As an individual investor, finding a way to maximize your income—both active and passive income—is important. The stock market provides a way to do both, but it’s certainly not the only way to achieve your investment goals.
Even so, relying on stocks alone puts you at great risk if the market shifts, which is why most investors decide to diversify their portfolio. One of the best ways to do this is by taking advantage of real estate investment opportunities.
Purchasing rental properties for rental income is one of the most common ways to build a real estate portfolio. Having access to both commercial properties and residential properties and being open to accredited and non-accredited investors alike, the only limitation you’ll run into here is how much capital you have to invest.
However, many investors don’t have hundreds of thousands of dollars to invest in individual properties. They also may also not feel like dealing with tenants, maintenance, taxes, and the plethora of other issues that come along with purchasing and managing your own properties.
The solution? Commercial real estate crowdfunding sites.
The Best Commercial Real Estate Crowdfunding Sites
There are multiple crowdfunding sites offering real estate deals. However, you should never make real estate deals lightly. If your investment strategy is to prove successful, it’s worth limiting your search to only the most viable investment options.
Fortunately, we’ve created the list below to save you some time on your search. Here are four reputable platforms that you can use to make alternative investments in real estate.
First National Realty Partners
FNRP doesn’t offer any opportunities to non-accredited investors. It does, however, offer accredited real estate investors direct access to exclusive, long-term growth investments in commercial properties.
Requiring an initial investment of $50,000, this real estate crowdfunding platform allows investors to add profitable commercial properties to their investment portfolio. Offering quarterly dividends and capital appreciation, FNRP targets an internal rate of return for each property.
Although the minimum investment and accreditation requirements may dissuade some potential investors, FNRP has proven itself to be consistently profitable for those who choose to invest with this company.
Like FNRP, CrowdStreet doesn’t offer investment options to non-accredited investors.
However, unlike FNRP, this real estate investment platform also doesn’t require a minimum investment of fifty grand: you only need $25k to start investing with CrowdStreet!
The platform functions as a real estate market, hosting a variety of different deals for individual properties. Factors like investment minimums, fees, and anticipated returns vary from project to project.
As such, it’s extremely important that retail investors research each opportunity before making this type of investment. Fortunately, CrowdStreet has done most of the legwork for you, offering data, webinars, and informational videos for each investment opportunity.
For those who prefer a less research-heavy approach to investing, CrowdStreet also has a real estate investment trust available.
Offering pooled, individual, and note-based types of investments, an individual investor can gain instant access to a variety of investment opportunities on this real estate crowdfunding platform for a mere $5,000!
Although reasonably priced, it’s impossible for us to quote specific fees or minimums accurately for the entire real estate platform due to the wide variety of real estate crowdfunding investment opportunities offered.
As such, you’ll want to look closely at each option before investing, as the return on investment can vary quite largely. Still, with a historical annual return of 17.4%, EquityMultiple is definitely an opinion worth considering.
Open to non-accredited investors with a minimum investment of only $100, Mainvest definitely stands out as the most accessible real estate crowdfunding platform on this list.
Rather than investing in giant real estate properties, Mainvest enables the average investor to use a local business as an investment property. Best of all? There are no fees (for the investor), meaning you’ll be able to maximize your entire investment effectively.
Although the company doesn’t have a very long track record (having only been around since 2018), returns generally run between 8% to 10%. Fortunately, the company offers plenty of data for each real estate investing opportunity.
With investments in a variety of industries and the chance to make a difference in a small community, Mainvest is a great option. Not only for those who want to invest for change, but also for those who are just beginning their investing journey.
Things to Consider
The rise of commercial real estate crowdfunding sites has made taking advantage of real estate offerings and building a portfolio of properties much more accessible to everyday investors.
That said, there are still a number of factors you must take into consideration before investing in this asset class.
The most obvious factor that potential investors will be concerned about is the potential return. Projected returns are not always met, and past performances never guarantee future results. There is always a risk of loss.
As such, you must be prepared to lose part—or even all—of your investment. You should also ensure that your annual income is sustainable, as losing both your income and your investments could pose a great risk to your financial health.
Even if you meet the minimum investment requirements, most investments lack a secondary market, making each one an illiquid investment. This further highlights the importance of having your finances in order before investing.
Lastly, you should look closely into any asset management fees—also known as advisory fees—that you will be responsible for. Knowing the management fees ahead of time will help you determine a realistic rate of return.
Building a Diversified Portfolio as an Individual Investor
There are many commercial real estate crowdfunding sites out there, and even more real estate opportunities await you.
Whether you decide to invest in a single multifamily property, through one of the real estate companies listed above, or via diversified funds, it’s important to do your due diligence before coming to any investment offering.
While pursuing individual investments may be more profitable in the long run, you stand a much higher chance of suffering unnecessary losses.
If you’d like to make investment decisions based on years of consistent performance, transparent data, and hundreds of happy real estate investors, we’d recommend going with one of the top-notch services listed above.