Arrived Homes and Fundrise are the best real estate crowdfunding platforms for non-accredited investors, offering the opportunity to invest with low investment minimums, a diverse portfolio, and a user-friendly interface.
Until now, options for non-accredited investors to invest in real estate crowdfunding have been limited, but several crowdfunding platforms are opening up real estate investing opportunities to virtually anyone. Read on to find out what options you have and what the best platforms for real estate crowdfunding for non-accredited investors are.
Quick Look: Best Real Estate Crowdfunding for Non-Accredited Investors
The Best Real Estate Crowdfunding Alternatives for Non-Accredited Investors
If you're looking for real estate investing options as a non-accredited investor, below is Benzinga's top picks list of the best real estate crowdfunding platforms for non-accredited investors.
1. Overall Winner: Arrived Homes
Arrived Homes is a real estate investment platform that allows investors to purchase shares in individual rental properties. The company allows you to invest in rental properties with as little as $100. Arrived Homes also takes responsibility for property management, so the investment is completely passive. The platform is a great option for investors who don't want to put down cash as a down payment on their own rental property.
Fees: Long Term Rentals: 3.5% sourcing fee, 0.15% AUM fee. Vacation Rentals: 5% sourcing fee, 5% gross rent fee, Property Management Fee (3rd Party Pass-Through Fee): VariableGet started with Arrived Homes
2. Best for Low Minimum Investments: Fundrise
Best for:
Real estate investment beginner
Securely through the Fundrise website
This is a recommendation in partnership with Fundrise, we earn commission from partner links on Benzinga.com. All opinions are our own.
Fundrise offers a wide range of real estate investment options for non-accredited investors, with minimum investments starting at just $10. You can invest in unlisted eREITs, real estate funds, and single asset offerings. The platform automatically allocates your investment across multiple projects, maximizing your returns and providing a hedge against risk.
Fees: 0.15% advisory fee on all assets on Fundrise, 0.85% on real estate funds, 1.85% on innovation funds, $10/month or $99/year for Fundrise Pro. Get started with Fundrise
3. Fractionals for Real Estate Debt Investing: The Ground Floor
Groundfloor allows non-accredited investors to invest in crowdfunding through short-term loans to real estate investors and home builders. It offers the lowest minimum investment crowdfunding option, allowing investors to get started with just $10.
Groundfloor offers short-term loans against residential properties and sells a portion of those loans to investors through Limited Repayment Obligations (LROs). Investors can browse available loans and invest in the loans they want in increments of $10. Most loans on the platform pay interest rates between 7% and 12% for terms between 6 and 12 months.
Investors can schedule recurring deposits into their Groundfloor account and set up automatic investments based on criteria they set.
Fees: Borrowers pay 2.75% to 4% of the principal amount as interest for assuming the loan. Points and fees are rolled into the principal loan amount at closing, and interest payments are deferred until the loan is repaid. Get started with Groundfloor
4. Best for Ease of Use: Streitwise
Streitwise offers private real estate investment trusts (REITs) for accredited and non-accredited investors with a minimum investment of around $1,000. The company focuses on investing in low-risk rental commercial properties with the goal of providing clients with stable, high-yield returns. The team invests in markets that are steadily growing. If you're looking to diversify your current investment portfolio but are worried that real estate is too high a target, Streitwise is worth considering.
Fees: There is a 2% annual fee. This fee is usually deducted from annual dividends, so investors don't see a direct 2% reduction in their investment each year. Get started with Streitwise
The difference between accredited and non-accredited investors
The SEC has rules that determine who can invest in what types of real estate crowdfunding, based on whether they are an accredited or non-accredited investor.
Accredited Investor
Accredited investors can participate in any type of crowdfunding transaction. To become an accredited investor, an individual must meet one of the following requirements:
Have annual income of at least $200,000 for the past two years ($300,000 if married) and are expecting to earn a similar amount this year Have a net worth of at least $1 million, excluding the value of your principal residence Hold a Series 7, 65, or 82 license in good standing.
Companies and trusts are also classified as accredited or non-accredited investors. To achieve accredited status, an organization must meet one of the following requirements:
A trust with total assets of more than $5 million that is not formed to purchase securities in targeted investments and is managed by knowledgeable persons; A trust with total investments of more than $5 million that is not formed to specifically purchase securities in targeted investments; All shareholders are accredited investors.
Accredited investors are the only investors who can participate in Regulation D Rule 506(c) offerings. Under Rule 506(c), accredited investors have no limitations on the amount they can invest.
Non-Accredited Investors
A non-accredited investor is someone who does not meet the accreditation requirements. Because crowdfunding is considered a higher risk investment than public stocks or bonds, these rules were put in place to prevent non-accredited investors from losing their retirement savings.
Investing in crowdfunding as a non-accredited investor
Offered through Regulation A+, real estate crowdfunding offers non-accredited investors a way to invest in real estate without having to buy their own property. Crowdfunding companies are not required to follow the same regulations as publicly traded REITs, meaning it's important to do thorough research when conducting due diligence on crowdfunding platforms and their individual offerings. Real estate crowdfunding can offer excellent returns, but only if investments are made wisely.
FAQ
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Investing by non-accredited investors involves risks and may result in inaccessibility to certain opportunities. Investors should research investments, consult with professionals and diversify to minimize risks.
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To get started in real estate crowdfunding, research and choose a platform for non-accredited investors, such as Fundrise or Groundfloor. Once you've chosen a platform, you'll need to create an account and go through a verification process. You can then start investing with as little as $500, depending on the platform's minimum investment requirements.
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Crowdfunding allows individuals and businesses to raise money from many people in exchange for products, services, or equity. A successful crowdfunding campaign requires careful planning, a compelling pitch, and a strong network of backers. Not all campaigns are successful and there are risks involved.