Real Estate Crowdfunding vs REITs: Which Is Better?

For most people, publicly traded REITs are the better choice: you can sell any trading day, a REIT index fund such as Vanguard Real Estate ETF costs 0.13% a year, anyone can buy, and the taxes come on a Form 1099-DIV. Single-property crowdfunding deals fit a narrower investor: someone who can leave money in for years, will vet each sponsor, can wait for a Schedule K-1 (the partnership tax form) at tax time, and, for deals sold under the SEC's Rule 506(c), is a verified accredited investor (someone who meets SEC income, net worth, or license tests). Platform funds such as interval funds (which buy back shares only at set intervals) and non-traded REITs (not listed on an exchange) sit in between: $1,000 gets you into Fundrise's Flagship Fund, but exits are limited and the yearly cost is 1.93% counting Fundrise's advisory fee. For how platforms work, see what real estate crowdfunding is.

How do REITs and crowdfunding compare?

A real estate investment trust (REIT) is a company that owns, and usually operates, income-producing real estate or real estate loans. Crowdfunding platforms sell both single-property deals, where you own a share of an LLC that holds one building, and funds that hold many properties. Platform funds include registered interval funds, such as Fundrise's Flagship Fund, and REITs sold under Regulation A, an SEC-qualified offering open to non-accredited investors, such as RealtyMogul Income REIT.

The Flagship Fund had $1.22 billion of net assets at the end of 2025; the Fundrise review covers the platform in detail.

How quickly can you get your money out?

• Listed REITs. VNQ trades on NYSE Arca, so you sell through a broker at the market price on any trading day.
• Interval funds. An interval fund buys back shares only through periodic repurchase offers on the schedule in its prospectus. The Flagship Fund makes them quarterly for 5% to 25% of its shares, says it is likely to offer only the 5% minimum, cuts each request proportionally when more shareholders want out than the offer allows, and may add a repurchase fee of up to 2%.
• Non-traded REITs. Buybacks are a program the REIT can stop; publicly traded vs non-traded REITs covers the broker-sold kind and their upfront fees. RealtyMogul Income REIT, sold through RealtyMogul under Regulation A, paused new investments in July 2025 and suspended its share repurchase program effective April 21, 2026. Its NAV was $6.79 a share at June 30, 2026, after raising $148.2 million by selling about 14.6 million shares, an average of about $10.15 each.
• Single-property deals. These are restricted securities with no market, and the SEC warns you may have to hold them indefinitely. Your capital may come back when the sponsor sells or refinances the property, but you could lose some or all of it; crowdfunding hold periods covers typical timelines.

Which one swings more in price?

Listed REITs show every change in price. A fund valued by appraisals reports a smoother line that can lag the market:

Both columns are yearly total returns based on NAV, from each fund's SEC filings. VNQ's worst quarter in the ten years shown in its 2026 prospectus was -24.11%, in early 2020. The Flagship Fund's prospectus says its private properties are appraised only periodically and that a new appraisal can move its NAV suddenly. That fits the pattern above: the fund fell far less than listed REITs in 2022 and more in 2023. Over the five years, the two compounded to similar results: about 4.6% a year for VNQ and about 4.0% for the Flagship Fund.

What do they cost?

• REIT index funds: VNQ's 0.13% is $13 a year on $10,000. REIT ETFs and mutual funds compares the main options.
• Interval funds: the Flagship Fund's 1.78% is $178 a year on $10,000: a 0.85% management fee, 0.74% of other expenses including 0.50% for marketing, and 0.19% of interest on borrowing. Fundrise's adviser also charges investors on its platform 0.15% a year ($15), for $193 in all.
• Single-property deals: the private placement memorandum (PPM) lists the sponsor's fees, which are paid from the deal's cash before distributions, and its promote, a share of the profit after investors receive their preferred return.

How are they taxed?

REIT dividends, including REIT income a fund passes through, arrive on Form 1099-DIV. IRS rules generally exclude REIT dividends from the lower tax rates for qualified dividends, so most are taxed as ordinary income. Qualified REIT dividends get a deduction of 20% of the amount under section 199A, and the 2025 tax law removed the date when that deduction was set to expire.

A single-property deal set up as an LLC taxed as a partnership sends each investor a Schedule K-1. A calendar-year partnership's return and K-1s are due March 15, and a partnership that files for an extension can send them later, which may push your own return onto extension. Your K-1 includes your share of the building's depreciation, which can turn a year with cash distributions into a tax loss. That loss is passive: it generally offsets only passive income, such as profits from other deals, and the rest carries forward. Those carried-forward losses are generally deductible in the year you sell your entire interest in the activity to an unrelated buyer in a fully taxable sale. The same rule applies if the partnership sells all property used in that activity under those conditions. The $25,000 rental loss allowance does not help, because limited partners, and anyone owning less than 10% of the activity, are not treated as actively participating. For more on K-1s, see tax implications of real estate crowdfunding.

Which should you choose?

Choose listed REITs, directly or through a low-cost index fund, if you can accept selling for less than you invested and any of these apply:

1. You want the option to sell any trading day. For money needed within five years, the SEC cautions against risky investments.
2. You are not an accredited investor and want the lowest cost.
3. You want one tax form and no K-1s.

Choose a platform interval fund or non-traded REIT if you want private properties for $1,000 or less and accept the exit limits: the Flagship Fund may buy back only 5% of its shares a quarter, and a non-traded REIT can suspend buybacks entirely. Before you buy, read the current prospectus or offering circular and the fund's latest reports on EDGAR for repurchase limits, suspensions, and NAV changes.

Choose single-property deals if you are accredited, can leave the money in for the deal's full hold period, and have passive income to absorb K-1 losses or can wait to use them. For each deal, get the sponsor's results on completed deals and look up the offering's Form D on EDGAR before you commit.