Fundrise Investment Strategies: How to Choose the Best Fundrise Strategy


Jeremy BiberdorfBy: Jeremy Biberdorf

November 17, 2022November 17, 2022

Real estate investing is competitive, especially if you’re trading on the public market. Many individual investors research real estate project after real estate project in an attempt to create diversified portfolios. Even institutional investors have to deal with this hassle, but what if there was an easier way? As it turns out, there is!

Any investor worth their salt knows that building diversified portfolios is the only way to protect against an economic downturn. This makes it one of the most important financial goals, along with securing profitable annual returns.

Unfortunately, many traditional real estate investment platforms aren’t open to the public. They either only accept accredited investors or require higher minimum investments than the average person can afford.

Fortunately, Fundrise has neither of these issues. It’s open to non-accredited investors, requiring minimal initial investments, and even offers some alternative investment opportunities (as covered in this comprehensive review). Fundrise enables anyone to start investing and reach their financial goals. How do they do it? Let’s take a look and find out!

What Are Fundrise Investment Strategies?

There’s more than one way to invest on this platform. Each “Fundrise Strategy” is a different portfolio, each offering unique investment opportunities & assets (such as office buildings or single-family homes). These diversified portfolios are actually real estate investment trusts, though Fundrise refers to them as “eREITs.”

Fundrise investment strategies have historically enjoyed a positive return. While the exact returns vary depending on the investment portfolio, you can rest assured that any one of them will help you reach your financial goals.

The company as a whole has enjoyed an average return of 5.42% over the last 23 quarters. During that entire time, Fundrise never had a single negative quarter! Compare that to the stock market, which averaged a return of 2.17% with six negative quarters.

It’s consistent portfolio performances like Fundrise’s that make real estate investing—specifically private market investments—appealing to new investors. It’s hard to pinpoint exactly what makes this company so successful (though we’d suspect it’s because they hand-pick each real estate project!). Regardless, the numbers speak for themselves.

Investment Tiers

Before you can start enjoying diversified portfolios and long-term returns from your select Fundrise strategy, you’ll need to choose an investment tier. Like many other real estate companies, the minimum investments required vary from tier to tier (plan to plan).

Fortunately, Fundrise has investment products available for nearly any real estate investor. You’ll want to compare the requirements and features of each option before settling on a tier. Here’s a brief overview of each tier’s benefits.

  • Starter – $10 minimum investment, limited options, includes auto-invest
  • Basic* – $10,000 minimum investment, investor goals, IRA options, Fundrise IPO access
  • Core* – $5,000 minimum investment, access to non-registered products
  • Advanced* – $10,000 minimum investment, access to specialized funds
  • Premium* – $100,000 minimum investment, accredited investment options

Includes access to all of the above features*

Choosing a Fundrise Strategy

After you’ve selected a tier, it’s time to consider the various Fundrise investment strategies. Each one of these diversified portfolios offers different potential for annual returns and long-term growth. That said, you’ll want to consider the risk before investing in a real estate project.

Fundrise investment strategies with the highest growth potential also have the highest risk. If all goes well, you’ll earn the most from these investments. However, they also are the most likely to fall through, underperform, or even cost you capital!

On the other hand, strategies with a lower growth potential have a lower risk. They tend to focus on gaining consistent—rather than sizable—returns from the real estate market. Though the gains may be minimal, these strategies are the least likely to lose your money.

One last thing to keep in mind: liquidation fees! Since Fundrise is a private company, the process for redeeming your investments is a little bit different. Liquidation fees vary depending on your specific investment. Be sure to consider these when selecting a Fundrise strategy.

Fixed Income’

Typical Return Profile Fixed Income

This strategy provides minimal returns but will still outperform the general stock market over time. The most modest of all the diversified portfolios, “Fixed Income” relies on providing loans and other types of structured financing in these real estate investments.

Each real estate project generates interest, which is the primary source of income for this strategy. Investors can expect to start seeing returns right away. “Fixed Income” is ideal for the real estate investor searching for a low-risk, consistent-income investment, projected to offer a total return of 4-8%.

Core Plus

Core Plus

This Fundrise strategy offers a positive return using a combination of rental income and growth. Unlike the other diversified portfolios, “Core Plus” focuses primarily on acquiring and operating real estate. There are many different assets under management in this real estate project, including single-family homes and apartment communities.

Investors should expect to wait between 6 to 12 months before they start seeing a return on their investment. Income varies from 4-6%, with a total return of 8% to 10%.

Value Add

Typical Return Profile Value Add

This investment portfolio—as the name would suggest—focuses on acquiring and adding value to new properties. It offers larger potential returns to individual investors, but it may take you a bit. Fundrise estimates it will take between 12-18 months before you start seeing a positive return from this real estate project.

“Value Add” primarily generates income from growth, although investors will also benefit from rental income. It’s considered a “high” risk investment.

Opportunistic

Typical Return Profile - Opportunistic

The riskiest out of all of the diversified portfolios, “Opportunistic” focuses on the acquisition and development/redevelopment of real estate. Total returns are projected to be between 12% to 15%. However, investors should be prepared to wait (up to 3 years) before seeing any cash flow from this real estate portfolio.

Fundrise Investment Strategies: A Summary

For non-accredited investors and accredited investors alike, Fundrise offers profitable private market investments to help reach your financial goals via long-term returns. Unlike the public market (and most other real estate companies), the platform is extremely accessible thanks to low minimum investments.

You can invest confidently, knowing that each real estate project has been comprehensively vetted by a legitimate company to ensure long-term growth potential.

Each investment portfolio offers instant diversification with a single investment. This provides protection from any future financial crisis that may occur. You’d need to make many different individual investments if you wanted the same protection in the stock market!

If you’re interested in real estate investments, then Fundrise is a place to start. With diversified portfolios, low fees, low minimum investments, and a history of success, there’s never been an easier way to hit your investment goals. Click here to start investing today!

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Jeremy Biberdorf

About the Author:

Jeremy Biberdorf is the founder of Modest Money. After working many years in the website marketing industry, he decided to take on blogging full time and also get his finances headed in the right direction. He has been blogging at ModestMoney since 2012. Also check out his contributions to Equities.com and Benzinga.

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