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Wondering which real estate crowdfunding platform is best for you? Keep reading as we compare Fundrise and RealtyMogul.
Today, real estate investors have a world of opportunities to explore. The market is no longer closed off to everyday investors. You don’t have to be accredited to start raking in profits from commercial space.
One of the newer ways to invest in commercial real estate is by using a real estate crowdfunding platform. Not all investors choose to go this route, and many purchase real estate either directly or through a brokerage firm (e.g., REITs).
That said, a growing number of investors are now using crowdfunding investing platforms because they offer a variety of options, they’re easy to use, and they can help investors generate passive income (e.g., in the form of dividends).
If you’re thinking about pursuing crowdfunding for real estate investment purposes, two leading platforms to consider are Fundrise and RealtyMogul. Let’s explore how these two platforms compare to help you determine which one is the better option for your unique circumstances.
Here’s a quick comparison summary:
|Low minimum of $500
|Minimum $5,000 investment to get started
|Who Can Invest
|You do not need to be an accredited investor to invest.
|Only accredited investors can access standalone properties
|Great customer service
|Great user experience
Fundrise vs. RealtyMogul: An Overview
First, here’s a quick Fundrise review.
What is Fundrise?
Fundrise is an online investment crowdfunding platform serving more than 100,000 active investors. It’s one of the oldest and most trusted crowdfunding platforms on the market.
Fundrise offers crowdfunding opportunities for both accredited and non-accredited investors, so you don’t have to be a high roller to get started on this platform. That said, you can still use this platform if you’re accredited.
Getting started with Fundrise
Here’s a breakdown of how to get started with Fundrise.
1. Download the Fundrise platform or app
Head over to Fundrise to create an account. You can also download the Fundrise app through the App Store or Google Play.
Registration is simple and only takes a few minutes. You’ll be up and running on the Fundrise platform in no time at all.
2. Pick your account level
You’ll need to determine what type of account you want to open when signing up for Fundrise.
Fundrise offers three account levels, including Basic, Core, and Advanced. Browse each category and determine what investment amount you’re comfortable with and how much customization you are looking for.
Beginners may have luck with the Basic plan, while more serious investors may want to aim for the advanced option. You can always upgrade your account down the line if you’re looking for a more comprehensive experience.
3. Let Fundrise go to work
Once you’re up and running on Fundrise, the platform then selects an investment opportunity for you. The company builds a portfolio of curated real estate investments, meaning you don’t have to go through the process of selecting each one. In other words, Fundrise manages the selection of real estate properties on your behalf.
4. Track your investments in Fundrise
Once you’re up and running in Fundrise, all you have to do is check in from time to time using their investor dashboard and mobile app. The company provides ongoing reporting and alerts so that you can stay informed about how your investments are performing.
What we like about Fundrise
- Low minimum of $500
- Reasonable management fees
- 90-day introductory period without advisory fees or redemption penalties
- User-friendly website and convenient mobile app
- Secure investing
- Great customer service
- Automatic investing
What we don’t like about Fundrise
- Illiquid investments
- Long-term investing only
- Tax liability due to income tax on earnings
So now let’s move onto a brief RealtyMogul review
What is RealtyMogul?
RealtyMogul is one of Fundrise’s top competitors. It’s another long-standing crowdfunding provider with a solid reputation.
Just like Fundrise, RealtyMogul offers a crowdfunding platform that lets you buy into commercial real estate even if you’re a non accredited investor. Anyone can join RealtyMogul and start vetting real estate deals.
When you use RealtyMogul, you’ll invest in a real estate investment trust (REIT). RealtyMogul offers two of them: MogulREIT I and MogulREIT II.
The company also provides access to standalone properties, as well. Unfortunately, you have to be an accredited investor to access them.
RealtyMogul’s signup process
Here’s a breakdown of how to get started with RealtyMogul.
