When it comes to getting started in real estate investing, where to begin can be one of the most difficult questions. Ultimately, there are so many different aspects to real estate investing that it can make your mind spin.
But, one of the best ways I found to begin was to invest in a real estate investment trust (REIT). There is much less management, and risk, for you as a first-time investor this way.
So, if you are thinking about beginning to invest in real estate, taking a look at crowdfunding sites may be a great first step. While there aren’t as many options available to the non-accredited investor, I put together a list of the best crowdfunding sites for non-accredited investors to get you started on your real estate investing journey.
What’s Ahead:
Real estate crowdfunding sites overview
Crowdfunding site Best for
Crowdstreet Risk tolerant and long-term investors
Fundrise Low fees and new investors
RealtyMogul More conservative investors
Streitwise Low fees and longer term gains
Groundfloor Low initial investment and new investors
Modiv Low initial investment and new investors
CrowdStreet
Crowdstreet has been around for quite some time and is well known in the accredited investing world. And up until recently, they have only had funds available to the accredited investor.
But, now CrowdStreet has two fund offerings, and plan to add more, that are specifically geared towards the non-accredited investor also.
Initial minimum investment
The initial minimum investment depends on which fund you choose to get into with CrowdStreet. Right now they have two fund offerings:
- Impact Housing REIT.
- Medalist Diversified REIT.
The initial investment for the Impact Housing REIT fund is $1,000. But, the initial investment for the Medalist Diversified REIT is a bit higher at $5,000.
Of course, you can certainly invest more right out of the gate. But, in a lot of cases, it might be wise to start out with the minimum first to see how the fund performs for you. Then, if you really like what you see, then you can throw more capital into the investment.
Minimum length of the investment
Since CrowdStreet is geared more towards the longer-term investor, their targeted investment period is longer for both funds. For the Impact Housing REIT, your money will be in there for a minimum of five years.
But, for the Medalist Diversified REIT it’s going to be in there for at least seven years. So if you aren’t comfortable with your money being tied up for that long of a period of time starting out, this may not be the fund for you.
Potential ROI (return on investment)
Even though your money will ultimately be tied up for quite a few years in either fund, you still might be making a good ROI. The Impact Housing REIT is their newest fund offering in the non-accredited investor space, while the Medalist Diversified REIT has been around a while now.
However, with either fund, you can expect an average ROI of 7%. So, it will really come down to how much you want to invest initially, and if you can handle your money being bound for at least two years longer with the Medalist Diversified REIT.
Investment and/or management fees
While not all crowdfunding sites charge fees, CrowdStreet does. For the Impact Housing REIT, you can account for an annual asset management fee of 1.75%. They say there are no other fees currently, but have the ability to add them if the fund requires it. So this may be something to keep an eye on since these fees will eat into your ROI.
The Medalist Diversified REIT has a slightly lower annual asset management fee of 1.50%. This fund has been around longer and has a larger portfolio, which is why they are able to charge less than the Impact Housing REIT.
Different REIT’s offered within the fund
CrowdStreet is a fairly straightforward platform in that it only works with commercial properties. However, commercial properties aren’t all the same animal, as one would naturally think.
Multifamily units with anywhere from 100 to 500 doors are also included in their offerings. Therefore, if you are interested in putting your money into larger apartment/condo projects or commercial buildings, then this may be a great fund for you.
Fundrise
Fundrise is another great real estate crowdfunding site for non-accredited investors. And it’s especially true if you are a new investor looking to get your feet wet. This is due to the fact that Fundrise has multiple offerings for the new investor with fairly high ROI’s.
Initial minimum investment
There are two options to get started investing with Fundrise. The first is called the Starter Plan, which is exactly what it sounds like. It is geared towards the new investor and only requires a $500 initial investment. However, if you choose to invest $1,000 instead, you can be upgraded to one of their advanced Core Plans instead. They have three Core Plan offerings to choose from, which include:
- Supplemental Income.
