Investing in real estate can be a profitable venture, but the lack of knowledge and capital often deters the average person from taking the leap. Enter Fundrise, a platform that opens up the world of real estate investment to everyone.
By pooling money from multiple investors, Fundrise offers the opportunity to purchase shares in an eREIT, allowing for a much lower minimum investment compared to traditional real estate investment methods.
But is Fundrise the right choice for your real estate investment journey? In this article, we’ll explore how it operates, who it benefits, and weigh its advantages and disadvantages.
What is Fundrise?
Established in 2010, Fundrise blazed the trail for real estate crowdfunding. It revolutionized the industry by allowing individuals to invest in real estate with just a few hundred dollars as a starting point.
Initially, the platform was only accessible to accredited investors, but in 2015 Fundrise made its services available online, expanding its reach to a wider audience. The direct-to-consumer model employed by Fundrise eliminates intermediaries and results in lower fees for investors. With reported average annual returns ranging from 8.7% to 12.4%, Fundrise offers a lucrative investment opportunity.
How does Fundrise work?
Starting your investment journey with Fundrise is simple. With a minimum investment of just $10, you can become a real estate investor. This grants you access to the Starter Portfolio, featuring 5 to 10 varied real estate investments. Not only will you receive quarterly returns, but you’ll also enjoy the appreciation of your shares.
Up your investment to $1,000 and you’ll be upgraded to the Core Portfolio, offering you the chance to invest in more than 40 diverse real estate projects. Choose from one of three plans, each tailored to fit your unique financial goals:
- Supplemental income – focus on steady, dividend-driven income.
- Balanced investing – create a well-rounded portfolio for building wealth.
- Long-term growth – pursue consistent growth over time.
Once you’ve signed up, Fundrise will craft a plan customized to your objectives, and when you reach $1,000 in total investments, your Starter Portfolio will automatically be upgraded to a Core Portfolio.
Invest with confidence – Fundrise offers little to no risk. If you’re unsatisfied with the service after 90 days, the company will happily buy back your original investment.
Who is Fundrise best for?
Investing in real estate doesn’t have to break the bank with Fundrise. Whether you lack the capital, time, or knowledge to choose properties independently, Fundrise makes it possible to invest in residential or commercial real estate with just a small amount of money.
The company takes care of the legwork, but it’s wise to research the properties you’re investing in to be aware of fees and potential risks.
Long-term investment is key for maximum returns with Fundrise, as withdrawals before the 5-year mark may incur a penalty fee. It’s also a wise option for experienced investors seeking to diversify their portfolio beyond stocks. Get started on your real estate investment journey today with Fundrise.
Advantages and Disadvantages
Fundrise is a good investment opportunity, but it’s not going to be the best option for everyone. Listed below are some of the pros and cons you should consider before investing with the company.
Pros
- Low initial investment: Most real estate investments cost thousands of dollars to get started. In comparison, there is a very low barrier to entry with Fundrise. If you have $500 to invest, you can get started right away.
- Easy-to-use investment platform: Getting started with Fundrise takes as little as 10 minutes. You just enter your name, phone number, and Social Security Number then you’re ready to fund your account. The website is easy to navigate and all the information you need is available in your portfolio.
- Money-back guarantee: One of the best things about Fundrise is that you can get started virtually risk-free. After 90 days, if you decide that signing up was a mistake, Fundrise will give you a full refund.
- Potential for real returns: If you stick with Fundrise, you could end up seeing substantial returns on your investment. On average, the company earns returns between 8.7% and 12.4%, which is comparable to what you’d get on the stock market.
- Diversification: With Fundrise, you get a diversified portfolio of multiple properties. So if one of your properties isn’t doing as well, this should be offset by other investments.
Cons
- Hidden costs: There are fees to using Fundrise and you may have to do some digging to figure out exactly how much. The company only advertises an annual asset management fee of 0.85% and an advisory fee of 0.15% (adding up to 1%), but there are other costs to using the service.
- Investment isn’t liquid: When you invest in eREITs, you’re putting your money in a long-term investment strategy. These assets aren’t liquid or publicly traded. If you do need to take your money out, it could involve a lengthy process and penalty fees.
- No guarantee on returns: The company has a history of strong returns, but there’s no guarantee you’ll get a return on your investment. Of course, this is true with any investment.
- Not recession-proof: And finally, Fundrise began in 2010, after the 2007 financial crash. The company hasn’t yet experienced a recession so it’s unclear how well the company will fare in that environment.
Is Fundrise safe?
Fundrise is a legitimate company that has produced solid returns for many real estate investors. The company received an A+ rating from the Better Business Bureau and has mostly positive customer reviews. So, you don’t have to worry that eREITs are a scam.
That being said, all investments come with a certain amount of risk. So make sure you do your homework first so you can pick the investment option that’s best for you.
Summary
Investing in real estate can be intimidating, but the Fundrise platform simplifies the process and eliminates much of the unknown. With its affordable and straightforward approach, Fundrise is a low-risk option for anyone looking to venture into the real estate market. The company even offers a money-back guarantee, giving you peace of mind as you begin your investment journey.
For those seeking additional real estate investment options, exploring the numerous ways to start investing is a great place to start.
Fundrise Frequently Asked Questions
Is Fundrise legit?
Fundrise has been a trusted player in the real estate investment space since its inception in 2010. Its innovative approach of offering direct investment opportunities to individuals, bypassing traditional intermediaries, has made it one of the foremost companies in real estate crowdfunding.
If for any reason, you’re not satisfied within the first 90 days of investing, the company will buy back your original investment. All in all, Fundrise is a credible and reliable choice for those looking to dive into the world of real estate investing.
Is Fundrise a good investment?
It certainly can be. Fundrise offers an innovative solution for those wanting to dip their toes into the market. With only a minimal investment required and various portfolio options available, Fundrise provides the flexibility and personalization that’s hard to come by in other conventional real estate investment opportunities.
The company’s emphasis on transparency, minimal fees, and its money-back guarantee all speak to their commitment to delivering the finest experience for their investors. Nonetheless, like any investment, there are always inherent risks and it’s essential to weigh your options carefully and conduct extensive research before making a decision.
Fundrise could certainly be a favorable investment opportunity if you’re looking to diversify your portfolio. However, the success of your investment is contingent upon several factors such as your financial aspirations and risk tolerance.
Is my money tied up at Fundrise?
It depends on the type of investment plan you choose with Fundrise. Some investment plans have a lock-in period, during which your funds are tied up and you are unable to withdraw them. This is a common practice in real estate investing to give projects time to mature and generate returns.
However, there are also plans that allow for more flexibility like the Flagship Fund that offers penalty-free redemptions every quarter. Make sure you carefully read the terms and conditions of your investment plan before committing your funds to ensure that you understand the potential restrictions and requirements.
Does Fundrise pay dividends?
Yes, Fundrise pays dividends to its investors. The frequency of dividend payments depends on the type of investment made, but it’s usually on a quarterly basis. The amount of the dividend payment is determined by the performance of the underlying real estate assets in the portfolio.
In general, real estate investment trusts (REITs), like Fundrise, are required to distribute at least 90% of their taxable income to shareholders in the form of dividends.
