Real Estate Crowdfunding, Investment Platforms and REITs Compared

There are three common ways to put money into real estate without buying a building yourself: an online crowdfunding or investment platform, a tokenized offering, or a real estate investment trust (REIT). All three pool money from many investors. They differ in what you own, how much you can put in, how the offering is regulated and, above all, how easily you can get your money back.

This article compares them for two readers: the small investor deciding where to put a few thousand dollars, and the sponsor, the person or company putting a deal together, who is wondering whether crowdfunding can fill part of the equity in a hotel or apartment project. It covers the rules in the U.S. and in Canada, including Nova Scotia.

What “real estate crowdfunding” actually means

The word covers two very different things. Donation and reward sites such as Kickstarter and GoFundMe collect money in exchange for a thank-you or a product. People who give that way are donors or pre-purchasers; they own no stake in anything.[4]

Real estate crowdfunding is the other kind: securities crowdfunding. Investors receive shares, limited partnership units or debt (a loan to the project) in return for their money, and the offering is regulated as a sale of securities.[4] That is why every platform must operate under a specific exemption from the full prospectus or registration process, and why those exemptions set limits on who can invest and how much.

A tokenized offering is the same idea with the ownership records kept on a blockchain. Tokens that give a share of rent or profits are securities, and they are sold under the same exemptions. We explain how that works in Tokenization and fractional ownership in real estate, so this article does not repeat it.

The three routes side by side

Ways to invest in property without buying a building

Item	Crowdfunding platform	Tokenized offering	Listed REIT	Non-traded REIT (U.S.)
What you own	Shares, units or a loan in one project or a small fund	The same, recorded as tokens	Shares in a company owning many properties	Shares in a company owning many properties
Typical access	Limited by exemption rules and investor limits	Limited by exemption rules and investor limits	Anyone with a brokerage account	Sold through brokers and advisers
Getting your money out	Usually only when the property is sold or refinanced	Only if a permitted trading venue and a buyer exist	Sell on a stock exchange	Generally illiquid; limited redemption programs
Price visibility	Sponsor’s reports	Sponsor’s reports, plus any trades	Daily market price	Often no per-share value until 18 months after the offering closes
Diversification	One building, unless you spread money across deals	One building, usually	Many buildings	Many buildings

Crowdfunding rules in the U.S.

U.S. platforms that accept non-accredited investors generally use one of two exemptions.

Regulation Crowdfunding (Reg CF). A company can raise up to US$5 million in any 12-month period, and the offering must run through a single registered broker-dealer or funding portal.[1] Investors who are not accredited face an annual cap across all Reg CF offerings: the greater of US$2,500 or 5% of their income or net worth (whichever is greater) if either figure is below US$124,000; otherwise 10%, up to US$124,000.[1] The issuer must be organized under U.S. law, so a Canadian company cannot use Reg CF directly.[1] After the raise, the issuer must file and post an annual report with financial statements every year.[8]

Regulation A. This is a larger, mini-public offering. Tier 1 allows up to US$20 million in 12 months and Tier 2 up to US$75 million.[2] In an unlisted Tier 2 offering, a non-accredited individual can buy no more than 10% of the greater of their annual income or net worth.[2] Unlike Reg CF, Regulation A is open to companies organized in the U.S. or Canada with their principal place of business in either country.[2]

Offerings open only to accredited investors usually rely on Regulation D instead, which has no dollar cap. Our guide to raising equity for a commercial real estate deal covers those exemptions.

Crowdfunding rules in Canada

Canada’s securities crowdfunding rule is National Instrument 45-110, Start-up Crowdfunding Registration and Prospectus Exemptions, adopted by the Canadian Securities Administrators in June 2021. It replaced the separate provincial regimes, including Nova Scotia’s, with one set of rules.[3]

Start-up crowdfunding limits under NI 45-110

Most an issuer can raise in 12 months[3]Up from $500,000 before 2021

$1.5M

Most one investor can put into one offering[4]

$2,500

Per offering, if a registered dealer advises it is suitable[4]

$10,000

Average investment per investor, 2015 to 2021[3]About 110 offerings under the earlier regimes

$576

Those limits make NI 45-110 a tool for small projects, not for buying an apartment building. A funding portal must hold investors’ money in trust until the minimum target is reached and return it in full if the target is missed. The offering document is not reviewed or approved by any securities regulator.[4]

Larger Canadian private real estate raises need other prospectus exemptions under NI 45-106, such as the accredited investor and offering memorandum exemptions; those are covered in our capital-raising guide.

