Fundrise can be referred to as one of the original grand daddies of the crowdfunding space. Founded in 2010, the company recorded some impressive early success and has shown sustained growth in the crowdfunding space.
The platform allows you to make a single investment and get diversified across dozens of individual real estate assets in the fundrise eFunds and eReits portfolios.
According to the Fundrise website, they are the first online investment platform to create a simple, low-cost way for anyone to unlock real estate’s historically consistent and exceptional returns.
Fundrise boasts of a mission to build “the best investing experience by minimizing fees, improving long-term return potential, and unlocking access for everyone”
Before we jump into the nitty gritty on Fundrise eFunds, and fundrise eReits though, there is the question of the one word I very casually slid in on you at the beginning – Crowdfunding. What is it exactly?
What is Crowdfunding?
Crowdfunding is the increasingly popular process or practice of sourcing the funding for a project or venture by raising itty bitty amounts of cash from a large number of regular folk, typically via the internet.
All these small and seemingly insignificant drops of cash however can very quickly turn into a large pile of investible funds for the company initiating the crowdfunding.
It is no wonder Crowdfunding sites are popping up at a rather high rate these days. Fundrise, though new itself, can claim to be one of the veterans in a very new, and untested industry. Let’s dive in and talk more fund-rising shall we?
How does the whole Fundrise operation work?
When you invest in Fundrise, your cash is placed into a diversified portfolio fundrise eFunds or eReits, made up of real estate projects negotiated, acquired, and managed by the company.
With an investment as low as $500 to open an account, you are placed in the Starter portfolio, which is just a cool name for the diversified mix of Fundrise eFunds (electronic funds) and Fundrise eREITS (electronic Real Estate Investment Trust) with real estate projects located strategically across the U.S.
Bump your initial investment to $1000 (or once you hit the $1k mark in your Fundrise account) and you are immediately upgraded to the Core account level. The core is particularly nice because you can invest choosing one of three laid out strategies:
- Supplemental Income: Focused on creating a steady income stream, this investment strategy aims to earn returns via quarterly dividends. It is therefore for you if you are looking for steady quarterly cash flow.
- Balanced Investing: This account targets building wealth via a diversified blend of both quarterly dividends paid out and appreciation.
- Long-Term Growth: As the name implies, this is designed to earn superior returns over the long term via appreciation in share value. You should not expect a ton of dividends out of this strategy.
Do I have to be Accredited to Join Fundrise?
This question I am particularly happy to answer as it is one which drove me bunkers when I was looking for the right platform to invest with.
Unlike other platforms like say, Patch of Land, or Crowd Street – with Fundrise, you do not have to be an accredited investor to gain access to the platform and begin your real estate investment journey.
This is particularly nice because most working class individuals and families do not meet the strict requirements from an income level to be regarded as accredited investors.
For the geeks out there who just need to know, an accredited investor is a person with a net worth of at least $1,000,000.00, excluding the primary residence value, or have income of at least $200,000 each of the last two years (or $300,000 combined income for a married couple).
Not me yet folks, not even close, but hey, stay with me on this journey and we can all push each other to pinnacle of our dreams.
How well has Fundrise Performed?
Well, I’m so glad you asked. The graphic below reveals the company’s average annualized returns dating back to 2014. To take full advantage of these kinds of numbers however, you would be invested with Fundrise for the long-haul.
Fees
The Fundrise eDirect offerings, or eREITS and Fundrise eFunds charge 0.85% in annual management fees. Fundrise does have an investment management services branch and clients subscribed to that pay 0.15 annual investment advisory fees (although these fees could be waived in certain circumstances)
Fundrise Early Withdrawal Fee Structure
Investors needing to redeem shares held with the platform for a period of 5 years or longer should receive 100 of the stated value of those shares at the time.
Regularly pulling your cash out (like you would from a savings account) precludes you from enjoying the full potential returns available from these kinds of real estate platforms however, and typically exposes you to redemption fees.
The Fundrise early withdrawal fee structure is no different. A breakdown of annually declining redemption fees for shares held greater than 90 days but fewer than 5 years is shown below…
- Shares held 90 days to 3 years – A 3% penalty of total share value is levied.
- Fundrise eFunds and eReit Shares held 3 – 4 years – Penalty is assessed at 2% of total share value.
- Shares held 4-5 years – A 1% penalty applies.
- Fundrise efunds and eReit shares held 5 years or greater – No fees.
How Do I Feel about Fundrise thus far?
Personally, I have taken a great liking to the Fundrise Platform. The visuals, graphics, perfect blend of colors just draw the eyes in (at least they did mine).
You actually get to see pictures of homes or apartment complexes in which your cash is invested. I don’t know about you, but, seeing all that detail makes me feel land-lordy. Don’t worry, it’ll catch on.
But more than shallow stuff like graphics and professional taken pictures, Fundrise does a great job at communicating with you right in your dashboard.
They answer most of your questions about how your cash is invested, or upcoming and on-going projects, right there once you log in. You get to see how your blend of funds are performing and make changes if you need to. It’s all right at your fingertips which I like.
Do note however that you are limited to what you can do if you still in the starter plan (under $1000). The real fun begins once you are in the advance plan ($10,000 or more) since you can invest in specific funds versus just having the platform decide where your money goes.
Fundrise and others
Like Rich Uncles and Realty Mogul, I opened up my Fundrise account in January 2019. You will notice these are three of the most recognized non-accredited platforms out there.
I hope you find this post and other articles on here to be a good read and stay with my pennies to dollars.
I’ll be glad when I can share my insights and strategies as an accredited investor someday when I achieve that milestone financially.
How did 2019 go for me? I finished the year 2019 with an annual return across all my Fundrise eREITS and Fundrise eFunds of 7.4% which isn’t too shabby for a completely hands off real estate investment strategy.
2020 has taken a sledgehammer to all investment types due to the pandemic so the numbers this year, thus far, do not look as appealing, but investing, as you know, should always be a long-term play.
What do I like about investing in Fundrise and Real Estate Crowdfunding in general?
Well, I like that I don’t have a third or fourth job of having run to one of my rental properties to unclog a toilet, or fix a dish-washing machine. Yes, I know there are phenomenal real property managers to handle things like that, but there’s the small issue of the initial investment into the rental property to address.
With Fundrise, I opened my account with $1000 and have been able to work my day job and watch it grow for close to a year and a half.
I am curious to see what kind of staying power the company has and what kind of bounce back Fundrise will experience post-pandemic.
Summary
In case you haven’t picked up on it already – I like Fundrise. I like the hands-off nature of the investment in real estate, and I do like their young and aggressive approach to investing. They are kind of edgy in their doings and I feel like I can relate to that.
Fundrise has some stiff completion in Rich Uncles, Realty Mogul, Patch of Land, Crowd Street, to name a few. Nothing in their history suggests to me however that the company lacks the staying power to be relevant in the crowdfunding space for a long time.
I am invested in Fundrise so that would mean good news for me, but aside from that, I strongly believe the company to be a solid start for a beginner investor.
If you are looking for a real estate crowdfunding platform to invest in, take a peek at Fundrise. The full list of fundrise efunds and fundrise eReits is available to see here. You just might like what you see.
