Is Fundrise The Best Fractional Real Estate Investing Company?

Jeremy BiberdorfBy: Jeremy Biberdorf

October 22, 2023October 22, 2023

Disclosure: This is a testimonial in partnership with Fundrise. We earn a commission from partner links on Modest Money.

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Real estate has long been a sought-after avenue for wealth generation and investment diversification. However, the high entry barriers, in the form of significant initial capital, have kept many at bay. Enter fractional real estate investing – a strategy designed to democratize property investment by dividing it into smaller, more affordable portions.

So, what is this about, and how does one jump on board? Fractional real estate allows multiple investors to pool resources, letting them collectively own a share of property. This approach drastically reduces the financial hurdle, making the real estate world more accessible. As we delve deeper, we’ll explore how this model operates and spotlight Fundrise, a leading figure in this space.

With Fundrise, real estate investing becomes a more seamless endeavor. The platform streamlines the process, saving investors from the laborious tasks of property vetting and management. What’s even more appealing? Their investment investment minimum is a mere $10.

Through this Fundrise review, we aim to equip you with the insights needed to decide if Fundrise is the best fractional Real Estate investing company for your needs.
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What is Fractional Real Estate Investing?

Fractional real estate investing offers an innovative approach to property ownership, where instead of one individual or entity owning an entire property, it’s divided into smaller shares for multiple investors. Essentially, you’re buying a slice of the property, be it residential or commercial.

This method opens doors for individuals to partake in real estate’s financial benefits without the need to buy a whole property. As an investor, you receive a share of the rental income and any potential sale profits, directly corresponding to the fraction you own.

Now, if the term sounds familiar, it might be because timeshares have operated on a similar principle for years. In a timeshare setup, individuals have ownership rights to a vacation property for specific weeks annually. However, the financial structure of timeshares, including maintenance fees and often-declining resale values, can sometimes make them more of a financial burden than a genuine investment.

But fractional real estate has evolved beyond the confines of timeshares. Today, with the rise of online crowdfunding platforms, the fractional model is democratizing access to upscale, high-value real estate ventures. These platforms are making it possible for the average investor to participate in substantial projects, such as luxury condos or new commercial properties, which might have been previously out of reach.

What is Fundrise?

Fundrise, established in 2010 by Ben Miller, has significantly reshaped the landscape of real estate investing through its pioneering approach. Fundrise introduced a novel idea to the market: a crowdfunded real estate project.

Their maiden venture, Maketto, drew significant attention, successfully raising $325,000 and marking the beginning of crowdfunded real estate ventures in the U.S. Building on this momentum, within a year, Fundrise expanded its reach, offering opportunities for Americans to invest in properties across the nation.

At its core, Fundrise operates as an online platform, democratizing access to private commercial and residential real estate investments. The platform’s unique model allows individuals to pool their resources, making it possible to venture into real estate with considerably smaller capital compared to traditional means.

Headquartered in Washington, DC, Fundrise has not only secured an A rating from the Better Business Bureau but has also cemented its position as a major player in the fractional Real Estate investmenting industry.

Driven by a mission to harness technology to create a more transparent, cost-effective, and reliable financial system for individual investors, Fundrise continues to thrive and innovate.

Fundrise Features

Here are some of the features that make Fundrise one of the best fractional Real Estate investing companies in the market:

  • Low Initial Investment: Starting your journey in real estate investing through Fundrise doesn’t require a hefty sum. With as little as $10, you can begin and experience the nuances of real estate crowdfunding.
  • Diversification Made Easy: One significant advantage of Fundrise is the ability to spread your money across a wide range of properties, from apartment complexes to commercial spaces like office buildings and shopping centers.
  • Open to All: Unlike several other platforms that cater only to accredited investors, Fundrise is open to everyone. Whether you earn $200,000 a year or not, you can invest.
  • Stable Returns: The stock market is known for its volatility, often affecting publicly-traded REITs. However, even during challenging times, Fundrise has showcased resilience, with its worst-performing quarter still yielding positive results.
  • Truly Passive Real Estate Income: Fundrise offers a genuinely hands-off approach to real estate investing. Once you invest, you can sit back and watch your returns roll in without the usual landlord-related hassles.
  • High Dividend Yields: The Income investing plan often boasts a dividend yield of 4-5% annually. This kind of return, combined with potential appreciation, often outpaces many stocks and mutual funds.
  • Invest Using an IRA: Fundrise collaborates with Millennium Trust Company, allowing investors to buy its shares using their IRAs, and in some instances, even waiving the annual custodian fee.
  • Expert Management: Forget about the steep learning curve associated with real estate deal-finding, financing, or management. Fundrise takes care of these complexities.
  • No Personal Liability: Direct property ownership comes with risks, from lawsuits to ever-evolving landlord-tenant laws. Investing through Fundrise keeps you insulated from such direct liabilities.
  • User-Friendly Platform: The sign-up process on Fundrise is straightforward, taking only about 10 minutes. Once signed up, funding your account is also a breeze.

Fundrise Pricing

Fundrise offers a transparent pricing structure with a consistent 1% annual fee across all its account types. This fee breaks down into a 0.85% asset management fee and a 0.15% advisory fee. When compared to its peers, Fundrise’s fees stand competitive.

Investment strategies provided by Fundrise include:

  • Fixed Income: Targets returns of 4-8%, emphasizing steady income over capital growth.
  • Core Plus: Balances income and appreciation, targeting 4-6% for both.
  • Value-Add: Focuses on improving existing properties for higher capital gains of 6-8% and lesser income of 2-4%.
  • Opportunistic: Aims for significant capital growth, targeting over 12% annually through comprehensive developments.

While the main fees are upfront, potential additional costs might be hidden in detailed offering documents. Periodically, Fundrise may offer promotional fee waivers for newcomers.

Check out this Fundrise Promo Code to access current offers.

Is Fundrise The Best Fractional Real Estate Investing Company?

Determining the best fractional real estate investing company often hinges on individual preferences and goals. However, when comparing various platforms, Fundrise consistently emerges as a standout option.

Founded with a mission to democratize real estate investing, they’ve established a reputable track record over the years. They cater especially to investors with a forward-looking perspective, aiming to branch out from traditional stocks and bonds.

While Fundrise welcomes investors regardless of their income or net worth, it’s crucial for potential investors to engage in thorough research and due diligence before diving in.

In the expansive world of real estate investing apps, Fundrise holds a unique position, especially for non-accredited investors keen on long-term real estate ventures. Click Here to learn more or get started with Fundrise today.
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Jeremy Biberdorf
Jeremy Biberdorf

About the Author:

Jeremy Biberdorf is the founder of Modest Money. He's a father of 2 beautiful girls, a dog owner, a long-time online entrepreneur and an investing enthusiast.

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