Concreit vs Fundrise: A Head-to-Head Comparison
May 20, 2022
Real estate investments aren't just for the rich and famous. With apps like Concreit and Fundrise, anyone can invest in real estate. However, knowing how they work, the pros and cons of each, the required investment timeline, and the returns can help you decide if Concreit vs Fundrise is better for you.
What Is Crowdfunding and How Does It Work?
Real estate crowdfunding is like any other crowdfunding you might be familiar with. It pools money together from many investors and uses the funds to buy underlying real estate assets. Investors receive a prorated amount of the earnings, such as rental income or interest payments as monthly or quarterly dividends.
Investors also receive a payout when the investor sells the real estate properties based on the percentage of the purchase price the investor contributed.
You can invest in real estate crowdfunding in two ways.
If you invest in debt securities, you loan the real estate investor money to buy, fix up, or run the commercial real estate. You and the other investors who contributed to the investment platform are the 'bank' for the investor. You collect interest payments as dividends rather than rental income.
Equity and debt securities are similar yet have one vast difference. Rather than acting as the bank for the real estate investor, you invest in the property's equity. As a result, you become part-owner of the real estate assets and receive a prorated amount of the rental income received monthly and the capital appreciation earned when the investor sells the property.
Accredited Investor vs Non-accredited Investors
The good news is, while real estate investing used to be reserved for only the accredited investor, today, both accredited and non accredited investors can invest in commercial real estate properties using crowdfunded real estate platforms.
To recap, an accredited investor is someone who earned at least $200,000 each year for the last two years and/or has $1,000,000 in net worth.
Non accredited investors don't have any criteria to meet. So while you might come up against a few obstacles or preferences for accredited investors, such as more real estate projects or more significant investments in apartment buildings or other commercial real estate, there are still plenty of opportunities to achieve financial freedom as a non accredited investor.
Click here to learn How and When to Prioritize Savings for Retirement.
What Is Concreit?
Concreit is a real estate investing app that helps you buy and sell shares of private real estate investment trust funds. The REITs invest in the debt side of real estate, providing investors with private loans to purchase commercial real estate, such as apartment buildings or multi-unit properties.
Concreit opened up real estate investing for any investor. They have low investment minimums ($1). You automatically invest in a diversified real estate portfolio to help you make the most out of your investment strategies.
How Does Concreit Work?
Concreit pools the funds of investors to fund various real estate projects, including:
- Multi-family developments
- Equity and debt securities for real estate related companies
- Private money lending for commercial real estate builders and developers
Concreit doesn't just allow any investment in commercial real estate, though. Instead, each opportunity goes through a distinct evaluation process with the Investment Advisory Committee. The committee comprises real estate industry experts with experience in real estate development, real estate debt, and fund management.
Concreit creates a diversified portfolio that investors can buy into, which sometimes pays weekly or monthly dividends.
- $1 minimum real estate investment options
- Approximately 5% annual returns
- No minimum time requirement
- You don't have to be an accredited investor, but your investment can't exceed 10% of your income
- 1% of assets under management annual fee
Returns and Performance
Concreit is known for its low-risk investments, which means you'll typically get lower returns than average. Some investors prefer to accept lower returns in exchange for less risk. While they claim their average returns are between 5% - 8% annually, they typically average around 5.5% per year for their real estate assets.
Who Can Invest With Concreit?
The good news is Concreit is open to any investors. Unlike many other real estate investing apps, it's not just for accredited investors. Like we said earlier, you are capped at an investment of less than or equal to 10% of your annual income, but that's the only restriction. So if you have a $1 initial investment, you can invest in Concreit.
Because real estate involves risks, it's essential to know the pros and cons of Concreit to help you decide if it's right for you.
- Regular dividend payments
- User-friendly mobile app
- Low minimum investment requirement
- Liquid investment
- Slightly high asset management fees
- It's not free to access your funds
- Returns are low
What Is Fundrise?
Fundrise invests in income-producing real estate. They typically invest in projects to own and run commercial properties, such as office buildings. Still, they occasionally invest in the debt side, providing mortgages for real estate investors.
Like Concreit, Fundrise offers REIT investments, but they call them eREITs. Another option they offer is eFunds which are pooled funds used to buy land or develop buildings and then sell them.
How Does Fundrise Work?
Fundrise offers access to a variety of portfolios that include eREITs and eFunds. Depending on your level of commitment, they have different levels.
