Real estate crowdfunding has revolutionized the world of investing, offering a dynamic avenue for individuals to participate in property ventures that were once the exclusive domain of industry insiders. In this blog, we’ll explore the exciting space of real estate crowdfunding and introduce you to some of the most powerful platforms to help unlock your investment potential.
These platforms democratize the real estate market and provide opportunities to diversify your portfolio, grow your wealth, and engage in exciting projects across the real estate landscape. Join us as we look into the top real estate crowdfunding sites, reshaping how we invest in bricks-and-mortar.
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Real Estate Crowdfunding Platforms
Fundrise: Ideal for Beginers
Fundrise is a standout choice for those entering the world of real estate crowdfunding. It’s also a platform that can cater to investors as they progress and seek more substantial opportunities. Fundrise prides itself on user-friendliness and cost-effectiveness, making it an excellent starting point.
The platform employs its proprietary software to identify and present investment options to its users. This in-house software keeps fees low, ensuring more of your investment goes into your pocket. Fundrise boasts 330,000 investors, a total asset transaction value of $7 billion, and $194 million in net dividends its users earn. Its investments primarily involve tangible, private real estate ventures, often more stable than REITs and stock-dependent investments. As an investor-owned entity, Fundrise offers a unique opportunity for users to invest in its IPO (Internet Public Offering).
Yieldstreet: Best for Real Estate Investments
Yieldstreet, founded in 2015, is a distinct alternative investment platform offering income-generating opportunities. What makes it unique is that these investments are collateral-backed, tend to have a low correlation with the stock market, and span a variety of asset classes, including art finance, real estate, commercial finance, legal finance, and more. Yieldstreet real estate crowdfunding has a noteworthy track record, having delivered over $600 million in returns to its investors since its inception.
Historically, annual returns have ranged from 3% to 18%, depending on the chosen goal-based strategy. The platform offers predefined payment schedules, such as monthly or quarterly payments, and may return both principal and interest based on specific events, like legal finance settlements. Investment durations vary from three months to seven years, with minimum investment amounts starting at $2,500 and sometimes reaching five digits.
While the Yieldstreet Prism Fund is open to all investors, participation in other Yieldstreet offerings requires accredited investor status. Yieldstreet’s blend of accessibility and diversification makes it a compelling choice for those seeking alternative income opportunities.
ARK7: Best for Single-Family Rental Properties
Founded in 2019, Ark7 operates similarly to platforms like Arrived and Lofty. Here, you can purchase fractional shares in single-family rental properties, short-term rentals like those on Airbnb, and multifamily properties.
What makes Ark7 distinct is that it maintains partial ownership in each property, typically ranging from 1% to 20%. This ensures they have a vested interest in the property’s success. Investing in Ark7 starts at just $20 per share, and after an initial holding period, you can quickly sell your shares through Ark7’s online marketplace.
While the website suggests a one-year holding period, you can sell after three months, adding liquidity to an investment type that traditionally lacks it. Ark7’s crowdfunding platform sets itself apart by not charging transaction fees when you decide to sell your shares, offering a hassle-free and cost-free exit. Unlike competitors like Lofty, Ark7 also simplifies the process by not requiring you to deal with cryptocurrency transactions.
EquityMultiple: Best for Commercial Real Estate Crowdfunding
EquityMultiple places its primary emphasis on institutional, commercial real estate investments. It offers a range of investment types, including equity, preferred equity, and senior debt. Established in 2015 in New York, the company has continually expanded its offerings to include tax-advantaged real estate investments and fund products.
Investment distributions vary based on the specific deal but typically occur monthly or quarterly. EquityMultiple provides several investment options: institutional, commercial real estate, equity, preferred equity, senior debt, opportunity zones, and 1031 exchange investments. As of 2023, the platform reports an average annual return of 17%, making it a compelling choice for investors seeking solid returns. EquityMultiple has already distributed $350 million to its investors, reflecting its commitment to delivering results.
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RealtyMogul: Best for Single Property
For accredited investors with a specific focus on single-property investments, RealtyMogul is a fitting choice. This real estate crowdfunding platform was created to grant investors access to the real estate market, offering opportunities for passive income strategies.
This real estate crowdfunding platform provides the following:
- Various investment options.
- Catering to accredited and non-accredited investors.
- Encompassing different property types and REITs.
RealtyMogul holds a Better Business Bureau A+ ranking, reinforcing its trustworthiness. However, it’s important to note that the platform has a relatively high initial investment requirement of $5,000. The fee structure can also be complex and varies based on the specific investment.
Investments in RealtyMogul tend to be less liquid, meaning you might see returns once they reach maturity, a process that can take three to five years. If you’re an investor seeking a dependable platform for individual real estate investments, RealtyMogul is an option worth considering.
AcreTrader: Best for Farmland
AcreTrader is a unique real estate crowdfunding investment platform designed for accredited investors with at least $10,000 to commit over three years or more. What sets AcreTrader apart is its primary focus on farmland real estate, distinguishing it from other crowdfunding platforms that typically deal with commercial or residential properties.
AcreTrader investors can earn money through two direct channels: annual rent payments from farmers and land value appreciation over time. Rent payments from farmers are typically distributed once a year, usually in December. Land value appreciation occurs when AcreTrader sells the property and the investment vehicle is dissolved.
Although the platform offers a limited number of new investment options, it stands out for its rigorous underwriting and due diligence process for properties featured, ensuring investor security. AcreTrader also accommodates investment through self-directed IRA accounts (SDIRAs) or taxable brokerage accounts, providing flexibility for investors looking into the farmland real estate market.
In conclusion, real estate crowdfunding is a game-changer, offering a level playing field for investors to participate in diverse real estate opportunities. The platforms we’ve explored in this blog empower you to tap into the wealth-building potential of the real estate market, irrespective of your background or location.
Whether you’re seeking stable income streams, long-term growth, or both, these platforms provide a gateway to the world of property investment. As you embark on your journey, remember that the power to shape your financial future lies in your hands. Explore, invest wisely, and watch your real estate dreams become reality.