Real Estate Investing

Yieldstreet Review 2022 – 9.71% Avg Annual Returns

Rachel Morey
April 21, 2022

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Yieldstreet is an online investment platform that offers several alternative investments options.

With Yieldstreet one can invest in marine projects, art, real estate, litigation deals, and commercial loans like merchant cash advances.

Most of the assets available through Yieldstreet are open to accredited investors only. Their Prism Fund, which launched in August 2020, is available to non-accredited investors with a minimum investment of $500.

While competing alternative investment and real estate investment sites allow investors to buy a portion of a block of commercial real estate properties, Yieldstreet crowdfunds debt that finances those (and other) deals.

The company’s first offering rolled out in 2015 in litigation finance, pairing investors with plaintiffs who need a loan to cover lawsuit expenses before the settlement.

While there’s always a risk of default, Yieldstreet investors can earn interest payments and eventually receive a principal return over the investments’ life.

You can learn or get started on YieldStreet’s website here.

What is Yieldstreet?

Yieldstreet is an online platform that allows investors to participate in crowdfunding a variety of alternative investments backed by several asset classes, including real estate. Investing with Yieldstreet may provide passive income and allow diversification of portfolios to reduce correlation to the stock market.

Qualified Yieldstreet investors can choose from short-term investments (fund options, equity deals, etc.) with a maximum term of three years.

Yieldstreet employs experts in every asset class offered on the platform, and they vet the sponsors and originators who want to list on the platform as well as the deals offered to investors. Retail investors may not have the knowledge necessary to properly evaluate the deals offered on Yieldstreet, so it’s crucial that there are experts on staff there who can make sure that investors get access to high-quality deals.

Yieldstreet favors investment opportunities with the following characteristics:

Low minimums
Short durations
Target 8%+ yield
Low stock market correlation

There are risks associated with investing in debt, even if assets secure it. A higher potential reward attracts investors willing to take a chance, but hopefully, investors realize that they may lose money with Yieldstreet.

Yieldstreet backers include Citi (NYSE: C); the company plans to use Yieldstreet to invest $2 billion for wealthy clients. Billionaire philanthropist George Soros is also backing Yieldstreet.

Yieldstreet Pros and Cons

✅ Pros:

Access to alternative investments including art, real estate, lawsuits, debt, etc.
Individuals can invest in privately structured credit deals
Open to non-accredited investors.
Tangible assets back each investment.
Easy to use platform.
Can be managed online or through mobile apps.

🛑 Cons:

Illiquid investments.
Many investments are available only to accredited investors.
Higher fees than competing platforms.
Consumer complaints and customer ratings raise concerns.

You can learn or get started on YieldStreet’s website here.

How Does Investing With Yieldstreet Work?

To invest with Yieldstreet, users look for a deal on the platform that interests them. They can search by asset type, loan term, and net yield parameters. Investments are a loan to the asset owner, with the asset serving as collateral for the loan.

Most of the investments available on the Yieldstreet platform are for accredited investors only. Accredited investors must meet the following criteria:

Minimum net worth of $1 million, excluding the value of a primary home
Minimum annual income of $200,000 ($300,000 for couples filing jointly) with the expectation that current income will continue.

Prism Fund Investment Requirements

The Yieldstreet Prism Fund is available to non-accredited investors as of late 2020. Retail investors can access multiple investment opportunities across several asset classes in a single fund.

Minimum investments for the Prism Fund are $500, which is much lower than Yieldstreet investments reserved for accredited investors.

How Yieldstreet Sources Investments

Yieldstreet investors lend money through the platform and make a return on the yield borrowers pay. Yieldstreet charges fees to manage the loan, collect payments from borrowers, and distribute funds + interest to borrowers. If a borrower defaults on their loan, Yieldstreet works to recover the investors’ funds.

Minimum Yieldstreet Investment

Certain investments on the Yieldstreet platform require an initial investment as low as $10,000. These investments are likely Borrower Payment Dependent Notes. Special Purpose Vehicles (SPVs) structured as LLC subsidiaries of the platform are owned by investors, and minimums may be higher for SPVs.

Short-term note options have a $1,000 minimum investment requirement.

How Investors Keep Tabs on Their Account

Investors can check their portfolios on the Yieldstreet platform to understand how their specific investments perform over time, the amount of money earned so far, and progress toward the fund’s goals. Yieldstreet sends every investor monthly and quarterly statements and updates any time there’s new activity with their investments.

What You Should Know About Yieldstreet Before Investing

Investment minimums: Yieldstreet states on their website that the typical minimum investment is $10,000. However, deals in the past have offered minimums of $5,000, and some reach a $60,000 minimum requirement.

Type of investments: Yieldstreet investments are debt-related, and investors lend money to the platform to fund high-risk loans in various sectors. Fortunately, the loans are secured by property, which reduces the financial risk if a borrower defaults.

Yieldstreet platform: Investments featured on the website include details like the minimum and maximum investment accepted, expected annual return, duration of the investment, the total offering size, and information about why Yieldstreet recommends the investment, any associated risks, expenses, and projected repayment schedule.

Asset-based investing: Yieldstreet investments are backed by underlying assets, which helps protect investors from losing the money they invest on the platform.

Fees: Annual management fees range from an average of 1% to 2.5%. There may also be an originator listing fee. Certain investments have an annual fee of $100 to $150 during the first year and $30 to $70 in subsequent years. Expenses come out of initial interest payments.

Self-directed IRA option: Investors can choose to participate in Yieldstreet’s opportunities through a self-directed IRA. The custodian broker is IRA Services.

Liquidity: Yieldstreent investments can’t be cashed out at any time during the target duration.

Investments have limited availability: Investments are open for a set period of time and are first-come-first-served.

Are Yieldstreet Investments Any Good?

Yieldstreet has a 7% to 12% target rate of return.

To put this into perspective, private investment vehicles had an internal rate of return (IRR) of 9.71% across all investments between 2015 and 2021 after the deduction of expenses and management fees. This is down from ~11.0% across all investments in February 2022 when we last surveyed their investor returns.

Investors have entrusted Yieldstreet with $2.3 billion since the company’s inception. As of early 2022, the company has returned nearly $1.35 billion of capital to investors, $189 million of which is interest. In 2020, Yieldstreet appeared on the 2020 Inc. 5000 and was ranked number 46 on the list, a collection of the fastest-growing privately held companies in the United States.

As of January 2022, more than 350,000 people have joined the platform. Each investor requests on average 6.5 different investment vehicles to spread their funds across.

Yieldstreet has experienced some challenges, and it’s willing to go after borrowers if they default on loans. In 2020, the company won a $77 million judgment in U.K. courts. A vessel deconstruction project didn’t go as planned, and the borrower defrauded numerous investors, including Yieldstreet. The lawsuit allowed the company to seize assets in an attempt to return investors’ money as promised.

Assuming economic conditions remain strong, investors with Yieldstreet could reasonably expect the company to continue to make profitable loans yielding the promised rate of return. If borrowers default, the company is expected to continue to make every effort to recoup their investors’ money.

Several deals on Yieldstreet are short-term, with projected high-interest yields. Each deal on Yieldstreet has unique risks, however. Lower-than-average minimum investment amounts for nonaccredited investors may attract those who have less than $1 million in the bank but want to get involved in non-traditional deals. Building a diversified collection of loans could help reduce the overall risk of default resulting in permanent losses.

A Note About Yieldstreet Liquidity

Yieldstreet investments are illiquid, and each individual investment opportunity has a term of 180-days to four years. Like other crowdfunded investments, it’s not possible to pull money out of the investment before its end date.

The Prism Fund has a duration of 48 months. During this time, investors can’t liquidate their assets and receive a return of capital. It may take up to one year after the fund’s end date for investors to receive their capital plus interest. Certain investments offer limited liquidity every quarter, however.

Yieldstreet vs. REITs

Investors interested in the real estate market can buy shares in real estate investment trusts (REITs) or invest directly through a platform like Yieldstreet. REITs allow investors to buy and sell stock quickly, just like investing in any other stock. Even so, like the investments on the Yieldstreet platform, much of the REIT market is reserved for institutional investors.

Yieldstreet investments are illiquid; investors must wait until the target date attached to the specific investment to gain access to their money plus any interest it earned. Target dates aren’t guaranteed, however, and investors may end up waiting longer than they planned to access their investment funds. REITs provide instant liquidity, restricted only by the stock market’s operating hours.

REIT values fluctuate according to the stock market, while alternative investments like Yieldstreet offerings are largely unrelated to stock market activity.

Yieldstreet vs. Competitors

Here are some of the other big players in the online alternative investment world and their annual returns to investors since inception.

Keep in mind, these online platforms primarily provide passive real estate investment products.

	Fundrise	CrowdStreet	DiversyFund	Yieldstreet
2014	12.25%	NR	NR	NR
2015	12.42%	NR	NR	9.71% avg
2016	8.75%	NR	NR	9.71% avg
2017	11.44%	NR	18%	9.71% avg
2018	9.11%	NR	17.3%	9.71% avg
2019	9.47%	NR	NR	9.71% avg
2020	7.42%	17.7%	NR	9.71% avg
2021	22.99%	NR	NR	9.71% avg

NR = Not Reported

Not all real estate investment platforms are alike, so be sure to research them each individually before making a decision.

Yieldstreet Fees

Yieldstreet doesn’t impose trading fees, commissions, or inactivity fees, which may be attractive to investors who want to diversify but don’t want to get hit with a ton of fees. The annual management fee ranges from 1% to 2% of assets. Prism Fund investors pay an annual administrative fee of 0.50%.

Flat annual fund fees vary according to the investment and are deducted from initial contributions. Expect a $100 yearly fee for Special Purpose Vehicles during the first year and $70 for subsequent years. Borrower Payment Dependent Note investors pay $150 during the first year and $30 for the following years.

Short-term notes don’t have fees.

Each investment’s fees are detailed on the deal page. Yieldstreet may impose a listing fee or deal origination fee, as well. For example, the Prism Fund has a 1% annual management fee with a maximum annual administrative fee of 0.5%. The Aviation Fund has a 0% to 0.25% management fee and a 0% to 2.5% incentive fee.

Because the fees vary for each investment, it’s crucial to evaluate each option and understand the fees before proceeding with an investment.

Is Yieldstreet Worth it For New Investors?

Maybe. New investors who have a solid portfolio and want to diversify should fully understand how Yieldstreet works before committing to an investment. They should understand that they may not get their investment back for several years, and there’s a risk of losing their money.

Understanding Crowdfunded Debt

Yieldstreet has several resources designed to help new investors understand how crowdfunded debt could produce returns. This information is available to potential investors even before they create an account. After opening an account, detailed information about each asset class and individual investments is readily available, as well.

Yieldstreet Customer Reviews

Yieldstreet doesn’t fare so well in customer reviews. There are only a few reviews on Trustpilot, and they are generally negative. Many customers who wrote reviews on various platforms seem disappointed with their inability to get their money out of the investment before the target end date. They didn’t seem to understand the terms of the investment with Yieldstreet.

