Whether you’re looking to cut a seven-figure check or buy a small share of a building, more crowdfunding platforms are entering the world of real estate to fuel the next generation of investing.
Leveraging a law enacted in 2013, real estate crowdfunding tools have significantly grown in popularity with dozens of companies now in the space. A vehicle that pools users’ money, crowdfunding in real estate allows investors of all sizes buy parts of multifamily units, commercial property, or groups of single-family homes.
Crowdfunding also offers new or smaller real estate investors a variety of advantages.
In addition to offering transparency of prospective deals, crowdfunding generally mitigates risk as you can split your money into a variety of projects. Crowdfunding also helps alleviate concerns with vetting prospective deals, as the platform will typically conduct due diligence before presenting it to its users. And what’s possibly most attractive to new investors is the low barrier to entry, as some crowdfunding platforms let users start investing with as little as a $500.
“Crowdfunding works great for the investors as they get to sit back and relax as they watch their investment grow since it is a group of professionals manages the properties,” wrote Modest Money’s Jeremy Biberdorf. “With real estate crowdfunding emerging as an alternative, real estate investing is now possible for the common investor.”
Here are seven top real estate crowdfunding platforms as recently rated by U.S. News and World Report.
With a minimum investment of $25,000 for most deals, RealCrowd believes that “commercial real estate offers benefits to investors that no other investment class can.” RealCrowd’s mission is to transform the real estate crowdfunding industry by giving investors the same access to commercial real estate as large institutions, pension funds, and university endowments.
ArborCrowd
ArborCrowd operates under a differentiated 506(c) model rather than the regulation A+ model under which most real estate crowdfunding platforms fall. That allows it to maximize the value that direct investments in commercial real estate can provide to its investors. ArborCrowd’s 506(c) model means that it invests in one deal at a time, providing capital upfront to close a deal and subsequently syndicating equity positions to the crowd.
Headquartered in Atlanta, Groundfloor opens private capital markets to a broader base of both investors and real estate entrepreneurs. Open to non-accredited and accredited investors, Groundfloor crowdfunds investments into single- and multifamily properties that are fixed and flipped for a profit and typically generates returns of more than 10 percent, the company said.
With a $25,000 minimum investment, CrowdStreet investors can participate in equity and debt real estate funding. Based in Portland, Oregon, CrowdStreet is highly-selective with its deals, and only offers about 2 percent of them to its users. The company also offers commercial real estate investment options.
PeerStreet created a peer-to-peer marketplace for high-net-worth individuals that brings lenders and investors together. Based in El Segundo, California, PeerStreet originated a whopping $1 billion in debt-based financing during 2018. The banner year pushes PeerStreet past $2 billion total in real estate lending since its launch in 2013.
Geared toward socially-conscious, small investors, Pittsburgh-based Small Change offers investors opportunities that aim to make cities better places to live. After browsing investment opportunities, users can make investments as small as $500 and then track its progress.
Offering users commercial real estate deals for non-accredited and accredited investors, RealtyMogul provides minimum investments opportunities as low as $1,000. The company’s vetting is rigorous, as on average only 1 out of 1,000 projects are accepted and presented to users.
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