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Fundrise vs. CrowdStreet: Comparison of Real Estate Investing Platforms

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Fundrise vs. CrowdStreet

If you’ve considered investing in real estate, you know there’s a considerable barrier to entry. Buying a rental property or commercial property isn’t realistic for most people. And you may not have the time to serve as a landlord.

Thankfully, crowdfunding platforms remove some of the most significant barriers so anyone can add real estate to their portfolio.

Two of the more prominent players are Fundrise and CrowdStreet, and both offer a variety of real estate investment options.

The title of this article is somewhat hyperbolic and adversarial in nature because these are both excellent investing platforms. Ultimately the choice between Fundrise and CrowdStreet will be determined by your specific goals and expectations, as they serve two different types of investors.

In this Fundrise vs. CrowdStreet comparison, we’ll compare both platforms to help you make an informed choice.

Fundrise vs. CrowdStreet Summary

The main difference between Fundrise and CrowdStreet is that Fundrise is accessible to the average person, while CrowdStreet serves high-income and high-net-worth investors.

CrowdStreet is open only to accredited investors, but Fundrise is accessible to accredited and non-accredited investors. The minimum to invest with Fundrise is just $10, while CrowdStreet’s minimum is $25,000.

Fundrise Overview

Fundrise

Fundrise was established in 2012. With a track record that’s more than a decade long, Fundrise is considered to be one of the best real estate investing platforms. Fundrise has raised more than $1 billion in capital to date, and they’re working with over 150,000 investors.

Investors own a share in crowdfunded real estate projects focusing on multi-family condominiums and office spaces.

Investors can start with as little as $10. This removes one of the most significant barriers that prevents many from investing in real estate.

Fundrise is an eREITs front runner with over $150 million raised, yet the average investment is only $5,000. Annual returns average in the 10-14% range, typically.

At this time, there are two Fundrise investment opportunities to explore, eREITs and eFunds. Both give an investor very easy access to commercial real estate investing projects.

It’s easy to see why Fundrise is a popular choice with new investors or those looking to move into real estate investing with lower risk.

To learn more, read our Fundrise review.

CrowdStreet Overview

CrowdStreet

At the time of writing this article, CrowdStreet is the largest commercial real estate investing marketplace.

However, unlike Fundrise, CrowdStreet is only available to accredited investors. To qualify, you need to have an annual income that exceeds $200,000 (or $300,000 if you’re married and file jointly) or a net worth of $1 million or more, excluding your primary residence. As you might imagine, these are significant limitations, and most investors do not qualify.

CrowdStreet offers REITs and the opportunity to invest in specific real estate projects. If you have $250,000 or more to invest, CrowdStreet can tailor an investment portfolio for you to meet specific needs and goals. It’s important to note that CrowdStreet restricts its real estate investments to commercial projects only.

How the Platforms Work

Both platforms perform well, but they work in very different ways:

Fundrise

This platform provides an investor with access to proprietary real estate investment trusts (eREITs) and certain eFunds that are not available elsewhere. Fundrise is an option for any investor that has at least $10 to invest. You do not need to qualify as an accredited investor.

There are five account tiers:

  • Starter
  • Basic
  • Core
  • Advanced
  • Premium

As you would expect, each account tier above Basic gives the investor access to new features. Let’s look at these five account tiers in more detail.

Starter: This is the $10 minimum investment tier. Investors will own a share in a diversified portfolio with the Flagship Fund. Optionally, you can set up auto investing payments of $10 per month. The dividends can be reinvested automatically, which makes this a great plan for people new to real estate investing with a long-term focus.

Basic: This has all the Starter plan benefits, but the Basic account tier adds the capability to set investing goals. Additionally, you can invest via an individual retirement account (IRA). You also gain access to the Fundrise IPO (Internet Public Offering). The minimum investment threshold is $1,000.

Core: The Core plan requires a minimum investment of $5,000. A host of features are added to the previous tiers at this level. The investment goals can be customized to meet specific needs, including growth, balanced returns, or income. Diversification is offered across various funds with potential access to open eREITs. Six months of advisory fees will be waived for each person you refer to Fundrise.

Advanced: This Fundrise account tier requires a minimum $10,000 investment with all the previous perks and much more. You can invest directly into the eFund. There is access to the plus plans, more diversification, and tax-advantaged funds. For each referral to Fundrise, the company will waive nine months of advisory fees.

Premium: This is the top Fundrise account tier, and a $100,000 minimum investment is required. Investors at this level must be accredited. Premium investors get the Core and Advanced plan features plus priority access to the investment team. Fundrise will waive a year of advisory fees for each successful referral.

CrowdStreet

Each investment offered on the CrowdStreet website is accompanied by a video webinar that details the scope of the project. This is a very useful tool for potential investors to learn detailed information about an investment and to determine if it’s a good addition to their portfolio.

Each webinar can be listened to live, and questions can be asked in real-time. If you don’t catch the live webinar, you can check out the recording and the questions that were asked and answered.

As we mentioned earlier, the focus of CrowdStreet is real estate investing in various specific assets, including office space, industrial facilities, medical offices, self-storage, senior housing, student housing, and retail locations.

The “Investment Thesis” feature gives a potential investor valuable insights into how CrowdStreet evaluates the value of these assets. The company has a “StreetBeats” video series that gives investors an insider perspective on the weekly changes in the commercial real estate market.

These sources of information give an investor guidance on a wide variety of investing topics, including: “Understanding the Internal Rate of Return,” “How to Review Investment Offerings,” and many more. So, it’s fair to say that CrowdStreet investors have many sources of good information that can help them to make sound decisions.

