Real estate investment has always been viewed as a steep mountain to climb, hasn’t it?
The hefty financial burden of acquiring rental or commercial property makes it a far-off dream for most. Add to that the time and energy commitment required to be a landlord, and the journey may seem quite daunting. Investing in real estate can also be risky, so if you’re just getting started you may want to consider some of the lower input, lower risk strategies like crowdfunding and syndication.
Among the industry titans, Fundrise and CrowdStreet have made a name for themselves, presenting many investment options in real estate.
Although this article’s title may suggest a duel between the two, it’s important to recognize the brilliance of both platforms.
Your decision to choose Fundrise or CrowdStreet hinges largely on your unique goals and aspirations, considering each platform caters to distinct types of investors.
In our Fundrise vs CrowdStreet review, we’ll dissect and analyze both platforms to aid you in making a well-informed decision.
What is Fundrise?
Inaugurated in 2012, Fundrise has grown into one of the most esteemed real estate investing platforms, with a decade-long legacy. Raising a staggering sum exceeding $1 billion has enticed more than 150,000 investors.
As an investor, you get to own a piece of the pie in crowdfunded real estate projects focusing on multi-family condominiums and office spaces.
The most intriguing aspect of Fundrise is its accessibility, requiring an investment as meager as $10. This effectively topples one of the most significant barriers that deter many from investing in real estate.
Fundrise leads the eREITs race with over $150 million amassed. Despite the intimidating total figure, the average investment clocks in at a humble $5,000, boasting 10-14% annual returns.
Currently, Fundrise offers two investment opportunities to delve into: eREITs and eFunds. Both offer effortless access to commercial real estate investing projects, making Fundrise an attractive choice for novice investors or those looking to tread the waters of real estate investment with minimized risk.
What is CrowdStreet?
As of penning this piece, CrowdStreet stands as the most substantial commercial real estate investing marketplace.
Unlike Fundrise, however, CrowdStreet opens its gates solely to accredited investors. This requires an annual income exceeding $200,000 (or $300,000 for married individuals filing jointly) or $1 million, excluding your primary residence. These high prerequisites render most investors ineligible.
CrowdStreet provides opportunities to invest in specific real estate projects and REITs. For those with $250,000 or more to invest, CrowdStreet offers to craft a custom investment portfolio tailored to your specific needs and ambitions. Do note that CrowdStreet confines its real estate investments strictly to commercial projects.
Fundrise VS Crowdstreet: Determining Factors
The Fundrise versus CrowdStreet debate primarily revolves around three critical differences, which will guide you in selecting the ideal real estate platform to match your goals and expectations.
Accessibility
The superiority of a real estate platform doesn’t matter if it’s beyond your reach. When directly juxtaposing Fundrise and CrowdStreet, it’s evident that Fundrise is the more accessible option for the average person.
Becoming a part of Fundrise is a breeze. There’s no need to be an accredited investor, and you can get started with a mere $10 in the Starter tier.
CrowdStreet, on the other hand, has sterner requirements that must be validated before you can hop on the platform and begin investing.
So, if you’re not an accredited investor, the choice is clear. Fundrise emerges as the winner.
Fees
While creating a CrowdStreet account is free, access to the sponsor may attract fees. In addition, CrowdStreet imposes a 1-2% annual fee on REIT investors.
Fundrise, conversely, levies management and advisory fees amounting to 1% annually, based on your portfolio’s value. This undercuts most real estate platforms. Moreover, the advisory fees are waived at the Core tier or higher if you introduce a new person to the platform.
Investment Opportunities
Though Fundrise doesn’t provide access to specific properties or customized real estate portfolios, you can invest via eFunds or REITs. Both residential and commercial projects are available for investment.
CrowdStreet, in contrast, offers more diversified investment options for eligible investors, including custom portfolios, individual property deals, and REITs. However, investments are limited to commercial properties on the CrowdStreet platform.
Also, while CrowdStreet investments have the potential for higher returns, the risk of losing your investment is correspondingly higher.
Pros and Cons
Let’s boil down the essential advantages of both platforms:
Pros of Fundrise:
- Low entry barrier: Allows investments starting from just $10.
- Accessibility: No need to be an accredited investor to join.
- Transparent fee structure: This avoids hidden costs, ensuring you understand your fees.
- Reasonable management fees: Set at 1% annually.
- Early redemption: Offers liquidity option, albeit with a redemption fee.
- DRIP (Dividend Reinvestment Plan): Automatically reinvest your quarterly dividends for compound interest.
- Retirement account support: Provides support for self-directed retirement accounts from the Basic account tier.
Pros of CrowdStreet
- CrowdStreet offers a variety of investment accounts.
- The platform provides robust resources.
- Investors can access individual real estate projects and REITs.
- There’s potential for stellar returns.
Fundrise vs CrowdStreet: Which One is the Best?
Addressing this question isn’t as straightforward as it might seem. Neither platform outshines the other in an absolute sense – they both stand as reputable bastions in real estate investment.
The trick lies in understanding your investment objectives, which will guide you to the platform that aligns best with your needs.
For newcomers to the investment arena, or those dipping their toes in the waters of real estate for the first time, CrowdStreet might not be the first choice. Given its requirement for you to be an accredited investor, it can seem rather daunting.
Here, Fundrise shines brighter, offering a more accessible entry point, allowing you to embark on your investment journey with a mere $10. You can sign up for Fundrise and get started using our Fundrise promo code.
Should individual deals and funds pique your interest, CrowdStreet emerges as your platform of choice. However, if your appetite leans towards REIT diversification and the convenience of investing smaller amounts, Fundrise becomes the logical preference.
As the adage goes, the right tool for the right job. In this case, it’s about finding the right platform for the right investor – and that investor is you.
