In this post, we cover some of the best Fundrise alternatives in Canada.
Fundrise is a US-based real estate investing platform and one of the pioneers of online real estate crowdfunding.
But is it available in Canada? And what are some of the other real estate crowdfunding platforms available in Canada?
Read on to find out…
Is Fundrise available in Canada?
Unfortunately, Fundrise does is unavailable and does not operate in Canada for now. There are also no public timelines or information for when or if the company will start operating in Canada.
You need to be a U.S. citizen or permanent resident that is aged 18+ and currently living in the US to invest in Fundrise.
Luckily, there are a few home-grown Canadian alternatives to Fundrise worth checking out.
We’ll cover them in detail below.
What is Real Estate Crowdfunding?
Real Estate Crowdfunding makes it easy for several individuals to pool their funds and co-invest in one or more properties that they would otherwise not be able to invest in individually.
With real estate crowdfunding, anyone can start investing in real estate with a few hundred dollars or even as little as the cost of a cup of coffee!
Some of the benefits include:
- Shared risk: Co-invest with other investors to share and ultimately minimize risk
- Low Minimums: Start investing with little sums
- Diversification: Invest small amounts in several opportunities
What is Fundrise?
Fundrise is a real estate investment platform that was founded in 2012. The basic idea behind their offering is to “use technology to make high-quality real estate investments available to everyone at a low cost”.
It provides a low-cost platform that allows an everyday investor to invest in diversified and “investment quality” assets that are ordinarily only available to high-net-worth individuals and corporations.
As of the time of writing, Fundrise has more than 170,000 active investors and has paid out $124+ million in net dividends.
One of the key features of Fundrise is that you don’t have to be an accredited investor to use the platform. The minimum investment amount starts at just $10 for the Starter account and as high as $100,000 for the Premium tier.
That means, there’s something for everyone!
Each of the account types gives you access to different funds and investments.
Benefits of Fundrise
- Start investing with as little as $10
- Invest using individual, joint, trust or even IRA account
- Easy access to well diversified and commercial real estate
- Low investment fees
- You can invest through 401(k)
- Your investment is not liquid, though you may be able to liquidate your investment before maturity. This isn’t guaranteed though
Alternatives to Fundrise in Canada
Below, we’ll cover 4 real estate crowdfunding companies that are worthy alternatives to Fundrise for Canadians and 2 other alternatives for getting exposure to real estate.
1. addy Invest
addy is a relatively new real estate crowdfunding platform in Canada. It was founded in 2018 and allows its users to invest in real estate opportunities across the country.
Though new, addy is a good alternative to Fundrise in Canada.
You can start investing with as little as $1 and they allow you to choose the specific property you wish to invest in – unlike Fundrise where you can only invest in their funds and not specific offerings.
But your funds are diversified with Fundrise since your capital goes into a pool of properties.
addy lists each property on its website where users can read the offering documents and invest in the deal if they like the numbers. The capital raised is then invested along with other investors to acquire or develop the property.
- Invest with little cash starting with $1
- Get started in a few minutes
- Ability to choose which deal you want to invest in
- Maximum investment of $1,000 per property for unaccredited investors
- Investments are not liquid
- Relatively new so performance data are unavailable
- Your investments are not diversified
Get $25 cash bonus when you sign up using this addy referral link.
Learn more: addy referral code
Another real estate crowdfunding platform that is a Fundrise alternative in Canada is NexusCrowd.
NexusCrowd was founded in 2015 as Canada’s first online platform that allows accredited investors to co-invest in real estate opportunities along with institutional partners.
Since then, they have raised more than $9 million for 13 deals with total property value above $410 million.
Unlike addy and Fundrise, the minimum investment amount at NexusCrowd is $10,000. This puts it out of reach for many people. Also, it is only available and open to accredited investors.
According to NexusCrowd, they perform due diligence on each partner they work with. And only projects that are already 50% funded are presented to their users.
NexusCrowd is regulated and registered as an Exempt Market Dealer in Alberta, British Columbia and Ontario.
