Keepin' It Real  

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

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.


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