Alex Mizerski- Alex Mizerski
Fundrise Review: an easy way to invest in real estate
Updated: Sep 27, 2021
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Writing this Fundrise review was super fun! I knew there were other ways to invest in real estate but never knew it could be this easy. What's awesome is you can start an account with $10, test out the waters, and get in deeper if you want our step away with limited investment.
You can check out my other reviews here. Let's dive into Fundrise!
How does Fundrise Score:
Cost and Fees: 8 out of 10
Security: 8 out of 10
Ease of Use: 7 out of 10
Features and Tools: 9 out of 10
Overall: 8 out of 10
Pros
$1,000 minimum to start investing
Super simple website navigation
IRA account availability
Low fees - 1% annually
Cons
Your money is stuck-ish
Fee structure is convoluted
Can be tough to understand the type of investment you are making
Tax liability
Fundrise Alternatives
What is Fundrise?
Fundrise is basically a mutual fund that invests in real estate. Their company was founded in 2012 by Ben Miller and is based in Washington DC. The basic premise was to crowdsource real estate investing. They built a platform for normal folks like you and me to invest our money in a variety of real-estate options. Historically, you or I would have to buy a house or know someone that was a commercial real estate investor and was willing to allow us to buy in.
An REIT is a newer real estate investment tool that lists on the major stock exchanges. These are different than what Fundrise is offering in a few ways that I'll write about in a future article.
Over the past 8 years, Fundrise has acquired $1 billion dollars in real estate across the country to help diversify their risk and the risk of individual investors like you and me. The reason they have been so successful is that they focus their portfolio on an underserved part of the real estate market, mid-sized commercial real estate.
Smaller real estate investments typically are handled by individual investors. While larger real estate development is handled by enormous corporations that specialize in commercial property development. In the middle is where Fundrise specializes and clearly, they have been successful.
How can Fundrise help you?
Fundrise is a great real estate investment option for those that don't want to actively manage a property and want a better return than a REIT. As many of you are aware, real estate is a great investment that typically performs quite well no matter the market conditions.
The challenge for you as an investor is determining when you have extra money to invest in real estate vs a Roth, or 529, or some other investment vehicle. If you are working with a financial advisor or feel confident that you are in a good place to invest your extra income in real estate, then Fundrise is a great option. They have a proven track record of growing investors' money, even through difficult times. Their portfolio was positive the first half of 2020 while many other indices were negative during that time frame.
Other considerations
When you invest with Fundrise your money will be tied up for at least five years. You can try to take your money out, but you need to find a buyer within the Fundrise community. Even with that, you might find you have to pay a fee to sell your shares before they "mature".
Fundrise Account Levels
Starter - Fundrise requires a $500 minimum investment from partners like you and me. That $500 investment will get you a very basic account. This is a great way to dip your toes in the real estate investment waters. For most, the thought of real estate investing means thousands of dollars in a down payment for a house or some other real estate investment vehicle. Fundrise offers a low bar to get into real estate investing which is awesome.
Core - Fundrise requires a $1,000 minimum investment from partners like you and me to hit the Core Level. That $1,000 investment will get you set up at the Core Account Level. This level provides you with dividend reinvestment, auto-investing, IRA account support, and 3 months of free advisory fees for every friend you invite that signs up, among other benefits.
Advanced - The requirement for this level is a $10,000 investment or the accumulation of this level of investment over time. This is where Fundrise's advisors begin to earn their keep. They will guide you through more advanced investment strategies to help you grow your money faster while maintaining a level of risk that works for you.
Premium - This is the gold standard of what Fundrise has to offer. You need to have an account balance of over $100,000, but you get the ultimate level of service. You will receive access to certain investments that other individuals will not. Many of these are long-term investments with a higher potential return on your investment.
