Fundrise vs Crowdstreet 2023
Disclosure: This is a testimonial in partnership with Fundrise & Crowdstreet. We earn a commission from partner links on Modest Money.
Adding property to your investments can really diversify your portfolio, and there is no doubt that there are benefits to real estate investing. Both Fundrise and Crowdstreet give investors a way into the real estate market, but are the platforms equal? They are both online investing platforms for real estate, a type of service that’s growing in popularity. However, there are significant differences between these services. Which is the right one for you? Let’s find out.
What is Fundrise?
Fundrise is a real estate investing platform, targeting both accredited and non-accredited investors. It focuses on income-producing properties, selected through its proprietary algorithm. With a minimum investment of just $10, it makes real estate investing accessible.
However, its liquidity is limited to a quarterly redemption program. Fundrise charges a total fee of 1% annually on your assets. Its primary investment offerings are REITs and eFunds, but it doesn’t allow users to invest in specific projects.
What is Crowdstreet?
Crowdstreet is an online real estate investing platform catering mainly to accredited investors. It requires a significant minimum investment of $25,000 and offers a variety of diversified funds, individual deals, REITs, and custom portfolios.
Crowdstreet stands out for its no general management fee structure and a dedicated secondary market, providing greater liquidity. This platform gives in-depth data for all its real estate projects, offering transparency and detailed analytics. Crowdstreet emphasizes both capital appreciation and risk management in its investment strategy.
|Fundrise is Better For:||Crowdstreet is Better For:|
|A lower minimum investment||No management fees|
|Newer investors||Recommended for accredited investors or those with a high net worth|
|Non-accredited investors||Those with self-directed IRAs|
|Mobile app access||Easy-to-use website|
Fundrise has various investment plans, with the most expensive one reaching over $100,000 in terms of minimum investment, but the most affordable option is only $10! This number is more attractive than $25,000, which is Crowdstreet’s minimum investment.
It’s no surprise that Crowdstreet requires investors to be accredited with a minimum investment threshold like that, but they don’t take a general management fee. Fundrise will take a 0.15% advisory fee and a 0.85% annual fee, which equals 1% of your assets.
Fundrise and Crowdstreet offer very similar account types, which are individual, joint, entity, and trust accounts. Where they differ is the IRAs. While they both offer IRAs, Crowdstreet’s IRA offerings are self-directed.
Let’s take a more detailed look at the comparison:
|Accredited Investor Requirement||No||Yes|
|Fees||1% total||No general management fee|
|Account Types||Individual, joint, trust, entity, IRA||Individual, joint, trust, entity, self-directed IRA|
|Investment Types||REITs (Real Estate Investment Trusts) and proprietary funds||Individual, joint, trust, entity, self-directed IRA|
|Current Promotion||More Info||More Info|
|Modest Money Overall Rating|
Fundrise VS Crowdstreet: Determining Factors
What do the returns look like? That is investors’ biggest concern, and we believe it plays a significant role in whether or not a real estate investment platform is legit. Let’s take a look at the biggest determining factors of Fundrise VS Crowdstreet.
Factor 1: Cost
The cost of services is usually at the forefront of every consumer’s mind. We know that the Fundrise real estate investing platform charges a total of 1% of your assets annually, which can be a lot if you have a large investment capital. Crowdstreet is clearly the winning contender in the aspect of cost because they do not charge an investment fee (you really can’t top that).
Factor 2: Investments
Just looking at the options alone, Crowdstreet gives access to more types such as REITs (real estate investment trust) and individual deals. Fundrise is more focused on single-family and stabilized commercial properties, but they have REITs as well.
Factor 3: Accreditation
You must be an accredited investor (an individual who has an annual income of $200,000 or over, a couple with an annual household income of $300,000 or over, or an individual or dual net worth of over $1,000,000) to sign up for the Crowdstreet real estate crowdfunding platform, while Fundrise has no such restrictions and is open to investors with lower net worths.
Factor 4: Minimum Investments
You need at least $25,000 to invest with Crowdstreet, which makes sense why you would need to be accredited (it’s a hefty sum). Fundrise offers investors more options. You can get a low minimum investment amount at only $10. Of course, you can opt for premium plans that can go all the way up to $100,000 investment minimums.
Factor 5: Returns
Can these real estate investment sites really earn you a good return? Let’s look at Fundrise first. If we go back a few years to when the platform really got its foothold in 2014, the returns have been anywhere between 8% to 12% up to 2019. We know that 2020 and a couple of years after are outliers due to the instability of the economy and the global pandemic.
