This article may contain links from our partners. Please read how we make money for more info.
Do you want to start investing in real estate, but don’t have the money to do so?
That’s some negative talking there! You don’t need to be really wealthy for private real estate investing nowadays.
Fundrise makes it possible for you to invest in private real estate and more with as little as $10.
But what is Fundrise and how do you use it to make money?
Today we’re going to do a Fundrise review and find out if they’re the real estate platform for you.
Real Estate Investing
Fundrise At A Glance
General Info: Fundrise is a way that any investor- including non-accredited investors!- can get involved in real estate investment. You can invest in large projects like apartments, commercial buildings, and upcoming construction projects to diversify your portfolio.
Pros: You can invest in Fundrise for as little as $10. Their platform is well structured, you can view all the details of possible real estate investments, and you have the potential to make more return on investments on Fundrise without high fees like other REITs.
Cons: Investing in real estate has low liquidity- you can’t just cash out quickly and move on as you do with the stock market.
What Is Fundrise?
There are other ways that you can invest in the commercial real estate world without actually buying a house and doing some flipping action.
Fundrise is a crowdfunding investment platform that has been set up as an easy way for people to invest in real estate deals.
It was founded in 2010 by brothers Ben and Dan Miller and has been called the first company to successfully crowdfund investment in the real estate market.
They’re set up so that the average person can make investments in real estate using real estate investment trusts (REITs) and funds (FUNDs).
Real estate investment has historically been only for the very wealthy. But not anymore!
It’s time for you to get in on real estate investment funds and other investment opportunities that can make you money.
So let’s talk about what Fundrise is and why you should get on the platform today.
Who Is Fundrise For?
So, who is Fundrise for?
Well, to start with, the requirements to invest with Fundrise are to be a U.S. citizen and at least 18 years of age.
But Fundrise investments are for:
Long-term investors
Investors who are looking to diversify their portfolio- aka having more than stocks and bonds
People looking for private real estate and commercial real estate investments
Hands-on investors, those who will do the research and some leg work to invest wisely
You don’t have to be a seasoned real estate investor to benefit from Fundrise, but to do real estate funds or trusts, you’ll want to be dedicated to “the work” of making smart investments.
You’ll have some leg work to do to make sure you’re putting your money into opportunities you’re comfortable with.
Your risk tolerance has an important part to play here and your research skills will need to be at the ready!
How Does Fundrise Work?
There are 2 Fundrise investments that you can invest in:
eREIT (electronic real estate investment trust)
eFund (electronic real estate fund)
A real estate investment trust (REIT) is the most common investment, similar to an ETF or mutual fund, but where you buy or manage buildings or have mortgages.
An eFund is when your money (and other investors’ money) is used to buy land, which houses are then built on, and then they are sold on to the home buyers.
As a Fundrise investor, you will be buying shares of the eREITS or eFunds in an available Fundrise account:
Starter
Supplemental income
Balanced Investing
Long-term growth
Fundrise will choose which mix you will have in each Fundrise plan, based on what your goals are.
Fundrise Features
Let’s have a look at some of the features:
Low Minimum Investments
Low initial investments are perfect for their real estate deals, making Fundrise more available for investors of all backgrounds.
A lot of people want to invest early in real estate, but don’t have the capital in order to start buying a lot of different properties.
Fundrise offers the chance to invest for a low initial investment of $10- meaning you can sign up and invest today!
Passive Investments
If you are looking to invest in real estate, it typically isn’t very passive if you pick to flip houses or work as a landlord.
However, investing in eREITs with Fundrise is passive. Meaning your investments are more hands-off once you’ve got your money dedicated to real estate projects in your portfolio.
Open to nonaccredited investors
A lot of investment companies are only available to accredited investors who have a net worth of at least $1 million or an annual income of $200,000 ($300,000 for couples) making it difficult for some investors to get into private real estate investments.
If you’re not an accredited investor, you’re in luck! Fundrise welcomes nonaccredited investors to join in and get involved in the real estate market.
Interval Fund
The Fundrise Interval Fund is for those looking for more liquidity in their investments, plus Fundrise investors have more assets and higher diversification.
A diversified portfolio is more likely to have good gains, and they added the Interval Fund in 2021 to give investors more options.
