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Real estate is one of the most effective investments for building wealth. Historically, several obstacles prevented the average person from investing in real estate. Fortunately, modern platforms make real estate investments easier and more accessible than ever.
Today, we’re taking a detailed look at these platforms in this Streitwise vs. Fundrise comparison. Both platforms give investors an easy way to invest in real estate with a much lower initial investment. But there are significant differences between them, and choosing the right platform that matches your needs is important.
Let’s compare head-to-head to help you make an informed real estate investment decision.
Streitwise vs. Fundrise Summary
The main difference between Streitwise and Fundrise is the minimum investment. You’ll need at least $5,000 to invest with Streitwise, but only $10 to start with Fundrise. And because Fundrise is larger and more established, they offer better diversification and more options to customize your investment.
Fundrise has been operating since 2012, which makes it one of the most established real estate crowdfunding platforms. They are considered one of the leading real estate, partly because of the accessibility for new investors.
At the time of writing this article, Fundrise has raised over $1 billion in capital, working with more than 150,000 investors. The platform uses its generated funds to invest in crowdfunded real estate projects. These projects are primarily commercial office space locations and multi-family condominiums, with some residential real estate included.
A typical Fundrise investment is around $5,000 (although the minimum is only $10), and the annual returns are in the 10-14% range. In the last six years, Fundrise has achieved and maintained an average net annualized return of 10% and higher.
There are two Fundrise investment avenues to explore. eFunds and eREITs both give potential investors easy access to commercial real estate project investing.
Overall, Fundrise is simple and extremely beginner-friendly. However, it’s also appropriate for more experienced investors looking to build a significant portfolio of real estate.
To learn more, read our Fundrise review.
The goal of the Streitwise founders was to change the lives of investors by offering an easy way to engage with real estate investment. This is a significant challenge, but the company operates with one dividend at a time to simplify the process.
At this time, the co-founders have invested more than $5 million of their own funds with Streitwise, demonstrating significant confidence.
The company has both accredited and non-accredited investor options. As an accredited investor, you can invest in real estate freely across the entire platform. If you’re a non-accredited investor, you’re restricted to investing up to 10% of your annual income or net worth. But, you cannot include the value of your home in the net worth figures.
To learn more, read our Streitwise review.
When you consider real estate investing, the potential return is one of the primary factors that should influence your decisions. After all, we invest our money to grow our portfolio, and when we analyze returns, there’s a challenge to overcome. Why? Well, both Fundrise and Streitwise have diverse offerings, which can make a direct comparison a tricky proposition.
Let’s take a look at a couple of examples to further illustrate this point:
The “Fundrise Starter Portfolio” is the flagship real estate fund, which had an impressive 29.3% net return in 2021, and as we head into the end of 2022, the netted return is 6.1% year-to-date.
Across all investor accounts, the average Fundrise return in 2021 was 22.99%. But, these numbers are variable because, as an investor, you can choose individual investments that you want to invest in. The results will differ from one investor to the next.
Streitwise has achieved an average return of 9.2% from 2017 to the present day. This demonstrates consistency, but there’s no doubt that Fundrise offers the potential for stronger returns.
How the Platforms Work
Let’s take a look at how each platform works in more detail.
When you invest with Fundrise, you’ll choose either eFunds or eREITs. These comprise a complete basket of non-traded real estate ranging from industrial facilities to multi-family apartments.
Both eREITs and eFunds are designed to seek a balance between capital appreciation and dividend distribution. When opening a new Fundrise account, you’ll be offered a range of account levels that we’ll cover in more detail later.
Fundrise offers Roth and Traditional IRAs, in addition to regular taxable accounts.
Like Fundrise, Streitwise is open to both accredited and non-accredited investors. The platform allows investors to invest in commercial real estate via a non-traded equity Real Estate Investment Trust (REIT).
However, Streitwise differs from many real estate investment platforms because they actually own and manage the real estate properties listed on the platform. Many competing platforms only act as middlemen because they connect investors with real estate sponsors.