Keep in mind that no investment platform will really guarantee a rate of return because they all come with some risk. You could profit one year and take a loss in another.
Crowdstreet offers investors a higher internal rate of return (IRR) than Fundrise (up to 20% after the hold period!).
Factor 6: User Experience
Investment opportunities are surely a vital part of any real estate investment platform, but having a user-friendly platform can definitely help make a good real estate investing platform great! Fortunately, both Fundrise and Crowdstreet offer easy-to-use browsing experiences on their websites.
Fundrise has a very simplistic website, offering users a streamlined experience with a clear overview of their various real estate deals and individual properties that you can add to your diversified portfolio. However, the platform doesn’t tend to offer in-depth details that some individual investors may want access to.
On the other hand, Crowdstreet provides very in-depth data for all of its real estate projects. In addition to previous track records, the required initial investment, and the property investment goal, you’ll also have access to various analytical data.
We think the higher level of detail provided for properties gives Crowdstreet the advantage in this regard.
Factor 7: Liquidity
One of the biggest issues that retail investors are likely to run into when building a portfolio of properties on a real estate investing platform is a lack of investment liquidity. These types of long-term investments are great for long-term growth, annual returns, and passive income, but tend to be either illiquid or very limited in options.
This statement remains somewhat true for Fundrise, which only offers a quarterly redemption program to everyday investors. While this does provide a certain level of liquidity to your real estate portfolio, it’s fairly limiting. Furthermore, you’ll also be subject to holding period and share redemption limitations.
Crowdstreet gives users a lot more flexibility when it comes to cashing out on their investments, providing a dedicated secondary market for investors. This allows users to sell shares at will, although—of course—their ability to sell (or buy) shares ultimately depends on market conditions and the availability of interested buyers/sellers.
While both platforms do suffer from a lack of investment liquidity to a certain extent, Crowdstreet does a much better job at offering investors ways to instantly reap rewards from their real estate opportunities than Fundrise does.
Factor 8: Transparency
When comparing the various investment options at your disposal in an attempt to build a diversified portfolio, it’s extremely important to have direct access to as many details as possible if you want to meet your investing goals. Potentially positive points are important, but the potential negatives must also be covered to achieve true transparency.
Both platforms perform adequately in this regard, making it easy to find all of the information for each investment opportunity: the good, the bad, and the ugly. Fundrise offers all of the project details—such as the minimum investment requirement—upfront, as well as detailed breakdowns of all the relevant fees and expenses for individual property deals.
Crowdstreet also provides breakdowns for each investment opportunity, laying out investment requirements, anticipated returns, fees, and expenses for each. This information will help investors make informed decisions, enabling them to add a good mix of growth and steady income properties to their portfolios.
Factor 9: Investment Strategy
Another important factor to consider when selecting a platform is the investment strategy (or strategies) used. We’re not going to pick a “winner” for this factor, as which strategy is better ultimately depends on your individual goals as a real estate investor.
Fundrise primarily focuses on selecting income-producing real estate properties. Using a proprietary algorithm, they add various types of investments (such as apartment buildings or offices) to their investment portfolio only if they meet the company’s requirements.
Crowdstreet offers more diversified funds and individual deals to investors, with a focus on capital appreciation and risk management.
Factor 10: Diversification
When it comes to diversification, both platforms offer a wide range of real estate deals for investors to select from. Fundrise offers REITs and eFunds. However, the platform doesn’t allow users to invest in specific real estate projects, which may be a deterrent for some potential users.
Crowdstreet—like Fundrise—-also allows users to invest in REITs, but expands the investment options to custom portfolios and single properties as well. This makes Crowdstreet a much better option for the passive investor who wants to handpick properties to maximize their long-term capital appreciation and overall return on investment.
The Bottom Line
Which is better, Fundrise or Crowdstreet? Assuming you’re an accredited investor, we’d have to say that Crowdstreet comes out on top. With a wider variety of investments, various types of investment offerings, and more liquidity, Crowdstreet is an excellent option for investors who want to reach their financial goals via handpicked diversification.
Unfortunately, for non-accredited investors, Fundrise is the only option available. This platform still has plenty of investment offerings that offer high potential investment gains, and it even has lower investment minimums than Crowdstreet. However, the lack of investment liquidity and overall investment type options do present themselves as potential drawbacks.
If you’re an accredited investor, we recommend going with Crowdstreet for the more diverse investment opportunities, higher liquidity, and greater potential gains. On the other hand, if you’re a non-accredited investor (or only want to invest a little bit into realty) then Fundrise may be worth looking into.