Gone are the days when you need a huge capital to invest in real estate. With the best real estate crowdfunding options listed here, you can invest a small amount and start building wealth right away.
Real estate is one of the easiest and most profitable ways to make extra money from home. The famous industrialist Andrew Carnegie said that 90% of all millionaires made their money through real estate.
With real estate, you don’t only get profits through property appreciation, but through rental income and tax benefits. However, it is a common notion that real estate money is only for people who can make substantial investments.
What if we tell you that you could use online commercial real estate crowdfunding platforms and start generating real estate income at only $500?
Read along to find out how to make extra money on the side in online real estate investment, along with the best real estate crowdfunding platforms to try out.
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What Is Online Real Estate Crowdfunding?
Online real estate crowdfunding makes it accessible for everyone to earn real estate profit, regardless of their investment amount.
Look at it this way. You want to buy a cake you can’t afford, so you bring in some of your friends and collect some money from each person. After you’ve bought the cake, everyone gets a piece.
In the same way, If someone wants to start a real estate project but lacks the money, they’d usually ask a sole investor for a huge investment. But, what if the sole investor can’t afford to back the project alone?
Instead of the conventional way, real estate crowdfunding programs fund the platform by asking a group of investors to pitch in. This creates a pool of investors contributing small amounts of money on a single project and receiving profits according to the amount they invest.
Besides the low starting investment, what makes this venture attractive is that non-accredited investors can join in as well.
Typically, commercial real estate crowdfunding is done online. Various business owners advertise their projects on social media networks to attract investors.
Similarly, you can find dedicated online platforms that let you participate in crowdfunding programs. But, check out the information provided below before you select the best real estate crowdfunding platform to start investing.
How Are Online Crowdfunding Platforms Different from REITs?
We know what you’re thinking. Online real estate crowdfunding sounds a bit like REITs, right? Yes, they’re more or less the same, but there’s a small difference that sets them apart.
REITs or real estate investment trusts own lots of properties like malls, rental properties, residential buildings, and hotels. The trust trades their stocks and mutual funds through brokerage, and investors get returns on their investments.
On the other hand, online real estate crowdfunding platforms let you access private REITs, without going through brokers. They have a higher risk factor than traditional REITs, but they also have potentially high returns.
Below, we’ve evaluated real estate crowdfunding opportunities by listing down their pros and cons. This way, you’ll get a clear representation of the venture before you start investing.
Real Estate Crowdfunding Pros and Cons
Whether you start investing with $50000 or $500, your hard-earned savings are valuable for you. That’s why you should conduct complete due diligence from your side before indulging in alternative real estate investment options.
Here are the pros and cons of commercial real estate crowdfunding so you can see whether the venture is right for you or not.
- Diversify your portfolio quickly by investing in several projects at one time.
- Minimalize the risk factor by distributing small investment amounts into multiple projects
- Crowdfunding opens up private real estate investment options for everyone, which were initially only open for accredited investors.
- Low minimum investment amounts.
- Crowdfunding lets you invest in multiple cities to avoid a negative ROI.
- You can earn easy passive income through crowdfunding.
- While most real estate investments require you to check the developments of the project yourself, here, a third party does it for you.
- You can simply reap the benefits and make money online.
- Relatively low monthly returns
- Crowdfunding investments are illiquid, so you cannot sell them for money if you need to.
- You have no control over the development of your investment properties.
Now that you’ve been through the real estate crowdfunding pros and cons, you probably know whether the venture is worth your time or not.
If you’re seriously considering stepping into commercial real estate crowdfunding, keeping all the aspects in mind, we’ve got you covered.
Here’s our list of the best real estate crowdfunding platforms where you can start investing today.
Best Real Estate Crowdfunding Platforms
Real estate crowdfunding is quickly gaining popularity as one of the easiest ways to earn money from home.
Due to their accessible nature and public demand, many websites are popping up on the internet, offering these easy investment options. However, if you don’t choose your crowdfunding site carefully, you can end up falling into a scam.
Even if you shortlist the best real estate crowdfunding platforms, you will find that each site has its own benefits and drawbacks. That’s why we’ve listed down our favorite online crowdfunding sites with their main features so you can figure out which one works for you.
Fundrise easily tops our list of the best real estate crowdfunding websites. It has a catchy interface and is easy to navigate, even for beginners, making it an ideal platform to start your investment journey.
Besides that, the platform welcomes unaccredited investors and lets you invest with as little as $500. Also, while other private crowdfunding intermediaries charge high fees from your investment returns, Fundrise only takes 1% of your earnings.
This way, you get to keep most of your profits. You can even reinvest your earnings on the platform and diversify your portfolio.
Furthermore, if you’re confused as a beginner about which investment option to choose from their vast list, Fundrise helps you out with that.
When you become a member, you can answer a short quiz on the platform. After that, it automatically analyzes your answers and picks out the investment option that fits your needs.
