Top Crowdfunding Platforms for Passive Income
Jerry Chu
Real estate crowdfunding is one of the easiest ways to generate passive income without the hassle of managing properties yourself. With platforms catering to both beginners and seasoned investors, you can start with as little as $10 or invest larger amounts for higher returns. Here's a quick breakdown of six leading platforms:
- Lofty: Invest from $50 with blockchain-based fractional ownership and daily payouts.
- Fundrise: Start at $10, aiming for 7–12% returns, with quarterly dividends.
- Arrived: Low $100 minimum for single-family rentals, offering quarterly payouts.
- CrowdStreet: Requires $25,000+ for commercial projects, targeting 12.2% realized returns.
- RealtyMogul: $5,000 minimum for REITs, offering 4.5–18.7% returns, with monthly/quarterly payouts.
- EquityMultiple: Accredited investors only, starting at $5,000, with returns up to 18%.
Each platform has unique features, fees, and payout structures. Whether you're a beginner or an accredited investor, there's an option to match your financial goals. Below is a quick comparison to help you decide.
Quick Comparison
| Platform | Minimum Investment | Annual Fees | Target Returns | Accredited Only | Payout Frequency |
|---|---|---|---|---|---|
| Lofty | $50 | 3% trading fee, you only pay if you made a trade, no management fees | Varies | No | Daily |
| Fundrise | $10 | ~1% | 7%–12% | No | Quarterly |
| Arrived | $100 | 5%–10% | Varies | No | Quarterly |
| CrowdStreet | $25,000 | Sponsor-led | ~12.2% realized | Yes | Varies |
| RealtyMogul | $5,000 | 1%–6.75% | 4.5%–18.7% | No (for REITs) | Monthly/Quarterly |
| EquityMultiple | $5,000 | 0.5%–1.5% + admin fees | 7%–15% | Yes | Monthly/Quarterly |
Your choice depends on your budget, risk tolerance, and whether you're accredited. Platforms like Fundrise and Lofty are great for beginners, while CrowdStreet and EquityMultiple cater to more experienced investors. Explore the details to find the best fit for your needs.
Crowdfunding Platforms Comparison: Investment Minimums, Fees, and Returns
Pros & Cons of Real Estate Crowdfunding Platforms
1. Lofty
Lofty uses the Algorand blockchain to make U.S. rental property investing more accessible by offering fractional ownership. This means you can own a piece of real estate without needing to buy the entire property. Each listing comes with detailed financial information, such as projected annual returns and gross rental income, giving investors a clear picture of potential earnings.
Minimum Investment
With a minimum investment of just $50, Lofty opens the door to real estate investing for both accredited and non-accredited investors alike.
Target ROI
Lofty provides financial projections for each property, including expected annual returns and rental income. These figures can vary depending on the type of property. The platform also handles operations to ensure steady rental income for its investors.
Payout Frequency
Investors benefit from regular dividend payments derived from rental income and loan interest. These payouts are distributed via blockchain, and liquidity is available through Lofty's secondary marketplace. By combining blockchain technology with real estate, Lofty creates a modern, low-barrier entry point into the market.
Average Fees
Lofty charges a 3% marketplace fee on share transactions, along with any applicable funding fees. Thanks to its transparent processes and strong investment opportunities, Investopedia recognized Lofty as "Best for Tokenized Real Estate".
Up next, let’s explore how Fundrise approaches real estate crowdfunding.
2. Fundrise
Fundrise has been a key player in real estate crowdfunding since its launch in 2010. Over the years, the platform has financed more than $7 billion in commercial real estate projects and currently manages around $2.87 billion in equity for over 385,000 investors. Its mission is to make real estate investing an option for everyone.
Minimum Investment
You can start investing on Fundrise with as little as $10 when using a brokerage account. If you prefer to invest through a Traditional or Roth IRA, the minimum requirement increases to $1,000. This low barrier to entry makes Fundrise one of the most accessible platforms available.
Target ROI
Fundrise estimates long-term returns between 7% and 12%. Historical performance data indicates average annual income returns of 4.81%, while the Ascent Income Fund aims for returns in the range of 8% to 12%.
Payout Frequency
Investors receive quarterly dividend payouts generated from rental income across a diversified portfolio that includes apartments, hotels, and commercial properties. You can choose to reinvest these dividends to grow your portfolio or have them deposited directly into your bank account for passive income. Additionally, Fundrise offers quarterly liquidity events for its Flagship and Income funds, with redemption requests handled on a first-come, first-served basis.