Yieldstreet on the BBB Website

Yieldstreet has an F rating on the Better Business Bureau (BBB) website, with 20 user reviews. Yieldstreet reviewers gave the investment firm an average of 2.05 stars out of five stars. Many negative reviews point out that an advertised $200 bonus was difficult or impossible to receive from Yieldstreet.

Here are two reviews that may help you decide whether to invest with Yieldstreet:

July 21, 2021

“As a retired hedge fund manager who invested in equities and distressed debt, I had high expectations for what YieldStreet should be, and I have been very impressed. The investments have worked, and my returns have been exactly what I expected. They provided help along the way, from detailed deal memos and access to YS analysts, to simplified tax reporting and, most importantly, an easy and friendly mobile app. I have been very happy. My only gripes would be that the timing and attractiveness of the new offerings have been choppy, and I prefer single-name investments over blind pools, but a lot of the recent offerings have been funds…”

-Kevin L.

July 12, 2021

“I’ve been an investor with Yieldstreet for 3-4 years now. They are, in my view, a responsible investment firm offering very favorable, secured returns for Accredited Investors.. Yieldstreet offers the opportunity to invest in secured bridge loans as well as an increasing number of other related investment funds and vehicles normally available only to institutions and very high net worth individuals, earning 7-11% interest or higher. At the moment, I’ve put more than 50% of my investments into it, a reflection of the poor returns of conventional fixed investments, and an overpriced equity market. However, this is definitely not for everyone, which is my main reason for not rating 5 stars..”

-Keith

Yieldstreet on Reddit

Reddit users are not fans (in general) of Yieldstreet. They are suspicious of the investment quality offered by the platform and seem to prefer other investment options.

“I have experience with YieldStreet and FundRise, and my advice is to steer clear of any startup promising high returns and low risk. Go with a mutual fund or stable dividend stocks (4%+ yield) like Verizon. The reality of platforms like YieldStreet is that you’re getting the bottom of the barrel – I’ve already had two YieldStreet investments go into default because they deal with shady companies that can’t get funding elsewhere.”

-Absolutboss

The whole appearance of every loan is ‘we worked hard to get Yieldstreet members a chance to participate in this high quality, private investment opportunity!’ The truth is actually ‘no one else would loan them money because it’s so risky so they came to us'”

-dinedal

Yieldstreet Customer Service

Investors requiring assistance can contact Yieldstreet customer service by emailing investments@yieldstreet.com or call the company at 844-943-5378. The site doesn’t have a live chat feature, but representatives aim to return emails within 24 hours.

Is Yieldstreet Worth it?

Yieldstreet provides individual investors with a means by which to invest in privately structured credit deals. The platform offers the unique opportunity to diversify into offerings typically reserved for institutional investors.

Not all loans through Yieldstreet have performed well for investors. Overall, the platform has a solid track record of generating passive income backed by alternative assets.

Investors who understand alternative asset classes, have discretionary income to spend on the investment, and are comfortable with illiquid investments, may find that Yieldstreet provides access to the type of diversification they want.

You can learn or get started on YieldStreet’s website here.

Top 8 Real Estate Crowdfunding Platforms for 2022

Rachel Morey
April 4, 2022

Real estate crowdfunding provides investors with a new way to diversify their portfolios by investing passively in real estate.

Some crowdfunding sites offer non-accredited investors access to investments that may have previously been available only to wealthy or knowledgeable individuals.

Real estate investing (like many other types of investing) is risky. Real estate investments don’t necessarily follow the ups and downs of the stock market, which is part of their attraction. In a portfolio with many different investment types, real estate could help protect investors from the stock market’s volatility.

Investors who would like to experience the potential advantages of real estate investing without having to finance, own, and manage properties may find the idea of real estate crowdfunding appealing. Even though real estate crowdfunding is relatively new, several real estate crowdfunding platforms have a track record of producing good returns for their investors.

The platforms listed here are in alphabetical order. There are many differences between the platforms identified here. Each may be “best” for certain investors, so we’ve identified the type of investor that may find the platform most appealing.

What Is Real Estate Crowdfunding?

Real estate crowdfunding allows individual investors to pool their resources with other investors to amass a large amount of money quickly. Crowdfunding sites facilitate investments by gathering money from multiple investors to fund a single investment opportunity. Each investor receives a return that’s in proportion to the amount of their investment. If there’s a loss, the investors share that misfortune, as well.

Investors benefit from real estate crowdfunding because it offers exposure to potentially lucrative investments that may be otherwise unaffordable. Many platforms provide automatic investing, which decreases the amount of time individuals must spend researching, vetting, and executing specific investments. Distributions or lump sum returns provide the potential for good returns from real estate crowdfunding investments.

It’s crucial to understand that if you decide to get involved with real estate crowdfunding, your money could be tied up for three to five years. This type of investment can be high risk when compared to other investments. Depending on the platform and investment, fees could be high, as well. Some investment platforms work only with accredited investors.

How Does Real Estate Crowdfunding Work?

Real estate investment platforms connect investment opportunities with funding. Most real estate crowdfunding deals have a sponsor, a crowdfunding platform, and investors.

Here’s a brief explanation of how real estate crowdfunding platforms work:

The sponsor acquires, manages, and eventually sells the investment. They are an individual or a company that takes responsibility for the entire project.
The crowdfunding platform makes connections between the sponsor and potentially interested investors. It handles regulatory issues, explains the terms of available deals to investors, and collects money from investors.
The investors offer money to fund the project in exchange for a share of the potential profits.

CrowdStreet: Best for Accredited Investors & Transparency

Platform	Avg. annual returns
CrowdStreet	19.0%

CrowdStreet offers accredited investors direct access to commercial real estate investment deals. Potential investors can review, compare, and choose individual deals that meet their investment criteria. More than 100,000 accredited investors across the United States have used the CrowdStreet platform to facilitate their real estate investments.

CrowdStreet has managed funds. Advisory services offer transparent access, and the platform makes it easy for investors to get involved in potentially lucrative deals outside of the stock market.

CrowdStreet fees range from 0.50% to 2.5% for CrowdStreet funds. Other funds are also available on the platform, and their fees vary by offering. There’s a minimum $25,000 investment required. Average annual returns are 19% as of 2022. Investors who choose to participate in a CrowdStreet investment deal may experience much lower or higher returns than the average 17.3% returns.

Choose from individual institutional-quality real estate deals or a professionally managed portfolio.

CrowdStreet’s headquarters are in Portland, Oregon. The company was founded in 2014 and has been very transparent with their numbers and annual investor returns. As of February 2022, Crowdstreet has invested over $2.8 billion with over 580 deals funded and $464 million paid in distributions to investors. As of 2022, 95 investments have been fully realized (sold) with 2 being realized this year so far.

Pros

A helpful chatbot helps users navigate the platform
Institutional-quality offerings
Investment deals are easy to find after you sign up for an account

Cons

Open to accredited investors only
High investment minimums
Early withdrawals prohibited

DiversyFund: Best for REITs

Platform	Avg. annual returns
DiversyFund	17% – 18%

Returns based on 2017-18 data.

Investors become co-owners in a portfolio of real estate assets with their first investment on the DiversyFund platform. The DiversyFund team finds, vets, and creates access to properties with a high potential for positive investment returns. They sell the assets, split profits among investors, and reinvest cash flows to create even more wealth.

Unlike similar platforms, DiversyFund actually purchases properties. They require a low minimum investment of just $500 for the DiversyFund Growth REIT, and you don’t have to be an institutional investor to get involved. However, investors never pay management or broker fees, and there is usually a 2% to 8% developer fee. Average annual returns across all investments on the DiversyFund platform range from 17% to 18%, based on 2017 and 2018 data.

Pros

Investors never pay management fees
Mobile app (unique among real estate crowdfunding platforms)
Low $500 minimum investment

Cons

Limited choices among investment types
Early withdrawals are prohibited
Investors receive payment at the end of the investment term

EquityMultiple: Best for Low Fees

Platform	Avg. annual returns
EquityMultiple	16.8%

EquityMultiple has a straightforward three-step process that allows investors to access institutional-quality opportunities quickly.

Create a free account to see the details of each property. Review EquityMultiple Marketplace deals to locate one that lines up with investing goals.
Choose an investment amount and submit an investment offer. E-sign the appropriate documents for EquityMultiple approval and fund the offer.
Monitor the direct equity in commercial real estate property via the EquityMultiple online portal. Get updates from the property sponsor, choose a distribution method, and manage tax documentation from the main dashboard.

EquityMultiple charges a 1% fee on equity investments, and other fees depend on the terms of the individual investment. There may also be origination fees associated with fund offerings. The minimum investment amount is $5,000, and participants must be accredited investors.

Previous investors with EquityMultiple experienced average annual returns of 16.8%. Since this is an average across all investment types, it’s possible to receive a much lower or higher return if you decide to invest with EquityMultiple.

The platform provides access to commercial real estate deals, including senior debt, equity, and preferred equity. Investors can also participate in tax-advantaged deals like Opportunity Zones and 1031 exchange investments.

Distributions are monthly or quarterly.

Pros

Diverse investment selection
Intuitive platform
Variety of distribution schedules

Cons

Limited redemption options
Open only to accredited investors

Fundrise: Best for Non-Accredited Investors & Beginners

Platform	Avg. annual returns
Fundrise	7.31% – 22.99%

Fundrise follows a value investing strategy of acquiring assets for less than their intrinsic value and replacement cost. Through partnerships with local operators and hands-on management, the Fundrise team works to increase the value of assets available on the platform.

Investment options include equity, debt, commercial, and residential assets.

Funrise was designed to withstand economic distress, making it ideal for investors that want to diversify to minimize the negative impact of stock market volatility on their portfolio. Extensive underwriting and a conservative approach make Fundrise one of the best platforms for beginning investors.

Investors may pay a .15% advisory fee as well as a .85% asset management fee. There’s a minimum investment for each account level that ranges from $10 to $100,000.

Average annual returns for Fundrise investors have ranged from 7.31% to 22.99% from 2017 – 2021. Last year was their best year on record returning an average of 22.99% returns to their investors.

As of 2022, Fundrise has more than 210,000 active members and $7 billion in total asset transaction value. They have also returned $160 million to their investors to date. Like Crowdstreet, Fundrise is extremely transparent with their numbers and specifically their return to investors. They even keep a real-time track record to keep tabs on investor earnings.

There are five account levels available on the platform; Starter, Basic, Core, Advanced, and Premium. Each investment tier has a minimum investment amount along with varying investment strategies.

Pros

Accreditation not required
Highly-rated mobile app
Share redemption requests available at any time, although redemption is not guaranteed

Cons

Investors receive nonqualified dividends (taxed at ordinary income rates)
Investments are illiquid

PeerStreet: Best for Investing in Loans

Platform	Avg. annual returns
PeerStreet	2% – 9%

PeerStreet provides the largest two-sided marketplace where accredited investors can purchase real estate debt. The platform sources loans from a network of private brokers and lenders. They also aggregate, service, and manage loans for investors. PeerStreet provides investors with the chance to invest in real estate without owning property.

PeerStreet is the first marketplace that allows non-accredited individuals to invest in real estate debt. When investors put money into PeerStreet and borrowers pay back outstanding loans with interest, dividends go back to the investors.

