Can You Exit Early?
Understanding liquidity options and secondary markets in real estate crowdfunding investments.
Lock-up Periods
Most real estate crowdfunding investments come with lock-up periods, typically ranging from 3 to 7 years. During this time, your capital is committed to the investment and cannot be easily withdrawn.
Secondary Markets
Secondary markets for real estate crowdfunding investments are rare but emerging. These markets allow investors to sell their shares before the investment term is complete.
Platforms with Secondary Markets
- Arrived: Offers a resale platform where investors can list shares for sale
- Fundrise: Limited quarterly redemption windows (with potential penalties)
- RealtyMogul: Limited redemption program for REIT investments
Limitations
- Limited buyer demand
- Potential discounts to fair value
- Redemption fees or penalties
- Redemption suspensions during market stress
Liquidity Tiers by Platform
| Liquidity Tier | Platforms | Exit Options |
|---|---|---|
| High | Public REITs, Real Estate ETFs | Daily trading on exchanges |
| Medium | Arrived, Fundrise, RealtyMogul (REITs) | Secondary market or redemption windows |
| Low | Most eREITs without redemption programs | Limited or no early exit options |
| Very Low | Individual deals, private placements | No early exit until property sale |
Alternatives: REITs vs. Private Placements
When considering liquidity, it's important to understand the differences between various real estate investment vehicles:
- Public REITs: Highest liquidity, traded on stock exchanges
- Non-traded REITs: Medium liquidity, may offer redemption programs
- eREITs: Medium to low liquidity, platform-dependent redemption options
- Private Placements: Lowest liquidity, typically no early exit options
Key Takeaway
"Real estate is long-term — but some platforms give early exit options."
Quiz: Test Your Knowledge
Q1: Which of these offers a secondary market for shares?
Q2: What does "lock-up period" mean?
Q3: Liquidity in private real estate is: