Fractional real estate platforms enable investors to acquire shares in different kinds of real estate assets, reducing the capital needed to start investing.

Generally speaking, there are two main types of fractional real estate platforms:

1. Equity investment platforms: Purchase shares in rental properties to earn returns through appreciation and tenant rent payments.

2. Debt investment platforms: Instead of investing directly in a property, purchase shares in the loan used to acquire it and earn returns from borrower payments.

The right investment platform for you will depend on your investment strategy, risk tolerance, and several other factors. However, based on our experience as both real estate investors and private lenders, we believe debt investing is often the better option for many investors because:

• Real estate debt is safer: Debt investors have the first claim on a property’s sale proceeds, protecting them from market downturns, while equity investors (or borrowers) are paid last. For example, if you invest in a $1MM loan for a $1.2MM property and the property’s value drops to $1MM, you’d recover your full investment while borrowers absorb the loss.

• Real estate debt offers fixed, reliable returns: With rental properties, returns depend on property appreciation and rental income, both influenced by market conditions. In contrast, real estate debt offers returns based on fixed interest payments, unaffected by market fluctuations.

• Short-term real estate debt offers higher annual returns: Short-term loans typically yield higher annualized returns than long-term rentals. Interest rates on short-term loans range from 10% to 14%, while rentals historically return about 7% annually.

• Real estate debt has a shorter investment horizon: Short-term loans typically have terms of 6 to 18 months, allowing investors to receive their principal sooner and reinvest more frequently. In comparison, rental properties take 5 to 10+ years to appreciate, locking up your investment longer.

We’ve put together this guide on the best real estate investment platforms.

First, we’ll dive into our real estate debt investment platform, Constitution Lending, and how we’ve delivered annualized returns of 10% to 14% to investors while protecting their capital against market and default risk.

At Constitution Lending, we make it easy for investors to gain fractional ownership of real estate loans starting at just $1,000. Sign up for an investor account to explore our investment options.

Signs of a Good Fractional Real Estate Investment Platform

Here are six characteristics we recommend new investors consider before investing with a fractional real estate platform:

1. Do they invest alongside you? Many investment platforms act as brokers, connecting sellers with fractional investors, but we recommend avoiding these. They typically have no stake in the featured loans and may not conduct rigorous quality checks. Instead, choose a platform that invests its own money in the featured loans, aligning its interests with yours.

2. Do they offer payment guarantees? Investors often worry about missed payments from borrowers or tenants. We suggest opting for an investment platform that offers payment guarantees, covering missed payments out of their own pocket to ensure steady cash flow throughout the investment term.

3. What are the annual returns? Evaluate the loan agreement's interest rate and repayment schedule before investing, as this represents your returns. The best short-term real estate loans typically yield 10% to 14% annually.

4. Do you hold the primary claim on the property? We recommend choosing an investment platform where you’re paid first, as this insulates you from losses in the property’s value. In most loan structures, debt investors are prioritized over borrowers.

5. What is the minimum investment amount? Consider how much capital is required to start investing. Some platforms let you start with as little as $1,000, while others require $10K or more.

6. What is the investment term? The investment term determines how long your principal investment will be tied up. Short-term loans typically offer a 6 to 18-month term, while real estate investors typically have to wait 5 to 10+ years for the investment property to appreciate in value.

1. Constitution Lending

First-lien real estate loans yielding between 10% to 14%

Constitution Lending is a private money lender based in Connecticut, specializing in short-term commercial loans such as fix-and-flip loans, bridge loans, and construction loans for professional real estate investors.

Through our investor platform, debt investors can purchase fractional shares in these real estate loans. Our short-term loans offer interest rates between 10% and 14%, which are notably higher than traditional real estate investments.

Additionally, thanks to the quality of our loans and the borrowers we lend to, our investors have never incurred a principal loss.

This is what investors say about our real estate debt options:

Here’s how we approach the six factors mentioned above:

Factor #1: We are invested alongside you

We fund every real estate loan on our platform with our own capital, meaning we are invested alongside you. This commitment ensures our interests align with yours.

We exclusively originate safe loans by lending to borrowers with strong repayment histories, high credit scores, extensive real estate experience, and large equity cushions. This gives investors confidence, knowing they’re investing in high-quality real estate loans.

In contrast, real estate crowdfunding platforms that merely connect sellers and fractional investors don’t offer this level of assurance. They earn commissions and fees for attracting investors, without being incentivized to prioritize high-quality investments. As a result, these platforms often feature a number of poor investment options.

Constitution Lending stands apart from other real estate platforms by offering loans with an LTV of 75% or less, giving investors significant downside protection.

