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Real estate investing used to be reserved for the wealthy. You could only enter into the game with a hefty lump sum of money for a down payment.
And the process of actually finding the property was mind numbing and time-consuming, filled with spreadsheet after spreadsheet of numbers to determine if a property was worth it.
Today, you can open an app, transfer funds from your bank account, and become a real estate investor in minutes.
With platforms that range from crowdfunding to actually allowing you to purchase fractional shares of a home, the real estate investing space is expanding like never before. But with hundreds of real estate investing apps available, how do you know which is the right choice?
Here’s our list of the best real estate investing apps for beginners to get started.
In this article, we’ll discuss:
- How we chose the top real estate investing apps
- Fundrise
- Arrived Homes
- DiversyFund
- Groundfloor
- Honorable mentions: AcreTrader and Bigger Pockets
How We Found the Best Real Estate Investing Apps for Beginners
In compiling this list, we only looked for companies that:
Accept Non-accredited Investors
Accredited investors have met certain criteria of income, net worth, or asset size (read: they’re rich) and are free to trade unregistered securities (read: securities that aren’t registered with financial authorities).
And while there are plenty of real estate investing options available to accredited investors, we recognize that those aren’t super approachable to the average joe.
So when we say these are the “best apps for beginners,” we mean you, the beginner who doesn’t have tens of thousands of dollars or more to throw down to get started.
Offer Instant Diversification
The number one perk of getting some real estate holdings is to build a more well-balanced portfolio. Adding diversification means expanding your holdings into various types of investments and sectors.
For example, if you currently invest 100% of your assets into the stock of your current employer, you’d be in quite a pickle if the company suddenly tanked.
But if you instead diversify by adding bonds, sector-specific ETFs, or real estate holdings, you’re not at such a steep risk of losing everything if a single company or sector were to tank.
Each of the following companies is helping investors diversify through the use of REITs, eREITs, funds, or ownership of properties in an LLC.
A REIT is a real estate investment trust. And that’s a fancy way of saying a company that owns a lot of income-producing real estate. You buy shares of REITs like you’d buy stocks, EFTs, or mutual funds.
So think of REITs and eREITs (a Fundrise specific term) as a lower-risk real estate investment tool that enables you to earn dividends (a piece of the company’s profit returned to shareholders).
Have Reasonable Minimum Investments
High down payment requirements are just one reason why real estate investments haven’t been historically mainstream.
However, we know you probably don’t have a boatload of money to dump into a real estate investment, so these apps allow you to dip your toe in the water with less than $10,000.
Offer Purely Passive Income
Real estate investing has traditionally come with the allure of being a passive-income earning asset. And that means once you perform the initial work of obtaining that investment, the money flows in regularly with little or no active effort.
Each of the following companies offers ways to earn passive income wherein you put in the cash investment, and they do the work to deliver you returns without lifting a finger.
App 1: Fundrise
Best for: Long-term investors willing to do research
Fundrise is using technology to bring high-quality real estate investments to the average person. And they’ve certainly done a great job of removing middlemen and high net worth requirements that prevent many everyday investors from getting into real estate in the first place.
Fundrise leans into private real estate, which they claim offers greater stability and income than publicly-traded REITs or stocks. And with many funds to choose from (like eREITs, eFunds, or Interval funds), it’s up to each investor to assess the risk and perform due diligence before choosing a portfolio.
Fundrise keeps fees low with a .15% annual advisory fee and a .85% asset management fee.
That means you’ll pay 1% in fees to invest with Fundrise or $10 for every $1,000 invested. All things considered, and when you factor in anticipated returns, that’s a pretty fair price to pay.
The best part is you can start using Fundrise for as little as $10. But more features are available to those in higher investment tiers, with Fundrise claiming the most popular option is a $5,000 initial investment.
Fundrise asks all investors to consider their shares on a multi-year (5+) time horizon.
That said, if you would need to liquidate shares early, it won’t be guaranteed and could cost you in fees to get your money out of funds like the highly illiquid private eREITs.
Pros
- Low initial investment of as little as $10.
- Easy to use app.
Cons
- Removing investment early could cost you up to 3% in eREITs and eFunds at certain service levels.
- Fundrise may charge additional fees for asset development or liquidation that aren’t clearly posted or understood.
Arrived Homes
Best for: Investors who want to own a rental property but not deal with day-to-day tenant management.
The Arrived Homes platform allows investors to purchase shares in an individual rental property for as little as $100. As an investor, you’ll then receive your piece of the property’s dividends, like rent, and appreciation paid out quarterly.
