Money Analysed

Revolutionizing Real Estate Investing: Top Real Estate Crowdfunding Sites

Real Estate Crowdfunding and the Impact of the JOBS Act

The rise of the internet and its widespread adoption has led to various forms of online marketplaces that have disrupted traditional industries. One such disruption is crowdfunding, which has enabled individuals to pool their money and invest in a wide variety of projects.

The real estate industry has been one of the major beneficiaries of this new trend, with the emergence of real estate crowdfunding platforms. This article will provide an overview of real estate crowdfunding, the process involved, and the impact of the Jumpstart Our Business Startups (JOBS) Act.

What is Real Estate Crowdfunding? Real estate crowdfunding involves pooling money from multiple investors to invest in real estate projects.

The process is similar to traditional real estate investing, but it provides opportunities for smaller investors to participate in larger projects. Crowdfunding platforms have democratized the real estate industry, allowing investors to spread their investments across multiple projects and diversify their portfolios.

The Process Involved in Real Estate Crowdfunding

The process of investing in real estate crowdfunding projects involves several steps. Firstly, investors need to identify a real estate crowdfunding platform that aligns with their investment goals and objectives.

The platform will require investors to create an account and complete their due diligence process to ensure that they meet the minimum investor requirements. Once investors have completed their due diligence, they can review the available investment projects listed on the platform.

Each project will contain information on the location, type of property, investment amount, expected returns, and other relevant data. Investors can review the project data and decide whether they want to participate in the project or not.

If an investor decides to invest in a project, they need to transfer the investment amount to the crowdfunding platform. The platform will hold the funds until the project is fully funded.

Once the project is fully funded, the platform will transfer the funds to the project owner, who will then initiate the project. There are various stages of the project, such as property acquisition, management, and eventual rental or sale of the property.

Through the platform, investors are kept informed of developments as well as receiving their dividends after project completion.

Impact of the JOBS Act on Real Estate Crowdfunding

The JOBS Act was passed in 2012, and it was intended to facilitate access to capital for small businesses and startups. The Act made it easier for small businesses and startups to raise capital through crowdfunding, and in 2015, it was revised to allow real estate crowdfunding.

The JOBS Act has significantly impacted the real estate crowdfunding industry, making it easier for investors to participate in crowdfunded real estate deals. Before the Act was passed, real estate crowdfunding was limited to accredited investors only.

However, with the JOBS Act, non-accredited investors can now participate in real estate crowdfunding projects. The Act has also eased regulations on real estate crowdfunding platforms, enabling more platforms to enter the market.

This has increased competition, resulting in better services for investors, and lower fees, thereby making it more beneficial to investors.

Conclusion

Real estate crowdfunding is an innovative way for investors to participate in real estate projects. The emergence of crowdfunding platforms has democratized the real estate industry, providing opportunities for smaller investors to participate in larger projects.

The passage of the JOBS Act has also helped to facilitate access to capital for small businesses and startups as well as democratizing the real estate investment landscape. Crowdfunding in real estate has made it possible for investors of all backgrounds to reap the benefits of real estate investing.

Real estate crowdfunding has grown rapidly over the past decade, providing an opportunity for small investors to invest in real estate projects. As the popularity of this type of investment grows, more platforms offering crowdfunding options have emerged.

This article will highlight seven real estate crowdfunding sites with their unique features. 1.

Crowdstreet

Crowdstreet has been one of the leading crowdfunding platforms since its establishment in 2014. The platform connects accredited investors with commercial real estate deals by allowing investors to directly access institutional-quality investments without the need for intermediaries.

Crowdstreet offers investment options ranging from individual commercial properties to customized portfolios, ensuring that investors can pick the option that aligns with their investment goals. The platform also offers investors comprehensive due diligence resources, minimizing investment risk.

2. DiversyFund

DiversyFund is a newer platform that provides investors with access to private, high-growth real estate assets.

The platform focuses on investing in multifamily real estate projects that generate steady, long-term income streams. Investors in DiversyFund can invest in two different options: The Growth REIT, which holds and manages rental properties, and the Cash Flow REIT, which focuses on real estate debt investments.

DiversyFund offers investors a unique opportunity to participate in the company’s success by investing in the company’s fund, making them part-owners of DiversyFund. 3.

Fundrise

Founded in 2012, Fundrise offers investors access to different types of real estate assets, including traditional apartments, commercial properties, and even rural development projects. Fundrise allows investors the option to invest in eREITs or eFunds, depending on their investment goals and needs.

eREITs invest in income-producing real estate properties, while eFunds focus on single-asset development and redevelopment projects with higher growth potential. Fundrise offers investors low initial minimum investment amounts and the opportunity to withdraw their funds after a 90-day holding period.

4. EquityMultiple

EquityMultiple is a unique platform that focuses on commercial real estate, with an emphasis on equity deals like joint ventures and preferred equity investments.

