Crowdfunding and real estate go together like peanut butter and chocolate. Capital remains one of the biggest barriers of entry into real estate investments, as the liquidity to make a seven figure investment in a single property may not be feasible even for accredited investors. Real estate crowdfunding saw $2 billion in transaction volume in 2015. Experts expect real estate crowdfunding to grow by 40 percent in 2016.
Investing through crowdfunding platforms helps investors diversify assets and can give non-accredited investors the opportunity to invest into real estate deals, which was unavailable before.
Here are five crowdfunding platforms that are opening opportunities up for real estate investments.
One of the first real estate crowdfunding platforms is Fundrise, a DC-based startup that’s been around since 2012. Over 80,000 users have invested on the site, totaling nearly $3 billion in real estate investments. Investors don’t have the ability to select specific deals, rather pick from either a debt or equity focused commercial eREIT on the platform. Fundrise has raised nearly $40 million in investment capital for its own operations since opening its doors.
Fundrise was founded by Benjamin Miller, Brandon Jenkins, and Kenny Shin, and is open to U.S. residents with a one thousand dollar minimum investment.
Founded by Jilliene Helman and Justin Hughes, Realty Mogul provides customers with debt and equity investment opportunities. Users can invest as little as $2,500 into various types of projects, including multifamily, commercial, and industrial properties. One of Realty Mogul’s most interesting features may be the opportunity for non-accredited investors to invest with the site, although investments may be limited.
The Los Angeles-based company has raised $45 million since its inception.
Patch of Land
Patch of Land provides accredited investors the opportunity to finance hard money loans. These short-term loans take the form of refinance, rehab, and bridge loan projects. Users on the platform can pick specific properties to invest in, and receive monthly payouts of annualized returns between 9 and 18 percent depending on the risk, with a five thousand dollar minimum investment.
Founded by Brian and Jason Fritton, Patch of Land has been operating since 2013, and has raised nearly $25 million to date.
Accredited investors can purchase occupied single family homes using Roofstock to buy properties. Users can implement various matrixes like price, location and even crime and flood risk to find appropriate investments. Investors can chose to put equity into a crowdfunding project, or purchase the property single-handedly and secure a loan and property manager through an integrated service.
Gary Beasley and Gregor Watson founded Roofstock in Oakland, CA in 2015, and have raised $13 million for their firm so far.
Founded by Trey Clark, Nav Athwal, and Ray Sturm in San Francisco, Realty Shares is one of the more diversified crowdfunding platforms, both in terms of property type and investment nature. Investors can choose from various property types, including multi-family, commercial and self storage units. Users have the option to fund either equity or debt, including first or second positions liens. Minimum investments usually range between one and five thousand dollars, and are available for accredited investors.
Realty Shares has raised $32 million since its inception in 2013.