Groundfloor and Fundrise are both equity crowdfunding platforms that let investors invest in real estate ventures. Which platform would you rather use?
Groundfloor and Fundrise are two different investing platforms that are competing for the same investment market. Groundfloor has a better review, but Fundrise is cheaper.
The smartest move you can make for your future is to diversify your wealth. You’re also in a better position if you’re considering adding real estate to your portfolio.
Real estate differs from the rest of your portfolio in that it does not respond to market volatility in the same way that equities and bonds do. But, since not everyone has thousands of dollars to put down on a house, investing in real estate may be the last thing on your mind.
While investing in tangible real estate may not be for everyone, crowdfunding platforms have made it feasible for us all to own a piece of property. This might be the first step toward investing in real estate that you didn’t realize you needed.
Hundreds or thousands of investors may contribute to a real estate sale via crowdfunding and get a prorated return depending on their contribution levels. It allows people to diversify their investments without using the usual way. You may invest as little or as much as you like and get returns on your investment via crowdsourcing.
Groundfloor and Fundrise are two platforms for real estate investing. There are certain parallels and distinctions between the two that you should be aware of. In this Groundfloor vs. Fundrise comparison, we go over all the factors that might help you make the best decision.
Overview of Groundfloor vs. Fundrise
Groundfloor and Fundrise are two comparable systems that enable investing in real estate simpler. Both, however, have a few distinguishing characteristics and distinctions that you should be aware of.
Concerning the Groundfloor
Groundfloor was founded in 2013 and now has over 100,000 active users and $1 billion in assets under management. The platform takes a unique approach to real estate investment, focusing on high-yield debt rather than stock in real estate holdings. A smartphone application for the platform was recently released. To discover more, read our entire Groundfloor review.
Groundfloor is the source.
Fundrise is a crowd-funding platform.
Fundrise is a real estate investment platform that was founded in 2010. Its goal was to make real estate investment more accessible to a wider range of individuals. Fundrise has over 150,000 investors and has been involved in over $5 billion worth of asset transactions. To discover more, read our entire Fundrise review.
How Do Groundfloor vs. Fundrise Work?
Groundfloor and Fundrise both provide a variety of investment options. Groundfloor specializes on high-yield real estate loans, while Fundrise focuses on equity investments.
Groundfloor
Groundfloor is a real estate investment crowdfunding platform that finances loans. It offers loans for single-family and multi-family residential properties. The loans are short-term, enabling investors to acquire and sell homes quickly. It’s critical to comprehend how Groundfloor operates.
They provide loans for properties that are not generally financed by banks. These are often run-down houses that are unable to get bank funding. Groundfloor will provide high-interest loans depending on the property’s potential. The riskiness of the loan will be determined. Groundfloor will take into account the amount of money the borrower intends to put into the project, as well as the investor’s expertise and involvement in the project. The loans will be graded from A to G, with A being the least dangerous and G being the most risky. It is feasible to deposit all of the money into one loan or to spread it out across many loans.
Fundrise
Fundrise is a commercial real estate-focused crowdfunding platform. Although you own a portion of the property you invest in, Fundrise will sell it as an eREIT. It’s a private real estate investment trust that you can’t purchase or sell on the open market (unlike publicly listed REITs), but you can keep. It’s a risky, long-term investment.
This also indicates that in the long run, there is a better likelihood of big returns. Fundrise has a financial stake in the assets it sells on the site. They purchase the property for less than it is worth, then utilize their skills to improve its value over time. With roughly 12 portfolios to select from, you may choose from cautious to aggressive investing techniques. The program will automatically add properties to your portfolio without demanding any further funds from you. Commercial property, office buildings, apartment complexes, and multi-family apartments are all options. It is possible to begin investing with as little as $10.
Fundrise is the source of this information.
Main Differences Between Groundfloor and Fundrise
Let’s take a look at what each platform has to offer.
Groundfloor
Groundfloor offers with a lot of features right out of the box, including debt investing and automated investing.
