Real estate investing is a fantastic way to diversify your portfolio and it’s not as scary as it looks. And, despite popular belief, you don’t need a boatload of cash to start with.
It can be challenging to start with all the platforms on the market today. But don’t worry. There is a real estate crowdfunding platform available that you can begin using with little to no research and at a low cost.
Keep reading to learn about what real estate crowdfunding platforms are and how you to start. For a more detailed comparison, check out Modest Money’s best real estate crowdfunding platforms.
The popularity of real estate crowdfunding platforms has increased significantly over the past few years. It has become one of the top ways to diversify your portfolio.
Speaking of diversification, one of the ways real estate crowdfunding stands out is how it’s popular with investors of all ages. But what is this method of investing and how does it work?
In short, real estate crowdfunding allows you to pool your money together with other investors to purchase a property–or, rather, part of a property. As we’ll discuss below, there are numerous advantages to the crowdfunding route.
Digitalization and the increasing demand for alternative ways to invest are the driving forces behind the booming real estate crowdfunding market. Also contributing is the number of millennials entering the workforce and the emergence of specialized crowdfunding platforms.
Let’s look at a few numbers. In 2019, the global real estate crowdfunding market size was valued at $1.3 billion. This is expected to expand at a compound annual growth rate (CAGR) of 58.1% from 2020 to 2027.
Long story short, it seems like there’s no better time than now to start investing in real estate.
Perhaps the greatest benefit of crowdfunding in real estate is the low cost to start. Imagine you’re going to the beach for spring break. Is it cheaper to go by yourself or with a group? Yes, it’s the latter and crowdfunding is like this but on a larger scale.
Other benefits of real estate crowdfunding include:
Rookies and veterans alike will finally be able to have some money in real estate. All it takes is a little discernment to see which platform is right for you. Here are some of our favorites:
Founded in 2010, Fundrise is catered to beginners and non-accredited investors. It’s our top pick on the list for several reasons.
First, Fundrise offers a wide variety of investment portfolios. Our favorite, The Starter Portfolio, only requires $10 to start investing. Additionally, Fundrise offers portfolios to both growth and income investors as well as a hybrid of the two.
As with the diversity of portfolios, Fundrise offers a sound investment strategy. The goal is to purchase properties below market value and improve them to build equity. A few other advantages include:
YieldStreet provides the opportunity to invest in commercial real estate, marine projects, legal finance, and even art. It’s the alternative, anti-cultural, 1960s platform of today.
Most crowdfunding sites simply allow you to purchase real estate properties. YieldStreet takes another approach. They crowdfund the debt to finance those investments. Additionally, YieldStreet boasts the following:
One of the drawbacks to YieldStreet is the minimum investment to start. It tends to be relatively high.
Founded in 2015, the New Jersey platform First National Realty Partners (FNRP) offers Opportunity Funds or individual properties for real estate. The holding period for the former is three to seven years.
Think of the shopping center down the street from your house–the one with a Walmart and CVS. What if it was possible to invest in these properties? Well, that’s the whole business model of FNRP.
The benefits that come with FNRP are:
Despite the benefits, First National Realty Partners comes with a pricey minimum investment of $50,000. But FNRP is still one of the fastest-growing commercial real estate firms in the country.
Real estate crowdfunding is a great option if you are new to investing or don’t have a lot of capital upfront. Going in with a group of fellow investors will help to diversify your portfolio for the future.
