retirement

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Are you interested in early retirement? Today, I have a great interview with Kristy Shen, who retired with $1,000,000 at the age of 31.

You probably know Kristy from the blog Millennial Revolution. Millennial Revolution is a popular early retirement resource, so I’m excited to share this interview with you on how she reached early retirement.

In this interview, you’ll learn:

  • How they calculated how much money to save
  • What made them want to retire early
  • Whether they live comfortably or not
  • How much time they spend traveling
  • The careers they had before early retirement
  • The sacrifices they had to make

And more!

This interview is packed full of valuable information on reaching early retirement.

Enjoy!

Related content:

1. Tell me your story. Who are you and what do you do? Can you go into detail on how much you saved for early retirement, how you chose that amount, etc.?

We are Kristy and Bryce, and we are world-travelling early retirees, having left the rat race in our early 30s back in 2015.

We were both working as computer engineers, but after almost a decade of trying to follow the “traditional career path” of buying a house and working until we’re 65 to pay it off, we realized that those old rules didn’t really work for our generation and we tried something different.

So we saved and invested our money instead, and when our portfolio hit $1,000,000, we retired and never looked back.

2. Can you explain how early retirement works? What is the 4% rule?

The 4% rule states that if you retire and start withdrawing your 4% of your portfolio, each year adjusting for inflation, you will statistically never run out of money.

It was based on something called the Trinity study that looked at historical stock market data and tried to figure out the safe amount to withdraw in retirement that won’t deplete your savings. 4% is the answer they come up with, and we used that as a target for how much we needed to have in order to retire early.

We knew that our annual spending was $40,000, so that means our Financial Independence target was $1,000,000, because $1,000,000 x 4% = $40,000.

3. When did you begin saving for early retirement?

We were saving the moment we started to work, but it wasn’t initially for early retirement.

As I mentioned before, we spent the first half of our careers trying to save up to buy a house, but because we live in a high cost-of-living city (Toronto), real estate just kept getting more and more expensive even as we tried to save up for a down payment.

Eventually, we got sick of playing what we thought was a rigged game and started looking for something else to do with our money.

When we stumbled across the FIRE movement, that was our “aha” moment, because we realized that at our current trajectory we could either spend our money on a house and then spend decades trying to pay it off, or hit our FI target and retire in just 3 years.

It was a no brainer.

4. What made you want to retire early?

Besides the frustration of the real estate market, something happened at my work that really crystallized my decision to retire.

Out of the blue, one of my co-workers collapsed and nearly died at his desk. The ambulance had to be called and he needed to be rushed to the ER. He had been working 12 hour days continuously for months, and the doctors told him that his health was so bad that it was equivalent to him smoking 2 packs of cigarettes a day, despite the fact that he’d never smoked.

And the most eye-opening thing about that whole experience was that rather than making any changes to his lifestyle, he was back at work just 2 weeks later because he couldn’t afford to stop working and paying his mortgage.

That’s when I realized how messed up my priorities were.

5. Would you say that you live comfortably?

Absolutely.

FIRE isn’t about sacrificing your happiness for money. If it were, it wouldn’t be sustainable. Instead, it’s more about being strategic and making conscious decisions in how you spend. For example, when we were working, we would still spend money taking 2 vacations a year because travel was (and still is) important to us.

On the other hand, owning a car wasn’t important, so we relied on public transportation instead. Now that we’re retired, we travel the world teaching other people how to pull off FIRE themselves.

We also discovered that travelling the world is less expensive than living in a North American major metropolitan city.

6. How much do you spend traveling each year? What do you spend your money on these days?

Before the pandemic, we basically lived nomadically and hopped from country to country every month, so for us travel is not so much an expense as it is just part of how we live. Since we left, we were surprised to find that travelling isn’t nearly as expensive as when we were working.

By using AirBnbs and HomeExchanges to live like a local and spending time in lower cost-of-living areas like Southeast Asia and Eastern Europe, we were able to make living nomadically cost less than living in a high cost-of-living city all year, which is about $40,000 a year for the two of us for the 6 years since retiring. Once the pandemic happened, we had to come back to Toronto for a family emergency.

We thought our living expenses would skyrocket (especially given the rise in inflation) but surprisingly, our expenses plummeted in the last 2 years to $34,000 (2020) and $39,000 (2021) due to lockdowns. This year we’re projected to spend $42,000.

We love spending money on travel, eating out, massages, and walking tours.

7. What career did you have before you retired? Do you think you have to have a high income in order to retire early?

We’re both computer engineers. I worked in finance and Bryce worked in a semiconductor company.

Having a high income definitely helps, but it’s still possible even if you don’t make that high a salary, and we’ve featured readers on our blog that are on their way to achieving financial independence as teachers, nurses, plumbers, and all sorts of other professions.

One reader even went from homeless and unemployed to $100K net worth in just 1 year by following our strategy.