Loans on the Ground Floor
The accepted loans are given a grade ranging from A to G, as well as a rate of return, by Groundfloor. With a low interest rate and a minimal risk of default, the loan with Grade A is the best option. Grade G loans provide a high risk of default, high risk interest rates, and high profits. The interest rate for Grade A might be as low as 5%, while it can be as high as 15% for Grade G. The rate of return on Groundfloor will be determined by a variety of variables.
Investing on Autopilot
The platform offers an Investing on Autopilot feature where you can allocate money to different loans across the loan grades and they will automatically invest your money based on the same. However, you can only allocate money for loans that you are not currently invested in. Through this feature, you can also reinvest the interest payments you receive from the investment.
Minimum Investment Requirement
To be a part of the Groundfloor platform, you don’t have to be an accredited investor. It is available to both accredited and non-accredited investors, with a $10 minimum commitment.
Groundfloor is the source.
Investment in Debt
It helps to understand the two types of investments you can make on the platform. They are equity and debt. Groundfloor offers you a chance to make Investment in Debt, which means you contribute the funds to loan to the investor. Then, the investor will make interest payments like they would on a traditional loan. The property will work as collateral against the funds.
Invest in Individual Retirement Accounts (IRAs).
Groundfloor allows account users to set up an IRA in a matter of minutes.
Availability
Groundfloor allows investors from all 50 states to participate in short-term loans. However, owing to law, Nebraskans are unable to invest. However, since the platform is only authorised to finance loans in 30 states, investors will not be able to diversify their interests across all states.
Fundrise
Fundrise also has a number of features that distinguish it from other crowdfunding platforms.
Minimum investment is low.
Fundrise is an investment platform that enables you to start investing with as little as $10. It’s a great way for non-accredited investors to get their feet wet in the real estate market.
Reinvesting Dividends
Fundrise has a Reinvesting Dividends program that will allow you to reinvest dividends automatically and make more money. There is no extra charge for this.
Self-Directed Individual Retirement Accounts (IRAs)
Millennium Trust Company offers regular and Roth IRAs for you to invest in. It’s a terrific choice if you’re thinking of retiring, but there’s a $125 yearly cost on top of the usual expenses.
iPO Fundrise
You may participate in an online public offering and purchase Fundrise’s parent company’s stock. It’s an early-stage investment in Fundrise’s development. The shares, however, are not listed on the market and cannot be exchanged publicly, although the minimum investment is $1,000.
Investing with a Purpose
Those who join up for a Basic account or one of the higher levels may plan their long-term investments with their objectives in mind. They may utilize the goal tracker to check whether they are making the proper choice, whether it is for a huge purchase or retirement. It’s a tool that shows users how their portfolio might expand in multiple ways and makes advice on how to get there.
Fundrise is the source of this information.
Invest in real estate investment trusts (eREITs).
eREITs are available to those who have joined up for the Core account level or above. They are private, non-registered funds that invest in real estate in accordance with your investment objectives.
Platform that is easy to use
Fundrise is a user-friendly platform that is simple to set up and simplifies the investment process.
Program of Atonement
You may redeem your non-introductory eREIT and eFund shares before their maturity date with Fundrise. You may be required to pay a redemption penalty, which may vary from 0% to 3% depending on the holding term.
Invest in Initial Public Offerings (IPOs)
Although only Premium account users have access to this service, it allows them access to specialized private funds. They are, nevertheless, very illiquid equities funds with a wide range of risk and return profiles.
Levels of Account
The one feature that sets Fundrise apart from other platforms is its multiple Levels of Account. Fundrise has five different Levels of Account that come with different investment amounts. Hence, you can start with as low as $10 and go as high as you want to. Investors can easily upgrade their accounts to get access to more features and enjoy additional benefits.
- Starter: This is the entry-level account that starts at $10 and allows access to registered products, Reinvesting Dividendss, auto-investment, and penalty-free redemption options at quarterly intervals. For every friend you refer, 90 days of advisory fees will be waived.
