3 Significant Differences Between Crowdfunding and REITs

Real estate crowdfunding is a newer way to invest in real estate where investors own a small slice of a specific project instead of carrying all the risk themselves. On the surface, it can look a lot like a Real Estate Investment Trust (REIT), which is why many investors lump the two together. But once you slow down and look closer, the differences are pretty clear.

In this article, we break down three major differences between real estate crowdfunding and REITs so you can understand what you’re actually investing in.

#1 Scale

Crowdfunding typically focuses on one property or one project at a time. A REIT, on the other hand, works more like buying stock in a real estate company. Most REITs own and operate many large properties at once, and investors earn dividends based on how the entire portfolio performs.

If you like the idea of investing in one deal you can wrap your head around, crowdfunding may feel more comfortable. If you’d rather put your money into a large pool of properties managed as a single business, a REIT might make more sense.

#2 Choice

Because crowdfunding usually involves a single project, investors have more visibility and control over what they’re investing in. You can review the property, understand the plan, and decide whether that specific deal fits your goals.

With a REIT, you don’t get that level of choice. You’re buying into the entire portfolio, which means you’re invested in every property inside it whether you love them all or not. It’s simpler, but it’s also more hands-off.

#3 Profits and Stability

REITs have been around since 1960, and many of them have long track records. They’re run by professional management teams with systems in place to manage large commercial assets. That structure creates stability and diversification, but it also comes with layers of overhead that can reduce overall returns.

Crowdfunding, by comparison, is still relatively new. That means there’s less history to lean on, and single-project investments can be more volatile. If a project runs into delays or problems, returns can be affected. That said, well-structured crowdfunding deals with tight operations can sometimes produce higher returns per dollar invested.

Summary

There’s no universal winner between crowdfunding and REITs. It really comes down to what you value more as an investor.

REITs tend to offer stability and simplicity, but with less control and potentially lower returns. Crowdfunding offers more choice and transparency, along with the possibility of higher returns, but usually with more risk tied to individual projects.

About Graystone Investment Group

Graystone Investment Group works with real estate investors throughout the Greater Tampa Bay area. We analyze neighborhoods one by one to identify where capital is most likely to perform, and we focus on opportunities that make sense for long-term investors.

Unlike traditional wholesalers, we don’t just find discounted properties. We also help investors connect with private financing and experienced rehab and property management teams we’ve worked with for years, without adding extra layers or fees.

You can read the fully updated version of this article here:
https://graystoneig.com/articles/3-significant-differences-between-crowdfunding-and-reits-updated-for-2025