Real estate crowdfunding has grown tremendously in recent years, providing opportunities for individual investors to invest in commercial and multifamily real estate developments with high returns. There are now hundreds of crowdfunding platforms for real estate investment, from small niche sites to large platforms managing hundreds of millions of dollars.
However, it is important to know that large deals with quite high minimum investments are generally not available on crowdfunding platforms, rather you need to invest in a real estate syndicate. To learn the difference between real estate syndication vs crowdfunding, click here. This article highlights some of the leading real estate crowdfunding platforms to help investors determine which platforms may best fit their individual investment needs and risk tolerance.
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Fundrise
Fundrise is a leading real estate crowdfunding platform that focuses on technology and financial innovation. They provide access to private real estate investments through REITs (real estate investment trusts) and eFunds which allow investors to diversify across different property types and regions.
A key attraction of Fundrise is that investors can start with a budget as low as $10. This makes it possible for individuals with modest amounts of capital to participate. They also have a simple quiz on their site to help match investors with the appropriate eREITs or eFunds based on financial goals, timeline, and risk tolerance.
Fundrise primarily invests in multifamily apartment buildings, single-family rentals, and commercial properties located in major metropolitan areas across the United States. Their sponsors and management team have decades of combined experience in real estate development, investing, and management.
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Crowdstreet
CrowdStreet is a real estate crowdfunding platform that provides investors access to institutional-grade commercial real estate investments. Their offerings are primarily in the commercial sectors of retail properties, office buildings, and multifamily apartment buildings.
A key strength of the CrowdStreet platform is the tools and resources they provide investors. They have a well-organized website that makes it easy to view active and past offerings, projected returns, and all relevant investment documents. Investors can sign documents and fund investments entirely online once they identify deals that match their preferences.
Historically, CrowdStreet catered mainly to accredited investors but they began offering investments to non-accredited investors starting in 2017. Their current offerings have a range of minimum investments from as low as $5,000 up to $50,000 for some institutional-level deals.
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Origin Investments
Origin Investments focuses on the ground-up development of stabilized multi-family properties. Their “Build-to-Core” investment strategy involves constructing apartment buildings and converting them into Class A properties that will produce long-term income for investors. This makes Origin a suitable option for accredited investors looking for a steady cash flow.
Origin purchases real estate directly rather than through REITs. They focus their investments on 11 major Sun Belt cities: Austin, Phoenix, Chicago, Dallas, Houston, Charlotte, Raleigh, Nashville, Denver, Orlando, and Atlanta. All of their multi-family projects are in these target markets.
Origin offers two investment funds: 1) The QOZ Fund which invests in Opportunity Zone-qualified projects to provide tax advantages and 2) The Income Plus Fund which focuses on stabilized multi-family properties that produce passive income. Origin claims to have had no realized losses to date, though they reserve the right to deny redemption requests. These funds are best suited for long-term buy-and-hold investors.
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PeerStreet
PeerStreet specializes in short-term lending for residential real estate, primarily single-family homes, townhomes, and storefront properties. They also occasionally offer loans for multi-family properties like condominium developments.
PeerStreet partners with major lenders to source loan opportunities and provide the crowdfunding platform to access investor capital. The platform is reported to have high levels of transparency and strong risk management.
PeerStreet is open to all investors with a relatively low minimum investment of $1,000. Their loans typically have terms between 6 to 36 months and target annual returns in the range of 6% to 9%. This makes PeerStreet a suitable option for beginner real estate investors.
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1031 Crowdfunding
1031 Crowdfunding offers investors access to a diversified range of commercial real estate investment opportunities. The majority of their offerings are in the retail, hotel, and self-storage sectors, though they also have some multi-family residential deals.
1031 Crowdfunding thoroughly evaluates all investments on the platform. Their management team has over 60 combined years of experience in real estate investing. To date, they have raised over $1.3 billion and facilitated over $2 billion in total real estate transactions.
What distinguishes 1031 Crowdfunding is its 1031 Insurance product which helps investors complete tax-deferred 1031 exchanges. 1031 Insurance guarantees that all exchange funds will be invested in a replacement property, avoiding capital gains taxes. This can help investors maximize their returns by keeping their exchange proceeds working for them.