Investors interested in PeerStreet can review individual investments to decide whether to become involved. The platform allows investors to automatically diversify their portfolios by choosing investments across various lenders, asset classes, LTV ratios, rates, terms, and geographies.

PeerStreet fees are typically 1%, with a minimum investment amount of $1,000. Investors receive average annual returns of 2% to 9%. Loans have a maximum term of 36 months.

Pros

Different product offerings
Flexible terms
Powerful technology-fueled platform

Cons

Accredited investors only
Investment types limited to real estate debt
May expose investors to higher risks than other real estate crowdfunding types

RealtyMogul: Best for Property Research

Platform	Avg. annual returns
RealtyMogul	4.5% – 8%

Investors get institutional-quality deals with the RealtyMogul platform. Both accredited and non-accredited investors can invest in commercial real estate deals. The platform has roughly 219,000 registered members and has financed more than $4 billion in property value.

Non-accredited investors can choose between two public non-traded REITs and accredited investors can add private placement investments to their portfolio. The platform provides access to individual properties, including office, industrial, retail, medical offices, multifamily, and self-storage. Qualified investors may also have access to 1031 exchanges. Investors can choose from passive income, growth, and diversification objectives when they set up their accounts.

Fees range from 1% to 1.5%, and the minimum investment is $1,000. Average annual returns historically range from 4.5% to 8%. Investors can get involved with the RealtyMogul platform with a $250 per month auto-investing REIT plan.

RealtyMogul is well-known for its attention to detail when vetting potential properties. They examine every property in person and evaluate deals using proprietary models and methods. RealtyMogul does not invest in ground-up construction or raw land, which are non-cash-flowing investments.

Pros

Range of investment types
Excellent due diligence
Start investing with just $250 per month

Cons

Fees vary according to investment type
Investments are illiquid
Long hold periods

Groundfloor: Best for Short Terms

Platform	Avg. annual returns
Groundfloor	10% +

Groundfloor facilitates the investment in real estate loans for those looking to fix and flip residential real estate. Groundfloor is available to both accredited and non-accredited investors alike.

You, as the investor, get to shop around for loans to invest in on the platform. Loans are available in different grades returning 5% to 25%. All loans are secured by the underlying real estate.

Average returns to investors since their inception in 2013 has been a little over 10%.

One of the more enticing features of this platform is that the loans generally have terms of just 6 – 12 months, so your funds aren’t locked up for years.

Pros

You choose the loans to invest in
Excellent due diligence, Groundfloor pre-funds most of the loans
Available to everyone

Cons

Fixing and flipping homes is a risky investment. This is why the loans have high interest rates with relatively short terms.
Only available to invest in residential fixer-uppers.

Roofstock: Best for Rental Property Income

Platform	Avg. annual returns
Roofstock	11 – 12%

Roofstock is an Oakland-based Fin-tech startup that was established in 2015. It’s an online marketplace that allows users to buy and sell residential properties that have both tenants and rental income.

On the buying side, you can finance properties or pay in cash and Rookstock will pair you with an experienced property manager that handles the day-to-day operations.

The layout is easy to navigate and you can quickly see key statistics you’d be keen to know as a prospective investor. Things like: gross yield, cap rate, neighborhood rating, etc.

They’ve had over $4 billion in completed transactions since their inception with 734 properties in 27 states currently on their marketplace.

Roofstock One is their newest offering available only to accredited investors. With Roofstock One you can buy shares of rental homes in multiple markets to better diversify your holdings. Minimum investment in Roofstock One is $5,000 and requires you to buy at least 1/10 of a rental property.

Pros

No minimum deposits required.
Investors can choose to pay cash or finance the properties.
Matched with an experienced property manager, so you remain a passive investor.

Cons

These are fairly illiquid investments.
Requires a large down payment if financing.
Roofstock One requires you to be an accredited investor.
No mobile app currently.

Real Estate Crowdfunding Platforms Provide Access to a Wide Variety of Investment Types

The Jumpstart Our Business Startups Act of 2013 (JOBS Act) was created to encourage funding of U.S. small businesses. The law eases many securities regulations, allowing companies like real estate crowdfunding platforms to use crowdfunding to issue securities. Before the JOBS Act, real estate investors had just two options; buy publicly-traded real estate investment trusts (REITs) or purchase property and pay to renovate, maintain, and manage it.

Now, real estate crowdfunding platforms provide an easy and safe way for investors to pool their money to purchase large properties or invest in real estate debt.

FAQs About Real Estate Crowdfunding

If you still have questions about investing in real estate through online crowdfunding platforms, here are a few more frequently asked questions by consumers like you:

How does it work?

Buying real estate as an investment is typically a sound idea as part of a greater portfolio that consists of stocks, ETFs (exchange traded funds), mutual funds, bonds, and cash. The major barrier to entry, however, has generally been high up front costs associated with the down payment. Along with that hurdle are ongoing monthly loan payments, utilities, maintenance and repair, potentially management fees, etc. Needless to say, it’s typically a costly and time consuming endeavor.

By crowdfunding real estate investments, individual investors can pool their money together using online financial technology companies (aka real estate crowdfunding websites) to fund real estate investments. Most platforms only require a few hundred to several hundred dollars to get started.

This pool of money is then transferred to a holding company – generally a REIT (real estate investment trust) or something similar. These holding companies then own the real estate and operational procedures.

Although there may be hundreds or thousands of investors in the holding company, it is still privately held and pays out dividends to investors on a regular schedule (see individual company’s TOS for details). Public REITs are available as an alternative, where shares can be bought and sold at any time during regular market hours.

Is it safe?

Like all investments, there are elements of risk associated with real estate crowdfunding.

For starters, these are relatively new investment vehicles that haven’t exactly stood the test of time yet. Since most were created after 2013, they haven’t had to weather any major market downturns or recessions up to this point.

Second, the investor (you) will need to have some general understanding of the type of property you’re looking to invest in and will need to conduct your own due diligence. Many of these platforms showcase dozens if not hundreds of properties to buy into. This adds to the risk profile.

Furthermore, when conducting due diligence you may not find every data point you’re looking for or you may not be able to digest everything without thorough experience in the field. Platforms will provide you with an executive summary (sometimes called an OM or offering memorandum) which provides a deeper look into the property, the sponsor and their background, financials, long-term plans and a summary of the investment.

How can an investor get started?

Investors new to the real estate investment scene can start by researching crowdfunding platform options. The best platforms have a track record of solid returns for past investors. They vet new deals thoroughly and have transparent fee structures.

Before getting involved in real estate crowdfunding, be sure to read the rules about how and when it’s possible to make withdrawals from the account. Understand how redemptions work, as well.

With real estate crowdfunding, there are no ongoing costs to own real property. It’s easy to track investment performance on the platform, as well.

A number of the best real estate crowdfunding platforms only work with accredited investors, however. Before new investors can participate, they must submit net worth and income statements to prove they qualify.

Can you crowdfund in commercial real estate?

Yes, many real estate crowdfunding platforms provide individual investors with the tools and access they need to invest in commercial real estate projects like apartment complexes, self-storage, retail, hotels, and medical complexes. Crowdfunding makes these large investments accessible to qualified individuals.

Can you make money with real estate crowdfunding?

Yes, depending on the attributes of the individual investment or fund and the platform’s effectiveness, it’s possible to realize positive returns with real estate crowdfunding. Some experts estimate that real estate crowdfunding returns average 11% to 15% per year.

Even so, real estate crowdfunding is risky. There are no guaranteed returns, and it’s possible to lose an entire investment. Most importantly, with real estate crowdfunding, the investment could be illiquid for years. Investors who discover that they need access to the money they’ve turned over to real estate crowdfunding platforms could face steep fees and wait months to get access to their funds. IT’s crucial to research the platform, fees, redemption rules, and sponsor before committing to a real estate crowdfunding platform investment.

How does an investor become accredited?

An individual or entity must meet income and net worth guidelines stated in Rule 501 of Regulation D of the Securities Act of 1933. The Securities and Exchange Commission (SEC) defines accredited investors as:

“A natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.”

And

“A natural person who has an individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person.”

There isn’t a single entity or agency that reviews an investor’s credentials to determine whether they can participate as an accredited investor. Companies that provide investment opportunities not registered with the SEC must determine a potential investors’ status as an institutional investor by conducting due diligence. Those seeking to participate in real estate crowdfunding investments reserved for accredited investors must provide the company with proof of their financial qualifications.

Are Real Estate Crowdfunding Platforms Worth It?

Maybe. It depends on your investment goals, your risk tolerance, how long you can afford to have your money tied up in an investment vehicle, and your comfort with new technology.

Accredited investors have more options when it comes to real estate crowdfunding investment opportunities. Still, non-accredited investors who would like to use this type of investment as a way to diversify a growing portfolio may find the potential for higher-than-average returns attractive.

If you want to try real estate crowdfunding and have access to money you can afford to have tied up in an investment for a while, it may be a worthwhile experiment. Be sure to take time to get comfortable with the platform. Understand the terms and fees before signing paperwork or committing funds to the investment. If you are interested in real estate as an investment but aren’t sure about crowdfunding platforms, you may find that publicly-traded REITs are a better fit.

Fundrise Review: Compare Annual Returns vs Competitors

Rachel Morey
February 14, 2022

[Update February 2022: Fundrise announced that 2021 was their best year on record for investor returns at 22.99%.]

Fundrise gives investors the ability to get in on private real estate deals by pooling their assets through the Fundrise online platform. Investors can invest in real estate investment trusts (REITs), use pooled money to buy and develop residential neighborhoods or participate in the Interval Fund, which provides diversification and higher liquidity than the platform’s other options.

You don’t need to be an accredited investor to work with Fundrise. Even so, real estate investing can be risky, and fees may be out of reach for many investors. It’s crucial to invest only funds you can leave alone for at least five years to see the maximum possible return and minimize fees.

Get started today with Fundrise.

The barrier to entry with real estate investing is often high enough that beginners shy away from this potentially lucrative sector. Fundrise offers a $10 account minimum and a 12-month waiver on advisory fees, making it an accessible alternative to many competing real estate investment platforms.

What is Fundrise?

Fundrise is an online investment platform that facilitates institutional-quality real estate investing for people who aren’t yet institutional investors. You can choose how much to invest since there are no mandatory minimums to get started. While you can decide your investing strategy, the actual investments are selected by a team of analysts that match various assets to your goals. Your portfolio will change over time as Fundrise acquires new investments.

There’s no need to be (or become) a real estate investing expert to experience success and see your money grow with Fundrise. You can keep up with the latest developments related to individual investments in your Fundrise portfolio. Still, there’s a management team in charge of making big decisions about where and when they invest your money to get the most significant return.

Fundrise Quick Stats

As of January 2022, Fundrise has:

210,000 active investors
More than $7 billion in asset transaction value
Over $160 million in dividends paid to investors

How Does Investing With Fundrise Work?

