Wallet Hacks

The Best Crowdfunding Real Estate Investing Sites for 2018

Real estate is a very well understood but often poorly executed way of becoming wealthy. If you've ever watched any of those HGTV shows about flipping houses, you know that it doesn't take a genius to do it but even geniuses can mess it up with bad execution.

If you're more of a buy and hold type, you're less likely to mess it up (at least with construction and renovations) but then you run into the ever constant drip of expenses like maintenance, repairs, finding tenants, 2AM plumber phone calls, cleaning, etc.

If you read a book about real estate investing, it all sounds so simple because it is simple. But as they say, the devil is the details.

That's why so many people invest in real estate investment trusts, commonly referred to as REITs. A REIT offers all of the exposure to real estate without any of the work. Vanguard's REIT Fund charges you only a 0.12% expense ratio (Admiral Shares, $10,000 minimum, or the ETF version) to give you exposure to a variety of commercial real estate companies. That's only $12 on every $10,000 invested!

What if you don't want to own a fund that just invests in storage facilities, office parks, and malls? Until recently, you were out of luck. You could try to find a real estate syndicate in your area but that's not without its own risks.

The best option for you is a crowdfunding real estate investing site.

RealtyShares

RealtyShares is the first crowdfunding real estate investing site I used (I have invested in RealtyShares deals) and they've over 1,000 deals valued at over $700 million.

They have a mixture of equity and debt deals, including NNN retail (debt) deals, with close to a dozen deals open at any one time. They invest in everything from retail locations to malls to industrial parks to single and multi-family structures. They will often pre-fund a deal and then offer it up to investors, which limits how often a deal may fall through.

The minimum investments vary with the deal type and size. It seems like they're trying to limit the total number of investors in each deal. The absolute minimum is $5,000, which you will see on deals under $1mm.

You can read our deeper review of RealtyShares and form your own opinion.

For a limited time, readers of Wallet Hacks can get a $100 bonus with your first investment when you use the code PARTNER100.

Learn more about RealtyShares
(This is only for accredited investors only)

Fundrise

Fundrise is one of the best crowdfunding real estate investing platforms for non-accredited investors because they offer a package of their individual investments in a vehicle they call an eREIT. Being an accredited investor is usually one of the biggest roadblocks to investing in a real estate platform, Fundrise offers an alternative for those who don't meet that high bar.

The eREITs follow a theme, spelled out in their documents, and they're like regular REITs except the minimum is just $1,000. Unlike regular REITs, which trade on the open market or once a day in the case of a fund, you can only redeem your shares quarterly. They're more liquid than a syndicate, less liquid than a mutual fund.

We have a full review of Fundrise.

Learn more about Fundrise
(This is for both accredited and non-accredited investors)

PeerStreet

If you're familiar with LendingClub, PeerStreet is like the LendingClub of the crowdfunding real estate investing world. It's a marketplace of just loans (debt deals only) secured by the underlying real estate asset.

They focus on shorter-term loans conservative loans, they stick with a term of 6-24 months and loan-to-value ratios of 75% or less. There are servicing fees on each loan around 0.25%-1.00% with a minimum of $1,000.

Since these are direct investments, you need to be an accredited investor to take advantage of these deals. We have a Peerstreet review that goes into greater detail.

Learn more about PeerStreet
(This is only for accredited investors only)

EquityMultiple

Equity Multiple is one of the newer entrants into the crowdfunding real estate investing marketplace. They offer debt and equity investments that exclusively focuses on institutional commercial real estate. They also have syndicate loans and they're backed by an existing national real estate advisory firm (Mission Capital), which helps with the pipeline of deals.

Minimum is $5,000 and the fee structure is designed to align their interests with you, the investor, and based on the type of investment. There's typically a 0.5% annual fee, to cover administrative costs, plus 10% of the profits after you've received all of your initial investment back. In preferred equity and debt deals, they also take a servicing fee in a “spread” between interest rate charged to the borrower and what is paid out to you. Finally, in all deals, they will collect a portion from the total amount raised. This fee structure is typical, you have to review specific deal terms to know the specific numbers in each.

Learn more about EquityMultiple
(This is only for accredited investors only)

RealtyMogul

RealtyMogul launched in 2013 and offers accredited and non-accredited investors a way to invest in commercial real estate. Accredited investors can invest in specific deals while non-accredited investors can contribute to their MogulREITs. They don't deal with any residential deals, they look to invest in targeted commercial real estate deals that the average investor won't have access to.

Whereas the larger REITs focus on large corporations like Simon Property Group (mall owner/operator) and Public Storage (huge storage facility operator), RealtyMogul looks to invest in apartment communities, retail centers, and Class A office buildings.

The minimum investment size for individual projects is $5,000 but for their REIT, MogulREIT, you can get involved for as little as $1,000.

Learn more about Fundrise
(This is for both accredited and non-accredited investors)

Patch of Land

Patch of Land is a peer-to-peer real estate lending marketplace for accredited investors, similar to PeerStreet. They look to work with real estate developers who are improving existing real estate projects.

The minimum investment is $5,000.

Learn more about Patch of Land
(This is only for accredited investors only)

The Rest of the Pack

As more sites pop up, I will continue to take a look at them and how they are different. This section of the post will cover those sites that I haven't more deeply researched, email me if you want me to take a closer look at any single one.

Here are some of the other platforms with a brief word about each:

What have your experiences been so far with crowdfunded real estate investing sites?