4 Popular Crowdfunding Platforms for Non-Accredited Investors
January 18, 2023
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Are you an aspiring real estate investor just getting started? Crowdfunding can be a great way to jumpstart your journey and build wealth through real estate investments without needing a lot of money.
Crowdfunding is a relatively new form of financing in which capital is raised from multiple individual investors to fund real estate deals or projects. The beauty of crowdfunding is that projects get funding from a larger pool of potential investors, making it easier for small-time investors to get in on the action.
According to a Yahoo article, the global crowdfunding market looks to reach $5.53 billion by 2030, with a compound annual growth rate of over 16%.
However, crowdfunding for non-accredited investors has some special considerations that must first be understood before taking the plunge.
This article will discuss crowdfunding. We’ll share the difference between accredited and non-accredited investors, 4 popular real estate crowdfunding platforms for non-accredited investors, and much more.
Read on to learn more about crowdfunding for non-accredited real estate investors and see if this investment strategy makes sense for you.
What Is Non-Accredited Crowdfunding?
In crowdfunding, there are two types of investors: accredited and non-accredited. Accredited investors are individuals or entities who meet certain financial thresholds set by the U.S. Securities and Exchange Commission (SEC).
To be considered an accredited investor, you must have either a net worth over $1 million, excluding any primary residence, or an annual income of more than $200,000 ($300,000 with your spouse) over the past two years with the expectation that you’ll continue earning at the same level in the current year.
Non-accredited investors are those who do not meet the SEC’s criteria.
Crowdfunding platforms for accredited investors require a high net worth or income threshold. They may provide higher potential returns than those geared toward non-accredited investors.
However, with the potential for higher returns comes a greater risk of loss if the venture fails or doesn't produce the projected returns. Investors who pursue more speculative investments must also bear in mind that liquidity can be a significant issue, with capital tied up in a venture for an extended time.
Crowdfunding platforms for non-accredited investors are generally open to anyone who meets their minimum investment requirements. They have fewer restrictions than those available only to accredited investors.
These platforms typically offer less speculative investments, which may be more attractive to investors seeking a conservative rate of return while preserving their investment capital.
While this avenue may not yield the highest potential returns, it can still provide a steady income stream and generate value over time without putting too much capital at risk. Crowdfunding platforms for non-accredited investors are generally more liquid, allowing investors to withdraw their funds on short notice.
4 Crowdfunding Sites to Explore for Non-Accredited Investors
For non-accredited investors interested in crowdfunding, several popular crowdfunding platforms offer real estate investing opportunities. Here are 4 of the top crowdfunding platforms for non-accredited investors to consider.
Concreit is an easy-to-use app providing non-accredited real estate investors an opportunity to diversify their portfolios and reduce exposure to riskier investments. It enables users to invest in hundreds of high-yield, income-focused first-lien mortgages across the United States, helping minimize risk.
Dividends are paid weekly, and investors can request a cash out at any time after an initial 60-day settlement period.
Concreit's simple investing process eliminates most of the barriers associated with traditional real estate investments. You don't need a lot of capital or knowledge, just the app and your investment goals. You can get started with any amount.
Simply download the app, create an account, select your investments, set up a portfolio, and start investing. Concreit also allows users to track their investments in real-time and manage their portfolios effortlessly.
Concreit offers investors a simple way to invest in real estate, with access to exclusive investment opportunities that may not be available through traditional methods. The platform helps non-accredited investors enter the world of real estate investing without the hassle or expense associated with other options.
With its integrated data analysis tools, Concreit makes it simple for investors to monitor their performance and make informed decisions about future investments. This innovative approach has allowed investors to achieve consistent returns and securely build their wealth.
Whether you're a beginner or an experienced investor, Concreit is an appealing way to invest in real estate while reducing risk and maximizing potential returns. Its user-friendly platform and comprehensive features make it an attractive tool for any investor wanting to diversify their portfolio.
Plus, you can invest confidently knowing you’re on a platform managed by a team of experts with over $10B in asset management experience, and who carefully select each investment for the portfolio.
The Arrived platform can be another good way to develop your property portfolio through investing in rental homes and short-term vacation rentals. All the properties are managed professionally by experienced team members who ensure everything runs smoothly.
