How We Review Real Estate Crowdfunding Platforms

Once exclusive to the wealthy, real estate crowdfunding opened up to regular investors in 2012. It’s a way to invest in real estate without much money. The best platforms are easy to use, have fair fees and low investment requirements, offer good research, let you cash out easily, allow you to reinvest, and offer many investment options. They also tell you clearly about fees, risks, and taxes.

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How We Research Real Estate Crowdfunding Platforms

Investopedia is here to help everyone, whether new or experienced, find the perfect real estate crowdfunding platform for you. We looked into 19 different companies to do this. This guide will explain how we decided which are the best overall and in eight important areas.

We used our knowledge, researched the industry, and gathered survey data to create a scoring system. This system rates each company on eight main areas and 38 important factors to help you decide which platform is best for you.

Data Collection and Scoring

We sent an online survey with about 44 questions to all 19 companies in our study. Our team also researched and filled in any missing information online and talked directly with each company between October 17, 2023, and November 15, 2023.

How We Score Criteria

• We rate data points on a scale from 0.00 to 1.00.

• Binary criteria, like questions with “Yes” or “No” answers, are scored as either 0 or 1.

• Scaled criteria, such as those using a 5-point scale, are scored from 0.00 to 1.00, with intervals of 0.25.

• For continuous criteria, we adjusted the lowest value in the data to be 0.00 and the highest value to be 1.00. Everything in between was divided into equal parts based on the total number of entries in that criterion. For example, for a 10-point criterion, the scale would be from 0.00 to 1.00, divided into ten equal intervals.

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Real Estate Crowdfunding Evaluation Categories

We determined the category weights based on our expertise in the subject.

Category	Weight by Category
Fees	15%
Account Services	15%
Investment Selection	15%
Liquidity	12.5%
Transparency	12.5%
Sectors and Domains	12.5%
Customer Support and Usability	10%
Educational Offerings	7.5%

We carefully divided the eight categories into 38 weighted criteria for companies allowing only accredited investors and 51 criteria for those supporting both accredited and non-accredited investors. This totals 851 data points in our scoring system.

Number of Weighted Criteria by Category

Category	Number of Criteria
Customer Support and Usability	10
Fees	5
Account Services	5
Educational Offerings	5
Liquidity	4
Transparency	3
Investment Selection	3
Sectors and Domains	3

Fees

Real estate crowdfunding platforms charge different fees for their services, usually between 1% and 4% of your investment. While platform and management fees are common, watch out for hidden costs like performance fees or charges for withdrawing early or trading on the secondary market. It’s important for investors to thoroughly check a platform’s fees, terms, and conditions to know all the costs they might face when investing in real estate crowdfunding.

This section makes up 15% of the total score we use to evaluate platforms.

To assess this category, we examined various fees and whether the platform charged them to its clients.

Platform Fees

We rated this aspect on a scale from 0.00 to 1.00. Companies with lower fees got higher scores, while those with higher fees got lower scores.

Management Fees

When evaluating this aspect on a scale from 0.00 to 1.00, companies with lower fees got higher scores, while those with higher fees received lower scores.

Investment-Specific Fees

We rated this aspect on a scale from 0.00 to 1.00. Companies that asked for lower fees got higher scores, while those that charged higher fees got lower scores.

Other Fees

When assessing this aspect on a scale from 0.00 to 1.00, companies with lower fees were given higher scores, while those with higher fees received lower scores.

Investment Selection

Real estate crowdfunding websites offer a range of investment choices, such as residential, commercial, and industrial properties. They give detailed descriptions of each project, including property details, location, financial forecasts, and expected profits. Investors can carefully review these options, do their research, and pick projects that match their financial goals and risk tolerance. Many platforms also allow for fractional investing, letting individuals spread their investments across different properties. This curated selection helps investors customize their real estate portfolio to fit their preferences and plans.

This part makes up 15% of the total score we use to evaluate platforms.

