While the SEC's Reg A+ regulations made these low buy-in investments legal, the technology platform made them possible. Without the technology, no firm would be able to accommodate the large number of investors that these funds attract. “It is really all about the technology. We can have one individual using the software that we have built to work with hundreds of thousands of investors,” says Jenkins. That type of engagement typically would have required hundreds of individuals.”

LOS ANGELES—The Reg A+ investment market requires a much different investment model. For find managers, the goal is to reach as many investors as possible while providing risk-adjusted returns to those investors. Finding that balance means pinpointing an investment minimum that is simultaneously accessible and scrutinized as a serious investment. For Fundrise, an e-REIT proprietor, that amount is a $1,000 investment minimum for its current e-REIT products.

“We wanted to be as accessible as possible while still being feasible to logistically manage,” Brandon Jenkins, COO of Fundrise, tells GlobeSt.com. “We found through our history of doing this that $1,000 is certainly achievable for the average investor, but it is an amount of money that will, for lack of a better term, be taken seriously. If you get to too small of an amount, people start to confuse it as a true investment and a consumer purchase. These are investments, and they are long-term investments of real estate assets. For us it was about finding the right balance between what made it accessible to as many people as possible while also having people take it seriously.”

Finding this balance is key, and every e-REIT product has a different estimation. RealtyMogul.com, which launched its first REIT last month with a similar goal of maximizing accessibility, chose $2,500 as the magic number that both boost accessibility and detours frivolous investments. Fundrise has played all over the map, with investment minimums as low as $100 and much higher.

Low investment minimums also attract more investors, and by default, complicate the business model. “When you are dealing with lots of smaller investors, it is critical that you keep costs down otherwise it is not logistically possible to offer investments at a $1,000 minimum,” adds Jenkins. “Having the regulatory process be efficient and relatively low cost is essentially in making the model work. Continuing to work with regulators to keep costs low while providing them with the information that they need is something that we are always working.”

While the SEC's Reg A+ regulations made these low buy-in investments legal, the technology platform made them possible. Without the technology, no firm would be able to accommodate the large number of investors that these funds attract. “It is really all about the technology. We can have one individual using the software that we have built to work with hundreds of thousands of investors,” says Jenkins. That type of engagement typically would have required hundreds of individuals.”