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The Climb18 min read

Real Estate Crowdfunding: A Complete Guide to Fundrise, Arrived, Groundfloor, and RealtyMogul

Invest in real estate with as little as $10. How crowdfunding platforms work, who they're for, and how they compare to direct investing and syndications.

Real estate crowdfunding has democratized access to property investing. Where syndications once required $50,000–$100,000+ minimums and accredited investor status, platforms like Fundrise, Arrived, Groundfloor, and RealtyMogul now allow investors to start with as little as $10–$100. These platforms pool capital from thousands of investors to acquire, develop, or lend on real estate assets.

But “democratized” does not mean “risk-free.” Crowdfunding platforms vary enormously in structure, risk profile, liquidity, and regulatory framework. Some offer equity ownership in real properties. Others offer debt instruments. Some are open to all investors under Regulation A+. Others require accredited status under Regulation D. Understanding these differences is critical before committing capital.

How Real Estate Crowdfunding Works

At its core, real estate crowdfunding is simple: a platform pools money from multiple investors and deploys that capital into real estate assets. The platform (sponsor) earns management fees, and investors receive returns through some combination of income distributions, interest payments, and appreciation.

The platforms differ in four key dimensions:

  • Investment type: Equity (you own a share of the property), debt (you lend money secured by property), or hybrid (preferred equity or mezzanine structures)
  • Regulatory framework: Regulation A+ (open to all investors, SEC-qualified), Regulation D 506(b) or 506(c) (accredited investors only), or Regulation CF (crowdfunding exemption, limited raise amounts)
  • Liquidity: Some offer periodic redemption windows; others lock your capital for 3–7+ years
  • Minimum investment: Ranges from $10 (Arrived) to $25,000+ (RealtyMogul accredited offerings)

Platform Comparison

Fundrise

  • Founded: 2012 (one of the first real estate crowdfunding platforms)
  • Minimum: $10 (Starter portfolio)
  • Investor requirement: Open to all investors (Reg A+ for eREITs and eFunds)
  • Investment type: Primarily equity — diversified portfolios of commercial real estate, single-family rentals, development projects, and credit investments
  • Fee structure: 0.15% annual advisory fee + up to 1.85% in underlying fund management fees (total approximately 1.0–2.0% annual drag)
  • Historical returns: Approximately 5–12% annualized net returns (varies significantly by vintage and strategy). 2022 was notably weak for Fundrise as rate hikes depressed real estate valuations.
  • Liquidity: Quarterly redemption windows, but redemptions can be suspended during market stress (as Fundrise did in 2022–2023). Penalty for early redemption in first 5 years. This is illiquid capital.
  • AUM: Over $3 billion across 300,000+ investors (as of 2025)

Best for: Beginners who want diversified real estate exposure with minimal capital and effort. Fundrise is the most accessible platform and requires no real estate knowledge to use.

Drawbacks: Limited transparency into specific assets, illiquid, returns have been inconsistent, fees are layered and can be difficult to fully quantify, and you have no control over asset selection.

Arrived (arrivedHomes.com)

  • Founded: 2019 (backed by Jeff Bezos and Marc Benioff)
  • Minimum: $100 per share
  • Investor requirement: Open to all investors (Reg A+)
  • Investment type: Equity ownership in individual single-family rental homes or vacation rentals. You buy “shares” in a specific property.
  • Fee structure: 1% annual AUM fee + sourcing fee (built into purchase price)
  • Historical returns: Approximately 3–7% annualized from dividends, plus potential appreciation at sale (properties typically held 5–7 years). Total returns TBD as most properties have not yet been sold.
  • Liquidity: Illiquid — capital is locked until the property is sold (projected 5–7 year hold). No secondary market as of early 2026.
  • Properties: Over 400 individual homes across 40+ markets

Best for: Investors who want to pick specific properties (you choose which homes to invest in) with low minimums. The per-property model gives more transparency than a diversified fund.

Drawbacks:Very illiquid (no exit until sale), relatively new platform with limited track record on full-cycle returns, and dividend yields have been modest (3–5% before appreciation).

