How We Review Real Estate Crowdfunding Platforms (2024)

Fees

Real estate crowdfunding platforms charge an assortment of fees for their services. These fees can range from 1% to 4% of the invested amount. While platform and management fees are customary, investors should also remain vigilant about potential hidden costs, such as performance fees or fees associated with early withdrawal or secondary market trading. It is crucial for investors to carefully review a platform's fee structure, terms, and conditions to gain a comprehensive understanding of the expenses they may incur throughout their real estate crowdfunding investment journey.

This entire section accounts for 15% of the total weighted score in our evaluation.

To evaluate this category, we looked at the following fees and if the platform charged the fee to its clients.

Platform Fees

We scored this item on a continuous scale of 0.00 to 1.00. Companies that charge lower fees received higher scores, while companies with higher fees received lower scores.

Management Fees

When scoring this item on a continuous scale of 0.00 to 1.00, companies that charge lower fees received higher scores. Conversely, companies that charge higher fees received lower scores.

Investment-Specific Fees

We scored this item on a continuous scale of 0.00 to 1.00. Companies that demand lower fees received higher scores, while companies that charge higher fees received lower scores.

Other Fees

When scoring this item on a continuous scale of 0.00 to 1.00, companies that charge lower fees received higher scores. At the opposite end of the spectrum, companies that charge higher fees received lower scores.

Investment Selection

Real estate crowdfunding platforms provide a diverse range of investment opportunities, including residential, commercial, and industrial properties. They typically offer detailed project profiles, including property type, location, financial projections, and expected returns. Investors can review these options, conduct due diligence, and select projects that align with their financial goals and risk tolerance. Many platforms also allow for fractional investing, enabling individuals to diversify their real estate portfolio across various properties. The ability to choose from a curated selection of investments empowers investors to tailor their real estate holdings to suit their preferences and investment strategy.

This entire section accounts for 15% of the total weighted score in our evaluation.

To evaluate this category, we looked to see if platforms made the following available to clients.

Investment Selection

We scored this item on a scale of 0.00 to 4.00. Companies received 1 point for each investment selection provided, up to a maximum of 4.00. Companies that provide access to equity-based, debt-based, REIT, and private REIT investments received the highest score of 4.00, while companies with fewer investments received relative scores.

Other Alternative Investments

We scored this item on a scale of 0.00 to 6.00. Companies were given 1 point for each investment offered—art, wine, legal, hedge funds, private equity, and venture capital—up to a maximum of 6.00. Companies with all six were given the highest score of 6.00, while companies with fewer than that received relative scores.

Other Possible Investments

For this criterion, companies received 1 point for each additional alternative investment type outside of those listed above.

Liquidity

Liquidity in real estate crowdfunding investments can vary significantly. While some platforms offer secondary markets or redemption options that allow investors to sell or exit their positions with greater ease, others may have limited liquidity. Investors should carefully consider the platform's specific terms and investment periods. Generally, real estate investments tend to have longer holding periods extending to several years. Liquidity can impact an investor's ability to access their capital in the short term. It's essential to understand the liquidity features of each investment before committing funds to ensure alignment with one's financial goals.

This entire section accounts for 12.5% of the total weighted score in our evaluation.

For this category, we evaluated how each of the following criteria affects each platform’s liquidity.

Restrictions

We scored this item on a continuous scale of 0.00 to 1.00. Companies that impose the fewest restrictions received the highest score, while companies with more restrictions received a lower score.

Redemption Options

We scored this item on a continuous scale of 0.00 to 1.00. Companies that offer the most redemption options received the highest score, while companies with fewer options received a lower score.

Holding Periods

We scored this item on a continuous scale of 0.00 to 1.00. Companies that require customers to remain invested for the shortest periods received the highest score, while companies with longer holding periods received a lower score.

Total Number of Investors

We scored this item on a continuous scale of 0.00 to 1.00. Companies with the highest number of investors received the highest score, while companies with fewer investors received a lower score.

Account Services

In an industry as dynamic as the real estate crowdfunding industry, the best platforms must require competitive investment minimums, provide reinvestment opportunities, and offer access to both curated and customizable portfolios in order to keep customers happy. It's crucial for investors to review the specific platform's account features, as they can vary, and choose investments that align with their financial situation and investment goals.

This category accounts for 15% of the total weighted score in our evaluation and measures the following key items that each platform offers.

Investment Minimums

We scored this item on a continuous scale of 0.00 to 1.00. Companies with the lowest minimum investment requirements received the highest score, while companies with higher minimums received lower scores.

Curated Portfolios

We scored this on a binary scale, giving a score of 1 to companies that offer customers curated investment portfolios. Companies that lack this feature received a score of 0.

Reinvestment Opportunities

We scored this on a binary scale, giving a score of 1 to companies that provide investors the option to reinvest dividends. Companies that lack this feature received a score of 0.

International Account Support

We scored this item on a continuous scale of 0.00 to 1.00. Companies that allow investors from the greatest number of countries, including the U.S., received the highest score, while companies with limited access for international investors received a lower score.

Customizable Portfolios

We scored this on a binary scale, giving a score of 1 to companies that provide customers with the ability to customize their portfolios, while companies that lack this feature were given a score of 0.

Transparency

Clear disclosure of fees, risks, liquidity terms, tax implications, and due diligence procedures is essential for informed decision-making with real estate crowdfunding platforms. It enables investors to understand the full cost structure, potential challenges, access to funds, tax obligations, and the reliability of the investment. Robust transparency builds trust, helps investors align their expectations, and ensures a higher level of confidence in the platform's operations.

This category accounts for 12.5% of the total weighted score in our evaluation.

To evaluate transparency, we examined how easy it is to find information about the following criteria on each company’s website.

