Investing in crowdfunding real estate platforms is becoming increasingly popular, and increasingly accessible, as more companies join the movement to offer real estate investments to the everyday investor. With so many companies emerging, it may seem like a daunting task to research them all. So, we’ve taken it upon ourselves to do a little research and provide this guide of several crowdfunding real estate companies to help you in the decision-making process.

~ Some of our articles may contain affiliate links. For more information, see our Disclosure Statement.

Researching Companies that Offer

Crowdfunding Real Estate Investments

Top 10 Crowdfunding Real Estate Investments

What is a Crowdfunding Real Estate Investment?

Before we start talking about which companies to consider investing in, it’s important to understand what a crowdfunding real estate investment is first.

Here are some related terms you should know:

  • Crowdfunding
    • In short, it’s the process of financing a business project or venture through public funding; the community collectively invests or donates small amounts of money to finance a very large capital investment.
  • REIT
    • ‘Real Estate Investment Trust’ – a company that owns, and most times operates, commercial income-producing real estate through a portfolio of several diversified properties.
  • Public non-traded offering
    • Public meaning open to public investors, and non-traded meaning not traded on any stock exchange. The REIT shares are instead sold through a private company (REIT), designed to thereby reduce or eliminate tax while providing returns on real estate.
  • Accredited Investor
    • An individual investor who has been granted a status which allows for investing in high dollar transactions following proof of high net worth and income; also includes banks, brokers, insurance companies and trusts. View a detailed definition on the SEC’s website. Click on “Rule 501.”
  • Cash Distributions
    • Payment to the investor (shareholder), usually in the form of a dividend, resulting from the cash flow of income producing properties in the REIT portfolio. (ie. tenant rents and leases)
  • Reinvested Distributions
    • Property produced income that has been reinvested in the REIT rather than paid out to the shareholders, usually in an effort to compound the return (increase capital gains) to all investors once the property is sold.
  • Illiquid
    • Not liquid. Your investment must remain invested for the expressed term. You cannot redeem your shares prior to the end of the term. If a REIT is illiquid, it will be clearly as such stated up front.
  • Repurchase Program or Redemption Plan
    • A program/plan designed to provide some flexibility in an otherwise illiquid investment. It is wise to know if a REIT provides a repurchase or redemption plan of any kind prior to making your investment, and what the rules are of the plan.

How crowdfunding real estate investing works

Crowdfunded Real Estate Platforms to Consider

The companies below are listed by lowest to highest initial investment amount needed to become an investor.

For this introduction post, we’ve included the minimum investment, the current average yield, and the main Pros and Cons.

For a detailed review on any of the following companies, click on the Title link provided for each.

Rich Uncles

Lowest Initial Investment: no minimum requirement

Current Average Yield: 6% and 7%

PROS:

  • Lowest Initial Investment available as there is no minimum requirement
  • 2 diversified REIT portfolios available
  • Share Repurchase Program available if you need to request repayment prior to the 3-year term

CONS:

  • Annualized returns lower than most other platforms
  • Fees are not disclosed on their website, and seem to vary greatly per review of the latest Prospectus.

DiversyFund

Lowest Initial Investment: $500

Current Average Yield: 17.6%

PROS:

  • Low Initial Investment currently available at $500
  • Higher than average annualized yield

CONS:

  • 5 year term with no early redemption plan, so you must commit to let your money sit for at least 5 years.
  • No option for cash dividends, as all returns are automatically reinvested.

Fundrise

Lowest Initial Investment: $500

Current Average Yield: 8.7% – 12.4%

PROS:

  • Low Initial Investment currently available at $500
  • 90 Day Satisfaction Period
  • Currently 4 REIT plans to choose from, each one very diversified.
  • Early Redemption Plan if you need to request repayment prior to 5 year term

CON:

  • Questionable transparency of fees, as some customer reviews state unexpected or hidden fees charged, when Fundrise only discloses 1% annually.

commercial real estate investing options

stREITwise

Lowest Initial Investment: $1,000

Current Average Yield: 10%

PROS:

  • Stockholder Redemption Plan, which allows for investors to sell back their shares prematurely should they need their investment money returned prior to the end of the 5+ year term.
  • Lowest account management fees with the most upfront and transparent fee structure.
  • Quarterly paid dividends which can be received by cash distribution, OR reinvested by opt-in.

CON:

  • The REIT that is currently available consists of only 2 properties.

Realty Mogul

Lowest Initial Investment: $5,000

Current Average Yield: 4.5% – 8% (2 different REITs)

PROS:

  • 2 different REITs available to choose from
  • Share Repurchase Program, which allows for investors to sell their shares prematurely should they need their investment money returned prior to the end of the minimum 3+ year term.

CONS:

  • $5,000 minimum initial investment
  • Currently lower average annualized returns than other crowdfunded real estate options.

CrowdStreet

Lowest Initial Investment: $25,000

Current Average Yield: Varies greatly due to the extensive range of offerings. Review independently.

PROS:

  • The most diversified online platform with hundreds of properties under management
  • The most diversified options for building a portfolio
  • Good historical returns and customer reviews.

CONS:

  • Accredited Investors Only with a minimum initial investment of $25,000. (In the past, they previously had a fund with a $5,000 initial investment)
  • Almost all investments are at least 5 years, with many estimated to have a term of 10 – 12 years or more without liquidity.

researching online real estate investments

What’s My TOP PICK Based on Current Data?

All things considered, my top pick today would be stREITwise.

With a low initial investment of $1000, regular historical dividends that you can take as cash or re-invest, an up-front fee structure, and a Stockholder Redemption Plan for unexpected early withdrawals, stREITwise offers a stable combination of features that instill trust in account holders.

No, 10% isn’t the highest return currently recorded, and their REIT isn’t the most diversified, but they are consistent, transparent, and growing. See our detailed stREITwise Review to learn more about stREITwise, and compare them to their competitors.

If you are just getting started in real estate investing, and are looking for the best ‘all-things-considered’ offering, then you may want to strongly consider adding stREITwise to your investment portfolio.


* Disclaimer – BYIO is not providing investment advice. BYIO is not promising a return on your investment. BYIO suggests you consult with your financial professional, or make sound judgment on your own, when debating investing in any crowdfunded real estate company, or any other online investment company. We’ll keep sharing what information we have, and we hope you make a lot of money!


RELATED: What is PeerStreet? (Review)

Why is PeerStreet not listed above? Because, it’s not a REIT. They approach the real estate investing game a bit differently. To learn more about PeerStreet, see our complete review and compare your real estate investing options.


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