Fundrise is an online real estate investing firm that allows individual investors to invest in real estate through an eREIT (Real Estate Investment Trust) or an eFund. Their crowdsourcing model sets them apart from a traditional REIT allowing the average investor to participate in deals for as little as $500. Since the Fundrise eREIT is sold directly to investors, they are able to have lower fees than 90% of the competition.
The way it works is, Fundrise uses funds from its investors to buy undervalued real estate. Then, they use their resources to renovate the property in order to sell it at a profit or rent it out for a longer investment. The profits made go back to Fundrise, which then distributes the profits to the shareholders.
Fundrise At a Glance
- Minimum Investment: $500 to $100, depending on chosen portfolio
- Offering Types: Debt, Equity, Preferred Equity
- Property Types: Commercial, Residential, Single Family
- Fees: Asset management fee of 0.85%, advisory fee of 0.15%. Other fees may apply.
- eREITs and eFunds: Investors choose among four investment portfolios which have an assortment of 5 eREITs and 2 eFunds
- Return Potential: Average return for all Fundrise Investments in 2017 was 11.44%, net of fees, assuming dividend reinvestment, according to Fundrise
- Available in all 50 states
- 90-day guarantee: Fundrise will “buy back your investment at the original amount” if you request a redemption within the first 90 days, according to its website
Who It’s Best For
- New real estate investors
- Those looking for low investment minimums
Why We Like it
Low investment minimums
Fundrise’s low investment minimums start at $500, which means it’s easier for investors to get into private real estate deals without needing big money to grow a portfolio.
Commercial real estate access
Commercial real estate is typically a high-dollar investment commonly out of reach for the average investor. By investing through Fundrise, investors can add commercial real estate properties to their portfolio with little money.
Fundrise investments are truly passive, unlike owning your own commercial real estate outright
Unlike competing firms, Fundrise is open to any investor in the U.S., regardless of income or net worth
Unlike other private REITs, Fundrise eREITs have a pool of many properties that could help smooth out returns
Fundrise will “buy back your investment at the original amount” if you are dissatisfied with the service and request a redemption within the first 90 days, according to its website. This lets you dip your toes in the water as an investor. Restrictions may apply, including a 60-day waiting period after submitting your request, according to Fundrise.
Once your Fundrise account is ready and your investments get funded, you will be able to easily review information about each property in your portfolio on your account dashboard.
What Could Be Improved
Limited investment liquidity
Fundrise eREITs are not publicly traded, so once you make an investment, you are pretty much committed to the investment for the term.
Fundrise says it saves investors money by creating a relatively direct link between investors and real estate, however, some of the associated upfront costs are somewhat difficult for investors to see (an area other online real estate investing firms tend to fall short as well).
How to Sign Up
Getting started with Fundrise takes about 10 minutes (after reading the lengthy investor disclosures) and the process is fairly straightforward.
2. You’ll be asked to provide your name, address, phone number, and Social Security number for identity verification.
3. Choose between funding your account via an ACH transfer (this would entail linking your bank account), by entering your bank information on your own, or by using a wire transfer.
4. Once you’ve chosen your investment and it’s funded, information about each property in your portfolio is easy to review on your account dashboard.
Disclaimer: This content and the opinions expressed here are the author’s alone and have not been provided, commissioned, or endorsed by any financial institution. All information was accurate at the time of publication but terms and conditions may change at any time.