Best Real Estate Crowdfunding Platforms

Real Estate Crowdfunding Platforms

Looking for reliable real estate crowdfunding platforms you can invest in?

In this post, you will discover reliable real estate crowdfunding platforms in the US, as well as a concrete guide to help you make the right decision.

However, before we begin discussing the available platforms, it is important that you understand what real estate crowdfunding is.

What is Real Estate Crowdfunding?

Have you ever wanted to invest in real estate before but couldn’t afford it?

Or you simply would want to own one but would rather avoid the hassle of owning and managing one.

Real estate crowdfunding makes it possible for individuals to invest and benefit from real estate opportunities passively without having to own or manage them individually.

Imagine a group of friends pulling their resources together to purchase a real estate property.

They decide to give it to developers who manage it for them and they all earn an amount of interest from their property investment capital invested.

That should give you the exact idea of crowdfunding.

What Is A Real Estate Crowdfunding Platform?

Real estate crowdfunding platforms are companies (sites) that connect real estate developers (who seek funds for the development of real estate projects) to access funds from individuals (interested in investing in real estate for a higher return on their investments).

They explain deals to potential investors, take care of regulatory issues, and collect money from the investors on behalf of the developers.

So, without them, it may be difficult to invest in real estate in bits unless you are an accredited (wealthy) investor.

Examples of Real Estate Crowdfunding Platform

There are many platforms or companies that facilitate or enable the above-explained crowdfunding process in the U.S

However, care must be taken when considering investing through any of these platforms to ensure the safety of your funds.

Before deciding which platform to go with, ensure to look at the platforms;

  • Credibility,
  • Site functionality,
  • customer service,
  • ROI,
  • Minimum investment amount,
  • Type of investments,
  • Investment safety, etc.

Below are examples of real estate crowdfunding platforms you could consider.

1. REI Capital Management

REI Capital Management is the sponsor of two Real Estate Investment Funds and they also have their own real estate crowdfunding platform.  The two funds are:

  1. REI Capital Growth:  A fund dedicated to the long term compounded growth of the value per share of stock, by approximately 8% to 9% annually.  And they offer the individual investor a robust liquidity redemption program. This fund does not offer income.
  2. REI Capital Income:  A fund dedicated to providing high yield fixed income investment bonds, secured by first lien debt on US commercial real estate.

It is composed of a team of dedicated, seasoned, and talented members with a unique vision aimed at building bridges to financial wealth for small balance investors.

leveraging over 90-years of combined hands-on experience and in-depth understanding of acquiring and managing multi-tenant shopping centers. REI currently manages $30 million of assets.

Latter this year (2024) when the SEC qualifies its two Reg A+ Tier 2 Offering Circulars REI Capital Growth will be:

  • Open to non-accredited and accredited US citizens: YES
  • Open to foreign or non-US citizens: YES
  • Two Investment Fund options: a) Equity Growth  b) Debt Income
  • Fees: a) Equity Growth – 1.75% Fund Admin and Asset Management
  • Fees: b) Debt Income – 0.25% Fund Admin
  • Minimum investment Growth: $500
  • Minimum investment Income: $100
  • Projected consistent annual Growth: 8% – 9.0%
  • Annual investor Income Yield:  6.3%

2. Fundrise

Fundrise is another real estate crowdfunding platform launched in 2012.

They currently manage over $1.5 billion of equity on behalf of more than 170,000 individual investors across the United States.

Fundrise requires a low minimum of $500 with its “Starter Portfolio” to begin investing.

Allow investors to be paid through quarterly dividend distributions and investment appreciation as their investment shares grow in value over time.

Dividend payouts aren’t always guaranteed.

Factors to Note:

  • Open to foreign or non-US citizens: No
  • Fees:0.15% Advisory fee; 0.85% Asset management fee
  • Minimum investment:$10 to $100,000, depending on account level
  • Average annual returns:7.31% to 16.11%, from 2017 to 2021
  • Total investor distributions:$124 million+
  • Investment options: Varies depending on the selected account level
  • Accredited investors only: No

3. Crowdstreet

Crowdstreet was founded in 2014 and headquartered in Portland, Ore., publishing more than 540 commercial real estate investment offerings.

More than 100,000 investors throughout the U.S. have invested on the Crowdstreet platform.1

Investors have access to a vetted range of institutional-quality real estate investments. It allows accredited investors to pick a single property or invest in a fund.

  • Open to foreign or non-US citizens: No
  • Accredited investors only: Yes
  • Fees:0.50% to 2.5% for CrowdStreet funds; other fees vary by offering
  • Total investor distributions:$220 million
  • Average annual returns:17.3% as of 2021, depending on the investment
  • Minimum investment:$25,000
  • Investment options: Funds, individual deals, and a professionally managed, tailored portfolio

4. PeerStreet

PeerStreet is an online real estate crowdfunding marketplace. Here accredited investors can invest in high-quality private real estate loans.

Investors lend their capital to real estate borrowers.

PeerStreet collects the monthly payments from the borrowers, and the investors get a share of those monthly payments.

  • Open to foreign or non-US Citizens: No
  • Fees: Typically 1%
  • Minimum investment:$1,000
  • Average annual returns:
  • 2% to 9%
  • Total Investor distributions:
  • $225 million+

Understanding Equity vs Debt In Real Estate Investment

It is important that you understand real estate investment processes or methods of investments as you plan to invest in real estate crowdfunding.

There are basically two ways you could benefit from or invest in real estate crowdfunding and earn passively.

They are; Equity-based crowdfunding and debt real estate crowdfunding investments.

Equity Real Estate Investment

This investment method allows investors to own a stake in the real estate property, as well as partake in the risks and gains associated with it.

They typically earn dividend returns on their investments based on the property’s rental income paid by tenants and capital gains from selling the property.

They usually pay less crowdfunding platform fees.

It provides higher returns compared to debt investing

Also, investors earn a share of the property’s appreciation value if it is sold. As well as lose money if the value of the asset depreciates.

Debt Real Estate Crowdfunding

In this type of real estate crowdfunding investment, investors act as lenders.

So, here you lend funds to the owner of the property and you receive fixed interest based on the owner’s mortgage loan and the amount that you have invested.

You are paid interest from the interest paid by mortgage owners.

A fixed date is given as the property payout date where you receive your invested capital.

Benefits of Investing Through Real Estate Crowdfunding

There are notable benefits for both the real estate crowdfunding investor (passive investors) as well as borrowers ( or developers).

Below are the benefits it avails investors.

For Passive Investors

  • Allows investors the opportunity to diversify their investment portfolio with various asset classes as well as access to other countries.
  • Gain exposure to the real estate industry without the hassle associated with owning and managing real estate properties.
  • The peer-peer lending opportunities allow investors to earn higher ROI since they do not have to pay investment fees.
  • Breaks the entry barrier. It gives individuals (who could not have afforded real estate investment) the opportunity to own a piece of the real estate investment and share in the profit (or loss).
  • Transaction transparency is high, as individuals know exactly where and what properties they are investing in.
  • Investors get the opportunity to choose the real estate projects they want to invest in.

Why Start Now Instead of Later?

Real estate continues to be a preferred choice for investors looking to generate long-term returns.

Investing in real estate is known to be more stable than many other types of investments, especially when investing in a real estate fund where the professionals manage everything.

However, most people assume that you can only get into real estate by building or buying properties by yourself.

A real estate investment fund is one proven way to get into the real estate investing market.

And this is where REI Capital Growth comes in.

If there is a better time to start, it is now.