‎Fundrise on the App Store

Best Real Estate Platforms

PlatformMinimumLink
$10 Minimum, Private Commercial Real Estate Portfo$10 Minimum, Private Commercial Real Estate PortfoliosView Investments
$10 Minimum, Short Term Real Estate Debt Investmen$10 Minimum, Short Term Real Estate Debt InvestmentsView Investments
$100 Minimum, Buy Rental Property Shares$100 Minimum, Buy Rental Property SharesView Investments
$1,000 Minimum, Private Commercial Real Estate Por$1,000 Minimum, Private Commercial Real Estate PortfoliosView Investments
Marketplace, Buy/Sell Single Family Rental PropertMarketplace, Buy/Sell Single Family Rental PropertiesView Investments

Video

How Fundrise Works

Fundrise operates an online platform for real estate investing. They combine the money from many small investors to build property portfolios as private (REITs).

When you sign up for a Fundrise account, the platform asks you to pick a real estate investment strategy from several options that address different preferences for risk, income and long-term growth:

  • Fixed income. Generate modest income with lower risk by making real estate loans.
  • Core Plus. Get higher income and some growth by investing in property.
  • Value Add. Aim for greater returns by investing in properties that need renovations.
  • Opportunistic. Invest in high-risk, high-potential return projects like building a new development.

Fundrise will manage your funds and continue to add properties that meet your investment objective.

Account Tiers

The Fundrise platform offers five account tiers with different investment options and minimum investment requirements:

  • Starter. Get access to the firm’s flagship fund only, an initial minimum investment of $10
  • Basic. Choose investing goals and open an individual retirement account (IRA), an initial minimum investment of $1,000
  • Core. Build a customized portfolio with an initial minimum investment of $5,000
  • Advanced. Access all fund options with an initial minimum investment of $10,000
  • Premium. For accredited investors, the initial minimum investment is $100,000

With the Starter tier, you can only invest in the main Fundrise flagship fund and you can’t open an investment retirement account (IRA). All the other accounts offer IRAs and starting with Core. You can pick between more funds and customize your investment strategy, like picking real estate funds specifically for generating income.

Fund Options

The key thing for potential Fundrise users to understand is that all accounts let you invest in the firm’s REIT investment funds, although your menu of funds varies depending on your account tier.

Fundrise manages all of the private REITs available on the platform. They are not publicly traded like REITs like the ones available for purchase via an online brokerage account, tradable on the open market whenever you’d like to buy or sell shares.

Instead, you must purchase and redeem your shares with Fundrise.

You can request a redemption anytime, but the firm must approve the redemption. The company warns that during a real estate market downturn, they could restrict withdrawals.

If you choose to invest with Fundrise, it’s important to understand that this type of private REIT is considerably less liquid—and potentially riskier for that reason—than publicly-traded REITs.

There is only one buyer for your investment: Fundrise. If the company runs into trouble or decides to limit redemptions, you have no choice but to leave your money on the platform.

Higher level accounts also let you invest in non-registered funds. These provide more investment variety and can offer even higher returns but maybe even less liquid than the private REITs. Fundrise calls these nonregistered funds e-REITs, which charge an early redemption penalty.

How Much Money Can You Make With Fundrise?

  • Between 2014 and 2021, Fundrise annual returns ranged from 7.4% — 23.0%, depending on the year and portfolio.
  • There are two main ways to make money on Fundrise: Dividend income paid on a quarterly basis and capital appreciation realized on long-term projects.
  • You can customize your Fundrise plan to tilt more towards steady dividend income or long-term capital appreciation, or a blend of both.
  • Fundrise aims to provide steady and attractive returns over the long term.
  • Staying on the platform longer leads to better returns, because a real estate investment has a lower return profile in its first few years due to the J curve.

Do You Need the Income?

Federal law requires that all REITs distribute no less than 90% of their annual income to their unit holders. Fundrise’s eREITs are not excluded from this requirement. As a result, the company intends to make a high yield cash distribution at the end of every quarter. This can be great for investors who want to create an additional revenue stream. However, unlike corporate dividends that are taxed at a low rate, REIT distributions are taxed at the normal income tax rate. This is why REITs are sometimes called tax-inefficient investments (depending on your tax situation).

In some cases, an investor may end up realizing higher net returns and a lower tax bill by investing in a stock that reinvests the majority of earnings instead of distributing it to shareholders.

Dividend Income:

  • Revenue from Fundrise’s real estate portfolio is paid to investors on a quarterly basis in the form of dividend income.
  • Dividends are “passive” or “residual” income, meaning you don’t have to sell your shares or do anything to collect dividend income from Fundrise.
  • Dividends are funded by the real estate portfolio’s revenue-generating activities, such as collecting rent or earning loan interest payments from debt investments.
  • If you choose, dividends can be automatically reinvested in your eREIT portfolio.
  • Fundrise offers an in-depth write-up on how their dividends work.

Plans

Fundrise offers five different portfolio options, with minimum investments ranging from $10 to $100,000.

Starter

This is Fundrise’s most basic plan. Investors can get into the market with a minimum $10 investment. This is a good option for anyone with a little money to invest or for anyone who just wants to test out the market.

