Passive real estate investing online means you put money into property deals – apartment buildings, rental homes, commercial offices, debt secured against real estate – and someone else does all the work. You don’t fix toilets. You don’t screen tenants. You don’t sign at closings. You get a quarterly distribution and a tax form.
This is not the same as buying a REIT ETF like VNQ in your Schwab account. A public REIT trades like a stock, swings with the S&P 500, and pays dividends. A passive real estate platform like Fundrise or RealtyMogul invests in private real estate that doesn’t trade on any exchange. The valuations move slowly. The correlation to stocks is lower. And the money is much harder to get back out.
We’ve been testing these platforms with our own money since 2018. This guide covers what works, what doesn’t, and the part nobody talks about – what happens when you try to withdraw.
What is passive real estate investing?
Passive real estate investing is buying a piece of a real estate deal that someone else operates. You’re a limited partner or a fund shareholder. The sponsor finds the property, buys it, manages it, and eventually sells it. You collect a share of the rent and a share of any appreciation when it sells.
The online version of this used to require a personal Rolodex of syndicators and a $50K-$100K check. The JOBS Act of 2012 changed that. Platforms can now raise money from retail investors over the internet, and minimums have dropped to $10 in some cases.
If you want a fuller breakdown of the differences between owning rentals yourself versus going passive, our active vs passive real estate investing comparison covers the tradeoffs in detail.
Accredited vs non-accredited: what you can access
The single biggest filter on what’s available to you is whether the SEC considers you accredited. The threshold: $200K individual income ($300K joint) for two years running, or $1M net worth excluding your primary residence.
If you’re not accredited, you can still invest. You’re limited to Regulation A+ offerings and crowdfunding regs that cap how much you can put in per year. Fundrise, RealtyMogul’s REITs, Streitwise, and Arrived Homes all welcome non-accredited investors. This is most of the market.
If you are accredited, the menu expands. You get access to individual property deals, 1031 exchange options, and higher-target-return funds. CrowdStreet is accredited-only with $25K minimums per deal. RealtyMogul’s 1031 exchange marketplace requires accreditation. The accredited side generally targets higher returns but with more concentration risk – one deal, one property, one outcome.
The four types of platforms
1. eREITs and diversified funds
An eREIT is a non-traded REIT sold directly through an online platform. You buy shares of a fund that owns dozens or hundreds of properties. Fundrise’s flagship real-estate fund is the dominant product in this category. RealtyMogul runs the Income REIT and Apartment Growth REIT. Streitwise runs a single dividend-focused REIT.
This is the most diversified, lowest-friction way in. Minimums run from $10 (Fundrise) to $5,000 (RealtyMogul REITs and Streitwise). Distributions hit quarterly. Read our full Fundrise review and RealtyMogul review for our test results.
2. Individual deal marketplaces
Instead of a fund, you pick a specific property. A 240-unit apartment complex in Austin. A medical office building in Charlotte. You commit capital to that single deal, hold for the sponsor’s planned hold period (usually 3-7 years), then get your share of the exit.
CrowdStreet is the biggest name here. Accredited only, $25K minimum per deal. Higher target IRRs (15%+ on many offerings), more risk, more work picking the right sponsor. Our CrowdStreet review walks through how to evaluate a deal listing.
3. Fractional single-family rentals
The newest category. Arrived Homes buys a single-family home, slices it into shares at $100 each, and you can own a stake in a specific house in Nashville or Boise. You see the actual property, the actual tenant, the actual rent. Distributions come monthly.
The appeal is concrete: you own a piece of a specific house. The catch is the holding period – typically 5-7 years – and the lack of any meaningful secondary market. Treat it as illiquid.
4. Debt platforms
You’re the lender, not the equity owner. Platforms originate short-term loans to property flippers or commercial buyers, and you fund a piece of the loan. Returns are typically 7-10% with shorter durations (6-24 months). You give up the upside of appreciation in exchange for predictable interest payments and first-lien security.
This is the closest passive real estate gets to behaving like a bond. Good for steady income, not for growth.
The liquidity warning nobody emphasizes enough
Here’s the part the marketing pages bury at the bottom. You can put money in instantly. Getting it out takes years.
We filed a redemption request with RealtyMogul more than two years ago. We are still not fully out. The Income REIT processes redemptions on a quarterly basis subject to available cash, and when redemption requests exceed what the fund can pay, they prorate. In a tough market for commercial real estate, redemptions stack up and the queue slows to a crawl.
This is not unique to RealtyMogul. Fundrise has redemption windows and quarterly limits too. Streitwise has a multi-year holding requirement before you can redeem without penalty. Individual deals on CrowdStreet have no redemption mechanism at all – you wait for the sponsor to sell the property.
Plan to lock up money for five years minimum. If you might need it sooner, this is the wrong asset class. Use a brokerage REIT ETF instead.
Tax treatment: 1099-DIV vs K-1
The tax form you receive tells you a lot about what you’re invested in.
eREITs send you a 1099-DIV in January like a normal stock dividend. Distributions get classified as ordinary income, qualified dividends, or return of capital. The Section 199A passthrough deduction often makes ordinary REIT dividends taxable at a 20% discount. Simple. Predictable. Compatible with TurboTax.
Individual deals and partnership structures send you a Schedule K-1. K-1s show up late (often March or later), are dramatically more complex, and may trigger state tax filings in every state the property sits in. Own a deal across five states and you may owe five state returns.