Groundfloor

  • Founded: 2013
  • Minimum: $10 per loan
  • Investor requirement: Open to all investors (Reg A+)
  • Investment type: Debt — you lend money to fix-and-flip and ground-up construction borrowers, secured by the property (first-lien position in most cases)
  • Fee structure: No direct investor fees — Groundfloor earns the spread between borrower interest rates and investor returns
  • Historical returns: Approximately 8–12% annualized on performing loans. Groundfloor grades loans A through G, with higher-risk grades offering higher yields. Default rates vary: A/B loans default at approximately 5–8%, while F/G loans can default at 15–25%+.
  • Liquidity: Relatively liquid compared to equity platforms — loan terms are typically 6–18 months, so capital cycles back as loans are repaid. However, defaults and extensions can delay repayment significantly.

Best for:Investors who want higher yields, understand credit risk, and prefer shorter hold periods. Groundfloor is the most “active” of the non-accredited platforms because you can select individual loans based on grade, market, LTV, and loan terms.

Drawbacks: Default risk is real and can be significant in weaker grades. During economic downturns, default rates spike. Interest income is taxed as ordinary income (no depreciation benefits).

RealtyMogul

  • Founded: 2012
  • Minimum: $5,000 (MogulREIT I and II, open to all investors via Reg A+) or $25,000+ (individual deals for accredited investors under Reg D)
  • Investor requirement: REITs open to all; individual deals accredited only
  • Investment type: Diversified REIT (equity) for non-accredited investors; individual commercial real estate equity and preferred equity deals for accredited investors
  • Fee structure: 1.0–1.5% annual management fee on REITs; individual deal fees vary (typically 1–2% acquisition fee + asset management fees)
  • Historical returns: MogulREIT I (income-focused): approximately 6–8% annualized distributions. MogulREIT II (growth-focused): more variable. Individual deals target 12–18% IRR.
  • Liquidity: MogulREITs offer quarterly redemption (subject to limitations). Individual deals are locked for the hold period (3–7 years).

Best for: More sophisticated investors who want institutional-quality commercial real estate exposure. The individual deal platform gives accredited investors access to specific multifamily, office, and retail assets.

Drawbacks: Higher minimums than Fundrise or Arrived. Individual deals require accredited status and the ability to evaluate specific commercial real estate opportunities.

Regulation A+ vs. Regulation D: What It Means for You

Regulation A+ (Open to All Investors)

  • SEC-qualified offerings, available to both accredited and non-accredited investors
  • Maximum raise: $75 million per year per issuer
  • Requires SEC filing and ongoing reporting obligations
  • Used by Fundrise (eREITs), Arrived, Groundfloor, and RealtyMogul (MogulREITs)
  • Generally more transparent due to SEC filing requirements

Regulation D 506(b) and 506(c) (Accredited Only)

  • No limit on amount raised
  • 506(b): Up to 35 non-accredited investors allowed (but practically limited to accredited)
  • 506(c): Must verify accredited status; allows general solicitation (advertising)
  • Used by syndications, RealtyMogul individual deals, CrowdStreet, and most institutional offerings
  • Accredited investor threshold: $200,000+ income ($300,000 joint) or $1 million+ net worth excluding primary residence

Crowdfunding vs. Direct Investing: Honest Comparison

Advantages of Crowdfunding

  • Low minimums: $10–$100 vs. $50,000–$100,000+ for direct ownership
  • No management: You do not deal with tenants, toilets, or contractors
  • Diversification: Spread small amounts across many properties or loans
  • Geographic diversification: Invest in markets you could not access directly
  • No mortgage qualification: No income documentation, credit checks, or personal guarantees

Disadvantages of Crowdfunding

  • No control: You cannot influence property management, renovation decisions, rent pricing, or sale timing
  • Limited tax benefits: Most crowdfunding investments do not pass through depreciation deductions (Arrived and some equity platforms do pass through K-1 depreciation, but the amounts are small relative to direct ownership)
  • Illiquidity: Most equity investments lock your capital for 5–7+ years. Redemption is not guaranteed.
  • Fee drag: 1–2% annual fees compound over time, reducing net returns
  • Platform risk: If the platform fails, your investment may be at risk (though assets are typically held in separate SPVs)
  • Ordinary income tax treatment: Debt investments (Groundfloor) and REIT dividends are taxed as ordinary income, not at preferential capital gains rates