The platform allows investors to invest in diversified portfolios of commercial real estate projects through equity and debt investments. EquityMultiple significantly emphasizes their underwriting as they utilize technology to screen deals and shape the portfolio.

EquityMultiple’s investment team conducts an extensive evaluation process to ensure investments are aligned with their high standards, providing a lower risk for investors. 5.

GROUNDFLOOR

GROUNDFLOOR is a platform specializing in residential real estate projects, with a focus on single-family homes. The platform sources funding for real estate deals from different sources, including crowdfunding investors.

GROUNDFLOOR is unique in that they offer debt investments in single-family homes with low minimum investments, allowing investors to diversify their real estate portfolios with low capital requirements. It is the only platform to offer direct ownership of real estate secured promissory notes.

6. RealtyMogul

RealtyMogul is a real estate crowdfunding platform focused on commercial and multi-family residential projects valued at around $30 million.

They offer a variety of investment products including REITs, debt investments, and equity investments. Investors can invest in specific properties, diversified portfolios of multiple properties or partner with RealtyMogul itself.

Investors have different options relative to minimum investments, portfolio diversification, and risk strength. Their comprehensive due diligence process reduces investment risk and offers maximum returns.

7. PeerStreet

PeerStreet is one of the largest crowdfunding platforms for hard money loans.

Unlike the other platforms that invest in properties directly, PeerStreet focuses on investing in loans made to borrowers who buy and renovate single-family homes in underprivileged communities. Their unique approach means that there is an impressive track record of historic returns that is reliable and offers a new way of investing in real estate.

PeerStreet allows users to invest in a variety of options with low minimum investments.

Conclusion

The emergence of crowdfunding platforms has transformed the real estate investment industry, providing easy access to smaller investors at low investment minimums. Depending on their investment goals, investors can choose from top crowdfunding platforms such as Crowdstreet, DiversyFund, Fundrise, EquityMultiple, GROUNDFLOOR, RealtyMogul, and PeerStreet.

Each platform has its unique features to accommodate investor needs, ranging from different kinds of real estate projects and investment structures to high-quality due diligence processes, making real estate investing even more accessible. 5.

DiversyFund

DiversyFund is a real estate crowdfunding platform that focuses on multifamily real estate buildings. The company’s mission is to democratize the real estate investment world by offering access to private, high-growth real estate assets that can generate steady, long-term income streams.

DiversyFund offers investors the opportunity to invest in two different options: The Growth REIT and the Cash Flow REIT. The Growth REIT focuses on acquiring and developing multifamily projects that can bring high-risk, high-reward returns on investment.

The Growth REIT puts its focus on long-term growth by using funds to invest in value-add multifamily real estate assets. These assets have the potential to generate significant capital appreciation living up to Diversyfund’s objective to offer a viable alternative investment option for non-accredited investors.

As a non-accredited investor, you can access DiversyFund’s crowdfunding options by investing as low as $500. In exchange, DiversyFund offers the opportunity to diversify your real estate investments through these crowdfunding options without the need to purchase a piece of property directly.

DiversyFund eases the investment process so you can build a diversified investment portfolio economically. 6.

Fundrise

Another leading real estate crowdfunding platform is Fundrise. Fundrise focuses on the real estate sector by offering investors the opportunity to invest in high-quality assets through private funds called eREITs and eFunds.

Accredited and unaccredited investors can access Fundrise’s offerings by either investing into eREITs, which invests in a portfolio of real estate projects, or eFunds, which focus on developing or redeveloping single-asset projects. eREITs hold a portfolio of real estate projects from different regions with a focus on stability, and eFunds focus on those projects that have a higher growth potential that provides opportunistic returns.

Fundrise’s minimum investment amount for eREITs is $500, and that of eFunds is $10,000. The platform also provides the opportunity to withdraw your cash after a 90-day holding period, making it a good option for those who value liquidity in their investment portfolios.

As Fundrise primarily caters to high-quality assets, investing with the platform minimizes the investment risks due to their extensive due diligence process in reviewing and selecting projects. Accredited investors may also access Fundrise’s wide range of investment options, including the ability to invest into individual properties.

Conclusion

Real estate crowdfunding has revolutionized the way individuals can invest in real estate and has made it easier, faster, and less complicated to diversify portfolios. Crowdfunding platforms like DiversyFund and Fundrise offer opportunities for non-accredited investors to invest in high-quality real estate assets and features that minimize investment risk.

Whether you choose to invest in real estate ventures through DiversyFund or Fundrise, you stand to gain an attractive investment with annual returns that differ according to your investment goals. Real estate crowdfunding platforms like these make it easier to invest in real estate without the need for massive capital.

7. EquityMultiple

EquityMultiple is a real estate crowdfunding platform that focuses on investing in commercial real estate projects.

