A great way to diversify your money and build wealth is through the real estate platform called Fundrise.
You might have heard of it before, especially as the boom of crowdfunding has exploded in recent years.
Previously, your options for investing in real estate were buying properties, REITs, or being an accredited investor to have access to million dollar deals.
But thanks to the SEC’s update investor regulations, non-accredited investors could get in on the action.
This is where Fundrise grew from the ranks and became one of the top platforms for investing in commercial real estate.
Quick Review: In short, I RECOMMEND Fundrise. It is a solid real estate investing platform, and I give it a 9/10 score. You can sign-up here to get started.
What is Fundrise?
Although you might be familiar with Fundrise, it’s best to give a quick overview of the platform.
Fundrise is one of the leaders of online real estate crowdfunding for non-accredited investors. It was founded in 2010 and gave investors a chance into big real estate deals for a few hundred bucks.
And just how big has this company become? According to their about page, Fundrise now has more than 500,000 members and they have invested in nearly $2 billion worth of real estate across the country.
Additionally the company sets the bar high and continues to be a leader in this space. They continue to innovate with their funds and have introduced various investment options pending what you’d like to do.
What Are the Minimum Requirements to Invest in Fundrise?
Fundrise offers a few options for you to get started, with the minimum investment required being $500.
This will get you access to some great real estate deals, without the hassle of vetting the properties or managing yourself.
In order to get started with a $500 minimum investment, you’ll be choosing their Start Portfolio, where you get a 90 day guarantee. This means you’ll get your full investment back if you are not satisfied!
The Starter Portfolio plan will diversify you in various real estate investments across the U.S. and you’ll make money via dividends and appreciate the properties over time.
Now, if you want to begin with a higher investment of $1,000 or more, you’ll be upgraded to one of Fundrise’s Core Portfolio. Here, you can choose from three plans or “goal based investing”:
- Supplemental Income: A steady income stream with a focus on dividends.
- Balanced Investing: A more diversified portfolio designed for greater wealth-building.
- Long-Term Growth: Designed for potentially superior returns over the long term.
Since real estate investing might be new to you, when you create an account with Fundrise, they will guide you with their easy questionnaire about your investing style and goals.
Can You Make Money With Fundrise?
So the big question most new real estate investors will have with crowdfunding and Fundrise, is can you make money?
The answer is yes! Fundrise pays dividends and the real estate assets also appreciate over time.
And these returns come from the individual real estate assets in your portfolio – interest or rental income collected, as well as potential appreciation in the property’s value. As a shareholder, you are entitled to your pro-rata portion of any returns.
Remember, real estate investment is a long-term game. It’s recommended that the money is invested for 5+ years.
Of course, results will vary and investing in real estate poses a risk like anything else. This is why you diversify your portfolios and do not put all your cash in one investment.
Does Fundrise Pay Monthly Dividends?
While Fundrise does pay dividends, they are on a quarterly basis not monthly.
Dividends are typically distributed in the middle of the month following the end of each quarter. For example, mid-April for dividends earned during the first quarter.
You may also receive additional periodic cash distributions as certain underlying properties are sold. The value of your shares is also typically re-calculated on a quarterly or semi-annual basis.
How Has Fundrise Performed?
Fundrise has now been around for a decade, but that is still young when it comes to the investing world.
However, their historical returns have been solid and very promising for the future.
What the team does a great job of is keeping track each year of the performance as well as keeping investors updated and informed.
This adds a lot of transparency toward your investments, the market, and what you might expect in the coming months/years.
Of course, no one knows exactly what will happen in the market but the insight from their real estate experts will help you make a more informed decision.
So far, Fundrise has shared their stats and returns since 2014. Below is all the results they have had over the last few years:
And since Fundrise is pursuing a private market, direct investment strategy, their portfolios earn higher annual current income than public income-focused investments.
What Are Fundrise’s Fees?
Now that you have some background and historical performance of Fundrise, you should also be aware of the fees.
Generally, any investment platform will have some sort of fee structure in place.
After all, they are making it easier for you to invest! But, you also do not want to invest in a company or platform that has outrageous fees either.
Now remember those above historical returns are net of fees, so they are not included.
All the offerings that Fundrise currently has have 0.85% annual asset management fee and there is a 0.15% annual investment advisory fee, which potentially can be waived under particular circumstances.
