Do you want to start investing in real estate, but don’t have the money to do so?
You don’t need to be really wealthy in order to invest in real estate nowadays.
Yes, really!
There are other ways that you can invest in real estate without actually buying a house.
You can invest in real estate investment trusts (known as REITs) which invest in real estate that will produce income for you.
Today we are going to do a Fundrise review and find out all about whether it’s a good idea to invest with them or not.
Let’s go!
Table of Contents
What Is Fundrise?
Fundrise is a crowdfunding investment platform that has been set up as an easy way for people to invest in real estate.
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 have set up so that the average person can invest in real estate. Real estate investment has historically been only for the very wealthy. So, is Fundrise legit?
How Does Fundrise Work?
Fundrise IPO has two main investments that you can invest in:
- eREITs (electronic real estate investment trusts)
- eFunds (electronic real estate funds)
The eREITs invest in real estate either by buying or managing buildings or having mortgages.
The eFunds are 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 an investor, you will be buying shares of the eREITS or eFunds by buying one of the portfolios available on Fundrise:
- Starter
- Supplemental income
- Balanced Investing
- Long-term growth
Fundrise will choose which mix you will have in each Fundrise plans, based on what your goals are.
Fundrise Features
Let’s have a look at some of the features for our Fundrise review:
- Low initial investment. A lot of people want to get started investing 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 in real estate for a low initial investment.
- Ease of use. The Fundrise website is easy to use and sign up to – it should only take a few minutes to sign up
- Available to non-accredited investors. A lot of real estate investments 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)
- Passive investment. If you are going to invest in real estate this typically isn’t very passive, however investing in eREITs is passive
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 started investing in real estate without having to actually purchase a property
- The investments are available to non-accredited investors
- The Fundrise fees are quite low
Cons
- $500 initial payment may be too much for some people, and this is only for the Standard plan
- You need to keep your money in there for at least 5 years
- 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 Is Fundrise Best For?
Real estate investing 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.
So, who is Fundrise best for?
Well, to start with, the requirements to invest with Fundrise is to be a U.S. citizen and at least 18 years of age.
Is Real Estate Investing 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 investing 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 with these real estate investments is because 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 $500 for the Starter plan (it’s more for the other plans).
Real estate investing is something that you can consider if you are 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 several types of fees to bear in mind when it comes to Fundrise:
- 0.15% annual investment advisory fee
- 0.85% annual asset management fee
You will need to have a minimum of $500 in order to start investing on the Fundrise platform – more if you want to use one of their other plans.
Fundrise Alternatives & Fundrise Competitors
Fundrise isn’t the only real estate crowdfunding platforms out there, so if you want to look for other options you could take a look at:
- Equity Multiple
- Realty Mogul
- RealtyShares
- Patch of Land
- PeerStreet
- Roofstock
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 $500, which is a lot less than the other platforms.
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 $500 to start with their Standard 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.
