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Real estate has long been considered a solid investment avenue. However, it’s historically required significant capital, knowledge, and hands-on management. Those who wanted to get involved in the real estate market would have to take out a mortgage, purchase a property, then rent and manage it themselves or through hired contractors.

But in recent years, the real estate market has become increasingly accessible to investors on a budget via online platforms and pooled resources. Three platforms leading this change are Fundrise, Groundfloor, and Roofstock. Each has carved its niche in the fintech real estate investment landscape. Let’s dive deep into the offerings, advantages, and distinctions of each.

Fundrise

Overview: Since its 2012 inception, Fundrise has grown into one of the largest online platforms for alternative asset management. The company manages $3.3 billion in assets for over 387,000 clients, including investment vehicles focused on real estate private equity, private credit, and growth equity in private tech companies. Individual investors can buy into these assets for as low as $10. The firm aims to pool resources to give individuals access to assets that have traditionally been too pricey for the average investor and have remained limited to venture capital and other institutional investments. 

Investment Model and Offerings: Fundrise offers a variety of real estate investment vehicles, with funds focused on assets ranging from single-family and multifamily homes to industrial and commercial buildings. 

According to its website, the company’s strategy “aims to harness the most powerful long-term macroeconomic drivers of the U.S. real estate market.” This includes taking advantage of trends like increased demand for residential real estate amid the remote work boom and investing in industrial spaces used by the growing e-commerce industry.

Its current strategies include investing in suburban apartment buildings and build-for-rent communities in the Sunbelt, in addition to its investments in logistics facilities and last-mile distribution centers.

Fundrise follows what it calls a “value investing” strategy that involves acquiring assets it believes are undervalued, then increasing the value of those assets with “hands-on management and in partnership with local operators.” Its model tends toward long-term returns and building a portfolio that’s able to withstand periods of sudden economic distress.

Groundfloor

Overview: Founded in 2013, Groundfloor provides diversified real estate investment opportunities for both accredited and nonaccredited investors. While Fundrise offers investors the opportunity to essentially buy shares in a property, Groundfloor focuses on lending money for real estate development ventures. It facilitates peer-to-peer lending, primarily focusing on short-term projects like house renovations. The idea is that when a borrower repays a loan, the investor gets their principal back along with interest. According to its website, the company has over 200,000 customers and has taken in over $1 billion in investments over its history.

Investment Model and Offerings: Groundfloor’s investment model enables investors to buy into limited recourse obligations, which the company describes as “a debt security … backed by the underlying real estate asset.” Rather than invest in real estate equity, Groundfloor users invest in backing home loans with the goal of collecting interest on those loans. Investors can buy into these limited recourse obligations with a minimum investment of $100. Groundfloor’s goal is to achieve average annual returns of 10%.

The company also distributes “fix and flip” loans to investors who want to purchase and remodel homes, then quickly resell them at a profit. Loans range from $75,000 to $750,000 and are designed to require minimum upfront capital. 

Roofstock

Overview: Roofstock, founded in 2015, focuses exclusively on single-family rental properties. It’s a platform that enables accredited and unaccredited investors alike to purchase entire rental properties online. Unlike Fundrise and Groundfloor, Roofstock users purchase and manage a property, in some cases with existing tenants. The platform connects buyers with property managers and a suite of financial services to help manage their rental property, which can be either financed or purchased with cash.

Investment Model and Offerings: Roofstock customers purchase single-family rental properties as investments. The platform’s technology identifies these investment properties, assesses their value and outlook, and provides analysis of relevant conditions such as neighborhood and rent history. The platform connects buyers to vetted property managers once a property is purchased. 

Roofstock users can collect rental income from their properties as they invest in hopes of the property accruing value over time. It’s a more active approach compared to Fundrise’s and Groundfloor’s. However, the Roofstock One service does offer single-family rental real estate investment trusts for a minimum entry price of $5,000.

Roofstock can also be used to sell rental properties. The platform’s Open House feature allows buyers to look at properties that haven’t officially been listed elsewhere. There’s a 24-hour window in which prospective buyers can then make an offer at, above, or below the open house price. 

Democratizing Real Estate Investment

Each of these platforms offers a distinct avenue for budget investors looking to enter the real estate investment space. 

Fundrise appeals to those interested in a diversified portfolio, focusing on long-term, passive asset growth. Groundfloor emphasizes short-term, peer-to-peer lending for real estate projects. These are options for investors who prefer a more passive approach, allowing them to contribute to larger projects without the need for hands-on management. Roofstock, meanwhile, caters to investors who seek a direct role in property management. The platform is tailored for those who are willing to spend more and take on the responsibilities of property ownership, but with the support of a management toolkit.

These platforms democratize real estate investment but cater to varied risk profiles, investment timelines, and management preferences. The optimal choice will depend on an investor’s specific goals and the level of engagement they wish to have in the real estate market.