For those curious about real estate investing, both Fundrise and RealtyMogul offer investment opportunities that don’t involve actually managing a property. Instead, they allow you to invest mainly in commercial real estate and get a return once the project has been completed.
But there are some major differences that make investing with each company an entirely different experience. Let’s take a look at these differences so you can see whether either option is a good fit for your investment goals.
RealtyMogul vs. Fundrise
Before investing money in any platform, consider the fees, account types, and other features. Here’s how RealtyMogul and Fundrise compare.
|Minimum investment||$5,000 for a REIT
$25,000+ for individual properties
|Management fees||Will vary depending on the REIT; a 1.0% to 1.25% asset management fee is common||0.15% annual advisor fee
+ 0.85% annual asset management fee
|Asset classes||REITs and individual properties||Managed portfolio of individual properties|
|Account types available||
|Distributions||IncomeREIT offers a 6.00% annual distribution paid monthly
Growth REIT offers a 4.5% annual distribution paid quarterly
|Some portfolios generate dividends quarterly|
|Best for...||Accredited investors with at least $5,000 to invest||Beginners looking for a managed real estate option|
|Visit RealtyMogul||Visit Fundrise
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How does RealtyMogul work?
RealtyMogul allows you to invest in two distinct ways: through REITs and individual properties, also known as private placements. REITs, or real estate investment trusts, are companies that own multiple income-producing real estate properties.
You can create your account in four steps and start browsing property options so you know exactly what you’re investing in. From there, you could start investing directly into those properties or pick between RealtyMogul’s Income REIT (MogulREIT I) or Growth REIT (MogulREIT II).
The Income REIT’s primary purpose is to provide a consistent cash flow to investors. It’s made up of different commercial properties and aims to provide monthly dividends, which are not guaranteed. The Growth REIT focuses on long-term growth rather than monthly income and is comprised of various multifamily apartment complexes. Its goal is to offer quarterly dividends.
To invest in individual properties, you’ll need to be an accredited investor, which comes with some pretty strict requirements (you don’t need to be accredited to invest in their REITs). You’ll need to have either earned income that exceeded $200,000 in each of the prior two years or have a net worth of more than $1 million.
Additionally, RealtyMogul has a $5,000 investment minimum for REITs. And that cost goes up with individual properties, with minimum investments between $25,000 to $50,000.
RealtyMogul also offers a 1031 exchange platform, which allows current real estate investors to potentially defer capital gains taxes.
To learn more about RealtyMogul’s offerings, read our full RealtyMogul review.
How does Fundrise work?
Fundrise is one of the more well-known real estate investing platforms, and one of the only ones that allows non-accredited investors to join in on the real estate game. This gives more investors the opportunity to take advantage of an investment option that used to be reserved for wealthier investors.
At sign-up, you’ll choose from one of Fundrise’s five plan options (Starter, Basic, Core, Advanced, or Premium) based on your investing goals, such as whether you’re looking for more growth or passive income. Here’s a quick rundown of the basics of each plan:
|Fees||0.15% annual fee + up to 0.85% in asset management fees||0.15% annual fee + up to 0.85% in asset management fees||0.15% annual fee + up to 0.85% in asset management fees||0.15% annual fee + up to 0.85% in asset management fees||0.15% annual fee + up to 0.85% in asset management fees|
|Customized portfolio option?||No||No||Yes||Yes||Yes|
|Access to specialized funds?||No||No||No||Yes||Yes|
Once you choose a plan and set up your account, Fundrise puts together a portfolio that matches your investment goals. If you have a Core account or higher, you can also choose to invest in funds directly rather than having Fundrise put together a portfolio for you. Your portfolio may include what it calls eREITs and eFunds.
Its eREITs and eFunds offer exposure to a variety of commercial real estate projects, including apartment buildings and single-family rental properties.
Fundrise boasts an average 5.42% return over the past five years for all investors and states it strictly vets all the investment properties it works with. Just make sure you’re willing to invest for at least five years, as that’s the only way to see maximum returns.
To learn more about Fundrise’s offerings, read our full Fundrise review.
What both platforms excel at
Both platforms are strong contenders in the real estate investing world, but they operate a bit differently. Here are a few of the things Fundrise and RealtyMogul have in common.
- Generally low fees: Although both platforms do charge fees, both keep them relatively low, especially in comparison to the cost of owning and maintaining a property yourself. Fundrise will charge an annual fee of 0.15% and adds on an asset management fee of up to 0.85%. RealtyMogul is more vague on its fee structure, which varies based on the type of investment, but you’ll often find an asset management fee that ranges from 1.00% - 1.25%.
- Good returns: Both platforms are open about the returns their clients could potentially earn. Although they don’t make any guarantees, they each have a history of providing healthy returns, often in the double digits. For example, RealtyMogul latest annual return on its Income REIT was 14.8%. In 2021, Fundrise clients saw returns of 22.99%.
- REITs are a driving force behind both platforms: Both Fundrise and RealtyMogul understand the value that REITs provide. They offer dividends, provide diversification, and have historically been a good option to hedge against inflation.
