One needs to have a solid financial plan. The goal should be getting the most out of the money you invest. In the past, real estate investment was saved for the extremely wealthy persons who were able to raise the large capital outlay required to acquire real property.
This has, however, changed with time. The normal investor can now have access to low-risk high-return real estate portfolios. Real estate investment has been made easier than having to buy income properties or house hacking to take care of your living expenses or pay your mortgage.
There are many online real estate investment platforms that make real estate investment a lot easier and convenient for the investor. Most of them come in the form of pooled fund investing where the money is collected from many investors and used to fund one big project that would have been impossible for the investors to acquire individually.
Here are 7 online real estate investment platforms you can consider as you make your financial plans.
Fundrise tops this list for the principle reason that it one of the longest operating real estate investment platforms. Founded in 2010, this crowdfunded real estate investment platform offers quite a several different and diverse investment portfolios.
There is a starter portfolio which has a minimum balance of $500 and advanced investment plans with a minimum balance of $1,000.With Fundrise, there is something for every investor. It uses the value investing approach.
Fundraise build equity by purchasing properties below their market value and improving them.
Available Investment Options
This is usually for newbies who would like to test the waters before deciding to invest huge amounts. It is also a viable option for investors who have little capital to invest.
With the Fundrise Starter Portfolio, you get 50% growth and 50% income holdings. The minimum opening balance is $500. However, once you have joined, you can upgrade to an advanced investment plan free of charge.
Supplemental Income Portfolio
As the name suggests, this portfolio allows the investor access to income-producing real estate. The investor receives dividends from real property that produce regular cash flows.
The rental income dividends are disbursed in proportion to an investor’s share of the fund. The dividends received by the investor can be reinvested with Fundraise or deposited to your bank account; your choice.
Balanced Investing Portfolio
This investment option offers a balance of 50% growth and 50% income holdings. It invests in a portfolio consisting of eREITs and eFunds. The investor gets to benefit from income-generating property and property whose value appreciates alike.
Long Term Growth Portfolio
This portfolio generally generates returns from the property’s appreciation in value. The investor invests in a portfolio that purchases properties with growth potential. These properties are sold at a profit and the profit disbursed to investors in the form of dividends.
This portfolio sometimes gets involved in a flipping investment where properties are bought and improved before selling them to the end-buyer. Fundraise yields annual returns of about 8.7% to 12.4%. An annual fee of 1% per year is applicable.
DiversyFund is similar to Fundraise because you are investing in private real property that is managed by experts on your behalf. The major difference is that its REITs apply the same strategy as opposed to different investment strategies as is the case with Fundrise.
DiversyFund purchases multifamily homes or apartments that are already generating income. They argue that everyone needs a place to call home, hence apartment investment is stable. They then renovate the property hence increasing its capital value and the rents applicable. After that, the property is sold for a profit.
You do not have to be an accredited investor for you to invest with DiversyFund. The minimum investment is just $500. As the name suggests, DiversyFund invests in many properties across the real estate markets and diversify into commercial real estate. The historical returns are about 17.5%.
3. Realty Mogul
Realty Mogul offers quite several different investment options. The downside is that some of these options are limited to accredited investors only. That means that the investors have to meet certain net worth requirements for them to be allowed to invest in the various portfolios.
Started in 2013, Realty Mogul has two investment options that are not limited to accredited investors. These are the Mogul REIT I which is a publicly-traded REIT that holds commercial debt and equity investments and the Mogul REIT II that focuses on capital growth over a long period.
However, the minimum investment requirement is on the higher side; $5,000. The Private Placement options are only accessible by accredited investors. With this investment option, you need to have a net worth of $1,000,000 or an annual income of $200,000 if you are single and $300,000 if you are married.
The Realty Mogul platform charges fees depending on the type of investment you have made. The fees include an asset management fee, i.e. 1-1.5 % per year.
Roofstock focuses on single-family units. It offers exclusively single-family residential property and serves both buyers and sellers of single-family rental units.
Roofstock has a property management team that takes care of the daily operations of the property such as repairs and maintenance, rent collection, and handling tenant relations. The investor is therefore allowed to build a portfolio consisting of rental property without having to get involved with the day-to-day running of the property.