Real Estate Investing
Investing With Fundrise
The Fundrise website is easy to use and sign up to – it should only take a few minutes to sign up.
There are the typical disclosures you should read (but do you really?), and then you give Fundrise general info like your name, address, phone number, and Social Security Number.
Then you’ll link it with your bank account to get your finances hooked up and ready for funds.
There are several plans and levels to Fundrise you need to know about:
Starter Portfolio
To get started on Fundrise, the minimum investment need is only $10. That’s it!
If you start with the Starter Portfolio, you can use $10 to invest in U.S. real estate opportunities.
Just like other investments, you’ll get quarterly returns from whatever you invest in, typically a mix of eREITs and eFunds, and you’ll get money from appreciation from your share values.
Basic Plans
At the Basic Level, you start with $1,000 investments, which is a pay bump, but you also get access to robo-investing, IRA investing, Fundrise IPO investing, and more.
You get a great mix of real estate projects in the U.S. to look through, which is why you’re on Fundrise, right?
The larger investment minimum means more investment chances, and more investments mean you have more opportunities to get higher returns on investment.
Core Plans
Next up, you’ve got the Core Plans, which have a starting investment of $5,000.
There are 3 Plans: Supplemental Income, Balanced Investing, and Long-Term Growth.
Each comes with more investing plans and sophisticated real estate strategies to aid you in getting more money from your portfolio, plus an expected return rate, so it may be something you’re interested in if you want more certainty from your investments.
Advanced Level
The Advanced Level is another step up, with a minimal requirement of $10,000, and it offers the same features as the Core Plans in addition to investing in more complex and advanced real estate funds.
Premium Level
This last level is a biggie, as the Premium Level requires investors to have a minimum of $100,000.
You can start with the Start Portfolio and then switch to Premium for no cost, but you have to be an accredited investor for this level.
As you may expect, this level gives you access to everything from everywhere else, plus you can be involved with Fundrise’s investment teams.
You may get more access to some real estate projects, so if you want more options for bigger investments and more ROI, this may be the best Level for you.
Fundrise IPOs
Not only can you get involved in real estate, but you can also invest in Fundrise by buying shares of the company if you’ve signed up for a Core account.
Fundrise Pros & Cons
Pros
Available for the average investor, instead of being only for the very wealthy
Low minimum initial payment amount to get started
Minimal requirements to sign up (just need to be over 18 and a U.S. citizen)
A way to get involved in real estate investments without having to actually purchase a property
The investments are available to non-accredited investors
The Fundrise fees are quite low: the annual asset management fee is only .85% and .in an advisory fee15%
Cons
Keep your money invested for 3-5 years to avoid early withdrawal fees
You pay 1% in annual fees (not high per se, but you may be used to commission-free investing)
The fees may be confusing to some (be sure to read through it all before signing up)
The investment is illiquid: you aren’t able to cash out easily because of this
Who Can Use Fundrise?
Investing in real estate has always seemed like something that only the very wealthy could participate in.
We love that there are more and more companies set up with an average participant in mind.
Not everyone will be able to buy multiple properties – there needed to be an option for those who couldn’t buy another house – and that’s where Fundrise stepped in.
FAQs For Using Fundrise
Is Fundrise a scam or a trustworthy place to invest?
No, Fundrise is not a scam!
We wouldn’t recommend an investment opportunity to you if it was a scam.
Fundrise is an SEC-regulated platform that is a safe app to invest in commercial real estate.
It also has an A+ rating with the Better Business Bureau (BBB), which is the highest rating a business can receive!
The BBB checks out customer complaints (not reviews!), pubic records, and more to determine their rating, and Fundrise hits high on every expectation, making them a trustworthy place to invest your money.
Are Real Estate Investments a Good Fit for YOU?
On the Fundrise site, they say that you need to be prepared to invest for a minimum of at least 5 years.
Real estate isn’t a get-rich-quick scheme. Like most investments, the longer you leave it, the better you tend to do.
The reason for this is that it is an illiquid asset. This means that cannot be easily sold – so you won’t be able to cash out any profit that you make straight away, unlike some other investments.
Something else to bear in mind is that there is a minimum starting investment of $10 for the Starter plan (it’s more for the other plans).
