Free trading apps, a booming financial market, and a COVID-19 lockdown from which we are only now just emerging, like benumbed creatures out of Rainer Maria Rilke’s “bright unbound forest” – all recipe for a tremendous surge in stock trading popularity. And while investing in stocks, bonds, and electronically traded funds (ETFs) becomes ever more popular among mom-and-pop types, real assets are being forgotten.
Real assets include precious metals, land, equipment, natural resources, and real estate. Real assets are worth including in any portfolio, if only for the sake of diversity. Due to their relatively low correlation with financial assets, real assets assure that your portfolio is safe against any turbulence world markets may experience.
Real estate is our go-to when it comes to branching out into alternative assets. Stocks tend to increase in value more quickly than real estate, but this is no cause for alarm. What real estate gives you is steady performance that slightly outpaces the rate of inflation. There’s a reason why Gallup’s 2020 Economy and Personal Finance survey found real estate to be the most popular investment choice for Americans as of 2013.
The issue with real estate has always been accessibility. But trading applications like Roofstock and Fundrise have changed the game, making the process of investing in commercial and residential properties just as easy as common stocks. Modest Money’s Bob Haegele calls both platforms “great opportunities for people who want to invest in real estate”. But what are the real differences between them?
Roofstock and Fundrise are in actuality quite different programs. Roofstock’s main service allows private investors to directly own properties. On the other hand, Fundrise is more of a crowdfunded operation with a manageable initial investment of $500. In effect, different strokes for different folks. Roofstock vs Fundrise – a rivalry at its finest.
But which program is right for you? Let’s take a closer look at these industry leaders.
Roofstock – Own Your Property
Founded by magnates Gary Beasley, Gregor Watson, and Rich Ford, Roofstock has a singular goal: to bring the purchase of rentable, single-family homes to the common investor. By providing clients with research, analytics, and insights, Roofstock helps the most tepid of investors dive deep into the world of real estate without fear of blowback.
Though Roofstock is sometimes lumped in with other crowdfunding ventures, it’s really not the same. That’s because with Roofstock you own properties directly rather than pooling your money together with other investors. Roofstock does offer a crowdfunding option, called Roofstock One, that allows you to buy shares in rental homes.
Fundrise – Rise Above the Ranks
Unlike Roofstock, Fundrise prides itself on its crowdfunding DNA. A Washington-D.C. based company founded in 2010, Fundrise is often hailed as the first company to crowdfund investment into real estate ventures. Founders Ben and Dan Miller saw an opening in the market, and they went for it, gung ho in their enthusiasm.
With low minimum investments and a simple, user-friendly application, Fundrise is on the forefront of democratizing real estate investment.
Roofstock vs. Fundrise – Which Platform Wins?
As always, there is no clear-cut winner when comparing notable investing platforms. Each has its own pros and cons, and it’s hard to suggest one over the other to the average investor. The fact is it all depends on what you are looking for in real estate investment.
With Fundrise, users are likely to pay more fees in the long run, but the minimum investment is a mere $500, which is likely to appeal to those with little starting capital.
On the other hand, Roofstock allows investors to directly own properties, but the initial investment is quite steep.
Both options give your portfolio much needed diversity, and are good ways of bringing in supplemental income and establishing long-term growth.