They offer different types of investment options for accredited investors, including short-term diversified notes, individual properties, and funds. The platform utilizes cutting-edge technology and a team of dedicated professionals to evaluate and select the best investment opportunities from a range of individual sponsors.

EquityMultiple takes a comprehensive approach to evaluating investment opportunities, utilizing an extensive due-diligence process that includes reviewing financials, conducting market research, and establishing underwriting standards to ensure that each investment meets its high standards. By investing in commercial real estate, investors can enjoy the many benefits of real estate investing, such as passive income, capital appreciation and portfolio diversification.

Artificial Intelligence-based underwriting technology and manually-done investment due diligence is a key factor that sets EquityMultiple apart from other platforms. This technology enables expedited loan selection and decision-making to help build a more predictable portfolio.

This can ensure greater investor returns as well as minimizing potential investment risks. EquityMultiple’s short-term diversified notes are better suited for investors who value liquidity, as they offer the opportunity for diversity exposure while being able to exit investments after a shorter timeframe.

Meanwhile, EquityMultiple’s individual properties or fund investments are considered to be more conservative investments primarily for those who value stability and prioritizes high-quality investments. 8.

GROUNDFLOOR

GROUNDFLOOR is a real estate crowdfunding platform focused on short-term, high-yield debt investments. They offer short-term loans to real estate investors looking to acquire and improve residential single-family homes.

Groundfloor’s mission is to bring more opportunities for non-accredited investors by giving them access to debt investments backed by real estate. What sets GROUNDFLOOR apart from other crowdfunding platforms is its unique approach in that investors have the opportunity to invest directly in short-term loans that are secured by properties.

The loans’ short-term nature carries less exposure to duration risk, providing quick returns in a predictable time frame. GROUNDFLOOR prides itself on multiple levels of protection for its investors.

One of these is the significant pre-funding stage where only loans that pass rigorous underwriting assessments are eligible for public investment. Second, GROUNDFLOOR issues loans in a highly regulated environment, which involves requiring borrowers to provide personal guarantees and underwriting loans manually.

The short-term nature of GROUNDFLOOR’s loans brings forth the advantage of quick returns for its investors. Loans duration ranges from six to twelve months, and interest payments are compounded monthly.

This approach makes GROUNDFLOOR investments a better alternative to traditional investments like bonds.

Conclusion

Real estate crowdfunding platforms offer a viable option for investors to diversify their real estate portfolios while gaining access to high-quality commercial and residential real estate projects. Platforms like EquityMultiple and GROUNDFLOOR offer unique approaches to real estate crowdfunding, whether it’s through AI-based underwriting technology or short-term, high-yield debt investments.

It’s essential to conduct research, including due diligence, and weigh your investment goals before investing in any crowdfunding platform. One key aspect of any crowdfunding platform is consider investing with the platform that has high-quality real estate underwriting standards to ensure that your investments are returned accurately and in good time.

9. RealtyMogul

RealtyMogul is a real estate crowdfunding platform that offers investors access to diversified investment options.

The platform is unique in that it provides investors with investment opportunities in commercial and multi-family residential properties valued around $30 million. They currently offer an extensive range of investment products, including REITs and private placement investments.

RealtyMogul’s Mogul REIT I and Mogul REIT II are two of their most popular investment products. These REITs invest in various institutional-quality commercial and multi-family residential real estate properties.

Mogul REIT I is focused on income-producing assets and Mogul REIT II seeks to invest in quality real estate properties that can produce attractive risk-adjusted returns serving its investors over a long-term horizon. Private placement investments on RealtyMogul are targeted to accredited investors.

RealtyMogul’s private placement investments offer opportunities for investors to own individual real estate assets and receive stable income through monthly dividends. The investments are vetted and underwritten extensively by RealtyMogul’s experienced team, who also focus on ensuring the annual returns for investors.

RealtyMogul is among the best when it comes to providing investors with insights and transparency. This is an area where they are among the best as they provide in-depth reports and live updates that keep their investors abreast of their investments in the platform.

10. PeerStreet

PeerStreet is a real estate crowdfunding platform focused on real estate debt.

The platform has a unique approach, giving investors the opportunity to participate in different types of real estate debt projects via investments in loans. PeerStreet caters to a broad range of investors, from individual investors to institutional investors.

PeerStreet provides investors access to diverse loan options with varying terms, originating from different regions in the United States. Loans acquired by PeerStreet have low loan-to-value (LTV) ratios, at around 75% on average, and invest in low-risk projects such as financing home remodels and repairs.

PeerStreet’s loans come in different forms, such as fix and flip, rental, and bridge loans, which cater to different investor sophistication levels. The investment minimums on PeerStreet vary from $1,000 to $10,000, while the duration of the loans ranges from

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