1. Create an account with RealtyMogul
Go to RealtyMogul and create an account. Just as with Fundrise, the process is fast and easy.
2. Pick an investment
The next step is to pick an investment. Browse the selection and determine where you want to allocate your money. RealtyMogul tells you what you’re eligible for right on the main dashboard.
The next step is to fund your investment. Determine how much money you want to include and distribute the money from a linked bank account.
4. Manage your real estate investments
Once you’re set up, managing is easy. All you have to do is log into the dashboard and track your investments. The company provides clear visibility for users, making asset management easy.
What we like about RealtyMogul
- Great user experience
- Withdraw or reinvest your earnings
- Secure platform
- Support for non accredited investors
- Automatic investing
What we don’t like about RealtyMogul
- Minimum $5,000 investment to get started
- No app
- Only accredited investors can access standalone properties
- Variable fee structure
- Illiquid investments
Comparing Fundrise vs. RealtyMogul
Here are important factors to consider when comparing Fundrise vs. RealtyMogul.
Both RealtyMogul and Fundrise enable investors to access funds that contain a variety of commercial real estate opportunities.
The main difference is that RealtyMogul gives you more of a say into where your money goes — especially if you’re looking for standalone real estate investments.
RealtyMogul also makes it possible for accredited investors to access individual properties. To be considered an accredited investor, you have to make at least $200,000 annually over a two-year period and have a net worth of at least $1 million.
What are eREITs and eFunds?
One thing to note is that Fundrise advertises its eREITs and eFunds as REITs, which can be a bit confusing for investors.
While eREITs and eFunds are like REITs, they aren’t the same. Instead, they’re proprietary offerings specifically from Fundrise. These types of investments are not traded on major stock exchanges. They’re bought and sold directly through Fundrise, instead of through brokers.
That being the case, it’s worth asking yourself whether it makes sense to tie up your funds in these products.
Pricing and fees
If you’re just getting started with real estate investing and you don’t have a lot of money to put into funds, you’re probably going to want to go with Fundrise over RealtyMogul because the former offers a lower $500 minimum investment.
RealtyMogul, on the other hand, has a minimum $5,000 investment. This makes it better suited for investors who have a little bit more money to play around with.
As for fees, Fundrise has management fees that range from 0.85% to 3% annually. On the flipside, RealtyMogul has fees ranging between 1% and 1.5% for REITs.
Both platforms offer a great customer experience, with strong support and a user-friendly experience.
Fundrise definitely has an edge simply because the company offers an app, while RealtyMogul requires customers to access their services through a web browser.
So if you’re looking for an optimized mobile experience for on-the-go investing, Fundrise is the better option.
Some investors are skeptical about using crowdfunding platforms, especially when large amounts of money are on the line.
However, both Fundrise and RealtyMogul are safe and trustworthy services. Both apps leverage the latest security protocols, including encryption and real-time monitoring, to detect fraud and keep data secure.
In short, you should feel confident about using both RealtyMogul and Fundrise for real estate investing.
When investing in REITs, it’s very important to be careful about taxes.
Fortunately, both platforms offer individual retirement account (IRA) access. You can use both platforms with self-directed IRAs to take advantage of tax-advantaged investing.
Both platforms are available for nationwide use. This means investors from Texas and Idaho to Vermont and Washington, D.C., can use these platforms to invest in REITs.
This may seem like a small thing. But it’s actually pretty important because it gives investors in rural areas direct access to real estate markets that are located in faraway cities and destinations.
Thanks to crowdfunding, you don’t need to be a local investor or have any connections in real estate to get some skin in the game. In that light, these platforms are true game-changers for many inventors.
Frequently Asked Questions
Here are the most frequently asked questions about Fundrise vs. RealtyMogul.
Is Fundrise a good investment?
Fundrise is generally a good investment if you’re looking to get involved with crowdfunding real estate investing. It offers a reasonable $500 minimum investment and access to a broad range of investments.