To assess this category, we checked if platforms offered the following to their clients.

Investment Selection

We rated this aspect on a scale from 0.00 to 4.00. Companies earned 1 point for each type of investment they offered, up to a maximum of 4.00. Companies that provided access to equity-based, debt-based, REIT, and private REIT investments received the highest score of 4.00, while those with fewer investment options received lower scores accordingly.

Other Alternative Investments

We rated this aspect on a scale from 0.00 to 6.00. Companies received 1 point for each type of investment they offered, including art, wine, legal, hedge funds, private equity, and venture capital, up to a maximum of 6.00. Companies offering all six types received the highest score of 6.00, while those with fewer options received lower scores.

Other Possible Investments

For this aspect, companies got 1 point for each different type of alternative investment they offered, apart from the ones listed above.

Liquidity

The ease of selling or leaving real estate crowdfunding investments can differ greatly. Some platforms have secondary markets or options for investors to sell their positions more easily, while others may not offer much liquidity. It’s important for investors to carefully check the platform’s terms and how long they need to invest. Real estate investments usually require holding onto them for several years. The level of liquidity can affect an investor’s ability to get their money back quickly. Understanding the liquidity features of each investment before putting money in is crucial to ensure it matches your financial goals.

This section makes up 12.5% of the total score we use to evaluate platforms.

In this category, we looked at how each of the following factors influences the liquidity of each platform.

Restrictions

We rated this aspect on a scale from 0.00 to 1.00. Companies with fewer restrictions received higher scores, while those with more restrictions received lower scores.

Redemption Options

We rated this aspect on a scale from 0.00 to 1.00. Companies that provide more redemption options got higher scores, while those with fewer options received

Holding Periods

We rated this aspect on a scale from 0.00 to 1.00. Companies with shorter investment periods got higher scores, while those with longer holding periods received lower scores.

Total Number of Investors

We rated this aspect on a scale from 0.00 to 1.00. Companies with more investors got higher scores, while those with fewer received lower scores.

Account Services

In the ever-changing world of real estate crowdfunding, top platforms must have reasonable investment minimums and reinvestment options and offer curated and customizable portfolios to satisfy customers. Investors need to check the features of each platform and pick investments that match their financial situation and goals.

This section makes up 15% of the total score we use to evaluate platforms. It assesses each platform’s important features.

Investment Minimums

We rated this aspect on a scale from 0.00 to 1.00. Companies that ask for the smallest minimum investment amounts got higher scores, while those with higher minimums got lower scores.

Curated Portfolios

We rated this on a simple scale, giving companies that provide customers with curated investment portfolios a score of 1 and companies without this feature a score of 0.

Reinvestment Opportunities

We rated this on a simple scale: companies offering investors the option to reinvest dividends received a score of 1, while those without this feature received a score of 0.

International Account Support 

We rated this aspect on a scale from 0.00 to 1.00. Companies that welcome investors from more countries, including the U.S., got higher scores, while those with restricted access for international investors received lower scores.

Customizable Portfolios

We rated this on a simple scale: companies that let customers customize their portfolios received a score of 1, while those without this feature got a score of 0.

Transparency

It’s important for real estate crowdfunding platforms to clearly explain their fees, risks, how easy it is to access funds, tax implications, and how they do their due diligence. This helps investors know the total costs, possible problems, how easily they can get their money back, their tax duties, and how trustworthy the investment is. Being transparent builds trust, helps investors know what to expect, and makes them more confident in the platform.

This section makes up 12.5% of the total score we use to evaluate platforms.

To assess transparency, we looked at how readily available information about the following criteria is on each company’s website.

Liquidity

We rated this on a simple scale: companies that provide much information about investment liquidity received a score of 1. At the same time, those with limited transparency in this area got a score of 0.

Fees

We rated this on a simple scale: companies that disclosed all their fees received a score of 1, while those that didn’t were given a score of 0.

