Fundrise vs CrowdStreet  CrowdStreet vs Fundrise
Real estate investing can be lucrative, but most folks don’t have the money to be an “individual investor.”
Luckily, individual investors no longer dominate the market. According to recent data, non-individual investors now own 25% of single-family rentals – suggesting that businesses and investment groups are becoming major players.
Below, I’ll walk you through the Fundrise vs CrowdStreet conversation and help you decide which one is better for you.
While most of us can’t afford to buy rental properties outright, you can start buying partial shares in real estate through a platform called Fundrise with as little as $10.
You can get regular updates on your investments through your account, including milestones like new construction progress, occupancy reports, market data trends, and project completion alerts.
If you want to dip your toe into real estate investing, Fundrise is one of the best ways to do it.
Fundrise vs Crowdstreet Overview
At first glance, Fundrise and CrowdStreet do the same thing: Help people invest in real estate.
But that doesn’t settle the CrowdStreet vs Fundrise debate. Far from it! Because while the two platforms have the same basic premise, they operate in totally different ways.
Fundrise lets you invest as little as $10 in a real estate investment trust (REIT). CrowdStreet has a minimum investment of $25,000, and you can use it to invest in specific properties.
Pretty different, huh?
Let’s take a closer look at how Fundrise and CrowdStreet work.
What is Fundrise and How Does Fundrise Work?
Fundrise is an investment platform that pools investors’s funds while managing a vast collection of real estate properties.
You can also use Fundrise to invest in private credit and venture capital – but I’ll focus on real estate here since that’s what’s most relevant to the Fundrise vs Crowdstreet conversation.
A major perk of Fundrise is that you can invest as little as $10. You don’t have to be rich, and there’s no requirement to become an “accredited investor.” Just create a Fundrise account online, move at least $10 over from a bank account – and you can start diversifying your investment portfolio by investing in real estate.
Fundrise has invested in 441 projects, including:
- Multifamily homes
- Single-family homes
- Industrial properties
Together, these properties are worth over $7 billion.
As an investor, you won’t have to worry about the day-to-day management of the properties. The experts at Fundrise will do that for you!
Fundrise lets you withdraw your returns on a quarterly basis. And if you want to liquidate your entire investment and walk away before the 5-year investment period is up, you can do that – but you’ll have to wait until the end of the quarter, and you could face a penalty (1% of total share value).
To learn even more about how Fundrise works, check out this complete Fundrise review.
What is CrowdStreet and How Does CrowdStreet Work?
CrowdStreet is a real estate investment company that helps people invest in both real estate investment trusts (REITs) and individual properties. It’s designed for folks who can invest some serious money in real estate – which is a key difference between CrowdStreet vs Fundrise.
Investing with CrowdStreet is a 4-step process:
- Verify your SEC accreditation. To invest with CrowdStreet, you have to qualify as an “accredited investor” with the U.S. Securities and Exchange Commission (SEC). As an individual, you can qualify with over $200,000 in annual income, a net worth of over $1 million (excluding your primary residence), or by holding certain financial securities licenses (Series 7, Series 82, or Series 65). You can apply for a joint account with someone else or sign up as part of a trust or private entity.
- Create a CrowdStreet account. You can do this online, and it just requires some basic information. You’ll also have to link a bank account so that you can receive any future returns.
- Watch the orientation video. In just 14 minutes, you’ll learn the basics of how to invest through CrowdStreet.
- Start investing! You can find individual properties that you’re interested in and then make offers on them. You can also invest in a REIT, which is a joint investment in multiple CrowdStreet properties. Just be aware that with most CrowdStreet investments, you’ll need to commit at least $25,000.
Once you’ve made an investment, the deal manager or “sponsor” will handle the daily affairs. CrowdStreet deal sponsors are usually professionals from a real estate company or entrepreneurs with substantial experience managing real estate assets. That means you just get to sit back and (hopefully) enjoy the returns – which are distributed either monthly or quarterly, depending on the sponsor.
Each property has a projected “hold period,” which represents how long the sponsor plans to keep the property before eventually selling it. A typical hold period is 3 – 5 years, but they can be even longer – up to 10 years. The average hold period comes out to 3.1 years.
Also, keep in mind that these projected “hold” periods are only estimates. Ultimately, the sponsor could decide to hold onto the property even longer because of market conditions.
Unfortunately, you can’t sell your stake in a property before the hold period is up. These investments are “illiquid,” meaning you won’t have access to your money.
So, even if you’re super excited about investing in real estate through CrowdStreet, you need to think carefully before committing.
Think you’d prefer a different investment strategy? Read this article on the best alternative investments.
Fundrise vs CrowdStreet Fees
Fundrise and CrowdStreet are both private companies – and naturally, they’re interested in making money. You know what that means: fees.
