Real estate investing is one of the best ways to grow your long-term wealth, and Fundrise and Crowdstreet are two of the top options for real estate investors. Both of these platforms offer a diverse range of options for investors, but they’re geared for very different investors.
Fundrise has low minimum investment requirements, making it a solid choice for investors of any type, especially those who haven’t started investing in real estate yet because of previously high minimums. On the other end of the spectrum, CrowdStreet requires accreditation before you can get started.
CrowdStreet vs. Fundrise: Which Real Estate Platform Is Best For You?
eREITs and eFunds
eREITs, eFunds, individual properties, and custom portfolios
0.15% annual advisory fee, 0.85% annual management fee, plus miscellaneous fees depending on your portfolio
No annual advisory fee or management fee, 0.5%-2.5% annual fee for funds
New real estate investors, non-accredited investors, those looking for income producing real estate investments
High-net-worth individuals, accredited investors, investors wanting income producing assets
Fundrise is an online real estate investing platform that’s focused on making real estate investing accessible to a wide range of investors, including those who want to start with as little as $10. They were founded in 2012, with headquarters in Washington, D.C., and they’ve invested over $4 billion in real estate across the country since their launch.
Besides a low minimum investment requirement, Fundrise specializes in eREITs and eFunds. These are proprietary investments that aren’t publicly traded, and eREITs are designed to produce income, while eFunds are designed for growth. Additionally, these funds are both inherently diverse because you’re investing in a collection of real estate investments, not just one real estate project at a time.
Fundrise pros and cons
CrowdStreet is a commercial real estate investment platform geared towards accredited investors who can commit a large initial investment. The platform has been around since 2013, and they’ve worked with thousands of investors to invest over $1.90 billion in more than 488 projects.
At any given time you’ll find five to fifteen different commercial projects on the platform, from apartment developments, shopping malls, and amusement parks. CrowdStreet also has non-traded REITs like Fundrise, and individual properties can be common equity, preferred equity, or mezzanine debt.
CrowdStreet pros and cons
Unique CrowdStreet features
CrowdStreet has a three-step vetting process that each property sponsor must go through before CrowdStreet will list the property on its platform. CrowdStreet digs into the developer’s background and track record. They evaluate each property in a deal-screening process to ensure consistency with the sponsor’s background. Finally, they review the terms of the offer to make sure it meets CrowdStreet criteria.
Individual property investments
The CrowdStreet Marketplace is where investors can browse deals and invest directly in individual projects. You will still have a very passive investing experience because the project is managed by the project’s sponsor. Projects generally have dozens of individual investors.
The kind of individual properties you’ll have access to are retail, office, apartment complex, and more. This allows you to diversify your portfolio, and because they’re across different geographic locations, you’ll have that kind of diversity as well. The Marketplace gives you access to documents on each property that you’ll want to look over before investing.
REITs are Real Estate Investment Trusts — both CrowdStreet and Fundrise offer them — and they’re a type of fund that invests in a mix of property types. They’re similar to mutual funds and are diverse at their core.
CrowdStreet has two types of these funds:
- Single-sponsor funds: These are funds led by individual real estate firms who specialize in a particular region or asset class.
- CrowdStreet funds: Funds that are managed by CrowdStreet’s team of real estate professionals, and they adhere to their proprietary process and give you access to deal flow from hundreds of sponsors.
CrowdStreet’s Private Managed Account Service tailors a portfolio specifically for your needs. Your portfolio is managed by CrowdStreet Advisors, LLC, which is a subsidiary of Crowdtreet. These rely on proprietary technology to invest in and manage your portfolio, and they come with a custom investing strategy, dedicated support representatives, and online tracking through CrowdStreet’s Portfolio Center.
There’s a $250,000 minimum balance to access a custom portfolio, and the fees depend on the size of your investment.
Want more crowdfunded real estate options? Check out 7 Best Real Estate Crowdfunding Sites & What You Need to Know Before Investing
Unique Fundrise features
eREITs and eFunds
Fundrise currently has 18 different eREITs and eFunds, and again, these aren’t publicly traded funds. Their offerings are either income, growth, balance, or income and growth focused. Some of these funds have a nationwide geographic focus, but there are also ones that target the East Coast, West Coast, and Heartland.
