Top 5 Apps for Fractional Property Ownership
Jerry Chu
Fractional property ownership allows you to invest in real estate by purchasing shares in a property, lowering the entry barrier to as little as $10. These apps provide access to rental income, property appreciation, and liquidity options, making real estate investing more accessible. Here's a quick overview of the five leading platforms:
- Lofty: Blockchain-based, $50 minimum investment, daily rental income, secondary marketplace for liquidity.
- Fundrise: REIT model, $10 minimum, quarterly dividends, limited liquidity with withdrawal penalties.
- Arrived Homes: Single-family and vacation rentals, $100 minimum, monthly payouts, secondary marketplace launching soon.
- Ark7: $20 minimum, monthly income, secondary marketplace available after one year.
- RealT: Tokenized properties, ~$10 minimum, periodic income, multiple liquidity options.
These platforms differ in investment minimums, income frequency, and liquidity options, so it's essential to choose one that aligns with your financial goals.
Best Fractional Real Estate Investing Platforms: Top Picks for Smart Investors
Quick Comparison
| Platform | Minimum Investment | Rental Income Frequency | Liquidity Options |
|---|---|---|---|
| Lofty | $50 | Daily | Secondary marketplace |
| Fundrise | $10 | Quarterly | Limited, penalties for early exit |
| Arrived Homes | $100 | Monthly | Secondary marketplace (upcoming) |
| Ark7 | $20 | Monthly | Secondary marketplace (after 1 yr) |
| RealT | ~$10 | Periodic | Multiple blockchain-based options |
These apps make real estate more accessible by offering low entry points, frequent income payouts, and flexible liquidity options. Choose based on your preferences for income timing, investment size, and ease of exiting investments.
1. Lofty
Lofty is a blockchain-powered platform that makes fractional real estate investment accessible to everyone. Using the Algorand blockchain, Lofty tokenizes rental properties across the U.S., allowing investors to purchase ownership shares starting at just $50 per token. The platform has earned an investment quality score of 4.0 and boasts a 4.6/5 rating on Product Hunt, based on 27 reviews. With more than 170 properties tokenized so far, Lofty has carved out a notable presence in the fractional real estate market. Its features are designed to prioritize both accessibility and liquidity.
Minimum Investment
Lofty sets the price for each property token at $50 during initial funding, making it easy for investors to start building a diversified portfolio without needing a large amount of capital upfront.
Rental Income Frequency
Lofty stands out by offering daily rental income payments to token holders. Investors begin earning rental yield immediately, with payments starting the same day.
"You'll get your first rent payment that same day, and daily after that. Your holdings will grow along with the property value, too."
The platform projects annual returns ranging from 0–12% in cash flow and 0–15% in property appreciation, combining immediate income with potential long-term growth.
Liquidity Options
One of Lofty’s strengths is its approach to liquidity. The platform offers a secondary marketplace where investors can trade their tokens without lockup periods. Additionally, Lofty is rolling out a feature that allows instant buying and selling of property ownership by leveraging liquidity from internet users, ensuring trades happen on the spot.
"We're the only platform that lets you buy AND sell fractional ownership with no restrictions or lock-up periods."
However, it’s important to note that Lofty charges a 2.5% fee on every purchase and sale transaction within the marketplace. These liquidity options make it easier for investors to manage their positions.
Streamlined Investment Redemption
Lofty simplifies the process of exiting investments by allowing token holders to sell their shares and convert USDC back into dollars.
2. Fundrise
Fundrise takes a more traditional path compared to Lofty’s blockchain-based approach, offering a real estate investment trust (REIT) model for fractional property investments. Through this platform, investor funds are pooled to acquire and manage both commercial and residential properties across the U.S. By leveraging the REIT structure, Fundrise makes real estate investing more accessible for smaller investors while simplifying the process.
Minimum Investment
Fundrise offers a low entry point, allowing investments starting at just $10 for taxable accounts. For IRAs, the minimum rises to $1,000. Their Innovation Fund also accepts contributions starting at $10.
Rental Income Frequency
Instead of daily payouts, Fundrise distributes income via quarterly dividends. These payments reflect your share of the income generated from loan interest and rental payments collected during the previous quarter. According to company data, their current average annual dividend return sits at 1.92%, while long-term investors have historically seen an average annual income return of 4.81%.
Dividends are typically paid mid-month after each quarter and are not guaranteed. Fundrise, as a REIT, is required to distribute at least 90% of its taxable income to shareholders annually. Over its 12-year history, the platform has paid out $194 million in dividends, with the average investor earning $587 in total dividends. Investors receive dividends in cash without needing to sell shares, though many opt to reinvest them automatically using Fundrise's dividend reinvestment program. This quarterly schedule appeals to those who prefer a more traditional dividend approach compared to platforms offering daily payouts.
Liquidity Options
Investments through Fundrise are designed for the long term and are not publicly traded. However, the platform does offer an early liquidation program on a quarterly basis, processed on a first-come, first-served basis. While this provides some flexibility, liquidity is not guaranteed, and early withdrawals may incur a penalty of up to 1%.
