The Best Real Estate Crowdfunding Sites

By Emily Southey | 16 minute read

Real estate crowdfunding is one of the hottest trends in the real estate industry. Suitable for investors of all ages and income levels, crowdfunding gives people a unique opportunity to enter the world of real estate investing that they otherwise may not have had. Therefore, real estate crowdfunding can help grow an investor’s wealth, diversify their portfolio, and ultimately makes real estate investing more accessible. To learn more about this new way of investing in real estate, keep reading. 

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What Are Real Estate Crowdfunding Sites?

If you’re interested in investing in real estate but aren’t sure where to start or don’t currently have enough capital to go it alone, using a crowdfunding platform can be a great option. Crowdfunding is not a new strategy, nor is it exclusive to the real estate industry. That said, in the past decade, it has taken off with regard to real estate investments. When this investment strategy is applied to real estate, it works like this: multiple investors come together to pool their capital and invest in a property together. The idea behind crowdfunding is that when several people are willing to invest a small amount of money, a large sum of money can be raised quite quickly. This sum is often large enough to purchase an expensive piece of real estate, allowing multiple smaller investors to achieve their goal of investing in real estate without needing to raise a huge amount of capital on their own. In essence, crowdfunding allows smaller investors to invest their money as part of a larger investment. Therefore, crowdfunding bridges the gap between real estate opportunities and interested investors. It has helped make real estate investing more accessible, as previously certain types of real estate (especially commercial real estate) were only open to the wealthiest investors. 

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Real estate crowdfunding platforms are online marketplaces that connect investors with a wide range of investment opportunities. They utilize the internet, including social media outlets, to reach a wide audience of potential investors. In basic terms, these websites help investors find attractive investment opportunities and eager fellow investors. Such platforms have become quite advanced in recent years. Nowadays, they offer many services that help streamline the entire real estate investment process. For example, some crowdfunding websites charge investors a fee that covers a team of professional investment strategy and account managers, who then take care of all the hard work needed to ensure a successful investment (for example, extensive research, legal contracts, paperwork, and more). It must be noted that some crowdfunding sites are open to everyone (that is, general investors), while others may only be open to accredited investors (those with an annual income or net worth over a certain amount).

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How Real Estate Crowdfunding Works

Real estate investing is often extremely lucrative, but it also comes with major upfront costs. On the surface, this might make real estate investing seem inaccessible. Thankfully, there are tools like crowdfunding platforms that make investing in real estate possible for investors with small amounts of capital. Real estate crowdfunding websites encourage investors with access to small amounts of capital to pool their money and fund an entire real estate investment. When you use a crowdfunding platform, a few hundred dollars might be all it takes to get started. Typically, capital is paid into real estate investment trusts (REITs) or other similar financial vehicles, which hold various properties and effectively function as holding companies. The properties can be anything from residential homes or condos to commercial malls, hotels, offices, or retail spaces. Unlike REITs, which are publicly traded, crowdfunding real estate investments are usually privately held. However, it’s also possible to use a crowdfunding site to invest directly in properties, rather than investing via a REIT. Even better, real estate crowdfunding platforms might give investors exclusive access to private market property investments that are unavailable to the public. These investments may also offer higher returns than REITs, though they come with more risk. Finally, it’s important to note that crowdfunding is not typically an investor’s primary method of generating money. Rather, it is used by investors as a way of entering the real estate market to diversify their financial portfolios, balancing out other investments, such as stocks and bonds. 

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The Pros and Cons of Real Estate Crowdfunding

As with any form of investment, real estate crowdfunding has both benefits and drawbacks. Before investing funds via a crowdfunding platform, be sure to carefully consider the pros and cons to identify whether crowdfunding aligns with your financial goals. 

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The Pros

The pros of real estate crowdfunding are as follows:

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• Real estate crowdfunding often pays larger dividends than traditional real estate investments;
• Crowdfunding makes real estate investing more accessible as minimal capital is required upfront. Therefore, it allows investors with small amounts of capital to pool their money and invest in part of a property;
• Crowdfunding provides a unique opportunity for investors to diversify and expand their financial portfolios;
• Real estate crowdfunding might offer access to exclusive real estate projects, properties, or investments that are unavailable to the general public;
• Real estate crowdfunding is a convenient method of investing, especially since many platforms handle much of the process for you;
• Crowdfunding represents a low-risk method of investing in property as investors can avoid the hassle of managing or maintaining a property themselves;
• Real estate crowdfunding can be residential, commercial, or industrial, allowing investors to choose to invest in a property that suits their personal interests and goals; and
• Investors who use crowdfunding platforms will receive income from their investments, which can help grow their overall wealth.

The Cons

The cons of real estate crowdfunding are as follows:

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• Investors who use crowdfunding platforms may be charged expensive fees by the platform for management or advisory services;
• As with all real estate investments, property isn’t liquid, meaning it can’t be easily or quickly sold off for cash;
• Investors may have to pay taxes on the dividends that they earn;
• As real estate crowdfunding is a relatively new phenomenon, many platforms do not have proven track records;
• Not all crowdfunding platforms are open to anyone. Rather, some may have requirements to invest or only be available to accredited investors with certain net worths or incomes; 
• Investors may not see immediate returns on their investments;
• When you invest in real estate, whether through a crowdfunding website or note, you always run the risk of the property depreciating rather than appreciating in value, meaning you may not earn back as much money as you originally invested; and
• Crowdfunding platforms are not government-regulated, which makes them inherently less safe and secure.

