Real estate investment doesn’t need to be a headache. You don’t have to spend months researching properties, securing funding, and finding tenants, and then continually manage the property yourself.
With fractional real estate companies, you can invest smaller amounts of capital, giving you fractional ownership in a given property or properties. This is a great way to diversify your portfolio with an alternative investment (real estate), but in a way that’s much easier than buying, renting, and managing properties yourself.
1. Fundrise | Our Top Overall Pick
Fundrise is our top pick in large part because it is one of the most accessible fractional real estate companies out there. In fact, Fundrise’s Starter Account only requires a $10 minimum deposit to get started. Plus, with a 1% fee, you won’t be giving away much of your gains.
Another point for Fundrise is the fact that it’s been around since 2010, which is a good bit longer than many of its competitors. It was essentially one of the first in the fractional real estate game.
Ultimately, Fundrise has something for everyone. You can set the parameters however you want, whether you’re oriented more toward growth (price appreciation) or income (dividends).
Pros
- Open to non-accredited investors
- Small minimum account size
- Many different account types
- Diversified by region and property type
- Excellent mobile app and browser-based site
Cons
- Fairly illiquid, meaning you can not easily cash out at any moment
- Not ideal for short-term investments
2. Realty Mogul | Best for Income Investors
More than 200,000 investors have used RealtyMogul since it started in 2012, making it one of the older platforms along with Fundrise. RealtyMogul has earned a solid track record in large part because of its commitment to due diligence.
RealtyMogul targets undervalued properties or existing leases and then works with partners who have extensive experience in real estate markets. Investors can pick one of three focuses: diversification, growth, or passive income.
Pros
- A good investment selection
- Commitment to due diligence
- Monthly auto-investment starts at $250 per month
Cons
- Each investment comes with different fees
- Investments are fairly illiquid
- Some extended hold periods
3. CrowdStreet | Best for Accredited Investors
Crowdstreet has appealed to many investors from all over the U.S., more than 100,000 in fact. It provides direct access to a carefully assembled portfolio of real estate. A highly organized company, CrowdStreet offers fractional and whole ownership of real estate to accredited investors.
Founded in 2014 in Portland, Oregon, Crowdstreet has offered more than 500 commercial real estate investment opportunities, and more than 60 of them have been fully realized.
Pros
- User-friendly platform that includes a chatbot feature
- Investment details are readily available
- Institutional-quality offerings
Cons
- Accredited investors only
- High investment minimums
- No early withdrawals
4. EquityMultiple | Best Variety of Investment Opportunities
EquityMultiple focuses primarily on providing fractional real estate opportunities for commercial and institutional real estate. There are also preferred equity, senior debt, and equity investments. EquityMultiple is serious about expanding its offerings, and its most recent products include tax-advantaged real estate (1031 exchange and Opportunity Zone), as well as funds.
Distributions vary depending on the product, but they usually occur monthly or quarterly. At this time, EquityMultiple is only for accredited investors.
Pros
- Great investment selection
- Assortment of target hold periods
- Simple to use and understand
Cons
- Accredited investors only
- High minimum investment
- Redemption options are limited
5. YieldStreet | Best for Real Estate and Other Alternative Investments
Yieldstreet offers not only real estate investment opportunities but other alternative investments as well. This makes it a unique platform that can be a sort of “one-stop shop” for your alternative investment needs.
Currently, you can invest in real estate as well as marine, legal, and art investments, plus commercial and consumer finance offerings.
While it mainly targets accredited investors ($500 investment minimum), the Yieldstreet Prism fund is available for non-accredited investors (with the same account minimum).
Pros
- It offers access to a range of alternative investments
- Privately structured credit deals are open to individual investors
- Non-accredited investors also welcome
- Each investment is backed by tangible assets
- Easy to use whether online or with the app
Cons
- Investments are illiquid
- Only accredited investors have access to most of its investments
- Fairly exorbitant fees
- Customer ratings and consumer complaints raise concerns
6. AcreTrader | Best for Farmland Investment
AcreTrader is a fractional real estate company that focuses solely on farmland real estate. In case you didn’t know, this often underlooked real estate has historically provided steady returns. It’s also not correlated with any other index, which is exactly what you want in an alternative investment.
With AcreTrader, income comes through rent payments paid by farmers and/or through price appreciation. The minimum investment ranges from $10,000 to $25,000. At the time of writing, it is only open to accredited investors.
Pros
- AcreTrader manages all aspects of the farmland ownership and leasing
- Historical returns in the 7-9% range
- Option for self-directed IRAs (SDIRAs)
- Sale leasebacks, capital-raising options, and property expansion for farmers
- Due diligence process and rigorous underwriting for properties
Cons
- Only accredited investors are welcome
- A limited number of new offerings
- Relatively illiquid
7. First National Realty Partners (FNRP) | Best for Commercial Real Estate
First National Realty Partners (FNRP) may be the final fractional real estate company in our list, but it is still a great option. Open to accredited investors, FNRP focuses on grocery-anchored commercial real estate.
Founded in 2015 in New Jersey, FNRP offers individual properties as well as funds to which investors can allocate their capital. The holding period ranges from three to seven years for their flagship Opportunity Fund.
Pros
- Clear and consistent property acquisition criteria
- Grocery chains and tenant relationships with major retail
- It supports simple diversification of fund option
Cons
- A relatively high minimum investment
- Accredited investors only
- The website can be difficult to navigate
Investors today are fortunate to have a variety of convenient fractional real estate companies to choose from. Whether you’re interested in investing in farmland, commercial, or residential real estate, there’s a platform for you. Our breakdown above should give you a good idea of the leading crowdfunded real estate platforms out there, and which one might be best for you.
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