When it comes to real estate crowdfunding platforms, RealtyMogul and Fundrise are two of the biggest players in the industry. Both platforms allow investors to pool their money together to invest in a variety of real estate properties, from commercial buildings to residential homes. However, there are some key differences between the two that potential investors should be aware of.
Let's find out more about these two platforms before deciding which is better in the battle of RealtyMogul vs. Fundrise.
What is RealtyMogul?
RealtyMogul started with the understanding that wealthy investors were typically heavily allocated in real estate. They focused on passive income, and, therefore, their income didn’t correlate with the time they spent working. The founders of RealtyMogul wanted to help many investors grow their wealth through real estate investing and make a market that used to only be available to the wealthy.
Investors don’t have to be accredited to sign up for RealtyMogul. They open their account, fund it, and then they can select from a variety of real estate investment trusts (REITs) and individual properties. They pick their investments, so their capital isn’t allocated to them. RealtyMogul’s offerings are private REITs, meaning they are only accessible to RealtyMogul users.
RealtyMogul does have a steep minimum investment requirement compared to other real estate platforms. Users need to have $5,000 to start their account and begin investing, which may not be doable right away for every investor. It does charge low fees, with annual fees ranging between 1-1.25%, though other REIT fees may also be charged.
Pros
- A mix of REITs and individual properties
- Easy-to-use platform
- Low fees
Cons
- High minimum investment
What is Fundrise?
Fundrise aims to make real estate investing accessible and easy for all investors. Their hands-off model partnered with their low minimum investment fees makes it easy for beginner or passive investors to begin growing their wealth.
Investors can open a Fundrise account with as little as $10. While starting their account, they’ll answer questions about the finances and goals, which will help Fundrise create an investment strategy. Once the account is funded, Fundrise will take it from there. It will allocate your capital into a diverse portfolio of real estate eFunds and eREITS, depending on your account balance. It charges a 1% fee per year.
It’s important to note that Fundrise has a tier system, and your account features and investment options depend on how much money is in your account. The tiers are:
- Starter: $10 minimum
- Basic: $1,000 minimum
- Core: $5,000 minimum
- Advanced: $10,000 minimum
- Premium: $100,000 minimum
Only users that are in the Core tier, or have at least $5,000 in their account, can access Fundrise’s eREITs. Investors in the Starter or Basic tier can still access the eFunds, that are real estate focused.
Pros
- Low minimum investment
- Great for passive or beginner investors
- Low fees
Cons
- Need $5,000 to access eREITs
Comparing RealtyMogul and Fundrise for Real Estate Investing
There are many things to consider when selecting an investment platform, from investment opportunities to customer support. Here’s how RealtyMogul vs. Fundrise compares in these major categories.
Cost Structure
Both RealtyMogul and Fundrise boast low fees. RealtyMogul’s fees are typically 1-1.25% annually, though there may be fees associated with investing in specific REITs. This means the impact on returns is low, and you’ll still get the majority of your income without it being heavily reduced by fees.
Fundrise’s annual fees are even lower, capped at only 1%. For long-term investors, this means you’ll only pay about $10 per $1,000 invested. However, Fundrise can tack on other fees like liquidation fees when trying to exit an investment.
Minimum Investment Requirements
RealtyMoguls’ minimum investment is $5,000, which may not be possible for every investor. Fundrise is much more accessible, with a minimum investment of only $10. It’s important to note that while you can start building a portfolio with only $10, you won’t be able to access all of Fundrise’s investment opportunities until your account has $5,000 in it and you reach the Core tier.
With less than $5,000, investors can build a portfolio of eFunds. And once they reach that Core tier, they’ll have access to the eREITs.
Investment Opportunities
RealtyMogul has two types of investment opportunities: private REITs and individual properties. Investors can invest in REITs to get a diversified pool of real estate investment or participate in crowdfunding to purchase a particular property.
Fundrise does not offer investment in individual properties or crowdfunding. Instead, it offers eFunds, which are private funds that hold a variety of real estate investments within them. Investors in the Core tier or above can access eREITs.
Performance and Returns
Fundrise produced positive returns on average between 2017 and 2022. Out of those six years, it outperformed public REITs in four and the S&P 500 in two. RealtyMogul boasts an internal rate of return (IRR) of 15.1% across its platform.
User Experience and Support
RealtyMogul has an easy-to-find customer support page on its website that lists the emails and phone numbers of different departments. The addition of a phone number makes it easier for investors to get support for their accounts more quickly instead of waiting for an email response.
Fundrise does not list a phone number or an email on the “Contact Us” page. It includes a form to fill out, leaving users with only one point of contact. This can make it hard for users who would like immediate support.
User Interface and Platform Design
Both RealtyMogul and Fundrise have intuitive and easy-to-use platforms. RealtyMogul allows investors to see the performance of their investments as well as seek out new ones. They can filter the investments by type, IRR and status. However, RealtyMogul does not have an app, so it’s not easy for users to check their investments on their mobile devices.
Since Fundrise allocates capital for its investors, they don’t have to search through investments. Investors can, however, see the performance of their portfolio and their holdings. The mobile app allows them to check in on their portfolio anytime, anywhere.
Become a Real Estate Investor Today
Fundrise and RealtyMogul provide investors with high-quality real estate investments. However, the differences in model, minimum investment requirement and investment opportunities mean one may be better than the other for specific investors. For example, if you’re a beginner or a passive investor who wants to start with a small real estate portfolio, then Fundrise may be a good fit. However savvy investors who want to diversify a larger portion of their portfolio may prefer RealtyMogul’s variety of investments.
No matter what platform you choose, ensure that you can handle the associated risk of investing in real estate. It’s best practice to consider your goals, investment horizon and risk appetite before taking on any investments. If you need further assistance, contact your financial adviser for more personalized advice.
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Frequently Asked Questions
Is Realty Mogul better than Fundrise?
Whether RealtyMogul is better than Fundrise depends on individual investor preferences and financial goals. Investors who value a wider range of investment options, higher minimum investments, and more hands-on control may prefer RealtyMogul. On the other hand, investors looking for a more simplified and passive investing experience with lower minimum investments may find Fundrise to be a better fit.
Is it better to invest in REITs or Fundrise?
Investors should consider factors such as minimum investment requirements, fees, level of control, and potential returns when choosing between REITs and Fundrise. It may also be beneficial to diversify investments across both REITs and platforms like Fundrise to mitigate risk and maximize potential returns.
What is the minimum investment for RealtyMogul?
For individual property investments, the minimum investment is typically $5,000. On the other hand, if investors are interested in investing in RealtyMogul’s REITs, the minimum investment is typically $1,000.
***This is a testimonial in partnership with Fundrise. We earn a commission from partner links on Benzinga.com. All opinions are our own.
About Savannah Munholland
Savannah Munholland is a dynamic author and communications professional known for her captivating storytelling and expertise in public relations. With a passion for YA fiction, Savannah explores themes of sexuality and acceptance in her writing, resonating with diverse audiences worldwide. Alongside her literary pursuits, she excels in verbal and written communications, social media management, and customer service, showcasing her multifaceted talents. As a dedicated advocate for the LGBTQ+ community, Savannah’s work reflects her commitment to promoting inclusivity and representation. Whether crafting compelling narratives or spearheading PR campaigns, Savannah’s creativity and determination leave an indelible mark on every project she undertakes.