- Balanced Investing.
- Long-Term Growth.
Each of these plans is diversified differently to reflect the main goals of the investor.
Minimum length of the investment
As with everything in investing, the longer the time horizon, the larger the chance for bigger returns. And this is certainly no different when it comes to investing in real estate crowdfunding sites.
While Fundrise states their preference for investors to be invested for at least five years, they do give you an option to obtain liquidity. If you are investing in an eREIT, you have the potential option to obtain liquidity on a quarterly basis. Or if your money is in an eFUND instead, there is the option to obtain liquidity monthly after a 60-day waiting period.
But there are certain limitations to both options. Ultimately, it is best to keep your money in the fund of your choosing for at least five years to reach its maximum potential.
Potential ROI (return on investment)
Since Fundrise offers so many different projects and options for the non-accredited investor, the potential for a higher ROI is better here. Of course, it will depend upon which fund you invest in what your ultimate ROI is. But, they state currently that all of their funds can net you an ROI of anything between 8% – 12%.
I love this because it’s on par with the annual stock market return on the low end, or you can go even higher.
Investment and/or management fees
Fundrise is another fund that does charge fees to their investors. However, their fees are lower than what CrowdStreet is charging, as they come in at 1% annually. This is the straight fee no matter which of their four plans you choose to invest in.
Different REIT’s offered within the fund
Fundrise deals with commercial properties primarily. However, this can not only include multifamily complexes and large commercial buildings, but also renovations to either option.
And if you choose to invest in an eFUND instead of one of their eREIT’s, then you may have the option to add in some single-family home investments as well. So, these funds will be a bit more diversified, which can be a very good thing for your long term returns.
This is a testimonial in partnership with Fundrise. We earn a commission from partner links on MoneyUnder30. All opinions are our own.RealtyMogul
RealtyMogul is very stringent with their vetting process regarding projects they choose to invest in – which is a very good thing for the investors backing the projects. What this means is there’s much lower risk of any default and potentially much higher returns.
If you are considered an accredited investor with RealtyMogul, then you qualify to invest in any of their funds, including MOGULREIT I & II.
But, if you are non-accredited, then your only options are the latter (MOGULREIT I & II) and not any of their other investment options.
The main difference between the two MOGULREIT products and their other investment products is that both of the MOGULREIT’s are managed diversified funds. This means that you won’t be able to choose your individual products or investments. Instead, you will be investing in a diversified portfolio.
Initial minimum investment
The initial minimum investment is a bit higher for both of their current REIT’s, which comes in at $5,000.
Minimum length of the investment
RealtyMogul is a bit different in that they do not have a minimum length of investment required. They leave this up to each individual investor in hopes that you will leave your money in the long term if you continue to see high ROI’s on your money. Which, from a mathematical perspective, just makes logical sense.
Potential ROI (return on investment)
Your potential ROI will vary for the two REIT’s offered. This is due to the fact that they are completely different offerings with different time horizons.
- For the MOGULREIT I, the annualized return has been between 7.8% – 8%. This fund is structured for diversification through debt and debt like securities.
- But, for the MOGULREIT II, the annualized return has been coming in much lower around 4.5%. This fund is structured for diversification in equity in multifamily apartment complexes. Which means it is designed for long term appreciation instead of annual distributions. Therefore, you have the chance to earn even more in the second fund over the long run if you choose to keep your money in there for multiple years.
Investment and/or management fees
This is another crowdfunding site that charges an annual asset management fee of 1%.
Different REIT’s offered within the fund
RealtyMogul isn’t much different than any of the other crowdfunding sites in their preference for commercial projects. However, they also include land into their commercial category, which broadens the range of investments even wider.
Streitwise
Another great real estate crowdfunding site that is open to both accredited and non-accredited investors is Streitwise. You can sign up online and manage your portfolio through the website or their iOS app. They generally only have one fund at a time that you can invest in, though. This can make investing extremely simple, which is great for the new investor. But it can also limit your diversification, which could potentially impact your overall ROI long term.