LTV (loan-to-value) compares the total loan amount to the property value. For instance, a $500K loan used to purchase a $1MM investment property results in a 50% LTV. The lower the LTV, the safer the loan, thus giving investors a larger borrower equity cushion to protect against market volatility.

With a 75% LTV loan, the property could lose up to 25% of its value — an unlikely scenario — and investors would still recover their capital. Direct real estate investment doesn’t offer this protection, as the borrower would absorb the full 25% loss.

Factor #2: Our loans include a payment guarantee feature

We offer a six-month payment guarantee on all our loans. If a borrower stops paying, we cover the interest payments for 6 months while we foreclose and recover your principal through the property sale. 

You don’t have to worry about borrower defaults or missed payments.

That said, defaults are rare. Thanks to the quality of our borrowers, our default rate is under 2%, half the national average of 4%.

Factor #3: Interest rates on our short-term loans range from 10% to 14%

The short-term real estate loans on our platform offer interest rates between 10% and 14%, providing investors with higher returns compared to traditional rental properties or the stock market, which typically generate a 7% return annually.

Factor #4: Our investors sit on top of the payment hierarchy

One of the key advantages of investing in our real estate loans is that you are paid first, whether from tenant rent payments or the proceeds from a property sale. This puts you higher in the payment hierarchy than borrowers or debt investors in other loans (like second mortgages, mezzanine loans, or preferred equity).

Everyone else only gets paid once you’ve fully recovered your principal investment and interest returns.

This priority repayment protects you against real estate market volatility and potential borrower defaults. To reiterate the example above, if you’re an investor in a $1MM loan secured by a $1.2MM property, the property could lose up to $200K in value, and you’d still recover your full investment. Borrowers get paid last and absorb the loss.

Read more: How to Invest in First Trust Deeds: Benefits & Risks Explained

Factor #5: You can start investing with just $1,000

You can start investing in Constitution Lending real estate loans with just $1,000, which is substantially less than buying entire loans or rental properties.

Factor #6: Investors receive their principal investment quickly

A major limitation of investing directly in real estate is the time required for the property to appreciate and for you to recover your principal investment. Many alternative investment platforms require you to wait 5 to 10 years or more before selling your fractional shares, and selling before this timeframe often results in hefty penalties.

At Constitution Lending, our real estate loans typically last just 6 to 18 months, allowing investors to recover their principal quickly.

‍Afterward, they can reinvest in more loans, withdraw their principal, or diversify into other investments. This quick turnaround minimizes the impact of market volatility and interest rate fluctuations, giving investors more flexibility to respond to personal or market-driven financial needs.

How to Invest in Constitution Lending Real Estate Loans

You can start investing fractionally in our real estate loans in under five minutes, with an initial investment as low as $1,000. Here’s how it works:

• Create an investor account and connect a bank or retirement account. Once set up, you’ll be directed to your dashboard, like the one shown below.

• The “Available Investments” section lists all real estate debt opportunities, including key loan details such as LTV, interest rate, duration, and risk assessment.

• Investors can do their due diligence by clicking on any loan to view a comprehensive breakdown of the property's current market value, type of investment property, projected value after renovations, borrower down payment, renovation costs, note position, and credit score.

• To fractionally invest in a real estate loan, simply link an IRA or bank account, click the “Fund This Loan” button and enter your desired investment amount. Our minimum investment amount of $1,000 enables regular investors to achieve diversification across multiple loans without the need to purchase them outright.

• Once you’ve made an investment decision, we deposit monthly distributions into your wallet on the first of each month. You can choose to withdraw these funds or reinvest in other opportunities.

• At the end of the loan term, your principal is returned, giving you the flexibility to reinvest or withdraw as needed.

• On the left-hand side of the interface, you’ll find the “Investor Dashboard” tab. This section provides an overview of your real estate portfolio, loan status, total capital committed, earnings over the loan term, and maturity dates.

Get Started

Open a Constitution Lending investor account to start investing in our real estate loans.

2. Yieldstreet

Yieldstreet offers individual investors access to a broad range of alternative asset classes, including real estate, private credit, structured notes, private equity, startups, and even cryptocurrency-related investments.

A standout offering is the Yieldstreet Alternative Income Fund, designed to give diversified exposure to private market assets, including real estate and private credit. This fund offers a hassle-free way to earn passive income, with a net annualized yield of 7.1% as of December 2024. Yieldstreet's real estate investments include commercial real estate properties and multi-family units.