Average Fees
Fundrise charges a 0.15% annual advisory fee and a 0.85% management fee, resulting in a combined annual fee of approximately 1%. For innovation funds, the fee is slightly higher at 1.85%. The platform also offers an optional Fundrise Pro plan for $10 per month or $99 per year.
Up next, let’s take a closer look at how Arrived approaches real estate investing.
3. Arrived
Arrived makes it simple for investors to own a piece of single-family rentals and vacation homes. Through fractional ownership, investors can enjoy passive income without the headaches of property management. The platform takes care of everything - tenant screening, rent collection, maintenance, and repairs - so you don’t have to lift a finger.
Minimum Investment
One of the standout features of Arrived is its low capital requirement, making it accessible to a broader range of investors.
Target ROI
Arrived generates returns in two ways: rental income and property appreciation. Investors receive dividends from rental income and interest, while property appreciation offers long-term growth, typically over a period of 5–7 years.
Payout Frequency
Investors can expect quarterly payouts. For those investing in managed funds, like the Single Family Residential Fund, redemption payments are disbursed at the end of the quarter in which the request is made, following a six-month minimum holding period.
Accreditation Requirements
Arrived welcomes both accredited and non-accredited investors. You can choose to invest in individual properties or opt for managed funds like the Single Family Residential Fund or the Private Equity Fund.
Up next, we'll dive into how Arrived stacks up against other platforms, exploring the unique perks and potential trade-offs.
4. CrowdStreet
CrowdStreet is designed for accredited investors looking to dive into commercial real estate opportunities. The platform specializes in connecting investors with individual properties across various sectors, including multifamily housing, industrial warehouses, medical offices, and retail spaces. Since its launch in 2014, CrowdStreet has facilitated over $4.2 billion in investments across more than 798 deals.
Minimum Investment
To get started with CrowdStreet, you'll need a minimum of $25,000 for most individual projects and real estate funds. However, some deals may require investments of $100,000 or more. If you're considering a Tailored Portfolio, the minimum investment jumps to $250,000.
Target ROI
CrowdStreet boasts impressive returns, with a 17.9% realized IRR across 168 completed deals and an average holding period of 3.1 years. Historically, the platform's annualized Internal Rate of Return has reached 18.3%. These returns stem from rental income and property appreciation. It's also worth noting that CrowdStreet is highly selective - only about 5% of the deals it reviews make it to the platform.
Payout Frequency
For most projects, investors can expect quarterly payouts, though the frequency depends on the structure of each deal.
Accreditation Requirements
To invest with CrowdStreet, you must meet accreditation standards: either a net worth of at least $1 million (excluding your primary residence) or an annual income that exceeds specific thresholds. Additionally, you'll need to complete a Know Your Customer (KYC) verification process before participating in any offerings.
Average Fees
CrowdStreet takes a unique approach to fees. Investors aren't charged directly for individual deals, but a 1.5% technology fee is typically passed along. For those investing in CrowdStreet funds, annual management fees range from 1% to 2%. The CrowdStreet C-REIT comes with a 1.5% annual management fee, while Private Managed Accounts charge between 2.0% and 2.5% in the first year, dropping to 0.25% annually after that.
sbb-itb-a24235f
5. RealtyMogul
RealtyMogul provides real estate investment options for both accredited and non-accredited investors, making it a platform that appeals to a diverse group of individuals. Since its inception, the platform has grown to over 300,000 members and has facilitated more than $4 billion in real estate transactions. Investors can choose between two primary paths: public, non-traded REITs or private placements in commercial properties like multifamily apartments and retail centers.
Minimum Investment
For RealtyMogul's REIT products, the minimum investment starts at $5,000. Accredited investors interested in private placements typically need to invest between $25,000 and $35,000, though some deals may require as much as $100,000. Non-accredited investors are generally limited to investing up to 10% of their annual income or net worth, whichever is higher.
Target ROI
Returns depend on the type of investment. The Income REIT has maintained an annualized cash distribution of at least 6% (net of fees) over the past eight years. Meanwhile, the Apartment Growth REIT has delivered approximately 4.5% annualized returns since January 1, 2018. For private placements, cash flow returns typically range from 0% to 10%, while equity investments have averaged an annual return of 18.7%.
Payout Frequency
The Income REIT pays out returns monthly, while the Apartment Growth REIT distributes earnings quarterly. Private placements also generally follow a quarterly payout schedule, though the exact timing can vary depending on the specific deal.
