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The Best REITs for 2023 – Compare Roots vs Fundrise vs Arrived Homes

Tue, June 06 2023 Daniel Dorfman

Investing in real estate can be a great option to diversify your portfolio, but getting started can be difficult. Companies like Roots, Fundrise, and Arrived make real estate investing accessible and easier to manage via their online private REIT platforms. All three platforms offer low minimum initial investment options and are open to non-accredited investors. So the decision ultimately comes down to your individual goals and preferences.

If you're looking for the most property types, Fundrise might be the better option for you.

If you're an experienced investor looking for individual properties to place bets on, or really like the vacation rental market, Arrived might suit you better

If you are looking for less fees and to invest in real estate that has a unique, positive social impact on the renters, Roots is for you.

All three platforms offer a great way to invest in real estate without the hassle. Ultimately, it's crucial to do your research, understand the risks involved, and seek professional financial advice before investing your money. Below you'll find an in-depth review of Roots, Fundrise, and Arrived, highlighting their differences across 5 dimensions: property type, minimums, fees, liquidity and average returns.

Property Type

Fundrise and Roots offer the ability to invest in a portfolio of assets, while Arrived allows you to invest in a single asset in a fractional capacity. While preferences may vary, we recommend that you read about other REITS and the citations below to assist you in your research before you make an investment.

Fundrise

Fundrise offers three property types: multifamily apartments, industrial properties, and single-family rentals. Like Arrived and Roots, these properties are electronic real estate investment trusts (eREITs), similar to traditional REITs, but offered through an online platform.

Arrived

Arrived offers two investment properties: rental homes and vacation rental properties. The key difference is that you are investing in a percentage of a single property that you choose, instead of a portfolio of assets.

Roots

Roots offers one investment option, a portfolio of single family rental properties. Roots has a unique model where the tenants of the properties get invested in the fund if they are good renters (pay rent on time, take care of the property, and are a good neighbor). This has led to less vacancy, lower turn costs, and higher returns for its investors, as you’ll see below.

Minimum Investments, Fees & Liquidity

Arrived, Fundrise and Roots allow non accredited investors to invest with a low minimum, but when it comes to fees and liquidity Roots, Fundrise, and Arrived differ significantly.

Fundrise Fees and Minimum Investment

With Fundrise, you can start with as little as $10, and they charge a 1% annual asset management fee, a 0.15% annual advisory fee, and a 0.85% annual investment fee. It’s also important to note that Fundrise is intended to be a long-term, illiquid investment. They offer the ability to withdraw your investment at the beginning of each quarter, but there is an approximate penalty of 1% of your total share value if it’s liquidated before 5 years.

Arrived Homes Fees and Minimum Investment

Arrived allows you to invest with a $100 minimum, and charges a one time sourcing fee of 3.5% of property purchase price and a 0.15% AUM fee of property purchase price on a quarterly basis for long term rentals. Arrived also has separate fees for vacation rentals and property management. At this time, there is no ability to liquidate early, but it has been reported that they are working on a program. It is expected that when this is available, there will be a six-month holding period on withdrawals.

Roots Fees and Minimum Investment

Roots allows you to invest with a $100 minimum. Unlike Fundise and Arrived, Roots has no start-up fees. Roots also developed a program that allows investors to cash out with no penalty fees after one year of your first investment. Investors also have the option to reinvest or cash out their distributions at the end of each quarter. If you need to liquidate your funds before one year, there is a 6% early withdrawal fee.

Performance

All platforms have delivered returns to their investors with Roots leading the way.

The Roots Fund had an average annual return of 18.25% and has returned 36% from July 1, 2021- July 1, 2023.

Fundrise boasts an average income return of 5.29%.

Arrived’s average annual return is around 8.4%.

However, it's crucial to note that past performance is not a guarantee of future results. There are always risks in investing, and it's essential to understand them before investing your money. Want to learn more about REITs? Read this article comparing BlackStone, YieldStreet, and Roots.

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