With just $10 investment minimums, you get a well-diversified investment portfolio. Most portfolios offer quarterly dividends, and you get a portion of the property's appreciation if applicable.
You'll need a $1,000 minimum investment, but you'll get more features, including automatic investments, dividend reinvesting, and access to IRA options.
You'll need a $5,000 investment at a minimum, but you get access to more advanced investment strategies. You can choose from a balanced portfolio, growth portfolio, or supplemental income portfolio. Your goals will determine how the funds are invested.
Advanced and Premium
You'll need a $10,000 investment at a minimum, and it works much like the Core plans. However, you get access to 'bonus' strategies to help you reach your financial freedom goals faster.
- Minimum investments range from $10 - $5,000
- Investment lengths are an average of 5 years
- Higher average returns starting at 7.5%
- You don't have to be an accredited investor
- Fees are 1% of assets under management per year
Returns and Performance
Since Fundrise offers the opportunity to earn rental income and appreciation, its returns are sometimes higher than other real estate investing platforms. On average, the returns are 7.5% - 16%, but in 2022, they are seeing record returns as high as 22%.
Who Can Invest With Fundrise?
Anyone can invest with Fundrise as long as they meet the minimum requirements. With the lowest minimum investment requirement at $10, it's easy to say that anyone can invest on this real estate investing platform.
- Low investment minimums
- High average rate of returns
- Anyone can invest there
- They have a redemption program that allows you to sell your shares back early for a 1% fee
- Not all fees are transparent, so you might make less than you thought
- eREITs are illiquid, which makes it hard to redeem your shares quickly
- You'll pay a 1% fee if you redeem your funds earlier than five years
Concreit vs Fundrise: Which Is Right for You?
Looking at Concreit vs Fundrise, you can see the many differences. Concreit is great for beginning investors or anyone that wants a low-risk portfolio. It offers the opportunity to invest in commercial properties with as little as $1 and minimal risk. It's one of the newer real estate crowdfunding platforms, but it's also great for new investors.
Concreit vs Fundrise FAQ
Are Concreit and Fundrise Legal?
Yes, Concreit and Fundrise are legal and backed by the SEC. In addition, all projects are carefully evaluated and vetted before either company includes them in their real estate portfolios.
How Are These Different Than High-Yield Savings Accounts?
A high yield savings account may feel like a great option since it offers a high rate of return, but the returns typically don't come close to what you could get from investing in real estate. Whether through Concreit or Fundrise, most real estate investments offer a greater return on your investment, and you have the chance to reinvest your dividends.
Real estate investing can pay out dividends frequently and payout well when the fund matures, whether it's debt or an equity investment.
How Do I Cash Out With Concreit and Fundrise?
Cashing out with Concreit is much easier than cashing out with Fundrise. Concreit doesn't have a minimum length of time you must have the investment. While it pays to hold onto it as long as possible to take advantage of rising real estate values, you can liquidate at any time.
Your request usually completes within a day or two unless cash flow is low, then you might have to wait a week or so to see the funds in your bank account.
Fundrise penalizes you for withdrawing funds earlier than five years, so make sure you are in it for the long term to avoid paying the redemption program fees of 1% of your withdrawal amount.
Is My Money Protected or Guaranteed?
Like any investment, such as those in the stock market, your earnings aren't guaranteed, but Concreit and Fundrise are governed by the SEC, so your funds are safe.
Is Concreit and Fundrise FDIC Insured?
Since Concreit and Fundrise are not your traditional bank account, they are not FDIC insured. Instead, they are governed by the SEC, which governs the stock market too.
Do These Apps Have a Sign-up Bonus?
From time to time, Concreit and Fundrise have sign-up bonuses. It depends on the state of the market and the activity with the real estate portfolios at any given time. Always check back to see if there are new promos available.
Concreit vs Fundrise is a common debate and it just comes down to your risk tolerance, what you want to invest in, and how long you want to invest. Concreit is great for short-term investments, beginners, or anyone who wants to keep your risk down while enjoying higher returns than your basic investments would allow. Click here to check out Conreit's website.
This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security which can only be made through official documents such as a private placement memorandum or a prospectus. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action. This information is neither individualized nor a research report, and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Past performance does not guarantee future results or returns. Neither Concreit nor any of its affiliates provides tax advice or investment recommendations and do not represent in any manner that the outcomes described herein or on the Site will result in any particular investment or tax consequence.Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals. Information is from sources deemed reliable on the date of publication, but Concreit does not guarantee its accuracy.