But if your real estate investments pan out, you’ll end up making much more than you pay to use the platforms. That’s why both of these services are so popular, with over 2 million people using Fundrise and more than 300,000 investors choosing CrowdStreet.
That said, the fees are an important factor in the Fundrise vs CrowdStreet debate.
Fundrise charges real estate investors two annual fees:
- An “advisory” fee of 0.15%
- A “management” fee of 0.85%
Add those together, and you’ll owe 1% in total annual fees.
So, let’s say you invest $1,000 in real estate through Fundrise. You’ll end up owing the company $10 per year. That’s pretty reasonable if you ask me!
CrowdStreet doesn’t charge investors a commission for using the platform, but it does charge a “technology fee.” To see how much you’ll owe for a specific deal, you’ll have to open the “fees” tab on the deal page.
You could also end up paying additional fees depending on the nature of the specific deal. Let me explain:
The deals listed on the CrowdStreet marketplaces are managed by “sponsors.” CrowdStreet charges these sponsors a fee to use the platform, and some sponsors pass this fee on to investors. Sponsors can also charge their own fees.
But don’t worry. None of these fees should come as a surprise. On the “details” page of any offer you’re considering, you can peruse the offering documents – which should include information about fees.
Fundrise vs Crowdstreet Returns
It’s time for the best segment of the Fundrise vs CrowdStreet comparison: The part where I talk about how much money you can make!
Both platforms publish statistics about average returns for investors. Isn’t that transparency fantastic? It’s what allows you to make an informed decision.
With Fundrise, your returns depend on how well the general portfolio is doing. Remember, Fundrise isn’t about buying specific properties. Your investment is spread among hundreds of active projects.
The real estate experts at Fundrise aim to create a portfolio that’s both lucrative and resilient. But despite the knowledge of the people in charge, losses are still possible. If you’re totally averse to risk, then real estate investing isn’t for you.
With all that in mind, here’s Fundrise’s average annual return over the past 5 years:
- 2023: -7.45%
- 2022: 1.50%
- 2021: 22.99%
- 2020: 7.31%
- 2019: 9.16%
Clearly, there are good years and bad years. But the average rate of return over the last 5 years is 6.702%, and you can always hope that the Fundrise portfolio does even better in the years ahead.
CrowdStreet reports the “internal rate of return” (IRR) for its properties. IRR is a metric that takes the “time value of money” into account when determining how much an invested dollar is projected to grow.
Since CrowdStreet started in 2014, its investments have a total IRR of 17.9%.
But remember, a key difference in the CrowdStreet vs Fundrise discussion is that CrowdStreet lets you invest in individual properties. So, if you buy into a specific property, the average rate won’t matter. You just want your property’s returns to be as high as possible.
The beauty of CrowdStreet’s model is that, if you pick the right property, you could end up making way more than that 17.9% average. For example, there was a property that earned an IRR of 88.4%. To put it mildly, those investors made bank!
But here’s the other side of the coin: With a few properties, investors have lost 100% of their investment. As in, they put in $25,000 or more – and ended up with nothing.
So, investing with CrowdStreet can be super lucrative, but it’s also risky. The key is to know that going in.
Pros and Cons: Fundrise vs Crowdstreet
There’s no simple answer to the CrowdStreet vs Fundrise question. Why? Both platforms have their strengths and weaknesses, which I’ll highlight below.
Pros and Cons of Fundrise
- You can invest as little as $10. That makes Fundrise a great option if you just want to dip your toe into the real estate market.
- You don’t have to be an accredited investor. Anyone can use Fundrise, which isn’t true of CrowdStreet and other platforms that have requirements related to income, wealth, and licensing.
- The fees are transparent – and low! You’ll have to pay a total of 1% annually in “management” and “advisory” fees.
- You can’t invest in specific properties. Fundrise operates as a real estate investment trust (REIT), meaning you’ll invest in the entire portfolio at once.
- You can’t access your money whenever you want. Fundrise investments are “illiquid.” If you request a liquidation, you’ll have to wait until the end of the quarter to get your money – and you could be charged a penalty.
- Some years, you could come out behind. While Fundrise’s portfolio generally earns money, investors lost 7.45% in 2023.
Pros and Cons of CrowdStreet
- You can invest in specific properties. This gives you more control over your real estate investment strategy.
- The “sponsors” manage the projects for you. That means a CrowdStreet property is basically a source of passive income.
- You can make some serious money. With one CrowdStreet project, investors earned an IRR of 88.4%.
- You need to be an accredited investor with the SEC. You can qualify through your wealth (over $1 million, excluding your primary residence), with a high annual income (over $200,000), or by holding certain licenses (Series 7, Series 82, or Series 65).
