RealtyMogul Vs Fundrise: Two Top Real Estate Crowdfunding Platforms

When you think of a premiere real estate investment platform, both RealtyMogul and Fundrise immediately jump into my head. Both platforms began in 2012 and are the oldest platforms today.

Let's do a RealtyMogul vs Fundrise comparison to see which one is better. Fundrise is currently my favorite real estate crowdfunding platform. I've been working with Fundrise since 2016 and have invested $134,000 in its Flagship fund.

Both platforms rely on the power of crowdsourcing. One of the most efficient ways to invest in real estate around the country isn't by flying around the country and kicking sheetrock.

Instead, simply invest as little as a few thousand dollars in various pre-vetted deals from the comfort of your home. Both RealtyMogul and Fundrise do their “due diligence” before opportunities become available to investors, and they only choose the best operators.

In other words, the opportunity needs to be solid before it becomes available.

Individual investors are empowered with an opportunity to analyze each potential deal and make up their own mind about whether to invest or move on to another opportunity.

RealtyMogul Vs Fundrise

Fundrise Performance Versus Stocks And Public REITs

Fundrise is one of the leading real estate crowdsourcing platforms that has raised over $40 million to date.

Since its founding in 2012, Fundrise has raised over $3.3 billion in capital from over 450,000 investors. Fundrise is the leading real estate crowdfunding platform today.

The money has been used to invest in real estate crowdfunded projects in commercial office space and multi-family condominium complexes across the country. Fundrise is also the pioneer in eREITs, having raised over $150 million so far.

The average investment on the Fundrise platform is about $5,000 with annual returns ranging from 10% to 14% according to management. If you’re looking for an easier way to diversify your investments into real estate, investing in Fundrise is a solution. You can read more in our Fundrise Review.

RealtyMogul Overview

RealtyMogul is the best alternative to RealtyShares

RealtyMogul is one of the largest real estate crowdfunding platforms today with over $500 million raised on its platform since its founding in 2012 from most accredited investors.

Realty Mogul enables investors to participate in a wide range of real estate investments across the country, many of which are commercial deals that are often times in the 10s of millions of dollars range and traditionally out of reach for the average investor.

Over 250,000 registered investors have invested in over 400 properties so far, valued at over $2 billion. They’ve returned over $100+ million to investors as of 2020.

Headquartered in Los Angeles, Realty Mogul has branched out to investment deals all across the country. For non-accredited investors and accredited investors, they have the MogulREIT I and MogulREIT II to participate in a portfolio of real estate crowdfunding deals. Learn more in our RealtyMogul Overview and RealtyMogul Review.

Why Invest With RealtyMogul?

When you invest with RealtyMogul, you typically do so by purchasing shares in a RealtyMogul limited liability company (LLC) that, in turn, invests into an LLC or Limited Partnership (LP) that holds title to the real property.

Realty Mogul Investment Examples

Investing in this way minimizes overhead for the investment sponsors and provides access to more investment opportunities, as well as streamlined reporting of distributions through the platform.

Also, RealtyMogul offers:

1) Investments That Are Pre-Vetted — Less than 10% of the deals first shown on the Realty Mogul make it through to their platform for their investors. The vetting goes through the sponsors history, track record, and individual backgrounds to ensure deals have the highest chance of providing a positive return.

2) An Easy Investment Process — Real estate crowdfunding is taking off largely due to its ease of investing. Realty Mogul’s platform allows investors to thoroughly analyze a deal with the research provided. An investor can view pictures, videos, and even ask the sponsors questions before making an investment.

3) More Focused Than REITs — A publicly traded REIT generally has dozens, if not hundreds of properties in its portfolio. It’s harder to invest in specific areas of the country, such as the heartland, or the east coast, or the west coast with a REIT. Real estate crowdfunding with Realty Mogul allows you to be much more surgical in your investments.

4) Low Investment Minimum – Instead of coming up with a $200,000 downpayment for a median priced San Francisco or NYC property and borrowing $1,000,000, you can invest as little as $10,000 in a property on the Realty Mogul platform to gain exposure.

Why Invest With Fundrise?

The Fundrise platform has achieved, on average, a greater than 10% net annualized return over the past six years. With Fundrise, you invest in relatively stable eREITs or eFUNDS that provide diversified exposure to commercial real estate across the country.