- Basic: This subscription tier has a minimum investment requirement of $1,000 and includes all the features of the Starter level. Additionally, it gives investors access to the iPO Fundrise, IRA accounts and offers an opportunity to create and manage the investment goals.
- The main account is next, where you may customize your portfolio and have greater control over it. It requires a $5,000 initial commitment and contains all of the perks of the beginner and basic levels. It also offers a personalized portfolio strategy based on your investing objectives, increased diversification, and non-registered assets such as eREITs. You are entitled to a 180-day remission of advising costs for each reference.
- Advanced: With $10,000, you may join the Advanced tier, which offers a high return potential and enables you to invest a portion of your portfolio in real estate strategies over time. You can also participate directly in eFunds, and each referral will waive 270 days of advising costs.
- Premium: The premium tier requires a $100,000 initial payment and provides access to all of the aforementioned features as well as a few more. These benefits include priority assistance from their team, access to private funds, the ability to arrange a call with a professional investment team member, and a 365-day waiver on advising costs with each referral.
Investment Options: Groundfloor vs. Fundrise
Despite the fact that they operate in the same business, both platforms appeal to various types of investors and provide a variety of investment alternatives.
Groundfloor
The main investment product of Groundfloor is the short-term residential real estate Investment in Debt. It includes residential single-family homes, townhomes, multi-family homes, and condominiums. Since it is a Investment in Debt, it means that the investors will be the first to be repaid if the property is sold as collateral to repay the loan.
Groundfloor is the source.
Fundrise
Fundrise specializes on residential, single-family homes, and commercial assets.
Returns on Groundfloor vs. Fundrise
We all want our money to grow, and looking at the returns might help you choose the best platform. No platform, however, can promise a certain rate of return. A lot is determined by market volatility and industry. Here’s a look at how the platforms have performed in the past.
Groundfloor
According to the website, Groundfloor investors have seen annualized returns of 10% on average over the last 6-18 months. According to a July 2021 research, the company’s portfolio had an average annualized return of 9.98 percent.
Fundrise
Although Fundrise can not promise returns, their prior performance may provide insight into how well they are doing. To further comprehend the track record, below is the average annualized return over the last several years.
- 22.99 percent in 2021
- 7.31 percent in 2020
- 9.16 percent in 2019
- 8.81 percent in 2018
- 10.63 percent in 2017
Fundrise is the source of this information.
Groundfloor vs. Fundrise: Fees & Commissions
Understanding the investment cost is a crucial stage that should not be overlooked.
Groundfloor
Investors are not charged any fees by Groundfloor. This is due to the fact that borrowers pay interest on the loan principle.
Fundrise
A 1% annual fee is charged by Fundrise. This is split into two parts: a 0.15 percent advising charge and a 0.85 percent management fee. It also charges a $125 fee on IRA investments.
Platform and App: Groundfloor vs. Fundrise
Customer satisfaction may be greatly improved by having user-friendly websites and mobile apps.
Groundfloor
Stairs, a mobile-friendly website and app from Groundfloor, helps you make the best real estate investment choices.
Groundfloor is the source.
Fundrise
Fundrise’s user-friendly website and mobile app make it simple and quick for consumers to establish an account and monitor their investments.
Customer Support: Groundfloor vs. Fundrise
Here’s what you’ll see if you ever need to call customer service.
Groundfloor
During business hours, you may reach out to the Groundfloor staff via phone, contact form, or e-mail.
Fundrise
With Fundrise, only premium members receive the greatest assistance. If you are not a premium member, getting in contact with the staff may be difficult. You may get out to the team by sending an email or filling out the contact form. A response will take one or two business days to arrive.
What We Like About Groundfloor vs. Fundrise
These are the platform’s finest features.
Groundfloor
- Minimum Investment Requirement
- There are no costs for investors.
- There are a variety of bargains to pick from.
- Investment in an IRA is permitted.
- Accredited and non-accredited investors are welcome to participate.
- Supports Investing on Autopilot
- You have full control over your investing decisions.
Fundrise
- A Minimum Investment Requirement required
- There are no hidden fees.