Accreditation Requirements
RealtyMogul's REIT products are open to all investors. However, private placements are reserved for accredited investors. This typically means having a net worth of over $1 million (excluding your primary residence) or an annual income above $200,000 (or $300,000 for couples).
Average Fees
The Income REIT charges an annual management fee of 1%, while the Apartment Growth REIT has a slightly higher fee at 1.25% per year. Fees for private placements vary by deal, as they are determined by the third-party sponsors managing each transaction. It's free to join RealtyMogul and browse available investments, and the performance figures provided already account for these management fees.
6. EquityMultiple
EquityMultiple caters exclusively to accredited investors, having distributed over $478 million to date. The platform is selective, approving only about 5% of the real estate projects it evaluates. This gives investors access to high-quality commercial deals that were once available only to large institutions. Investments are organized into three categories: "Keep" for short-term notes, "Earn" for real estate debt, and "Grow" for commercial equity, each tailored to different passive income objectives.
Minimum Investment
Here’s what you need to know about the minimum investment requirements:
- New investors can start with just $5,000 for Alpine Notes or the Ascent Income Fund.
- Individual commercial deals typically require $10,000 to $30,000.
- Managed portfolios generally have higher minimums, ranging from $20,000 to $50,000.
These amounts are in line with what you’d find on other top-tier platforms.
Target ROI
EquityMultiple provides competitive return targets across its investment options:
- Alpine Note: Offers a 7.4% annualized yield with terms of 3, 6, or 9 months.
- Ascent Income Fund: Targets returns of 8% to 12% for debt investments and 10% to 14% for preferred equity.
- Common equity investments: Aim for a net internal rate of return (IRR) of approximately 18%.
As of Q2 2023, the platform reported an impressive 17% net total return to investors.
Payout Frequency
The frequency of payouts varies by investment type:
- Debt and preferred equity: Typically pay distributions monthly or quarterly.
- Alpine Note: Pays out at maturity with compounding interest.
- Equity investments in the "Grow" category: Distribute cash flow alongside property appreciation, usually over holding periods of 3 to 5+ years.
Accreditation Requirements
EquityMultiple is open only to accredited investors. To qualify, individuals must meet one of the following criteria:
- Have a net worth exceeding $1 million (excluding their primary residence).
- Earn an annual income of $200,000 (or $300,000 with a spouse) for the past two years.
Average Fees
Here’s a breakdown of the fees you can expect:
- Management fees for common equity investments range from 0.5% to 1.5%.
- An annual administrative fee of $30 to $70 applies to all offerings.
- Alpine Notes are fee-free.
- Some investments include a 10% share of profits paid to the platform.
Performance figures reported by EquityMultiple already account for these fees, ensuring transparency for investors.
Platform Comparison: Advantages and Disadvantages
After diving into the detailed platform reviews earlier, here's a quick summary of how these platforms stack up. They differ in terms of investment minimums, fees, returns, and who can participate. The table below highlights these key points to help you decide which platform aligns with your goals.
Accessibility is a big factor. Some platforms, like Lofty, let you start with as little as $50, while others, such as CrowdStreet, require a hefty $25,000 minimum. This wide range means there’s an option for nearly every budget.
Fees also vary significantly. Fundrise keeps it simple with a 1% annual fee, but RealtyMogul’s REIT products can go as high as 6.75%. Lofty charges a 3% transaction fee, while EquityMultiple's fees range from 0.5% to 1.5%, plus additional administrative costs.
Returns differ depending on the platform and investment type. Fundrise aims for 7%–12%, CrowdStreet has a realized return of 12.2%, and EquityMultiple offers a target range of 7%–15%. RealtyMogul's offerings span from 4.5% to 18.7%, depending on the investment.
Accreditation requirements can be a hurdle for some. Platforms like EquityMultiple and CrowdStreet cater primarily to accredited investors, meaning you need to meet specific income or net worth criteria. However, options like Lofty, Fundrise, and Arrived are open to non-accredited investors, making real estate income more accessible to a broader audience.
