Fundrise vs. CrowdStreet: Real Estate Investing for Two Very Different People

Fundrise vs. CrowdStreet: At a glance

Real estate crowdfunding platforms like Fundrise and CrowdStreet¹ <p>CrowdStreet, Inc. (“CrowdStreet”) offers investment opportunities and financial services on its website. Broker dealer services provided in connection with an investment are offered through CrowdStreet Capital LLC (“CrowdStreet Capital”), a broker dealer registered with <a href="https://www.finra.org/#/">FINRA</a> and a member of <a href="https://www.sipc.org/">SIPC</a>.</p> <p>Investing in commercial real estate entails substantive risk. You should not invest unless you can sustain the risk of loss of capital, including the risk of total loss of capital. All investors should consider their individual factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. Direct and indirect purchase of real property involves significant risks, including without limitation market risks, risks related to the sale of land and risks specific to a given property, which could include the potential for property value loss, potential for foreclosure, changes in tax status and fees, and costs and expenses associated with management of such properties. All investors should consider risks specific to that given property prior to investing.</p> <p>We calculate IRR, or Internal Rate of Return, for individual realized deals based on the aggregate investor cash flows, utilizing the XIRR function in Microsoft Excel and with reference to the effective capital contribution dates of each individual investor as recorded in the CrowdStreet Management Console and the date of distribution as recorded in the CrowdStreet Management Console (which may vary from the actual date invested or the actual date the issuer made the distribution). The aggregate IRR of all realized deals is based on aggregated cash flows of individual realized deals, as described above, and similarly calculated utilizing the XIRR function. IRR figures listed on this page are net of the most onerous fees charged to clients of CrowdStreet Advisors, LLC, our registered investment advisor subsidiary; an investor’s actual IRR on a realized investment may differ. We utilize a consistent methodology for calculating returns. However, in most cases, the applicable issuing entity provides the distribution information used for our IRR calculations. While we take reasonable steps to verify this information, we cannot guarantee its accuracy. Please reference our website performance page for more information.</p> have made it easier to invest in real estate without requiring the amount of money needed to buy a property on your own.

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:

Minimum investment	$10	$25,000
Annual fees	0.15% advisory fee 0.85% to 1.85% management fee	CrowdStreet doesn't charge investors fees Sponsors may charge investors fees
Available assets	Multifamily properties Single-family properties Industrial properties Private equity in tech companies	Multifamily properties Single-family properties Industrial properties Business properties
Available account types	Individual accounts Joint accounts Entity accounts Trust accounts Individual retirement accounts	Individual accounts Joint accounts Entity accounts Trust accounts Individual retirement accounts
Investment accreditation	Not required	Required
Best for...	Real estate investors who don't qualify as accredited investors and new investors who want to dip their toes into the real estate market or generate supplemental passive income	Accredited investors who are willing to invest larger amounts of money and let them be illiquid for years
	Visit Fundrise Paid Non-Client Promotion FinanceBuzz doesn’t invest its money with this provider, but they are our referral partner. We get paid by them only if you click to them from our website and take a qualifying action (for example, opening an account.)	Visit Crowdstreet

When to go with Fundrise

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. It is a good choice to start investing if:

• You are new to real estate investing
• High investment minimums aren't your thing
• You have different investment goals

Let's explore these benefits a little further.

Best for new real estate investors

Fundrise is available to anyone. The platform also provides a wealth of educational resources and tools to help new investors understand the fundamentals of real estate investing, making it an attractive and accessible option for those looking to enter the market confidently and with ease.

Low investment minimums and predictable fees

The minimum opening investment requirement is only $10, though if you want to use your individual retirement account (IRA), you will need to invest at least $1,000. Using an IRA for your Fundrise investments allows you to take advantage of tax-deferred or tax-free growth.

Fundrise's investment offerings include multifamily, single-family, and industrial properties. It also offers private equity in tech companies.