New users create an account with the platform and connect a funding source. Decide how much you want to invest initially and provide details about your preferred investment strategy. The properties you invest in at first form the “engine” that drives your portfolio. You can continue to add money to your Fundrise account for investing purposes, but even if you don’t, the team at Fundrise may diversify your investments when new opportunities match your strategy.

Fundrise publishes regular updates about various investments, including exit updates, construction updates, and news relevant to the properties.

The platform advertises that they are suitable for both experienced and new investors. If you decide to invest with Fundrise, you’ll receive regular updates about their strategists’ plans and observations about the real estate market in general.

Fundrise is the first platform providing software-driven reporting for private equity real estate investing. Here’s what you’ll get with the Fundrise investor dashboard:

Newsfeed: includes educational material to help give investors context for important concepts like how appreciation powers return.
Real-time performance reporting: see exactly how much your account has appreciated and how much it has earned in dividends to date.
Investment goal tool (Core level accounts and higher): shows whether projected future performance is on track to meet stated goals.
Auto invest: allows users to set up automatic deposits for additional investments.

Are Fundrise Investments Any Good?

Investing in non-traded REITs carries some significant risks but can also be lucrative. Fundrise investments potentially generate quarterly dividends, and shares may grow in value over time.

On average, Fundrise’s investments produced average annualized returns of 8.76% to 12.42% between 2014 and 2019. In 2019, Fundrise had a net return across its entire platform of 9.47%. Of course, not all investors experienced a precise 9.47% return; most earned a bit more or a bit less than 9.47%.

In 2020, the year of COVID, Fundrise returned just 7.42% to investors. Last year, however, Fundrise had its best year on record bringing in a whopping 22.99% to investors.

Investors with Fundrise who had the highest return on their investment were the ones who had been with the platform the longest. The time it takes to see a good return may help potential investors understand that succeeding with Fundrise requires patience.

Learn more at Fundrise.

A Note About Fundrise Liquidity

Investors that need to liquidate shares prematurely may incur costs. They may have to wait to receive funds, as well.

Fundrise Platform Portfolio Performance

Year	Investor Returns
2014	12.25%
2015	12.42%
2016	8.75%
2017	11.44%
2018	9.11%
2019	9.47%
2020	7.42%
2021	22.99%

Based on this 8 year performance, Fundrise provided an annualized average return of 11.73% to investors.

Learn more at Fundrise.

Fundrise Returns vs Stocks and Savings:

To put Fundrise’s historical returns into perspective, consider the following yields from the S&P 500 and your average savings account over the same time period.

Year	S&P 500	Avg Saving Rate
2014	11.39%	0.06%
2015	– 0.73%	0.06%
2016	9.54%	0.06%
2017	19.42%	0.06%
2018	– 6.24%	0.08%
2019	28.88%	0.09%
2020	16.26%	0.05%
2021	26.61%	0.05%

S&P data provided by macrotrends.net and savings rate data provided by FDIC.gov

Although the S&P has done well over this time period, its volatility can be too much to stomach for some people.

Conversely, savings accounts, while pretty much risk-free when backed by the FDIC, have provided almost nothing for savers in terms of yields.

Fundrise Returns VS CrowdStreet, DiversyFund and Yieldstreet:

Although Fundrise is one of the early entrants to market, they’re certainly not the only real estate crowdfunding investment platform available.

Here are some of the other big players and the annual returns they’ve provided investors since their inception.

	Fundrise	CrowdStreet	DiversyFund	Yieldstreet
2014	12.25%	NR	NR	NR
2015	12.42%	NR	NR	10.61% avg
2016	8.75%	NR	NR	10.61% avg
2017	11.44%	NR	18%	10.61% avg
2018	9.11%	NR	17.3%	10.61% avg
2019	9.47%	NR	NR	10.61% avg
2020	7.42%	17.7%	NR	10.61% avg
2021	22.99%	NR	NR	10.61% avg

NR = Not Reported

Not all real estate investment platforms are alike, so be sure to research them each individually before making a decision.

Fundrise vs. REITs

Real estate investment trusts (REITs) trade on stock exchanges, allowing investors to purchase or sell stock quickly. Even so, a big part of the real estate investment market is private and only available to institutional investors. The JOBS Act of 2012 allowed private investments for a wider group of investors. Fundrise jumped at the chance to take advantage of opportunities created by the JOBS Act and become one of the first companies to provide high-quality investment opportunities to everyone.

Fundrise specializes in proprietary public non-traded REITs (eREITs), similar to those on the stock market. Some non-REIT fund options (eFUNDS) are available to certain investors.

Assets in many publicly traded REITs are comparable to assets available in Fundrise eREITs. Fundrise’s eREITs invest primarily in affordable housing across the Sun Belt. This region of the United States stretches from southeast to southwest. It includes Alabama, Arizona, Florida, Georgia, Louisiana, Mississippi, New Mexico, South Carolina, Texas, the lower two-thirds of California, certain areas North Carolina, Nevada, and Utah.

Comparable REITs, including Camden Property Trust, Invitation Homes, and Mid-America Apartment Communities, also own single-family residences in growing markets across the southern states.

There are a few critical differences between eREITs and publicly-traded REITs, however.

Pricing and liquidity: REITs provide instant liquidity, limited only by the stock market’s trading hours. Fundrise investors purchase shares of eREITs, but can’t pick specific eREITs. Some investments accept limited new investments, as dedicated by the constraints of the JOBS Act. Fundrise can halt redemptions if the market is in turmoil like it did early in 2020. So liquidity may be limited with eREITs as opposed to REITs.

Volatility and valuation: The stock market significantly impacts REIT share prices, as the value of shares with this type of investment correlates to the stock market. There’s no connection between the stock market and eREITs, however. Investors buy and sell eREIT shares at their NAV, which is updated quarterly or semiannually.

Fees: REIT investors pay the management team overseeing the real estate portfolio. For example, the Vanguard Real Estate ETF charges a 0.12% expense ratio. Fundrise acts as the manager of eREITs and eFunds, so investors pay the platform an annual investment advisory fee. Fundrise’s fees are higher; eFunds and eREITs charge investors 0.15% of their portfolio.

Many REITs have internal managers. Thus, investors aren’t paying fees to an external manager who oversees the real estate portfolio; and instead, they pay the REIT’s management team.

Strategy: Investors can choose between two main types of REITs; equity and mortgage. Equity REITs are primarily residential, office, industrial, self-storage, infrastructure, hospitality, diversified, data center, timberland, healthcare, retail, and specialty. Mortgage eREITs invest in pools of mortgage loans backed by commercial or residential real estate. This allows investors to narrow down their REIT selection based on sector. Fundrise eREITs focuses on affordable housing in the U.S., only. Investors interested in this trend may prefer Fundrise as an investment platform.

Fundrise is a niche platform, so it may not appeal to many investors. At the same time, REITs are versatile enough that many investors’ plan to diversify their portfolio includes this type of investment.

How To Get Started With Fundrise

New Fundrise investors must create an account online through the Fundrise platform. After choosing a portfolio strategy, Fundrise managers diversify the investor’s funds across multiple investment funds tailored to meet the stated goals in the portfolio strategy.

Even after the initial investment, fund managers work to add new assets to the portfolio over time. There’s no additional investment required to receive this service, and adding assets allows portfolios to become stronger over time.

Users can watch assets evolve through the in-app newsfeed. Fundrise regularly publishes asset updates like new construction progress, market data trends, project completion alerts, and occupancy reports. This level of transparency sets Fundrise apart from other investment firms.

Interval Fund Option

Interval Funds are more liquid than eFunds and eREITs with Fundrise. Investors can opt into the Fundrise Interval Fund for better ongoing access to invested funds via quarterly repurchase offers. Unlike eFund and eREIT investments, Fundrise Interval participants won’t pay a penalty if they decide to liquidate Interval Funds during a quarterly repurchase offer.

The Interval Fund is also larger than other funds on the Fundrise platform. It may offer a higher level of diversification, and it provides the same benefits of eFunds and eREITs.

Fundrise Fees

Real estate investors are familiar with the high fees often associated with exposure to this sector. Hidden management fees and high advisory fees limit potential returns. With Fundrise, investors can own real property at a low cost.

New software designed by the Fundrise team makes many required processes less expensive, and Fundrise passes those savings on to their investors in the form of fewer and smaller fees.

All real estate business is also handled in-house, as Fundrise works directly with operators and real estate developers to manage deals one-on-one. Eliminating most intermediaries allows the company to keep fees low.

Here’s a breakdown of Fundrise fees.

Annual Investment Advisory Fee: 0.15% (waived under certain circumstances)
Standard Portfolio Fee: 0.85% annually
Redemption Program Participation Fee: 0% reduction in share price value if investors sell shares back to Fundrise within 90 days; 3% if shares were held 90 days to 3 years; 2% if shares were held 3-4 years; 1% if shares were held 4-5 years; zero fees if shares were held more than five years.

All investment funds, EFT, and REITs incur expenses offset by annual management fees paid by investors. However, these fees are rolled into the fund, making it difficult for investors to understand how much of their gains are reduced by fees.

Fundrise’s fees are straightforward. Investors pay $8.50 per year for every $1,000 invested on the platform. Those fees go toward the operating expenses of the real estate projects in Fundrise’s investor portfolios. They may pay for construction, zoning, accounting, or other project-specific costs.

Fundrise eFund investors may also experience Liquidation fees and Development fees applied at the fund level, and these fees aren’t paid by investors directly. eFunds often incur many of the exact costs as eREITs, but eFunds pay the expenses directly, while eREIT projects cover those costs with money from outside borrowers.

Is Fundrise Worth it For New Investors?

Maybe. Many online real estate platforms are available only to accredited investors (those with a net worth of $1 million or more and an annual income of $200,000 or more). Fundrise is available to any investor. The low investment minimums and intuitive platform make it ideal for those who want to get into private real estate investing but don’t have hundreds of thousands of dollars to sink into a fund.

New investors should read the fine print and have a good idea of how and when they could get their money back if they need to close their positions with Fundrise. They should also be careful of fees and understand that liquidating before they’ve been with Fundrise for at least five years could carry a hefty penalty.

Fundrise real estate investments may work for you if:

You have some experience as an investor, and you have money to invest but aren’t accredited.
You plan to leave the money you invest with Fundrise alone for at least five years.
Your personal financial situation is stable, and you understand the risks associated with investing in the real estate market.
You understand that you will pay fees with Fundrise, and you could lose money on your Fundrise investments.

Fundrise Customer Reviews

Fundrise is a unique platform, and customers who write reviews seem pleased overall with their experience. The company generally receives negative reviews from investors who object to the lack of liquidity with eREITs and eFUNDs, even though the company clearly states the fee structure multiple times throughout the investing process.

Reviewers seem happy with the returns they get from their Fundrise investments, although some who tried to withdraw funds before they had been with Fundrise for five years weren’t pleased with the associated fees.

