Different Types of Real Estate Crowdfunding Platforms

Are you interested in investing in real estate but don't have the capital to buy the property outright? Don't worry; there are many ways to get involved in real estate investing without having a ton of money.

One of the best is crowdfunding, which allows you to invest in residential and commercial properties through small investments. Real estate crowdfunding has been growing in popularity over the past few years.

There are many different types of real estate syndication crowdfunding platforms. Some quotes on real estate investing specialize in specific micro-unit property types. Others are more general and focus on expanding the platform so that people can use it to fund any real estate venture they're working on.

There are certain benefits to each platform, and some will be better suited to your situation than others. It is, therefore, essential to know what types of quotes for real estate investment are available to decide which one is best.

CrowdStreet

This crowdfunding platform connects property developers and investors in syndication real estate. Crowdstreet is for accredited investors with a view of having commercial real estate in their portfolios.

Another unique requirement in crowd real estate investing is for one to be a U.S. citizen. A green card holder on the platform may enjoy crowdfunded commercial real estate.

The sponsor sets the minimum investment that an individual can make. This investment varies depending on the available investment opportunities. Most projects and funds in the platform's property classes require a $25,000 investment.

As an investor, this platform requires you to perform your due diligence on the investments. This activity helps make sure any project you choose aligns with your portfolio—crowdfunding real estate investing charges a 0.5% to 2.5% fee on invested capital annually.

Features

Some real estate investor's quotes of the platform's features you should know include:

Investing guidance

Each project page contains a resources section with videos and articles offering instructions and quotes about real estate investing guidance on general investment topics.

Complex investments

Most of Crowdstreet's investment options are complex commercial real estate transactions. Investors should perform due diligence to ascertain that it is a suitable investment.

In-depth research

Its Investment Thesis feature provides Crowdstreet's outlook on various asset classes and insight into evaluating most deals. These instruments are helpful in a category many properties.

Pros

• CrowdStreet provides accessible commercial real estate deals.
• Crowdstreet's website is user-friendly, with an intelligent assistant bot that helps you class a property.
• Provides an income-earning opportunity

Cons

• The platform is only available to accredited investors only.
• Early withdrawals are not possible.
• Involved investments are highly illiquid.

DiversyFund

DiversyFund is best known for Growth Real Estate Investment Trust(REIT), focussing on multifamily investments for any investor. These REITs must register with the Securities and Exchange Commission and submit an annual audit.

Rather than brokering investors with specific projects, the company manages properties and owns them directly. For this reason, Diversyfund becomes both the sponsor and developer in the investment.

Investors invest as little as $500 and expect returns on their investment in 3 to 5 years. This investment platform allows you to monitor ongoing projects and infuse and gain access to them.

The company charges a developer fee of 2% to 8% on loan equity. The platform also has an expected annual rate of return of 17% to 18%, solely dependent on the investment made. Its total investor distributions stand at about $135 million.

It is best for

• Nonaccredited investors who seek diversity in their portfolios.
• Investors seeking a low-cost entry into real estate.
• Investors with no immediate need for a return on their investment.

Pros

• Offers access to the commercial real estate market.
• Nonaccredited investors are eligible.

Cons

• Applicable investments are highly illiquid.
• Early withdrawals are not permitted.

Fundrise

Founded in 2011, Fundrise is one of America's best real estate crowdsourcing platforms for beginners. Investors purchase Private commercial and residential. The investors then pool their assets through an investment platform.

It offers five different account levels, each with varying investments and returns, namely;

• Starter- requires a $10 minimum investment.
• Basic- with a $1000 minimum investment
• Core -$5000 minimum investment
• Advanced-$10,000 minimum investment
• Premium-$100,000 of investment

Fundrise employs a value investing strategy, putting money into properties and assets that appreciate value over time. Interested investors pay an advisory fee of about 0.15% and an asset management fee of 0.85%.

Many classes of property investing in real estate quote an annual rate of return of about 7.31% and 16.11%. Their total investor distributions reached at least $124 million, indicating growth.

How it works

Members of the Fundrise team are responsible for locating a diverse number of potential investment projects. Once you invest in these projects and your shares appreciate with time, you may earn dividends at a quarterly distribution rate. However, the payment of dividends is not always a guarantee.

Pros

• Allows for a low minimum investment.
• It is open to all investors if interested in real estate investing online.
• Their website is easily accessible, making investing in real estate online simple.

Cons

• The investment is illiquid.
• Involves complex investments that call for investor due diligence.

EquityMultiple

EquityMultiple is a commercial real estate investing platform. It provides real estate funding for investors with access to professionally managed projects. The company enables individuals to invest in real estate online. They also collect data and analytics for each property via the real estate investment app. The annual management fee ranges between 0.5 and 1.5 percent for those investing in real estate online.

What is equity multiple?

An equity multiple is a metric that calculates the total return on the initial investment in the real estate development process.

How it works

While aiming for high returns, EquityMultiple resolves to a traditional blend approach of online real estate investing and crowdfunding. Crowdfunded real estate utilizes the bottom-up approach. They work on behalf of investors to reduce possible risks while communicating with stockholders. This process is to achieve maximum returns.

Features

Some of the EquityMultiple quotes on investing in real estate include:

Accredited Investors

Individual investors are eligible to open commercial pref real estate investments, but they must be accredited to make real estate investments online with a preferred return.

