Fundrise – 2019 Review

Fundrise is an online real estate investing platform that allows investors to invest in commercial and real estate through crowdsourcing.  One of the advantages of Fundrise is that its investments are open to anyone.  You need not be an accredited investor to participate in the investment offerings.

The company deals mostly in REITS by managing properties or holding mortgages on them.  The REITS are illiquid, as they are not publicly traded, so there may not be a buyer should an investor want to sell shares.  Fundrise calls its products eREITS.  They also offer an eFund, which is a pooling of investor money used to buy land and develop it before selling to home buyers.  According to their website they have invested in over $2.5 Billion in real estate to date.

Fundrise has four funds that investors can participate in.  Starter, Supplemental Income, Balanced Investing, and Long-Term Growth.  The average return in 2018 was just over 9% making this an attractive investment, but there are risks.

Fundrise Facts

  • The platform is open to everyone, but there are some investments that are geared towards accredited investors.
  • Invest with a long-term outlook. Investments are intended to be held for at least 5 years.  In some cases, there are fees to get out of deals early.
  • The minimum investment is $500 for the Starter portfolio and $1000 for the other 3 fund options. This low entry barrier makes Fundrise an attractive investment option to more novice and passive investors.
  • There is a 0.85% management fee and 0.15% advisory fee, but other fees may apply.
  • Fundrise states that they will buy back your investment at the original amount within 90 days if you are not satisfied.

Some things to keep in mind before investing

  • Private REITs can be illiquid and risky. There may not be a buyer should you want to sell, and there are penalties to withdraw your money early.
  • All fees are not disclosed up front. Everything is listed on the website to Fundrise’s credit, however some of the fees are buried in documents that can be several hundred pages long.  Be wary of the costs of investing in the funds before diving in.
  • Crowdfunding real estate sites have never been through a real estate recession. It in unknown how these funds would perform in a down market.
  • REITs don’t offer the tax advantages that owning physical real estate do. However, owning a piece of property comes with its own set of challenges and isn’t for everyone.  Just keep in mind that things such as depreciation won’t be available to you by investing in a REIT.

Summary

Fundrise can be an attractive alternative to the stock market and can help the average investor to diversify their portfolio.  The platform is easy to use, and all information is disclosed if you are willing to do the work to find it.  REITs can produce a nice return, but they can be risky, and you will be subject to fees if you want your money early.  For this reason, you will want to invest with a 5-year timeline.  The fact that you don’t need to be an accredited investor is a nice feature and allows everyone to participate in the investment offerings.  Returns over the short history of the company have been impressive, but this is no guarantee of future results, and these investments have never been through a recession.

I believe Fundrise can be a nice addition to your overall portfolio, but I would advise you to do your research and not tie up more than 10% of your assets into this investment.

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Real Estate Investing for Beginners: Top 7 Tips You Need to Know

Real Estate Investment Forecast for 2019: Will the Trends and Prices Change?

Master the Market: How to Invest in Real Estate and Make a Killing

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