If you’re considering venturing into real estate investing, it’s not as simple as just plunging in with your money. You need to research, understand what type of investor suits your personality best, and decide on the best path for you. One great avenue for beginners is real estate crowdfunding websites.
These platforms provide an opportunity for you to start by investing smaller sums of money. They also help you gain a broader understanding of real estate investing as a whole. Over time, not only can you earn decent returns, but you can also determine the type of investor you aspire to be. Moreover, investing in real estate crowdfunding platforms can generate a significant passive income.
In your early days as a real estate investor, you’ll be labelled a non-accredited investor. This means you’ll face more restrictions on where you can invest, with some crowdfunding platforms not permitting investment till you become an accredited investor. However, as you continue to invest through crowdfunding, you may eventually attain the status of an accredited investor.
To become an accredited investor, you’re required to earn a minimum of $200,000 annually – a consistency that needs to be maintained for at least the past 2 years. Moreover, you need to maintain or exceed this income in the year you receive accreditation. Despite this being a challenging achievement for newcomers, it’s definitely achievable with time. In addition, you’re also required to have a net worth of at least $1,000,000,000. As a non-accredited investor, you may face higher fees and lower ROIs, but that doesn’t make it less worthwhile. It can be effortless to get started with crowdfunding sites, making it an attractive option.
If you decide to venture into the world of real estate crowdfunding, there are numerous options. Not every website will be a perfect fit for you, so it’s crucial to find one that aligns with your personality and goals. Here are three platforms that I recommend for newcomers.
Fundrise, one of my top picks for non-accredited investors, offers an array of options, with low initial investments and quite high ROIs. Apart from the potential for good returns, they also charge an annual flat fee of merely 1%.
Groundfloor differs from Fundrise in that it allows you to choose the specific loans you want to invest in. The site requires a much lower initial investment and offers shorter-term requirements than most real estate crowdfunding sites. Over and above that, it doesn’t charge any investment or management fees, with average ROI reaching 10%.
Finally, Rich Uncles is another excellent choice. Despite having a slightly different structure and fewer investment options compared to the other two, it stands out for its low initial investment requirement – you can start with just $5. However, their investment fees, which range from 1% to 3% for the first three years, are among the highest of the trio.
To sum up, investing in real estate via crowdfunding sites opens up a world of opportunities. However, before selecting a platform, you should reflect on several key factors, like your initial investment capacity, risk tolerance, investment timeframe, long-term investing goals, and preference for passive or active management of your funds.
Getting started in real estate investment can seem daunting, but finding the right crowdfunding platform can make the journey worthwhile and rewarding. The perfect time to start is now, and with the right tools and knowledge, you’ll be on the road to success in no time.
Have you ever tried real estate crowdfunding platforms? Let us know how your experience was; we’d be thrilled to hear your story!