It supports different investment goals

Fundrise offers three investment plans for different investment goals:

• The supplemental income plan: Aims to create a consistent income stream and focuses on assets that are expected to generate this type of stable cash flow.
• The balanced investing plan: Aims for high diversification and focuses relatively evenly on income and growth-oriented real estate assets.
• The long-term growth plan: Aims to pursue better overall returns over the long term and focuses on assets that have a high potential to appreciate in value.

Learn more in our Fundrise review.

When to go with CrowdStreet

CrowdStreet is a crowdfunding real estate marketplace that's available only to accredited investors. It is a good fit for you if:

• You are an accredited investor with over $25,000 to invest
• You are looking for access to high-quality commercial real estate projects
• Potentially want higher returns

Accredited investors

There are several ways to qualify as an accredited investor, including having an annual income of $200,000 or $300,000 if married or being a high-net-worth individual with $1 million or more, excluding a primary residence. This limitation means many real estate investors can't join or invest.

High-quality commercial real estate investments

CrowdStreet allows you to invest in REITs and individual real estate projects. If you invest at least $25,000, the platform can build a tailored investment portfolio based on your needs and goals. CrowdStreet offers various types of properties, including multifamily, single-family, industrial, and business properties.

Potentially higher returns

According to its site, CrowdStreet has had years of high returns, saying, "Total annual REIT returns have ranged from a high of 27.5 percent in 2010 at the beginning of the recovery to a slight 3.2 percent in 2013." While all real estate investing is risky with no guarantee of returns, typically investing in bigger projects, like senior citizen living centers, can result in higher returns than investing in rentals.

Learn more in our CrowdStreet review.

5 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.

1. Accessibility

Fundrise is more accessible than CrowdStreet. Fundrise 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, which is only $10.

With CrowdStreet, you can join only if you meet the accreditation requirement — which you'll need to verify before you can become a fully-active member. The minimum investment on the platform is $25,000.

Winner: Fundrise since it has a low investment minimum and no accreditation requirement.

2. Fees

Fundrise charges annual advisory and management fees that range between 1 and 2%. That's about average for a traditional managed investment fund.

On the flip side, CrowdStreet doesn't charge any fees to its participating investors. However, the sponsors of the deals you join may charge their own fees.

Winner: Tie. Some investors may prefer the clear fee structure of Fundrise, while others may prefer having no platform fees with CrowdStreet.

3. Investment options

Fundrise doesn't offer access to individual properties. You can invest via REITs and eFunds — you can join in both residential and commercial real estate investments.

CrowdStreet does provide more options to people who qualify, including REITs and individual deals. You can directly invest in residential and commercial properties on the platform.

Winner: CrowdStreet since it offers individual property deals.

4. Legal issues

Want to know how a company is doing? Do a quick search to see if there are any outstanding legal actions against them. This gives you better insight into how the company is run behind the scenes. As of publishing, CrowdStreet is facing legal complications as investors have alleged that funds were misappropriated in certain deals, leading to $63 million in losses with investments called Nightingale Properties.

Fundrise is not without their legal issues either, though not as concerning as CrowdStreet's. The U.S. Securities and Exchange Commission (SEC) charged Fundrise for paying content creators for undisclosed promotions, which is a violation of regulations requiring transparency in advertising.

Winner: Fundrise since legal issues aren't specific to their investment practices.

5. Holding period

Most real estate investments are often considered illiquid, meaning they cannot be easily converted into cash. Fundrise has grace built into their platform and will allow you to liquidate your investment for a 1% fee. CrowdStreet is not as generous, and you will have to wait for when your holding period (typically around three years) is up to access your money.

Winner: Fundrise for allowing a liquidate option.

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. Beginners and non-accredited investors who want to invest in real estate will find Fundrise a lot more accessible.

If you're an accredited investor and qualify for both platforms, you should consider a few different factors to determine which platform is the better fit for you.

For example, you should consider the investment options you're 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.

Another important factor to consider is the cost. Fundrise has a fixed rate for its advisory and management fees. These fees are similar to what you will find with financial advisors or robo-advisors. Although CrowdStreet doesn't charge platform fees, expect to pay fees based on the sponsor of the deal you join.

FAQs about Fundrise vs. CrowdStreet