Best Overall: Groundfloor
GROUNDFLOOR has an investment minimum of just $10. No other real estate crowdfunding platform has a minimum investment this low.
This low minimum makes Groundfloor an excellent investment option for non-accredited investors.
What I Like About Groundfloor
- Low Investment Minimum. Invest just $10.
- Zero Fees For Investors. Borrowers pay fees.
- Short Investment Timeline. Most loans range in duration from 6 to 12 months.
- Risk/Return Profile. Groundfloor loans range from A (lowest risk) with yields starting at 5% to G (highest risk) with a yield starting at 15%. There are investment options for investors with all types of risk appetites.
- Greater Control. You can choose the projects you want to fund and how much you want to invest in each project.
- Multiple Investment Options. Other crowdfunding platforms only offer a limited number of investment options at a given time.
What I Don’t Like About Groundfloor
- No Liquidity. Groundfloor does not offer an option to sell your position early. Given the short duration of the notes (6-12 months), it shouldn’t be a problem for most investors.
- Limited Investment Types. Loans are only for residential real estate investors. Other platforms offer commercial real estate, residential real estate, REIT investing, and 1031 property investments.
Best For Passive Income: RealtyMogul
The RealtyMogul Income REIT (Real Estate Investment Trust) is a public, non-traded REIT.
The REIT makes equity and debt investments in commercial real estate properties diversified by investment type, geography, and property type.
What I Like About RealtyMogul
- Consistent Income. The Income REIT has distributed 64 months of consecutive distributions with an annual distribution rate of 4.50%.
- Thorough Due Diligence. RealtyMogul has a thorough vetting process – to date, only 1.1% of opportunities have been funded.
- Limited Liquidity. If you invest in a RealtyMogul REIT, you can sell your shares back after at 100% of NAV after 3 years, otherwise, you have to only sell back at a discount.
- 98% if you held the investment for one year but less than two.
- 99% if you held the investment for two years but less than three.
- 100% if you held the investment for three years or more.
- 0% if you held the investment for less than a year.
What I Don’t Like About RealtyMogul
- High Minimum Investment. There is a minimum investment of $5,000, creating barriers to entry for some non-accredited investors.
- Restrictions for Non-Accredited Investors. RealtyMogul does not allow non-accredited investors to invest in individual properties, only in their REIT program.
Best For Commercial Real Estate: Streitwise
What I Like About Streitwise
- Same Investment Options For All Investors. Streitwise offers non-accredited and accredited investors the same investment options. Other platforms offer additional investment options or services for accredited investors.
- Given the same investment options are available, you can be confident you are being treated fairly.
- Transparent Fee Structure Streitwise is upfront about its fee structure. There are no hidden fees buried in its offering documents.
- Over $5 million skin-in-the-game. The founders have over $5million of their own money invested with Streitwise. This means there is a shared alignment between investors and shareholders.
What I Don’t Like About Streitwise
- High Minimum Investment Minimum $5,000 investment. This is a lot of money if you are just starting to learn about real estate crowdfunding.
- Limited Investment Options Streitwise only offers a commercial property REIT. There is no individual property or residential real estate options.
Accredited vs. Non-Accredited Investor
Accredited investors meet either the financial criteria or the professional criteria. If you do not meet any of these criteria, you are considered a non-accredited investor and are subject to more investment restrictions.
- Net worth over $1 million, excluding your primary residence (individually or with spouse or partner)
- Income over $200,000 (individually) or $300,000 (with spouse or partner) in each of the prior two years, and reasonably expects the same for the current year
- Investment professionals in good standing holding the general securities representative license (Series 7), the investment adviser representative license (Series 65), or the private securities offerings representative license (Series 82)
Should I Invest in Real Estate Crowdfunding?
Real Estate provides uncorrelated returns to the stock market and is widely considered a hedge against inflation.
Rents and property values tend to increase in conjunction with modest inflation.
Alternative assets have historically been out of reach for non-accredited investors.
However, many companies have arrived to fill that void
Real estate crowdfunding is becoming an increasingly important part of all investors’ asset allocation and should be considered if you are serious about investing.