The upside of the K-1 route: depreciation flows through to you. Real estate generates large paper losses from depreciation, and those losses can offset your distributions, often making the cash you receive partially or fully tax-free in the early years. You eventually recapture this at sale, but the deferral has real value.
The fee stack
There are three layers of fees, and platforms vary on how much they disclose up front.
Annual management fees run 0.85% to 1.5% on most eREITs. Fundrise charges roughly 1% combined (0.15% advisory + 0.85% management). Streitwise charges 2% on the REIT.
Acquisition or origination fees are charged once when the platform buys a property. These come out of your invested capital before any of it hits a building. Typical range: 1-3% of the deal size.
Performance fees or promote kick in when returns exceed a target. The sponsor takes 10-30% of profits above a preferred return (usually 6-8%). On individual deals this is where most of the sponsor’s compensation comes from. On REITs the promote is smaller or absent.
Net it all together and your gross-to-net spread on a typical platform is 1.5-3% per year before the promote. That’s a real bite if returns disappoint.
The diversification case – and the limit
Private real estate has a low historical correlation to public equities. When stocks dropped 25% in 2022, private REIT valuations held up much better. That’s the case for owning some of this.
The case against owning too much: illiquidity, valuation lag (which can mask real losses), platform risk, and the hard-to-time exit. For most investors, 5-15% of investable net worth in passive real estate is the right ceiling. Going to 30%+ means tying up capital you might need before the platform is willing to give it back. We’ve seen what that feels like.
How to pick a platform
Match the platform to what you need. The shortlist:
- Starting with under $1,000: Fundrise. $10 minimum, broad diversification, the cleanest user experience in the category. They’ve also added Fundrise Pro (advanced allocation controls), iPO (Internet Public Offering shares of pre-IPO companies), and recently converted the Innovation Fund to a venture capital exchange product.
- $5,000-$25,000, non-accredited, want income: Streitwise or RealtyMogul’s Income REIT. Higher current yields, smaller appreciation upside.
- Want to own a specific house: Arrived Homes. $100 per share, single-family rentals.
- Accredited with $25K+ per deal: CrowdStreet for individual properties, RealtyMogul for 1031 exchange options.
- Skip: DiversyFund. They wound down their flagship Growth REIT in 2024. Not currently a competitive option.
Our first-hand tests
We’ve put real money into these platforms so we can write about them honestly. Here’s where it sits today:
- Fundrise: Started in 2018 with $5,000. Now over $20,000 across the flagship fund and the Innovation Fund (now VCX). Distributions have been consistent. Withdrew $2,000 in 2023 – took about 60 days to clear.
- RealtyMogul: Started in 2019 with $10,000 in the Income REIT. Filed redemption in early 2024. Still partial. The grind to get out has been brutal.
- Streitwise: Tested with $5,000 in 2020. Steady ~8% yield, not much else. Decent for the income piece.
- Arrived Homes: $1,000 across four properties in 2022. Distributions have run a bit below pro forma. Too early to call.
- CrowdStreet: Two deals, $25K each, started in 2021. One is performing, one is in workout. This is what concentration risk looks like.
Net result: real estate platforms can pay. They are not a substitute for the brokerage portion of your portfolio, and they are not an emergency fund. Treat them as a 5-10 year commitment and size positions accordingly.
Frequently asked questions
What is passive real estate investing?
Putting money into a real estate deal that someone else operates. You don’t manage tenants, repairs, or sales. You receive distributions and a tax form. Online platforms let you do this with minimums as low as $10.
How much money do you need to start investing in real estate online?
$10 on Fundrise. $100 on Arrived Homes. $5,000 for most established eREITs like RealtyMogul or Streitwise. $25,000 per deal on accredited-only marketplaces like CrowdStreet. You can start meaningfully for under $1,000 if you stick to the broad funds.
Are real estate investing platforms safe?
Safe in the sense that the established platforms are SEC-registered and audited. Not safe in the sense that you can lose money – property values fall, sponsors blow up deals, redemptions get gated. The platform itself going under is a smaller risk than the underlying real estate underperforming. Diversify across platforms and deal types.
Can you actually make money with Fundrise or RealtyMogul?
Yes, over a long enough horizon. Our Fundrise account has compounded since 2018 at a respectable rate, though performance lagged in 2022-2023 when commercial real estate broadly repriced. RealtyMogul’s Income REIT has paid consistent distributions, but appreciation has been modest. Expect 6-10% annualized total returns over a full cycle. Some years will be flat or negative.
How long does it take to get your money out?
Faster than expected on the way in. Much slower than expected on the way out. Our Fundrise redemption took 60 days. Our RealtyMogul redemption has run more than two years and is still incomplete. Individual deals lock up capital for the full hold period – typically 5-7 years – with no early exit. Plan accordingly.
Is real estate crowdfunding better than a REIT ETF?
Different tools. A REIT ETF (VNQ, SCHH) gives you instant liquidity, tight tracking to public markets, and zero hassle – but moves with stocks. Crowdfunding gives you exposure to private real estate with lower correlation to equities, but at the cost of liquidity and complexity. Use the ETF for the liquid sleeve of your portfolio. Use a platform like Fundrise for the patient money you can lock up for five-plus years. Most investors should own some of both.
