The Next $4000 Investment
After 6 months as a Fundrise investor, I decided to scale up my investment to $5,000. I was satisfied with the return I had received, and I wanted more skin in the game. I bumped my investment up from $1,000 to $5,000 by depositing an additional $5,000 which took place on
Now, since I had significantly more invested, my dividends were more substantial.
As I mentioned earlier, all of my dividends are reinvested back into my Fundrise portfolio. Here’s where this gets exciting for me… If I add up these three dividends alone, that is $197.38 of passive income that was reinvested back into my portfolio, allowing my money to grow even more!
Good For Those Who Want To Diversify Out Of Stocks
Fundrise is also ideal for investors who want to add diversity to their portfolio outside of traditional investment options such as the stock market.
These private real estate investments are not tied to the stock market like some publicly traded investments are, meaning true portfolio diversity when you invest with Fundrise.
Fundrise Review : Invest In Real Estate With Only $10
Last updated Oct 8, 2021| By Matt Miczulski
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Investing in the real estate market might seem like something best left to the pros. After all, youve got the stock and bond markets to invest in. That should keep your portfolio diversified enough, right? Maybe not, according to Fundrise. In regards to its service, it says its the piece of your investment portfolio you didnt even know was missing.
While traditional investing practices have been limited to asset classes public stocks and bonds, Fundrise changes all that. Now you can learn how to invest in real estate like the pros. This platform is an option worth considering if you’re interested in building a diversified portfolio of investments.
So, lets find out how Fundrise works, who it’s right for, and how to start investing.
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Fundrise Fees Vs Vanguard Fees
Now, heres the part that kind of ruffled my feathers a little bit.
In this article, Fundrise kind of dogs on Vanguards fees, saying:
Fundrise charges investors a small fee for our unaccredited investor offerings 0.15% in annual advisory fees, to be exact. This means that over a 12-month period, you will pay a $1.50 advisory fee for every $1,000 youve invested with us. For the sake of comparison, Vanguards famously-low advisor fee is 0.3%Our obsession with doing everything ourselves, rather than relying on a bloated list of third-party service providers, necessitates that we charge the annual advisory fee but its also the main reason why our annual advisory fee is so low. Even Vanguards fee is twice as large an amount they refer to as an incredibly low cost for a service.
In my opinion, there are a few things unfair about this statement.
First of all, Vanguards Personal Advisor Services provide a different level of service than Fundrise does.
Now, just so youre aware so we dont have any confusion here you can invest in Vanguard index funds and ETFs and not pay the 0.3% advisory fee referenced by Fundrise.
However, if you want to sit down or have a call with a Vanguard financial advisor who will sit down with you, discuss your goals, and rebalance your portfolio quarterly, you can sign up for Vanguard Personal Advisor Services and pay a 0.3% advisory fee.
Is this a high level of financial service?
Fundrises fees are not high, but Vanguards are lower.
Changes In Portfolio Reporting
One notable change I saw in my dashboard this year was how the portfolio positions are reported. In previous years, my investment had been reported in terms of what percentage was in Debt projects vs. Equity projects.
Debt projects are when the money is being borrowed by another investor or developer, and that borrower pays interest on the loan, which then contributes to the growth of my invested dollars.
Equity projects are when the money is being invested into the ownership of a property. As the property generates cash flow and appreciates in value until being sold, this money contributes to the growth of my invested dollars.
Starting in February 2021, the portfolio mix is now broken out by Fixed Income, Core Plus, Value Add, and Opportunistic. I wasnt entirely sure what these terms meant, so I asked Fundrise to explain. Heres what they told me:
As you can see, the website is continuing to do its thing. My investment is still throwing off dividends, even in the midst of an incredibly bizarre year in 2020.
What impact with 2021 have on Fundrise and the real estate market as a whole? Ill be sure to report back on this next year.
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Best Property Research: Realtymogul
- Average annual returns: 4.5% to 8%
- Total Investor distributions: $136 million
- Investment options: REITs, individual properties , and 1031 exchanges
- Accredited investors only: No
Since its inception in 2012, more than 219,000 investors have joined RealtyMogul to access its REITs and private market offerings. Known for its exemplary due diligence, the company vets every potential property in person and scrutinizes each deal using propriety methods and models.
The company looks for well-leased properties or those with existing leases, and it works only with real estate partners with proven track records and experience managing assets. It does not invest in non-cash-flowing investments, such as raw land or ground-up construction. Investors can choose from three objectives: passive income, growth, and diversification.
Monthly auto-investing in REITs starting at $250 per month
Different fees associated with each investment
Investments not easily sold or traded
Some long hold periods
Fundrise And Commercial Real Estate Investing
Commercial real estate investing can be an excellent way to grow your nest egg, although it’s not without risks. The big risk? Commercial real estate requires large amounts of upfront capital to purchase a property. To properly diversify your portfolio, you should own multiple properties, various types of features and properties in various locations.