See the performance chart below.

Fundrise weighted average returns by objective: income, balanced, growth  - RealtyMogul Vs Fundrise

As you can see from the chart, Fundrise returns are much more stable than returns from public stocks and public REITs. If you want more peace of mind, investing in Fundrise over the past five years has helped.

And, I like the Fundrise Heartland eREIT, which is increasingly showing an incredible opportunity for investors. With an 8.25% annualized yield net of fees, the Heartland eREIT™ is relatively attractive if they actually pay out this amount every quarter. When it comes to RealtyMogul vs Fundrise, you got to think about funds versus individual investments.

A few things about the Heartland eREIT™ that appeal to me:

Flexibility and diversity. For non-accredited investors, these specialized eREITs™ are an easy way to get specific regional real estate exposure with a low $1,000 hurdle since Fundrise has a West eREIT™, Heartland eREIT™, and East eREIT™. It’s good to be able to diversify away from where you currently rent or own physical property, especially for folks who live in expensive coastal cities like SF, LA, San Diego, NYC, and Washington DC where the real estate market is slowing.

Liquidity restrictions. Unlike a publicly traded REIT, an eREIT™ adjusts its Net Asset Value (price) once a quarter. Further, if you need money from the eREIT™ you can only sell once a quarter. Therefore, it’s important you only invest money you can afford to tie up for the duration of the fund’s time horizon.

Expense ratio. The biggest kink with Regulation A+ is that each eREIT™ can only be a maximum of $50 million in size. With expenses up to $1,000,000 a year, the lowest expense ratio is therefore 2% ($1M / $50M). You can see how expenses can really be a drag if they are not managed in unison with asset growth.

More Positives Of Investing With Fundrise

Fundrise is also the most innovate real estate crowdfunding platform given they pioneered the eREIT, raised company money through an Internet Public Offering, and are establishing an Opportunity Fund to take advantage of new tax laws.

When comparing RealtyMogul vs Fundrise, we should also look at these benefits as well. They pertain specifically to Fundrise.

  • Prefunds all deals with their own capital, showing commitment and confidence in their deals.
  • Low minimum investment (only $1,000), compared to $10,000 for other platforms.
  • One of the longest track record in the industry.
  • Well capitalized firm.
  • High-quality deal flow (they only approve about 2% of deals)
  • Allows non-accredited investors to diversify into commercial real estate deals previously unobtainable by common retail investors.
  • Launch the new Fundrise Innovation Fund, an open-end venture capital fund investing in private growth companies. This is huge because I've been looking for ways to gain more exposure to artificial intelligence. AI is likely going to revolutionize the world, but also eliminate millions of jobs int he process.
Fundrise Historical Investment Returns Since Inception - RealtyMogul Vs Fundrise

RealtyMogul Vs Fundrise: The Bottom Line

The key with any investment is to invest with the best platform, and I think Fundrise is the best platform for non-accredited investors. They were founded in 2012 and are the pioneers in the eREIT product category. For most investors, investing in a stable and diversified eREIT is the way to go.

My favorite platform for accredited investors is actually CrowdStreet. CrowdStreet is focused on 18-hour cities where valuations are cheaper and cap rates are higher. Due to positive demographic trends, I believe migration towards lower-cost areas of the country will continue.

With CrowdStreet, you can invest in individual 18-hour city real estate opportunities and build your own select real estate portfolio.

RealtyMogul is a good platform. Although they were relatively quiet for a few years, they are ramping back up. Meanwhile, Fundrise and CrowdStreet have clearly been the two leaders putting out content during the pandemic, finding attractive opportunities, and reaching out to their clientele.

About the Author:

Sam worked in investment banking for 13 years. He received his undergraduate degree in Economics from The College of William & Mary and got his MBA from UC Berkeley. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $250,000 a year in passive income.

He spends time playing tennis and taking care of his family. Financial Samurai was started in 2009 and is one of the most trusted personal finance sites on the web with over 1.5 million pageviews a month.

Fundrise is a sponsor of Financial Samurai and Financial Samurai has invested over $134,000 in Fundrise funds. Sunbelt real estate has lower valuations and higher yields. It is a great way to diversify away from expensive San Francisco real estate, where Sam owns multiple properties. 

RealtyMogul vs Fundrise is a Financial Samurai original post.