Real estate, while a familiar avenue to amass wealth, is often mishandled. Just by watching a single HGTV episode on house-flipping, it’s clear that it’s not about intelligence but proper execution.
While buy-and-hold investors have a slight edge, they’re still prone to numerous challenges: from maintenance to late-night emergency calls from plumbers.
Reading about real estate makes it seem straightforward. It is, but mastering it is a different ballgame. As the saying goes, it’s all in the details.
This complexity has driven many to opt for real estate investment trusts (REITs), especially since they provide a hands-off approach to the real estate world. For example, Vanguard’s REIT Fund charges a mere 0.12% expense ratio, granting you access to diverse commercial properties for just $12 per $10,000 invested.
But what if you’re interested in more niche areas like vacation homes or single-family residences? Traditional routes would often leave you stranded. Real estate syndicates might be an option, but they come with their share of risks.
Enter: Crowdfunding real estate platforms.
Summary of Leading Real Estate Crowdfunding Sites
- Fundrise: Focuses on eREIT (fund), minimum $10, open to all investors.
- Arrived: Specializes in single-family homes, minimum $100, open to all investors.
- Streitwise: Another eREIT (fund) option, minimum $5,000, open to all investors.
- AcreTrader: Great for low-cost investments in farmland, ranging between $3k-$10k, but only for accredited investors.
- HoneyBricks: Deals with tokenized commercial real estate. More details awaited, but meant for accredited investors.
- CrowdStreet: Focuses on commercial properties. The investment range is $25k-$100k, targeting accredited investors.
- Yieldstreet: Offers a variety of investment possibilities with a $2,500 minimum, open for all investors.
- RealtyMogul: Gives access either directly or through funds to commercial real estate, ranging from $1k-$5k, open to all investors.
- EquityMultiple: Centered around institutional commercial properties. The threshold is $5,000, and it’s open only to accredited investors.
- Groundfloor: Deals in short-term debt backed by real estate with a low entry point of just $10, accessible for all investors.
Highlights from selected platforms:
Fundrise allows non-accredited investors to dip their toes into real estate via their eREITs, which require as low as $10 to start.
Arrived lets you invest in rental properties with Arrived taking up the mantle of property management. The minimum stake is $100.
Yieldstreet covers not just real estate but a broader spectrum of assets. The minimum investment varies based on the asset class, but they currently offer a promotional bonus for new accounts.
Streitwise boasts about its 8.4% returns and straightforward fee structure, with a focus on clarity and transparency for its investors.
AcreTrader presents an opportunity to invest in the unique segment of farmlands. Their rigorous selection process ensures the quality of the deals on offer.
Platforms like HoneyBricks merge the world of real estate with cryptocurrencies, offering investments using both conventional and digital currencies.
For those eyeing commercial properties, CrowdStreet is a promising platform, while RealtyMogul provides more localized commercial real estate deals.
EquityMultiple has a more specialized focus on institutional commercial real estate, and Groundfloor offers short-term debt opportunities backed by real estate.
Upcoming Platforms:
There’s a wave of new entrants in this space, and while we’re still familiarizing ourselves with all of them, here are a few noteworthy mentions: Small Change, Fund That Flip, ArborCrowd, and Senior Living Fund.
Is Investing Through These Platforms a Good Idea?
If you’re on the fence about these emerging platforms, is it the right choice for you? We discussed this with Professor Ralph Lim, Associate Professor of Finance…
