Real estate investing is a popular alternative asset class for investors seeking diversification in their portfolios, alongside traditional investments like stocks and bonds. The emergence of real estate crowdfunding investment platforms has further democratized access to this asset class, eliminating the need for significant capital or extensive industry knowledge. In this article, we will explore the benefits of real estate investing and compare some of the most popular platforms that can help you get started on your real estate investment journey.
Benefits of Real Estate Investing
Real estate investing has several advantages that make it an attractive option for investors. Some of these benefits include:
- Diversification: Real estate provides diversification to traditional investment products such as stocks and bonds, which can reduce portfolio risk.
- Tangible Asset: Real estate provides a tangible asset, which can provide a sense of security.
- Income Generation: Real estate can generate rental income and appreciation, which can provide long-term returns.
- Inflation Hedge: Real estate has historically acted as an inflation hedge, which can protect against inflation risk.
Especially in times like these when inflation and stocks create a downward spiral of volatility, you can make sure your portfolio is not only protected but productive with real estate assets.
Crowdfunding platforms such as Fundrise and Cadre offer real estate investors an opportunity to invest in real estate projects through real estate syndication without having to own a physical property or be a landlord in the traditional sense.
Most often, these investments are made through a vehicle known as a real estate investment trust, or REIT, which can provide real estate equity exposure and capital appreciation. The REIT purchases, leases, and manages the property, while all investors have to do is buy shares in the REIT. Collected rent makes up the bulk of the dividends that get distributed back to investors.
So not only are real estate assets diverse, they also offer passive income and potential capital appreciation through real estate investment strategies in a way that many traditional investments don’t.
Fundrise v/s Cadre
Fundrise is a real estate crowdfunding platform that enables investors to invest in private real estate projects. Founded in 2010, it has become one of the most popular real estate investing platforms in the United States. Some of the advantages of investing with Fundrise include:
- Diversification: Fundrise provides access to a wide range of real estate projects, offering portfolio diversification.
- Low Investment Minimums: Fundrise has a low minimum investment of $10, making it accessible to a wider range of investors.
- Ease of Use: Fundrise has an easy-to-use platform, enabling investors to easily invest in real estate projects.
Fundrise aims to offer affordable yet institutional-quality real estate investments to DIY investors. They invest in REITs, or "eREITs", using a "value investing" strategy. This strategy involves acquiring real estate assets for less than their intrinsic value, then putting in hands-on work to increase their value.
Fundrise users can choose their own portfolio strategy, receive updates on the actual real estate properties in which they have invested, and view investment performance.
Fundrise is unique for its low minimum investment, making it accessible to a wider range of investors. Their pricing is broken into "account levels" and investors can start for as little as $10, with the most popular account level requiring a $5,000 initial investment.
The average historical annual return for Fundrise investments is around 8-12%, which is higher than the average return for traditional investment products such as stocks and bonds. Fundrise offers its investors diversification, affordability, transparency, and accessibility.
Cadre is a real estate crowdfunding platform that was founded in 2014 by Ryan Williams, Jared Kushner, and Joshua Kushner. The platform caters to accredited investors, who meet certain financial criteria, such as having a net worth of at least $1 million or an annual income of at least $200,000. One of the key advantages of investing with Cadre is access to institutional-grade real estate projects that are typically reserved for large institutional investors.
Another advantage is transparency. Cadre provides investors with detailed information about the real estate projects they are investing in, including market data, financial projections, and deal documents. This can provide investors with a sense of security and confidence in their investment decisions.
Cadre has a higher average historical annual return rate of 18%, compared to the 8-12% average annual return for Fundrise. Cadre focuses on investing in commercial real estate properties of institutional quality, such as multifamily apartments, office buildings, hotels, and industrial buildings such as warehouses.
The company utilizes its own advanced technology to assist its investment and asset management teams in identifying and procuring properties, as well as overseeing their management on the Cadre platform. The platform offers two different options for investors to access their platform: the Cadre Direct Access Fund, which provides investors with access to a diversified portfolio of commercial real estate properties, and deal-by-deal investing, which allows investors to select individual properties to invest in.
