Free trading apps, a booming financial market, and the isolation from COVID-19 that we are just emerging from like numb creatures from Rainer Maria Rilke’s “bright unconnected forest” are all recipes for a huge surge in the popularity of stock trading. And while investing in stocks, bonds, and electronic funds (ETFs) is becoming more and more popular among family people, real assets are forgotten.
Real assets include precious metals, land, equipment, natural resources and real estate… Real assets should be included in any portfolio, if only for the sake of variety. Due to its relatively low correlation with financial assets, real assets ensure that your portfolio is protected from any shocks that may arise in the global markets.
When it comes to alternative assets, we prefer real estate. Stocks tend to rise faster than real estate, but this is not a cause for concern. What real estate gives you stable productivity that slightly exceeds inflation. There’s a reason a 2020 Gallup study on economics and personal finance found real estate to be the most popular investment option for Americans since 2013.
The problem with real estate has always been accessibility. But trading apps like Suspension and Fundraise changed the rules of the game by making investing in commercial and residential real estate as easy as investing in common stock. Modest Money’s Bob Hägele calls both platforms “great opportunities for people looking to invest in real estate.” But what are the real differences between them?
Roofstock and Fundrise are actually completely different programs.… Roofstock’s core service allows private investors to directly own real estate. Fundrise, on the other hand, is more of a crowdfunding operation with a $ 500 managed seed investment. In fact, different touches for different people. Roofstock vs Fundrise rivalry at its best.
But which program is right you? Let’s take a closer look at these industry leaders.
Roofstock – own your property
Founded by tycoons Gary Beasley, Gregor Watson and Rich Ford, Roofstock has a single goal: to attract a common investor to buy single-family rental homes. By providing clients with research, analytics and insights, Roofstock helps the coldest investors dive deep into the real estate world without fear of failure.
While Roofstock is sometimes mixed with other crowdfunding ventures, they are not really the same thing. This is because with Roofstock, you directly own real estate, rather than pooling your money with other investors. Roofstock offers a crowdfunding option called Roofstock One, which allows you to buy shares in rented homes.
- Optimized process: One thing that keeps most investors from real estate is the whole process of finding suitable property, connecting with management companies and financing. Roofstock will arrange all of this for you, including a home checkup. The result is a one-stop shop for real estate investors.
- Property data: If you are not good at home, it can be difficult to know exactly what you are buying when you first take up real estate. Roofstock does the dirty work for you, providing users with detailed information, photos, area ratings, and inspection history for each property.
- Fees and rates: the fees are simple with Roofstock. Basically, there is only one payment structure when buying homes through Roofstock. Buyers pay $ 500, or 0.5% of the sale price, and sellers pay $ 2,500, or 3.0% of the sale price.
Fundrise – rise above the ranks
Unlike Roofstock, Fundrise prides itself on its crowdfunding DNA. A Washington-based company founded in 2010, Fundrise is often referred to as the first company to invest in real estate venture capital projects. Founders Ben and Dan Miller saw an opening in the market, and they went for it with enthusiasm.
With minimal investment and a simple, user-friendly app, Fundrise is at the forefront of democratizing real estate investment.
- Different account levels: Fundrise has four different account tiers, each with a different minimum investment size, making it a platform for users of all wallet tiers and sizes. For example, their “entry-level” requires only $ 500 to buy-in, while their “premium” tier requires a whopping $ 100.00 initial investment.
- Different plans: Like many of the best robo advisers today, Fundrise offers a variety of account profiles that allow you to tailor assets to the needs of individual investors. Choose from income, balanced and long term growth.
- Fees and rates: Like Roofstock, Fundrise simplifies fees and rates: eREIT and eFunds in your portfolio come with a 0.15% consulting fee, combined with a 0.85% asset management fee. Basically, this means that you will receive an annual fee of 1%.
Roofstock vs. Fundrise – Which Platform Wins?
As always, there is no clear winner when comparing well-known investment platforms. Each has its own pros and cons, and it is difficult for the average investor to offer one advantage of the other. The point is, it all depends on what you are looking for in real estate investment.
With Fundrise, users are likely to pay more in the long run, but the minimum investment is only $ 500, which is likely to appeal to those with little start-up capital.
On the other hand, Roofstock allows investors to directly own real estate, but the initial investment is quite high.
Both options give your portfolio much needed variety and are good ways to generate additional income and long-term growth.