Are you looking for the best real estate crowdfunding platform? If you are wondering which one is the best between Fundrise and RealtyMogul, then this Fundrise vs. RealtyMogul review will help you decide.
Fundrise vs. RealtyMogul: What Real Estate Crowdfunding Platform is Best?
With the increased number of investing platforms available to investors, offering multiple unique features, deciding on the best platform can be challenging.
Since diversification plays a significant role in portfolio balancing, and investors try as much as possible to diversify, getting the right vehicle then is crucial. With real estate investing, I usually look into the numbers to derive my investment thesis. I build a free rental property Excel spreadsheet that can help you invest smarter.
In this article, we will look at Fundrise vs. RealtyMogul, and see which real estate crowdfunding platform is best for your investing plans.
Both platforms offer the investors an incredible opportunity to create serious wealth as they both use crowdsourcing as their principal pillar.
Crowdsourcing is a type of sourcing model where the companies or individuals acquire goods and services, (including finances and ideas) from a large and growing pool of internet users.
The two platforms allow the investors to invest in numerous pre-vetted deals just with a few thousand dollars and at the comfort of their homes.
I’ve been integrating my real estate assets into my Personal Capital portfolio, which is completely free to use. It helps me track my net worth and cash flow. For real estate investing, I only track my net worth building on my actual real estate assets.
They offer guidance on how to invest in commercial real estate even for non-accredited investors. To understand which platform is better than the other, let’s get in-depth details on each one of them.
Read our guide about real estate crowdfunding if you need to know more.
What is Fundrise?
Fundrise a leading real estate crowdfunding platform that is designed to allow average investors to get access to private real estate investment projects. Initially, only high-end investors could access such projects due to the high investment capital required.
Fundrise, under the new investing regulations, gives even the average income earner a chance to invest in such deals.
As an investor today, Fundrise gives you the power to invest both in residential, as well as commercial real estate.
Fundrise has an average investment of $5,000, with annual returns of between 10% to 14% according to the management report. If you desire to diversify in real estate, then Fundrise might be that solution for you.
How Does Fundrise Work?
As a crowdfunded real estate investing service, Fundrise targets to enable investors to invest in commercial real estate directly. The platform has created a market place that is fair and transparent to simplify the process of high quality residential and commercial real estate investing.
Investors can now pool their money into a single platform that helps them to purchase even the most top-quality properties.
The assets then produce returns or growth depending on the initial investment, which is then distributed to the investors. These earnings are distributed to the investors throughout the holding period of the investment.
The main aim of Fundrise is to bridge the gap between the developer and the investor. Traditionally, real estate was limited only to the wealthy or the high net worth investors who could directly access institutions that fund such deals.
With a low investment minimum of $500, Fundrise ranks among the best platforms that offer real estate crowdfunding for non-accredited investors. They offer an iOS app, which I believe is one of the best passive income apps out there.
Fundrise Investment Portfolio Options
With this portfolio, it is easier for anyone to invest in real estate as it allows you to invest with as little as $500. This option is the most common with new investors, and it offers a free upgrade if you want to upgrade to an advanced plan. The portfolio is a combination of 50% income and 50% growth-oriented holdings.
Fundrise helps you to invest in a diversified portfolio that consists of real estate projects distributed throughout the US.
The Fundrise team will identify, acquire, and manage these properties on your behalf, and you will receive the distribution of the earnings.
This is a portfolio that helps the investor to create a consistent passive income stream that investors realize through investing mainly in cash-flow generating real estate. Investors in this income strategy earn regular distributions that come from rent collections or interest payments.
These distributions are paid in the form of quarterly dividends based on the proportion of your contribution to the fund. This portfolio is primarily allocated towards debt real estate assets.
Balanced Investing Portfolio
Balanced Investing is the third portfolio that Fundrise offers. The plan helps the investors to grow wealth by investing in a blend of growth-oriented and cash-flowing real estate projects. In this portfolio, investors receive returns from dividends and appreciation as it combines both growth and income strategies.
The portfolio is distributed across equity and debt real estate assets.
Long-Term Growth Portfolio
Investors in this portfolio pursue higher overall returns as they primarily invest in potentially high-growth real estate. Here, you will earn through appreciation in the share value, and there are fewer dividends.
The plan is a growth-oriented strategy, with the portfolio primarily allocated towards equity real estate assets. This plan aims at buying properties, renovating them, and selling them later at a higher gain.
See Related: Top Real Estate Investing Terms
Fundrise Fees and Liquidity
Fundrise platform charges a 1% per year fees with no extra hidden charges or front load fee. Since Fundrise uses your funds to buy real estate, there is a 60-days waiting period before you can withdraw your funds.
They offer quarterly redemption periods during which you can access your funds.
What are Fundrise eREITs and eFunds?
Fundrise eREITs and eFunds are companies (limited liability) that hold the real estate investment projects in the investor’s Fundrise portfolio. Essentially, if you invest with Fundrise, you will be buying these companies’ shares, which allows you to diversify into multiple properties efficiently and at minimum costs.
An eREIT generates income for the investor’s portfolio through dividends which are earned from rent payments, or interest payments from real estate debt investments. An eFund, on the other hand, is a partnership formed by Fundrise, which is treated differently for taxation purposes and which also provides superior investment flexibility.
eFunds are built to help to avoid double taxation of the normal C-Corps. While eREITs are designed to generate income, eFunds, on the other hand, are focused towards growth.