How a sponsor uses crowdfunding to fill the equity

For a sponsor, a crowdfunded raise is usually one slice of the capital stack, sitting next to a bank or CMHC-insured mortgage and the sponsor’s own money. The order of work is much the same in either country.

A crowdfunded equity raise, step by step

1. Set up the holding entity

   A company or limited partnership that will own the property and issue the units or shares investors buy.

2. Pick the exemption first

   Reg CF, Regulation A or Regulation D in the U.S.; NI 45-110 or an NI 45-106 exemption in Canada. The exemption decides who can invest, how much, and what disclosure you owe.

3. Choose a registered portal or dealer

   Check with the securities regulator in each province or state where you will sell that the platform is allowed to operate there.

4. Prepare the offering document

   The property, the business plan, the debt, the fees, the sponsor’s track record, the risks and how money raised will be used.

5. Set a minimum and a closing date

   If the minimum is not reached, investors get their money back and the deal does not close.

6. Report after closing

   Investors expect regular updates on occupancy, income and distributions. Under Reg CF, the issuer must file and post an annual report with financial statements.

Crowdfunding also brings costs a single private investor does not: platform fees, legal work on the offering document, and ongoing reporting to hundreds of investors. On a small deal those can absorb a meaningful share of the money raised.

REITs: the liquid alternative

A REIT is a company that owns, and usually operates, income-producing property. Shares of listed REITs trade on a stock exchange like any other share, so they are the easiest of the three routes to sell.[5]

In the U.S. a REIT must meet tax tests set out in the Internal Revenue Code. Among them: its shares must be held by 100 or more persons, at least 75% of the value of its assets must be real estate, cash or government securities, and it must distribute at least 90% of its taxable income each year to avoid corporate tax on it.[6][7] In Canada, a trust that meets the REIT definition in the Income Tax Act is excluded from the specified investment flow-through (SIFT) rules that tax publicly traded income trusts. Among other conditions, at least 90% of its gross REIT revenue must come from sources such as rent, interest and property sales, and at least 75% from rent, mortgage interest and property sales.[9]

The SEC is blunt about non-traded REITs: they are generally illiquid, they often give no per-share value until 18 months after the offering closes, and sales commissions and up-front fees usually total about 9% to 10% of the investment.[5]

Single-property crowdfunding versus a listed REIT

Crowdfunding or tokenized deal

• You choose the specific building and sponsor.
• Returns depend on one property and one business plan.
• Money is usually locked up until a sale or refinancing.
• Disclosure is lighter than for a public company.

Listed REIT

• Management chooses the buildings; you buy the portfolio.
• Spread across many properties and tenants.
• Shares can be sold on any trading day, at the market price.
• Price moves with the stock market as well as with the property.

What to check before you invest

• The exemption and your limit. The offering document should say which exemption it uses. That tells you how much you can invest and what disclosure you are owed.
• The platform’s status. Confirm with your provincial or state securities regulator that the portal or dealer is allowed to operate where you live.[4]
• The sponsor. Past projects, how they turned out, and how much of the sponsor’s own money is in the deal.
• The debt. Equity investors are paid after the lender. High leverage magnifies both gains and losses.
• Every layer of fees. Platform, acquisition, asset-management and disposition fees, and the sponsor’s share of profits.
• How you get out. When the property is expected to be sold or refinanced, and whether any resale of your units is allowed in the meantime.

Sources

1. 17 CFR 227.100: Crowdfunding exemption and requirements — Electronic Code of Federal Regulations (U.S.). Checked 2026-10-12.
2. 17 CFR 230.251: Scope of exemption (Regulation A) — Electronic Code of Federal Regulations (U.S.). Checked 2026-10-12.
3. Canadian securities regulators adopt new nationally harmonized start-up crowdfunding rules — Canadian Securities Administrators, June 23, 2021. Checked 2026-10-12.
4. Start-up Crowdfunding FAQs — Canadian Securities Administrators. Checked 2026-10-12.
5. Real Estate Investment Trusts (REITs) — Investor.gov, U.S. Securities and Exchange Commission. Checked 2026-10-12.
6. 26 U.S. Code § 856: Definition of real estate investment trust — Legal Information Institute, Cornell Law School. Checked 2026-10-12.
7. 26 U.S. Code § 857: Taxation of real estate investment trusts and their beneficiaries — Legal Information Institute, Cornell Law School. Checked 2026-10-12.
8. 17 CFR 227.202: Ongoing reporting requirements (Regulation Crowdfunding) — Electronic Code of Federal Regulations (U.S.). Checked 2026-10-12.
9. Income Tax Act, section 122.1 (definitions, including real estate investment trust) — Justice Laws Website, Government of Canada. Checked 2026-10-12.