If you’re interested in real estate investing, you may feel put off by the amount of money it requires to do it through individual investment properties. Fortunately, real estate crowdfunding platforms like Fundrise and CrowdStreet have made it easy and affordable to learn how to invest money in the real estate market.
With both of these real estate platforms, you’ll get a lot more investment options, which can help you tailor your portfolio to your specific preferences and goals. But which platform is better: Fundrise vs. CrowdStreet? Here’s everything you need to know to decide for yourself.
- Fundrise vs. CrowdStreet: At a glance
- Fundrise: What it is and how it works
- CrowdStreet: What it is and how it works
- 3 important differences between Fundrise and CrowdStreet
- Fundrise vs. CrowdStreet: Which investment app should you choose?
- FAQs about Fundrise vs. CrowdStreet
- Bottom line on Fundrise vs. CrowdStreet
Fundrise vs. CrowdStreet: At a glance
Fundrise and CrowdStreet target two different types of real estate investors. Depending on your financial situation, how much you have to invest, and your investing goals, one may be a better fit for you than the other. Here’s a quick rundown:
|Management fees||.15% annual advisory fee; .85% annual management fee||None|
|Investment options||REITs and eFunds||REITs, individual properties, and custom portfolios|
|Account types available||
|Features||Varies based on your account level||Offers the choice between existing funds, custom funds, or individual deals; provides many resources, including online education, webinars, and events|
|Best for...||Real estate investors who don’t qualify as accredited investors; new investors who want to dip their toes into the real estate market or generate supplemental income||Accredited investors|
Fundrise: What it is and how it works
Fundrise is a real estate investment platform that provides investors with access to proprietary real estate investment trusts (eREITs) and eFunds that aren’t publicly available. The platform is available to anyone who can meet the minimum opening investment requirement, which is $500. Fundrise’s investment offerings include both commercial and residential properties.
Fundrise offers four account tiers: Starter, Core, Advanced, and Premium. Each one has a different minimum starting investment and provides access to different features:
- Starter: You can get on the lowest account level with a $500 opening investment. The Starter plan provides diversification across a minimum of two REITs and allows you to set up automatic investments of $100 or more per month. Plus, your dividends will be automatically reinvested. This plan is best if you’re new to real estate investing and want diversification across five to 10 projects.
- Core: With a starting investment of $1,000, you can get on the Core level, which provides you the ability to diversify across 40 to 80 real estate projects. Other features include all the benefits of the Starter plan plus customized plans based on your objectives, potential access to invest in the Fundrise iPO (Internet public offering), and three months of advisory fees waived for each friend you refer to the platform.
- Advanced: You can join this level with a beginning investment of $10,000. You’ll get all the perks of the Starter and Core accounts, as well as access to plus plans, which provide greater diversification and tax-advantaged funds. You’ll also get six months’ worth of advisory fees waived for each referral. This plan is good for you if you’re interested in diversification across more than 80 projects.
- Premium: Fundrise’s top account tier requires an investment minimum of $100,000 and provides a target diversification of more than 80 projects. You’ll get all the features of the Standard, Core, and Advanced plans, as well as priority access to the platform’s investment team and a full year of advisory fees waived for each person you refer.
- Several different plan options with low minimums for all kinds of investors
- Access to more features the more you invest
- Several account options
- Access to proprietary funds
- Charges annual fees that amount to 1% of your portfolio
- Limits features for smaller investors
- Fewer resources for investors than CrowdStreet
- No ability to invest in individual properties
CrowdStreet: What it is and how it works
CrowdStreet is the largest commercial real estate marketplace and is available only to accredited investors. To qualify as an accredited investor, you must have an annual income exceeding $200,000 (or $300,000 if married) and a net worth exceeding $1 million, excluding a primary residence. This limitation makes it impossible for many real estate investors to join and invest.
In addition to REITs, CrowdStreet also allows you to invest in individual real estate properties, similar to investing in an individual stock instead of a mutual fund. If you have at least $250,000, the platform can build a tailored investment portfolio based on your needs and goals. Keep in mind, though, that CrowdStreet offers only commercial property investments.
- Offers access to individual real estate deals
- No management fees
- Robust resources
- Several account options
- High investment requirements
- Available only to accredited investors
- Commercial properties only
3 important differences between Fundrise and CrowdStreet
As with any financial decision, it’s important to compare and contrast each option to determine the right fit for you. Here are the main ways Fundrise and CrowdStreet differ from each other.