Together, your fee for your investments will be at 1%. Generally, I always look for investments with a max 1%.
But this percentage can still be much cheaper than other investments, plus you getting access to some of the best real estate deals without any hassle of management.
How Do I Get My Money Out of Fundrise?
When you invest in real estate, you should think of this as a long-term investment. Meaning, only invest money you won’t need for potentially 5+ years.
Some deals may sell or be done before then as you get your returns, but generally this is an illiquid investment.
However, things happen where you will need that money. So you can request to sell your investment early, however there are some stipulations.
- There is a 60 day waiting period once you invest before you can request cash back
- You will have a penalty fee for selling shares early, which can be as high as 3% and will lower the longer your investment is in place.
What Tax Documents Can I Expect to Receive?
Oh taxes! As you grow your wealth and expand your investments, your tax forms can start to pile on too.
But don’t worry, Fundrise provides everything you need.
Pending which fund you choose to invest in, you’ll receive potentially different tax documents.
This is because the types of funds that are in each one and the states where real estate is located that you might be invested in.
Below are the tax forms you can expect with each investment fund.
- Investors in the Starter Portfolio plan can expect to receive a Form 1099-DIV for each eREIT in the plan’s allocation.
- Investors in the Supplemental Income plan can expect to receive a Form 1099-DIV for each eREIT in the plan’s allocation.
- Investors in the Balanced Investing plan can expect to receive a Form 1099-DIV for each eREIT and a Form K-1 for each eFund in the plan’s allocation.
- Investors in the Long-Term Growth plan can expect to receive a Form 1099-DIV for each eREIT and a Form K-1 for each eFund in the plan’s allocation.
The Pros and Cons of Fundrise
So now that you got a big overview, what are the pros and cons of Fundrise?
Overall, the advantages outweigh the negatives and it’s a solid platform to get started in the real estate game. Their historical returns have been above average and continue to perform well.
Here is the list of pros and cons you’ll want to consider.
Pros of Fundrise:
- Low minimum to get started ($500)
- Low fees compared to most alternative investments
- Open to both non-accredited and accredited investors
- Real estate diversification in various locations
- Starter account offers a 90 Guarantee. If at any time during your first 90 days you’re not satisfied, we will buy your investment back at the original investment amount.
- In-depth information about properties and your investments
- Access to major commercial real estate projects
- Multiple ways to invest like self-directed IRA, goal-based investing, eREIT (non-traditional REIT), eFund (private commercial real estate fund), and Fundrise IPO (Invest to own shares of Fundrise as a company).
Cons of Fundrise:
- Lack of liquidity. Your investment money can be tied up for 5+ years. You can request to sell your shares early if you need the money, but there will be some fees applied.
- Real estate investments are a bit more complex, so it may take you more time to understand your investments.
- Your distributions will be taxed. If you are investing in a tax-exempt account (like an IRA), your distributions will be taxed, you may have capital gains taxes as well.
- Distributions are never guaranteed. Just like in stocks, dividend payouts can change or not happen at all. There is always that potential to happen pending the market and real estate investments.
Fundrise Review Final Thoughts
I love the idea of investing in real estate, but it can also be very intimidating to people. That’s where the crowdfunding space has changed the game.
Fundrise has been a clear leader in the real estate crowdfunding space and continues to prove solid historical returns over the last few years. I’m scoring this platform a 9/10.
Is Fundrise A Good Investment?
In the end, yes Fundrise is a good investment. If you are ready to take your finances and wealth to the next level, this is a solid platform to choose for diversification and to get in the real estate game.
It takes the pain out of buying physical real estate properties, needing a ton of upfront money, managing or fixing the property, selling it, etc.
Now you can choose a fund with as low as $500 and be invested in a piece of real estate that you are completely hands free on.
How Much Should I Invest in Fundrise?
How much you ultimately decided to invest in Fundrise is up to you.
Remember, this is a long-term investment that you should expect to keep invested for 5+ years. You can get the money out earlier if needed, but you will face some penalties.
You can start with a minimum of $500 and continue to invest more over time, or start with some bigger.
This will depend on your risk tolerance, how much you have saved and invested elsewhere, and what your future financial goals are.