cardone capital vs Fundrise (Must Know)
LAST UPDATED: August 23, 2023 | By Conrad Golly
Real estate crowdfunding platforms like Fundrise and Cardone Capital offer investors the opportunity to invest in real estate without owning the property directly.
This makes it more accessible and affordable for individual investors who want to get exposure to the real estate sector.
While both platforms offer investment opportunities for both accredited and non-accredited investors, they operate on different models.
Fundrise offers a more diversified portfolio of smaller properties, while Cardone Capital focuses on larger, cash-flowing properties.
In this Cardone Capital vs Fundrise review, the investment strategies, average returns, and fees of both platforms will be evaluated to help investors decide which platform is better for their investment needs.
Key Takeaways
- Fundrise offers more flexibility and diversification, while Cardone Capital may yield higher returns and tax advantages.
- Cardone Capital is better for high investment returns and professional real estate investors, while Fundrise is better for moderate-risk investing and private real estate investment.
- The choice between Cardone Capital and Fundrise will depend on individual investment goals and preferences.
What is Fundrise?
Fundrise is a real estate crowdfunding platform that allows non-accredited investors to invest in commercial and residential real estate.
Fundrise offers a well-diversified portfolio of properties with a low minimum investment, making it accessible and affordable for individual investors.
Fundrise’s investment option is similar to a REIT (Real Estate Investment Trust), where investors essentially buy shares of a trust that holds real estate rather than being a direct partner.
However, Fundrise also offers the option to invest in their national eFund, which would make investors a partner in their LLC.
Fundrise has a minimum investment of just $10, making it a much more accessible option for those who may not have tens of thousands of dollars for a traditional real estate investment down payment.
Fundrise’s Internal Rate of Return (IRR) ranges from 8-12%, representing a combination of dividend payments and appreciation over time.
What is Cardone Capital?
Cardone Capital is a real estate syndication that aims to make large-cap real estate investments accessible to individual investors.
The syndication operates more like a crowdfunding platform, allowing investors to invest in one real estate fund at a time.
Each fund holds a number of high-end residential real estate properties in the southeastern United States, specifically in Texas and Florida.
As a passive partner in the LLC owning and managing the fund, investors receive rental income paid out as distributions with a 65/35 split.
Cardone Capital provides investment opportunities for both accredited and non-accredited investors, with a minimum investment of $5,000 for non-accredited investors.
As an investor, you will become a passive partner in the LLC owning and managing the fund. Rental income is then paid out to investors as distributions with a 65/35 split. You can read more about this here.
Fundrise vs Cardone Capital – Key Differences
| Fundrise | Cardone Capital | |
| Min. investment | $500 | $5,000 |
| Investment type | eREIT | LLC |
| Real estate | Comm./Resid. | Residential |
| Holdings | – | $1.7B (7722 Units) |
| Taxation | 1099-B/DIV | K-1 |
| Return | 8-12% | 15% |
Minimum Investment
Fundrise offers a minimum investment of $500 USD, which can go up to $100,000 USD depending on the account type. Their investment options include eREITs, but only available to those with an “Advanced Account.”
Cardone Capital, on the other hand, has a minimum investment of $5,000 USD across all funds. While this may seem high initially, it is comparatively low compared to other real estate syndications.
The only truly interesting distinction between the different account levels is that you need at least an “Advanced Account” to start investing in their eFunds.
Cardone Capital’s minimum investment is $5,000 USD across all funds. This might seems high initially to a novice investor, however, it is actually comparatively low. Other real estate syndications – such as Holdfolio – tend to start around $25,000.
Fundrise does make it easier to get started with their lower initial investment but this comes at a price: their more premium products and eFunds will not be available to you. I like Cardone Capital’s approach a lot better of having an equal minimum investment amount for everybody.
However, for accredited investors who are looking to invest with Grant Cardone the minimum investment will be $100,000.
Investment Type & Holdings
Fundrise offers mostly eREITs, which are nationwide real estate developments in the commercial and residential sectors.
They have a large variety of different REITs available described as either income or growth investments.
Cardone Capital operates solely in a fund structure.
One fund usually comprises 3-5 high-end luxury residential properties made up of several hundred units which are held by an LLC.
Their focus lies on investment properties in Florida and Texas. In total, Cardone Capital manages some 7722 units with $1.7B of assets under management.
Taxation
The main difference between these two investment vehicles is the tax form investors receive.
With Fundrise’s eREITs, investors receive a 1099-DIV, which is used to declare any dividends received.
These dividends are then taxed the same way as any other capital gains and dividends received from other stocks or ETFs.
Cardone Capital, on the other hand, operates through an LLC and provides investors with a K-1 tax form.
This form allows investors to declare their share of the LLC’s taxable income and losses.
This can often result in a large paper loss with a tax shield of up to 85% or 90% of earnings.
Returns
Fundrise advertises returns between 8-12%, which is the combined returns of dividend payments and appreciation over time.
While this may be slightly higher than what you would get out of the stock market, it falls significantly short of the return that can be commonly expected in real estate syndication.
Cardone Capital aims to achieve an advertised IRR (Internal Rate of Return) of 15%.
Grant Cardone aims to achieve this by tripling the capital on the sale of the property along with the monthly distributions of 6% annualized.
If this goal is reached, then Cardone Capital is the clear winner here in terms of overall returns.
The Bottom Line: cardone capital vs fundrise
Investing in real estate can be a great way to diversify your portfolio and generate passive income.
However, not everyone has the time, expertise, or capital to invest in real estate directly. This is where real estate investment platforms like Cardone Capital and Fundrise come in.
Both platforms offer investors the opportunity to invest in real estate without owning property directly.
However, they operate on different models with unique features that may suit different investor preferences and goals.
Cardone Capital is better for investors who are looking for high investment returns, real estate opportunities, and professional real estate investment.
The minimum investment for Cardone Capital is $5,000, and it focuses exclusively on multifamily real estate, with a target return of 15-17% annually.
On the other hand, Fundrise is better suited for moderate-risk investors, private real estate investment, and long-term investors (5+ years).
Fundrise has a lower minimum investment of just $10 and offers a more diversified portfolio of smaller properties. Its average annual yield is around 7.5%, and its Internal Rate of Return (IRR) ranges from 8-12%.
When it comes to investing style, Fundrise is more affordable, and its investing style allows investors to invest in alternative investments.
Cardone Capital, on the other hand, provides investment opportunities for both accredited and non-accredited investors.
Non-accredited investors receive more detailed information about the fund structure, fees, and performance since regular disclosures are filed with SEC.
In terms of cost, Cardone Capital has a higher minimum investment requirement, but it offers personalized guidance and support from experienced real estate professionals.
Fundrise, on the other hand, has a lower minimum investment requirement and a range of subscription options to suit different investment needs and budgets.
Do you want more than the average return and actively research and take responsibility for your real estate investment decisions? Then choose Cardone Capital (or another real estate syndication).
What are your thoughts on Cardone Capital vs Fundrise? Which would you choose?
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