If there were a prize for which platform is more accessible, Fundrise would win, hands down. The platform doesn’t require you to be an accredited investor to join, so it doesn’t matter what your income or net worth is. You just need to have enough cash to meet the minimum investment requirement.
With CrowdRise, you can join only if you meet the income and net worth requirements — which you’ll need to verify before you can become a member.
Fundrise charges advisory and management fees that amount to a 1% annual cost based on your portfolio’s value. That’s about average for a traditional managed investment fund. On the flip side, CrowdStreet doesn’t charge any fees to its participating investors.
3. Investment options
CrowdStreet provides more options to people who qualify, including REITs, custom portfolios, and individual deals. That said, you can invest only in commercial properties through the platform.
Although Fundrise doesn’t offer access to individual properties or custom-built real estate portfolios — you can invest via REITs and eFunds — you can invest in both residential and commercial properties.
Fundrise vs. CrowdStreet: Which investment app should you choose?
Neither of these real estate platforms is inherently better than the other, and both of them made our list of the best investment apps. So it’s important to know your situation and your goals to determine the right fit for you.
For most real estate investors, CrowdStreet likely won’t be an option because of its accredited investor requirement. What’s more, new investors and individuals with lower net worths who are just seeking to build some passive income will find Fundrise a lot more accessible.
If you qualify for both based on your income and net worth, you’ll want to consider a few different factors to determine which is the better fit for you.
First, which investment options are you interested in? If you want funds and individual deals, CrowdStreet is the better option. But if you prefer the diversification of a REIT and don’t want to invest a lot, Fundrise may be the better choice.
The other important factor to consider is cost. Fundrise will cost you more because of its advisory and management fees. So if you have enough cash to invest with CrowdStreet and want to maximize your return, avoiding fees will help you do that.
FAQs about Fundrise vs. CrowdStreet
Can you really make money with Fundrise?
As with any investment, investing in real estate doesn’t guarantee you’ll make money. And although past performance doesn’t guarantee future returns, Fundrise provides its track record on its website. Here are the company’s average annualized returns for the past several years:
- 2019: 9.47%
- 2018: 9.11%
- 2017: 11.44%
- 2016: 8.76%
- 2015: 12.42%
- 2014: 12.25%
One thing to keep in mind is that REITs and eFunds provide diversification, which you can’t get with individual real estate properties. A diversified portfolio improves your chances of avoiding negative returns, though it doesn’t guarantee them.
Is CrowdStreet a good investment?
Like Fundrise, CrowdStreet doesn’t provide any guarantees when it comes to returns. However, it provides some historical performance numbers based on deals that have sold since 2014 to give investors an idea of what they might expect:
- Internal rate of return: 23.1%, which is based on the expectation of future cash flow over the course of the holding period.
- Equity multiple: 1.51X, which represents the total cash distributions from an investment divided by the equity invested.
- Hold period: 2.2 years, which is the amount of time between the purchase of a deal and its sale.
CrowdStreet also shows its lowest return (a 95.8% loss), highest return (a 91.9% gain), and average return (14.2%) based on realized deals.
Is CrowdStreet for accredited investors only?
Yes. In order to join CrowdStreet, you must be an accredited investor. To qualify, you must have a net worth of at least $1 million, not including your primary residence, and also earn at least $200,000 annually (or $300,000 if you’re married). You’ll need to verify your status as an accredited investor before you can join Crowdstreet.
Which is better CrowdStreet vs. Fundrise?
Neither real estate investing platform is better than the other for all investors. As you compare Fundrise vs. CrowdStreet, consider your eligibility, funds available to invest, financial goals, and personal preferences.
For example, if you want to invest in office buildings, either platform could be good for you. But if you’re looking for residential rental properties, a Fundrise investment will be a better fit. Carefully review the features, resources, and terms of each option to determine which platform is the better choice for you and your situation.
Bottom line on Fundrise vs. CrowdStreet
If you’re wondering how to invest in real estate, using an online platform could be a good investment strategy for you. Real estate could be a way to create supplemental income and achieve long-term growth when it comes to your wealth.
For real estate investors of all levels, crowdfunded platforms can provide you with excellent access to REITs and other real estate investment opportunities. Both Fundrise and CrowdStreet are popular real estate investing options, but depending on your situation and goals, one may be better than the other. You should do your due diligence to make that decision for yourself while taking your personal risk tolerance and financial goals into account.