Fundrise and Realty Mogul are two of the top US-based real estate crowdfunding platforms out there. Both platforms are moving the real estate investment space forward and making it easier for sponsors to connect with investors for legitimate property or real estate deals.
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Both Fundrise and Realty Mogul have contributed content to CrowdCrux, including a helpful checklist for investors and a podcast interview on the state of real estate crowdfunding. At the same time, there are many differences between the two platforms, which may make them a better choice for investors or sponsors down the road. In this article, we’ll explore some of those differences below.
Fundrise
Founded in November of 2010, Fundrise has raised $41 Million in aggregate for it’s online real estate investment platform. It is currently mainly operating in New York City and Washington, DC, and has helped facilitate circa 30 transactions, with an average deal size of $1 million and the largest deal being $10.5 million. The average investment amount has been about $5,000, with annual returns being between 10-16%.
Vetting Process for Investors: Fundrise pre-funds every investment and accepts about 5% of the deal flow, which passes through due dilligence and basic screening. Investors must be accredited investors (see here).
Vetting Process for Sponsors: “Fundrise will guarantee funding for qualified projects.” This represents about 5% of all projects that have applied. They review projects ranging from 8-16% annual yield including family homes, mid-market commercial buildings, large transactions, and more. Sponsors are allowed to fund up to 90% of the project’s cost and can receive funds in 15 days.
Number of members: 41,694.
Check out the FAQ here.
Realty Mogul
Realty Mogul was founded in 2013 and has raised $10.1 Million in total for it’s online real estate investment platform. Based in Los Angeles, CA, this company’s real estate crowdfunding platform has processed $52,623,794 million in funds from deals around the USA, which are mainly focused in California and Florida. In addition, the deals have mainly been for retail (34%) and residential (16%) properties.
Unlike Fundrise, Realty Mogul has been more transparent with their deal flow data, even including a “statistics” section on their website. They report that 64% of the deals at the time of writing have been for equity real estate crowdfunding investments and 36% have been for debt or loan-based investments. In addition, unlike Fundrise, the minimum investment amount is $10,000.
Vetting Process for Investors: Realty Mogul assesses the property, the borrower or sponsor, and conducts background and criminal checks prior to offering investment opportunities. The platform itself does not recommend any investments. Investors must be accredited.
Vetting Process for Sponsors/Borrowers: Sponsors or borrowers must go through the due diligence process before their investment opportunity is available to the platform’s accredited investors pool. Between $1 million and $10 million can be raised. It also takes about 15-20 days for the funds to arrive once the deal has been funded.
Check out the FAQ here.
My Thoughts & Conclusion
It seems like Fundrise has more of a foothold in the eastern side of the country and Realty Mogul has more of a home base in the western side of the USA. I think that both of the platforms offer a sound online real estate investment platform, which also makes investment management easier.
Eventually, we’re going to see real estate crowdfunding become more and more popular as sponsors/investors become more accustomed with this new financial tool and how it differs from a REIT. By getting into the industry now, you will have a leg-up on other investors/real estate firms, even if it’s from an informational standpoint.