High Minimum Investment

The minimum investment requirement starts at $5000. The most common figure is $10,000 if an investment passes through a self-directed IRA. These figures vary depending on the type of project.

Specialized investments

EquityMultiple offers a wide range of products such as preferred equity, 1031 exchanges, real estate investing apps, mezzanine debt, and senior debt. The main difference is primarily related to risk level and payment priority order.

Pros

• There is a possibility of earning high returns.
• Provides an easy-to-use platform
• Provides a real estate investment app allowing you to make real estate investments online.

Cons

• Available for accredited members only who make real estate online investments.
• Requires a high minimum investment by a real estate investor online.

RealtyMogul

RealtyMogul provides all investors with institutional-style commercial real estate deals online. The company stresses due diligence, scrutinizing each agreement. It also personally vets every potential property during research.

How It Works

The company utilizes a traditional growth technique suitable for investors looking to generate passive income from real estate investments. Such investors buy and hold properties such as apartment buildings and offices.

RealtyMogul also provides MogulREITs which are public, nontraded real estate investment trusts that offer growth and income.

Features

RealtyMogul has some exciting features worth looking at, which include:

Investments

RealtyMogul offers two REIT products, namely:

RealtyMogul Income REIT: It is a public and nontraded REIT that manages investments and a portfolio of commercial real estate investments.

RealtyMogul Apartment Growth REIT: Invests in preferred equity and joint investments in multifamily apartments paying dividends at a quarterly rate.

REIT buyback program

The company's investments are illiquid, but they provide a share buyback option. These option allows shareholders to sell their investments back to the company quarterly but at a reduced rate.

Open to all investors

Nonaccredited members have access to their REITs but can only invest 10% of their net worth or income.

Charged Fees

Each investment within an asset class is liable to a fee. Some of these fees include:

• A 1% annual fee of the total value of equity for the income REIT
• 1.25% of the total equity value for the Growth REIT.

Pros

• There is an emphasis on due diligence.
• The buyback option increases liquidity.

Cons

• Involves complex fees that vary with investments
• Holds long periods on investments

PeerStreet

The PeerStreet marketplace brings together lenders and accredited real estate investors to create top-quality real estate loans. Accredited PeerStreet investors can open PeerStreet Pocket accounts with a $1,000 initial deposit.

PeerStreet clients, like equities investors, choose which properties to fund and build customized real estate lending portfolios. You can diversify your portfolio using different lenders, asset classes, and investing in other locations.

How it Works

Investors provide capital to lenders who then lend to real estate borrowers. PeerStreet then collects the borrowers' monthly payments, with investors receiving a portion.

Features

Some of its features include:

Automated investing

Investors specify their investment criteria, then PeerStreet automatically allocates any uninvested capital to the loans that meet those criteria.

Accredited investors

PeerStreet offers its services on investing real estate online to any accredited and willing investor.

Transparency

PeerStreet is very open about its fees and the overall performance of its loan portfolio.

Charged Fees

The company charges roughly 1% on the loan equity with an annual rate of return of between 2% to 9%.

Investment Options

The platform mainly offers investment options in the field of real estate debt. Tangible assets cater for its loans.

Pros

• Opportunity to earn interest on uninvested capital.
• It is a diverse platform.
• Interest rates are low.

Cons

• Only accredited investors are eligible.
• Investment options only occur in debt.

Yieldstreet

Yieldstreet makes alternative investments that were previously only available to a small percentage of investors available to individual investors. Yieldstreet offers a variety of investment options based on your objectives and level of experience.

This real estate investment is online and includes marine projects, art, and commercial real estate. With the alternative investments, individuals earn extra income and grow wealth. The minimum investment required starts at $10,000.

How it Works

Yieldstreet crowdfunds the debt used to finance those investments and a variety of other deals. Yieldstreet launched the Prism Fund in August 2020, which is open to nonaccredited investors with a $500 minimum investment.

Features

Yieldstreet has some exciting features, which include:

Asset-based investments

All loans hold an asset as collateral which the company uses to recoup any defaulted loans.

Charged Fees

YieldStreet charges an annual management fee ranging from 0% to 2.5%. The company may also charge a listing fee in some cases.

Limited availability of investments

Each deal is available for a limited amount of time for investment. The agreements also come on a first-come-first-served basis leaving no assurances.

Most offerings are for accredited investors only.

Most of the deals are available for accredited members only who act as commercial real estate investors. Nonaccredited members have their prism fund for an initial investment fee of $500.

Pros

• Individuals can invest in privately structured deals.
• Investments carry collateral that offers a sense of security.
• Yieldstreet provides access to legal, commercial, and marine investments, among others.

Cons

• Investments made are highly illiquid.
• Only a few investment options available to nonaccredited individuals

Conclusion

As a real estate investor, you need to make sure that you diversify your portfolio. If there is a significant decline in real estate values, it could be devastating to your investment portfolio.

If you don't have an adequate amount of income coming in, staying afloat will be even more challenging. Making sure that you spread your assets out among different asset classes and investments is imperative by real estate investment crowdfunding.

By using crowdfund real estate platforms, you can ensure that you aren't putting all of your eggs into one basket. By spreading out your risk, you can rest assured that if one type of investment goes sour, another might still be bringing in a steady cash flow stream.

With crowdfunding platforms available, real estate investors can quickly raise capital for their projects without going through banks or other traditional lenders. While several crowdfunding platforms are available to real estate investors, some are better than others. This overview should help you find one that fits your investment needs.