Crowdfunding isn’t just for medical bills and small startups anymore.
Real estate crowdfunding websites are on everyone’s mind. But once you decide to invest in a crowdfunding website, you might feel bombarded by the number of options to choose from.
That’s where we come in.
We narrowed down all of the crowdfunding platforms to two choices and quickly reviewed how investors might use each one. (There’s a winner, but we won’t reveal that just yet).
Ready to start crowdfunding? Let’s go.
Why should you invest in real estate through crowdfunding?
Before we get into the differences between Fundrise and Realty Mogul, let’s look at the pros of investing in either platform. Crowdfunding is newly accessible to non-accredited investors and is quickly becoming the hottest place to put your money. Here's why:
Crowdfunding gives investors the ability to back individual projects that appeal to their values. Small Change, for example, is a real estate crowdfunding site that backs individual projects aiming to help the surrounding community.
Crowdfunding sites usually offer real estate investment trusts (REITs) with a collection of different real estate holdings. Investors may be able to take a look at these holdings, where they are located, and building progress. This is the next best thing if you cannot put up the minimum investment for individual projects.
It takes little to no money to sign up for a crowdfunding site - especially when you consider the price tags for physical real estate properties. There are websites that only need $5, although the typical minimum rests in the $1,000 range. Crowdfunding websites are easy to use; investors can sign up within minutes.
Investors with little money often feel that they have few options in the real estate game. They turn to the stock market. One look at the last few days of 2018 prove that stocks can result in big gains - or huge losses. Investors love real estate because even if the value of a property depreciates over time, it will still be worth something.
Real estate is a more stable market to invest in. A couple hundred dollars in real estate crowdfunding will get you farther than a couple hundred dollars in the stock market.
So we’ve convinced you to start browsing around and look at crowdfunding websites, have we? As you start to shop for different crowdfunding platforms, you will quickly recognize a king and queen of the game: Fundrise and Realty Mogul.
Fundrise and Realty Mogul: About The Top Crowdfunding Sites For Real Estate Investors
Fundrise and Realty Mogul are constantly battling it out for the prize of the top crowdfunding site. So which one is best for you? Read our reviews of each site to learn more about what they offer and what you can get out of investing in each site.
Quick Stats About Fundrise
Minimum investment requirement: $500
Offerings: eREITs and eFunds
Fees: 1% per year
Average Annualized Returns:
Fundrise is a great way for new investors to get to know real estate investments through REITs. The founders of Fundrise created the website with accessibility in mind. It’s not easy to find crowdfunding platforms that take a minimum of $500.
The website is not only easy to use - it’s very transparent for investors. Investors can see every holding in each REIT, where it is located, and how that holding contributes to their overall investment. They can also track specific milestones on each holding’s profile. Investors certainly can’t say they are left in the dark with Fundrise.
Before signing up, investors can also pick which eREITs or eFunds suit their interests. Do they want to invest in debt instruments or prefer equity? Are they looking for income or growth? Are they interested in a specific market? Fundrise caters to all of these answers with different options.
Website visitors can also check out some of Fundrise’s past holdings and their realized returns to get an idea of how Fundrise has performed in the past. From just a quick look, investors might get pretty excited by the idea of investing through Fundrise. Projects generated returns as high as 28%.
Does the transparency and ease of use offset the 1% annual fees? Some people say no and others warn that fees are higher than you might anticipate. Still, Fundrise offers a great way for new investors to understand how real estate crowdfunding works without the complications of buying into an REIT through the market.
Quick Stats About Realty Mogul
Minimum investment requirement: $1,000
Offerings: REITs, individual properties, 1031 exchanges
Returns: Monthly or quarterly
Fees: .3%-.5% per year
Very quickly, investors can see that Realty Mogul offers more portfolio options and lower fees than Fundrise. But do all of these factors come with higher returns?
Not so much. Fundrise tends to boast the highest returns for any crowdfunding site in the game right now. Keep in mind that Realty Mogul doesn’t stray far behind. Realty Mogul also offers investors the option to invest in individual properties and rake in individual returns.
Like Fundrise, Realty Mogul offers detailed information on the locations, purposes, and milestones associated with each holding. But admittedly, this information is not as easy to find.
Realty Mogul has more options for investing, but the $1,000 minimum only applies to REITs. Individual investments may require at least $5,000. If you are a non-accredited investor, you won’t have to worry about that price tag.
Investors without accreditations only have the following investment options:
- Mogul REIT I - A diverse mix of commercial real estate investments throughout the country. The Mogul REIT I boasts 8% annual distributions.
- Mogul REIT II - An REIT with multifamily apartment complexes throughout the country. Realty Mogul added this second REIT to their portfolio in September 2017. Since January 2018, the REIT has generated a 4.5% annualized return.
Realty Mogul carefully vets all potential holdings before they put together their REIT or back an individual investment. This vetting process helps to ensure investors that they will continue to see returns as they put their money into growth strategy through debt or equity instruments.
Overall, this is a great website for more seasoned investors who have a little more change in their pockets and want to take more control over their investments without buying any physical property. Investors have more options and can navigate through these options with an easy-to-use platform.
What’s the Verdict?
Both websites offer a transparent, accessible opportunity for non-accredited investors to put money into REITs. While Fundrise fees might raise eyebrows when put next to Realty Mogul’s, they are still pretty puny compared to the fees you might pay buying into a typical REIT. The annualized returns in Fundrise’s track record are pretty tempting. If you’re a first-time investor, we say go with Fundrise and dip your toes into the real estate crowdfunding pond.
Alternatives to Fundrise and Realty Mogul
Not sure if you are ready to invest quite yet? We understand. Investors should take the time to read each offering circular and know what they are getting into before they put their money in any real estate investment.
Remember to explore all the options, too. Even if you have as little as $5, you can still invest in real estate through crowdfunding and put yourself in the real estate game.
This article only covers Fundrise and Realty Mogul; investors can also put money into Rich Uncles and Groundfloor, among many other websites. If crowdfunding isn’t for you, we have a whole list of suggestions on how to invest in real estate with little or no money.
The opportunities are endless and can put you on a path toward long-term growth and financial success.