Best Crowdfunded Real Estate Platforms For Accredited Investors
Real estate has been turning average people into millionaires for years. It is a tool that people have used to generate wealth for centuries.
Now, in the era of the internet and technology, there are more options than ever before for real estate investment. One of the newest opportunities is online crowdfunded real estate investing.
This is where people from all over pool their money together, and that money is used to back real estate projects. This could be an equity investment, where you are an owner in the property. Or, it could be a debt investment where you are simply providing financing for a developer.
We already covered the best real estate crowdfunding sites for non-accredited investors. Now, we will be going over the best options available right now for accredited investors looking to get in on this new investment opportunity.
First of all, let's identify what an accredited investor is.
The vast majority of these online real estate investment opportunities are available to accredited investors only.
Is this some elite "invite only" club? Not quite.
There are massive regulatory agencies out there called the SEC and FINRA that screen through investment opportunities out there. The aim of these agencies is to protect average investors. The problem is, it is impossible for them to screen every single investment opportunity out there.
In lieu of this regulation, some investment opportunities are only available to accredited investors. Since these investment opportunities are unregulated, they expect that the individual investor will perform his or her own due diligence.
As we will explain in a minute, these accredited investors are higher income or higher net worth clients. These regulatory agencies understand that this type of investor has greater risk tolerance. meaning they can more safely be involved with these unregulated investments.
Now don't fret! Most of these investments for accredited investors are totally legitimate. It is just important that you are doing your own research.
Income/Net Worth Requirements
In order to be an accredited investor, you must meet one of these two requirements:
- Your annual income must be $200,000 or more, or $300,000 for married couples
- Your net worth needs to exceed $1,000,000 and this is excluding the value of your primary residence
That being said, if you meet either of these requirements, you qualify as an accredited investor. That means you are able to invest in both accredited and non-accredited investment opportunities.
Coming in at #1 on our list is a commercial real estate investing platform called EQUITYMULTIPLE backed by a major real estate company known as Mission Capital.
Many of these platforms have a limited operating history and track record. This platform draws on the 17+ years of real estate experience of Mission Capital.
Through this platform, investors can invest directly into individual real estate projects. This means you can research each project and pick and choose what you want to invest in.
Since you are picking and choosing projects, this is a more active real estate investment. Other platforms instead have you invest in prebuilt portfolios of real estate.
Minimum Investment: $10,000
Investment Options: Equity, Preferred Equity, Syndicated Debt
Fees: 0.5-1% Annual + 10% Carry on Profit
Returns: Aim for 7-12% net APR for Debt, 6-12% cash on cash for Equity
This platform offers options for both accredited and non-accredited investors. In particular, we will be focusing on the private placements which are for accredited investors only.
Launched in 2013, RealtyMogul offers portfolio based investing through the Mogul REIT I and II or private placements, which are tailored to the specific needs of each individual investor. These are investments in individual properties, not portfolios of real estate.
These individual property investments often fall under the category of office, multi-family, mixed use, industrial and flex-space. The typical investment timeframe is 3 to 7 years with a minimum investment of $15,000 to $50,000.
Minimum Investment: $5,000 for REITs, $15k-50k for Private Placements
Investment Options: Mogul REIT I & II, Private Placements
Fees: 0.5-1% Annual, Private Placements vary
Returns: 4.5-7.7% for REITs, Private Placements vary
Unlike other platforms mentioned in this article, AcreTrader is offering you the opportunity to invest in farmland. Essentially, they take a piece of farmland and divide it up into individual shares. Then, those shares are sold to investors on the platform.
Investors potentially make money in one of two ways. The first is asset appreciation, when the land goes up in value while they own it. The second way is through rental income from the farmers. AcreTrader rents out the land, and you earn distributions from the rent collection.
Here is our full review of AcreTrader.
Each offering as an estimated ownership duration. This tells you how long you should expect to own the land before they sell it. While there are liquidity opportunities available during the investment, farmland should still be viewed as a long-term investment like any other real estate investment.
Minimum Investment: $5k-10k
Investment Options: Shares of Farmland
Fees: 0.75% Annual + Closing Fees
Returns: 11-12% average annual return (Farmland over the last 30 years)
Here's an interesting "alternative investment" platform that has completed over $1B in investments on their platform.
Yieldstreet is an investing site that specializes in less common investment avenues. This, of course, includes crowdfunded real estate. They offer investments in portfolios of real estate, primarily in urban areas. On the site, we saw a portfolio of single family homes in Florida for example.
However, they also offer a number of other less common investments that you might not see elsewhere. This includes investments in private art portfolios, marine tankers and commercial or personal financing. The idea behind this is that these different asset classes will have less correlation with the overall stock market.
Every offering is different on this platform. In most cases, the minimum investment is $5,000 and the fee is 2%. However, this may vary based on the investment.
One of the benefits of this site is that they have a huge variety of offerings with different time horizons. Some of their short term financing offerings are for as little as 6 months while some of the real estate portfolios have a 5 year investment term. This is great for those looking for different time horizons for investments.
Here's a unique real estate investing platform that specializes in one category of real estate. That is, single family.
Unlike other platforms that specialize in mixed use, multi family or commercial real estate, Roofstock only offers single family properties for sale. They offer a marketplace for both buyers and sellers who are looking to get in on the single family rental market.