- The minimum real estate investment is $25,000. CrowdStreet is really only an option for serious investors.
- You could lose all your money. Real estate investing is risky, and some CrowdStreet projects have gone completely belly-up.
Fundrise vs CrowdStreet Review
Unfortunately, I couldn’t find many reviews that directly discuss the Fundrise vs CrowdStreet debate. But we can still learn a lot just by seeing what users are saying about these platforms.
In a 5-star Fundrise review, someone said they’d been using Fundrise for 5 years and loved the service.
Another user said that the returns “aren’t bad,” giving Fundrise 4 stars.
But not everyone loved the Fundrise experience. In a 1-star review, someone said they “invested in this for 5 years just to end up in the red.”
Now, let’s take a look at some CrowdStreet reviews. As we do, just remember a key point in the Fundrise vs CrowdStreet comparison: CrowdStreet users are more likely to be large-scale investors.
In a 4-star CrowdStreet review, someone called the platform “good” while complaining that it can be tough to find investment opportunities.
In another 4-star review, someone said that the sponsors on CorwdStreet are “responsive to questions” while suggesting that they provide better quarterly updates.
Another user left a 2-star CrowdStreet review, complaining that the platform will “ghost you once they have your money.” This person also touched on the CrowdStreet vs Fundrise debate, saying Fundrise and RealtyMogul are “way better companies.”
Fundrise vs CrowdStreet Reddit
I found a Reddit thread where someone asked about Fundrise vs CrowdStreet.
Someone responded with a super detailed breakdown of their experience with CrowdStreet. Their average return was 11.8%, which is a useful data point for anyone having the CrowdStreet vs Fundrise conversation.
Another Redditor offered a useful way to understand the Fundrise vs CrowdStreet dynamic, suggesting that Fundrise is similar to investing in mutual funds while CrowdStreet is like investing in individual stocks.
In a more recent Reddit thread, someone else asked for people’s thoughts on the CrowdStreet vs Fundrise debate.
This thread didn’t include as many useful responses – although one person suggested that the returns on Fundrise aren’t worth it. But take that conclusion with a grain of salt. They admit that they came to it by watching YouTube videos.
Fundrise vs CrowdStreet: Which is Better?
Here’s my verdict on the Fundrise vs CrowdStreet question: Neither platform is inherently better, but each one is better for certain types of investors.
Let’s say you’re new to real estate investing and you’ve got somewhere between $10 and $25,000 to work with.
In that case, Fundrise is the platform for you. Why? Because it’s so accessible. Remember, you can’t even use CrowdStreet without becoming an “accredited investor,” which can be tough if you’re not raking in the dough.
But now, let’s imagine you’re planning to invest $25,000 or more, and you’re determined to invest in specific properties. You’ve also got the wealth, income, or licenses to get accredited with the SEC – or maybe you’re accredited already.
In that situation, CrowdStreet is the way to go. You’ll have the freedom to invest in the properties that seem most appealing. And if you choose wisely, your returns could end up being astronomical – over 50%, if it really works out!
For more tips, read this article on the best way to invest money.
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Commonly Asked Questions About Fundrise vs CrowdStreet
Is CrowdStreet or Fundrise Better?
There’s no clear winner in the CrowdStreet vs Fundrise debate. Each platform is better for certain types of investors. Want to invest a little bit of money in a real estate investment trust? Then Fundrise is perfect. Prefer to invest 25k or more in a single property? Then, choose CrowdStreet.
What is Better Than Fundrise?
CrowdStreet is better than Fundrise for larger investors who want to invest in specific properties. You can create a CrowdStreet account as long as you’re an accredited investor with the SEC. From there, you’ll be able to make offers on individual real estate projects.
What is The Average Return on CrowdStreet?
Since CrowdStreet’s founding in 2014, the average “internal rate of return” (IRR) has been 17.9%. Individual properties can do much better or worse. One project had an IRR of 88.4. With others, investors have lost everything.
Does CrowdStreet Charge Fees?
CrowdStreet charges a “technology fee,” which you can see on the “fees” tab of an offer’s “deal page.” Some sponsors on the platform will charge additional fees, which they have to disclose ahead of time.
Fundrise vs CrowdStreet vs Yieldstreet?
In the Fundrise vs CrowdStreet vs Yieldstreet debate, there’s no ultimate champion. It all depends on your preferences. Smaller real estate investors might choose Fundrise, and larger investors could use CrowdStreet. Yieldstreet is sort of in the middle while also offering a variety of alternative assets.
Fundrise vs REIT?
Fundrise is actually a form of REIT. It’s just that it’s private, while publicly traded REITs can be bought and sold on the market. Fundrise’s REIT sometimes performs better – but shares of public REITs can be sold more easily, giving you greater access to your money.