Fundrise Reviews on Trustpilot

The Fundrise has 312 reviews on Trustpilot:

Excellent: 84%
Great: 4%
Average: <1%
Poor: <1%
Bad: 10%

Here are a few Trustpilot reviews from verified Fundrise investors that may help you decide whether the platform is a good fit:

“This is not a savings account, a publicly-traded REIT, or anything else that you can just sell and get your money back. This is a private equity investment and anyone who invested should have taken time to carefully consider the amount of money they were putting in this.” -Paul Bommarito

“I find it very easy to put money in but very hard to take money out. The process should be the same both ways. Other than that, I think the design and implementation has been pretty good compared to your competitors (iFunding.co)” -Raymond L

“I’ve been with Fundrise for 4 years with a total return of 27%. I reinvest my dividends, and get a small increase almost every single day. This investment is for the long haul, and is ideally for those that would like to supplement income with dividends. Interestingly the negative reviews are accurate. Fundrise is not liquid. You’ve chosen to invest in real estate. Your money is literally tied up in property. You cannot just pull your money out when you feel like it. I no longer add funds to my Fundrise account. I just allow the reinvested dividends and compound interest to do its job.” -Terez Lundquist

Fundrise on the BBB Website

Fundrise has 77 published customer reviews on the Better Business Bureau (BBB) website. The company has an average rating of 3.66 stars out of five. The BBB closed 59 customer complaints in the past three years and 32 in the past 12 months.

Customers typically complain about having difficulty getting their money out of the investments promptly. Fundrise responds to each customer complaint, often with some variation of this statement:

“For context, under our redemption program, all redemption requests that are made during any given quarter, regardless of when the request is made, remain in a pending state until the end of the quarter at which time they are expected to be reviewed and processed.

We make an extensive effort to ensure that investors are made aware of this fact prior to placing an investment with us. For example, as part of the process of placing an investment, each investor is required to acknowledge the following: ‘I recognize that my investment is in real property, which is fundamentally a long-term, illiquid investment; that liquidations, if approved, are paid out quarterly for the eREITs and Interval Fund, and monthly after a minimum 60-day waiting period for the eFund; and requests for liquidation for the eREITs and eFund may be suspended during periods of financial stress‘”

Fundrise on Reddit

Reviews of Fundrise as an investing platform from Reddit users line up with Trustpilot and BBB reviews. Investors who didn’t understand Fundrise’s fees for early withdrawal of funds weren’t pleased with their experience.

“I invested a lot of money through Fundrise early last year and I just withdrew all of it after a 3 months waiting period. Overall, I lost money with Fundrise.com due to minimal dividends and 3% penalty for redeeming investment after 15 months.”

-re-emerald

“Fundrise is legit, but it might not be the best way for you to get exposure to real estate. A publicly traded REIT or REIT index fund is much easier to get in and out of. Private REITs like Fundrise should really be held until they liquidate, which could be five or ten years. I like Fundrise but I think an illiquid long-term investment like this should not be a core part of your portfolio.”

-Citryphus

“Invested a few times up to a certain amount, and am holding any further investments. I think the actual returns are/will be less than the claims. Also, look at the “process” to get your money out.”

-RedditDogX

Is Fundrise Worth it?

The Fundrise platform provides an easy-to-navigate way to diversify your investment portfolio into the world of real estate.

The platform may be ideal for investors with a portfolio that includes stocks and bonds and are willing to leave their investments alone for at least five years. Investors interested in real estate may find that his platform allows them to easily access high-quality assets while experiencing returns that far outpace REIT stock investments.

Get started with Fundrise today!

PeerStreet Review – Avg Annual Returns 6 – 9%

Rachel Morey
December 21, 2021

PeerStreet offers accredited investors the opportunity to use the power of crowdfunding to invest in real estate loans. Much like a peer-to-peer lending platform, PeerStreet provides access to loans backed by real estate assets.

PeerStreet, launched in 2014, has funded over 8,800 loans worth more than $4 billion since their inception.

As of February 2020, PeerStreet had paid out $2.2 billion in principal and $175 million in interest to investors.

PeerStreet is the first two-sided marketplace that allows investors to make money on real estate debt. Loans are sourced from a network of private brokers and lenders. The platform also services, manages, and aggregates loans for investors.

What is PeerStreet?

PeerStreet facilitates crowdfunding that connects borrowers who want short-term real estate loans with lenders. The lenders here are investors that pool their money to lend in the hopes of receiving their principal plus interest back in the future.

PeerStreet allows investors to generate truly passive income in the real estate space while protecting principal investments by linking them to tangible property. There are risks associated with equity investments and debt that are also present with unsecured loans. For many investors, real estate that secures a loan provides an additional measure of security.

With PeerStreet, borrowers are professional investors who purchase a property, fix it, and sell it quickly at a higher price. These real estate equity investors agree that if they fail to meet the terms of the agreement, the loan may default, and PeerStreet can seek legal remedies to protect the investor’s stake in the deal. Investors have a first-lien position, which means they are first to get paid back if the borrower defaults.

PeerStreet Returns

At the close of 2020, PeerStreet paid off 96.32% of its loans without foreclosure.

According to their FAQ page regarding investor returns, PeerStreet’s high quality, moderate LTV, short-term loans have provided investors with annual returns ranging from 6 – 9%, depending on a number of asset characteristics.

PeerStreet Returns VS Competitors

Keep in mind, these online platforms primarily provide passive real estate investment products.

	Fundrise	CrowdStreet	DiversyFund	PeerStreet
2014	12.25%	NR	NR	6 – 9%
2015	12.42%	NR	NR	6 – 9%
2016	8.75%	NR	NR	6 – 9%
2017	11.44%	NR	18%	6 – 9%
2018	9.11%	NR	17.3%	6 – 9%
2019	9.47%	NR	NR	6 – 9%
2020	7.42%	17.7%	NR	6 – 9%

NR = Not Reported

Not all investment platforms are alike and many don’t require you to be an accredited investor. You can compare each option in depth in our rundown of the best online real estate investment platforms.

PeerStreet Pros and Cons

✅ PeerStreet Pros:

📊 Numerous investment choices: Each day, new investments are posted to PeerStreet around noon Pacific time. Over the years, the company has increased the number of new investments featured daily.
🤖 Automated investing: PeerStreet investors can set up their investment criteria allowing PeerStreet to automatically allocate any invested capital into loans that line up with those preferences. Up to 24 hours before any automated investment goes live, the investors can opt out of the investment.
📖 Transparency: PeerStreet is transparent about its fees and the loan portfolio’s performance.
💲 Earn interest on uninvested funds: PeerStreet Pocket allows investors to earn interest on the cash in their account while deciding what investment to choose next.
🏡 Positive impact on communities: The Evolving Neighborhood Uplift Fund supports entrepreneurs who want to improve real estate and are from underserved communities.
📈 Track Record: PeerStreet has a good track record of performance including a high success rate when it needs to recoup capital from defaulted loans.

❌ PeerStreet Cons:

💰 Accredited investors: PeerStreet requires all investors to be accredited, which excludes the majority of people who may want to invest in real estate.
💰 High minimum investment amount for more potentially stable and lucrative investment options: Accredited investors must provide a minimum $100,000 investment to get the advantages of the diversified fund.
💰 Debt investment only: PeerStreet only provides debt investments, which may work well for investors that want a steady income but aren’t so concerned about growing the principal. This platform does not provide equity crowdfunding deals.

How Does Investing With PeerStreet Work?

PeerStreet provides more transparency and flexibility than many other real estate investment options. Here’s what to expect:

Loans are short-term and span six to 24 months. When you open a PeerStreet account, you can set criteria to help investments meet your diversification preferences. Choose maturity dates, investment risk, property type, and geographic location.

Investors can automate settings, so if the loan that meets pre-set requirements isn’t yet available, they’ll be placed on a waiting list. When the loan is available, investors on the list can have their funds automatically invested when the balance in their cash account is at least $1,000.

Choose from a self-directed IRA or taxable account. A self-directed IRA acts as a retirement account, and investors can transfer funds from any other compatible retirement account to fund the PeerStreet investment account. Taxable accounts are also available.

PeerStreet recently integrated with Wealthfront and Betterment so investors can see all of their investments in one location to easily view their asset mix.

All PeerStreet accounts are FDIC insured up to $250,000.

If a loan defaults, PeerStreet works for the investors to maximize return on the investment. The platform also ensures that if it goes out of business, a third party will take over to manage any remaining loan investments.

What You Should Know About PeerStreet Before Investing

PeerStreet sources investments from a network of private lenders who each handle vetting and due diligence. Loans are listed on the PeerStreet platform, and investors can choose to fund those loans. Investors with PeerStreet act as mortgage lenders, while PeerStreet handles the financials and performs all independent underwriting and valuation of loans.

Loans on the PeerStreet platform generally have a loan-to-value (LTV) ratio of 75% or lower and are secured by first liens on the associated real estate. A first lien gives PeerStreet investors senior claim on the real estate that secures their investments. So, if the borrower defaults, PeerStreet investors have a better chance of recouping their funds.

Unlike more traditional real estate loans, PeerStreet real estate investments are short-term. Expect to see bridge loans of six to 24 months. Many loans on the PeerStreet platform are hard money loans for real estate that will undergo a fix-and-flip by experienced real estate professionals.

At this time, PeerStreet investments are only open to accredited investors, per SEC regulations. This may change in the future, but as of right now, unless you can prove your status as an accredited investor, you must look elsewhere for real estate investment opportunities.

The minimum investment on the PeerStreet platform is $1,000 for an initial investment plus $100 for reinvestments, so it’s possible to get started with only a small amount of money.

How To Sell PeerStreet Investments

PeerStreet loans are illiquid, so there’s no quick and easy way to get cash out once the investment has closed. There’s no secondary marketplace for loans, so investors can’t usually get a hold of their money during the loan term.

However, while many crowdfunding platforms target a four to ten-year timeframe, PeerStreet loans are typically just six to 24 months long.

PeerStreet vs. REITs

While both real estate investment trusts (REITs) and PeerStreet investments allow investors to lean on real estate professionals for due diligence, some REITs are less diverse.

With PeerStreet, investors can customize a portfolio that matches their diversity goals by choosing properties across many geographical areas. Investors can choose loans with different targeted return rates, LTVs, terms, and lenders, as well.

In general, PeerStreet is more flexible and transparent than many REITs. Investors can select individual loans from carefully vetted opportunities. Information about each property, loan maturities, and other details of the loan are readily available to help investors choose a loan that may help them reach their financial goals.

REITs have received some negative press about high visible and hidden fees. PeerStreet’s fee structure is designed to allow investors to capture higher investment yields than they may experience with many REITs. To date, PeerStreet has zero losses due to their quick action where late payments and defaults are concerned.

Many PeerStreet investors prefer the platform over REITs. While REITs can be lucrative, they are often less efficient than PeerStreet, which means fees may eat into investors’ returns.

PeerStreet Fees

PeerStreet makes money by charging service fees on individual loans of 0.25% to 1.00%. Investors don’t pay fees directly. PeerStreet may offer a loan to a real estate developer for a project with an 8% interest rate. Investors may get 7.5% interest if they choose to participate. PeerStreet keeps 0.05% to cover their fees.

PeerStreet also charges loan origination fees but most of their revenue comes from servicing fees.

Is PeerStreet Risky?