Initial minimum investment
The initial investment for any of their funds is $5,000. This is true no matter which fund they happen to be offering at the time. Of course, if you want to reach a higher ROI in the long run, you should consider investing more than that.
But one of the best things about Streitwise is that you can fund your portfolio through a variety of methods, including bank transfer, trust, IRA, and even cryptocurrencies like Bitcoin and Ethereum.
Minimum length of the investment
Your initial investment amount has to be invested for at least a year. After that, you can take quarterly distributions or cash out completely.
Potential ROI (return on investment)
Streitwise states they have had an average ROI of 9.44% since their inception for investors. They also let you see what the dividends were for the most recent quarters. The first quarter of this year was a bit lower than their average, though, coming in at 8.4%.
Investment and/or management fees
Their fees are significantly higher than any of the other real estate crowdfunding sites discussed thus far. Streitwise states they have a one-time 3% organizational and offering cost fee. But they also have an annual 2% management fee on top of that. While it looks like their potential ROI is at the higher end, when you take into account these fees, it really isn’t.
Different REIT’s offered within the fund
Streitwise specializes in commercial property offerings only. However, they are extremely particular with the commercial properties they choose to invest in, which helps to boost the ROI. The owners of Streitwise only look at commercial properties that:
- Have good construction.
- Are close to public transportation.
- Have good amenities.
- Have regular, sustained occupancy and employment.
- Are strategically located.
Groundfloor
Groundfloor is a bit different than the other offerings I’ve discussed so far. They let you pick and choose which particular loan you want to invest in. Which could be for a commercial property or for individual residential properties.
This gives you more control over where you put your money, but could end up netting you lower returns and potentially pose a higher risk.
Initial minimum investment
The initial minimum investment with Groundfloor comes in extremely low at $10. Of course, you won’t make much money on your $10 investment, so you may want to invest considerably more if you really want to see what Groundfloor can do for you.
Minimum length of the investment
Groundfloor is a terrific real estate crowdfunding site to get involved in if you want a shorter-term investment. This is due to most of their loans only having six – 12-month terms.
Potential ROI (return on investment)
The average ROI for Groundfloor investments has been coming in at 10%. They tout that more often than not, it is slightly above that rate though. This is because you get to choose your individual investment offerings for specific loans. So, depending upon which loan you choose to fund, and which grade the offering is, you could be making anywhere between 5% – 25.5%, which is a very wide ROI range.
Investment and/or management fees
The way Groundfloor is structured means that they don’t charge investors any fees. Which is awesome for all of us investing with them!
Different REIT’s offered within the fund
Groundfloor offers commercial real estate and individual residential properties. Since they have so many offerings at one time, you can pick and choose which loans look the most appealing to you. Groundfloor makes it more intuitive to choose the best fit since each option offered comes with a great deal of information and potential statistics for you to run the numbers.
Modiv
Modiv, formerly Rich Uncles, simplifies commercial real estate investing for accredited investors. When you invest with Modiv, you invest in all of their properties at once, which means less legwork on your part. They also own all of the properties in their portfolio–a rarity among REIT platforms.
Initial minimum investment
If a $5,000 initial minimum investment feels too risky but $500 feels too safe, Modiv’s $1,000 minimum might be just right. (Anyone else getting Goldilocks and the Three Bears vibes?)
You could always invest more, of course. If you’d rather add to your investment later on, you can do so in increments of $100.
Minimum length of the investment
You’ll need to hold your Modiv shares for at least six months before you can sell. After six months, you’ll be eligible for Modiv’s Share Repurchase Program. But like other platforms, the fees become much less with each year you are invested, which is an incentive to keep your shares longer.
Potential ROI (return on investment)
Once Modiv makes a profit on your investment, they’ll take 40% of the first 6.5% of that profit. Then, they distribute the remaining profit among their investors. But that means if the investment doesn’t make a profit, or at least 6.5% profit, your dividends will accordingly reflect that.
