Considering the poor correlation between commercial real estate performance and the more diversified stock and bond markets, investing in commercial real estate has become a prominent strategy for investors to diversify their portfolios. While commercial real estate investing is far from infallible, it can give some form of security from the overall market’s ebbs and flows.
Commercial real estate pricing adjusts far more slowly than other securities, such as equities and bonds. That’s the beauty of retail real estate crowdfunding. With this, those with minimal funds can now invest small amounts with many other investors in institutional-quality commercial real estate.
That brings us to the focus of this guide. Below, we review some of the best online multifamily crowding platforms serving the marketplace today. However, before we get started, let’s briefly look at what real estate crowdfunding is all about.
What is Real Estate Crowdfunding?
In recent years, real estate crowdfunding has been growing in popularity. This process of obtaining funds for building projects by approaching investors and asking them to donate a reasonable sum of money towards your cause is called “asset-based lending.”
Simply put, it’s an opportunity made available to all sorts of people who are looking to invest but can’t afford to do so otherwise – even those with modest incomes!
Stakeholders raise funds through an online crowdsourcing site. This idea may sound too good to be true, but it works! One entity joins a platform to obtain funding and begin or improve a real estate project. Another joins for higher rates of return on investment opportunities available at any time they choose.
Benefits of Crowdfunding
For both newbie and experienced investors, securing the necessary funds for real estate investments can be difficult. Real estate crowdfunding can be a great way to get money for a project. It also has several other essential benefits for both borrowers and investors/lenders, which includes the following:
For Borrowers
- Crowdfunding is a type of direct marketing that might help you promote your real estate company
- It expands your funding options while also expanding your investor network
- Peer-to-peer lending enables start-up real estate enterprises to get up and running faster
- Positive word of mouth and ultimately client loyalty result from successful projects from a peer-to-peer financing network
- Your company can get helpful input from your online crowdfunding community, allowing you to fix any potential faults
- Using a user-friendly investment platform can help you save money and time
For Investors
- You have access to low-cost investments, with some projects available for a bit of a fee
- Short-term investments are available, with some extending from 2 to 48 months.
- Investment costs are not charged on peer-to-peer lending options, implying a more significant return on your investment
- It allows you to spread your money across a variety of asset types and regions
- As a member, you also benefit from transaction accountability. That way, you know exactly where your money goes
5 Best Online Multifamily Crowding Platforms
1. Holdfolio
Holdfolio crowdfunding platform takes the first spot on the best real estate investor websites currently. It provides accredited and non-accredited investors with passive real estate investing alternatives.
The good thing about this platform is that it invests alongside its investors, which is quite remarkable. The platform’s deals are equity-based, meaning they have both upside and cash flow possibilities. Each deal gets a 4 to 10 percent investment from Holdfolio, meaning investors are not under pressure to take risks resulting in capital loss.
Holdfolio is at the top of this list because the platform has the broadest, most comprehensive range of investment portfolios. Other crowdfunding real estate investing platforms often have limited options. Furthermore, as compared to other organizations, the platform’s minimum investment rates are pretty inexpensive. Real estate crowdfunding for beginners on this platform is relatively straightforward.
2. Fundrise
Fundrise is another unique platform on this list. It was founded in 2010, making it one of the oldest crowdfunding platforms. It is one of the best online multifamily crowding platforms because it has a variety of investment portfolios. A minimum deposit of $10 is required for the starting portfolio, while they need a minimum balance of $1,000 for the advanced plans.
Fundrise is unique from other platforms in that it caters for a wide range of people. Fundrise uses a value investment technique when it comes to real estate investing. Furthermore, the site tries to buy properties below market value and subsequently develop them to build equity, which is impressive.
3. CrowdStreet
Founded in 2014 as an online commercial real estate investing platform, CrowdStreet is also one of the best crowdfunding sites for investors. It has raised nearly $2 billion through 500 different offerings to date, which is quite remarkable.
This platform varies from the others discussed in this guide in that it offers three different investment options. You have the option of investing directly in individual real estate purchases, contributing to a 30 to 50-property investment portfolio, or fully managing investments depending on your aims and ambitions.
CrowdStreet allows investors to choose the projects for participation. This site is also entirely focused on business real estate, with no residential properties included. They meticulously carry out vetting processes to ensure high-potential transactions. In addition, CrowdStreet validates the agreement and the sponsor who brought the business to the platform as part of the screening process.
4. DiversyFunds
DiversyFund’s model is one of a kind in the world of real estate crowdfunding. The platform acquires, develops, manages a portfolio of properties, gathers cash flow, and distributes profits to its clients rather than acting as a broker who connects investors with projects.
It does not charge any administration or broker fees, unlike some other crowdfunding platforms real estate offers. It also has a smartphone app, making it one of the few platforms having one. In addition, it has low minimum investment plans, which gives many people the opportunity to invest.
5. EquityMultiple
This platform deals almost entirely on institutional, commercial real estate investments, stock, preferred equity, and old debt. The company has expanded its product offering to include tax-advantaged real estate investments and funds, which is extremely outstanding. The distribution schedules vary in every contract, but they are usually monthly or quarterly, making it an easy platform to use.
Conclusion
If you’re still on the fence about which online multifamily crowdfunding platforms to join, we hope this guide has helped make your decision a little bit easier.
You must have come up with a plan for how and when to allocate funds from your capital – especially if crowdfunding is new territory for you. Remember, there are no right or wrong answers here; it all depends on what kind of investor you want to be! Which of these online real estate investor websites will YOU choose? Let us know in the comments box below!”