With the recent popularity of remote work, more options are opening up for people to super-charge their savings by moving to a lower-cost city and baking the difference, so if anything early retirement is becoming more accessible to more people as time goes on.

8. Do you still earn an income in early retirement?

I’ve always wanted to be a writer since I was a kid, but I had to put my dreams on hold to pursue a practical career that makes money, but once we left we could focus on actually making my dream a reality.

So we created our blog Millennial-Revolution.com, and we wrote a book Quit Like a Millionaire. To our complete surprise, both projects now make money, but we continue relying on our initial $1M portfolio to fund our day-to-day living expenses and treat any extra income we earn in retirement as fun money.

9. What sacrifices or hard decisions did you have to make to reach early retirement?

It was really hard bucking what I like to call the “cult of home ownership,” not just because we lived in Toronto where everyone is obsessed with owning real estate, but also because I’m Chinese, where owning a home is such an important part of my culture that it’s considered unthinkable not to buy a house.

I fought with my parents about that so much that we basically stopped talking for the first year of my retirement.

Our relationship has improved since then, but it was really difficult for me at the time to basically be the only one doing this in my group of friends and family, but now that I did it, I now know it was the best decision I’ve ever made.

10. What do you do for health insurance in early retirement?

When you travel, medical care is not nearly as expensive as back home, so a monthly travel insurance policy really isn’t that expensive.

For example, we’re currently using a company called Safetywing and insurance costs $42 USD a month.

If you have to live in the US, you would be eligible for federal government subsidies to pay for your insurance from the Affordable Care Act (ACA) since your earned income would drop to $0 after retirement.

11. What are your long-term plans now that you are retired?

More writing, travelling and teaching people about FIRE.

We also have the time and space to help out with family members whenever health issues come up.

12. If you were starting back at ground zero, what would you do differently?

I wouldn’t have wasted so much time chasing after a house like everyone else, but all things considered I think we actually avoided many of the mistakes that trip a lot of people up, like getting into a ton of student debt or picking the wrong career, so I can’t complain too much.

I would say, we probably should’ve started investing earlier and not sat on the sidelines after 2008, trying to save up money to buy a house.

This made us miss out on years of investment gains.

13. Lastly, what is your very best tip (or two) that you have for someone who wants to reach the same success as you?

If you want to retire early, surround yourself with people who are also on a similar life path because those people will sustain you on your journey.

When I was doing this, the FIRE community wasn’t as big (or well organized) as it is today. Now, there are FIRE meetups all over the world, so find your local group and introduce yourself. It’s also a good idea to start learning how to invest as soon as possible.

You can learn via our free, step-by-step investment workshop and our book Quit Like a Millionaire.

Are you interested in early retirement? Why or why not?

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Source: makingsenseofcents.com

Apache is functioning normally

For the past six weeks, I’ve been hard at work writing my “introduction to financial independence and early retirement” project for Audible and The Great Courses. It’s been challenging — and fun — to rework my past material for a new audience in a new format.

Naturally, I’m emphasizing two important points in this project: profit and purpose.

  • I believe strongly that you need a clear personal mission statement in order to find success with money (and life).
  • I also believe that the most important number on your path to financial freedom is your personal profit, the difference between your income and your spending. (Most people refer to this number as saving rate. I prefer the term “personal profit” because it’s, well, sexier.)

That last point is important.

Too many people want magic bullets. They want quick and easy ways to get out of debt and build wealth. They believe (or hope) that there’s some sort of secret they can uncover, that somehow they’ve missed. Well, there aren’t any secrets. Money mastery is a combination of psychology and math. And the math part is so simple a third-grader could understand it. Wealth is the accumulation of what you earn minus what you spend.

There are only two sides to this wealth equation — earning and spending — but a disproportionate amount of financial advice focuses on the one factor, on spending, and that’s too bad. Sure, frugality is an important part of personal finance. And if you’re in a tight spot and/or have a high income and still struggle, then cutting expenses is an excellent choice. But the reality is, you won’t get rich — slowly or otherwise — by pinching pennies alone.

The Biggest Lie in Personal Finance

Recently at his excellent blog, Of Dollars and Data, Nick Maggiulli wrote about the biggest lie in personal finance. What is that lie? He writes:

While there are lots of people who are in financial trouble because of their own actions, there are also lots of people with good financial habits who just don’t have sufficient income to improve their finances.

That’s why the biggest lie in personal finance is that you can be rich if you just cut your spending. And the financial media feeds this lie by telling you to stop spending $5 a day on coffee so that you can become a millionaire.

With charts and graphs and data, Maggiuli demonstrates that the problem facing people with low incomes isn’t their spending — it’s their earning. If you’re living at the poverty line — currently $26,200 per year for an American family of four — you’re not going to escape through thrift. Thrift is an emergency measure, a stopgap. It’s a bandage on a major wound.

