On November 7, 2018, RealtyShares announced that it was no longer accepting new investments. If you're not familiar with RealtyShares, they are a crowd funded real estate platform. What this means is that you could have invested with other people a small amount into a bigger property.
For example, you could invest in a $2 million large apartment complex but only invested $5,000 - but you'd pool your money with other investors to make it happen. It's a fantastic idea for people that are looking to invest in real estate but don't have a large amount of money to commit.
With RealtyShares closing it's doors, what are the options. We break down the top five RealtyShares alternatives and highlight the different options with each one.
Fundrise is what's known as an e-Reit. This means that you're investing in an Real Estate Investment Trust. Inside that trust are numerous properties, and as a holder of the trust, you get any income (or potential losses) generated by the underling properties.
It's important to note that Fundrise isn't a stock - you invest and your money is locked in. However, they do allow you to withdraw your money with a 30 day notice. This is important to know, but shouldn't scare you away.
Fundrise is awesome because they allow you to invest in real estate with as little as $500. They also advertise historical returns in excess of 8%. Check out our full Fundrise review here.
If Fundrise is interesting to you, open an account here.
2. Equity Multiple
Equity Multiple is a very similar platform to what RealtyShares was. You can invest in pre-vetted projects from investors looking to raise money. These investments can be in preferred equity, debt, or regular equity.
Their platform has a consistent deal flow of listing that are usually multi-family, student housing, or mixed use. Sometimes there are straight commercial properties as well.
With this platform, you invest directly in the deal, so your money is locked up until there is an exit event. However, as a result, you directly share all aspects of the investment proportional to your investment percentage.
3. Realty Mogul
Realty Mogul is a hybrid of what Realty Shares was, as well as what Fundrise is, but with a focus on commerical real estate, with some multi-family.
Realty Mogul offers both a REIT investment option, as well as private placement deals (such as preferred equity or debt).
They have a lot of opportunities consistently flowing through their platform, and they have closed over 1,000 deals.
stREITwise is a private equity REIT that is focused on cash flowing real estate. The cool thing about stREITwise is that it's open to both accredited and non-accredited investors.
stREITwise has a minimum investment of $1,000 to invest in their REIT.
They also have one of the better fee structures in the crowdfunded real estate space.
5. Crowd Street
Crowd Street touts itself as one of the largest online commercial real estate investing platforms. It focuses almost exclusively on commercial real estate, and it showcases some amazing returns.
It does require you to be an accredited investor (similar to RealtyShares), but that does give you access to great deals. They also have one of the highest minimums to invest - $10,000.
They offer a variety of investments across their platform, including equity and debt deals.
What Happened With RealtyShares?
RealtyShares sent the following email to it's subscribers:
Five years ago, RealtyShares was founded with a mission to connect capital to opportunity. With over $870 million invested across more than 1,100 projects, we have built one of the top online real estate investment platforms. We’re helping investors meet their financial goals and deploying capital to real estate operating companies to execute value-add and development strategies for properties across the U.S.
As an early stage company, we have relied upon venture capital to fund our operations. Over the past six months, RealtyShares aggressively pursued a number of financing options to continue growing the business. Unfortunately, despite our best efforts, we were unable to secure additional capital. As a result, we will not offer new investments or accept new investors on the RealtyShares platform.
From this point forward, RealtyShares’ focus will be servicing our existing investors and approximately $400 million of assets under management. This transition will have no impact on the underlying real estate investments. Investments will continue to be managed and distributions will continue to be made. Investors will continue to receive asset management updates and year-end tax information.
As a reminder, investing in real estate is risky - especially if you're not the owner directly. With all these investments, you do own the underlying assets, but you're not the manager.
So, you not only have vacancy risk, property value risk, and more, but you do layer in management risk. It's always important that you assess every deal like you're the owner.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.