What Is Fundrise?
Founded in 2012, Fundrise is one of the largest real estate crowdfunding platforms in the US, with more than 1.9 million active investors and a net asset value in excess of $7 billion. Fundrise is open to US-based accredited and non-accredited investors over the age of 18.
Fundrise – Passive Real Estate Investing for Everyone
Fundrise is the easiest way to invest in a portfolio of income-generating properties. You’ll get the benefits of owning real estate with a totally passive, hands-off investment.
- Excellent track record and historical returns
- Invest in a diverse portfolio of properties
- Earn quarterly dividends
- User-friendly platform
- Start with as little as $10
- $10 bonus with your first investment
Fundrise offers access to a wide variety of commercial and residential real estate investments with an industry-low minimum investment of just $10. With headquarters in Washington, DC, Fundrise is slowly expanding to encompass more than Southeastern US, and as of 2023, has 294+ active projects and 141+ completed projects.
Fundrise is an excellent platform for beginners and retail investors looking to gain exposure to the real estate market for cheap.
Is Fundrise Good For Passive Income?
Yes – investing in Fundrise is an excellent way to start earning passive income. Fundrise pays out dividends quarterly, in the middle of April, July, October, and January every year. Since its launch in 2012, Fundrise has paid over $300 million in dividends to more than 1.9 million investors.
One of our favorite aspects of Fundrise portfolios is that they don’t just focus on passive income and the short term. Most of their premade portfolios also include safe Value add and Growth investments that will steadily build your wealth.
What Is The Average Return From Fundrise?
The average annual return for Fundrise investors starts at 5.29% and goes as high as 22.99%. If you hold your investments for multiple years, Fundrise data shows that returns compound – after the third year, the average return is 32.8%. That’s higher than most other real estate investing platforms. After seven years, the average is 83.4%.
For this average, Fundrise used data from more than 500,000 users over a 6-year period.
What Are The Fundrise Investment Strategies?
With Fundrise, you can access a premade portfolio and choose the one that best fits your long-term goals. The four biggest investment strategies include Fixed income, Core plus, Value add, and Opportunistic.
Fundrise investments that qualify under the Fixed income and Core plus strategy start paying out dividends very quickly – within a couple of weeks – at the cost of long-term growth. Both strategies generate most of their income through rental income and structured financing.
The Value add strategy focuses on acquiring real estate properties that need repairs or improvement and selling them at a higher price – or increasing the lease – after improving them. Compared to Fixed income and Core plus, the Value add strategy has a longer investing horizon, with dividends and returns coming in between 6- to 12 months after making your first investment. If you can afford to hold on to your investments for longer, the Value add commercial real estate investments are generally a better option than the Fixed income strategy.
Finally, the Fundrise Opportunistic portfolio. The opportunistic portfolio focuses on developing real estate – often from the ground up. These have the longest investing horizons with the highest profit margins. We recommend this portfolio if you can afford to hold on to your shares for at least 5 years.
Our Recommendation
If you’re still unsure which strategy is a better fit for you, here are our recommendations:
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If you’re looking for immediate dividend payments and cash flow, the Fixed income and Core plus strategies pay out dividends within the first few weeks of making an investment
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If you’re in for the long term and are looking to grow your wealth with the biggest profit margins, Opportunistic investments are your best bet
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If you’re somewhere in the middle between earning interests in the short term and slowly adding value to existing real estate properties, the Value add portfolio is for you
Fundrise – Passive Real Estate Investing for Everyone
Fundrise is the easiest way to invest in a portfolio of income-generating properties. You’ll get the benefits of owning real estate with a totally passive, hands-off investment.
- Excellent track record and historical returns
- Invest in a diverse portfolio of properties
- Earn quarterly dividends
- User-friendly platform
- Start with as little as $10
- $10 bonus with your first investment
Keep in mind most of Fundrise’s premade portfolios comprise a combination of all these strategies – to access individual investments or specialized portfolios, you’ll need to subscribe to Fundrise Pro. The Fundrise Pro subscription is just $10/month and completely worth it for intermediate and experienced investors.
Is Fundrise Better Than A REIT?
Yes – investing in Fundrise and other private real estate assets is considerably better, in terms of returns, than public REITs. Over the last 6 years, Fundrise outperformed the S&P 500 index and public REITs by 60% and 20%, respectively.
One of the only advantages of public REITs over Fundrise is liquidity. Public REITs are highly liquid and can be traded on the stock market like stocks. Fundrise shares, on the other hand, aren’t as liquid and can’t be traded on secondary markets. You’ll need to submit a liquidation request and wait for approval before you can liquidate your Fundrise shares.
Still, we strongly believe Fundrise returns more than make up for the lower liquidity, especially if you don’t have liquidity problems and can afford to hold on to your investments for the long term.
Does Fundrise Have A Monthly Fee?
Fundrise charges an annual advisory fee plus a flat management fee. Depending on the fund you choose, the fees are:
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Advisory Fee (all funds): 0.15%
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Management Fee (all funds): 0.85%
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Fundrise Innovation Fund Fee: 1.85%
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Fundrise Pro Subscription: $10/month (or $99/year)
The Fundrise Innovation Fund Fee applies only to that fund and covers management and advisory fees.
How Long Should You Invest In Fundrise?
