3 Best Fundrise Alternatives

Looking for an alternative to Fundrise for real estate investment? We've narrowed down the best three options for you to consider.

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

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.

1. Arrived Homes

Arrived Homes allows both accredited and non-accredited investors to buy shares of cash-flowing rental properties in some of the top rental markets throughout the United States. With a minimum investment of just $100, investors can easily diversify their portfolios across multiple rental homes and receive dividends each quarter based on the rental income generated by each property.

The company handles all of the management headaches that go along with owning rental properties so investors can simply enjoy the best part; collecting passive income.

After a target hold period of 5-7 years, Arrived Homes will choose the best time to sell the property to realize the highest gains. Each investor will then receive their pro-rata share of the proceeds from the sale and their investment will be fully realized.

You can also read our full Arrived Homes Review.  

2. CrowdStreet

CrowdStreet offers you direct access to individual commercial real estate investment opportunities. Since its launch in 2014, the company has published over 521 offerings, 54 of which have now been fully realized. Better yet, $2.1 billion has been invested through the marketplace, with $240.4 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.

3. Groundfloor

Groundfloor is an alternative investment platform that has created a new way for retail investors to gain access to the real estate market; through loans secured by residential properties.

Groundfloor makes short-term high-yielding loans to real estate investors and home builders for the construction and renovation of residential properties throughout the United States. The company then securitizes and sells shares of the loans to individual investors with a minimum investment of only $10.

Investors on the Groundfloor platform receive the interest paid on the loan plus their principal when the loan is paid in full, typically within 6-12 months.

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 of 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 investing.  

• 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 a 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 result in out-of-pocket expenses for which you may not be prepared.

Get Your Foot on the Property Ladder Today

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.