Real Estate Crowdfunding vs. Real Estate ETFs
- For full report, visit Seeking Alpha!
- Promising efficient and low-cost access to private market real estate, more than 100 online real estate crowdfunding platforms have emerged over the last decade, raising billions of dollars from investors.
- Fundrise and other real estate crowdfunding firms have begun to offer online non-traded "eREITs" marketed primarily to younger investors as a better alternative to real estate ETFs.
- Both FINRA and SEC have issued warnings about non-traded REITs, noting their high fees, lack of liquidity, “dividends” coming from return of capital, conflicts of interest, and lack of transparency.
- Beneath a slick website and marketing materials, these "eREITs" are just your average highly-levered and conflict-ridden non-traded REIT. To be fair, Fundrise spells out these risks on their offering documents.
- While we love the concept of making private real estate more accessible, these firms make misleading claims when comparing their inefficient and high-fee nontraded REITs to low-cost real estate ETFs.