At the time of writing this article, Streitwise has a REIT offering comprising two separate commercial properties and future properties that the company may acquire. This current offering has a minimum investment of $5,055 or 500 shares at a share price of $10.11 each. The dividend target is 8-9% net of fees, and investors can invest as an individual, company, trust, or self-directed IRA or 401K.
The fee structure between these two investing platforms is quite different.
This platform has two primary ways to make money: asset appreciation (from increased property values) and dividends. The dividends represent a portion of the collected rents and interest which is then shared between the individual investors.
This does offer good return potential, but there’s a 1% annual fee charged for using the Fundrise platform. This fee is broken down as follows: 0.85% goes towards asset management, and 0.15% is used for investment portfolio management.
Fundrise also charges a one-time asset origination fee of 0-2% of the initial investment. This fee is charged to establish various real estate partnerships and to negotiate the underlying asset structure.
In comparison to Fundrise, the fee structure at Streitwise is more transparent and easy to understand. Most real estate crowdfunding platforms have an overly complex fee structure. But, Streitwise charges a 3% fee upfront plus a 2% management fee. These fees may seem high, but many new investors appreciate the simplicity and peace of mind that this approach offers.
Real estate is inherently an illiquid investment. As a result, you should only invest money that you won’t need for the next five years or more. However, unexpected situations may arise, and it’s good to know your options.
Fundrise offers the possibility of early redemption. But as you might expect, this does incur certain fees. Redeeming your shares before the end of a standard five-year investment term incurs an early redemption fee.
The fee is a discount on the share price of the investment, and the fee is reduced for every year that you hold on to the investment. So, if you’re cashing out after the first year, you’ll pay a higher early redemption fee than you would after the fourth year.
When you invest with Streitwise, you can’t withdraw your money for at least one year. After the first year, it’s possible to withdraw your money, but there are some hefty fees to consider.
Withdrawing your money in 1-2 years incurs a 10% fee. The fees phase out as you hold onto the investment for longer periods of time toward the five-year mark. When you’ve held onto a Streitwise investment for five years, there are no withdrawal fees, and you can cash out any time.
When you look at these two approaches, it’s obvious that Fundrise has a greater potential for liquidity, although neither should be considered a liquid investment. With Fundrise, there’s no mandatory lockout for that first year, and the 10% fee charged by Streitwise is much higher.
Let’s take a closer look at the account types for both platforms.
- Starter: The beginner account with basic features and investing options with a low minimum investment of only $10.
- Basic: This account has a minimum investment of $1,000, and it adds IRA investing capabilities and personal investment goal management options.
- Core: This adds investing options across a wider variety of portfolios, including balanced investing, long-term growth, and supplemental income. The minimum investment for Fundrise Core is $5,000.
- Advanced: This tier has all the Fundrise Core features, but Fundrise Plus plans are added, which offer more change-based and strategic investment options. The minimum investment for Advanced is $10,000.
- Premium: This adds the capability to invest in select projects that are illiquid with longer time horizons for significant gains. The minimum investment for a Premium account is $100,000 or more.
To supplement these account types, there are several portfolio options to consider. At this time, there are over a dozen real estate portfolios that an investor can choose from based on risk tolerance and investment goals. Certain portfolios are designed to improve cash flow, while others focus on asset growth.
The starter portfolio can be accessed from the Starter account. But, access to the other portfolio types requires a Core account or higher, and this is where you can find the customized investment portfolios.
The most popular Fundrise account and the one we recommend that new real estate investors check out is the Core Portfolio. This account has a reasonable $5,000 investment with all the benefits and options an investor needs to get started.
At this tier, you can create a customized investment strategy and diversify across various funds. This is the best way to find the optimal portfolio that meets your needs for supplemental income, balanced investments, or long-term growth.
