As people continue to move their money into real estate investments more and more new real estate investing platforms come to market.
These new platforms are primarily driven through crowdfunding. Platforms such as Groundfloor and Fundrise now give individual investors easy access to private residential and commercial real estate investments.
|Groundfloor is Better for:||Fundrise is Better for:|
|Residential single family homes, multi-family homes, townhomes, and condos||Commercial Real Estate (CRE), REITs|
|No Fees||Investors seeking an inexpensive way to get started in real estate investing|
|Not limited to accredited investors||Flexible investment options|
|Short Term Investing||Long term investment|
Here are some comparisons between Groundfloor and Fundrise, two of the most popular real estate platforms.
Let’s look at some comparisons:
|Minimum Investment||$10||$10 (Starter Portfolio), $1,000 (Basic Plan). Up to $100,000 (Premium Account Level)|
|Available Assets||Debt investment for Fix and Flip projects||Debt, Equity and Preferred Equity|
|Returns||Over 10% annually on average||10.1% (Average returns)|
|Current Promotion||More Info||More Info|
|Modest Money Overall Rating|
Groundfloor Vs. Fundrise: Determining Factors?
There’s no doubt Groundfloor is one of Fundrise’s biggest competitors. It’s hard to split them but, there are three main factors to consider when comparing apples with apples.
Here’s how Groundfloor vs Fundrise compare below.
Factor 1: Investment Options
Fundrise Investment Style Is Preferable To Groundfloor If You Like
- Flexible investment options
- Long Term Investing
- Less Risk
Groundfloor Investing Options
Groundfloor is a real estate crowdfunding platform that provides short-term residential real estate debt investment opportunities. These are usually for properties that banks do not typically finance.
These include single family homes, townhouses, multi-family homes, and condos.
Groundfloor bases each high-interest rate loan on the potential of each property. Each real estate loan will be ranked based on risk using its A-G risk scale.
The lower risk loans will be ranked A, while the riskiest loans will be ranked G.
You can read the full review on Groundfloor finance here.
Fundrise Investing Options
Fundrise investment choices range from single-family properties to commercial real estate via REITs (real estate investment trusts).
They typically offer long-term, illiquid investments. This means there is a higher chance of strong returns.
There are different types of investments available to invest in, including conservatively-managed ones and aggressive ones. With regular updates, you won’t need to add any extra money for investing.
It is possible to start an investment for as low as $10.
All you need to do is choose your desired portfolio management approach. After that, the Fundrise team will manage your investment portfolio.
That’s it, you’re done.
Sit back and let Fundrise continue to look for and buy new assets for your diversified portfolios.
You can read an in-depth review of Fundrise here.
Factor 2: Cost
Groundfloor Doesn’t Charge Any Fees
Groundfloor doesn’t charge you any fees. Instead, you will pay interest on the loan principal.
Groundfloor doesn’t charge any upfront costs for its loans. Borrowers don’t need to worry about paying any additional charges.
You are required to pay interest fees on the loan principal.
With Fundrise, you pay a yearly fee of 1%. There are no additional hidden costs and there is no frontload fee with Fundrise.
Factor 3: Performance
Looking at a platform’s return history can be a great way of choosing which to go for.
But, no platform can guarantee fixed returns and past results never guarantee future earnings.
It really varies depending on the industry and the volatility of the markets. Here’s an overview of their historical performance.
According to Groundfloor, investors averaged a 10% annualized return in a 6-18 month time span.
Currently, Groundfloor has an average annualized return on its portfolio of 9.98%.
There is no guarantee of returns from Fundrise, but their past performance shows Fundrise is legit.
For a better understanding of expected returns with Fundrise, here is the average annualized return over the past few years.
- 2021: 22.99%
- 2020: 7.31%
- 2019: 9.16%
- 2018: 8.81%
- 2017: 10.63%
Groundfloor vs. Fundrise: The Bottom Line
Both Groundfloor and Fundrise are great for accredited and non-accredited investors looking to build a real estate portfolio.
Those who are comfortable with alternative investments and willing to take on higher risks will benefit from using Groundfloor.
For beginners, the low barrier to entry is a good stepping stone into the real estate market.
If you are someone looking for an alternative to REITs, you will enjoy what Groundfloor has to offer.
The low minimum investment amount with Fundrise will open new opportunities for those who do not want to spend a lot of money investing in real estate.
Fundrise is convenient for all, especially those with a long-term investment horizon.
If you like a little more control over your investments, go with Fundrise.