Of course, there is a level of risk associated with any investment, and a borrower with PeerStreet occasionally fails to make on-time payments or defaults on the loan. Fortunately, PeerStreet investments are backed by underlying real estate. When a default occurs, PeerStreet pursues legal remedies on behalf of its investors.

PeerStreet handles the recovery of outstanding defaulted loans. The company has regulatory experts on staff to help enforce legal remedies. They work to make sure that investors don’t lose capital. While the process may take time, PeerStreet has a track record of helping borrowers avoid default with the intent of minimizing the negative impact on investors. More than 95% of loans through PeerStreet have avoided foreclosure and have paid off.

PeerStreet investors typically earn returns close to expectations. With a solid track record of good performance, PeerStreet may be a good choice for accredited investors who want to diversify while creating passive income secured by real estate.

PeerStreet Customer Reviews

While customer reviews generally help new investors decide whether a platform may be a good fit that ultimately generates good returns, few reviews are available about PeerStreet. Trustpilot shows zero reviews, the BBB has a thin file on the company, and Reddit investors are outspoken, but there’s no real volume of information there, either.

The lack of reviews could be due to the high bar that platforms catering to only institutional investors set. Since the general public can’t use PeerStreet, there are fewer investors who are able to give a first-hand account of their experiences.

PeerStreet on the BBB Website

PeerStreet Investment, Inc has only six customer reviews on the Better Business Bureau (BBB) website with an average one out of five star rating. The BBB file was opened January 22, 2018 and says that PeerStreet is not accredited by the BBB.

The BBB indicates that PeerStreet’s headquarters are in El Segundo, California.

PeerStreet on Reddit

Investors who participate in Reddit are not generally fans of PeerStreet, but seem to think that it’s important to understand the risks associated with real estate investing before you decide whether to participate in the platform.

“It’s a pretty terrible platform. I luckily dabbled with only enough for one loan at a time. The first two were fast and paid off well ahead of time.

My current loan, established in 2019, has not been paid for 21 months and they are finally just now getting around to some type of “discounted” resolution according to their truly ambiguous cut and past updates. For example, they have now engaged in a foreclosure attempt 3 times (2019, 2020, and now 2021), recorded 3 notices of sale, and each time simply said “the process is very complicated” when I have emailed customer service for clarity. Apparently they will now only do meaningful updates, but it’s now been two weeks since the discounted offer went to their legal desk with nothing further. At this point I expect a substantial tax write-off of the original amount.”

-Mustang_over20, October, 2021

“It was only within the last year that I had any single investment default, foreclose, AND I lost money. But that’s bound to happen sometimes. In all other cases, due to favorable LTV that held or improved over time, I’ve always recovered my principal in addition to at least some interest.

The key, as with any investing, is to diversify. At any one time I have 10-15 active investments on PeerStreet, so that 1 which went into default and resulted in a foreclosure sale that recouped less than the original loan amount was but a minor blip in an otherwise well-performing portfolio.”

-bleedsixcolors, August, 2021

Is PeerStreet Worth it?

PeerStreet won’t work for investors until they are accredited, which automatically excludes most everyday investors. The platform specializes in unique real estate loans. While PeerStreet may be a good fit for high asset investors with tolerance for risk, it takes a great deal of knowledge about this type of real estate lending to confidently participate in the deals offered by PeerStreet.

Even advanced investors may find that the lack of liquidity may be an issue with PeerStreet investments. Although the term of many loans on the platform is fewer than 24 months, there’s not an easy way to get a hold of money wrapped up in a PeerStreet loan before the loan reaches maturity.

CrowdStreet – Averaging 17.1% Annual Returns for Investors

Angelica Leicht
August 16, 2021

[Update August 2021 – CrowdStreet just funded its 500th real estate deal. Their largest individual deals are now in the following markets:

Miami, Florida
Park City, Utah
Atlanta, Georiga
Clemson, South Carolina
Denver, Colorado.

Diversifying your portfolio is an important step to take whether you’re an amateur investor or have decades of experience. And while you may think that diversifying the types of stocks, bonds or ETFs you buy will cut it, it may not be the most well-rounded plan for 2021 as many “alternative investments” have changed the landscape for everyday investors.

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Take, for example, cryptocurrencies like Bitcoin and its rise — this is one of the prime examples of how alternative investments can be a lucrative, albeit risky, way to invest.

Surely, crypto has created a lot of wealth for many people in recent years, but many still find it too risky to add to their portfolio.

Luckily, there’s another option with commercial real estate investment via crowdsourcing platforms. Real estate investing, in general, is a lot more stable than crypto or other alt investments, and dozens of real estate investment marketplaces have emerged after Congress eased the securities regulations back in 2012 with the JOBS act. These platforms, like DiversyFund or GroundFloor, have made it extremely simple for novice real estate investors to take part.

One of the more popular real estate crowdfunding options is CrowdStreet, a platform that makes it simple to invest in commercial real estate projects across the country by connecting investors with “sponsors” (project developers) looking to fund a project.

CrowdSteet Platform Quick Facts:

Expected Annual Rate of Return (IRR)	17.10%
Equity Multiple (expected ROI to investor)	1.39x
Hold Period (how long your money will held)	2.3 years
Fees	0.50% – 2.50%
Investment Minimum	$25,000

If you’re looking for a platform to get started in real estate investing, CrowdStreet is certainly worth looking into. Here’s what this real estate investing platform can offer.

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What is CrowdStreet and Who is Behind It

Founded in 2013, CrowdStreet is one of the oldest and largest real estate crowdfunding platforms available to investors. It’s also one of the highest volume marketplaces — at least in terms of standalone crowdfunded real estate deals. Since its inception, CrowdStreet has hosted 367 commercial real estate offerings from sponsors looking for funding from small and large investors.

The number of real estate offerings on this platform isn’t the only reason for its popularity, either. The company’s co-founders, Darren Powderly and Tore Steen, are both industry veterans who have helped to establish CrowdStreet as a legitimate investment opportunity.

Prior to founding CrowdStreet, Powderly served as President of Compass Commercial, a full-service commercial real estate services company. Since that point, Powderly has transacted billions of dollars’ worth of commercial real estate investments and enterprise software contracts.

Steen, on the other hand, led the product, sales, marketing, and business development efforts for Janrain prior to launching CrowdStreet. Steen is widely recognized for helping guide Janrain from its phases to a recognized leader in the social identity space with a full user management platform.

Both Powderly and Steen are still at the helm of the massive platform, with Steen acting as Chief Executive Officer and Powderly as Vice President of Capital Markets.

And, the duo’s combined expertise has clearly paid off. CrowdStreet currently offers the largest number of investment offerings in this market at any given time — helping to set it apart from the competition.

That’s not the only thing setting CrowdStreet apart, either. What’s unique about CrowdStreet is that unlike other platforms, CrowdStreet acts as an intermediary, taking a small fee (between 0.50% and 2.75% depending on the project) while connecting sponsors — who they vet thoroughly via background checks and references — directly with investors.

This gives both the investors and sponsors the freedom to manage the relationship with each other. It also helps keep issues with communication or delayed funding to a minimum that you would generally find with SPVs or special purpose vehicles, which are frequently formed entities in commercial real estate deals.

With CrowdStreet, you can choose between individual properties or CrowdStreet’s funds, which act much like mutual funds with a diverse range of real estate projects. Those features aren’t standard on other platforms.

These less common features, coupled with a potential for a high rate of return, have helped build CrowdStreet into one of the mainstays in the real estate crowdfunding space.

Features and Benefits

One of the more obvious benefits of the CrowdStreet platform is that it allows investors to pick and choose what real estate crowdfunding projects they’d like to buy into. If a savvy investor feels capable of picking individual real estate projects and navigating the relationship with the sponsor, that’s an option on this platform.

Or, if the investor is a little more gun shy and would prefer a safer bet, the CrowdStreet fund may be a better option. Having both options to choose from — along with a highly-integrated investment management platform — makes this platform user-friendly for a wide range of investors.

It’s also friendly to sponsors or real estate investment and development groups who are looking to fund their projects. As of 2021, more than 250 large commercial real estate developers and operators had utilized CrowdStreet’s technology to raise the funds necessary for their projects. That is a substantially higher number of funded projects than many of the smaller platforms have hosted, lending credibility to the idea that both the investor and the project sponsors can benefit from CrowdStreet.

The platform also offers a wide range of investment opportunities for investors. In recent years, investors were able to choose from new construction rental projects, charter school projects, multifamily developments, and other real estate projects. Many of these projects are unavailable on other real estate crowdsourcing platforms — which further helps CrowdStreet to stand out against the competition. Whatever type of project you’re looking to invest in, CrowdStreet likely offers it.

More platform benefits include:

A direct investment: Unlike other platforms, you deal directly with the sponsor if you opt to invest that way. This works in favor of the sponsor too, who is offered a more personal relationship with the investors using the platform.

A very thorough vetting process: CrowdStreet has an incredibly thorough vetting process it uses to determine legitimate projects and sponsors. It’s worth noting that only ~5% of submitted projects get approved for the platform. But, the vetting process doesn’t stop there. The platform also vets the investors, too — so both the investor and the sponsor can rest assured that the deals and funding are legit.

A culture of transparency: Investing in real estate crowdfunding deals can be intimidating, especially on this platform — where the minimum amount you’re investing is much higher than it would be on other platforms. CrowdStreet makes the process transparent, though, by offering documents and research on each deal.

The option to buy into CrowdStreet’s fund: Another benefit is the option to buy into CrowdStreet’s fund, which, as mentioned, acts much like a mutual fund in that it uses your money to buy into a wide range of real estate projects. This option is great for investors who aren’t comfortable with the one-on-one interaction with sponsors — or for those who want to fund a wide range of projects without buying into each one individually.

Tons of investment options: As one of the largest real estate crowdfunding platforms, CrowdStreet offers investors a massive range of commercial real estate projects to choose from. There are between five to 15 private equity investment opportunities on its marketplace, including both single-asset projects and funds.

Easy access to project research: One very unique feature of CrowdStreet is that you get access to all of the information you need to make a decision on a project. For example, each investment opportunity on the website gives you a detailed video with information about the project. This feature gives you a very simple way to both vet the project and understand what the purpose and goal of the project is. You can watch these videos and understand where your money is going — and why — to ensure you’re doing your due diligence before forking over any cash. Plus, you also have the option to submit questions to the sponsor, which can help you further understand the goal of the project — and decide whether the investment makes sense for you.

Access to a ton of resources: In addition to the easily accessible research, you’ll also get easy access to a ton of resources in the website’s research section. You can find instructional videos, articles, investing topics, and other resources in this section — along with access to the Quick Start Guide, which can help you navigate the platform.

Average Return to Investors

Targeted Returns on the above properties range from 12.9% IRR to 18.7% IRR. IRR = APY (annual percentage yield)

Another major perk of this platform is that it makes return information easily accessible to users. According to the website, CrowdStreet’s investors have made, on average, about 17.1% IRR as of June 2021, which is the annualized return metric that spreads cash flows and equity return over the course of the entire holding period.

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Furthermore, according to CrowdStreet’s data, investors, on average, receive a 1.39x equity multiple, which is the total cash distributions received from an investment, divided by the total equity invested.