As we mentioned earlier, Streitwise only invests in commercial real estate, such as office buildings, warehouses, and similar properties. So, the platform is focused on specific investment opportunities with strict term limits. At the time of writing, a single REIT is offered, the 1st Streit Office. Of course, this may be subject to changes later if other investment opportunities arise.
As you can see from the minimum investment amounts shown above, there are some significant differences between Fundrise and Streitwise. At the starter level, you can open a Fundrise account with only $10. With Streitwise, you need at least $5,000 to get started.
It’s also worth noting that Streitwise requires an additional $500 minimum deposit, which is far higher than the starter tier for Fundrise. So, if you’re starting small and want to learn more about real estate investing, Fundrise is the better option.
Streitwise offers a Dividend Reinvestment Plan (DRIP) that investors can take advantage of if they don’t want to receive dividends in cash. The money can be automatically set to reinvest in additional REIT shares to compound the returns over a longer time period.
Fundrise has a similar DRIP feature with quarterly dividend investing. From the investor dashboard, you can change the setting from reinvestment to cash (or vice versa) at any time.
Let’s summarize the key advantages of Fundrise:
- A Low Minimum Investment: Fundrise offers a wider variety of investment accounts to suit an array of investing budgets that start at only $10.
- A More Diversified Portfolio: Fundrise spreads investor money across a wide range of properties throughout the United States.
- Lower Management Fees: The Fundrise management fee is set at a very reasonable 1% per annum.
- Early Redemption Option: Fundrise has quarterly redemption periods if you need to release an investment earlier than expected, but this incurs early redemption fees.
- Longer Track Record: As an older company with a longer history, Fundrise has a more established track record.
- Better Historical Returns: Both Fundrise and Streitwise have performed well for investors to date, but Fundrise has the advantage here.
Streitwise has a few key advantages to consider:
- Easy to Understand Fees: The Streitwise fee structure is simple, 3% upfront followed by a 2% annual management fee.
- Strict Vetting: All new projects are strictly vetted by industry professionals to ensure the viability of optimal investment returns. With a small portfolio, Streitwise can minimize risk.
- Higher Dividends: Fundrise has produced better returns overall, but those returns include dividends and appreciation. Streitwise continues to manage its properties, so all of the returns to date are from dividends.
This article contains much information that may overwhelm people new to real estate investing. So, we’ve compiled a list of the key features of both platforms in a single location that’s easy to scan:
- The platform is open to accredited and non-accredited investors.
- Investors can access eFunds and eREITS with an investment as small as $10.
- Prebuilt portfolios provide easy access to U.S.-based real estate investment opportunities.
- Fundrise has a variety of real estate portfolios to meet specific investment objectives, such as supplemental income, long-term growth, and a balanced mix of both.
- The Fundrise annual fees are set at a very reasonable 1%.
- Fundrise has a strong track record of producing results for investors.
- Streitwise is also open to accredited and non-accredited investors.
- The exact minimum investment is $5,055 at the time of writing this article.
- Streitwise picks the investment for you based on its current portfolios.
- The platform offers REITs investments in commercial real estate.
- Streitwise investors are locked into the first year of investing.
- The dividends are redeemable quarterly.
- Streitwise is open to U.S. citizens, legal U.S. residents, and non-U.S. investors.
- Fundrise and Streitwise are long-term real estate investing platforms with five-year minimum time horizons.
- Both platforms charge significant fees for early redemption.
- The quarterly dividends can be reinvested automatically with DRIPS to earn compound interest.
- Neither platform guarantees redemption and liquidity, which can be affected by a poor economy.
From the general tone of this article and the information presented, it’s easy to infer that we favor Fundrise over Streitwise. This is true to a certain extent, but it’s important to state that Streitwise is a solid real estate investing platform with a good track record.
That said, Fundrise has lower minimum investment thresholds that attract new real estate investors, and the fees are reasonable.
If you want a balanced mix of income and growth from real estate investing, Fundrise is the best option. But, Streitwise has a solid track record and could be an appropriate part of your portfolio based on your preferences.