Real Estate Crowdfunding Sites for Non-Accredited Investors

There’s an adage in real estate… location, location, location.

I live in the DMV – Washington DC, Maryland, Virginia – and it’s an area where real estate is higher than average. It’s challenging to find investment properties and as someone who is neither experienced nor patient, it doesn’t make much sense for me to look to the local area for real estate investment opportunities. The savvier investors snatch them up before I can.

If I want to look outside this area, I’m at a disadvantage because I’m not where I’m not.

If you’re interested in investing and this sounds like a familiar problem, you’ve probably looked to real estate crowdfunding as an alternative. Why not rely on the expertise of others to do the research and you invest smaller amounts in areas that look appealing?

Real estate crowdfunding has become one of the most popular investing mechanisms in the last five or so years. Much like peer to peer lending, real estate crowdfunding as an investment has gotten attention for some of the same reasons.

One big difference (between P2P lending and real estate crowdfunding) is the borrower and the level of research conducted by the crowdfunding site. With real estate crowdfunding, you’re talking extensive due diligence by a top-notch group of individuals. They often fund the deals ahead of getting investors just to facilitate the closing. They need to do their homework or they could be left holding the bag. All an investor pays is a percentage based on assets invested and we receive a return that is comparable to real estate alternatives.

One of the big problems with many of the sites is that you need to be an accredited investor to participate. We have found a few options that offer investments that don’t require you to be an accredited investor. (not sure what that is? click here to skip to that and find out!)

Which real estate crowdfunding companies offer investments for non-accredited investors?

Fundrise

Fundrise

Fundrise is a passive real estate investment option that has a very low minimum ($500) and is very accessible. Fudnrise offers eREITs, their name for the REITs available only on their platform, which means that they’re available to non-accredited investors.

There are several eREITS but they invest in a mix of commercial assets and loans, collecting cash flow from interest payments, rents, and other profits from the properties. There are no transaction fees for buying into the eREITs but you do pay a 0.85% annual asset management fee.

Minimum $500.

See our Fundrise review for a more detailed look at the company and its offerings.

Learn more about Fundrise

Streitwise

Streitwise Logo

Streitwise is a non-public REIT that invests in institutional quality commercial properties and has been paying out 10% dividends since inception. They’ve invested in commercial office buildings (you can see some of their investments on the homepage) and they accessible to all level of investors.

$1,000 minimum.

You can see our full review of Streitwise here.

Learn more about Streitwise

RealtyMogul

RealtyMogul

RealtyMogul offers REITs that non-accredited investors can invest in. MogulREIT I is an online REIT that offers cash flow and equity appreciation with its investments in a mix of loans, equity and other “real estate related assets.”

They are open to investing in pretty much everything – “multi-family, office, industrial, self-storage, retail, medical office, and hospitality.” The only obvious omission is single-family homes. You can read our full review of RealtyMogul to learn more.

Minimum $1,000.

Learn more about RealtyMogul

Groundfloor

Groundfloor

Groundfloor has the absolute lowest minimum investment level of all the real estate crowdfunding sites – a mere $10. They claim a return of over 10% (on average) and they score their loans on a grading scale that offers anywhere from 5% to 25%. The loans themselves are short, just 6-12 months, and they say they only approve 5% of the loans they screen.

It feels very much like a peer to peer lending site except you have the underlying real estate as collateral on the loan. The other sites feel more like investments, since the total loan value is much bigger and the terms are longer, these feel shorter like the P2P space.

Minimum $10. Check out our review of Groundfloor to get more details.

Learn more about Groundfloor

CrowdStreet

Crowdstreet

Of all the crowdfunded real estate sites, I’m the least familiar CrowdStreet. They’re based in Portland, OR, and they focus on commercial real estate deals. I wanted to include them because they have an option for non-accredited investors willing to put in a minimum of $10,000.

Learn more about Crowdstreet

Minimum $10,000.

REITs

These are not technically real estate crowdfunding sites… but they get you what you are looking for in those sites – diversified real estate investment. Non-accredited investors have always been allowed to buy REITs. The rules behind REITs, and what is required for them to maintain that status, is that they own and operate real estate and distributed 90%+ of their taxable income as dividends to shareholders.

