I have been looking to start some real estate investments. I did some research and found these two platforms that have been repeatedly referred in various investment forums.
It was not very clear which one is better therefore I did my own research and collecting my thoughts here. Please do you own due diligence after reading this and share your thoughts.
Key Differences
- Investment Evaluation
- Minimum investment
- Fees
- Risk
- Returns
- Tax
- Company Support
1. Who Does The Investment Evaluation?
The key difference between Fundrise and Crowdstreet is evaluation of investment.
The CrowdStret is a platform where anyone can come to list the property and raise fund for it. They provide all the tools to market fund raising and document it well. However they do not evaluate these investments.
The Fundrise is a platform that takes a pool of money and invests into real estate. The real estate investment decision is made by Fundrise investment evaluation experts.
2. Minimum Investment
Fundrise minimum $500
Crowdstreet minimum $25000 + Only accredited investors.
3. Fees
Fundrise Fees: It charges around 1%
Crowdstreet Fees: Depends on each investment, each offering has a section of fees that describes it needs to be analyzed.
4. Risk
Fundrise offers 3 option of strategy that varies your investments. Overall risk is moderate.
Crowdstreet — Each investment has its own risk evaluation required.
5. Returns / IRR
Fundrise IRR returns may be in range of 9% — mostly based on past reviews on web.
CrowdStreet IRR returns can be at times very good in range of 20% however these are rare opportunities that go very quickly. Average IRR offered may be still more than 11%. It is hard to verify since each investment return may vary.
6. Tax
Both provide Form K-1 for tax returns.
Fundrise returns are regular taxed. K-1 is provided only for eFund.
CrowdStreet offers options that can save you some taxes since they are direct real estate investments.
You can also do 1031 exchange on some investments, these are rare though.
7. Company Support
Fundrise works like a private investment company that makes sure on its own that investments are good. It can make a decision on switching or continuing investments based on its performance. More detailed analysis here
Crowdstreet acts as a middle man to let two parties meet and do business. It does not really care if the deal had bad returns. They may provide historical information of the raising business and their crowdstreet performance but they do not interfere with you decision.
Which Approach Is Better?
It depends on your preference.
CrowdStreet is certainly higher risk/gain investment since it is single business based investment. You can split your investments in 25K denomination to diversify.
If your profile can take higher risk you may be able to make a better investment in CrowdStreet but overall returns may completely depend on your own expertise on evaluation.
Fundrise is certainly lower risk as compared to CrowdStreet and therefore also offers lesser returns. However, they are inherently diversified that makes it moderate/low risk.
