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Lightstone DIRECT

(All 50 States)

Lightstone DIRECT isn't really crowdfunding at all. It's a channel to partner directly with Lightstone, a $12B AUM real estate owner/operator that's been around since 1986 and is one of the largest private multifamily operators in the country.

What sets it apart for me is alignment: Lightstone puts up a minimum of 20% of the equity in every deal on the platform. These are single-asset multifamily and industrial transactions that Lightstone would pursue with its own capital anyway, and every asset is managed in-house from acquisition through operations. No marketplace middlemen, no blind funds.

If your rule #1 is to never lose money, investing alongside a sponsor with four decades of cycle-tested experience and real skin in the game is a reasonable place to start your diligence.

Lightstone DIRECT requires a minimum investment of $100,000 and is open to accredited investors only.

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EquityMultiple

(All 50 States)

I'm a fan of this platform for two reasons: (1) quality deals; and (2) the founder is an ex-Biglaw real estate lawyer. Given his background, I think EquityMultiple takes a conservative approach to the deals that make it onto the site.

This may lead to slightly lower deal volume compared to other sites but I believe that's due to their high standards and cautious vetting process. This fits with my investment philosophy where rule #1 is to never lose money

Full Disclosure: I currently have two investments on the EquityMultiple platform: an office space on the west coast occupied by a government tenant and a 100-unit apartment complex in Florida.

EquityMultiple offers debt, preferred equity and equity structuring on their platform.

EquityMultiple requires a minimum investment of $10,000.

The Best Real Estate Crowdfunding Sites

The JOBS Act continues to have an ENORMOUS impact on expanding the number of investments available to investors, thanks to making it legal to crowdsource funding for equity and debt investments. This has been readily apparent in the field of real estate investing, where successful real estate crowdfunding platforms have been enjoying success online with investors. Because investors can conduct due diligence through the platforms, invest by pressing a button, and track the results of their deals online, real estate crowdfunding companies have enjoyed immense success over the past few years.

For me personally, as someone who spent 10 years living in NYC, real estate crowdfunding made it possible to allocate a portion of my investment portfolio in real estate deals in a way that isn’t possible when you live in an expensive urban environment. I simply didn’t have hundreds of thousands of dollars to invest in local deals, but I desperately wanted exposure to leveraged real estate deals where I could reasonably expect to see double digit returns.

For example, in 2018 I purchased a small piece of a 235,661 square foot Class B suburban office building located on a 12-acre plot. It had a stable government tenant (the Department of Social & Health Services) that occupied most of the space but the building needed some renovation work to spruce up the 1984 interior. Once the renovations were complete, the team planned to achieve 100% occupancy of the property and eventually sell it to investors looking for stable cashflow.

Average Joe investors simply didn’t have access to those types of investment opportunities until the JOBS Act made them available on a widespread basis.

And it’s not just commercial office space that is available. Real estate crowdfunding platforms offer everything from fix-and-flip homes to multi-family apartment buildings to self-storage and car wash facilities. If it involves real estate, you can invest in it.

Best of all, the real estate crowdfunding platforms make it much easier to perform due diligence, since you can review the project sponsor and their past performance online, as well as the particular details of the deal.

The problem is that there have been dozens of companies that have entered and exited the real estate crowdfunding space over the past few years as they fight among each other for dominance in the market (RIP RealtyShares). So how do you find the top real estate crowdfunding sites? It’s pretty difficult actually.

I’ve been following the real estate crowdfunding space since it started in 2012. In addition to performing due diligence on the individual deals, I’ve also had the opportunity to meet with the founding teams of many of the platforms. I have either invested (or would invest) on all of the sites mentioned on this page and regularly review their offerings to identify investments that fit with my investment philosophy, asset allocation, and desired risk profile.

If you scroll up and review my list, you can see my personal thoughts on each crowdfunding site. Where possible, I try to relate my own personal experience with the site as an investor and explain where I think each crowdfunding marketplace sits in relation to the others. As the market grows in complexity, it’s helpful to understand which platforms specialize in which deals.

Typically, I look for the following qualities when reviewing deals available on real estate crowdfunding platforms:

  • Quality of sponsors (by far the BIGGEST variable)
  • Reputation among industry veterans
  • Reputation of platform founders (I get excited when I see a lawyer on the founding team)
  • My own personal experience on the real estate crowdfunding site as an investor

If you have any experience with private equity, you know that there’s an enormous world of private investment opportunities not available to the public. The JOBS Act continues to expand the investments available to the broader public and I’m excited to see where that takes us.