Real estate crowdfunding platforms have emerged as game-changers in the world of real estate investment. They have revolutionized the way individuals participate in the market in a bid to build their real estate portfolios.
With their innovative approach, these platforms have opened up new avenues for both seasoned real estate investors and newcomers, providing access to lucrative real estate opportunities that were once exclusive to wealthy individuals or institutional investors.
In this blog, we shall cover the top real estate investment platforms that are worth checking out in 2023.
The contents of this article are for educational purposes only. They are not intended to be a source of professional financial advice. You will find experts on financial planning and financial management here. More on disclaimers here.
Real estate crowdfunding is a method of raising funds from a large number of individuals to finance real estate projects. It involves using online platforms that connect investors with real estate developers or property owners.
Through these real estate crowdfunding sites and platforms, investors can contribute relatively small amounts of money and become shareholders or lenders in specific real estate ventures. In return, they may receive a share of the profits, rental income or interest payments generated by the property.
Real estate crowdfunding platforms are online platforms that facilitate the investment process for both real estate developers or property owners and individual investors. These platforms act as intermediaries, connecting these two parties and enabling them to transact and collaborate on real estate projects.
How they typically work is that:
It's important to note that specific procedures and terms can vary among different real estate crowdfunding platforms. Investors should carefully review the platform's offerings, as well as their terms and conditions before making any investment decisions. Be sure to speak to a financial advisor. or real estate professional before making any investments, so they can offer you some guidance.
Founded in 2018, AcreTrader is a real estate crowdfunding platform that is focused on investing in farmland. With the use of tech, the company provides investors with an easy way to invest in high quality farmland with the aim of supporting the business of farming.
So far, AcreTrader has invested in 131 properties and has raised a total of $320M+ in equity.
Arrived Homes is a crowdfunding platform that enables investors to easily invest in residential real estate. The goal of the company is to make the ownership of home and vacation rentals easier.
So far, the platform has funded 266+ properties and the value of property that has been funded through the platform stands at $97+ million.
CrowdStreet is a real estate crowdfunding platform that was established in 2013, and has its headquarters in Austin, Texas. The platform allows individual investors to easily access investment opportunities and also offers them the online tools needed to manage those investments.
So far, the platform has thousands of investors who have invested $4+ billion in more than 752 projects. The company is on a mission to deliver the best online real estate investing experience and make it easy for individual investors to diversify their portfolios.
DiversyFund is a real estate crowdfunding platform that enables investors to primarily invest in commercial and multifamily residential real estate. The platform offers its clients the necessary tools and information to enable them start investing in private market assets in order to build wealth and diversify their portfolios.
The platform provides non accredited investors with access to investment opportunities in real estate, allowing them to diversify their portfolios and earn income.
Lower minimum investment requirements. The platform is ideal for passive investors as all aspects of the investment process, including property acquisition, management and potential sale are handled by the company.
Real estate investments made through DiversyFund are illiquid during the 5 year investment term.
The platform offers its investors limited investment options. Investors have limited control over the specific properties chosen for investment or the management decisions made by DiversyFund.
Equity Multiple is a crowdfunding platform that helps investors build wealth through streamlined access to diverse real estate investment products. The platform offers investors 17% total net return and the total project value currently stands at $4.4+ billion.
Accredited investors only: Yes
Founded in 2015, First National Realty Partners is a company that majorly invests in necessity-based commercial real estate properties such as grocery-anchored shopping centers and premium multi-family housing. So far, the company has $2 billion in assets under management and a total of 2360+ investors on the platform.
Fundrise was founded in 2012 and the firm has its headquarters in Washington, DC. The company leverages technology to offer its investors high quality real estate investments at an affordable cost.
Currently, the firm manages $3+ billion of equity on behalf of more than 387,000+ individual investors.
Accredited investors only: Yes PeerStreet is an online marketplace that enables accredited investors invest in real estate debt. With the goal of building wealth and rebuilding the American neighbourhood, the platform gives private lenders access to capital which they then lend to real estate borrowers.
PeerStreet then collects monthly payments from the real estate borrowers and distributes a part of that monthly payment to the investors on the platform. As of 2022, the platform's average annual return was 6.49%.
RealtyMogul is a real estate crowdfunding platform that enables real estate investors to easily invest in commercial real estate and generate income. So far, the property value under the platform's portfolio stands at $5.9 billion.
