Investing in real estate is a proven path to building wealth, but the high price of properties often poses a challenge for new investors. Fortunately, crowdfunding platforms like Fundrise have emerged, making commercial real estate investment accessible to almost anyone. If you’re considering real estate crowdfunding but Fundrise doesn’t quite resonate with you, there are several outstanding alternatives worth exploring. In this article, we’ll delve into these platforms to help you make an informed investment decision.
Understanding Accredited Investor Status
Before we dive into the alternatives, it’s crucial to determine if you qualify as an accredited investor. This distinction is important because certain platforms and investments are exclusively available to accredited investors. In the United States, to be considered an accredited investor, you need to meet specific criteria:
You must have an individual income of at least $200,000 per year for the past two years, or a joint income with your spouse of $300,000 or more. Additionally, there should be a reasonable expectation of maintaining the same income level during the current year.
Net Worth Requirement:
Your individual or joint net worth must be $1 million or more at the time of investment. However, it’s essential to note that your primary residence’s value cannot be included in the calculation of your net worth.
If you are a “knowledgeable employee” of a private fund, you may also qualify as an accredited investor.
Certificates, Credentials, or Designations:
Holding specific licenses or credentials such as Series 7, Series 82, or Series 65 can also grant you accredited investor status.
While proving your accredited investor status is not directly your responsibility, the investment vehicle or company you seek to invest in will typically require you to provide relevant information and documentation, such as financial statements, W2s, and tax reports.
Investing in real estate has long been a popular method for building wealth. However, the high price of properties can often deter new investors. Fortunately, crowdfunding platforms like Fundrise have made commercial real estate investment accessible to almost anyone. While Fundrise is a leading platform, there are several excellent alternatives worth considering. Let’s explore these alternatives and their key features to help you make an informed investment decision.
HappyNest is a newer real estate crowdfunding platform that offers a compelling alternative to Fundrise. Founded in 2017 by Jesse Prince, the platform aims to create opportunities for everyday investors to make money through crowdfunded real estate. While HappyNest may lack the extensive history and track record of Fundrise, it brings unique features to the table.
One standout feature of HappyNest is its accessibility. With a very low minimum investment of just $10 per month, almost anyone can start investing in real estate through the platform. This low entry point allows individuals to build their investments at their own pace, without any maximum caps. HappyNest believes in the potential of real estate investing, emphasizing that commercial real estate tends to be less volatile than the stock market and can provide a passive income stream.
Arrived is a relatively new platform that allows investors to own fractional shares of individual rental homes, offering a unique approach compared to Fundrise’s diversified real estate portfolio. With a low minimum investment of $100, Arrived provides an opportunity for investors to earn dividends based on the net income of each property. Although Arrived is still in the early stages, it anticipates additional returns from appreciation upon the sale of each property.
CrowdStreet is a well-established real estate crowdfunding platform that serves as an excellent alternative to Fundrise. Since its establishment in 2014, CrowdStreet has gained a reputation for its rigorous vetting process and emphasis on generating profitable returns for investors. However, it’s worth noting that only accredited investors can participate, and the minimum investment requirement is typically around $25,000.
One of the key advantages of CrowdStreet is its ability to thoroughly vet developers and conduct extensive background checks, increasing the likelihood of successful investments. The platform allows investors to choose individual properties or engage directly with project sponsors, providing valuable opportunities to address any concerns or obtain additional information.
Streitwise, operating since 2016, offers investors the chance to passively invest in a portfolio of income-generating properties. While Fundrise’s portfolio is more extensive and diverse, Streitwise focuses on a smaller number of properties. The platform is open to both non-accredited and accredited investors, but it does require a minimum investment of $5,000. Streitwise distinguishes itself with a transparent fee structure, charging a simple 3% upfront fee with no hidden costs.
Roofstock is another compelling alternative to Fundrise that focuses on single-family rental (SFR) properties. Acting as a marketplace, Roofstock allows investors to buy and sell fully occupied rental homes. One significant advantage of Roofstock is that the properties listed on the platform already have tenants in place, providing an immediate income stream for investors.
To ensure quality and compliance, Roofstock certifies all properties listed on its platform, rejecting those that do not meet their minimum standards. This attention to quality gives investors peace of mind when considering property purchases. Additionally, Roofstock offers the Roofstock One option for accredited investors.
With a minimum investment requirement of $5,000, Roofstock One allows investors to own a share of a portfolio of rental properties that are managed for them, providing a hands-free real estate investing experience.
Groundfloor stands out among the Fundrise alternatives by specializing in short-term real estate investments. This platform focuses on generating investments for property purchases and renovations, with the intention of flipping the properties for profit. What makes Groundfloor unique is its short-term loan structure, typically ranging from 6 to 12 months, providing investors with more liquidity and flexibility compared to longer-term commitments.
With a very low minimum investment of just $10, Groundfloor allows investors to participate in smaller capital investments, contributing to a diversified portfolio of real estate projects. Groundfloor’s average annual returns of 10% or more make it an appealing option for individuals seeking shorter investment horizons.
RealtyMogul is a reputable real estate crowdfunding platform that has been operating since 2012. Like Fundrise, it offers the opportunity for both accredited and non-accredited investors to passively invest in a portfolio of income-generating properties. However, RealtyMogul has a slightly higher minimum investment of $5,000 compared to Fundrise’s $10 minimum. The platform has facilitated investments in over 350 properties with a total value exceeding $2 billion, providing more than $100 million in returns to investors.
Cadre, operating since 2014, is another prominent Fundrise alternative that focuses on making commercial real estate accessible to a broader audience. While primarily catering to accredited investors, Cadre distinguishes itself through its selective approach and commitment to investing in high-growth markets. Through meticulous due diligence, Cadre identifies promising investment opportunities in various property types, including industrial properties, hotels, offices, and multi-family apartment buildings.
To enhance investor confidence, Cadre also invests its own funds into the properties it offers. With a historic realized net internal rate of return (IRR) of 27.6%, Cadre presents an enticing investment opportunity for individuals seeking potentially high returns.
DiversyFund specializes in investing in apartment buildings with over 100 units. Like Fundrise, it allows non-accredited investors to participate in a portfolio of properties. However, DiversyFund’s portfolio is not as extensive or diverse as Fundrise’s. With a minimum investment of $500, DiversyFund focuses on acquiring undervalued multi-family properties and generating rental income. The platform reinvests the income to finance improvements and aims to sell the properties for a profit, distributing the capital appreciation and dividends to investors.
For those seeking a more traditional approach to real estate investing, real estate investment trusts (REITs) offer a compelling alternative to Fundrise. REITs allow investors to include income-generating property in their portfolio without the need for direct property ownership.
One advantage of REITs is their liquidity. Publicly-traded REITs can be bought and sold just like stocks, providing investors with the flexibility to enter and exit positions as needed. This liquidity makes REITs an attractive option for those concerned about tying up their funds for an extended period.
When it comes to real estate investing, Fundrise is undoubtedly a top-notch platform with attractive investment opportunities. However, if Fundrise doesn’t align with your investment preferences or requirements, there are several exceptional alternatives worth considering.
Choosing the best Fundrise alternative entails considering factors such as minimum investment amounts, property types, income preferences, and investment timelines. These factors will guide you in finding the right real estate investing platform or product that matches your risk tolerance, investment goals, and personal preferences.
It’s crucial to review the complete terms and conditions of any alternative platform you’re considering to ensure you’re comfortable with the fee structure and investment duration. By doing so, you can make informed decisions and confidently invest in the best Fundrise alternative that suits your needs.