Crowdfunding: The Democratization of Alternative Investments and the Evolution of Real Estate Investing

Published on
July 23, 2023
Crowdfunding: The Democratization of Alternative Investments and the Evolution of Real Estate Investing

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In the world of investing, the rich have always had an upper hand. They've had access to opportunities that the average investor could only dream of. But the winds of change are blowing, and they're blowing in favor of the everyday investor. The catalyst for this change? 


Crowdfunding is revolutionizing the investment landscape, democratizing access to alternative investments like real estate, startups, and private equity. These were once the playground of the ultra-rich 1%, but now, they're within reach of anyone with an internet connection and a bit of spare cash.

The Rise of Crowdfunding

Crowdfunding has been a game-changer in the world of alternative investments. It has opened the doors to investment opportunities that were once reserved for the wealthy elite. Through crowdfunding platforms, investors can pool their resources to invest in high-value assets like real estate and startups.

The beauty of crowdfunding lies in its simplicity and accessibility. With low minimum investment requirements, anyone can become an investor. You don't need a six-figure salary or a hefty inheritance to get started. All you need is a willingness to take a calculated risk and the patience to let your investments grow over time.

The Allure of Alternative Investments

So, why are alternative investments so attractive? Why do the ultra-rich 1% pour their money into these assets?

The answer lies in the potential for high returns and diversification. Alternative investments like real estate and private equity can offer higher returns than traditional investments like stocks and bonds. They can also provide a hedge against market volatility, reducing the risk of significant losses during market downturns.

Moreover, alternative investments often have low correlation with traditional asset classes. This means they tend to perform well when the stock market is struggling, making them an excellent tool for portfolio diversification and risk management.

Beyond the Public Stock Market

While the public stock market has its merits, it's not without its pitfalls. Market volatility, economic events, and the herd mentality of investors can lead to unpredictable swings in stock prices.

On the other hand, alternative investments offer several benefits. They can help diversify a portfolio, potentially reducing risk and enhancing returns. They often offer the potential for higher returns compared to traditional investments. Some alternatives, like real estate, tend to have lower volatility than stocks, providing a smoother investment journey. And certain alternatives, like real estate and commodities, can act as a hedge against inflation, protecting the purchasing power of your money.

The First Generation: Opening Access to Real Estate Investing

The first generation of real estate crowdfunding platforms, including Fundrise, YieldStreet, RealtyMogul, EquityMultiple, and CrowdStreet, played a crucial role in opening access to real estate investing. They pioneered the concept of crowdfunding for real estate, allowing individual investors to pool their resources and invest in high-value real estate properties that were previously out of reach for most investors.

These platforms offered a range of investment opportunities, from individual properties to diversified portfolios, and from debt investments to equity investments. They made it possible for anyone to become a real estate investor, regardless of their net worth or income level. These platforms generally focused on syndications for accredited investors, but a few of the platforms built managed portfolios that allowed investments from non-accredited investors.

Fundrise, for example, was one of the first platforms to offer eREITs, a type of real estate investment trust that's sold directly to investors over the internet. YieldStreet focused on alternative investments, including real estate, and was known for its high-yield investment opportunities. RealtyMogul offered a mix of individual properties and diversified portfolios, while EquityMultiple focused on commercial real estate. CrowdStreet, on the other hand, focused on individual commercial real estate properties and allowed investors to choose which deals they wanted to invest in. The last 3 focused primarily on accredited investors, and have recently opened up a few unique opportunities to non-accredited investors.

These platforms were revolutionary in their time, and they paved the way for the next generation of real estate investing platforms. But as the market evolved, investors began to demand more due to the rise of FinTechs and the impact of DeFi. They wanted more control over their investments, more transparency, and more opportunities to diversify. And that's where the next generation of platforms, including Concreit, Arrived, and Landa, come in.

The Next Generation of Real Estate Investing Platforms

As the real estate crowdfunding space evolves, a new generation of platforms is emerging. These platforms, including Concreit, Arrived, and Landa, are taking a different approach. They're not just offering access to real estate investments; they're fractionalizing discrete assets, making it possible for non-accredited investors to own a piece of individual properties.

Arrived is one of the platforms leading this new wave of real estate investing. They allow investors to buy shares in individual rental properties. Once you've invested, you earn returns from rental income and property appreciation. This approach gives investors the opportunity to build a diversified portfolio of individual properties, something that was previously only possible for wealthy investors or large institutions.

Landa is another platform that's changing the game. Like Arrived, Landa allows investors to buy shares in individual properties. They offer a mobile app that makes it easy to buy and sell shares, track your investments, and receive your share of the rental income. It's real estate investing for the digital age.

At Concreit, we've taken a slightly different approach. We believe in the power of diversification, so we've built a platform that allows investors to invest in a diversified portfolio of commercial real estate. But we've also embraced the trend towards fractionalization. With Concreit, you can start investing with whatever amount you are comfortable with, making real estate investing accessible to everyone.

But what truly sets Concreit apart is our status as a registered investment advisor (RIA) with the SEC. This means we're held to a higher standard of transparency and fiduciary duty. We're committed to acting in the best interests of our investors, providing transparent pricing, and offering a level of customer service that's second to none.

The Evolution of Real Estate Investing

The evolution of real estate investing platforms reflects the broader trends in the investment world. Investors are increasingly looking for ways to diversify their portfolios, achieve higher returns, and gain access to investments that were previously out of reach. And thanks to technology and regulatory changes, platforms like Concreit, Arrived, and Landa are making this possible.

But as the space evolves, it's important to remember that not all platforms are created equal. At Concreit, we've made certain decisions about our business structure to ensure we're providing the best possible service to our investors. We believe in the power of diversification, the importance of transparency, and the value of customer service. And as a registered investment advisor, we're committed to acting in the best interests of our investors.

In conclusion, the future of real estate investing is here, and it's more accessible than ever. Whether you're a seasoned investor or just getting started, there's never been a better time to explore the world of real estate investing.

**Disclaimer:** This article is for informational purposes only and is not intended as investment advice. Always do your own research and consider your financial situation carefully before making investment decisions.


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.

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