Both of these numbers are based on a 2.3 year hold period, which is the amount of time from the date of the purchase to the date of the sale.

Those are just the current numbers, though. Thus far, CrowdStreet says it has successfully funded 485 deals on the site, of which 47 of have realized (sold).

As more deals work through their holding periods, the numbers will be updated to reflect the latest metrics, which are calculated to be net of fees.

Potential Drawbacks

While there are opportunities for a very healthy return on your investment of 18% or more with this platform, there are also potential drawbacks to using CrowdStreet to invest. These include:

Limited to accredited investors: Right now, CrowdStreet is mainly limited to accredited investors. That means that anyone who cannot meet the accreditation standards set by the SEC is out of luck. There are other platform options to choose from, of course, but CrowdStreet isn’t a viable option for anyone who would struggle to meet accreditation standards.

A long investment term: The payoff for using CrowdStreet can be extremely high, but you’ll have to leave your money sitting in the investment for a period of years before you realize it. It takes about two-and-a-half years for most investments on this platform to mature, so if you can’t leave your funds tied up for that long, you may want to steer clear of this one.

A high minimum investment: In general, the minimum investment on this platform is $25,000 for the marketplace but this goes up to $250,000 for a CrowdStreet Advisors account which is privately managed.

Costs

CrowdStreet charges a 1% management fee for investing in its Blended Portfolio. It also charges a 1.75% management fee on the REITs, along with a 1% financing fee.

There are also fees for managed investments, which carry a 2% to 2.75% fee on the assets that are under management for the first year. After the first 365 days, that management fee drops to 0.25%, but the costs are still significant given the amount you’re investing in this platform.

How are CrowdStreet’s Investments Sourced

Unlike many of the smaller real estate crowdfunding platforms, investors don’t typically seek out CrowdStreet. Rather, the company’s “Capital Markets” team has a presence in every region of the nation and is always looking for deals worthy of making it onto the platform.

When the team finds a potential deal worth featuring, the opportunity is taken to the investments team, which puts the sponsor and the deal through a rigorous review process. This helps them determine whether the deal is a prime fit for the CrowdStreet marketplace.

According to CrowdStreet, out of every 100 deals that makes it in front of the investor team, only five will make it onto the marketplace for investors to buy into. It’s evidence of how extremely thorough and, dare we say, picky, CrowdStreet is with the investment opportunities it promotes.

CrowdStreet puts each of its potential investment opportunities through the same objective review process, which includes:

Background checks using industry-leading platforms. These background checks are run on the firm and the principals involved in the potential deal.

A track record review. CrowdStreet wants to know the history of the companies behind the potential deals, so they look into any past deals to find successfully executed projects in the asset type they are looking to bring to the marketplace. This gives them an idea of whether the past projects have been actualized in a sufficient manner.

Sponsor designation. Each sponsor is placed into a category based on background and experience.

These categories include emerging, seasoned, and tenured to help prospective investors understand the experience level and size of the sponsor or real estate firm they will be working with.

Below is a table breaking down the categories and what the sponsor requirements are for each.

Category	Sponsor Requirements
Emerging	Requires 2–5 years worth of experience with portfolio activity up to $100 million, as well as experience in both the geographical region and proposed asset class.
Seasoned	Requires 5 or more years worth of experience with portfolio activity over $100 million. Must also have an existing network of repeat investors and established banking relationships.
Tenured	Requires 10 or more years’ experience with portfolio activity of over $500 million, with principals who have invested together through multiple real estate cycles. The company must also have a dedicated staff for investor relations and accounting.

Any red flags, including “bad actor” violations or any pending material litigation, are grounds for immediate rejection — which is part of why only 5 out of 100 projects make it onto the marketplace.

Who is CrowdStreet For

While other platforms allow non-accredited investors to buy into projects, CrowdStreet primarily caters to accredited investors. This limits the opportunities to those who can meet the laborious accreditation standards set by the SEC.

In order to become accredited, the SEC requires a net worth of more than $1 million — not including your residence — or an annual income of at least $200,000 per individual for at least two years. CrowdStreet makes it clear that their platform is geared toward investors who can meet these standards — which can block out the little guys from the equation.

Accreditation isn’t the only requirement, though. Right now, only U.S. citizens and green card holders can invest in CrowdStreet, so if you’re outside of the United States, you’re likely out of luck.

You also have to be in this investment for the long haul. You won’t see a quick return on your investment with this platform, so anyone interested in using CrowdStreet to invest needs to be ready to leave their money tied up in a project for a couple of years at minimum. This can be tough if you need the cash unexpectedly, so before you take a dive into this platform, make sure you’re OK with tying up your funds for a few years at least.

And, CrowdStreet can pay off, but it can also be risky. If you’re risk-averse, you may not want to invest in real estate crowdfunding on any platform. The potential payoff is large because there’s risk involved with funding other people’s projects. You don’t have much control of what happens after you part with your capital.

But, if you’re willing to take the risk and do your homework on the projects you’re considering funding, this platform can be a great way to get into real estate crowdfunding — especially if you value choice and options in the projects you invest in.

Is CrowdStreet Safe

As mentioned above, if you’re going to invest in real estate crowdfunding, you’re going to take a risk. It’s important to remember that a good chunk of change is going into these projects — generally about $25,000 at minimum — so be sure this figure works within your overall portfolio. If it takes up a sizable portion of the pie, this probably isn’t for you.

And, as with any investment, you’re at risk of losing money with this platform. That’s the reality of investing. There’s a payoff because there’s risk. If a project you funded fails to pan out as expected, you may not make as much as you expected.

That said, CrowdStreet is transparent with the results of the past investments from the marketplace. You’re able to see what the results of each project were right on the website.

The recent performance results show that most of the individual investments tend to outperform the blended portfolio options, but individual projects are by far much riskier than blended portfolios. When investing in an individual project, you run the risk of losing some or all of your capital.

How CrowdStreet Differs from the Competition

CrowdStreet makes it easy for accredited investors to shop around for commercial real estate projects to add to their portfolio. They have one of the largest platforms in terms of active deals on the market. You can browse projects by region, view incredibly in depth videos, see key statistics such as estimated time lock requirements, targeted cash yields, IRR (Internal Rate of Return) estimates, etc.

It also requires a hefty investment. You’ll need at least $25,000 to invest in this platform, though minimum investments can be much higher depending on what you’re investing in. That can limit who uses this platform to invest. Many competing platforms have much lower thresholds, some as low as $500.

Final Thoughts

CrowdStreet is one of the big players for a reason. This platform offers everything from video briefs on projects to clear and transparent vetting and project information on who it works with, from the individual investors to the deal sponsors. All sides are on equal footing with this platform, which is a pretty unique feature for the industry.

But, while the platform offers everything, it doesn’t offer everything to everybody. Smaller investors who can’t meet accreditation standards may feel boxed out.

That said, if you can meet current accreditation standards, the risk may be well worth it. With an average of an 18% return on investments, this platform offers a very high rate of return especially when pitted against other traditional saving vehicles.

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RealtyMogul Review – a passive real estate investing platform

Angelica Leicht
June 10, 2021

ReatlyMogul is averaging 4.50% – 6.0% yields on their REITs and up to 15% on private placements.

Investing in general can be a tricky landscape to navigate. The stock market has seen its share of ups and downs over the last couple of years, and crypto investing, while potentially lucrative, can be a volatile gamble for average investors. There are other, safer options you can utilize to help your money make money, of course — things like high-yield savings accounts, bonds, or low-risk funds — but these less risky investments don’t typically offer the high returns many investors seek.

The drive to find a good balance between risk and reward has led many investors to take an alternate route via real estate investing.

Thanks largely to matured start-ups reaching mass adoption like Airbnb and Vrbo, there has been an explosion in real estate investing nationwide as buyers snatch up properties for short-term rentals in hot markets, which has led to a shortage of inventory in these markets. Competition is now extremely tough for properties in many areas, making it even harder to land the right type of investment.

While short-term rental properties are extremely popular options for investing, many investors would prefer passive investment options in real estate.

That is where platforms like RealtyMogul come in. RealtyMogul allows you to invest your money passively in vetted commercial real estate properties that have the potential to generate income and grow in value.

To see if this real estate investment platform is right for you, continue reading our comprehensive review below.

What is RealtyMogul and who is behind it?

While perhaps not as well-known as platforms like CrowdStreet or DiversyFund, RealtyMogul is one of the earlier entrants into the hot market of crowd sourced real estate investment platforms.

The site was founded in 2012 by Jilliene Helman and Justin Hughes as part of the Microsoft/TechStars Accelerator event in Seattle, and was officially launched in 2013.

Helman, who has underwritten over $5 billion of real estate and acts as the CEO of the company, sits on RealtyMogul’s board. She is responsible for the company’s strategic direction and operations, and has plenty of experience with these tasks, thanks to her prior experience as a Vice President at Union Bank, where she spent time in Wealth Management, Finance and Risk Management.

Hughes is the co-founder of RealtyMogul and is a licensed real estate professional in California. Prior to helping launch RealtyMogul, Hughes ran an independent consultancy in Los Angeles that managed on-line communities and built web presences.

Helman and Hughes launched this platform with the idea that it would bring investors and real estate investment sponsors and borrowers together in order to create real estate investment opportunities that were mutually beneficial for both parties.

On the surface, the platform works similarly to many of the other real estate investment platforms. Investors buy “shares” into commercial real estate projects that are sold on the marketplace. This process allows developers to “crowdsource” the funds they need to complete their commercial project(s) from many investors who want a decent return on their invested capital and like the prospects of the project.

Investors who use RealtyMogul are able to choose from a wide range of individual commercial real estate investments. This could include projects like multi-family dwellings, office buildings, industrial sites, storage units, and retail or medical buildings — or any mix of other commercial projects, depending on what needs funding.

Prior to being allowed access to the RealtyMogul marketplace, each project is vetted to ensure the individuals behind the deal, and their project, meet the rigorous standards outlined by the company. A tenured group of real estate veterans with contracts across the US both seek out deals for the platform and vet deals submitted for inclusion.

According to RealtyMogul, they review thousands of deals each year and less than 1 percent of those end up on the marketplace.

There are other options for investing in commercial property via RealtyMarket, too. In addition to the private investments listed on the platform’s market, accredited investors can also opt into real estate investment trusts, or REITs, and 1031 eligible private placement investments on this platform.

REITs are available to non-accredited investors while private placements are not. Image credit: realtymogul.com

REITs are a popular choice among real estate investors because they allow you to invest in companies that own, operate, or finance income-producing properties — which can result in much higher returns than other types of investments. We’ll talk more about these types of investments below.

Features and Benefits

There are a wide range of benefits for investors, but perhaps the largest one is that it offers investors multiple avenues for investing in commercial real estate. Investors who use this platform get access to a variety of both public, non-traded REITs and private placements, which allows both accredited and non-accredited investors to take advantage of what RealtyMogul has to offer.

This is a significant perk for smaller investors, who may not be able to meet the laborious requirements for accreditation that are required by other platforms. It can be nearly impossible for smaller retail investors to meet the accreditation requirements set by the SEC, and that can put other platforms out of reach.

