The real estate industry has changed significantly over the past decade, much of it pushed by technology. Today, buyers can view homes for sale on the next street or across the globe on their devices. Sellers can sell their home by themselves and still reach thousands of potential buyers on the internet. Even those in search of a weekend getaway or unique vacation spot can find it online. Another area in the real estate industry that has blossomed due to technology is crowdfunding. What are the best real estate crowdfunding platforms?
Crowdfunding has been used in the past to launch new, innovative products and to raise money for a variety of causes, but now investors are finding it is an easy way to invest in commercial or residential real estate projects. Crowdfunding for real estate can be used as an alternative to or in addition to owning real estate yourself or buying into Real Estate Investment Trusts (REITs).
As you’ll see, there are plenty of options out there, depending on your interests, goals, and resources. Here is a look at some of the best real estate crowdfunding platforms that have gotten or are gaining traction, and one that hasn’t fared so well.
This is a commercial real estate investment platform that was formed in 2014. Since 2014 they have proposed 338 real estate investment offerings, 17 of which were fully realized. Annualized returns have averaged an impressive 25.5%. CrowdStreet has raised over $670 million throughout its lifespan, returning $64 million to its investors. This platform offers a variety of investment options in a range of investment periods for short and long-term investors.
Roofstock is a real estate crowdfunding platform that specializes in investing in single-family rental properties. This, they’ve apparently done very well, as they boast of $1 billion in completed single-family rental transactions in just under two years. They have a unique guarantee that assures your satisfaction and that a property will be rented within 45 days of being “rent ready.” If you have ever thought of buying a rental property but didn’t want to be a landlord, Roofstock is an option.
This is a REIT and commercial real estate investment platform that claims to thoroughly vet each and every project by “…setting foot on every property and thoroughly scrutinizing each deal using proprietary due diligence principles and conservative financial models.” RealtyMogul says they have 180,000 investors participating in its projects.
This real estate crowdfunding resource allows even small investors to participate in million-dollar real estate projects. It permits investors to diversify among a variety of projects depending if they are focused on short or long-term returns. Fundrise features a “Starters Portfolio” where investors can take the platform for a test drive for 90 days and get a free upgrade should they decide to continue. The Starters Portfolio takes just a $500 investment. Fundrise promotes itself as being a “simple, low-cost real estate investment platform.”
ArborCrowd is the first real estate investment institution that launched its own crowdfunding platform, basically opening up its investment network to a new type of real estate investor. ArborCrowd has owned or financed over 400,000 properties and has over $2 billion in assets. They screen projects rigorously, sifting through an average of about 500 projects per year and selecting only seven. They were investing in real estate before crowdfunding was a thing.
This is a platform for serious real estate investors that give users the same direct and free access to commercial real estate companies pension funds and university endowment programs have. The platform says it is not a middleman, but instead facilitates direct access and allowing investors to build their own relationships with investment vehicles. RealCrowd vets its participating real estate companies to ensure each has at least “ten years of principal-level experience and at least $50 million in transactional history as principals.” This ensures investors a choice of proven, experienced solid and stable commercial real estate companies.
PeerStreet invests in debt that is backed with real estate to provide solid short-term returns. Investment durations average just six to 36 months and have average annualized returns of 6-9%. The company says it was started to give opportunities to average investors that were previously limited to a select few. Choose your own investments or allow PeerStreet to do it for you automatically.
This is a perfect platform for smaller real estate investors willing to invest in socially conscious projects. Much like traditional crowdfunding websites, investors can read the stories and missions of various projects and decide to invest in those that appeal to them. “Small Change” refers to both the social impact of its investments and the small amount of cash required to participate. Investors can invest as little as $500. The website offers some very interesting reading and intriguing investment opportunities.
GroundFloor works for both house flippers and real estate investors as well as for those interested in real estate investing. Investors can get good short term returns, and borrowers can get better than competitive rates on hard money loans. How small of an investor can you be and still get involved in GroundFloor? How about $10? This is the Everyman’s real estate investment platform.
Real estate crowdfunding platforms are not above experiencing bumps in the road. RealtyShares.com, for example, suddenly stopped taking on real estate investor in November of 2018, apparently after new venture capital funding fell through. It behooves any real estate investor to perform their due diligence before choosing the platform right for them.
If you would be interested in investing in real estate without having to fill vacancies, chase rents, or getting late-night maintenance phone calls from tenants, check out one of the above resources from our guide to the best real estate crowdfunding platforms.
And remember to check out Richr’s other articles if you are interested in what’s happening in the residential real estate market.