Here’s the bottom line:

  • If you’re poor and hope to be not poor, your attention should be focused on increasing income, not on cutting costs. Your expenses are likely already very low.
  • If you have an average household income — currently $63,179 according to the U.S. Census Bureau — your path to building wealth will probably include both frugality and income enhancement.
  • If you have a high income but still struggle to make ends meet, your attention should absolutely turn to cutting costs. You need to rein in your lifestyle. But you won’t accomplish this with frugality; you’ll do this by optimizing the big stuff.

Maggiuli is fed up with the Biggest Lie. It “triggers” him.

“This is the same financial media who write stories about how people save money by living in a trailer, making their own dish soap, or reusing their dental floss,” he writes. “Yes, it’s that ridiculous. But what really gets me is how these examples are provided as ‘proof’ of how cutting spending can make you rich.”

From my experience, this sort of stuff is perennially popular because it’s easy. It’s easy to write and it’s easy to read, even if it doesn’t offer any real solutions. It’s more difficult to write about boosting your income. And, it’s more difficult to act on that information because it takes time, effort, and actual sacrifice.

Real-Life Examples of the Biggest Lie in Action

Just this morning, Trent at The Simple Dollar published an article about optimizing dishwashing for money and time. Trent writes:

If I can invest some time and thought and effort into optimizing a routine I do three times a week, and that optimization trims off five minutes of effort and $0.50 in cost, I’m literally saving 13 hours per year and $78 per year for the rest of my life.

Trent isn’t wrong. If his math is correct (and his discipline too), he will literally save 13 hours and $78 each year by optimizing how he does dishes. This isn’t a lie. In this case, the lie comes from what is implied: Do this and you’ll grow rich. You’ll reach financial freedom by becoming a smarter dishwasher.

Here’s the truth: You don’t reap the thirteen hours and $78 annual benefit as a one-time win. You’re saving five minutes and fifty cents per day. This may seem like a niggling point, but it’s important. If you gain thirteen hours or $78 at once, that’s something real and tangible, something you can work with. But an extra five minutes and fifty cents per day? Not so much.

I’m not saying that you shouldn’t optimize your dishwashing routine. Do it! But don’t expect it to make you rich. Because it won’t.

Here’s a bigger example of the lie in action.

Elizabeth Willard Thames writes at Frugalwoods, which is one of my favorite money blogs. Recently, especially, Liz has been publishing lots of amazing stuff. I look forward to each new article. (Those of you who make use of the Spare Change list of links on the GRS front page have probably noticed that I bookmark Frugalwoods frequently.)

As you might guess from the name of her blog, Liz focuses (almost?) exclusively on thrift. She and her husband practice extreme frugality. She wrote a book, Meet the Frugalwoods [my review], that documented their journey from poor college students to achieving financial independence on a 66-acre farm in central Vermont.

Now, there’s no doubt that Liz and Nate are thrifty. They practice what they preach. But their frugality is not the reason for their wealth, the reason they were able to retire early. You can’t buy a 66-acre farm in Vermont simply by optimizing your dishwashing routine. Or clipping coupons. Or hosting potlucks. To do this, you also need a high income. And that’s a part of the story that Liz doesn’t share with her readers. She and her husband made a lot of money, and that’s how they got rich — not through frugality.

I’m sure Liz doesn’t mean to obfuscate the truth, but that’s the net effect. She’s complicit in “the biggest lie in personal finance”.

To her credit, Liz seems to be incorporating more of the truth in her writing. Today, for instance, the About page at Frugalwoods acknowledges their high incomes. This didn’t used to be the case.

Now, I don’t mean to dog on Liz and Trent. They’re both good people and fine writers. But I think they do their readers a huge disservice by covering just one aspect of the wealth equation, by rarely (if ever) mentioning income. They’re active participants in Maggiuli’s “biggest lie”.

And I’ll confess: For a long time, I was guilty of the same thing. Sometimes, I still am. Hell, I’ve spilled a lot of words lately about my quest to optimize my food spending, haven’t I? I’m not claiming to be any better than Liz or Trent. But I want to at least acknowledge the lie — and the reciprocal truth.

The Biggest Truth in Personal Finance

If frugality isn’t the path to riches, what is? The answer is simple: Big Wins. Big Wins are the quickest way to wealth.

You can scrape your dishes and rinse them in cold water every day for the rest of your life, and you still wouldn’t match the benefits you’d obtain by purchasing a cheaper home. Or choosing a more fuel-efficient car. Or negotiating your salary.

The best way to spend less is to cut back on the big stuff.

If the average American family were to trim their housing costs by 10%, they’d save roughly $150 per housing payment — more than twenty times the benefit of optimizing your dishwashing routine. Transportation offers similar opportunities. According to the American Automobile Association, the average driver spends just over $9000 per year on her vehicle. Reduce this spending by less than one percent and you’ve accomplished the same thing as a year of diligent dishwashing.

But, as Maggiuli notes in his article, income is the elephant in the room, the subject that too many writers ignore.