Through Roofstock, buyers have access to already-vetted homes with the potential to generate income where they can invest their money. Sellers are also able to list their single-family rental units for sale without causing a disturbance to the existing tenants or losing income by selling it while vacant.
Roofstock has three investment options. You can purchase properties at a relatively lower price. You have to set aside capital to be able to make the purchase. The second investment option is one where you buy into a portfolio of properties for sale.
This is usually for investors with a high net worth. The other investment option is the purchase of property shares. You acquire part ownership of a single-family rental unit. The minimum investment requirement for the purchase of property shares is $5,000.
Every property on Roofstock has a different return. Financial data on the properties are available for an investor to review.
Crowdstreet focuses on commercial properties such as office spaces, retail spaces, and multifamily housing units such as condominiums. Investors get the opportunity to access Commercial Real Estate (CRE).
Launched in 2014, Crowdstreet started as a platform exclusively for accredited investors. This changed in 2017 when it opened doors for non-accredited investors to invest.
Crowdstreet provides investors with the online tools they need to make their real estate investments. You can view data such as potential or projected returns and properties that are on offer.
Some of the distinctive features of Crowdstreet are based on the various ways you can invest with them. There are three different ways. The first one is by investing directly into individual real property deals.
Secondly, you can invest in fully managed investments depending on your investment objectives. Lastly, you can invest in a portfolio of 30-50 properties.
Crowdstreet is characterized by relatively high upfront investment. For you to invest in the direct individual property deals, the minimum can be $25,000 or even $50,000. The fully managed investment portfolio calls for a minimum of $250,000, while the portfolio option has a minimum of $10,000.
PeerStreet gives accredited investors the opportunity to invest in real estate debt. The main focus is on residential debt, so you will mostly be investing in single-family home projects. There are occasional instances whereby you will invest in multi-family units such as condominiums.
PeerStreet merges peer to peer lending with real estate crowdfunding. It used advanced algorithms and big data to review their potential investments.
The minimum investment in PeerStreet is $1,000. Loans are provided at an interest rate of about 6% to 9% in a short term ranging from 6-24 months. PeerStreet partners with originators with a successful history in the private lending sector.
The availability of the lending option gives newbies in the industry the chance to thrive in real estate crowdfunding even if they lack the capital at the moment.
The expected returns range from 6-12%. This rate of return is typically higher than normal mortgage rates. This is because PeerStreet looks for high-risk high-return loans.
Streitwise is accessible to both accredited and non-accredited investors. It mainly focuses on investing in office buildings that produce cash flow. One of the distinctive features of Streitwise is that it owns and operates the office buildings that investors can invest in.
They do not act as links between investors and the property owners as is the case with many other online investment platforms.
Streitwise has only one investment option called the 1st Streit Office Inc. that is available to both accredited and non-accredited investors. The minimum investment required for this REIT is $1,000. Streitwise acquires a portfolio and manages it.
These spaces are rented out to tenants who provide a steady income that is distributed among investors in the form of dividends.
For stability, Streitwise adds to its portfolio properties that have few characteristics. They seek properties that are next to amenities, ones that have quality construction and high tenant occupancy rates. In addition to that, they choose properties with creditworthy tenants such as IBM, Wells Fargo, and Walgreens.
Streitwise generates about 10% dividends annually. Investing with Streitwise is subject to some fees. 3% of the funds you put in is used to cater for organizational and offering costs. The sponsor receives a 2% annual management fee.
The sponsor is also reimbursed for acquisition and operating expenses. You will not be charged acquisition fees, financing fees, or servicing fees.
There is no doubt that online real estate crowdfunding is shaping the way the real estate industry operates. They are quickly becoming part of every investor’s modern investment portfolio.
With the advancement of fintech, the field is being leveled for ordinary investors, and there is absolutely no doubt that more and more of these platforms are yet to come up.
Whether you want to be a landlord, or you want to invest in retail or office buildings, there is something for everyone in online real property investment.
Some platforms allow you to invest with as little as $500. Some even avail cheap loans in case you are unable to cater for the initial capital investment.
If you want to diversify your investment portfolio, online crowdfunded real estate investment is the way to go.