If you’re not sure why accreditation would be out of reach for smaller investors, here’s why: the SEC requires accredited investors to meet one of the following to be officially accredited:

Individuals: Must have income of more than $200,000 per year for each of the last two years with expectations to exceed that threshold for current year.
Spouses: Must have joint income between spouses of more than $300,000 per year for each of the last two years, with expectations to exceed the threshold in the current year.
A net worth exceeding $1M, excluding your primary residence, either individually or jointly with your spouse.
An investment on behalf of an entity with at least $5M in assets or an entity in which all the equity owners are accredited investors.

These accreditation requirements make it tough for small retail investors to take advantage of public, non-traded REITs, which are subject to oversight by the SEC.

But that’s where platforms like RealtyMogul (or DiversyFund) differ. They offer investors the option to buy into private market offerings, which are projects offered by individual borrowers that need funding. It also offers two different public, non-traded REITs, which gives investors even more options.

Another great feature of RealtyMogul is the vetting process. Rather than focussing on riskier projects in hopes of higher returns, RealtyMogul looks for safer “value-add”deals, particularly in multi-family housing. In most cases, the properties listed on the platform already have cash flows to help fund them, but could use a cash boost from private investors to help generate higher returns.

RealtyMogul REIT Offerings

RealtyMogul has two different REITs available to investors: the MogulREIT I and the MogulREIT II.

MogulREIT I: According to RealtyMogul, the MogulREIT I is a “public, non-traded REIT making debt and equity investments in commercial real estate properties diversified by investment, geography and property type.” This REIT’s primary focus is on providing regular income to investors. To do this, it rigorously evaluates investment opportunities to find ones that can support the REIT’s distribution target.

The goal of this REIT is to help investors earn passive income by investing in a range of investments across property types and geographies. By diversifying the types of properties in the REIT, it helps to reduce risk and maximize returns for investors. This REIT pays out to investors on a monthly basis.

MogulREIT II: The MogulREIT II is also a public non-traded REIT. The main difference between the MogulREIT I and II is that MogulREIT II focuses on longer-term appreciation, and in turn, only pays out dividends to investors on a quarterly basis.

The MogulREIT II generally invests in common and preferred equity investments in multifamily apartments. The historical dividends for MogulREIT II are lower than MogulREIT I, but that’s because, according to RealtyMogul, it aims for “significant value appreciation” in its share prices over time.

Access for non-accredited investors

While private placements are limited to accredited investors, both the MogulREIT I and II are available to both accredited and non-accredited investors alike. This means that investors have a choice of what they want to put their money into. In many cases, REITs are limited to accredited investors, so having two REITs available for non-accredited investors is a substantial perk.

Through the RealtyMogul platform, investors have the opportunity to invest in real estate opportunities online through a private, secure website. Investors can browse investments, review due diligence materials and sign legal documents securely online. Once invested, investors have access to an investor dashboard, giving them 24/7 access to monitor their money at work.

1031 exchange eligible properties

RealtyMogul also offers 1031 exchange eligible properties to investors, which helps cut down on costs associated with buying and selling properties. A 1031 exchange is a procedure that allows the owner of an investment property to sell it and buy like-kind property all while deferring capital gains tax.

By using RealtyMogul, you can find and invest in properties eligible for this type of capital gains tax deferment. This helps cut down on tax penalties incurred from buying and selling investment properties.

The benefits of using this exchange are as follows:

You can defer capital gains taxes on the sale of your property, and invest in cash flowing properties.
You can ensure certainty of closing and avoid property management headaches.
You can diversify your portfolio with a broad range of geography and property types.

Lower-risk deals

As touched on above, the deals on this platform tend to be lower risk than what you’d get with some of the other real estate crowdfunding platforms. While no investment is without risk, the upside of using RealtyMogul is that there is a lot of due diligence that goes into vetting the investment opportunities on this platform.

We’ll get into more on the safety measures in place for this platform below, but what you need to know is that generally, you’ll encounter investments with lower risk.

The option to auto-invest

Not all platforms offer the option to auto invest, but RealtyMogul does. After the initial investment into one of the REITs, you can auto-invest as little as $250 per month into your chosen REIT to continue building your investment on a monthly basis.

The Share Repurchase Program

If you aren’t happy with your REIT investment on this platform, or if you need access to your capital and can’t wait out the term of your REIT, you have the option to opt into the Share Repurchase Program.

This program allows shareholders to sell their MogulREIT I and MogulREIT II investments back to RealtyMogul for a reduced price after a year. One thing to note, though, is that these repurchases are “subject to availability of capital,” according to RealtyMogul.

If you want to sell back your REIT shares to RealtyMogul, here’s what you’re looking at on the repurchase price:

Less than one year: No repurchase allowed
1 to 2 years: 98% repurchase
2 to 3 years: 99% repurchase
3 or more years: 100% repurchase

Average Return to Investors

The average return varies by the type of investment you make. That said, the good thing about RealtyMogul is that they provide clear data and information on average returns since inception.

Here’s how the ROIs (return on investment) look per product:

MogulREIT I: The minimum initial investment amount for this type of REIT is $5,000 and the return is a 6% annualized rate of return.

Dividends on this REIT are paid monthly, so what you get in return for your investment will depend on how much you invest. It’s important to remember that the dividends are paid out monthly, and the total you receive is 6% per year.

If you want to know more about the historical returns for this REIT, you can find the monthly distribution information broken down by share here.

MogulREIT II: As with the MogulREIT I, the minimum initial investment amount for the REIT II is $5,000. The return is 4.50% annualized.

Dividends on this REIT are paid quarterly, which means that you’ll get dividends equal to one-quarter of the 4.5% annualized rate for each quarter.

If you want to learn more about the historical returns for the MogulREIT II, you can find the monthly distribution information per share here.

Private placements: The average return information on private placements isn’t readily available. According to RealtyMogul, the average return on private placements can range from 0% to 15% annualized — which is admittedly a pretty wide range.

That variable rate of return is due mostly to the fact that individual properties vary widely from one another. What you stand to earn on your investment will be affected by a wide range of factors, including the total amount invested, the length of the investment, the type of project, the risk associated with the project, and of course other macro factors that deal with the health of the economy in general.

Potential Drawbacks

Any type of investment you pursue will have some drawbacks, and that’s true for RealtyMogul as well. The potential drawbacks of using this platform include:

Accreditation requirement for private placements: If you want to invest in private placements as a non-accredited investor, this isn’t the right platform for your needs. You have to be accredited to invest in RealtyMogul’s private placements, but you do have the REIT options if you want to pursue them.
A high minimum for investments: RealtyMogul requires you to invest at least $5,000 in its REITs and other investment opportunities, which means that you need to have a lot of spare cash on hand to invest via this platform. If you’re short on funds, or just aren’t ready to take the plunge, you may want to opt for an alternative platform.
Fees: We’ll talk more on these fees in the section below, but you should note that there are fees associated with using this platform.

Cost Associated With RealtyMogul

As mentioned above, there are some fees to pay when using this platform.

The fees you may encounter when using this platform for private placements include:

A technology services fee for private placements.
A 1% administrative services fee for private placements.

REIT fees include:

Operating fees of up to 3% of equity raised from REIT investors.
Asset management fees of 1% annualized, which is based on the average investment value.
A disposition fee of up to 2% of the contract sales price for each sold asset
An undisclosed promoted interest fee.
A servicing fee for performing investments, which amounts to 0.5% of the principal balance and accrued interest.
A special servicing fee for non-performing assets — which is 1% of the original value.

These fees can be costly depending on what you invest in, how it performs, and how much money you have invested in the platform. So, keep this in mind and be sure to do the math of what your investment will cost before you pull the trigger.

How are RealtyMogul’s Investments Sourced?

RealtyMogul’s investments come from two places: 1.) directly from borrowers, who submit deals to be considered and vetted by the platform; and 2.) via an in-house team that finds the investments that may fit its platform and market.

The potential deals that are presented to RealtyMogul are vetted to gain insights into things like the potential partner’s background, their experience, their references, etc. Background and criminal checks are also conducted to identify any pending litigation or items of concern.

Any and all assets that were previously acquired by the potential real estate partner company are then examined and compared to the scope of the proposed project. RealtyMogul also consults references to find out more about the potential partner(s) before any investment opportunities are listed on the marketplace.

How are the properties vetted

The quality of the property is obviously a huge point of consideration before accepting or rejecting it onto the marketplace.

RealtyMogul evaluates the property in 3 ways before coming to their determination. These are:

Physical state of the property. The current physical condition of the property is assessed as well as the business plan or capital expenditure plan to renovate the property.
Income generated and occupancy relative to market. RealtyMogul thoroughly evaluates the tenant population, the vacancy and rental rates of the asset, and then benchmarks these figures against comparables in the local market.
Site visit. A RealtyMogul representative visits the property ALWAYS. This is a core tenant of RealtyMogul’s due diligence.

Who Is This Platform For?

This platform caters to a wide range of investors because it offers opportunities for both accredited and non-accredited investors. That said, while you can invest in the opportunities offered by RealtyMogul, you’ll have to have enough spare cash to do so.

The minimum investment on this site is $5,000, which means it’s geared toward investors who are both able to come up with the minimum requirement and unafraid of making larger investments. That can be limiting in many cases, as smaller or novice retail investors are welcome, but may not be able to meet the requirements for the minimum investment.

Otherwise, it’s a great way for investors to find individual projects to fund or to take advantage of what the REITs offer. If you can meet the minimum investment requirement, there’s likely an opportunity for you to invest on this site.

Is RealtyMogul Safe?

As we noted above, RealtyMogul does a deep dive into the backgrounds of the potential partners and the projects they’re presenting. The focus with this platform is on safer investment opportunities, so if you’re looking for a “safe” real estate investment opportunity, chances are good that the ones on this platform have been thoroughly vetted.

In addition to the vetting process, investors are also offered deal-specific information so that they can perform their own due diligence on the investment opportunities offered on the site, which adds another layer of protection to the mix.

RealtyMogul also works to protect the privacy and confidentiality of information transmitted through its platform. Some of the central features of its security program include:

Internal and external review of public and non-public sites and services.
The use of specialized technologies such as firewalls and encryption.
Rigorous multi-stage testing of the operability of products and features and updates for known vulnerabilities.
Monitoring of systems infrastructure to detect weaknesses and potential intrusions.

How RealtyMogul Differs From the Competition

We’ve pitted RealtyMogul against the largest and most popular crowd sourced real estate platforms on the web to give you an idea of how they stack up against the competition on some key metrics.

Platform	Fees	Minimum Investment	Annual Returns
DiversyFund	$0	$500	11 – 18%
Crowdstreet	0.50% – 2.50%	$25,000	17.1%
Fundrise	1%	$500	9.47%
RealtyMogul	0.50% – 3.0%	$5,000	up to 15%

We should also note that the Share Repurchase Program is unusual for these types of companies and investment products. It’s not typically easy to get out of a longer-term investment once you’re locked in, but this platform offers a way for investors to do that with minimal loss after one year.fdiver

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