Fundrise Dashboard Overview
One of my largest pain points and complaints about some of the personal finance apps in the market is the clarity of their dashboard. The ability to easily understand how your investments are performing is critical to customer satisfaction. The Fundrise dashboard has made it simple to understand how your investments are performing. Beyond displaying growth over time, you can also see dividends, appreciation, and advisory fees (this is another major complaint as many companies aren't very straightforward with fees).
Fundrise App Overview
A Fundrise app is an amazing tool that allows you to invest and monitor from your pocket (or where ever you carry your phone).
The app is fully featured, containing the same tools and visuals you expect from Fundrise. I was even able to tour the app without logging in to my account.
They provide a great tour feature the first time you open the app. It walks you through all the major tools available to you.
You get quick access to investor updates.
You get updates to your current portfolio.
You can view current projects the Fundrise team is working on. These are all potential future investments for you.
You can dive into individual investments you have a stake in.
Better understand your portfolio.
Your Notification Center collects everything you need to know in one place.
Overall, the Fundrise app is a great extension of the website and a useful tool for any modern investor on the go. Go check it out for yourself as it may convince you that Fundrise is your real estate investment tool of choice.
How to get started with Fundrise
Setting up an account is really basic and can be done in a few easy steps. Make sure you are fully committed to investing $500 or more because linking your bank account and transferring money is a part of the setup process.
First, follow this link to open your account. This link will take you to a page where you submit your email address.
From here you start to answer some basic questions about why you want to be a part of Fundrise.
More get to know you stuff. The more honest you are the better off you will be in the end. I would even error on the side of less experienced just so you can get more advice on how to keep your money safe.
Next step, where does your advice come from. Hopefully you answer, an Investment Advisor, because you shouldn't be committing money to Fundrise if you don't have a trusted advisor, outside of their team, giving you advice on how to proceed.
Your reason for investing is probably to make more money, but they want you to get a bit more specific than that. This will help them tailor your experience to meet you where you want to be.
Answering this series of questions will help Fundrise determine the type of Account to suggest for you. If you are looking to make a quick buck, then they aren't going to offer you some of the longer-term investment options.
Make sure to read what they are asking here. Fundrise wants to know how much you plan to invest across all your investments, not just with them. Understanding what part of your wallet share they have helps their team communicate better with you. If you have a ton of money to invest annually, but only a small portion is going to Fundrise then they need to offer you the best possible investment options to move some of that money over to their platform.
You have now answered all of their questions and they have a suggestion for which account type you should sign up for. If you want to understand the different types of accounts better, read my outline above. Otherwise, take their advice to get started and make adjustments later if the plan isn't for you.
Finally, you are preparing to commit your money to their investment platform. The next few steps they will be asking for personal information to get your account setup.
Determining your account type, individual or other, will tell Fundrise what other information to collect from you during this part of the signup process.
The last steps are determining how much you want to commit and connecting your bank account to your Fundrise account. After this step you review their lengthy agreeements and finalize your account setup.
At this point, you are fully committed to investing with Fundrise. You will soon own real estate in some part of the developed world. I'm proud of you for taking the leap.
Who can benefit from using Fundrise?
Anyone can benefit from using Fundrise if they are willing to jump in with a $500 investment. For some, that is a lot of money and for others they will think this is a very low barrier to get into real estate. Where ever you land on that spectrum just know that getting into real estate investing for $500 is actually a pretty low bar and a definite pro for Fundrise.
Summary
Fundrise is a low barrier entry into real estate investing that many people should feel comfortable participating in. Make sure you are willing to set your investment aside for a while because getting your money back isn't as simple as transferring your money to Fundrise. You will need someone, either at Fundrise or a new investor, to want to buy you out when you are ready, otherwise you have to wait to get your money out.
Remember this isn't the stock market. You are investing in actual real estate so your money is less liquid than it would be if it were invested in stocks or bonds. If you are on board with this, then Fundrise is a great option with outstanding returns on your investment.
If you are interested in starting an account with Fundrise go talk to your financial advisor and make sure it is the right move for you at this time.
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