Real estate is an investment to consider if you’re looking for long-term investments and won’t need the money back quickly.
Can You Really Make Money With Fundrise?
Yes, you can make money with Fundrise. There are 2 ways that you can get payouts from Fundrise, which are:
Quarterly dividends
Appreciation in asset value
Fundrise has said that in 2019 the average annualized platform Fundrise returns were 9.47%, which is based on reinvesting back into it.
They seem to be quite consistent over the years but it’s worth remembering that it is an investment which means that there is no guarantee.
What Does Fundrise Cost? What Are The Fees?
There are 2 types of fees to bear in mind when it comes to Fundrise:
0.15% annual investment advisory fee
0.85% annual asset management fee
In total, that’s 1% of payments in fees, which isn’t high at all, but I know some of you are used to no-commision.
They really aren’t over-charging you, and these fees aren’t even how Fundrise makes money!
Fundrise makes money mostly from their lending fees, not from annual advisory fees and or other investment fees.
In addition to fees, Fundrise will “cost you” whatever investment minimum you decide to invest with, just like any other stock investments.
You will need to have a minimum of $10 in order to start investing on the Fundrise platform – more if you want to use one of their other plans.
The minimum used to be $500, which is half of what you need to go from Starter to Basic, but they dropped the minimum to make investments more available to everyone.
The costs and fees are still fairly low, making real estate investments a feasible money-making opportunity for you.
How do I withdraw money from Fundrise?
It can be difficult to withdraw money from Fundrise- as we’ve discussed, real estate is an illiquid asset, so it can be hard to shuffle money around quickly.
Our research showed that you can’t withdraw from your investment until about 3-5 years have passed, and many suggest waiting until 5 years to avoid fees and to see if you can get more money back on your investment.
Fundrise has addressed this for investors in their own article, saying you’ll have to request to withdraw your shares and get estimated wait times and possible penalties if you redeem your shares before 5 years have passed.
This may seem strange if you haven’t invested in real estate before, but this is fairly common practice as it is an illiquid asset that takes time to get great returns and takes time to find new investors to purchase your shares.
Unlike a stock or ETF, you can’t buy it one day and sell it the next, so withdrawing your money will be a waiting game.
Fundrise Alternatives & Fundrise Competitors
Fundrise isn’t the only real estate crowdfunding platform out there, so if you want to look for other options to buy stock in private real estate assets you could take a look at:
Roofstock
Equity Multiple
Realty Mogul
RealtyShares
Patch of Land
PeerStreet
When you are looking into alternatives, make sure that you look at the fees on the platform and also the minimum investment required.
The thing that we love about Fundrise, in particular, is that the minimum amount that you need to start is only $10, which is a lot less than the other platforms.
Fundrise Vs. Roofstock
Roofstock is another real estate investment platform you may want to get familiar with if you want more investment options.
They’re known for single-family properties and retirement investments (IRAs in real estate), whereas Fundrise is for investing in large-scale projects like apartments buildings and commercial buildings.
Just like Fundrise, you don’t have to be an accredited investor to join the platform and they both are ways to invest passively once you’ve purchased your REITs and added investments to your portfolios.
Most properties on Roofstock are below market value, and you can view all the key details and pictures through the platform.
The one drawback with Roofstock is that you are essentially buying the entire property rather than a piece of it, so your minimum investment is whatever the buying price happens to be.
Fundrise has a better minimum investment for beginners, but Roofstock is better for investors wanting to be involved in single-family rentals.
Other Investments
Are you wondering about investing in the stock market and having more investment options for your cash flow?
Here are some other platforms to consider:
Final Thoughts On Fundrise
If you are interested in investing in real estate but don’t have the capital to purchase a property off the bat, then investing with something like Fundrise is a good option.
There are other companies out there that you can use for the same thing, but the great thing about Fundrise is that you can have such a small amount to start with.
There are similar companies out there where you need $5000 to invest with them, but with Fundrise you only need $10 to start with their Starter plan.
We think that if you are looking to get started investing in real estate, looking at eREITs and similar is a really good option.
If you don’t have a lot of money to start with, then Fundrise could be a good option for you.
Real Estate Investing
This post Get Started In Real Estate With Only $10 was original published at “https://thesavvycouple.com/fundrise-review/”
