Best Real Estate Crowdfunding for Non-Accredited Investors • Benzinga

Would you like to jump straight to the best? Diversyfund is definitely the best real estate investment platform for most people.

While the options for non-accredited investors to invest in real estate crowdfunding have been limited in the past, some crowdfunding platforms open up real estate investments to virtually anyone. Read on to find out what options are available and what are the best real estate crowdfunding platforms for non-accredited investors.

What is real estate crowdfunding?

Real estate crowdfunding is a method that real estate investors and developers use to raise capital to buy or develop a property. Several investors looking to generate passive income will pool their money on a real estate project. Investors either share some of the equity or make the money available as a loan and receive interest on their investments.

Because crowdfunding regulations allow real estate companies to raise capital without registering with the SEC, there are rules in place to protect investors. These rules limit who can invest in crowdfunding businesses, depending on which regulation the offer falls under.

Difference between accredited and non-accredited investors

The SEC has rules in place to determine who can invest in what type of real estate crowdfunding offering, based on whether it is an accredited investor or a non-accredited investor.

Accredited investor

An accredited investor can participate in all types of crowdfunding deals. To be an accredited investor, an individual must meet one of the following requirements:

• An annual income of at least $ 200,000 ($ 300,000 if married) in each of the previous two years, and the same is reasonably expected for the current year.
• A net worth of $ 1 million or more, excluding the value of the person’s primary residence.
• Have an unrestricted series 7, 65, or 82 license.

Corporations and trusts are also categorized as accredited or non-accredited investors. In order for an organization to receive accredited status, it must meet one of the following requirements:

• A trust with total assets in excess of US $ 5 million that was not established to purchase securities in the relevant investment and is managed by an experienced person
• A company with total investments of $ 5 million or more that is not formed specifically to purchase securities in that investment
• A company in which all shareholders are accredited investors

Accredited investors or the only type of investor who can participate in Regulation D Rule 506 (c) offers. Under rule 506 (c), accredited investors are not limited by how much they can invest.

Non-accredited investor

A non-accredited investor is anyone who does not meet the requirements for accreditation. Because crowdfunding is believed to be a riskier investment than publicly traded stocks or bonds, these rules were put in place to protect non-accredited investors from losing their savings.

Can non-accredited investors invest in crowdfunding?

While there are fewer opportunities for non-accredited investors to get involved in crowdfunding real estate transactions, there are an increasing number of real estate crowdfunding platforms with offers for non-accredited investors.

Regulation A + crowdfunding

Regulation A + offerings are sometimes referred to as “mini-IPOs”. This type of crowdfunding requires companies to have their offering qualified by the SEC. In addition, there are additional reporting and disclosure obligations, depending on whether the offer is tier 1 or tier 2 according to Regulation A +.

Because this type of offering includes stronger SEC oversight than a Regulation D offering, investments are open to both accredited and non-accredited investors. The only restriction is that a non-accredited investor cannot contribute more than 10% of their annual income or net assets to a Tier 2 offering.

Regulation crowdfunding (CF)

Regulation CF is the latest form of crowdfunding for non-accredited investors. This type of offering has not yet become so prevalent for real estate investments because the amount a company can raise is limited.

Until recently, Regulation CF only allowed companies to raise a maximum of $ 1,070,000 per year. However, recent rule changes have raised that maximum to $ 5,000,000. Even with the larger amount, it is difficult for companies to raise enough capital to offer attractive opportunities to passive investors.

Best real estate crowdfunding options for non-accredited investors

Diversity Fund

DiversyFund offers crowd investing for non-accredited investors through its private Growth REIT. The company makes the process easy to invest in multi-family homes with a minimum investment of just $ 500.

Investors can quickly increase their equity by setting up automatic transfers on a regular basis. You can even use their self-directed IRA to invest.

ground floor

Ground floor allows non-accredited investors to invest in crowdfunding through short term loans to real estate investors and home builders. They also offer the lowest minimum investment crowdfunding option, allowing investors to start with just $ 10.

Groundfloor offers short term residential real estate loans and then sells portions of those loans to its investors through a Limited Recourse Obligation (LRO). Investors can browse the available loans and invest in any one in $ 10 increments. Most of the loans on the platform pay an interest rate between 7% and 12% with terms of 6 to 12 months.

Investors can schedule recurring deposits to their ground floor account and even set up automatic investments based on criteria they set.

Fundraising

Fundrise offers crowdfunding investments for non-accredited investors through its eFunds and eREITs. The minimum investment starts at $ 1,000 for the basic level, and more options will become available as investors increase their equity on the platform.

The company’s core, advanced and premium levels provide access to a wider variety of investment options with higher return opportunities.

Minimum investment

$ 1,000

fees

0.85% asset management fee per year

Invest in crowdfunding as a non-accredited investor

The real estate crowdfunding offered by Regulation A + offers non-accredited investors the opportunity to invest in real estate without having to buy their own real estate. Crowdfunding companies don’t have to follow the same rules as listed REITs. Therefore, it is important to be thorough when performing due diligence on a crowdfunding platform and individual offerings. Real estate crowdfunding can produce great returns, but only if smart investments are made.

DiversyFund expedites your wealth accumulation by reinvesting cash flows from the real estate – the DiversyFund Growth REIT is a public, unlisted REIT that is designed to build wealth by investing in multi-family properties and intends to accumulate over a period of approximately 5 years. You don’t have to be an accredited investor to invest in Diversyfund. Open a Diversyfund account today.