Fundrise Review: Gain Access to Private Real Estate Markets

Real estate is undoubtedly a profitable investment, but it’s usually difficult to get into because of the huge amount of capital it requires up front. In recent years, however, this obstacle has been drastically mitigated, if not completely removed through crowdfunding real estate. Crowdfunding real estate is a real estate investment in which several investors pool money together to invest in real estate projects.

Fundrise is a pioneer of crowdfunding real estate companies. It offers everyday investors the opportunity to profit from real estate for only a few hundred dollars. It’s a great platform for passive investors to gain access to private real estate markets, and unlike most crowdfunding platforms, it does not require you to be an accredited investor to participate.

Fundrise Investment plan

Core

A core plan acts as the foundation of an investing experience. They allow you to start growing a diversified real estate portfolio that fits your objectives. You can choose to focus on generating consistent cash flow, maximizing long-term growth, or achieving a balance of both. The minimum investment is $1000.

Advanced

An Advanced investment plan has higher potential returns than Core plans. Advanced investors gain access to Plus plans, an optional add-on to each Core plan. These plans allocate a portion of your portfolio to more sophisticated real estate strategies that evolve over time based on new market opportunities. The minimum investment is $10,000.

Premium

Premium investors can access private funds that periodically become available. These offerings are usually specialised, truly illiquid private equity funds with even longer time horizons, but they have the potential for outsized performance. The minimum investment is $100,000.

Apart from these three, a starter portfolio allows you to invest with just $500.

You can read more about these plans on the Fundrise platform.

Overview of Fundrise

You only need as low as $500 to invest with Fundrise and it offers individuals the opportunity to invest in real estate through an eREIT or eFund. Along with the long-term investment minimum of five years, Fundrise includes debt investments and equity investments in its portfolios. Fundrise offers a monthly redemption period during which investors have the opportunity to cash out each month following a minimum 60-day waiting period. Due to its low capital requirement, it is popular with younger investors and millennials. It uses technology to make quality real estate more accessible to ordinary investors.

After you place your initial investment, Fundrise starts working to find and add new assets to your portfolio over time, with no additional investment required on your end. This way, your already diversified portfolio can become stronger every year. Fundrise will automatically deposit dividends or distributions into your bank account on record unless you opt in to the dividend reinvestment program.

To maximize returns with Fundrise and earn compound interest, you should opt in to the dividend reinvestment program, also known as DRIP. This dividend reinvestment program is provided free of charge as a courtesy for investors. By reinvesting dividends, you’re able to earn more because your investment gets larger every time. After a while, this will result in exponential growth of your portfolio.

There are several real estate platforms out there if you’re not yet sure with Fundrise. Here’s our list of the top 5 real estate platforms this year.

Fundrise Fees

Fundrise saves investors money by creating a direct link between investors and real estate. There’s no middleman at Fundrise, and that saves on costs. Although Fundrise clearly notes its asset management and advisory fees, here are some costs that are not so popular:

1. Shares in Fundrise’s products may be sold at a premium to their value, which means you could pay $10 a share for an eREIT that has a net asset value of $9.50. That differential acts as a type of sales load.
2. With eFunds, there’s a potential development fee of up to 5% of total development costs, excluding land. Also, when an eFund sells a property, there may be a potential disposition fee of 1.5% of the gross proceeds, after repayment of property-level debt.

FAQ About Fundrise

Is Fundrise a good investment?

Yes, the historical annual returns of 8.7% – 12.4% (net of fees) from Fundrise’s website certainly make it seem like a good investment.

Is Fundrise safe?

Like all investments, there is a risk to investing in Fundrise. There are real, physical assets that you invest in when using Fundrise, but there is a risk that your investment can depreciate in value. Before investing in Fundrise, make sure it fits your investment strategy and risk tolerance.

Does Fundrise pay dividends?

Yes, Fundrise pays quarterly dividends that can be taken out as cash or reinvested.

Does Fundrise guarantee dividends?

Fundrise does not guarantee dividends; they can increase, decrease, or cancel dividends at any time.

When can I liquidate my positions?

You can only liquidate your positions quarterly.

Do I have to pay an advisory fee?

Over a period of one year, you will pay a $1.50 advisory fee for every $1,000.

Can I sell my investments on a traditional stock exchange?

Investors cannot sell Fundrise investments on a traditional stock exchange.

How is Fundrise taxed?

Dividends are non-qualified and taxed as regular income rather than at the 15% rate.

Bottom Line

Fundrise is an online real estate company that gives investors access to private real estate deals. It makes it easy to become a real estate investor, allowing investors to own real property in a way that costs less than traditional real estate investments. Like other crowdfunding real estate platforms, Fundrise charges low advisory fees, zero return-limiting performance fees, and no management fees. It allows individuals with low income to invest in real estate without the traditional minimum net worth or income requirement. It is not suitable for short-term plans.

If you’re interested to know other similar platforms, you may check out PeerStreet Review and CrowdStreet Review too.