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Types of Canada Real Estate Crowdfunding Sites

Before we dive into some of the top real estate crowdfunding websites in Canada, we’re going to break down the four main types of crowdfunding below. 

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Donation

Donation crowdfunding is when people donate money to a campaign, company, or person for nothing in return. In other words, the money donated is donated solely to support your cause. This type of crowdfunding is less common in real estate investing but could be an option. 

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Debt

Debt-based crowdfunding is a form of peer-to-peer lending. With this type of crowdfunding, the money pledged by donors is considered a loan and must be repaid with interest by a set date. 

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Rewards

Rewards crowdfunding is when donors receive something in exchange for their donation. Rewards vary and are often determined by the size of the donation (larger donations equal a better reward). 

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Equity

Finally, equity crowdfunding allows small businesses and startups to give away parts of their business in exchange for funding. These types of donations are generally viewed as investments, as in exchange for providing funds, the donors receive shares in the business proportional to how much money they contributed. 

Top Real Estate Crowdfunding Sites

Let’s move on to the top real estate crowdfunding sites. If you’re ready to start investing in real estate via a crowdfunding platform, it’s important to do your research and understand what benefits and services each crowdfunding platform offers. We profile a few of the top crowdfunding websites in Canada below. 

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Fundrise: Fundrise is one of the most popular and talked-about real estate crowdfunding platforms. Why? The main reason for this is that Fundrise is open to everyone, including non-accredited investors. The minimum investment is just $500, which makes it accessible to a wide pool of investors. This platform has opportunities for all kinds of real estate investments, including both commercial and residential properties. With Fundrise, any money that is invested goes into REITs, which then are responsible for a range of tasks, such as buying land, purchasing properties, and developing real estate projects. Another benefit of Fundrise is that it is an easy-to-use, intuitive platform. 

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YieldStreet: YieldStreet is another crowdfunding platform, however, unlike Fundrise, it largely caters to accredited investors. It offers a greater degree of security than other crowdfunding sites as many of their investments are backed by assets that help protect each investor’s principal. How it works is as follows: YieldStreet provides an opportunity to crowdfund real estate financing vehicles, rather than owning part of a specific residential or commercial property. YieldStreet is open to non-accredited investors with a minimum investment of $1,000.

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EquityMultiple: EquityMultiple has a higher minimum investment than other crowdfunding websites at $5,000 and is only open to accredited investors. It specializes in privately managed commercial buildings, such as office buildings, hotels, data centres, and assisted-living facilities. Investments typically range in length from six months to a decade. Together, this makes EquityMultiple best suited to wealthy investors looking for unique, lucrative opportunities.  

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CrowdStreet: Like Fundrise, CrowdStreet is another well-known real estate crowdfunding platform. It is open to accredited investors and specializes in commercial real estate projects, which is what allows the site to offer higher returns. For an added layer of security, CrowdStreet conducts background and reference checks on developers. Since this platform caters to accredited investors with commercial real estate investment goals, the minimum investment is often high, with many properties requiring $25,000 per investor.  

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RealtyMogul: One final real estate crowdfunding site is RealtyMogul. RealtyMogul is open to both non-accredited and accredited investors. It gives investors access to residential and commercial real estate investments, as well as a variety of REITs. This allows investors to spread their money across a wide range of real estate holdings for greater stability and increased portfolio diversification. Minimum investments tend to be around $5,000 and fees vary based on the investment.

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How to Start a Real Estate Crowdfunding Site

Getting started with a real estate crowdfunding site might seem overwhelming, but it’s actually easier than it looks. Follow our step-by-step guide to investing in real estate through a crowdfunding website below. 

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1. Research the real estate crowdfunding platforms available to you

Before signing up for a certain crowdfunding website, the first step is to research your options. You will find lots of crowdfunding websites on the internet today. However, they won’t all be suited to your needs. You likely will not qualify for all of them either. Do your research and compare sites to help you determine which one is right for you. Part of this process should include reading reviews, comparing fees and services, and confirming the minimum requirements (for example, accredited versus non-accredited investors and minimum investment amounts). We recommend going with a platform that has been around for at least five years and has an impressive track record of returns on investments. 

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2. Decide how much money you want to invest

The next step is to decide how much money you want to invest through a real estate crowdfunding website. Many platforms allow you to invest with as little as a few hundred dollars (some might even allow investments as low as $100 per month). Take the time to review your finances and determine the amount of money you are comfortable investing. The amount you choose to invest should always align with your current financial situation, as well as your long- and short-term investment goals. 

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3. Sign up for an account with your chosen platform

The third step to getting started with real estate crowdfunding is to sign up for the platform of your choice. Based on your research from step #1, make a decision as to which site most aligns with your goals. From there, visit the platform’s website and sign up! This process typically takes a few minutes and can conveniently be done online.