23 Apr 3 Best Fundrise Alternatives • 2020 • Benzinga
For several years crowdfunding has provided entrepreneurs an easier way to obtain money without soliciting venture capital. This movement — many small contributors partnering together for a purposeful investment — has since stretched to the real estate market, where investors pool funds for real estate investments.
The raised capital can be used to purchase, develop or renovate a real estate holding with the aim for future transactions or use. And, thanks to the nature of crowdfunding, you can diversify your portfolio by investing in various properties through the low minimum investment requirements.
Best Fundrise Alternatives:
Best Fundrise Alternatives
If you’re already dabbing in real estate crowdfunding, then you might be invested with Fundrise, which has proven to be a great choice to get real estate investing exposure. What if you want more offerings, a different platform, better fees or simply want to learn how to invest in REITs? Here are some Fundrise alternatives you should consider.
DiversyFund is a fintech company that provides a no-middleman, no-broker fees platform for anyone looking to delve into the real estate investment trust (REIT) scene. For only $500, you can open an account with the company — even if you’re not an accredited investor.
The company offers its popular DiversyFund Growth REIT that’s SEC-regulated and builds its wealth by investing in cash-flowing apartment buildings. Getting started is incredibly simple: Create your free account, browse the current eligible investments, make your investment and monitor your investments through the DiversyFund dashboard.
DiversyFund also boasts a team of experts with more than 20 years of experience in real estate development, real estate law and stock trading. A vast collection of interactive investing articles is available if you need to add to your existing knowledge. You may address queries to customer support through the live chat option, email [email protected] or schedule a call.
You can also read our full DiversyFund review.
CrowdStreet offers you direct access to individual commercial real estate investment opportunities. Since its launch in 2014, the company has published over 409 offerings, 26 of which have now been fully realized. Better yet, $1.13 billion has been invested through the marketplace, with $120 million returned to the investors.
The CrowdStreet Marketplace offers 3 investment options: individual deals, diversified funds and vehicles and advisory services. All deals are reviewed by a team with over 60 years combined private-equity real estate experience. Its Investor Relations team is readily available to handle your questions and guide you through the investment process. The investment minimum for most of its offerings is $25,000 though some may be higher. The account creation process is easy, with the option to sign up with LinkedIn or Google.
Licensed real estate brokerage Roofstock offers an online marketplace where you can invest exclusively in single-family rental homes. Creating an investor profile is as simple as answering a few questions, after which you activate a customized dashboard and property recommendations based on your profile.
The Roofstock Marketplace offers 2 distinct listings for its investors: Roofstock Exclusive properties, which are listed directly from the seller and are exclusive to the marketplace and Roofstock Select, which are identified as homes with a strong investment potential. The company also allows you to invest through self-directed IRA or solo 401(k) plans.
Resource offerings are also abundant, with unlimited access to the Roofstock learning center, Roofstock Academy and Rooftalk webinar series to stay updated with the latest info. The Roofstock Guarantee allows you to receive a refund of your proceeds if you’re not satisfied with a purchase. Signing up is free, though you can expect a marketplace fee of $500 or 5% of the buying price — whichever is higher.
More on Real Estate Investing
Having real estate in your portfolio adds diversity to minimize your investment risk. There are numerous strategies to achieve this, including REITs — they are as passive as holding dividend paying real estate stocks. Others like purchasing and holding rental property for capital appreciation or cash flow need active involvement. But is real estate investing for you? Understanding the pros and cons will help you choose where to put your money.
Pros of Real Estate Investing
Portfolio diversification and cash flow are probably the best parts about real estate investing. Here are other reasons to venture into real estate investing:
- Reduced volatility: The real estate market doesn’t suffer the level of price fluctuations experienced by investment vehicles like stocks, which is often based on several operational and market adjustments. Real estate investing offers a more consistent return on investment (ROI).
- Ability to invest with other people’s money: Contrary to the purchase of bonds and stocks, a real estate investment can be financed with long-term, fixed-rate mortgages. The possibility of financing multiple properties with minimal cash outlay — and to get them generating income immediately — means that reliable ROI can be achieved quickly and consistently. For instance, you can purchase a $100,000 single-family rental and pay only 20% down plus closing costs. You’re simply leveraging other people’s money to build equity.
- Tax benefits: Real estate ownership offers you various tax-deductible expenses, including operational expenses, property taxes and mortgage interest. Property improvements, which are related to the investment value of a property, are deductible.
Cons of Real Estate Investing
There are no absolutes with real estate investing. Here are a few reasons why you should exercise caution when contemplating a move into real estate.
- Illiquid investing: When you put money into real estate, you’re taking a long-term view. There are only a few levers you can pull to get your money at your discretion.
- A steep learning curve: Without a background in real estate investing, you’ll need to start by familiarizing yourself with various financial, legal and commercial concepts. Learning is the way to position yourself in the best possible way to reduce risk.
- Carrying costs: The cost of ownership for property isn’t limited to your monthly mortgage payments. Property taxes, insurance, maintenance and management all add up and cut into your bottom line. Months between tenants results in out-of-pocket expenses for which you may not be prepared.
What if there’s a way to invest in real estate without having to worry about the hassles of property ownership? The stress of tenants can be a nightmare and the return on investment can be negative without the right strategy. Fortunately, real estate crowdfunding can take away these nightmares and open up real estate investing to the average investor. You can now access prevetted real estate investments that were previously unavailable outside of close-knit circles.
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