One avenue for the small investor who wishes to invest in commercial real estate is through a REIT . Luckily for investors, there’s an online platform that can simplify investing in REITs.
It’s called Fundrise, and we think it’s one of the best real estate investment services in the market today. Let’s take a closer look to find out how it works, how you can utilize it, and if it’s for you.
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Review Of Fundrise Why Invest In Commercial Real Estate
One of the big things we need to cover in this Fundrise Review is why commercial real estate is a great place to invest your money and a great long term investment.
The biggest reason is income. Commercial real estate is bought for the primary purpose of providing income, and thats what it does best. In CRE, even the price of the building is determined entirely on the income it provides, not on what other properties are selling for.
The second biggest reason to have commercial real estate as an investment is because of appreciation. Since price is determined by the income, anything that increases income will increase its value. In real estate, we call this forced appreciation and its a great way to increase the value of your investment.
Investing $5000 On Fundrise: Final Thoughts
Overall, I have been very happy with my returns so far as an investor. I am still new to crowdfunded real estate investing, but based on what I have seen over the last year and a half of investing I am comfortable with making a sizable investment in this platform.
It is important to remember that any real estate investment is going to be a longer term investment and Fundrise is no exception. According to their site, Fundrise investors should have a minimum time horizon of 5 years. If you are looking for a short term investment, this is not for you.
Also, keep in mind that liquidity is not guaranteed. They do offer quarterly redemption periods, but you are not guaranteed the ability to cash out at this time. Your money is used to purchase real estate, and as such they may not have enough cash on hand if you are looking to cash out.
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Fundrise Review Final Thoughts
I love the idea of investing in real estate, but it can also be very intimidating to people. Thats where the crowdfunding space has changed the game.
Fundrise has been a clear leader in the real estate crowdfunding space and continues to prove solid historical returns over the last few years. Im scoring this platform a 9/10.
Does Fundrise Pay Monthly Dividends
While Fundrise does pay dividends, they are on a quarterly basis not monthly.
Dividends are typically distributed in the middle of the month following the end of each quarter. For example, mid-April for dividends earned during the first quarter.
You may also receive additional periodic cash distributions as certain underlying properties are sold. The value of your shares is also typically re-calculated on a quarterly or semi-annual basis.
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What Is Fundrise And Should I Invest In It
Fundrise is a financial company that advertises itself as a real alternative to investing in the stock market. The company lets individuals invest in private real estate markets, something that was difficult or impossible in the past.
Team Clark has gotten a number of questions about how Fundrise works and if its a good idea to invest with them, and this article addresses those.
Why Most People Love Fundrise
Ive spoken to numerous people who have invested in Fundrise, and they all rave about the experience. These are the three features that most real investors love.
Transparency – Fundrise makes it easy to understand what youre investing in. It helps that you can look at a picture of the property, find where it is on a map. You can also dig into the financials of every single property. Have a question? Customer service will respond to emails and phone calls.
Lack of liquidity – Logically, most people want money easily accessible, but having money locked into an investment is a great way to keep your money growing. Fundrise has seen phenomenal returns, and part of their success comes from forcing their investors to stay the course. However, note, that during tough times , Fundrise may prevent you from withdrawing your funds.
Competitive Advantage – Fundrise is a company that prides itself on its competitive advantage. They invest primarily in projects that have between a $5 million and $100 million market cap. These are too large for most private investors, but they get overlooked by banks who cannot accurately rate the risk profile of the developments. In some cases, Fundrise has an advantage because banks face such high costs due to burdensome regulations.
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What I Like About Fundrise
- $500 Minimum: One of the lowest minimums for real estate crowdfunding.
- Non-Accredited Investors Welcome: One of the few real estate platforms for the non-rich.
- Different Investment Strategies: Can pursue income, growth, or both!
- Instant Diversification: Fundrise invests in many residential and commercial projects. This limits downside risk so you earn a profit each year.
- 90-Day Satisfaction Guarantee: You have three months to try Fundrise penalty-free.
Redemption Of Fundrise Ereit Shares
Here is another complicated one because there are a few variables at play here.
First, Fundrise will only redeem a certain amount of shares per quarter. Once they have redeemed those shares, you will get in line for the following quarter, and so on. Additionally, when you redeem the shares, you will incur a penalty of between 3 and 5% of the share price. Thirdly, Fundrise gets to calculate the value of the shares and its essentially impossible for us to determine that value on our own.