Basic

This account is a setup from the starter plan and allows investors to invest via their individual retirement accounts (IRAs). This plan requires a minimum $1,000 investment.

Core

The core plan adds a bit more customization than the basic plan, including customizing their portfolio strategy and directly allocating money to funds. The minimum investment for the core plan is $5,000.

Advanced

This plan gives investors access to more sophisticated real estate investing strategies. The minimum investment for the advanced tier is $10,000.

Premium

This is the highest-end offering from Fundrise, tailored for accredited investors. The minimum investment is $100,000 and gives investors priority access to the company’s investor relations team.

Fundrise Disadvantages

Moderate fees. Between the annual advisory and management fees, you are paying a flat 1% yearly to use the Fundrise funds. They charge the same fee for all account sizes too. In comparison, one of the best Vanguard ETFs for real estate costs 0.12% yearly.

Potentially limited liquidity. While you are supposed to invest for at least five years with Fundrise, you can request to cash out at any time. However, they reserve the right to restrict redemptions during real estate market downturns. They did so in 2020, at the start of the Covid-19 pandemic.

Redemption penalty for some funds. The eREITs and Fundrise eFunds charge a 1% redemption penalty if you try cashing out within five years of your initial investment.

Complete fee information is hard to find. The Fundrise website notes that you could owe other fees for projects, like development or liquidation fees, but they are not clearly labeled on the website. You need to search through each project’s offering circular to see exactly what you’re paying.

Limited customer service. If you have questions, you can email Fundrise or search through their help center database of articles. However, they do not provide a customer service line for phone support.

Who can use Fundrise?

Currently, U.S. citizens or permanent residents currently residing in the U.S. and over the age of 18 can learn how to invest in real estate with Fundrise. You do not need to have a certain net worth or be an accredited investor to use the platform. With five different portfolios to choose from, there’s an option suitable for most everyone.

However, if you are an accredited investor or have a high net worth, it may be worth your time to consider Crowdstreet, which offers investment opportunities in commercial real estate without the fees of other platforms. You can see how Fundrise and Crowdstreet stack up and choose the platform best suited to your investment goals.

How Has Fundrise Performed?

Fundrise publishes historical performance reports every year as well as quarterly reports. To date, it’s had 21 positive quarters and zero negative quarters, with the worst quarter returning 1.15% and the best quarter returning 9.40% for investors.

Here’s how Fundrise’s performance compares versus public REITs and the S&P 500:

FundrisePublic U.S. REITsS&P 500
2022 Q13.49%-5.27%-4.60%
202122.99%39.88%28.71%
20207.31%-5.86%18.40%
20199.16%28.07%31.49%
20188.81%-4.10%-4.38%
201710.63%9.27%21.83%

As you can see, both public U.S. REITs and the S&P 500 have had quarters with higher returns. But they’ve also had worse quarters than Fundrise as well, so there’s more volatility.

That said, always remember that past performance doesn’t guarantee future performance.

Got $10? Start Investing in Real Estate with Fundrise

My Fundrise Portfolio Returns

I started my Fundrise investment in February 2018 with $1,000 in the Basic diversified portfolio plan. About a month later, Fundrise was offering an initial public offering (IPO), which is something that always grabs my attention.

But to take advantage of the IPO, I had to have at least $5,000 invested, and that meant moving up to the Core plan. That was as easy as adding an additional $4,000 to my original investment.

The current balance of my account is about $11,113.83. Of that, $8,055.99 is the growth of the original $5,000 investment. The remaining balance in the account is my portion of the Fundrise IPO.

Focusing only on the real estate side, my $5,000 i

Focusing only on the real estate side, my $5,000 investment has increased by $3,055.99 over just four years.

Here’s how that breaks down by annual percentage return:

My Fundrise ReturnsYear% Return
20187.4%
20199.2%
20207.6%
202123.9%
20222.7% (YTD)
  • Average annual return: 13.3%

I don’t have the full dollar breakdown for each year, but here’s what I do have, along with the split between dividends and capital appreciation:

  • 2018: Dividends, $274; capital appreciation, $74, for a total return of $348, net of fees.
  • 2019: Dividends, $383; capital appreciation, $131; advisory fee, $7.97, for a net total return of $506.
  • 2020: Dividends, $226; capital appreciation, $234, for a total return of $452, net of fees.
  • 2021: Dividends, $229; capital appreciation, $1,308.36, for a total return of $1,528 net of fees
  • YTD, through March, 2022: Total return of $219, net of fees.
  • Total net return for all four years: $3,055.86

This is what I really like! They break down exactly how much you earn, and also where you earn it. They also let you know when a property has been sold. All that information is available in the Fundrise dashboard.

As a comparison of my returns here’s what Fundrise shares on their site:

Was Fundrise Involved in a Scandal?

Every fast growing company will deal with some sort of headaches with personnel and/or business roadblocks. For the most part, Fundrise has avoided most scrutiny from media and investors.

The biggest negative headline that Fundrise has received was the ousting of their former CFO, Michael McCord, back in 2016. McCord claimed that Fundrise’s practices were fraudulent. Fundrise claimed their former CFO was attempting to exhort them for over $1 million plus company stock.