Appreciation is simply the increase in value of the property over time. Especially in a hot market, the price may go up significantly since your initial investment, so you’ll definitely want to get a cut of that change in value.
Compared to other investment options, Arrived fees are slightly higher. There’s a 1% annual management fee charged to all investors.
But investors also need to cover 8% for their home’s property management and a one-time sourcing fee to cover the cost of purchasing the property. So all in, you’re looking at a pretty penny to get started, which could cut into profits, especially if you’re only looking to invest a small amount.
Pros
- Low minimum investment of $100.
- No need to maintain a property or deal with tenants.
- No personal liability since assets are placed in an LLC.
Cons
- Higher fees to cover property management costs could eat up returns on smaller investments.
- No mobile app, but the website is mobile-friendly.
DiversyFund
Best for: New investors with a long time horizon
DiversyFund is out to make real estate investing approachable and available to the everyday investor. They do this by eliminating the net worth restrictions enforced by some larger wealth management firms.
As a result, investors can get started for a low minimum investment of just $500.
The differentiator for Diversyfund is that it owns and manages properties itself. So it doesn’t act as the middle man connecting investors with projects, which has allowed them to do away with management fees.
But investors will want to be cautious about using Diversyfund for investments if they need access to the money in the near future. This is because the projected value-add cycle (which includes capital raise, purchase, renovation, and sale) of Diversyfund’s projects is 5 years.
All dividends are immediately reinvested during that time, and you won’t see returns until properties sell.
Pros
- Relatively low initial investment of $500.
- No management fees.
Cons
- Tough to get money out due to illiquid investments.
- Limited portfolio of investment options with only one Growth REIT at present.
Groundfloor
Best for: Investors seeking short-term investment horizons
Groundfloor is a crowdfunding platform that pulls together investments to purchase properties, fix them up, then flip them for a profit. When you hear crowdfunding, you may think of a platform like Kickstarter. And that’s exactly what Groundfloor does.
It takes a lot of small capital investments from a large number of people and uses them to pay for the purchase, flip, and eventual sale of real estate assets. In turn, Groundfloor hopes to pay back that initial investment plus more, encouraging investors to keep coming back.
With short-term loans for 6, 9, or 12 months, Groundfloor is one of the best options for real estate investors who are looking for a quicker return on their cash.
With a minimum investment of only $10, Groundfloor is approachable to all investors. And with no management fees and investments that return north of 10% on average, there are very few reasons not to give Groundfloor a try.
Pros
- Low account minimum of $10 to start.
- No management fees.
- Short-term loans mean investment returns may happen faster than with other options.
Cons
- No mobile app, but the website is mobile-friendly.
Honorable Mentions
AcreTrader
Best for: Hands off accredited investors looking for alternative passive income deals
We have to give a shout to AcreTrader as a really cool real estate investing option. While the platform is only open to accredited investors at this time, they’ve expressed interest in opening up the platform to everyday traders. Still, as of writing, no official plan is in place.
Acretrader puts a new spin on real estate investing by offering diversification into farmland. And with average annual returns of 11%, farmland seems like an exciting option for investors at any stage.
With Acretrader, you’ll make money in two ways, first from the increase in value of the land, then from rent payments from farmers who lease the land to raise crops.
Minimum investments vary, and projects are typically listed weekly, so investors looking to use this app will need to keep an eye out on availability and be ready to invest when a good option becomes available.
BiggerPockets
Best for: Investors who are hungry for more information before getting started.
While you can’t actually invest in real estate using the BiggerPockets app, it’s a treasure trove of information for beginner investors. For example, you can use calculators to estimate rent and run property analyses if you’re looking for a hands-on investment in your local area.
And with access to community forums that have over 2 million members, you can easily find the answers you’re seeking from a group of knowledgeable and like-minded individuals.
In addition, BiggerPockets has a database of some property listings all throughout the country, making it a one-stop-shop for all of your real estate investing needs!
The Bottom Line
Real estate investing can offer instant diversification to any investor portfolio. And more options are cropping up every day, allowing beginner investors to get started at a low cost. However, before you download any real estate investing app, be sure to think about:
- How much you plan to invest: Take account minimums into consideration and whether you plan to make recurring purchases or a one-time lump sum investment.
- Your investing horizon: If you plan to need your money back within 1-3 years, a crowdfunding platform might be a better option than a company buying, flipping, and selling properties over a multi-year contract.
Passive income through real estate is a wise addition to your portfolio, but be sure you’re in a good place financially before you commit.
As with any other investment, real estate is volatile, and that means always being cautious to only invest what you’re able to lose.