At the same time, the company offers automated investing, enabling investors to diversify their portfolios without much heavy lifting. When it boils down to it, you really can’t go wrong with Fundrise for REITs.
At the same time, RealtyMogul offers a competitive platform as well; it just has a higher minimum investment requirement.
Spend time comparing the two platforms and decide which is the better option for your specific needs. As a real estate investor, only you can determine which platform makes more sense for your unique circumstances.
Which is better: DiversyFund or Fundrise?
DiversyFund is another platform for real estate crowdfunding. Unlike Fundrise, the platform exclusively targets large apartment buildings. Fundrise, on the other hand, is much more varied.
If you’re looking for a more narrow market focus and you have a long-term investment horizon of at least five years or more, DiversyFund might be the perfect investment option for you.
That said, it’s worth noting that you can’t make withdrawals from the DiversyFund platform. That’s compared to Fundrise, which allows users to make withdrawals during the 90-day introductory period.
Beyond that, investors can make withdrawals from Fundrise by request, but they are not guaranteed. They also may come with a penalty.
As you begin searching for a crowdfunding real estate investing platform, you’ll quickly find out there are a lot of options at your disposal. Other options to consider include CrowdStreet and Yieldstreet, for example.
Suffice it to say that there are a lot of interesting platforms in this exciting new investing space. Research your options to find the one that meets your needs best.
Can you lose money with commercial real estate?
Here is a disclaimer: You can lose money on any type of investment. Investing is risky, and there is never a guarantee for a return. That’s just a risk you’re going to have to be willing to take if you want to get into the game.
That said, there are ways of minimizing risk. It largely depends on what type of real estate you’re investing in. Crowdfunded REITs typically have a very solid chance of generating a return on an initial investment because REITs are required by law to pay out 90% of their profits as dividends.
Standalone properties are quite different and have a lot more risk.
The key is to make sure that your portfolio is in a place to take on excess risk before investing in commercial real estate. Take a look at your portfolio and analyze your risk tolerance.
Generally speaking, young investors typically have a very high risk tolerance. But everyone is unique and has a different investment strategy. Only you know how much you are comfortable with investing.
Can REITs produce a strong cash flow?
REITs can produce a steady cash flow in the form of dividend distributions. It’s important to think about what you want to do with returns. Some people choose to automatically reinvest the dividends into additional shares of the REIT while others prefer to pocket returns so that they have more free cash to invest in other offerings.
One thing to consider is that a REIT probably won’t provide as strong of an annual return as a rental property. If you’re looking to get a bigger bang for your buck investing in commercial properties, you may want to look into buying a rental property.
if you move in this direction, just make sure that you’re willing to take on the extra risk that goes along with it.
The Bottom Line
If you’re looking to increase your cash flow or net worth, you should look into real estate crowdfunding platforms like Fundrise or RealtyMogul.
Both companies have a proven track record for success and strong user bases. They are both great choices for the average investor who is seeking to build a diversified portfolio.
At the end of the day, both Fundrise and RealtyMogul can help with portfolio diversification, providing more well-rounded and robust portfolio for investors. Each of them are solid investment opportunities, offering access to a variety of real estate projects ranging from multifamily homes to apartment buildings and offices — and everything in between.
Whatever you decide, do your due diligence ahead of time before moving forward with these investment vehicles, and make sure that you know what you’re getting involved with before signing up. New investors should make sure they are in a position to take on private real estate before moving forward with real estate investment platforms and seeking real estate deals.
Of course, you’ll also want to monitor how much you put into crowdfunding. If your goal is building a well-balanced portfolio and achieving financial independence, you’ll also want to invest in the stock market and buy up some mutual funds and exchange-traded funds (ETFs).
Ultimately, there has never been a better time to be an investor. If you’re looking into crowdfunding, you’re on the right track. By spreading around your investments into as many vehicles as possible, you’ll be well on your way to financial freedom before you know it.