Wouldn't it be great if you could invest in commercial real estate and apartments without dealing with all the hassle of buying, improving, and re-selling real estate? Well, now you can, thanks to Fundrise. In this Fundrise review, we'll explore the pros and cons of this innovative investment platform and compare it to other options in the market.
What is Fundrise?
Fundrise is a unique online platform that allows individuals to invest in commercial real estate through an eREIT (Real Estate Investment Trust). Unlike traditional REITs, Fundrise offers a crowdsourcing model that enables the average investor to participate in deals for as little as $10. This means you don't have to be a millionaire to invest in large-scale real estate projects.
One of the most exciting aspects of Fundrise is its ability to let investors buy into private commercial and residential properties by pooling their assets through an investment platform. By cutting out middlemen and selling eREITs directly to investors, Fundrise is able to offer fees lower than 90% of the competition.
Why Invest in Fundrise?
Fundrise offers a diverse portfolio of private real estate deals, allowing you to invest in a variety of property types and regions. With a minimum investment of just $10, Fundrise makes real estate investing accessible to everyone. Whether you're a seasoned investor or just starting out, Fundrise provides an opportunity to diversify your portfolio and potentially earn attractive returns.
Fundrise Fees
Fundrise charges a management and advisory fee of about 1% of the assets under their management on a yearly basis. This fee is broken down into two parts:
- Investment Advisory: This covers automated distributions, investor relations, automatic asset rebalancing, composite tax reporting, and other digital platform services. It amounts to 0.15% per year.
- Asset Management: This segment oversees the real estate properties in the portfolio and covers ongoing operations such as accounting, financing, construction, marketing, and sales. The fee for asset management amounts to 0.85% per year.
It's worth noting that Fundrise does not charge any transaction fees or sales commissions, and all reported dividends and returns are net of fees.
The Benefits of Investing with Fundrise
Fundrise offers several benefits that make it an attractive option for investors:
- Lower Fees: With fees of only 1% per year, Fundrise offers cost-effective investment opportunities compared to traditional approaches that can cost around 5-6% annually.
- Accessible Investment: Fundrise allows you to start investing with a minimum of $10, making it accessible to investors of all backgrounds and budgets.
- Customizable Search: The platform provides a robust filter option that allows you to customize your search and find potentially profitable deals based on your preferences.
- Free Account Creation: Opening an account with Fundrise is free, and there are no charges to maintain your account or browse investment options. This gives you the opportunity to explore the platform and its services before making a decision.
- Passive Income: Fundrise offers inherently passive income from real estate investments. You can enjoy the benefits of real estate investing without the intensive planning and active management required in traditional real estate investments.
- Rolling Maturity Dates: Most Fundrise investments have rolling maturity dates, allowing you to access your investment periodically. While the investments are not liquid, Fundrise provides an opportunity to withdraw part or all of your investment value every few years.
- Secure and Convenient: Fundrise provides a secure and convenient investment experience. You can invest from the comfort of your home, add funds using an electronic check, and sign documents online.
The Downsides of Investing with Fundrise
While Fundrise offers many benefits, it's important to consider the potential downsides:
- Limited Investment Options: Fundrise currently offers a limited number of investment options, particularly for unaccredited investors. Accredited investors have more choices, but there are still relatively few options compared to other platforms.
- Illiquidity: Fundrise investments remain illiquid until they reach maturity. There is no secondary market, so you cannot easily sell your shares if you need immediate access to your money. However, Fundrise has introduced measures to make it easier for investors to cash out.
- Limited Historical Data: As a relatively new company, Fundrise has limited historical data to examine. While they have achieved impressive returns in the past, it remains to be seen how their operations will perform in the future.
- Not Available to Unaccredited Investors: Some investment options at Fundrise are only available to accredited investors. Meeting the criteria for becoming an accredited investor can take several years, making these options inaccessible to many individuals.
Fundrise Alternatives
If Fundrise doesn't meet your needs or preferences, there are several alternatives to consider in the real estate crowdfunding space:
- Groundfloor: Groundfloor is a peer-to-peer real estate lending platform that allows investors to start with as little as $10. It offers direct access to private real estate deals and the opportunity to make great returns.
- Roofstock: Roofstock is an app designed for investors who want to buy and rent out single-family rental homes. It simplifies the process of investing in rental properties and offers a platform for diversifying your portfolio.
- PeerStreet: PeerStreet allows investors to invest in real estate debt and earn money as borrowers pay back their loans. It offers a low minimum investment of $1,000 and a diverse portfolio of real estate debt investments.
These are just a few examples of Fundrise alternatives that can provide alternative investment opportunities in real estate.
Conclusion
Fundrise offers a hassle-free way to invest in real estate for as little as $10. With its diverse portfolio, low fees, and accessible investment options, Fundrise provides an opportunity for both seasoned and new investors to participate in the real estate market. While it has its limitations, Fundrise remains a compelling option for those looking to diversify their investment portfolio and potentially earn attractive returns.
Click here to sign up for Fundrise and explore the latest investment opportunities.