The longer you can hold on to your Fundrise shares, the better. The average annual return based on how long you hold on to your shares is:
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After 1 year: 5.0%
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After 2 years: 20.2%
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After 3 years: 32.8%
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After 4 years: 46.0%
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After 5 years: 56.6%
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After 6 years: 77.1%
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After 7 years: 83.8%
For this average, Fundrise used data from 511,065 client accounts over a 6-year period. Keep in mind that there’s a 1% penalty fee if you try to liquidate your shares before the 5-year mark, so we recommend that you invest in Fundrise only if you can afford to hold on to your investment for at least 5 years.
Signing Up For Fundrise
Signing up for Fundrise is quick and won’t take more than a few minutes. Fundrise is open to all US investors – accredited or not – who are over 18. Here’s how to sign up:
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Visit Fundrise’s website
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On the top right, click Get Started
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Enter a valid email address and follow the steps
Sign up with this link, and you’ll get complimentary access to Fundrise Pro for 30 days, with no credit card required. Additionally, you’ll get a $10 bonus on your first deposit.
You can add or remove your linked bank account at any time from the Bank Account section under account settings.
How Is Fundrise Taxed?
Fundrise dividend payments are taxed as nonqualified dividends, and you are required to include them in any reported income – even if you reinvest part of it back into Fundrise.
Thanks to its integration with TurboTax, Fundrise makes the tax filing process very easy. TurboTax is one of the largest tax preparation software in the US, and to get your personalized report, all you need is your Fundrise account number and email address.
The TurboTax reports include a Form 1099-DIV for each REIT in your portfolio that generated at least $10 in a given tax year. When ready, you can access your tax documents on the Document section of your Fundrise investor dashboard.
Is Fundrise Legit?
Yes – Fundrise is completely legit. Fundrise has more than 1.9 million active investors in the US and is registered with the Securities and Exchange Commission (SEC). The Fundrise portfolio has a total value in excess of $7 billion, with more than 294 active projects and 141 finished projects.
That’s more than 8,900+ residential real estate assets, 2.3 million square footage of industrial and commercial real estate assets, and 3,400+ single-family rentals across all their projects. Since its launch in 2012, Fundrise has paid investors more than $311 million in dividends.
BBB Fundrise Reviews
Fundrise has mostly positive reviews from its users, with an average rating of 3.7 on BBB. Here’s what some of those users have to say about Fundrise:
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“I have nothing but good things to say about Fundrise. Investors need to understand the nuances of investing in non-traded REITs, and Fundrise does an excellent job of providing the necessary information. They offer great products and are very receptive to feedback. Customer Service is very attentive.” – Sean W.
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“I’ve Been an investor with Fundrise for 3 Years. I am happy with the transparency and the details they describe for all their Funds.” – R. R.
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“I have had an excellent experience with Fundrise. They made it very clear from the get-go that real estate is a long-term commitment and that I am going to have to be ok with the possibility of them denying redemption in times of financial hardships.” – Benny K.
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“Fundrise does a good job of putting diverse portfolios together for long-term investors. However, amateur investors should thoroughly read and understand the disclosures before opening an account.” – Lettie T.
Conclusion
Fundrise is among the best real estate investing platforms in the US, with almost 2 million active investors. Fundrise was the first crowdfunded platform to be established in the US, and it broke into the market and gained a lot of traction for being the first platform to offer everyday retail investors access to a previously inaccessible asset class: real estate.
Fundrise can compete with some of the largest real estate platforms in the US because it’s open to accredited and non-accredited investors. Fundrise investors can get started with just $10 and start earning dividends within a few months. For professional investors, there’s Fundrise Pro. With Fundrise Pro you can customize your portfolio and handpick your investments for just $10/month.
No matter where you are in your investing career, Fundrise has something for beginners and experienced investors alike.
FAQs
Do You Need To Be An Accredited Investor To Invest In Fundrise?
No – you don’t need to be an accredited investor to participate in Fundrise. Fundrise is open to accredited and non-accredited investors alike. However, Fundrise is only available for US citizens or permanent residents over the age of 18.
At this time, international investors can only participate in Fundrise investments if they have a US-based entity with a valid tax ID number, file taxes in the US, and pay taxes in the US.
Can You Make Monthly Income On Fundrise?
Even though Fundrise is excellent for generating passive income, it may not be the best option if you’re looking for monthly income. Like most real estate investing platforms, Fundrise offers quarterly dividends, paid out in April, July, October, and January every year.
Can I Liquidate My Fundrise Shares Early?
Like most real estate crowdfunding platforms, Fundrise offers quarterly liquidity for investors looking to sell their shares. You’ll need to submit a liquidation request to liquidate a portion or all of your shares. Liquidation requests are reviewed quarterly, and the termination fee will depend on the type of fund:
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eREITs/eFunds: 1% penalty if you redeem before the 5-year mark
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Flagship and Income Fund: No penalty for redeeming your shares early
Keep in mind that there’s no guarantee your liquidation request will be approved. You can track your request’s status at any time from the Transaction section of your Fundrise investments dashboard.
Is It Halal To Invest In Fundrise?
No – as of mid-2023, Fundrise does not offer access to halal-compliant real estate investments.
Can You Lose Money Investing In Fundrise?
Yes – no matter the type of investment you choose, some risk will always be involved. Markets will crash, and the economy will fluctuate. However, a real estate investment platform like Fundrise offers risk-adjusted returns, a hedge against inflation, and access to a diversified portfolio of real estate projects.
Over the last 6-years, Fundrise has only had one negative quarter where investors lost money. That’s better than the S&P 500 index and public REITs, both of which reported 6 negative quarters over the same period.
The post Invest In Fundrise: Passive Income From Commercial Real Estate Assets appeared first on Vital Dollar.