- Users can choose which property to invest in
- Lower risk since projects must be 50% funded before they invest
- Access to professional managed and institution led projects
- Higher minimum investment amount
- Only available to accredited investors
- Investment is into individual properties so diversification is limited
- Illiquid investment
Fundscraper was founded with the goal of “empowering Canadian investors to access institutional quality deals and smart tools designed to grow their wealth”.
It is a digital real estate platform that lets its members invest in quality real estate opportunities with as little as $5,000.
They’ve managed to grow their platform to over 7,500 members who have invested more than $420 million in several projects over the years.
Real estate opportunities featured on Fundscraper typically have an average annual return 7-12%.
Like NexusCrowd, Fundscraper is registered as an exempt market dealer in Ontario and other Canadian provinces.
- Extensive selection: choose an opportunity that meets your risk appetite
- Tax-advantaged: Invest using your TFSA, RRSP and so on
- Low fees and 100% digital platform
- High minimum investment
- Illiquid investments
RealStarter is another Canadian real estate crowdfunding platform that connects investors to developers.
The investments are capped at $1,500 per project and the company operates in a few provinces.
At the time of writing, their site is down and it is not clear if they’re still operating.
Depending on your investment objectives, investing in Real Estate Investment Trusts (REITs) is another smart alternative to Fundrise for Canadians.
REITs are companies that own, finance or operate income-generating real estate assets. They can be public entities that are traded on a stock exchange or private with their units not available to the general public.
There are several REITs in Canada, many of them with years of excellent and commendable returns to their investors.
A few of the biggest REITs in Canada include:
- Canadian Apartment Properties REIT
- Choice Properties REIT
REITs are also an excellent choice for an investor looking for regular cash flow and high returns. By law, REITs are required to distribute almost all their income to avoid taxation.
That means you can count on consistent high monthly income when you invest in an individual REIT like Canadian Apartment Properties REIT, Choice Properties REIT and Killam Apartment REIT, or in REIT ETFs like the ones below.
- Vanguard FTSE Canadian Capped REIT Index ETF (VRE)
- iShares S&P/TSX Capped REIT Index Fund (XRE)
- BMO Equal Weight REITs Index ETF (ZRE)
Another plus for this approach for investing in real estate is that you can easily buy REITs from your existing bank or online brokerage.
Benefits and Pros of REITs
- They are professionally managed and operated
- Provide consistent and high cash-flow to investors
- Access to a diversified real estate portfolio with little money
- More liquid compared to buying real estate directly
- You can’t choose the individual asset to invest in
- If public, your investment is subject to market fluctuations
6. Broad Market ETFs
Finally, investing in a broad market ETF that invests in companies from all sectors of the economy is another alternative to investing in real estate crowdfunding offerings.
Like the REITs above, you can easily buy them on a stock exchange through your brokerage.
And investors have several options when it comes to the investment strategy they want to pursue.
That means, you can go with a growth-oriented ETF or an income-generating ETF. Alternatively, you can keep it all simple by investing in an asset allocation ETF.
Depending on your risk appetite, you can go with an all-equity option like VEQT, conservative (20% equity, 80% fixed income) or stay somewhere in the middle.
Should you invest in Fundrise Alternatives for Canada?
As an investor in these relatively new real estate crowdfunding companies, you should know and always remember that they are very illiquid and have few years of performance records.
With publicly listed REITs, you have access to their financial performance data and can easily sell on an exchange if you need your funds.
This is generally not the case with Fundrise, NexusCrowd and the other alternatives for Canadians.
The bottom line is: only invest a small portion of your portfolio in any unlisted investment including private REITs.
Also, consider your risk appetite and your overall financial and investment objective before putting money in these illiquid investments.
Fundrise may not be available in Canada for now but there are several other options to choose from.
If you’re ready to add to start investing in real estate passively, one of the Fundrise alternatives covered in this post are a great place to start.
Willow is another real estate investing platform that’ll be launching soon. They are building a platform that lets Canadians buy and sell individual properties. Visit their website to join their waitlist.