar to the well-known peer-to-peer platform Prosper, where borrowers in need of money can access capital from investors who are seeking a return.
The difference between that peer-to-peer lending platform and LendingHome is the latter connects borrowers in need of a bridge loan for a short time period to finance a fixer-upper or a flip.
Investors can earn yields of anywhere between 6% → 12% annually according to LendingHome, who claims over $1 billion in loan proceeds have been returned to investors.
| LENDINGHOME SPOTLIGHT | |
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InvestorMint Rating 4.5 out of 5 stars |
via LendingHome secure site |
To gain access to the LendingHome platform and investment opportunities, you will need to be an accredited investor willing to commit a minimum of $50,000.
In exchange, you may receive interest earnings from day one on residential investment opportunities that are spread geographically across the United States and are limited to loan-to-value ratios of 72%.
Top Real Estate
Crowdfunding Platforms:
Realty Mogul
Realty Mogul is an online marketplace for real estate investing that connects individuals and institutions to residential and commercial property investments across the United States.
Like Rich Uncles and RealtyShares, Realty Mogul is accessible to non-accredited investors and mandates a $1,000 minimum investment to get started.
The idea behind Realty Mogul is that investors can get access to real estate investment opportunities at lower cost and with greater geographical diversification than would be possible by investing solo.
It is possible to invest both in loans and equity investments and potentially earn passive income from an alternative source to the stock market.
Realty Mogul enables investors to participate in the MogulREIT, which includes a variety of property types:
- Multi-family
- Office
- Storage
- Industrial
- Retail
| REALTY MOGUL SPOTLIGHT | |
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InvestorMint Rating 4.5 out of 5 stars |
via Realty Mogul secure site |
What makes Realty Mogul one of the best real estate crowdfunding sites is its experienced investment team that has transacted in over $5 billion of real estate deals.
Plus, it’s one of the few real estate platforms that makes it possible for non-accredited investors to gain exposure to the commercial real estate sector.
Is Real Estate Crowdfunding
A Good Investment?
Whether you are an accredited or non-accredited investor looking for exposure to the residential or commercial real estate sectors, online crowdfunding platforms have much to offer.
If you want to own residential property outright, Roofstock may be your best bet because you can purchase property 100% online.
However, if the idea of owning shares in a company that in turns own a diversified portfolio of commercial property with no more than 50% leverage is more appealing then Rich Uncles could be a good fit.
For short-term oriented investors seeking a quick return on capital from property owners in need of bridge capital, LendingHome is worth checking out.
And investors seeking a wide variety of property types from storage to multi-family will find Realty Mogul has one of the most diversified funds.
Fundrise shines with its eREIT offering while RealtyShares connects companies in need of real estate financing with investors who can pool assets together to buy a share of a real estate project.
Whatever your capacity for risk and financial aims, real estate crowdfunding offers an alternative investment avenue to traditional stock market investing that is well worth exploring but keep in mind that your money is generally tied up for longer, so make sure to use only money that you won’t need in the near term.
Have you invested your money with real estate crowdfunding platforms? Was it a good experience? We would love to hear from you.
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