Liquidity

We scored this on a binary scale, giving a score of 1 to companies that offer a high degree of transparency regarding investment liquidity. Companies with poor transparency in this area received a score of 0.

Fees

We scored this on a binary scale, giving a score of 1 to companies that are fully transparent about the fees they collect, while companies that lack this level of transparency were given a score of 0.

Reporting Options

We scored this on a binary scale (1 or 0). If companies are proactive about sending updates regarding items such as tax reports, portfolio performance, and investment activity, we gave them a score of 1. Conversely, companies that lack frequent and transparent updates in this area received a score of 0.

Educational Offerings

Many real estate crowdfunding platforms provide educational content to help investors make informed decisions. This content typically includes webinars, articles, videos, and guides about real estate investing, risk management, and the platform's specific investment offerings. These resources aim to empower investors with knowledge, enhance their understanding of the real estate market, and ensure they have the tools and information needed to select suitable investments. Educational content is a valuable component of real estate crowdfunding platforms, fostering transparency and investor confidence.

This category accounts for 7.5% of the total weighted score in our evaluation.

When examining the educational offerings of the companies we reviewed, we looked at the following criteria.

Frequently Asked Questions (FAQs)

We scored this on a binary scale, giving a score of 1 to companies whose websites contain an frequently asked questions (FAQs) page, while companies that lack this information were given a score of 0.

Investment Research Analysis

We scored this on a binary scale (1 or 0). We gave companies that provide customers with research and analysis of potential investments a score of 1, while companies that lack this feature received a score of 0.

Blogs/Articles

We scored this on a binary scale, giving a score of 1 to companies whose websites contain educational blog posts, while companies that lack this content were given a score of 0.

Videos/Webinars

We scored this on a binary scale (1 or 0). If a company offered educational videos, it received a score of 1. For companies whose websites lacked this form of educational content, a score of 0 was given.

Live Training

We scored this on a binary scale, giving a score of 1 to companies that provide customers with the opportunity to attend live training events. Companies that lack this feature received a score of 0.

Customer Support and Usability

Customer service is a critical aspect of real estate crowdfunding platforms. These platforms typically offer multiple channels for investor inquiries, like email, phone support, and live chat. Key features of these channels include timely responses, personalized assistance, and a commitment to addressing investor concerns. Quality customer service enhances trust and satisfaction, making it easier for investors to navigate the platform, alleviate doubts, and resolve issues. This can contribute to a positive investing experience.

This category accounts for 10% of the total weighted score in our evaluation.

When measuring the breadth of customer service offerings each of these real estate crowdfunding platforms delivers, we considered the following criteria.

Telephone Support

We scored this on a binary scale. Companies that provide customer support by phone got a score of 1, while companies that lack this feature received a score of 0.

Telephone Support Hours and Days

The hours that customer service is made available via telephone were scored on a scale of 0.00 to 1.00 (0.00, 0.25, 0.50, 0.75, 1.00) so that companies with the most availability were given higher scores and companies with limited availability were given lower scores.

Customer Service Chat Form

We scored this on a binary scale where companies that offer an online chat form received a score of 1 and a score of 0 was given to companies without this feature.

Email Support

If a company offers customer support via email, it was given a binary score of 1. For companies without this service received a score of 0.

Live Chat Support

A binary score of 1 was given to companies that provide live chat support, while companies that lack this technology were given a score of 0.

Live Chat Hours and Days

For platforms where live chat support is offered five days a week, from 9 a.m. to 5 p.m., ascore of 1 was given. Companies with anything less than this availability of live chat support were given a score of 0.

Chatbot Support

A binary score of 1 was given to companies that provide users the option of using a chatbot to access customer support, while companies that lack this feature were given a score of 0.

Usability

The best real estate crowdfunding platforms also prioritize user-friendly interfaces, ensuring that investors can easily navigate the website or mobile app to analyze potential investments, review project details, and make informed decisions. Providing users with access to an intuitive dashboard, simplified investment process, and transparent information are critical pieces of this experience.

We scored usability on a continuous scale of 0.00 to 1.00. Companies that deliver their services via an intuitive, user-friendly platform, where critical information is transparent, received the highest score. Conversely, companies that offer poor usability received a lower score.

iOS App Availability

A binary score of 1 was given to companies that provide an app for iOS devices, while a lack of this app resulted in a score of 0.

Android App Availability

A binary score of 1 was given to companies that provide an app for Android devices, and a score of 0 was given for no app availability.

Sectors and Domains

This category accounts for 12.5% of the total weighted score in our evaluation.

To score this category, we looked to see if the following investments are available.

Commercial Investments

We gave companies that offer commercial investment opportunities a binary score of 1, while companies lacking these projects received a score of 0.

Industrial Investments

A binary score of 1 was given to companies that provide access to industrial real estate projects, while companies that lack this offering were given a score of 0.

Residential Investments

If a company offers access to residential investments, it received a binary score of 1. For companies lacking such investments, a score of 0 was given.

Articles That Use Our Methodology

The global real estate crowdfunding market is growing rapidly—it’s estimated to exhibit a compounded annual growth rate (CAGR) of 45.9% between 2023 and 2030, according to Vantage Market Research. Expanding our coverage of these crowdfunding platforms and their offerings can help investors learn how to gain direct access to a wide variety of real estate projects to diversify their portfolios, enjoy possible tax benefits, and earn passive income at a fraction of the cost of investing directly.

Extensive research and data collection are at the core of how we compiled our list of the best real estate crowdfunding platforms. All Investopedia reviews of the real estate crowdfunding companies that make up our list of the best, such as Fundrise and Crowdstreet, are based on the research, data, and grading process described in this methodology, along with subjective and experience-based insights from our editors and industry experts.

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