"We chose to structure our funds to include the benefit of an early liquidation program, a feature many private investment vehicles do not offer, so that investors who desired to, could request to liquidate early." – Fundrise
That said, investors should approach Fundrise with a long-term mindset, as funds may remain tied up for extended periods despite the availability of the liquidation program.
3. Arrived Homes
Arrived Homes offers a way for individuals to invest in fractional ownership of single-family and vacation rental properties across the U.S. By pooling investor funds, the platform acquires residential properties, making real estate investment more accessible.
Minimum Investment
One of the standout features of Arrived Homes is its low entry point - investors can get started with as little as $100 per property. According to Korin Hedlund:
"Our mission at Arrived is to make investing in rental homes accessible to everyone, and as such the minimum required to make an investment is only $100 USD per property."
While the minimum is $100, the average investment per property is around $3,195. This affordability allows investors to explore flexible income opportunities without a significant upfront commitment.
Rental Income Frequency
Arrived Homes distributes rental income as dividends to investors on a monthly basis, helping boost cash flow. Dividends are calculated based on the investor’s ownership percentage in the property. In Q4 2024, the platform reported strong performance, with over $1.84 million in dividends paid out - a 19% increase compared to Q3 2024. During this period, 365 individual properties contributed to the payouts.
Performance by property type in Q4 2024 included:
- Single-family homes: Annualized dividend of 4.0%
- Vacation rentals: Annualized dividend of 2.3%
For fund-based investments, the Arrived Single Family Residential Fund mirrored the 4.0% annualized dividend, while the Arrived Private Credit Fund delivered an impressive 8.1% annualized return. These consistent returns are part of the platform's strategy to improve investor benefits and liquidity options.
Liquidity Options
Unlike diversified portfolios, Arrived Homes focuses on specific properties and is working to enhance liquidity for its investors. Shares typically have a term of 5–7 years for single-family homes and 5–15 years for vacation rentals. However, the platform provides some early liquidity options. Investors can request redemptions after six months, though approvals are not guaranteed, and liquidity fees may apply. Redemptions are processed quarterly, with limits on the number of shares eligible for withdrawal.
Looking ahead, Arrived Homes plans to launch a secondary marketplace in Summer 2025. This marketplace will allow investors to trade shares directly with one another during four one-week trading windows each year. Features include limit orders, enabling participants to set specific price points. However, there are restrictions:
- Shares cannot be sold within the first six months.
- Early sales incur penalties: 2% of sold shares if sold within 6–12 months, and 1% if sold within 1–5 years.
Historically, Arrived Homes' rental properties have delivered annual returns of 5.4% to 7.0%, primarily through cash dividends generated from rental income. These returns, combined with the upcoming secondary marketplace, aim to provide investors with both reliable income and improved flexibility.
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4. Ark7
Ark7 makes fractional real estate investing simple and approachable, offering a low barrier to entry with a $20 minimum investment. Its platform provides an easy way for investors to gain detailed insights into income and property performance.
Minimum Investment
You can start investing with Ark7 for just $20. As noted on their website:
"It is designed for investors of all backgrounds, regardless of experience level or income status."
This minimal investment requirement makes it possible for nearly anyone to explore fractional property ownership without a large financial commitment.
Rental Income Frequency
Ark7 distributes rental income monthly, with payments sent via direct deposit on the 3rd of each month. Payouts are based on your proportional ownership and are calculated after expenses.
In May 2023, Ark7 distributed a total of $59,268.88 in rental income to investors, achieving an annualized return of 4.58%. Depending on the property, annualized cash returns typically range between 3.22% and 6.96%, equating to about $0.10 to $0.58 per share. Keep in mind, monthly payouts can fluctuate due to operational factors.
5. RealT
RealT brings a fresh approach to real estate investing by offering tokenized U.S. properties through blockchain technology. This method lowers the barriers to entry and provides international investors with improved liquidity options compared to traditional real estate investments.
Minimum Investment
While RealT doesn't explicitly state a minimum investment amount, it is known for its low entry point. In many cases, investments start at around $10, similar to other platforms.
Liquidity Options
RealT addresses liquidity challenges by allowing investors to trade fractional shares through various channels.
"Through tokenization and DeFi protocols like YAM and the RMM, RealT offers enhanced liquidity."
Investors have three primary ways to resell their RealTokens:
- YAM platform: This serves as the main marketplace where users can connect their wallets, explore listings, and make offers. The platform has shown remarkable success, recording over $4.5 million in trading volume across more than 37,000 transactions as of November 2023.
- Direct sales on RealT's website: Investors can sell tokens directly through RealT's site, though there are some restrictions. Sales are capped at $2,000 USD worth of tokens per week, with a 3% processing fee and a processing time of up to 10 business days.
- RealT Market Maker (RMM): This option allows investors to borrow xDai by using their RealTokens as collateral, up to 50% of the tokens' value. This provides liquidity without requiring the sale of tokens.