You can only cut costs so far. There’s no way to reduce your spending below zero, and most of us can’t come close to that. As I mentioned earlier, the U.S. poverty line for a family of four is currently $26,200. (For two people, it’s $17,240.) Not counting his business, Mr. Money Mustache (a famously frugal fellow) spent $13,068 in 2019.

If you’re living like this and want to escape, you shouldn’t look for ways to cut costs. That stuff is useless to you. If somebody tells you otherwise, they’re lying. In these circumstances, you should be trying to increase your income. And even if you have a standard middle-class salary, boosting income is usually the best way to meet your goals.

There are three primary ways to earn more money.

  • First, become better educated. Despite the dire details in the gloomy mass media, one fact is undeniable: The more you learn, the more you earn. In the U.S., education has a greater impact on lifetime earnings than any other demographic factor. It’s more important than your race, your religion, your gender, your location. (In fact, the Census Bureau says education has five times the impact of gender on annual earnings.) That’s great news because while you can’t control your age or race, you have total control over your education.
  • Second, become a better employee. I read a lot on Reddit (and other places) where people piss on their employers, complaining about how their boss (or company) is out to screw them. This stuff is counter-productive. Sure, there are some shitty employers out there, but most are happy to promote and reward their best workers. If you want to earn more, work longer and harder than others will. If you’re in a situation where hard work goes unrewarded, switch jobs.
  • Finally — and most importantly — learn to negotiate your salary. Study after study shows the same thing: Failing to negotiate your salary can cost you over half a million dollars during the course of a typical career. Half a million dollars! For over a decade, I’ve been pushing Jack Chapman’s book, Negotiating Your Salary: How to Make $1000 a Minute. Let me do so again.

“You can’t frugalize income you don’t earn,” Liz writes in Meet the Frugalwoods. She speaks the truth! The biggest truth.

I’m no enemy of thrift. Yes, absolutely, pinch your pennies, if that makes you happy. Frugality is an excellent way to build good habits. Over the long run, many frugal habits combined can make a big difference to your financial situation.

But if you have a low income, do not focus on thrift. It’s a red herring. Instead, turn your attention to Big Wins. And, especially, to increasing your income. Because this is the biggest truth in personal finance: You can’t get rich through frugality alone.

Source: getrichslowly.org

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DRIP is an acronym for Dividend Reinvestment Plan, and in this guide, we are going to break down and take a look at what it means, why you should consider it, and what some of the pros and cons of DRIP investing are.

If you’re already familiar with investing, you’ll know that dividends are paid out on the shares you own in a publicly-traded company. This is your slice of the pie or your share of the profits in the company you hold stock in.

While some people take their dividends every quarter and spend them, reinvesting them can be extremely profitable over the long run.

According to the DRIP model of investing you will reinvest those quarterly dividend payments into the company, provided it offers a share purchase plan (SPP), rather than taking them. These are usually automatic in nature, meaning once you set them up they run themselves.

There are pros and cons to DRIP Investing, of course. Let’s take a look at some of those now.

Note: There are two kinds of DRIPs, synthetic and traditional. A synthetic plan is set up and run by your broker, while a traditional plan is run by the company itself. Naturally, synthetic plans will almost always be more expensive in terms of fees and charges.

Pros of DRIP Investing

You Can Start Small & Invest Long Term – DRIPs are definitely better for long-term investment plans like college savings funds or retirement funds. They utilize the power compounding and allow you to acquire more shares of a company through small investment amounts over time. You won’t need much to get started, either. One share will usually be enough.

It’s Automatic – Once a DRIP is set up it will be run by either the company or your broker, depending on what you have chosen. This means you don’t have to think about it, and even if you are an undisciplined investor, a DRIP will take care of itself and grow automatically.

Low/Zero Fees – DRIPs are usually either fee-free or very low-cost. This can only be a good thing since fees are enemy number one of an investor’s profits. There will usually be a one-time setup fee with most DRIPs, which could be as low as $10 or as high as $400.

Discounts – It isn’t the case with every plan, but loyalty to a company can be rewarded in the form of buying discounts. This gives you a chance to score extra value below market price.

Cons of DRIP Investing

Lots of Mail – Once you buy shares in a company, you will get monthly, quarterly, and annual earnings reports, as well as alerts and news from the company, as well as annual reports, etc. If you have more than one DRIP on the go, this can be a lot to keep up with.

Complex Setup – Buying a single share in a company is enough to get started on a DRIP plan, but usually when you buy through a broker that share will be held in their name. You will need to get a share certificate in your name to be able to get started on a DRIP.

Not Diversified – We’ve all heard the old phrase ‘Don’t put all your eggs in one basket’. With a DRIP, you are increasingly exposed to the fortunes of the company you hold the stock in. You could, of course, have more than one DRIP set up to help counter this.

Temporarily Reduces Income – If you look forward to and enjoy your quarterly dividend payments then you will have to accept that a DRIP will reduce those until the plan has reached its conclusion and you’re ready to take profits.

