Have you been looking at investing in real estate but don't know where to start? There are many alternative investment and real estate platforms, two of which are Yieldstreet and Fundrise. However, they both have their pros and cons, so it can be hard to choose one.
I’ll help you out, though! In this article, I’ll compare Yieldstreet vs. Fundrise side-by-side to help make your choice just a little bit easier.
Commercial real estate, art, legal cases, and marine vessels
eREITs and eFunds
1% to 2.5% annually plus flat annual fees
0.85% annual management fee + 0.15% annual advisory fee + miscellaneous fees
Mostly accredited investors
Yieldstreet is a debt crowdfunding platform. Their minimum investment is $10,000, and most investments are open only to accredited investors. However, they have one portfolio (the Prism Fund), which is open to non-accredited investors and has a minimum investment requirement of $5,000.
Most Yieldstreet investments are in debt investments, which means a fixed rate of return and a high risk of default. It also means very little liquidity since there’s no secondary market to sell the securities. If you invest in Yieldstreet, make sure it’s with money you don’t need for many years.
Yieldstreet invests primarily in commercial real estate. But, they also dabble in marine vessels, legal settlements, and art. All investments have collateral, so the risk of a total loss is minimal. Still, there isn’t a guaranteed rate of return like any other investment.
Yieldstreet pros and cons
Here’s what you need to consider when deciding if Yieldstreet is the right real estate investing platform for you.
Fundrise is open to non-accredited and accredited investors. You need only $10 to invest in Fundrise, which removes the barrier to entry for most investors. Fundrise offers crowdfunding, which means multiple investors pool their money together to invest in debt and equity. When you invest in debt, you’re the bank. But when you invest in equity, you have partial ownership of the property.
Fundrise focuses on buying undervalued properties and selling them for much more than they paid for them. Then, they fix the property up and either flip it for fast profits or increase its cash flow for greater dividends. Fundrise has many portfolio options, each of which has a different risk tolerance and returns.
Fundrise pros and cons
Are you weighing your options between Yieldstreet vs. Fundrise? Here are the benefits and disadvantages of moving forward with Fundrise.
Unique Yieldstreet features
All investments are backed by a valuable asset. It’s commonly commercial real estate, but there are also art, marine vessels, and legal settlement collateral options. If the borrower defaults, Yieldstreet does its best to recoup the asset’s value and pay back the investors.
Most Yieldstreet portfolios are for accredited investors except the Prism Fund. This fixed-income portfolio invests in five asset classes, including:
- Commercial real estate
- Legal cases
- Private business credit
- Corporate preferred bonds
The fund pays dividends quarterly at a 7% rate. The cost is 1.5% annually, and the fund matures in March 2024.
Yieldstreet Wallet is a savings account at Yieldstreet. You can keep your cash balance there and earn (minimal) interest. The account is FDIC insured and makes it easier and faster to invest in new investments when they become available.
If you use the Yieldstreet Wallet option, you can open a Yieldstreet IRA. The self-directed account means you control the investments, buying and selling the alternative investments as you see fit. If you have a balance of $250,000 or higher, there’s no cost for the IRA.
Unique Fundrise features
Most crowdfunded real estate investments aren’t liquid, meaning you can’t get your money back until the investment matures. Fundrise offers some redemption options, though, including a 90-day free redemption window on most investments (sometimes longer). If you’re unhappy with the investment within the first 90 days, Fundrise will repurchase it.
If you keep the investment longer than 90 days and need to liquidate it, you may have redemption options too. Again, it depends on the economy, but know that it will cost you 3% of the value to redeem it.
Many eREIT options
Fundrise offers seven eREITs which are real estate investment trusts invested in commercial real estate. Some invest in retail properties, apartment buildings, or offices. You can choose from various eREITs based on location, goals, or other factors, making it easy to diversify your portfolios.
Portfolio options for everyone
Each investor has a different goal for their portfolio. Some look for regular payments, while others want a perfect balance between risky and non-risk investments.
Here are the Fundrise options:
- Starter - Invest with as little as $10, which is excellent for beginners. You can reinvest your dividends or cash them out. You can also set up auto investments.
- Basic - Invest with $1,000, open an IRA, and create individual investment goals.
- Core - Invest with $5,000 and create a custom portfolio strategy versus using the pre-created options.
- Advanced - Invest with at least $10,000 and have access to more investment strategies for advanced investors.
- Premium - Invest with at least $100,000 and get exclusive investment opportunities reserved for accredited investors.
Yieldstreet vs. Fundrise: Fees
Yieldstreet charges between 1% and 2.5% annually. But read the fine print because some investments have additional fees, including flat annual fees ranging from $100 to $150 the first year and slightly less in subsequent years.
Fundrise advertises a 1% total annual fee, but other fees typically pop up once you invest. Some of the most common fees are development and liquidation fees, among others.
Yieldstreet vs. Fundrise: Who are they for?
Yieldstreet is mainly for accredited investors, except the Prism Fund that’s open to anyone. Anyone looking to invest in alternative investments should do well with Yieldstreet since their focus isn’t just on real estate but also on marine vessels, art, and litigation cases. It can be a great way to diversify your portfolio if you’re looking for something different.
Fundrise is for anyone looking to dip their toe into real estate investing but who doesn’t have a lot of money to invest at one time. You can invest with as little as $10 and call yourself a real estate investor. Of course, you won’t see crazy high returns as you might see on the alternative investments of Yieldstreet, but it’s a great way to see if real estate investing is right for you.
If you’ve always wanted to invest in real estate or alternative investments, Yieldstreet and Fundrise offer great opportunities. However, before choosing either one, make sure you can give up the funds you're investing in for at least a few years since both platforms offer illiquid investments, except the Fundrise redemption opportunities that cost 3% of our investment.