Did you know that over the last two centuries, 90% of the world’s millionaires created their wealth through investing in real estate?
Property has always been seen as a great investment and often continues to perform well when the stock market is struggling.
New investment regulations over the last five years have led to the emergence of innovative investment platforms. This is making it easier than ever before for almost anyone to invest in real estate.
Two of the leading platforms are Roofstock and Fundrise.
We’ve previously written a blog comparing these two platforms along side the Realty Mogul platform, but how do these two platforms stack up, head-to-head?
They’re two are quite different beasts,and therefore suit investors with different needs.
While both allow for hands-off passive investing, Roofstock helps you into your single-family investment property, whereas Fundrise is a crowd-funded investment into potentially hundreds ofproperties across the USA.
Roofstock
Roofstock takes virtually all the hassle and legwork out of residential property investing.
They make it a straightforward process.
First, you search their website listings to view a range of single-family homes across the country that they’ve already vetted.
Next, you analyse each home with the help of some great online tools and videos.
Then you chose a property and make an offer.
Finally, when you close the sale, you can have a Roofstock-vetted property manager do all the Landlord duties for you. You could do it yourself, but that’s not easy if the property is in another state.
To invest you need to have enough money to at least put a deposit on a home. That will usually be 20% of the purchase price. That’s always a lot of money.
Fees are simple, $500 or 0.5% of the purchase price (whichever is highest) and sellers pay $2,000 or 3% of the sale price.
Accredited Investors are those earning more than $200,000/year ($300,000 for a couple) or with net assets of $1M can invest into Roofstock 1 for as little as$5,000. They can own up to 10% of a property and receive a share of its profits.
A unique feature is Roofstock’s two guarantees!
If you’re not satisfied with your purchase within the first 30 days, you can get your money back. Or, if the property remains untenanted after 45 days, they will pay 75% of the rental for up to a year
There are further conditions with both guarantees, but nobody else is doing this. It certainly reduces some of your immediate risks.
Here is where you can learn more details about Roofstock.
Fundrise
This platform is the largest and oldest crowdfunded real estate investment platform offered.
All investors pool their money together to buy into one or more portfolios of properties managed by Fundrise and share in the income and/or capital gains those properties make, based on your share of the overall portfolio.
You can start investing in Fundrise for just $10!
Fees are only 1%/year, though some additional fees may apply sometimes.
Withdrawals may face a 3% fee and Fundrise reserves the right to stop all withdrawals to protect investors. They enforced this for a few months in 2020 when Covid first broke out.
Every three months dividends are paid out or you can choose to have them reinvested.
There are four real estate strategies employed, each one stepping up the potential risk and return. You invest through one of five account levels based on the total principal dollar amount invested in your account and determine access to certain features, benefits, and investment offerings.
Fundrise also haseReits and eFundsas additional investment options. Follow this link for more specific details of Fundrise.
Roofstock or Fundrise?
Bothare passive investments, that lack liquidity and should be considered long-term investments of 5 years or more. You can invest in both through your IRAs.
You should not consider either of these if you are investing money, you might want back within five years.
The two stand-out advantages of Roofstock are the immediate cash flow potential and the guarantees.
The two stand outs for Fundrise are the minimum investment of $10, and the huge range of real estate available to invest in.
But if you had to choose between these two investments, consider these two points:
- Affordability
If you don’t have enough money to put at least a 20% deposit on one of Roofstock’s available homes, then Roofstock is simply not an option.
- Diversification
If you do have enough money to put at least a 20% deposit on one of Roofstock’s available homes, you are investing into one single asset.
That’s putting all your property eggs into one property basket. That is never a recommended risk. It becomes even riskier if you don’t have investments elsewhere!
Even if you are an accredited investor and can afford to buy a portfolio of homes through Roofstock One, you’re still not getting anything like the diversification in Fundrise.
Diversification reduces investment risk.
Two more reasons to favor Fundrise over Roofstock; they’ve been around longer, so have more experience, and they seem more proactive about educating investors. The more you know about investing the better decisions you will make.
You can read this article for another take on how these two platforms compare.
If Fundrise and the opportunity to benefit from the income and gains from hundreds of different properties, sounds like the right investment for you, then you can get started right here.
If you prefer to own your property outright and focus just on the income and growth of that one asset, you can get started with Roofstock here.