Summary

DRIPs aren’t for everyone, but if you have time and patience, and are willing to let compound interest work its magic, you can make DRIPs work for you and they can lead to substantial returns long-term.

So, now you know what they are, and what some of the advantages and disadvantages are. The only question left to answer is – are DRIPs right for you?

Brian is a Dad, husband, and an IT professional by trade. A Personal Finance Blogger since 2013. Who, with his family, has successfully paid off over $100K worth of consumer debt. Now that Brian is debt-free, his mission is to help his three children prepare for their financial lives and educate others to achieved financial success. Brian is involved in his local community. As a Financial Committee Chair with the Board of Education of his local school district, he has helped successfully launch a K-12 financial literacy program in a six thousand student district.

Source: debtdiscipline.com

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In a world where virtual investments like crypto increasingly receive media attention for their volatility and uncertain futures, people desire to put their money into something stable and tangible.

Real estate has historically been one of those investments, but the barriers to entry have always been steep—until the emergence of real estate crowdfunding platforms. 

What is Real Estate Crowdfunding? 

With real estate crowdfunding, individuals can pool their money to fund a property investment. Crowdfunding platforms benefit investors by allowing individuals to combine a relatively small amount of money with others so they can collectively fund a real estate investment they otherwise wouldn’t be able to. 

The entity owning the property benefits from crowdfunding by receiving funds they otherwise wouldn’t through traditional investing. 

Real estate crowdfunding can include debt or equity investments. Equity investing occurs when an investor owns a property and receives income through things like rent and profits from selling the property for more than what they paid. 

Debt investing involves loaning money to real estate buyers. Those who loaned their money receive their investment in fixed increments, depending on the loan terms.

What Type of Investors is Real Estate Crowdfunding Best For?

Real estate investing was historically reserved for accredited investors, who, according to the SEC, must fulfill one of the following requirements to be considered accredited. 

  • You have an individual income of more than $200,000 per year in the last two years and expect to maintain the same income level in the current year.
  • You and your spouse jointly have an income of $300,000 per year in the last two years and expect to maintain the same income level in the current year.
  • You have a net worth exceeding $1 million, excluding your primary residence, either individually or jointly with your spouse.
  • You invest on behalf of an entity with at least $5 million in assets or a business in which all the equity owners are accredited investors.

In addition to being accredited, investors need the time, effort, and knowledge available to find a property, conduct all activities related to property management, and take on all the risks of a single property. 

While some real estate crowdfunding platforms do require individuals to be accredited investors, several do not. With these platforms, all investors, accredited or not, can invest in the relatively stable real estate market without the time, effort, and patience previously required.

You might be interested in investing in real estate via crowdfunding, but where do you begin? We’ve rounded up the top seven best real estate crowdfunding platforms in 2023, with some extra honorable mentions. We’ve found something for everyone’s specific financial needs, so read on to get started with your real estate investing journey. 

Table of Contents

Best Real Estate Crowdfunding Platforms for 2023

Fundrise is an ideal platform for those just getting started in the real estate crowdfunding space. It’s also ideal for people who want a platform to provide increasingly larger investment opportunities as they grow as investors. 

What You Need to Know:

  • Minimum investment: Depends on the chosen account level
    • Starter–$10
    • Basic–$1,000
    • Core–$5,000
    • Advanced–$10,000
    • Premium–$100,000
  • Recurring management fee: 1.0% annual fee (0.85% management fee plus 0.15% servicing fee)
  • Accredited investors only?: No
  • Property types: Check out their assets page to learn about available property types, including apartment buildings, residential and commercial properties.  

Pros

  • Variety of account levels offers something for everyone.  
  • Relatively stable investing options through private real estate, as opposed to REITs or stocks
  • Diversified portfolio strategy via the soon-to-be-released Innovation Fund

Cons

  • Minimum iPO investment is $1,000
  • Limited customer support services  
  • Lack of complete fee transparency

Fundrise prides itself on being an easy-to-use and low-cost option for those looking to break into real estate crowdfunding. Fundrise uses its commercial software to find and advertise properties to its investors. Utilizing its own software enables Fundrise to charge lower fees, leading to more money in investors’ pockets. 

Fundrise currently has 330,000 investors using its site, a total asset transaction value of $7 billion, and $194 million in net dividends already earned by its investors. The company’s investments are all tangible, private real estate investments, typically more stable than REITs and stocks tied to the stock market’s performance. Also, because the company is investor-owned, Fundrise allows its users to invest in its iPO, or internet public offering.  

While the platform offers something for the beginner up to the seasoned investor, it leaves much of the troubleshooting up to users, as Fundrise has limited customer service assistance. There’s no way to directly speak with a representative if you have an issue—only an email address and troubleshooting articles are on the website. Fundrise’s total fees for individual investments aren’t clearly stated on its website either.  

If you’re a green investor looking to break into the real estate crowdfunding space, Fundrise may be an excellent option. Check out our Good Financial Cents Fundrise Review for more information. 