These flexible liquidity options work hand-in-hand with RealT's income distribution model, offering investors convenience and adaptability.
Rental Income Frequency
Rental income from RealT properties is distributed periodically, calculated after deducting property expenses.
It's worth noting that these distributions come with tax obligations. Investors typically report this income on Schedule K-1 forms, making it essential to consider the tax implications of fractional property ownership.
App Comparison Chart
When it comes to fractional property ownership, choosing the right platform means understanding how each one handles essential investment factors. Here's a breakdown of five popular apps and their key features:
| Platform | Minimum Investment | Rental Income Frequency | Liquidity Options | Property Management |
|---|---|---|---|---|
| Lofty | $50 | Daily | Secondary marketplace using blockchain tokenization | Full-service property management included |
| Fundrise | $10 | Quarterly | Limited liquidity with penalties for early withdrawals | Professional management for eREITs |
| Arrived Homes | $100 | Quarterly | No secondary marketplace available | Not specified |
| Ark7 | $20 | Not specified | Secondary marketplace available after a 1-year holding period | Property management with 8%–15% fees |
| RealT | ~$10 | Periodic (after expenses) | Not specified | Managed by third-party companies |
Here's a closer look at what sets these platforms apart:
- Minimum Investments: Entry points range from as low as $10 on platforms like Fundrise and RealT to $100 with Arrived Homes. Lofty and Ark7 fall in between, requiring $50 and $20, respectively.
- Income Distribution: Lofty stands out with daily payouts, while others, like Fundrise and Arrived Homes, offer quarterly distributions. RealT's income is periodic, depending on expenses.
- Liquidity: Lofty offers immediate trading through blockchain tokenization, making it a standout for flexibility. Ark7, on the other hand, requires a one-year holding period before accessing its secondary marketplace, while Fundrise imposes penalties for early withdrawals.
- Property Management: Lofty includes full-service management, while Ark7 charges additional fees ranging from 8% to 15%. RealT relies on third-party companies, and Fundrise provides professional management for its eREITs.
These differences are crucial for aligning platform features with your financial goals and risk tolerance. Whether you're looking for low entry costs, frequent income, or flexible liquidity, this chart helps simplify the decision-making process.
Final Thoughts
Fractional ownership apps are shaking up the real estate investment world. By breaking down barriers that once excluded average investors, these platforms now make it possible to dip into real estate with as little as $10 to $100. This shift is opening doors for more people to build wealth through property ownership, marking the start of a new era in accessible investing.
The growth of the fractional property market across the United States highlights this change, with the sector gaining momentum and expanding steadily.
These apps stand out by offering a blend of accessibility, transparency, and convenience. Features like daily rental income and professional property management bring advantages that traditional real estate investing simply can't match.
"Fractional ownership is revolutionizing the real estate investment world by allowing multiple investors to buy shares in a single property. This lowers the barrier to entry, making real estate more accessible to people who might not have the capital to buy entire properties."
- ideausher.com
However, choosing the right platform is key. Investors should align their financial goals and risk tolerance with the unique features each app provides. Whether you're after steady daily income, long-term growth, or a diversified portfolio, it's essential to evaluate factors like minimum investment amounts, fees, and liquidity options to find the best fit for your needs.
The future of real estate investing has arrived - and it’s right on your smartphone. With tools that allow instant liquidity, daily payouts, and low entry points, these apps make it easier than ever for anyone to step into the world of property investment, regardless of experience or starting capital.
FAQs
What should I look for in a fractional property ownership app?
When choosing a fractional property ownership app, focus on a few essential aspects. Start by examining the platform's fees, reputation, and how easy it is to navigate and manage your investments. Opt for apps that prioritize transparency, offer high-quality properties in sought-after locations, and make buying and selling as hassle-free as possible.
Don't overlook the user experience. A good app should let you easily track your investments, view financial details, and provide liquidity when needed. Platforms with reliable property management and clear communication can help you make smarter decisions and get the most out of your investment.
What are the liquidity options available for fractional property ownership platforms?
When it comes to liquidity options for fractional property ownership platforms, the choices can differ significantly. Some platforms include secondary marketplaces where investors can trade property shares, making it easier to access their funds when needed. For example, Lofty simplifies things even further with instant buying and selling of property fractions, allowing for faster and more convenient transactions.
The degree of liquidity varies depending on how the platform is set up. Investors can find everything from semi-liquid systems to fully developed resale markets, providing multiple ways to handle their investments effectively.
What tax considerations should I be aware of when investing in fractional property ownership through these apps?
When you invest in fractional property ownership in the U.S., any profits from selling your shares may be subject to capital gains tax. If you hold onto your investment for more than a year, you might qualify for lower long-term capital gains tax rates. Plus, there’s a chance to claim tax deductions - like depreciation and mortgage interest - based on your ownership percentage.
Tax rules can differ depending on how the property is used and the ownership structure in place. To get a clear picture of how these rules apply to you, it’s a good idea to consult a tax professional.
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