Crowdstreet is an accessible site for accredited investors looking for the best real estate crowdfunding site. The website gives new investors access to high-quality real estate investment options from the comfort of their homes.
However, the minimum investment limit is slightly higher on Crowdstreet than other platforms from its league. Here, you can only invest if you have a capital of at least $25000.
Nevertheless, the website charges a 2.5% service fees from your returns and offers about 11.5%-25% annual returns, depending on your investment amount. This means you can generate a steady passive income if you invest your savings with Crowdstreet.
Similarly, the platform is a reliable option to invest your savings. It has currently distributed more than $135 million in investment returns to its 101,000 investors in the US.
Additionally, it gives you a professionally-managed portfolio and helpful customer service so you can be sure your investment is in good hands.
If you wish to invest in rental properties, Roofstock is the best crowdfunding site for you. Founded back in 2014, the company brings an easy and innovative solution for beginning investors.
Despite being a comparatively young platform, the site has conducted transactions worth more than $1 billion to this date.
Currently, the minimum investment amount on Roofstock is $5000. It does seem like a lot of money, but you can own about one-tenth of a legit property by investing this amount.
The platform offers investment options in commercial, residential, and single-family properties. You can diversify your real estate investment portfolio by acquiring shares in multiple properties at once.
This not only helps you minimize your investment risks but lets you maximize your annual returns in the long run.
If you find real estate ‘flipping’ an exciting venture, you can get great investment opportunities of that nature through Groundfloor.
Property flipping is a profitable system where a platform provides loans for borrowers to purchase a run-down property, renovate it, and sell it further for a profit.
This means, all the loans you invest in from Groundfloor are backed by hard assets. These are tangible properties with the potential to bring high profits in the future.
All of the loans handed out by the platform are processed after thorough background scrutiny of the borrowers. This ensures the safety of their investor’s money.
The best part is, Groundfloor lets you invest in flipping properties for as low as $10. This is easily the best real estate crowdfunding site for those of you who don’t have a huge capital to invest.
Peerstreet is another online real estate platform that lets you make money online. Here, accredited investors can invest as little as $1000 and earn regular annual returns.
The website uses the investment from its investors to lend money to real estate borrowers. After that, the borrowers hand their monthly installments to the platform, and it pays its investors a share of these payments.
Peerstreet is one of the best real estate crowdfunding options when it comes to transparency. The company has no hidden charges and takes on a 1% service fee from your investment returns.
Besides that, it offers more than 12% annual returns on your investment, one of the highest figures in the online real estate marketplace.
Similarly, the platform lets you increase your earnings by diversifying your portfolio manually. If you choose to do so, the site reinvests your funds automatically as well.
Streitwise is a legit online investment platform for non-accredited investors looking for the best real estate crowdfunding sites.
You can start by purchasing property shares for only $10 per share. However, you have to buy at least 100 shares initially, making the minimum investment about $1000.
What we love about Streiwise is its highly transparent nature when it comes to dividends and investment returns. It displays the payment amounts and past investment options as well, so beginners can get a clear idea about the types of properties available on the platform.
On average, Streitwise pays around 10% annual returns to its investors. Besides that, they put each project they lend for through thorough scrutiny to safeguard their users’ investments.
With Streitwise, new investors can gain good market exposure and diversify their commercial and residential real estate portfolios. You can invest in multiple options ranging from regular cash returns to long-term equity appreciation to minimize investment risks and earn a passive income at the same time.
Diversyfund is a go-to platform for new investors looking to make money with online real estate. Apart from connecting investors with potential projects, the company acquires and manages the properties itself.
If you’re looking for platforms where you can keep all your investment returns without any hidden charges, Diversyfund is the best real estate crowdfunding site for you. The site does not charge any management or broker fee from its users.
You can start investing in their property options for as low as $500. The site has two options for beginners to choose from, the Diversyfund Growth REIT and the Diversyfund Series-A Round Funding.
The latter is restricted to accredited investors and requires a minimum investment of $2500, while the former is accessible for newbies.
Most importantly, the platform comes with a handy mobile app. Apart from surfing through the investment options on the web, you can get all the details of your investment on your smartphone whenever you need it.
However, Diversyfund has limited investment choices as compared to other platforms. So if you’re looking to diversify your portfolio, this is not the ideal site for you.
Wrapping up our guide to real estate investment online, one thing you should keep in mind is that it’s not as easy as it looks.
While it does not require managing, developing, and scrutinizing your investment property by yourself, it has other matters you’ll need to keep an eye on.
Yes, online real estate crowdfunding does make work easy for you. But, as an investor, you should conduct thorough due diligence initially, and keep following the progress of your investment and work on your portfolio to establish yourself in the real estate market.
To keep your investment safe, choose a platform that fits your needs from our list of the best real estate crowdfunding sites.
- Real Estate Crowdfunding Guide: What is it & How to Invest
- 10 Best Fundrise Alternatives for Real Estate Investing
- 10 Important Pros and Cons of Real Estate Investing