- Alternative Investments
- Real Estate Investing
Investing in real estate is a great way to diversify your portfolio, generate income, and take advantage of unique tax benefits. You can use a real estate crowdfunding platform to invest in a variety of commercial, residential, and industrial real estate projects at a fraction of the cost.
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Best Real Estate Crowdfunding Platforms for 2024
Investopedia’s experts put 19 companies through a rigorous evaluation process to identify the best real estate crowdfunding platforms for you and your real estate investing needs. We collected 851 data points and used our subject matter expertise to develop a process for finding the best real estate crowdfunding platforms, focusing on fees, transparency, investment selection, and more.
Winners
- Best Overall, Best for Beginners, Best for Low Fees: Fundrise
- Best for Accredited Investors and Best for Transparency: EquityMultiple
- Best for Alternative Investment Selection: YieldStreet
- Best for Expert Real Estate Investors: CrowdStreet
- Best for Commercial Real Estate: RealtyMogul
- Best for Rental Properties: Arrived
- Best for Real Estate Investment Selection: DLP Capital
Guide to Real Estate Investing
Real Estate Crowdfunding Platforms
Frequently Asked Questions
How do I invest in real estate?
While you can invest in real estate by purchasing a rental or commercial property, not everyone has the cash required to invest to do so. Real estate investment trusts (REITs) are publicly traded investment vehicles that offer real estate exposure without having to put forth a down payment or be a landlord. You can also invest in real estate via online real estate crowdfunding investment platforms and real estate investment groups (REIGs), and there are avenues to rent properties you already own, such as with Airbnb.
Learn More10 Habits of Successful Real Estate Investors
Does real estate or the stock market perform better?
Historically, stocks have generally outperformed real estate in terms of average returns. However, the performance can vary based on factors like location and timing. From March 1992 to March 2022, the average growth rate of the U.S. housing market was 5.4%. The S&P 500 witnessed annualized returns of 9.65% from the beginning of 1992 to the same period in 2022.
Learn MoreHas Real Estate or the Stock Market Historically Performed Better?
What is a Real Estate Investment Trust (REIT)?
A real estate investment trust (REIT) is a company that owns, operates, or finances income-generating real estate. REITs allow you to invest in most real estate property types, including apartment buildings, cell towers, data centers, hotels, medical facilities, offices, retail centers, and warehouses, which are generally not feasible for individual investors to purchase directly. You can invest in REITs—as well as REIT mutual funds and REIT ETFs—by purchasing shares through a broker.
Learn More5 Types of REITs and How to Invest in Them
Is flipping houses an easy way to make money?
While flipping houses can in fact be a lucrative endeavor, it requires a lot of research, up-front capital, time, and patience. Flipping houses also requires hard labor skills to improve the home’s value. If you aren’t adept at handiwork, you will need to pay a professional to do the renovations and repairs, further reducing the profit potential of your investment.
Learn More5 Mistakes That Can Make House Flipping a Flop
Key Terms
Real Estate Crowdfunding
Real estate crowdfunding allows both accredited and non-accredited investors to pool their money online with other investors to purchase property (or a share of property) at a fraction of the cost. Real estate crowdfunding offers a compelling way to diversify your assets by tapping into real estate investments that offer both passive income and price appreciation opportunities. The idea behind crowdfunding is that many people may be willing to invest a small amount in such projects, and when they do, large sums of money can be raised pretty quickly.
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REIT ETF
Real estate investment trust (REIT) ETFs are exchange-traded funds (ETFs) that invest the majority of their assets in equity REIT securities and related derivatives. REIT ETFs are passively managed around an index of publicly-traded real estate owners.
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Triple Net Lease (NNN)
A triple net lease (NNN) is a type of commercial lease in which the tenant promises to pay all the expenses of the property, including real estate taxes, building insurance, and maintenance in addition to the rent and other expenses. Many investors view triple net leases as attractive investment vehicles because they provide low-risk, steady income.
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Capitalization Rate
The capitalization rate is the expected rate of return an investor can expect to receive from owning and operating a piece of commercial real estate. The capitalized or “cap” rate is calculated by dividing the net operating income by property asset value and is expressed as a percentage.
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Investment Real Estate
Investment real estate is a piece of real estate that generates income or is otherwise intended for investment purposes that is not used as a primary residence. Investment property can be commercial or residential and holds different tax implications than residential real estate.
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Real Estate Investement Trust
A real estate investment trust (REIT) is a company that owns, operates, or finances income-generating real estate. REIT portfolios typically include a wide variety of commercial, residential, and industrial real estate projects. The three types of REITs are equity REITs, which own and manage income-producing real estate, mortgage REITs, which lend money to real estate owners and operators, and hybrid REITs, which combine the investment strategies of equity and mortgage REITs.
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Real Estate Wholesaling
Real estate wholesaling is a business venture in which the wholesaler acts like an intermediary, selling the property on behalf of the property owner and keeping the profit. The wholesaler doesn’t actually purchase the property, instead, they are afforded the right to sell the property on behalf of the owner for an amount of time determined by the contract.
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Real Estate Investment Group (REIG)
A real estate investment group (REIG) buys, renovates, sells, or finances properties, then allows investors to join the group by purchasing them. REIGs provide direct investments in real estate projects, without all the property management responsibilities. Unlike real estate investment trusts (REITs), REIGs are not subject to any specific limitations or disclosures.
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CEIC. "US House Price Growth."
Official Data. "Stock Market Returns Since 1992."