The main drawback for many potential investors is that they must be accredited to join and access CrowdStreet investment opportunities. Additionally, the minimum investment of $25,000 is significant. For these reasons, it’s fair to say that CrowdStreet is geared toward more experienced investors than Fundrise.

Historical Performance:

Both platforms can make money with sound investing strategies. Of course, there are no guarantees of positive returns, which is true with any investment. But, you can examine the track records of Fundrise and CrowdStreet to evaluate the average annualized returns over recent years.

Past performance is no guarantee of future returns, but it can be a useful indicator. Let’s take a look at both platforms in more detail.

Fundrise

The average annualized Fundrise returns over the past few years are:

  • 2022: 1.5%
  • 2021: 22.99%
  • 2020: 7.31%
  • 2019: 9.16%
  • 2018: 8.81%
  • 2017: 10.63%

The 1.5% return in 2022 may not seem all that impressive at first glance, but compared to public REITs (-25.10%) and the S&P 500 (-18.11%), any positive return is much more impressive.

It’s important to remember that the eFunds and REITs provide the diversification you would not get if you chose to invest in an individual property. When you have a diversified portfolio, you will reduce the risk.

CrowdStreet

Again, there are no guarantees of returns even though CrowdStreet is considered an excellent investing platform. Although the company does provide a large volume of data for its investors, the historical performance numbers can be useful.

CrowdStreets reporting is slightly different than Fundrise’s because numbers are only available for completed projects (the property has been sold). Until projects are complete, it’s impossible to know exactly what the return will be for investors.

Instead of a yearly average annualized return figure, we present three indicators that CrowdStreet has typified performance in recent years:

  • The Internal Rate of Return (the average annualized return): 19.4%
  • The Hold Period (average the time that elapses between the deal purchase and sale): 2.9 years
  • The Equity Multiple (the total cash distributions from the investment, divided by the equity invested): 1.59x

This data, as of January 2023, is based on 159 completed deals.

Fundrise vs. Crowdstreet: Key Differences

There are three key Fundrise vs. CrowdStreet differences to consider carefully. These details will ensure that you choose the right real estate platform to meet your goals and expectations.

1.   Accessibility

A specific real estate platform may be the best option, but if it’s not accessible for you, it’s inconsequential. If you’re making a direct comparison between Fundrise and CrowdStreet, it’s obvious that Fundrise is far easier to access for the average person

Fundrise is easy to join. You don’t need to be an accredited investor, and you can begin at the Starter tier for only $10. Your net worth or income is not an issue. All you need is the available cash to meet the requirements of the Fundrise tier you want to join.

CrowdStreet has much more stringent requirements, which must be verified before you can join the platform and start investing with them.

So if you’re not an accredited investor, the decision is easy. Fundrise will be the choice for you.

2.   Fees

CrowdStreet does not charge fees to create an account. However, investors may pay fees to the sponsor for access CrowdStreet chares a 1-2% fee annually to REIT investors.

Fundrise charges management and advisory fees that are a 1% annual cost which is based on the value of your portfolio. These fees are lower than most real estate platforms. And at the Core tier or higher, the advisory fees will be waived if the investor brings a new person to the platform.

3.   Investment Opportunities

Fundrise does not offer access to a specific property or customized real estate portfolios. But, you can invest via eFunds or REITs, and it’s possible to invest in residential and commercial projects.

CrowdStreet has more investment options for qualifying investors, including custom portfolios, individual property deals, and REITs. But, investments are only made in commercial properties through the CrowdStreet platform.

Additionally, investments with CrowdStreet offer the potential for higher returns, but also a higher potential for loss of your investment.

Pros and Cons

Let’s summarize the key advantages of both platforms:

Fundrise Pros:

  • The starter investing threshold of only $10 is a surefire way to attract newer investors that want to learn more about real estate investing.
  • Anyone can invest. You don’t need to be an accredited investor.
  • The fee structure is transparent and easier to understand than many competing real estate crowdfunding platforms. New investors can feel overwhelmed by the “hidden costs” of investing if they don’t understand the fees.
  • The management fees are set at 1% per annum, which is reasonable.
  • Early redemption is an option if you need liquidity, but this will incur an early redemption fee.
  • Fundrise can earn the investor compound interest with DRIP investing their quarterly dividends automatically.
  • This platform has self-directed retirement account support from the Basic account tier onwards.

CrowdStreet Pros:

  • CrowdStreet offers several types of investment accounts.
  • The resources are robust.
  • The investor has access to individual real estate projects and REITs.
  • There’s potential for outstanding returns.

Fundrise vs. Crowdstreet: Which One is Best?

This is a hard question to answer because both platforms are very different, and one is not inherently better. They’re both reputable real estate investment platforms, and if you understand your goals, it’s easier to find the right one that meets your needs.

Most new investors or those new to real estate investing are unlikely to consider CrowdStreet as an option because it requires you to be an accredited investor. For these investors, Fundrise is a more accessible platform, and you can get started with only $10.

If you’re an investor that can qualify for both platforms, you may want to consider a few factors before you make a final decision. First, consider the investment options that interest you. If you want individual deals and funds, CrowdStreet is the best choice. But, if you want REIT diversification and you want to invest small amounts, then Fundrise is the logical choice.

If you’ve ever considered real estate investing, an online crowdfunding platform is a great way to get started. With real estate, you can achieve long-term growth or create a supplemental passive income stream.

Access to a variety of real estate investment opportunities and REITs with both platforms is possible, but the platform you choose should be determined by your specific goals.

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