Both the SEC and the local police department conducted an extensive investigation into the allegations and were not able to find anything remotely close to what McCord was claiming. That was several years ago and Fundrise continues to grow and expand making their investors a good amount of money.

BUILD WEALTH IN REAL ESTATE

INVEST IN FUNDRISE NOW

The Fundrise Advantage: Real Estate Made Accessible to Everyone

At other online investment platforms, there are restrictions on who can invest.

The worst part:

Some platforms only allow accredited investors. 

An accredited investor is someone who has an earned income of more than $200,000 for the last two years or a net worth of over $1 million. 

Fundrise doesn’t have those restrictions.

Anyone can invest through the platform, as long as they’re a U.S. citizen aged 18 or older. 

The platform also makes it easy to invest if you don’t have a lot of money to start. The $500 investment minimum for a Starter portfolio is lower compared to some platforms that require $5,000 or $10,000 to invest. 

You can also upgrade to a Core account once you have the $1,000 minimum needed to get started. It doesn’t cost anything to upgrade your account. 

How Does Fundrise Work: Final Thoughts

Fundrise offers a relatively easy way to buy into real estate with a starting point of $10.

Fundrise will pool your money together with thousands of others and put it toward new construction projects or rehabilitations with potential. This will be completely passive investing requiring no time or energy on your part.

How successful has the Fundrise platform been so far? To date, Fundrise has acquired more than $5.1 billion in real estate and distributed over $100 million back to investors in the form of dividends.

If this is the type of investment you are searching for, follow the link below to sign up for Fundrise today!

Start Investing With Fundrise Today With $10 Minimum

Maximizing your earnings with Fundrise

Your potential earnings with Fundrise will vary depending on your portfolio and the investments within it. But there are a few things you can do to help maximize your earnings. Consider these tips before jumping in:

  • Look at your options: Fundrise doesn’t offer one catch-all portfolio but rather a handful of options tailored to your specific investment style. Understand each of these plans before you begin so you know you’re choosing the best option for your situation.
  • Reinvest your dividends: It might be tempting to take your earnings and do with them what you want, but reinvesting your dividends puts that money straight back into open offerings with Fundrise. There are no fees to reinvest your dividends.

Investment Options

Fundrise offers two investment vehicles: eREITs and eFunds. 

The eREIT is a real estate investment trust. Real estate investment trusts are companies that own real estate properties. REITs are required to pay out 90% of dividends to investors and they offer the tax benefits of owning property without actually having to own it. 

And, eFunds are private investment funds that invest in real estate. Both eREITs and eFunds offered by Fundrise focus exclusively on commercial properties, not residential. 

Starter portfolios cover these four investment options:

  • Income REIT
  • Growth REIT

Growth REITs are designed for appreciation. Income REITs are geared toward cash flow. All four differ in terms of the number of projects they invest in, the dividend payout and return performance. 

Core accounts work a little differently. At the Core level, investing is strategy-based. You can choose from:

  • Supplemental Income
  • Balanced Investing
  • Long-term Growth

Supplemental Income

The Supplemental Income Portfolio earns returns mostly through quarterly dividends.

The goal of this portfolio option is to provide investors with consistent income.

According to Fundrise, the projected annual return is 7.8% to 9.2%. 

Balanced Investing

Balanced Investing offers investor’s returns through a combination of quarterly dividends and appreciation.

This option is an almost equal split between debt and equity real estate investments.

The annual return profile for this option is 8% to 12%. 

Long-term Growth

The Long-term Growth portfolio focuses on providing long-term appreciation.

This one has the highest annual return profile overall, at 8.2% to 14.7%.

But, this option might not be right for you if you’re not looking to buy and hold real estate for the long haul. 

Whether you have a Starter or Core plan, investments are taxed the same way. You’ll pay ordinary income tax on returns. 

Fundrise simplifies investing by offering eREITs and eFunds.

If you’re looking for a way to invest in individual real estate projects, you’ll need to check out a different real estate investment platform.

The same goes if you’re looking for residential real estate investments.

Fundrise Features

Minimum Investment$10
Account Fees1%/year
Time Commitment0 Months
Accreditation Required
Private REIT
Offering TypesDebt, Equity, Preferred Equity, Direct Ownership
Property TypesCommerical, Residential, Single Family, Foreign Investors
Regions Served50 States
Secondary Market
Self-Directed IRA
1031 Exchange
Pre-vetted
Pre-funded

Disclaimer: The information contained herein neither constitutes an offer for nor a solicitation of interest in any securities offering; however, if an indication of interest is provided, it may be withdrawn or revoked, without obligation or commitment of any kind prior to being accepted following the qualification or effectiveness of the applicable offering document, and any offer, solicitation or sale of any securities will be made only by means of an offering circular, private placement memorandum, or prospectus. No money or other consideration is hereby being solicited and will not be accepted without such potential investor having been provided the applicable offering document. Joining the Fundrise Platform neither constitutes an indication of interest in any offering nor involves any obligation or commitment of any kind.

Tags