See Related: How Much Should a Real Estate Investor Make
When looking at Fundrise vs. RealtyMogul, understanding the positives and negatives of each is essential. Here are some advantages of using Fundrise:
- Low minimum account balance of $500 for the Starter Portfolio.
- Allows access to the once-inaccessible private real estate investments by small retail investors.
- The REIT is less correlated to the general market since it’s a non-traded one.
- Allows you to choose an investment plan that you desire.
- It offers a diversified portfolio in real estate.
- The platform supports retirement accounts.
- Fundrise offers monthly redemption periods, which removes the urge for panic selling.
- 1% per year transparent fee.
- The platform provides a real alternative to stock market investing.
- Fundrise is 100% passive income investment.
Even with all these advantages, the platform also has a few drawbacks, which include:
- Unguaranteed liquidity, especially during a downturn.
- Distributions (dividends) are not always guaranteed.
- The platform doesn’t have an extensive investment history but instead offers a limited record of four years.
- The dividends taxes are on ordinary income rates instead of the capital gain rates.
What is RealtyMogul?
RealtyMogul is an online real estate crowdfunding platform through which investors can pool together funds to invest in multiple real estate projects. The platform brings together investors, borrowers, and real estate investment sponsors to build mutually friendly real estate investments.
The RealtyMogul platform offers many investment plans that consist of both residential and commercial real estate.
As compared to the traditional REIT, this platform provides a modern approach that aims to provide the investors with better real estate investing experience.
How Does RealtyMogul Work?
With this platform, the investors pool their funds together and purchase various real estate projects spread throughout the country. That is RealtyMogul allows users to buy different investment portfolios, including equity investments (in both residential and commercial real estate), and debt investment.
Although RealtyMogul offers various investment vehicles, some of the portfolios are available only to the accredited investors. The minimum account balance for one to invest with RealtyMogul is $1,000.
Deposits under $100,000 can be made directly through ACH transfers whereas amounts above $100,000 require a wire transfer.
RealtyMogul Investment Options
For non-accredited investors, they can invest in the following REITs:
This is a REIT (Real Estate Investment Trust) suit to create income and diversification through various real estate investments. The portfolio leans primarily towards debt, as well as debt-like securities. MOGULREIT I portfolio targets to protect, preserve, and grow the investors’ long-term investment as well as pay consistent and attractive cash distributions.
The platform is a public and non-traded REIT. Its primary focus is to generate monthly income for the investors by thoroughly appraising various investment opportunities to identify those that can support their distribution target.
To invest in MOGULREIT I, non-retirement accounts requires a minimum of $1,000 while retirement accounts require a minimum of $5,000.
For any account, the REIT has an annual fee of 3% and an average yearly return of 7.7% during its life. This investment plan is not just for accredited investors, but rather, it’s open for anyone. Also, it pays dividends to investors every month.
MOGULREIT II is a public and non-traded REIT whose aim is to realize capital appreciation over the long-term. The REIT targets to pay distributions to investors every quarter. So, this plan primarily invests in residential properties, especially apartment developments.
In essence, they buy and renovate properties to sell them at a higher gain in a later date. The minimum account balance needed for this investment option is $1,000.
Also, MOGULREIT II has an average distribution rate of 4.5% at a minimum investment of $5,000 for retirement accounts.
For accredited investors:
Individual Properties/Private Placements
This is the Real Estate Investment Trust for accredited investors. An annual income of $200,000 for single individuals (or $300,000 if married), or net worth of $1,000,000 is a must-have precondition for this option. The various private placements offerings differ slightly, with some having investment minimums and initial investment lock-up periods.
The primary investment objective for this portfolio option is long term appreciation in the capital and income over time.
Typically, investment periods range between 3 and seven years, while the minimum investments range from $15,000 – $50,000.
This is a 100% passive investment option that offers the ability to invest resources instantly. The investment plan excludes agents, requires no Escrow, and also charges zero closing costs.
With 1031 EXCHANGE option, you get flexible investment amounts ranging from $25,000 – $50,000,000 with monthly distributions.
Also, the investment option offers the benefit of deferred capital gains taxes when you sell your property and allows you to invest in multiple cash flowing properties.
Depending on investment type (e.g., equity or debt investments), Realty Mogul charges varying annual fees, which range between 0.30% to 0.50%.
Depending on the specific types of investments that you choose, you may incur a 3% legal fee.
- A minimum investment requirement of $1,000
- Accessible dashboard and experience.
- Large-scale real estate investments access for average investors.
- Based on the type of investment, investors receive monthly or quarterly distributions.
- Lastly, it offers investment opportunities, both for debt and equity real estate investments.
Realty Mogul Cons
- The non-traded REITs are not liquid and require long term periods.
- Some investment options are only for accredited investors, thus blocking unaccredited ones.
- Fees vary depending on the investment vehicle.
Summary Table of Fundrise & RealtyMogul
Here is a snapshot of both Fundrise vs RealtyMogul together to help you make a better decision.
Conclusion on Fundrise vs. RealtyMogul
Traditionally real estate investing was only for the rich folks in the society, a norm that these crowdfunded investing platforms have changed. I hope that this particular piece has helped you answer the question on Fundrise vs RealtyMogul, and which one is better for your investing.
Are you ready to get started with real estate crowdfunding?
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