When Direct Investing Is Better

  • You have $50,000+ to invest in a single property
  • You want depreciation deductions to offset W-2 income (if you qualify as a real estate professional)
  • You want to build equity through forced appreciation (value-add)
  • You want the ability to refinance, 1031 exchange, or sell on your own timeline
  • You are willing to manage or hire management for your properties

When Crowdfunding Is Better

  • You have less than $25,000 to invest
  • You want truly passive exposure with no management responsibility
  • You want to diversify across multiple markets and asset types
  • You are testing real estate before committing larger capital
  • You are already a direct investor and want passive allocation alongside your active portfolio

Risk Factors to Understand

Liquidity Risk

This is the biggest risk most investors underestimate. When you invest in a crowdfunding platform, you generally cannot access your capital until the investment matures or the platform offers a redemption window. During market stress (2022–2023), several platforms suspended or limited redemptions. If you need your money back on a specific timeline, crowdfunding is not appropriate.

Default Risk (Debt Platforms)

Groundfloor loans are secured by property, but that does not guarantee full recovery. If a borrower defaults, the platform must foreclose and sell the property. In declining markets, the sale proceeds may not cover the loan balance plus foreclosure costs. Higher-yield loans (grades E/F/G) have meaningfully higher default rates.

Valuation Risk (Equity Platforms)

Fundrise and similar platforms report “returns” that include unrealized appreciation based on internal valuations. These valuations are not market-tested (no buyer has agreed to pay that price). Actual returns are only known when assets are sold. Be cautious about advertised returns that include significant unrealized gains.

Sponsor/Platform Risk

Crowdfunding platforms are businesses that can fail. CrowdStreet, one of the largest platforms, faced significant controversy when a sponsor (Nightingale Properties) allegedly misappropriated over $50 million in investor funds in 2023. While most platforms have safeguards (SPVs, third-party custody), the risk of sponsor fraud or platform insolvency is real. Diversify across platforms if you allocate significant capital to crowdfunding.

Tax Treatment

  • Debt investments (Groundfloor): Interest income taxed as ordinary income. No depreciation pass-through.
  • Equity eREITs (Fundrise, RealtyMogul MogulREIT): Dividends typically taxed as ordinary income (non-qualified REIT dividends). Some portion may be return of capital (non-taxable until basis is reduced to zero). The 199A deduction may apply to REIT dividends (20% deduction).
  • Individual property equity (Arrived, some RealtyMogul deals): K-1 income with depreciation pass-through. This is the most tax-efficient crowdfunding structure, as depreciation can offset income. However, the amounts are typically small given the investment size.
  • 1099 reporting: Most platforms issue 1099-DIV or 1099-INT. K-1 issuers may delay your tax filing (K-1s are often issued in March or later).

Our Recommendation

Real estate crowdfunding is a legitimate investment category, not a gimmick. For investors with limited capital, it provides genuine exposure to real estate assets that would otherwise be inaccessible. For experienced direct investors, it can serve as a passive diversification tool.

However, we believe direct real estate investing delivers superior risk-adjusted returns for investors who can commit the capital ($50,000+) and management effort. The tax benefits (depreciation, 1031 exchanges), leverage advantages, and control over asset management are difficult to replicate through crowdfunding. If you have the resources and willingness to learn, the tools on this site — our Proforma Calculator, Rent Estimator, and LadderScore Calculator— are designed to help you analyze direct investments with confidence.

If you are starting small, consider Groundfloor for short-term debt exposure and Arrived for individual property equity. Use crowdfunding to learn while you save for your first direct investment.

Sources:SEC EDGAR filings (Regulation A+ offering circulars for Fundrise, Arrived, Groundfloor, RealtyMogul), Fundrise investor updates (2024–2025), Arrived investor disclosures, Groundfloor loan performance data, CrowdStreet/Nightingale Properties SEC enforcement action (2023), IRS Publication 925 (Passive Activity and At-Risk Rules), IRC Section 199A. This guide is for educational purposes only and does not constitute investment advice. Crowdfunding investments involve risk of loss, including total loss of capital. Past performance does not guarantee future results. See our full disclaimer.