Fundrise is an online investment platform which lets customers invest into their cash flowing real estate properties. Fundrise identifies potentially depressed properties and renovates them to generate cash flow with the ultimate goal to sell the property in the future after the asset appreciates in value. Properties may be residential or commercial in nature, ranging from single family houses to large apartment complexes. Fundrise assets are privately owned and customers must be members within the platform in order to invest in them.
I’ve been interested in investing into the real estate market for some time now and I believe Fundrise is a good opportunity for investors to tap into that market without the complexity of actually owning/managing physical real estate. I’ve started investing into Fundrise in the beginning of 2019 and have noticed a few pros and cons of this platform since then.
Disclaimer, this is not financial advice but meant to be viewed for your fun and entertainment. Please consult a certified financial planner for actual investing advice.
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Click HERE to sign up to create your Fundrise account today.
1. Invest outside of the stock market – Fundrise properties are privately held by the company and its investors are not directly influenced by the stock market. Fundrise cash flow returns occur independent of whether the stock market is having a good or bad day. This gives a buffer to investors that want to diversify their portfolios to include assets outside of the stock market.
2. Lower minimum investment – Does not require you to be an accredited investor in order to start. You can start investing with a $100 at a time towards your portfolio of assets. This differs from typical real estate investing where you have to put that large down payments (~20% of property value) and take additional capital to rehabilitate the property in preparation to renting it out.
3. Platform ease of use – Typically getting into real estate requires a lot of paperwork, coordination, work… However the Fundrise platform is simple and easy to use, requiring minimum amount of effort and time to sign up. This is a significant barrier that Fundrise helps investors to overcome and invest in real estate without the paperwork.
1. Non-liquid asset – Investors are putting their capital into actual real estate properties and therefore needs to account for the lifecycle of the real estate property itself. It takes time to buy/renovate the property, to rent it out to tenants and obtain cash flow and then sell the property after it has appreciated over a length of time. Investors need to plan accordingly to know it will take time to sell your portfolio holdings and get your capital back.
2. Dividend taxed as income – Fundrise provides dividends from your portfolio over time. These dividends count as normal income tax and will be taxed accordingly to your tax bracket. This is higher than typical portfolio dividend taxes at 15%.
Below is a snapshot of my Fundrise account and progress made so far. I’ve started with $2,000 since Jan 2019 and the returns have been around 4% so far by Sept 2019. The long-term growth investment plan I’ve chosen does not provide as much dividends initially but should provide a larger return in the long term.
Fundrise’s portfolio is composed of their own electronic Real Estate Investment Trusts (eREITs) and based in different locations within the United States. Certain locations are better for short term dividend growth (good rental market) while others may be better for longer term appreciation (up and coming area). Depending on what investment plan you choose, Fundrise will create the portfolio to suite your goal. Investors do not get to choose the specific region or exact property.
In conclusion, I believe Fundrise has offered me a simplified path towards beginning to invest in real estate. The platform has given me plenty of tools and insights into how the real estate market works removing the barrier of complexity. I intend to get more involved in the future and invest more heavily towards getting my own residential properties in the hopes of renting them out and getting cash flow from them.