A lot of people like investing in single family properties because often time you attract families as tenants. These tend to be long term tenants who don't want to move around.
Roofstock opens you up to a variety of vetted single family homes you can invest in. This gives you exposure to many different real estate markets outside of your local area.
These single family investments require as little as 20% down and are open to both accredited and non-accredited investors. However, Roofstock also offers something called Roofstock One which is open to accredited investors only.
This is a portfolio based investment option where you buy shares of an individual rental home, rather than buying the entire property yourself. Multiple investors will own shares of the same property, and the best part is the properties are fully managed by Roofstock.
The minimum investment is $5,000.
Roofstock One makes it easy to invest in real estate markets across the US. You can also spread your money across many different properties thanks to the low minimum.
This platform, launched in 2014, offers a variety of different investment options for accredited investors. You can invest directly in individual real estate deals. Or, you can invest in a real estate portfolio of dozens or properties. The final option is to have your money fully managed by CrowdStreet, where they build and manage a portfolio based on your goals and objectives.
The minimum investment for the portfolio based investing is $10,000. For the direct investing approach, the minimum is much higher ranging from $25,000 to $50,000. The fully managed portfolio option has a minimum investment of $250,000.
One of the features unique to CrowdStreet is the fee structure. Investors do not pay any fees. Instead, the deal sponsors pay all of the fees.
This platform merges crowdfunded real estate investing with peer to peer lending. Essentially, they provide a marketplace where accredited investors can invest in debt real estate deals.
Real estate developers looking for financing come to PeerStreet looking for a loan. Then, individual investors buy shares of that loan through the marketplace. Most of these loans are shorter term, with a range of 6 to 24 months.
The minimum investment is only $1,000 but due to the risks associated with peer to peer lending, this platform is for accredited investors only. The expected annual return is 6 to 12% and that is based on the risk/reward spread of each loan you back on the platform.
This platform is definitely not for beginners, and you should have deep real estate knowledge and experience. Many of the loans on this site are specialty loans, like rehab loans. These are less common, higher risk/return loans.
PeerStreet applies a servicing fee to each loan being offered on the platform. This fee ranges from 0.25% to 1%.
8. Patch of Land
This is another hybrid platform that merges the world of peer to peer lending with crowdfunded real estate investing. Patch of Land specializes in high yield, collateral backed loans. These loans are offered as debt investments on the platform. Essentially, they supply a marketplace of loans where accredited investors can pick and choose individual projects to back.
The minimum investment is just $1,000 and they collect a fee of 1 to 2% of the interest on each loan. This fee is quite high compared to other platforms out there offering a similar investment opportunity.
One of the unique attributes of this platform is that the deals on the platform are all pre-funded. This means that your cash is not sitting there idle as they gather financing for a deal from other investors.
This is another platform that has a unique approach to fees. They do not charge investors any fees. With RealCrowd, you pick and choose individual properties to invest in. Each property has a target for IRR, Cash on Cash and other returns.
The minimum investment is quite high, at $50,000. They typical term for investments on this site are 3 to 5 years. Returns vary based on the individual property you invest in, but they supply you with a list of targeted returns for each property on the site.
This is a hands off real estate investment platform. Unlike many of the other sites we have covered so far, AlphaFlow offers curated portfolios for accredited investors. You do not choose properties yourself, you leave that to the experts.
The minimum investment is $10,000. Right now, they currently serve 30 states but they are expanding regions served. Both debt and equity investments are offered on the platform.
As far as returns go, AlphaFlow aims for a 8 to 10% return for investors. Keep in mind, they cannot guarantee these returns in the future. Each portfolio consists of 75 to 100 different notes, giving investors diversified real estate exposure. This is the type of platform that is designed for the set it and forget it type of investor who does not want to actively manage a portfolio.
11. Origin Investments
This firm began operations back in 2007, giving them a longer track record than most other platforms on this list. When the JOBS Act was passed, they embraced the change and leveraged technology to create a crowdfunded real estate investing platform. With a minimum investment of $100,000 to work with them, they are clearly going after high net worth individuals.
Origin Investments purchases properties in key markets that have big upside potential in terms of asset appreciation. These markets include Atlanta, Dallas, Phoenix and more.
This is another platform where you invest in a portfolio of different properties, not individual projects. They offer several different funds. They charge a fee of 1.25% per year.
This is another platform that offers a marketplace for buying into loans. Again, a merge between real estate crowdfunding and peer to peer lending as the name suggests. The minimum investment is $50,000 however each note has a minimum investment of $5,000. With a $50,000 investment, you could diversify across 10 different notes.
Each note has a different risk/reward profile, so returns vary. One benefit to LendingHome is that they pre-fund all deals, so your cash is not sitting idle on the sidelines. You start earning interest immediately. They offer strictly debt investments. The loan duration is just 12 months. As far as fees go, they collect a servicing charge equal to 10% of the coupon rate.
This is another platform with a low account minimum. In the case of Sharestates, accredited investors can get started with just $1,000. They offer both debt and equity investments. The typical investment term with this platform is 6 to 24 months.
Sharestates connects investors with sponsors who are looking for funding for real estate projects. On this platform, you pick and choose projects to invest in and purchase notes or membership units. This means you can spread your money across many different projects.
The equity investments fall under the category of membership units and the debt investments fall under notes. This is a great option for active investors who want to pick and choose the projects they back.