However, owning a REIT may not be what you’re looking for what you want to invest in real estate crowdfunding sites. Many of the publicly traded REITs invest heavily in commercial property. Very few are in the business of owning a large portfolio of single-family homes, for example.

One of the best Vanguard funds is the Vanguard REIT ETF (VNQ). It has an expense ratio of just 0.12% and it holds a lot of property companies, like Simon Property Group (malls) and Public Storage (storage). Their number one holding is the Vanguard Real Estate II Index Fund, which is itself a mutual fund that holds a variety of REITs.

Are You an Accredited Investor?

Most real estate crowdfunding sites require that you be an accredited investor (Rule 501 of Regulation D).

To be accredited, you must:

  • Have made $200,000 in annual income ($300,000 for joint investors) for the last two years with the expectation that you’ll earn the same or more this year, or,
  • Have a net worth over $1,000,000, individually or jointly, excluding their primary residence.

The requirement exists because the SEC wants to make sure that the folks who are investing in unregistered securities can afford to lose it. These deals are often called private placements and they don’t need to register with the SEC, so they don’t provide as much information as you’d expect from, say, a publicly-traded company. The accredited investor requirement assumes that someone who is accredited can do due diligence on their own.

For some investors, that bar might be too high. Or perhaps it’s the timing of it. You need that level of income for three years (two in the past plus the current year), perhaps that’s not possible. Either way, if you want to invest in real estate crowdfunded sites and you can’t an accredited investor, there are options.

The SEC adopted rules in 2015 that permitted companies to offer and sell securities through crowdfunding. It’s called Regulation Crowdfunding and you’re allowed to invest subject to certain investment limits. The rules also limit how much the issue can raise using the crowdfunding exemption ($20 million per 12 month period for Tier I or $50 million for Tier II). The limits are pretty restrictive so many crowdfunding platforms haven’t yet adopted it, but its time may be coming.

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Jim Wang

About Jim Wang

Jim Wang is a thirty-something father of three who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Personal Capital, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a few commercial properties and a farm in Illinois via AcreTrader.

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    • Jim Wang says

      If you’re accredited, my vote is RealtyShares in part because I’ve used them so I’m familiar with them. If I were starting off brand new, I’d join them all and then just look at the deals. In the end, it’s about the deals they are able to find and how attractive they are for your investment plan.

      If you’re not accredited, Fundrise is a great place to start. Once you have enough funds, if you want to get into commercial real estate then I’d probably keep it simple and look at a Vanguard REIT fund. They tend to hold things like malls, storage facilities, and things of that nature. The smaller “eREITs” tend to dabble in individual properties, which can be a little more interesting than a REIT fund that just holds other REITs.

  1. Bernz JP says

    Jim,
    I’m currently looking at a real estate crowdfunding company InvestaCrowd which is Singapore based. A friend of mine mentioned this to me when I was in Singapore last November. Have you looked at investing in Asia (Singapore and Hongkong)? Would like to hear your thoughts.

  2. Paul says

    I’m interested to see how all of this plays out. Crowdfunded RE feels like the Wild West right now – everyone chasing money to get to a sustainable scale. I’m not ready to jump in myself, but I really do like that these options fill in some of the continuum between doing nothing in residential RE (my plan right now) and owning units directly. Thanks for the overview – bookmarking for when I’m ready to dive in.

  3. Ally says

    Great post Jim! I’m not quite ready for RE crowdfunding bit yet, and was firmly on the traditional real estate/rental income investing path. Compared to index or dividend investing, rental income returns generally outweigh in terms of risks and returns (assuming well researched property, good market, monthly rent of at least 1% of the purchase price, moderate property appreciation). With those assumptions – you can generally yield ~6% a year on rental real estate (assuming half of your monthly rents go to pay the expenses). Other benefits include tax efficiency. Cons include a large upfront investment. But lately have been thinking – what about regular old REITs? VNQ’s yield is almost 5%. Lots of others out there with 9-10%. They are not tax efficient, but offer low up front investment, no need for additional leverage, generate roughly the same returns, spread the risk (if you get the REIT index), spare all the trouble of looking for a property, repairs, costs, etc. Now, if another housing bubble bursts – yes they will lose 70% of their value like last time, but you don’t really buy REITs for value, rather distributions – which will continue even if the bubble bursts. What am I missing here? The more I think about they more I become convinced that well researched/stable REITS are the way to go. Thoughts?

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