- Less than 6 months No Redemption Allowed
- 6 Months to 2 Years 95%
- 2 to 3 Years 96%
- 3+ Years 97%
The biggest unknown appears to be the unknown value that Fundrise will place on each share. Upon purchase, each share is worth $10, but that can easily go up or down based upon their valuation. On top of that, you can only get a portion of your money back when you redeem.
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Is Fundrise Right For You
There’s a lot to like about real estate as a way to diversify your portfolio, and the Fundrise platform is easy to navigate.
But it’s also true that crowdfunded real estate platforms such as Fundrise have yet to be tested during a real-estate driven downturn. For example, in the event of a housing crash, Fundrise could be forced to postpone redemptions for some investors. We should also note that while the Interval Fund has no penalties for early redemption, the eREITS and eFunds in the Core, Advanced and Premium service levels may still impose an early redemption fee of 1%. Investors concerned about this might prefer investing through a standard brokerage account, which gives you access to a wide range of investments.
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If you already have a diversified portfolio of stocks and bonds, and you have time to let your money sit for at least five years, then investing via a platform like Fundrise can be one way to add real estate to your portfolio. Just be sure you’re aware of the risks and do your own due diligence.
An Interview With Ceo Ben Miller
Were just a little addicted to talking to the people to create companies like Fundrise.
Our interview with Fundrise CEO Ben Miller. We cover everything discussed in this Fundrise review plus quite a bit more. We even dive into a bit of controversy the company had recently to find out what happened. You know were not shy.
If youre interested in hearing the early concepts of Fundrise and our interview with Ben before they were open to average investors, check out our episode Crowd-Sourced Real Estate Investing.
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Breakdown Of The Ereit Fees
- Manager Offering costs of $1,000,000 or roughly 2% f money raised
- Acquisition/Origination Fee Manager 3% of the amount funded. Paid by borrowers and not by the Fundrise investors
- Reimbursement of Acquisition Manager Only if not reimbursed by the Borrower Amount Unknown
- Asset Management Fee 1%
- Servicing Fee 0-0.5% * This is the fee that may be waived if underperforming
- Special Servicing Fee 1% of non-performing assets
- Other Fees Unknown
- Commissions There appears to be no commissions
Navigating The Fundrise Platform
Fundrise makes their platform easy to navigate. Although you must decide which investing plan to follow, Fundrise does the most of the work for you.
Recent updates make Fundrise more transparent. Now, you can instantly track your investing progress. And, you can see what project youre investing in and why Fundrise holds them.
Before these updates, a common investor complaint was the lack of transparency. It no longer seems like your sending money to an online company and hoping its legit.
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My $1k Fundrise Investment: Three Years Later
Three years ago, I put together a blog post and video explaining how Fundrise works.
Fundrise is a real estate crowdfunding platform that allows people to invest smaller amounts of money into eREITs. Essentially, its like buying into a pool of real estate, rather than tying up all of your investment dollars in one single property.
Back in 2017, I put $1,000 of my own money into an eREIT with Fundrise and I recorded the process to show people how the site worked.
After posting that video, I got a lot of questions from viewers on YouTube,
What have your earnings been to date?
How has your account performed?
How much money have you made since investing?
I thought these were all valid questions, so I put together a one-year follow up video in 2018 and again in 2019 to show people how the results turned out.
Of course, the performance of my investment doesnt necessarily dictate what YOUR returns may look like but it does offer some insights on how Fundrise performs as a company specifically in comparison with other investment options like the stock market, mutual funds, or some of the other real estate crowdfunding websites out there.
So for what its worth, I just put together ANOTHER follow-up video to show what my returns have been, now that Fundrise has been working with my money for 36 months. You can see it here
Think About Investing In Rental Properties
Tiffany Alexy didnt intend to become a real estate investor when she bought her first rental property at age 21. Then a college senior in Raleigh, North Carolina, she planned to attend grad school locally and figured buying would be better than renting.
House hacking allows you to live in your investment property while renting out rooms or units.
I went on Craigslist and found a four-bedroom, four-bathroom condo that was set up student-housing style. I bought it, lived in one bedroom and rented out the other three, Alexy says.
The setup covered all of her expenses and brought in an extra $100 per month in cash far from chump change for a grad student, and enough that Alexy caught the real estate bug. Now age 27, she has five rentals and is a broker and owner of Alexy Realty Group in Raleigh.
Alexy entered the market using a strategy sometimes called house hacking, a term coined by BiggerPockets, an online resource for real estate investors. It essentially means youre occupying your investment property, either by renting out rooms, as Alexy did, or by renting out units in a multi-unit building. David Meyer, vice president of growth and marketing at the site, says house hacking lets investors buy a property with up to four units and still qualify for a residential loan.
If you manage it yourself, youll learn a lot about the industry, and if you buy future properties youll go into it with more experience, says Meyer.
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