RealtyMogul: Best for Single Property

If you’re an accredited investor looking to focus on finding and investing in the best single piece of property, RealtyMogul may be for you. 

What You Need to Know:

  • Minimum investment: 
    • $5,000 for individual property investments
    • $5,000 for REITs 
  • Recurring management fee: Usually 1.0%–1.25% annual fees
  • Accredited investors only?: Yes for single properties, no for REITS
  • Property types: Office, residential, single-family, and others 

Pros

  • Two REIT options to invest in focused on income and growth
  • Options for accredited and non-accredited investors
  • Trustworthy platform, evident by its A+ ranking with the BBB

Cons

  • Requires a high minimum investment. 
  • High management fees and limited fee transparency
  • No secondary market for investments, making them illiquid

RealtyMogul’s beginning was inspired by a realization from its founder, Jilliene Helman. While working in wealth management, Jilliene’s experience with her clients showed her three things: 

  1. Real estate investors were her wealthiest clients.
  2. There was no connection between her clients’ level of income and the amount of time they worked.
  3. Her clients prioritized real estate investing for its ability to earn them passive income. 

Thus, RealtyMogul was created to allow investors access to the real estate market and gain wealth through passive income strategies. 

RealtyMogul currently has over 245,000 investors, over $950 million in investments, and $5.5 billion worth of potential deals currently listed on its site. 

RealityMogul offers various investment options, including several property types and REITs available to accredited and non-accredited investors. Additionally, the platform’s Better Business Bureau’s A+ ranking provides the assurance investors need to know they are utilizing a trustworthy site. 

RealtyMogul’s initial investment costs are steep—investors will need $5,000 to join the platform. Additionally, the company’s fee structure isn’t easy to navigate and depends widely on the investment. RealityMogul’s investments are also relatively illiquid, meaning investors won’t see a return on their investments until maturity, which could take upwards of three to five years. 

Investors wanting to utilize a trustworthy platform to find their ideal single piece of real estate should look to RealtyMogul for assistance. Check out our review of RealityMogul to learn more. 

DiversyFund: Best for Building a Portfolio Over Time 

If you’re a non-accredited investor looking to grow your real estate investment portfolio gradually, DiversyFund may be right for you. 

What You Need to Know:

  • Minimum investment: $500 
  • Recurring management fee: Not available on website
  • Accredited investors only?: No
  • Property types: REITs (multi-family properties)

Pros

  • Relatively low minimum investment compared to other crowdfunding platforms. 
  • Good option for non-accredited investors 
  • Completely automated, making investing simpler

Cons

  • Few investment choices 
  • Long investment timeline of at least five years 
  • Lack of information on its website  

DiversyFund offers a wealth-building, diverse portfolio to average investors. With DiversyFund, you don’t have to be an accredited investor or have thousands of dollars to invest in real estate. With a minimum of $500, you can invest in a multi-family REIT using DiversyFund. 

The platform is completely automated, taking the guesswork out of investing in real estate. DiversyFund is great for everyday investors, especially those who aren’t accredited or don’t want to spend a lot of time learning the ins and outs of real estate investing.

DiversyFund does have a limited amount of investment options—it only offers multi-family property REITs. Additionally, investments take at least five years to see returns, which means those investing with DiversyFund should anticipate sitting tight for a while before realizing any gains from their investments. DiversyFund’s website also doesn’t include much information about how the company works. 

If you’re a non-accredited investor looking for a simpler way to access the real estate market and gradually grow your portfolio, DiversyFund may be for you. 

Roofstock: Best for Single Family Homes 

Roofstock is an ideal investment platform for accredited investors who want to invest in single-family properties. 

What You Need to Know:

  • Minimum investment: $5,000
  • Recurring management fee: Marketplace fee to buyers ($500 or 0.5% of the purchase price, whichever is greater)
  • Accredited investors only?: Yes 
  • Property types: Single-family rentals

Pros

  • Variety of ownership structures to invest in 
  • Investments monitored by property managers 
  • IRA investment option 

Cons

  • Minimum investment timeline of five years 
  • Only accredited investors 
  • No mobile app

Roofstock was founded to simplify single-family rental investing by making it as easy as possible for investors to enter the market.  

Roofstock offers its accredited investors a variety of ownership structures to invest in, including individual accounts, joint accounts, limited liability companies, corporations, revocable trusts, irrevocable trusts, and limited partnerships. All Roofstock’s assets are managed by an asset manager and a property manager, taking these burdens off the investor and saving time. Roofstock boasts its ability to allow investors the benefits of passively investing in real estate without the headache of property management. 

Roofstock enables investors to use an IRA as the title holder to their investment, a unique retirement investing strategy not offered by many other crowdfunding platforms. It also supports a 1031 exchange program, enabling investors to substitute one property for another while putting off paying capital gains taxes on the investment.  

Some downsides of Roofstock include the patience required to see any returns, which may take at least five years. The platform is also limited to accredited investors and doesn’t currently offer a mobile app. 

