Some or all of the products featured here are from partners who compensate us. These partnerships may influence which topics or products we cover but do not influence our reviews. Money Armada is an independent publisher.
When people talk about investment opportunities, you primarily hear about stocks and bonds. But many lucrative and exciting investment classes exist besides those. Establishing a well-founded, diverse investment portfolio is an important and often overlooked aspect of the equation. Real estate is one example of an alternative investment that can pay big dividends to patient investors, all while providing you with benefits that some other investments can’t.
If you’re looking to break into the real estate investment space, there’s no shortage of routes you can take—but an increasingly common option gaining popularity in our digital age is online real estate investment platforms, which allow you to find investment opportunities from the comfort of your own home.
In this article, we’ll conduct a Fundrise review to give you a detailed look at one such platform and decide whether or not it’s a good fit for you. Read on to learn everything you need to know about Fundrise!
What is Fundrise?
If you’re new to the world of real estate investment, you may be skeptical about online investment platforms like this one and find yourself asking questions like, is Fundrise legit? Or maybe, can Fundrise really find me a good investment opportunity? While these are valid concerns to have, you can rest assured with the knowledge that Fundrise is a reputable and well-respected platform in this industry.
Founded in 2010, Fundrise came onto the scene with the goal of making it easier for prospective investors to find high-quality real estate investment opportunities. Fundrise was one of the first platforms of its kind to really take off—and all these years later, many industry experts are still singing its praises. It’s tailored to help the everyday investor find private commercial or residential properties, then invest in them independently or by pooling their resources with other investors in order to generate the necessary capital.
How does Fundrise work?
There are two main products on this platform. The first is a real estate investment trust (on Fundrise, they’re called eREITs), which typically means you’re invested in real estate by buying and managing property or alternately holding mortgages. The second product is an eFund, whereby you and other investors pool money to purchase land or develop housing to sell.
In order to invest, you select one of Fundrise’s portfolios, which are broken out into four tiers: Starter, Supplemental Income, Balanced Investing, or Long-Term Growth. Based on the portfolio you buy, Fundrise selects an appropriate combination of eREITs and eFunds for you based on your individual investment needs. Fundrise pays investors quarterly dividend distributions and appreciation in asset value once you reach the end of the investment term.
Pros of Fundrise
As mentioned earlier in this article, Fundrise has remained relatively popular in the 12 years they’ve been in business. To give you a better sense of why that is, here are some of the platform’s highlights:
- With so many years of experience, you can rest assured that you’re investing with a reputable company. Nothing speaks more highly than a longstanding business that consistently ranks highly among users and experts alike.
- No accreditation is needed to invest through Fundrise. Since many of their competitors require accreditation, and many investors are unable to meet annual income and net worth requirements to pass this threshold, they’re prevented from participating. But Fundrise is open to all U.S.-based investors.
- Low fees and minimum investments are other benefits to the platform, making them one of the most accessible real estate investment platforms. Fundrise charges a low annual fee of 0.85% for asset management, and the minimum investment is just $10.
- Since Fundrise’s eRITs have a pool of properties, investors’ returns aren’t reliant on an individual property’s success and returns are more stabilized.
- Their website is very intuitive and easy to use for all investors.
- As opposed to buying investment real estate outright and becoming responsible for navigating all the logistical headaches of owning property, real estate investments with Fundrise or CrowdStreet are completely passive—invest, then sit back while you profit without having to lift a finger to tend to your properties.
- No matter what your personal investment goals are, Fundrise has a portfolio tier for you that will help you get there.
Cons of Fundrise
While there are lots of good things to say about Fundrise, there are a few things to keep in mind when deciding if they’re the right company for you. Here are just a few things to consider as you shop around for a real estate investment platform.
- While fees are significantly lower than some of their competitors, there are some drawbacks to the tax consequences of Fundrise. While many investment platforms use a 15% tax rate on qualified dividends, distributions through Fundrise are taxed as regular income.
- For many investors, high liquidity is something they look for in an investment, because it means after a period of time, they’re able to sell an investment on a secondary market. On Fundrise, they may be disappointed: eREITs are not able to be publicly traded—once you’re invested, you must hold the investment to the end of its term. You can sell shares after a five-year holding period, though you pay a 1% fee in most cases.
While the list of cons is certainly shorter than the pros, for some investors these are real deal breakers. Consider your circumstance carefully and evaluate your needs against these points before deciding to move forward with Fundrise.
Is Fundrise right for me?
Investment platforms are not a one-size-fits-all situation. Although Fundrise has years of experience and many positive attributes to boast of, it isn’t the right choice for every single investor.
Who is Fundrise best for? The answer is those who are looking to find a long-term investment to fold into their portfolios, especially if diversification of assets outside of stocks and bonds is a desirable feature. You should also be an investor prepared to do your own due diligence on your investments—while Fundrise makes it far easier to break into real estate investment than many of their competitors, some complex deals need to be reviewed carefully in order to be sure you fully understand what you’re investing in.
Invest in Fundrise with confidence
As with any investment, it’s important that you know what your goals are, have taken careful stock of your circumstances, and are finding an investment platform that aligns well with your existing investment portfolio. While diversification is important, be sure real estate makes sense for you and that you take the time to consider exactly what you need from your investment platform.
In this Fundrise review, we’ve clearly highlighted that this is a great option if you’re just getting started because they make it easy to break into this asset class and fully manage investment—but if you’re unsure you’ll want to be in it for the long haul, you may want to look elsewhere.