However, Yieldstreet doesn’t invest alongside its users, meaning its incentives may not always align with those of its investors. While reviewers say the platform offers compelling opportunities, investors should consider this factor when evaluating risk. Additionally, it’s unclear if there are protections in place for investors if tenants or borrowers fail to pay.

3. Fundrise

Fundrise is a popular fractional investment platform that gives individuals access to real estate, private credit, and venture capital with a low minimum investment. Traditionally, these asset classes weren’t available to retail investors, but Fundrise lowers the barrier to entry with professionally managed investment portfolios.

One of Fundrise’s main advantages is its passive investing model, where the platform selects and manages assets on behalf of users. Investors can choose diversified funds like the Flagship Real Estate Fund, focused on build-for-rent housing and multifamily developments, or the Income Fund, which prioritizes real estate-backed fixed-income investments for steady returns.

However, the lack of liquidity and long investment horizon are drawbacks. Unlike Constitution Lending’s short-term loans, which are 6 to 18 months long, Fundrise investments are long-term and not easily liquidated. The platform offers a quarterly share repurchase program but redemptions are subject to availability, and investors may not be able to exit immediately. This makes Fundrise best suited for those with a long investment horizon.

Additionally, Fundrise doesn’t co-invest alongside users, meaning its financial incentives may not always align with yours.

4. Arrived Homes

Arrived Homes is a fractional real estate investing platform that enables both accredited and non-accredited investors to gain exposure to rental properties with a low minimum investment. The platform specializes in single-family homes and vacation rentals, allowing investors to earn passive income through rental dividends and potential property appreciation.

Arrived’s Single-Family Residential real estate investment trust (REIT) handles property management and offers some liquidity options, though investors should expect holding periods of 5–7 years for residential properties and 5–15 years for vacation rentals. Limited liquidity is a key consideration, as redemption requests are only available after six months and are subject to approval.

Just like Yieldstreet and Fundrise, Arrived doesn’t invest alongside you. Instead, the platform manages rental properties. Its financial interests are primarily tied to management and sourcing fees rather than direct ownership stakes alongside investors.

5. RealtyMogul

RealtyMogul is an online platform that allows both accredited and nonaccredited investors to invest in commercial real estate. Nonaccredited investors can access two public, non-traded REITs, while accredited investors have additional access to private placements.

For REITs, the minimum investment is $5K, while private placements generally start at $25K. RealtyMogul’s REITs focus on various commercial properties, including multifamily, office, retail, and self-storage.

Private placements, available only to accredited investors, involve direct investments in commercial properties with holding periods ranging from 2–10 years. These investments tend to be illiquid and carry higher risk.

RealtyMogul offers a limited share repurchase program for its REITs, so investors can sell shares at a discount based on how long they have held them. Fees vary by investment, with many reviewers saying REITs typically charge a 1% to 1.25% asset management fee, while private placement fees depend on the specific deal.

6. EquityMultiple

EquityMultiple specializes in managing institutional-grade commercial properties across asset classes like multifamily, office, industrial, and self-storage. Their real estate investing platform lets investors fractionally invest in these assets.

One of the platform’s key advantages is the variety of investment options. Investors can choose from individual real estate projects, diversified fund offerings, and short-term note investments.

However, EquityMultiple has a relatively high barrier to entry. Most investments require a minimum of $5K to $10K, with some private placements having even higher thresholds. Additionally, investments are typically illiquid, with holding periods ranging from 1–10 years, depending on the offering.

Another important consideration is the lack of a payment guarantee. Unlike Constitution Lending, which covers investor payments if a borrower defaults, EquityMultiple doesn’t offer this protection. Investors bear the full risk of borrower defaults, real estate market downturns, and potential project delays.

7. Lofty.ai

Lofty.ai is a real estate investment platform that sells fractional ownership in rental properties through tokenized assets. Investors can earn daily rental income and potentially benefit from property appreciation.

One of Lofty’s main advantages is its liquidity. Unlike traditional real estate investments, which often require long holding periods, Lofty allows investors to sell their shares on the secondary market at any time. This feature makes it more flexible than many other real estate platforms that lock up capital for years.

However, Lofty doesn’t provide any payment guarantee feature. Lofty investors bear the full risk of tenant defaults, property vacancies, and market downturns. Rental income is only distributed if the property generates revenue, meaning investors may experience fluctuations in returns.

Additionally, investors report that Lofty charges a 2.5% marketplace fee on buy and sell orders, which can impact overall returns. The platform doesn’t co-invest alongside users, meaning its financial incentives are tied to transaction fees rather than direct ownership stakes.

Invest in High-Quality Loans with Constitution Lending

Create an investor account to explore our real estate debt investment opportunities.