If you think real estate investing is out of reach–say, because of cost or complexity–then keep reading this Fundrise review.
And prepare to be pleasantly surprised!
Fundrise lets you invest in residential and commercial real estate with just $500.
The company helps investors meet their goals through an online crowdfunding platform. Buyers can pool their assets so that they have the leverage to invest in property. What distinguishes the Fundrise platform from other online real estate companies or crowdfunding sites is that it offers products to non-accredited investors.
Therefore, if you have a net worth of less than $1 million and have an annual income of less than $200,000, you can still take advantage of investment opportunities through Fundrise eFunds
- Minimum investment of just $500 to $1,000
- Flagship product: real estate investment trust (REIT)
- eFunds: purchased land or housing developments
- Residential or commercial real estate investments
- Asset management fee and advisory fees equal 1%
Fundrise operates mainly on commercial and residential real estate investment trusts (REITs). Investors look for opportunities to buy a property that produces income and has long-term growth.
Examples include: managing commercial buildings, office buildings, or holding mortgages. These are liquid properties that provide no guarantee of investors regardless of their net worth.
eREITs, as Fundrise calls them, and eFunds are part of the real estate crowdfunding platform.
The platform gives Fundrise account holders an opportunity to create supplemental income through land investments, new construction projects and housing developments. These real estate projects are for people who are interested in buying houses.
Fundrise Portfolio Options
Fundrise offers four investment portfolio options:
- Supplemental Income
- Balanced Investing
- Long-Term Growth
Real estate assets and properties available are combined in a mixture of Fundrise’s eREIT and eFunds. Fundrise determines how they are combined in each portfolio. (Their Supplemental Income option is one of the best passive income ideas).
This method of crowdfunded investing presents both high risks and lucrative opportunities for real estate investors. In 2017, investors saw an average return of nearly 12%.
Why Use Fundrise?
- Long-term investing
- Properties have liquid value
- Diverse portfolio: no stock market connection
- Fundrise searches markets for investors
Fundrise isn’t for everyone. Since investments are not traded on the stock market, it means they have liquid value. Therefore, investors partnering with Fundrise need to plan to hold a property for at least five years. This type of investing is what makes Fundrise attractive to certain investors.
Also, if you are looking for diversification without the pull of the stock market or public trading, then Fundrise provides this option. Fundrise’s portfolio is independent of stock market portfolio or the middleman. Whether you are launching a starter portfolio or looking for more advanced investments, you have far more flexibility.
Additionally, Fundrise is also ideal if you are looking for a company that can choose or manage your properties for you. Fundrise eREITS include properties that they have identified as good investments. They find residential and commercial real estate, perform the underwriting, and then choose which properties fit into your portfolio.
Fundrise Review: Pros
There are several key characteristics of Fundrise investments that make it a better option than the competition including:’
- Low-cost, low minimum investment
- 90-day money-back guarantee
- User-friendly platform for any device
- Easy signup
If you don’t have a lot of cash to shell out upfront for real estate deals, then you can still get in on the good deals with Fundrise. The average first-time investment for entry-level users is $500. A low investment may be what you need to start your portfolio.
Related: check out the 12 highest paying part-time jobs.
According to the Fundrise website (Fundrise.com), the company will purchase your original investment for the original price if you are unhappy with the service. This allows you to decide if Fundrise is for you.
Average investors will appreciate the easy-to-use platform. Signup takes less than 15 minutes after you read the investor disclosures. You simply provide your personal information including your social security number and decide how you want to transfer money to your account. Once you setup your account it may take three to five business days to fund your investment.
Fundrise Review: Cons
With all the benefits that come with using Fundrise, there are some things you need to be aware of such as:
- Fundrise does not make their fee information readily accessible
- Fundrise can bury you in lengthy digital documents that you still need to read
- The Fundrise online platform does not tell the whole story
As seen, the three statements above can be summed up in one word: transparency. When it comes to fees, regulations, any offering circular, or other vital data, Fundrise does not make it easy for you to find this information. They are not alone in this regard. This is standard in the online investment industry.
Also, since you do not have a broker or a middleman to search and decipher this information, you will have to do it yourself. In addition, you may miss hidden management and advisory fees or an annual fee if you don’t do your homework (even the low fees). Furthermore, do not depend on the online investment platform to provide you with the information you need.
Fundrise Review: Bottom Line
If you have some cash to spare and want to get started in real estate investing, Fundrise may be a great starting point.
If you invest, however, make sure you are in it for the long haul. Fundrise works best with long-term investments.
As with any investment company, make sure you what you are getting into. In short, read all documents carefully and understand all fees associated with Fundrise’s services.
Related: check out the best investing apps for beginners.