If you’re an accredited investor looking to break into the single-family home market, but you don’t want the headache of actually managing the property yourself, Roofstock can be a great option for you. 

Cadre: Best for Multiple Investment Styles

Cadre seeks to be a one-stop shop for all things real estate investing.

What You Need to Know:

  • Minimum investment: $25,000
  • Recurring management fee: Yes, but the amount varies by investment
  • Accredited investors only?: Yes
  • Property types: Apartment, hotel, industrial, and other properties 

Pros

  • Data-driven approach to finding investments 
  • Wide variety of properties to invest in
  • Greater liquidity than other platforms 

Cons

  • High minimum investment 
  • No 1031 exchanges 
  • Three to eight-year waiting period for investments 

Founded by Ryan Williams to offer investors greater access to commercial real estate investing, Cadre’s data-driven approach enables its platform to source the most attractive real estate investment options in the most sought-after markets in the United States. 

Cadre allows its investors to realize returns through a wide variety of investments. These include property deals, Cadre Funds (a portfolio diversification strategy), and the Cadre Secondary Market (which enables participants to buy and sell real estate shares).  

Cadre currently has over $5 billion in total transactions, a rate of return of over 27%, and over $338 million in gross distributions to investors.  

Cadre’s downsides include its high barrier to entry—accredited investors will need at least $25,000 to get started. There are also no 1031 exchange options, and property deals can take anywhere from three to eight years to see returns. 

If you’re an accredited investor with a lot of money to invest and want to see quicker returns than traditional real estate investing, Cadre may be the best option.

AcreTrader: Best for Farmland

Folks looking to invest in farmland should check out AcreTrader.

What You Need to Know:

  • Minimum investment: $15,000 – $40,000
  • Recurring management fee: 0.75% asset management fee 
  • Accredited investors only?: Yes
  • Property types: Farmland

Pros

  • Highly selective farmland offerings
  • High returns (7.0%–9.0%)
  • Self-directed IRA options for investing 

Cons

  • Unique risks associated with farmland
  • Investment periods of five to ten years 
  • Lack of liquidity 

AcreTrader’s mission is to provide direct access to farmland investments. AcreTrader chooses its farmland through an extensive underwriting process, enabling users to invest in the most sought-after farmland possible. 

Historically, farmland was a problematic asset to invest in due to extensive research, administrative tasks, and property management. AcreTrader’s tool eliminates those burdens, enabling investors to yield passive income returns with farmland.   

Using AcreTrader, investors purchase shares equal to 1/10 of an acre in the enterprise that owns the farm. That piece of land is chosen in a highly selective process to ensure that the investment will realize the 7.0%–9.0% returns AcreTrader boasts. AcreTrader also has self-directed IRA investment options for accredited investors looking to utilize AcreTrader’s platform. 

AcreTrader’s downsides include the inherent risks associated with investing in farmland, including the land’s subjectivity to adverse weather conditions, the seasonable nature of crops, and government policies that could affect land’s market value.

Additionally, farmland investments may take anywhere from five to 10 years to see returns, so investors in AcreTrader need to ensure they are committed to this platform for the long haul. Farmland is also a highly illiquid investment, so AcreTrader’s platform users won’t be able to opt for an early return. 

If you’re an accredited investor looking to invest in farmland but need someone to research which farmland to choose, AcreTrader may be a great platform for you.  

Fund That Flip: Best for Fix-and-Flip Investments

Fund That Flip is a unique platform for individuals looking to invest in residential house flipping.  

What You Need to Know:

  • Minimum investment: $5,000
  • Recurring management fee: 1.0%–3.0%
  • Accredited investors only?: Accredited investors only 
  • Property types: Single or multi-family residential real estate 

Pros

  • Up to 11% investment returns 
  • Very rigorous underwriting process
  • Offer bridge loans, allowing borrowers to get funding as quickly as five to seven days

Cons

  • House flipping is inherently risky
  • Minimum investment is a bit high 
  • Must be accredited 

Fund That Flip utilizes extremely highly selective underwriting, only accepted 6.0%–8.0% of all potential real estate investments. The chosen projects are managed by a seasoned team of redevelopers, so investors know that their projects have the highest chance of seeing a return. Fund That Flip boasts up to 11% returns for its investors.

Additionally, Fund That Flip offers bridge loans to its borrowers to help further fund redevelopment efforts. 

House flipping is inherently risky, but Fund that Flip reduces some of that risk by doing the underwriting and sourcing work itself. All investors must be accredited, and only 8.0% of loan applicants to this platform are approved, making it difficult for just anyone to join. 

If you’re a real estate investor looking to break into the house flipping market but don’t want to deal with the headaches of finding a redeveloper and a property to flip yourself, Fund That Flip may be a great option. 

