Ratings Methodology for Real Estate Investment Platforms
NerdWallet’s overall ratings for real estate investment platforms are weighted averages of ratings in the following categories:
Data collection and review processNerdWallet reviews 7 companies that allow U.S. customers to invest in real estate, primarily through non-traded real estate investment trusts (REITs) or private equity.
We collect data from providers, do first-hand testing and observe provider demonstrations, as necessary. Our process starts by sending detailed questionnaires to providers. The questionnaires are structured to equally elicit both favorable and unfavorable responses. They are not designed or prepared to produce any predetermined results. The questionnaire answers, combined with our specialists’ hands-on research, make up our proprietary assessment process that scores each provider’s performance.
The final output produces star ratings from poor (1 star) to excellent (5 stars). Ratings are rounded to the nearest half-star.
Factor weightingsThe weighting of each rating factor is based on our team’s assessment of which features are most important to consumers and which ones impact the consumer experience in the most meaningful way.
Our writers and editors conduct real estate investment platform reviews on an annual basis. Throughout the year, we maintain contact with providers and update our reviews to reflect changes to their offerings.
The review teamThe review team comprises seasoned writers, researchers and editors who cover stocks, bonds, mutual funds, index funds, exchange-traded funds, alternative investments, socially responsible investing, financial advisors, retirement, and investment strategy. In addition to appearing on NerdWallet, the work of our team members has been published in The New York Times, The Washington Post, Forbes, USA Today, Bloomberg News, Nasdaq, MSN, MarketWatch, Yahoo Finance and other national and regional media outlets. Each writer and editor follows NerdWallet’s strict guidelines for editorial integrity.
The combined expertise of our investing team is infused into our review process to ensure thoughtful evaluation of products and services from the customer perspective. Our writers and editors together have more than 70 years of experience in writing about finance. Their former positions range from Wall Street Journal reporter to senior financial advisor at Merrill Lynch.
Account minimumThis is the minimum amount required to open an account and begin investing. A required minimum of $500 or less earns the highest rating; a required minimum of $25,000 or more earns the lowest rating. This category does not consider whether investors need to be accredited, which some real estate investment platforms require.
Redemption optionsOften, real estate investments are illiquid and require consumers to lock up their funds for several years. This category considers how long that lock-up period is, and whether the provider offers repurchase opportunities, which may allow investors to exit during the lock-up period. It also considers the fee associated with repurchase agreements.
A policy that charges no penalty to redeem your investment after two years earns the highest score here. Providers that do not offer redemption options earn the lowest score.
Investment feesThis category considers the costs associated with investing through the provider. Providers that require no fee earn the highest score; those whose fee is greater than 3% earn the lowest score.
Investment selectionThis category considers the number of investments available through the platform and the level of diversification those investments afford. It is common for real estate investment platforms to offer only one or two investment opportunities.
The highest rating is awarded to providers that offer at least two different investments that have wide diversification of project type and location. The lowest rating goes to providers that offer only one investment that lacks diversification — for example, a single REIT that invests only in residential properties.
Website usabilityWe define website usability as how easy it is for our reviewers to find key details on the provider’s website. If we can find all information in under five minutes, a provider earns the highest rating. If we can’t find any information, the provider earns the lowest rating.
Investment transparencyThis category rates providers on how much information is readily available about the investments they offer. Our reviewers look for easy-to-understand information about:
Providers that fully disclose all five factors on their website earn the highest rating. If our reviewers can only find one of five factors, the provider earns the lowest rating.
Customer supportOur customer support rating is based on availability and means of contact. Providers who offer phone support during extended hours (such as weekends or evenings) earn the highest rating. Those that offer only email support earn the lowest rating.
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