- Non-accredited investors are welcome to participate.
- Diversification of the portfolio is aided.
- Reinvesting Dividends
- Investing in a self-directed IRA
- Investing in vehicles
- Easy Program of Atonement
- There are many levels for different types of investors.
Fundrise is the source of this information.
What We Don’t Like About Groundfloor vs. Fundrise
There are a few disadvantages to consider.
Groundfloor
- Possibility of insolvency
- Only once a month are the loans updated.
- Diversification of real estate courses is lacking.
- There is no assurance of a refund.
- There is no secondary market for resale.
- Investment that is very illiquid.
Fundrise
- Investing in illiquid assets
- There is no assurance of a return.
- The payouts are subject to ordinary income taxation.
- Deals for individuals are not available.
- Customer service is solely available through email.
For Whom Is Groundfloor Intended?
Groundfloor is for accredited and non-accredited investors who want to add real estate to their portfolios. It is ideal for investors who have risk tolerance and a long investment horizon. Beginner investors who want to tread the real estate industry will benefit from the Minimum Investment Requirement.
If you prefer not to invest in real estate via REITs, Groundfloor is the way to go.
What Is the Purpose of Fundrise?
Fundrise is ideal for all types of investors including accredited and non-accredited investors. Since it has a Minimum Investment Requirement amount, it will open a new opportunity for those who do not want to spend a lot of money investing in real estate. Fundrise offers a range of Levels of Account, making it convenient for all. It is also suitable for those with a long-term investment horizon and the ones who like to have control over their investment choices and do not enjoy automatic investment.
Groundfloor vs. Fundrise: What’s the Difference?
The following are some of the most frequently asked questions concerning both investing platforms.
To invest with Groundfloor or Fundrise, do I need to be an accredited investor?
You do not need to be an accredited investor to invest with Groundfloor or Fundrise. Both the platforms are Non-accredited investors are welcome to participate..
Which platform is better: Fundrise or Groundfloor?
Both platforms have a lot of similarities and dissimilarities and they serve different types of investors. The main difference is in the way they function. With Groundfloor, you invest in debt and with Fundrise, you get to invest in equity. This will have an impact on the risk, returns, and liquidity. Investment in Debts have low risk and low returns while equity investment has high risk and a higher potential of return.
However, if you are a beginner and do not have the knowledge of the real estate industry, Fundrise will be ideal for you. It has a low minimum requirement, low fee and has generated strong results in the past. The platform also offers several other benefits like Reinvesting Dividends, Program of Atonements, and private offerings.
Between Groundfloor and Fundrise, which platform is better for beginners?
Because of its basic and easy-to-use layout, Fundrise is an excellent platform for newcomers. There are also eREITs to select from. What makes Fundrise distinct, though, are the many investment levels that enable you to increase your investment amount and get access to additional services as you go through each tier. It will meet the demands of someone who is just getting started in real estate investing and has no prior experience.
Last Thoughts
Fundrise and Groundfloor are two platforms that have a lot in common. Because neither platform requires a large net worth to participate, there are other considerations to consider. Groundfloor allows you to invest in various real estate loan grades in your portfolio, while Fundrise allows you to participate in a number of portfolios that include equity, debt, and preferred equity investments. Fundrise also has a lot of additional things that Groundfloor doesn’t. Groundfloor is great if you have a low risk appetite and a long investment horizon, but if you have a high risk appetite and a long investment horizon, Fundrise will fulfill your portfolio diversification requirements.
There is no such thing as a one-size-fits-all financial platform. As a result, while starting your financial journey, it’s critical to think about your risk appetite and investment requirements. While Fundrise charges a 1% yearly management fee, Groundfloor has no such cost. Both systems enable you to invest via retirement assets while deferring taxes to avoid paying taxes on the earnings. They use a passive investing strategy and enable you to start with as little as $10.
The “fundrise vs diversyfund” is a debate that has been going on for a while. Fundrise offers an exclusive deal with investors, whereas Diversified is open to the public.
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