Here’s a snapshot of the platforms to help you compare:
| Platform | Minimum | Annual Fees | Target Returns | Accredited Only | Payout Frequency |
|---|---|---|---|---|---|
| Lofty | $50 | 3% marketplace fee | Varies | No | Daily |
| Fundrise | $10 | 1% total | 7%–12% | No | Quarterly |
| Arrived | $100 | 0.4%–1.2% | Varies | No | Quarterly |
| CrowdStreet | $25,000 | Sponsor-led | 12.2% realized | Yes | Varies |
| RealtyMogul | $5,000 | 1%–6.75% | 4.5%–18.7% | No (for REITs) | Monthly/Quarterly |
| EquityMultiple | $5,000 | 0.5%–1.5% + admin fees | 7%–15% | Yes | Monthly/Quarterly |
This table makes it easy to weigh your options and pinpoint the platform that fits your passive income strategy. Whether you're just starting out or you're an accredited investor looking for higher returns, there’s something for everyone.
Conclusion
Deciding on the best crowdfunding platform boils down to factors like your budget, accreditation status, and investment timeline. If you're looking for a low-cost entry point, platforms like Fundrise (starting at $10) and Lofty (starting at $50) make it easy to get started. On the other hand, platforms like CrowdStreet cater specifically to accredited investors, requiring a minimum investment of $25,000 or more.
Fee structures also play a big role in your decision. For example, Fundrise keeps things simple with a flat 1% fee, while other platforms may include additional charges, such as organizational or disposition fees that can exceed 3%. It's essential to weigh these costs against the liquidity terms to ensure you're maximizing your returns.
Liquidity options vary widely in real estate crowdfunding. If flexibility is a priority, platforms like Fundrise, which offers quarterly liquidity events, or EquityMultiple, with short-term debt options like Alpine Notes (3–9 months), might be a better fit. For those focused on long-term wealth building, Arrived's rental properties - typically held for 5–15 years - offer opportunities for property appreciation.
A well-rounded strategy that includes multiple platforms can help you manage risk while tapping into diverse market opportunities. For instance, pairing Lofty's tokenized residential properties with RealtyMogul's commercial investments provides exposure to different sectors and risk profiles. Ultimately, your choice should align with your financial goals and risk tolerance, as no single platform can meet every investor's needs.
FAQs
What are the main advantages of real estate crowdfunding for passive income?
Real estate crowdfunding makes it possible for individuals to invest in properties without needing a hefty down payment or dealing with the hassles of being a landlord. By pooling your money with other investors, you can get started with as little as $10 and gain access to a wide range of properties - think apartments, commercial spaces, or rental homes spread across various markets.
What’s even better? These platforms take care of all the heavy lifting. From tenant screening and rent collection to maintenance, they handle the day-to-day property management, making it a completely hands-off way to earn passive income. Investors often enjoy monthly or quarterly payouts, with projected returns typically falling in the 7–12% range - a performance that can surpass many traditional investment options. Plus, some platforms let you sell your fractional shares, offering a level of liquidity that’s hard to find in traditional real estate investments.
With its low barrier to entry, professional management, and potential for consistent income and property appreciation, real estate crowdfunding is a modern and convenient way to grow your wealth through real estate.
What are the minimum investment requirements for real estate crowdfunding platforms?
Minimum investment amounts can differ significantly based on the platform you choose. For example, fractional real estate marketplaces often let you dive in with as little as $10, making real estate investing an option for almost anyone. In contrast, platforms catering to accredited investors usually set the bar higher, with minimums typically ranging from $5,000 to $25,000 or even more. These higher thresholds often align with larger-scale investment opportunities.
Lofty takes a more accessible approach, offering a low-minimum investment model. With this platform, you can invest in rental properties without needing hefty down payments or extensive real estate expertise. It's a straightforward way to start generating passive income with smaller amounts of capital.
What factors should I consider when selecting a real estate crowdfunding platform?
When selecting a real estate crowdfunding platform, it’s important to weigh factors like minimum investment requirements and accessibility. Some platforms let you get started with as little as $50, making them more approachable for beginners, while others might set the bar at thousands of dollars. Also, check whether the platform is open to non-accredited investors or exclusively caters to accredited ones.
Another key consideration is the fees and potential returns. Most platforms charge fees - whether for management, transactions, or other services - that can eat into your earnings. Compare these costs with the expected returns, which typically fall between 7% and 12% annually, depending on the type of investment you choose.
Lastly, take a close look at the platform’s liquidity options and payout schedule. Some platforms provide quarterly payouts, while others might require you to hold onto your investment until a property is sold. Transparency is crucial here - opt for platforms that offer clear reporting on property performance and ownership details. For instance, a platform like Lofty allows you to instantly buy and sell property fractions, which not only helps with cash flow but also lets you benefit from property appreciation. By carefully evaluating these elements, you can find a platform that suits your financial goals and comfort with risk.
Related Blog Posts