Yieldstreet is a real estate crowdfunding site that empowers investors to grow their wealth outside the stock market by curating private market alternatives from top investment managers.
Investing in real estate crowdfunding platforms can have several benefits, but it's important to consider the potential drawbacks as well. Here are some pros and cons of investing in real estate crowdfunding platforms:
Access to a broader range of real estate opportunities . Real estate crowdfunding platforms provide access to a variety of investment opportunities that may not be easily accessible to individual investors. This allows you to diversify your real estate portfolio across different types of properties, locations and investment strategies.
Lower investment minimums . Real estate crowdfunding platforms often have lower investment minimums compared to traditional real estate investments. This allows investors to participate in real estate projects with smaller amounts of capital.
Passive investment . Investing through crowdfunding platforms allows you to be a passive investor. The platform handles property acquisition, management and other operational aspects, reducing the time and effort required on your part.
Potential for attractive returns . Real estate investments, if successful, can provide attractive returns through regular income distributions (such as rental income) and potential capital appreciation when the property is sold.
Transparency and information access . Crowdfunding platforms typically provide detailed information about the investment opportunities, including financial projections, property details and associated risks. This transparency helps investors make informed decisions.
Risk of loss . Real estate investments inherently involve risks, including the possibility of loss of capital. Property values can fluctuate, rental income may not meet expectations and unforeseen circumstances can impact the performance of the investment.
Lack of control . As a passive investor, you have limited control over the decision-making process and day-to-day operations of the property. You rely on the platform and project sponsors to make sound investment decisions and effectively manage the property.
Liquidity challenges . Real estate investments are typically illiquid, meaning it may be difficult to sell or exit your investment before the completion of the project or a designated holding period. Crowdfunding platforms may offer secondary markets, but liquidity can still be limited.
Platform risk . Investing through crowdfunding platforms exposes you to the risk associated with the platform itself. If the platform faces financial or operational difficulties, it could impact your investments and ability to access your funds. ** Regulatory considerations** . Real estate crowdfunding is subject to regulatory requirements, and the legal framework may vary across jurisdictions. It's important to understand the regulatory environment and ensure the platform you choose complies with applicable regulations.
To get started in real estate crowdfunding as an investor, follow these steps:
Step 1 : Research reputable real estate crowdfunding platforms that offer a variety of investment opportunities.
Step 2 : Evaluate the available investment options based on your investment goals and risk tolerance.
Step 3 : Conduct thorough due diligence on the platform and the specific investment opportunity, including the platform's track record and the project sponsor's expertise.
Step 4 : Register on the chosen real estate crowdfunding platform, providing the required identification and financial information.
Step 5 : Fund your account by depositing the desired amount of money.
Step 6 : Browse the available projects on the platform and carefully review their details, financial projections and associated risks.
Step 7 : Select an investment opportunity that aligns with your goals and preferences.
Step 8 : Make an investment by allocating your funds to the chosen project.
Step 9 : Monitor the progress of your investment and stay updated on project updates provided by the platform.
Step 10 : Reap the potential benefits, such as regular distributions, potential capital appreciation and the opportunity to diversify your real estate portfolio.
Before making any investment decisions, be sure to consult with a financial advisor and real estate professional, as well as do thorough research and due diligence. As an investor, carefully consider the risks involved in real estate crowdfunding before you jump into any opportunity.
Bay Street Capital Holdings is an independent, Black-owned financial company that provides independent investment advisory, wealth management and financial planning services to enhance total assets and income while efficiently managing overall risk and volatility.
The company's founder, William Huston, has been recognized as one of Investopedia's Top 100 Financial Advisors for 2022. Bay Street Capital Holdings was established to foster diversity and aid emerging fund managers and entrepreneurs. Additionally, the firm was a finalist in the Asset Manager for Corporate Social Responsibility (CSR) category, out of more than 900 firms in the US.
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https://www.investopedia.com/best-real-estate-crowdfunding-sites-5070790
https://www.nerdwallet.com/best/investing/real-estate-crowdfunding-platforms
https://www.benzinga.com/money/best-real-estate-crowdfunding-platforms
https://youngandtheinvested.com/best-real-estate-crowdfunding-sites-platforms/
https://sparkrental.com/real-estate-crowdfunding-investments/