The minimum investment is $100 with quarterly dividend payments, when available. However, investors should understand there is limited deal flow and liquidity; share redemption isn’t always guaranteed.
Also, fees may take away from rental income earned, so it’s important to factor them into your budget when deciding whether or not to invest.
Fundrise offers both non-accredited and accredited investors an opportunity to participate in commercial real estate equity and debt investments.
The minimum investment ranges from $10–$100,000, and investment lengths generally average 5 years. You can create an account quickly and pick your desired investment strategy to spread your capital across a variety of tailored funds.
Investors can expect annualized returns of 4%–12%, depending on their goals and risk appetite, with an annual management fee of up to 1.0% of assets under management per year.
However, there is a risk of making less if the project doesn’t perform as expected. Many investments are not liquid, making it difficult to cash out if funds are needed immediately. There is also a 1% fee for redeeming your funds before the end of the holding period.
Landa is a user-friendly mobile app that makes it possible to invest in shares of single-family and small multi-family rental homes for just $5. With comprehensive services, from selecting potential investments to arranging leasing, maintenance, and management, users don't need to be hands-on in managing their properties.
The pros of investing through Landa include low minimum investments with no fees and distributions paid out monthly.
However, the company charges an acquisition fee of up to 6% and a property management fee of up to 8%, which may reduce any distribution amount and can result in a loss if home prices decline. Additionally, shares can be illiquid if an initial offering is not fully sold or there are no buyers on the app platform.
Benefits and Risks of Investing in Crowdfunding
With the rise of crowdfunding platforms, non-accredited investors now have far more options than before when assessing alternative investments. These platforms don’t require a considerable minimum investment, making them accessible to a broader range of investors.
Moreover, crowdfunding platforms allow non-accredited investors to access options typically unavailable to them due to their limited capital and resources. They can offer diversification benefits and recurring dividends that traditional investments like growth stocks and non-dividend paying equities do not.
However, there are a few crowdfunding risks to consider. First, the ratio of risk vs. potential reward can vary from one crowdfunding platform to another, and investors need to research any platform they use.
Second, returns may vary significantly from expected levels, which could lead to unexpected losses if an investor fails to research the investment sufficiently.
Finally, investors should be aware there is no guarantee of success when investing in crowdfunding platforms, and any money put in may be lost.
Overall, there are advantages and disadvantages of investing in crowdfunding platforms for non-accredited investors. Taking the time to educate yourself on each investment opportunity can help ensure you make a sound decision when selecting the best option for your individual needs.
Things to Consider before Investing in Crowdfunded Projects
When investing in crowdfunded real estate projects, remember that being part of a collective does not mean you should be any less responsible with your investments.
Do the necessary research and due diligence before investing your money. Research the team behind the project, read up on the industry, and evaluate the business plan.
Investing within the scope of your risk tolerance levels while diversifying across multiple crowdfunding platforms when possible is also essential. Investing in different types of projects with varying return rates can help mitigate risk and maximize potential returns over time.
A general recommendation for investors is to invest small amounts into multiple projects instead of putting all your real estate eggs into one basket, which could result in potentially higher losses if a project fails or does not reach its goal.
Also, investors should pay close attention to the various fees associated with crowdfunded projects. These costs may include platform and transaction fees and any additional charges associated with some crowdfunding campaigns.
Before investing in a crowdfunded project, investors should consider the following points:
- Evaluate the risk/reward profile of the project.
- Consider the potential return on your investment.
- Check that any promised returns are realistic.
- Make sure you have access to accurate data about the project.
- Research and understand the opportunity, business plan, and team.
- Diversify across industries, regions, and types of projects.
- Be aware of your own limitations when making decisions.
- Invest only as much money as you are comfortable risking.
- Have a clear exit strategy should you need to liquidate your investment.
- Be aware of platform and transaction fees.
- Invest responsibly.
It is essential to remember that investing in crowdfunded projects is not without risk. However, with research and a solid understanding of those potential risks,
Crowdfunding can be a great way to diversify your investments and participate in innovative projects. Keep your financial goals in mind when deciding which crowdfunding project to support.
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.