If you want to maximize your ROI, you can have Modiv reinvest your dividends, rather than receive a payout. Unlike other platforms, Modiv also pays a 13th dividend as an added bonus for their shareholders.
Investment and/or management fees
Their fee structure is a bit different than most of the other sites I have discussed so far. You won’t pay any service or administration fees when you invest, but you might when you sell.
Modiv’s administration fee for withdrawals declines each year. Here’s what that looks like:
- Shares sold between 6 months and 1 year – You’ll pay 3% of your investment.
- Shares sold after 1 year but before 2 years – You’ll pay 2%.
- Shares sold after 2 years but before 3 years – You’ll pay 1%.
- Shares sold after 3 years – You’ll pay a whopping $0 in fees.
Different REIT’s offered within the fund
Modiv deals solely in commercial real estate investing. You’ll see a mix of industrial, office, and retail properties in their portfolio.
Summary of the best crowdfunding sites for non-accredited investors
Crowdfunding site Minimum investment Investment and/or management fees Potential ROI
CrowdStreet $1,000 or $5,000 1.50% - 1.75% annually 7%
Fundrise $500 1% annually 8%-2%
RealtyMogul $5,000 1% annually 4.5%-7.8%
Streitwise $5,000 3% one-time fee plus 2% annually 9.44%
Groundfloor $10 None 10%
Modiv $1,000 No fees to invest; annual declining rate of 3%, 2%, 1%, and 0% for withdrawals 6.5%
How I came up with this list
This list was a bit easier to pull together since it is directed at non-accredited investors. Since the choices are still minimal, compared to those options for the accredited investor, I had less to choose from.
A few of these sites are our affiliates, which means I really love their products and offerings. But, I didn’t want to be biased and play favorites, so I included some other sites that I really like also.
All of these crowdfunding sites are:
- Fairly easy to use.
- Full of information and facts to help guide you to the best fund for your situation.
- Have decent ROI’s.
- Have lower initial entrance investments.
- Intuitive.
- Quick to get started.
What constitutes a non-accredited investor?
A non-accredited investor is an investor who is starting out to begin with. You can reach the status of accredited investor once you have been investing for a while. But, there are also some financial parameters that have to be met in order for you to leap out of the non-accredited investor category.
First, you must be making at least $200,000 annually. But, you also have to have made that for at least the last 2 years and be on track to make that, or more, the year you become accredited.
On top of that, you must have a net worth of at least $1,000,000,000. While that sounds like a pretty hefty hurdle to jump, it can be done. Until then, though, you are considered a non-accredited investor. This just means you fall into a higher risk category as an investor, so there aren’t quite as many options for us. Plus, non-accredited investors have slightly higher fees and lower ROI’s, typically, until they become accredited.
Basically, all of us have to pay our dues. And real estate crowdfunding is a great way to get started for minimal risk.
What are the most important things to know when choosing a real estate crowdfunding site?
Overall, when you are considering getting into real estate crowdfunding there are a few things you should narrow down first.
The questions any investor needs to ask themself are:
- How much liquid capital do you have to invest initially?
- What is your risk tolerance?
- How long can you keep your money tied up in an investment?
- What ROI range are you most comfortable with?
- Which fees, and how much annually, are you willing to pay to invest?
- Do you want to invest in a certain type of real estate?
- Are you more comfortable with a traditional REIT, or would you prefer to choose individual loans?
- Are you wanting regular quarterly dividends or prefer to have more long term appreciation?
Once you have the answers to these questions, then it will be easier to narrow down which real estate crowdfunding site is the best fit for you.
Summary
Ultimately, there are a lot of different options out there to begin investing in real estate. But, one of the best ways to get started is by investing in a crowdfunding site, such as any of the aforementioned. Depending on your personality and investment strategy, you have a plethora of choices.
Plus, you are never too old or too young to start investing in real estate.
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