Reporting Options

We rated this on a simple scale of 1 or 0. Companies that regularly send updates on things like tax reports, portfolio performance, and investment activity received a score of 1. Those who don’t provide frequent and transparent updates in this area got a 0.

Educational Offerings

Real estate crowdfunding platforms often offer educational materials like webinars, articles, videos, and guides. These resources cover topics such as real estate investing and managing risks. They help investors learn more about the market and make better investment choices. Providing educational content builds trust and confidence among investors, showing that the platform is transparent and committed to helping them succeed.

This section makes up 7.5% of the total score we use to evaluate platforms.

We considered the following criteria when checking the educational materials provided by the companies we reviewed.

Frequently Asked Questions (FAQs)

We rated this on a simple scale: companies with a Frequently Asked Questions (FAQs) page on their website received a score of 1, while those without it got a score of 0.

Customer Support and Usability

Customer service is really important for real estate crowdfunding platforms. They usually provide different ways for investors to ask questions, like email, phone calls, and live chat. Good customer service means they respond quickly, give personalized help, and make sure to solve any problems investors have. This makes investors feel more confident and happy using the platform and helps them understand everything better, clear up any worries, and fix any problems. This makes the investing experience better.

This section makes up 10% of the total score we use to evaluate platforms.

We looked at the following factors when evaluating each real estate crowdfunding platform’s quality of customer service.

Telephone Support

We rated this on a simple scale: companies that offer customer support by phone received a score of 1, while those without this feature got a score of 0.

Telephone Support Hours and Days

We rated customer service availability via telephone from 0.00 to 1.00. Companies with more availability received higher scores, while those with limited availability got lower scores.

Customer Service Chat Form

We rated this on a simple scale: companies that provide an online chat form received a score of 1, while those without this feature got a score of 0.

Email Support

A company scores one if it offers customer support through email. Companies without this service get a score of 0.

Live Chat Support

Companies offering live chat support scored 1, while those without this feature received a 0.

Live Chat Hours and Days

Platforms that offer live chat support five days a week, from 9 a.m. to 5 p.m., received a score of 1. Companies with less availability of live chat support received a score of 0.

Chatbot Support

Companies that offer a chatbot for customer support received a score of 1, while those without this feature received a score of 0.

Usability

Top real estate crowdfunding platforms focus on easy-to-use interfaces, making it simple for investors to browse the website or mobile app, study potential investments, check project details, and decide wisely. Offering an intuitive dashboard, a straightforward investment process and clear information are key parts of this user experience.

We rated usability on a scale from 0.00 to 1.00. Companies with intuitive, user-friendly platforms that provide transparent critical information received the highest score. On the other hand, companies with poor usability received a lower score.

iOS App Availability

Companies offering an app for iOS devices received a score of 1, while those without this app received a 0.

Android App Availability

Companies offering an app for Android devices received a score of 1, while those without this app received a 0.

Sectors and Domains

This section makes up 12.5% of the total score we use to evaluate platforms.

To rate this category, we checked if the following investments are offered.

Commercial Investments

We gave companies that provide commercial investment opportunities a score of 1, while those without such projects received a 0.

Industrial Investments

Companies that offer access to industrial real estate projects received a score of 1, while those without this option received a score of 0.

Residential Investments

Companies that provide access to residential investments receive a score of 1. Companies without such investments receive a score of 0.

Articles That Use Our Methodology

The worldwide real estate crowdfunding market is expanding quickly. According to Vantage Market Research, it’s expected to grow by an average of 45.9% annually from 2023 to 2030. By exploring more of these crowdfunding platforms and what they offer, investors can directly discover how to invest in different real estate projects. This helps diversify their portfolios, potentially brings tax benefits, and allows them to earn passive income without investing much money upfront.

Thorough research and gathering data are key to creating our list of the top real estate crowdfunding platforms. All Investopedia reviews of companies like Fundrise and Crowdstreet are based on this research, data, and grading process explained in our methodology. We also consider insights from our editors and industry experts to make informed evaluations.

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