Fundrise’s eREITs and eFunds fund a number of active projects at any given time, and you have access to the details for each project the funds include, like investment size, projected returns, timeline, and market analysis.
The funds all include details regarding historic performance — NAV, dividends, and appreciation. You can also access the offering circular, annual and semi annual reports for each year, and tax forms. The majority of this information is available on Fundrise’s platform whether you’re an investor or not, which I really like.
Because you can’t sell your shares of the eREITs and eFunds you’re investing in on a public exchange, Fundrise does offer a redemption program if you want to sell your shares back to Fundrise. There are fees — they’re paid into the eREIT or eFund — and they range from 3% to 0% of the share price.
There’s a 90-day introductory period when there’s no redemption fee so investors can sort of test out Fundrise. But Fundrise can (and has) suspend or delay redemptions. They did this during 2020 to keep more cash on hand and protect their investments. The suspension lasted from March 2020 through July 2020.
Multiple portfolio levels
Fundrise has five different account levels with features that unlock as you’re able to grow your investment. They all have the same annual advisory fee of 0.15%, give you access to registered products, and include dividend reinvestment and auto invest.
Here are Fundrise’s portfolio options:
- Starter: $10 minimum — Fundrise recently relaunched their Starter Portfolio with this new lower minimum
- Basic: $1,000 minimum — You can invest via IRA and access tools that let you manage your investment goals
- Core: $5,000 minimum — Additionally access a custom portfolio strategy and directly allocate to funds
- Advanced: $10,000 minimum — Comes with plus plans, which offer more complex and strategic investment offerings
- Premium: $100,000 minimum — Investors on this level also have priority access to the Fundrise investment team and periodic accredited offerings
CrowdStreet vs. Fundrise: Fees
Although CrowdStreet requires a high minimum investment of $25,000, they don’t charge fees to use the platform. There are fees related to individual projects, which vary, but you will be able to see the fees in the project details page on CrowdStreet’s site. You’ll also incur fees if you invest in one of CrowdStreet’s funds, and these range from 0.5% to 2.5% of invested capital.
Fundrise charges a number of fees that can eat into you investment:
- Annual advisory fee: 0.15%.
- Annual asset management fee: 0.85%.
- For IRA investing: Fundrise’s IRA custodian, Millennium Trust Company, charges an annual fee of $125.
- Organizational and offering costs: This is the cost of bringing the eREIT or eFund into existence, and Fundrise says these run 0% to 2% of the money raised by investors. These are reimbursed to the manager out of the eREIT or eFund in monthly installments that do not exceed 0.5% of the fund’s total proceeds.
- Potential development fees on eFunds: Up to 5% of total development costs, excluding land. There may also be a potential disposition fee when an eFund sells a property, which is 1.5% of the gross proceeds, after repayment of property-level debt.
CrowdStreet vs. Fundrise: Who are they for?
Fundrise did something different when they lowered their minimum investment to $10 — they opened the doors to those who’ve never before been able to afford to invest in real estate. Which is why Fundrise is best for:
- Brand new real estate investors
- Investors who want to try out the market
- Those who don’t qualify as accredited investors
- Investors who want to generate supplemental income through real estate
CrowdStreet is a more traditional option in the sense that they require you to be an accredited investor. This means you’ll need to meet the SEC definition that requires income exceeding $200,000 or over $300,000 if married. You’ll also need to have a net worth, or joint net worth, that exceeds $1 million and does not include your primary residence.
With that being said, CrowdStreet is best for:
- Accredited investors
- High-net-worth individuals
- Investors who want to expand their portfolio and produce income from real estate
CrowdStreet vs. Fundrise: The final word
The reality is that these two crowdfunded real estate investment platforms are for two different types of investors. Fundrise is best for new and non-accredited investors, while CrowdStreet is better for accredited investors.
Both of these platforms offer tons of investor resources and are transparent about their process of selecting properties, and that should make you feel comfortable working with either of them.