The minimum investment amount for the Cadre Direct Access Fund is typically $25,000, while the minimum for deal-by-deal investing may be higher or lower in some cases, depending on the specific property. Overall, Cadre is a top-tier real estate investment platform that offers accredited investors access to high-quality real estate projects with strong potential returns.
Other Real Estate Investing Platforms to Consider
In addition to Fundrise and Cadre, there are several other real estate investing platforms that investors can consider. Here are brief descriptions of some of them:
CrowdStreet: Award Winning Real Estate Crowdfunding
Investopedia named CrowdStreet the best overall real estate crowdfunding site of 2022 — an impressive feat.
With CrowdStreet, investors can go for individual deals, invest easily in managed funds, or take advantage of the platform’s advisory services to build a personalized real estate portfolio. The majority of CrowdStreet’s investment offerings require a minimum investment of at least $25,000, including their own REIT — CrowdStreet REIT I, Inc. (C-REIT).
DiversyFund: A Truly Accessible Investment Minimum
DiversyFund has a mission that’s starting to sound familiar — getting everyday investors access to real estate assets that used to be limited to the extremely wealthy.
The platform invites investors to buy shares in high-growth multi-family real estate assets (think apartment buildings, etc.) in order to increase their net worth and win financial freedom. Investors can get started with just $500, which we find to be quite a reasonable minimum investment.
RealtyMogul: Commercial Real Estate Focus
RealtyMogul empowers commercial real estate investment across several categories:
- Office buildings
- Residential real estate
With RealtyMogul, both accredited and nonaccredited investors can access private real estate offerings as well as two types of real estate REITs — one focused on growth and one focused on income. The minimum for individual investments starts at $25,000. For REITs, it’s $5,000.
Roofstock: Remote Real Estate Investing and Management
Looking for more investment options? Roofstock takes an all-in-one approach. In addition to being a resource for buying rental properties as well as pre-made portfolios and REIT shares, individual and institutional investors can sell and even manage their properties via Roofstock.
Similar to many REITs (their REIT is called Roofstock One), the minimum cost to get into Roofstock’s REIT is $5,000. But unlike most, this REIT is only available to accredited investors. Otherwise there are no hard-and-fast investment minimums of which we’re aware.
Yieldstreet offers a curated selection of alternative investment opportunities that were previously only available to institutions and the ultra-wealthy. The platform offers a range of investment opportunities, including real estate, art, and litigation finance.
Yieldstreet's real estate investments are typically in the form of short-term loans to commercial real estate projects. The loans are usually secured by the underlying real estate, which provides a level of security to investors. Investment minimums are typically in the thousands, for example you can get into their Growth & Income REIT for $5,000, but some offerings like their Prism Fund can be accessed for $500.
Both Fundrise and Cadre are real estate investment platforms that provide investors with access to a diverse portfolio of commercial and residential real estate projects. Fundrise is accessible to a wide range of investors with a low minimum investment, while Cadre caters to accredited investors and offers access to institutional-grade real estate projects.
Both platforms provide a high average historical annual return, with Fundrise averaging 8-12% and Cadre averaging 18%. Ultimately, investors should consider their investment goals, risk tolerance, and financial situation when choosing between the two platforms or any other real estate investment platforms available. However, regardless of which platform an investor chooses, real estate investing offers several benefits, including portfolio diversification, passive income, and the potential for long-term returns.
Cadre utilizes its own cutting-edge technology to enable its personnel to make wise investments in various types of commercial properties such as multi-family dwellings, offices, hotels, and warehouses. This technology helps them to identify and assess potential investments, and to accurately track and analyze the performance of their investments over time.
After investments have been made, Cadre's technology allows them to effectively manage their properties by providing them with the necessary tools to track and monitor performance, analyze data, and make informed decisions. Additionally, Cadre's technology helps to streamline the process of managing properties, making it easier and more efficient for personnel to ensure their investments are profitable.
We saw that problem ourselves all the time as beginner investors. In fact, solving asset management issues like this is exactly why we created Kubera.
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