5 important differences between RealtyMogul and Fundrise
RealtyMogul and Fundrise have fundamental differences and will work for specific types of investors. In general, Fundrise caters more to beginner investors. RealtyMogul may work better for more experienced investors. There are five other major differences that set these two companies apart.
- Minimum investment requirement: Fundrise has substantially lower minimum requirements, depending on the plan you choose. It even has a low minimum investment starter option that requires just $10. RealtyMogul, on the other hand, has a $5,000 initial investment minimum for REITs and a $25,000+ minimum for individual properties.
- Independent investing choices vs. managed private real estate: RealtyMogul allows investors to hand-pick the properties they want to invest in. Fundrise, on the other hand, will put together an investment portfolio for you based on your goals and risk tolerance. Both of these are good options; it’s simply up to how you prefer to organize your portfolio.
- Accredited vs. non-accredited investor options: Perhaps the biggest difference between the two companies is in their investment requirements. Although you can invest in REITs through RealtyMogul without being accredited, to invest in individual properties, you have to be accredited. Fundrise doesn’t require investors to be accredited except for a few of its Premium offers.
- Plan options: Fundrise offers five different plans depending on the features you want and the minimum amount you want to invest. With this structure, you can grow as your investments start to grow and get services that better your investing experience. RealtyMogul focuses on offering specific investment options rather than plans, which may be preferable if you prefer more control over your investments.
- Mobile apps: Fundrise offers an easy-to-use app so you can see how your investments are performing. RealtyMogul doesn’t yet have an app, so you’ll need to be comfortable doing everything on your desktop.
Which platform should you choose?
Although RealtyMogul and Fundrise have similar offerings and provide investors with the same end goal, different types of investors will definitely appreciate one over the other.
Choose RealtyMogul if…
- You want the most control over your investments. RealtyMogul allows you to invest independently; it just provides the options. That means you’ll get to customize the project you’re working on, choosing only the ones that interest you. You will need to have a minimum of $25,000 to invest in individual properties, though, or $5,000 for a REIT. In other words, it’s geared more toward high-net-worth investors.
- You have more experience investing in real estate. With such high minimum investments, it’s best if you have at least some experience with real estate investing before going with RealtyMogul. Plus, if you’re interested in individual properties, you’ll need to be able to choose your own investments.
Choose Fundrise if…
- You’re not an accredited investor. RealtyMogul gives accredited investors the advantage, so if you don’t fall into that category, you’ll want to stick with Fundrise.
- You’re an absolute beginner. If you’ve never invested in real estate, Fundrise has the perfect plan for you, and you only have to spend $10 instead of $1,000 on your first investment. You could dip your toes in the water and see how you like using the platform and make a bigger commitment later.
- You’d like to grow with your investments. Fundrise offers five different plan levels, with minimum investments ranging from $10 to $100,000. That means, as you continue to grow your Fundrise portfolio, you can gain more premium features as you go along. More advanced features include customizable portfolios and access to the Investor Relations team.
What are the differences between Fundrise and ReatlyMogul?
Fundrise and RealtyMogul differ mostly in their investor requirements. To invest in individual properties through RealtyMogul, you’ll need to be an accredited investor, whereas you won’t need to be if you go through Fundrise. That being said, with RealtyMogul you get to choose the properties you invest in, whereas Fundrise creates a portfolio for you.
Is Fundrise a scam?
Fundrise is not a scam. Fundrise is a registered LLC and is accredited by the Better Business Bureau and scores a Better Business Bureau rating of A+.
Can you get rich from Fundrise?
There’s no guarantee that you’ll get rich if you do choose to invest with Fundrise. Nor is it likely that you’ll ever get rich quick from any one investment. Gaining wealth from investing often takes years of dedication and consistent contributions.
Fundrise has shown impressive returns over the years, with many of its clients seeing a return of over 20% in 2021, but this does not indicate future performance.
When it comes to Fundrise vs. RealtyMogul, it all depends on the experience you’re looking for. Overall, they both have a lot to offer potential real estate investors. New investors looking for a beginner-friendly experience will likely prefer Fundrise, which doesn’t require high minimum investments and also doesn’t require their investors to be accredited.
For more advanced investors, RealtyMogul provides an easy way to browse real estate options or offers REITs for those looking for a more low-key option. With RealtyMogul, however, you will need a more sizable minimum investment.
Both options have relatively low liquidity compared to stocks and other investments, which is something to keep in mind as you do your due diligence. That means you may pay a penalty if you choose to redeem or sell back your shares to the real estate platform.
As always, take the time to learn how to invest in real estate before diving into these real estate crowdfunding platforms, and keep in mind that, like the stock market, there are no guarantees when it comes to real estate investing. But one of these platforms could be a way to diversify your portfolio when you’re ready to expand beyond mutual funds and other more traditional investments.
- Invest in individual properties or REITs
- Over 212,000 investors have joined
- $3.1 billion worth of properties available
- Each property is thoroughly vetted