Other Real Estate Crowdfunding Platforms to Consider

While we’ve mentioned our favorite real estate crowdfunding platforms, there are many other worthy sites to choose from. Here are a few of our honorable mentions: 

HappyNest

HappyNest prides itself on enabling everyone who wants to join the real estate market to do so. HappyNest’s investments are unique because they involve investing in net lease (triple-net) agreements. With these agreements, renters pay some or all expenses associated with using the property, including maintenance, insurance, and taxes. 

HappyNest can keep costs down and provide access to all investors. All it takes is $10 and a 0.04% monthly asset management fee—plus a willingness to wait at least three years—to see investment returns. 

CrowdStreet

Crowdstreet offers a variety of debt and equity investments in various property types, including multifamily, retail, office, industrial, and land. The minimum investment is a steep $25,000, and fees may be required depending on the opportunity. However, Crowdstreet prides itself on the ability to grant investors access to previously inaccessible real estate markets. 

PeerStreet

PeerStreet is a crowdfunding platform for real estate debt investing. Investors provide capital to borrowers in real estate, who pay interest every month on their loans. PeerStreet investors then receive a part of the monthly interest on the loan payments. There is a $100 minimum investment, with management fees around 1.0% of loan fees, but you must be accredited to participate with the platform. 

EquityMultiple

EquityMultiple’s unique value proposition lies in its team of experts, who have over $75 billion in transactions under their belt and provide asset management through the entire investment process. Their technology is also easy to use. 

This platform, reserved for accredited investing in commercial real estate, requires a minimum investment of $5,000. Fees for common equity investing are 0.5%–1.5%, and debt and preferred equity fees are 1.0%. 

Jamestown Invest

Jamestown Invest has over 80,000 investors and $13.2 billion in assets under management.  A platform for accredited and nonaccredited investors, Jamestown Invest requires a minimum of $2,500 to begin investing in its commercial real estate offerings, including office, retail, and mixed-use spaces in the United States. 

Bottom Line – Choosing the Best Real Estate Crowdfunding Site

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There are a host of real estate crowdfunding options for all investors, investment types, investment amounts, and accreditation statuses. Your personal investor profile and desired real estate investing outcomes determine the best real estate crowdfunding option. 

While each platform is different, they all create a more accessible real estate market. While investing always comes with a certain amount of risk, real estate investing has traditionally been considered more stable.

Historically, its barriers to entry were high due to relatively high property costs and the time and effort needed to find and manage a property. With crowdfunding platforms, those barriers are reduced, making the real estate market more accessible for investors. 

Best Real Estate Crowdfunding Companies

Company Property Types Minimum Investment Annual Management Fees Accredited Investors Only

AcreTrader Farmland $15,000 0.75% Yes

Cadre Apartments, hotels, industrial properties $25,000 Varies Yes 

CrowdStreet Multifamily, retail, office, industrial, and land $25,000 Varies Yes

DiversyFund REITs $500 Not available No

EquityMultiple Commercial $5,000 0.5%–1.5% Yes

Fundrise Apartment, residential, commercial $10 1.0% No

FundThatFlip Single or multi-family residential  $5,000 1.0%–3.0% Yes

HappyNest Pandemic and internet resistant businesses $10 0.04% (monthly) No

Jamestown Invest Office, retail, and mixed-use spaces $2,500 Varies No

PeerStreet Real estate debt $100 1.0% Yes

RealtyMogul Office, residential, single-family $5,000  Varies Yes for single properties; No for REITs 

Roofstock Single-family rental $5,000 $500 or 0.5% of purchase price Yes 

Have you invested in any real estate crowdfunding platforms? If so, what has been your experience?

Best Real Estate Crowdfunding Platforms FAQ

How should I pick a real estate crowdfunding platform?

First, determine if you are an accredited or nonaccredited investor. Next, decide how much money you’re willing to invest and how long you’d like it tied up. Using the above chart as a guide, choose a platform based on your specific criteria. 

What are the common costs and fees for real estate crowdfunding?

Real estate crowdfunding has several associated costs, including but not limited to the initial investment cost, account-opening fees, and asset management fees. Initial investments can range from $10 to tens of thousands or more.

Account opening fees usually fall within 0.25%–1.0%, and management fees can have a fixed rate of anywhere from 0.5% to 2.0%. 

What are the risks of real estate crowdfunding platforms?

Ultimately, crowdfunding platforms are tied to real estate assets with inherent risks. While platforms make it easier to search through properties, good investments are still challenging to find. Like anything online, there is a necessary amount of due diligence on the investor’s part to ensure that the platform is legitimate. 

What is the minimum amount needed to invest in real estate?

With crowdfunding platforms, individuals can invest in real estate for as little as $10, although most of these platforms require at least $500–$1,000 to get started. Check out our resource for ideas on investing in real estate with any budget. 

How can I invest in real estate with less than $5,000?

Some crowdfunding platforms allow you to invest less than $5,000 in real estate, including Fundrise, DiversyFund, and Jamestown Invests. In addition, you can use self-directed IRA funds or REITs to invest. Both options often enable you to invest less than $5,000. 

Source: goodfinancialcents.com