Fundrise Review

4.6
116 votes
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Introduction Fundrise

Fundrise is an online real estate company that connects investors to private real estate agreements, however, they are cautious of fundamental costs and absence of liquidity. Perhaps the best part about Fundrise is that the company aids regular investors with normal-sized portfolios to get into the property market; the platform offers assets from both commercial and residential property sectors.

Fundrise mainly focuses on real estate investment trusts, or REITs, that usually invest in lucrative real estate. Fundraise will either acquire, rent out, and manage the buildings or they will hold mortgages.

 

Overall review
Advantages

  • Non-accredited investors can invest.
  • Low minimum investment.
  • Variety of plans available to choose from.
  • Access to commercial property.
  • Quarterly redemptions and distributions.

Disadvantages

  • No secondary market to sell your investment to.
  • Distributions are subject to 15% tax.

Fundrise Homepage

The platform
4.7 Stars

Fundraise calls its products eREITs and eFunds. In eFunds, clients’ money is grouped together to buy land, build properties, and then sell it for a profit. Both eREITs and eFunds are limited liability companies and investors will buy the company’s shares through several plans.

The simplest plan is the Start Portfolio, where the minimum investment is just $500. After that, Fundrise has several core plans for investors looking for more diversification.

Features

The platform offers services to investors from all over the world. 


How to get started? 

You can create an account by registering on the website. The registration is free. However, there are fees that apply when you have registered already. 

Fundrise charges an asset management fee of 0.85% per annum based on your investment, and a 0.15% advisory fee. Along with some other miscellaneous fees, you could be looking at paying between 2-3%.

Fundrise will define the combination of eREITs and eFunds in each plan, as well as the main properties. The three core plans are:

Supplemental Income Plan

The main aim of this plan is to offer investors an income-oriented real estate private equity strategy with quarterly dividends, and minimal appreciation. The target allocation of this plan is towards assets that produce consistent cash flow.

In the Supplemental Income Plan, Fundrise will invest in low-risk assets that have anticipated returns; this could be investing in a developer’s new project or buying an existing building that’s already occupied. In order to sustain and develop a high-income stream, Fundrise invests into the improvement of the property that will increase its value. In contrast to a growth strategy, where returns end once the property is sold, investors in an income strategy will earn consistent dividends through rent or interest.

Below is an example of a completed project, where returns are over 11%.

Balanced Investing Plan

The main aim of this plan is to offer investors a blend of dividends and appreciation through income and growth strategies. The target allocation of this plan is across a broad range of investment types and structures.

In the Balanced Investing Plan, Fundrise will invest in low-risk assets that have projected returns; this could be investing in a developer’s new project or buying an existing building that’s already occupied. In order to sustain and develop a high-income stream, Fundrise invests in the improvement of the property that will increase its value. In contrast to a growth strategy, where returns end once the property is sold, investors in an income strategy will earn consistent dividends through rent or interest.

Below is an example of a completed project, where returns are over 9%.

Long-Term Growth Plan

The main aim of this plan is to offer investors returns via appreciation in share value, with fewer dividends through a growth-oriented real estate private equity strategy. The target allocation of this plan is towards assets with a high potential to increase in value.

In the Long-Term Growth Plan, Fundrise aims to secure maximum growth potential in real estate by buying ahead of the general public. Therefore, they will invest in an emerging neighborhood or property with unrecognized potential. Fundrise will either build the development from scratch or renovate an existing property to add more value to it. In this plan, investors see returns towards the completion of the project, once it’s sold.

Below is an example of a completed project, where returns are over 9%.

Fundrise also offers Advanced and Premium account levels, where sophisticated investors can get access to a larger number of real-estate projects, along with other features and benefits.

How are eREITs different from other REITs?

Fundrise’s eREITs are quite similar to non-traded REITs with their main difference being fees. Investors purchase shares directly from Fundrise without going through a broker, which allows Fundrise to reduce the fees dramatically. There are no upfront fees or commissions just an annual asset management fee.

What are efunds?

eFunds (Electronic Fund) invest in commercial real estate and are similar to a professionally managed mutual fund but are not publicly traded. eFunds are set up as partnerships, so they are taxed differently. Investors save on double taxation as well as commission. While an eREIT is typically used for income, eFunds are used for growth.

Who can invest with Fundrise?

Fundrise does not have any investment requirements, so non-accredited investors are welcome to join.  Accredited investors are defined as those who have a net worth of over $1 million (personal residence not included) or with an income over $200,000 per annum for individuals and $300,000 per annum for couples.

Fundrise has some minimum investment requirements based on your account level:

  • $500 minimum – Starter Portfolio.
  • $1,000 minimum – Core plans (Supplemental Income, Balanced Investing, Long-Term Growth).
  • $10,000 minimum – Advanced account level.
  • $100,000 minimum – Premium account level.

Who is Fundrise best suitable for?

Fundrise offers real estate investors an opportunity to diversify their portfolios and is a platform that’s very easy to navigate. Understandably, every kind of investment has risks and despite real estate being amongst the most secure investments out there, investors can still come across an unpredictable housing crisis or recession.

Fundrise is great for investors that are not looking to redeem shares early and are happy to keep their money tied to their investment for some time. Furthermore, Fundrise works for new investors as it has very low minimum investments and serves non-accredited investors too.

Regulations

The company is US-based, although it operates in a number of countries around the globe.

Risks and securities

Fundrise uses bank-level security for your protection. Your information is encrypted with an AES bit symmetric key, the same as level as the largest commercial banks.

Customer Service
4 stars 

There is a contact form on the website, so anyone can reach out with their questions. The physical address of the company: 11 Dupont Circle NW, 9th Floor Washington, DC 20036 

Conclusion

Fundrise offers real estate investors an opportunity to diversify their portfolios and is a platform that’s very easy to navigate. Understandably, every kind of investment has risks and despite real estate is amongst the most secure investments out there, investors can still come across an unpredictable housing crisis or recession.

Fundrise is great for investors that are not looking to redeem shares early and are happy to keep their money tied to their investment for some time. Furthermore, Fundrise works for new investors as it has very low minimum investments and serves non-accredited investors too.

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