Real estate crowdfunding has become a real estate investment wave of the future. Individual investors can now buy pieces of commercial real estate projects throughout the country that were once limited to high net worth/income individuals.
Many people live in today’s mega cities where the price point in real estate can be a huge barrier to entry for many. To come up with a $10’s-100’s of thousands of dollars can be daunting to many. An alternative investors should consider to gain exposure to real estate is real estate crowdfunding.
Real estate crowdfunding has become one of the most popular investing mechanisms since the JOBS Act was passed in 2012. Much like peer to peer lending, real estate crowdfunding as an investment has gotten attention for many of the same reasons.
Unlike P2P lending, there’s collateral with real estate crowdfunding. This is why I’m more bullish on real estate crowdfunding than P2P lending and not adding anymore to my P2P account(LendingClub). The borrowers can’t just runaway with your money and disappear because there’s an asset.
One of the problems with many of the sites is that you need to be an accredited investor to participate. Therefore, let me present to you the top real estate crowdfunding platforms for non-accredited investors.
What is Fundrise?
Fundrise is a crowdfunded real estate investing platform that was founded in 2012 by two brothers (Ben and Dan Miller) in Washington D.C. Their father, Herb Miller of Western Development Corporation, developed 20 million square feet of real estate in the Washington D.C. area. Fundrise’s first project was a $325,000 raise from 175 investors (minimum of just $100) in the H Street NE Corridor in D.C.
Today, you don’t invest directly in real estate but can instead invest in eREITs and eFunds. They are portfolios of private real estate located across the United States and focused on your investment goal. Some investments are designed for income, others are designed for equity growth, and the fund will be tailored to that goal in mind.
Crowdfunded real estate has gotten very popular lately because it allows you to diversify your risk. Fundrise is different from some other crowdfunded real estate marketplaces because you invest in funds, not directly into properties. This is also why you don’t need to be an accredited investor since you’re investing in a fund and not into a private placement.