Fundrise is an online platform that allows everyday investors to invest in commercial real estate. With as little as $10, you can buy shares in real estate investment trusts (REITs) and earn steady income from rental payments and property appreciation.
Unlike traditional REITs, Fundrise’s eREITs and eFunds provide access to private real estate deals previously only available to institutional investors and the ultra-wealthy. Their low minimum investments, low fees, and easy-to-use website have opened up real estate investing to thousands of new real estate investors.
Fundrise handles all the details so you can earn returns without the hassle of being a landlord. They collect rent, pay operating expenses, and distribute quarterly net income to investors. You get regular quarterly dividend payments deposited directly into your account. Here is a detailed Fundrise review weighing out its pros and cons.
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The Pros of Investing With Fundrise
One of the biggest pros of investing with Fundrise is the low barrier to entry. You can open an account and start investing with just $10. This makes real estate investing accessible to nearly everyone.
Another major benefit is that Fundrise is open to accredited investors and non-accredited investors. Whether you’re just starting or have years of experience, you can invest in real estate through their platform.
Fundrise also offers multiple account options to suit your needs. This includes an automated plan to invest your mutual funds based on your goals. The automated investment option is perfect if you want to take a hands-off approach. Depending on your priorities, you can also choose from growth, balanced, or passive income-focused investment portfolios.
Perhaps best of all, you can withdraw your money from Fundrise at any time without penalty. Your money isn’t locked in, so you have flexibility if you need access to it. You can cash out some or all of your funds whenever you want.
If you’re looking for an easy, low-cost way to invest in real estate, Fundrise has a lot of benefits that are hard to beat. The flexibility, choice, and accessibility they provide can help you reach your financial goals through real estate.
The Cons of Investing With Fundrise
While Fundrise has a lot of attractive qualities, there are some downsides to be aware of before investing.
- The investment platform’s annual asset management fees can be difficult to parse through and understand fully. They charge real estate asset management, acquisition, and disposition fees, which can add up over time and eat into your returns. The fees are often higher than traditional public REITs or real estate ETFs.
- Given the illiquidity of the passive investments and fees involved, Fundrise is really designed for long-term investing and building wealth over time through compounding returns. If you want to invest your money for less than 3-5 years, the short timeframe likely won’t outweigh the cons.
- While Fundrise provides an easy way for novice investors to get into real estate, you must ensure you fully understand the commitment required and the fees involved before investing. For long-term, patient investors, Fundrise can be an attractive choice to build wealth through real estate. But for short-term needs or if you require quick access to your funds, you may want to consider other fund options.
Fundrise charges fees to invest in real estate investment trusts (REITs) and real estate investment funds. As an investor, it’s important to understand the total costs to invest so you know exactly what you’re paying.
Fundrise charges an asset management fee of 0.85% per year plus an advisory fee of 0.15% per year. That totals up to 1% annually. The asset management fee covers the cost of sourcing deals, evaluating properties, and managing the diversified portfolio. The advisory fee is for creating direct investment plans.
While 1% seems reasonable compared to other robo-advisors, the fees can add up significantly over time and reduce your returns. Fundrise sometimes offers promotions to waive the advisory fee for new clients to incentivize you to invest, but no current promotions are being offered.
Is Fundrise Right for You?
Fundrise is ideal for new investors looking to dip their toe in the real estate market. Their low investment minimum and easy-to-use website make real estate investing accessible. You can start with as little as $500, and Fundrise handles all the paperwork for you.
However, if you’re an active investor who wants more control over property selection and management, Fundrise may feel limited. Their pre-built portfolios mean you can’t hand-pick properties, including residential properties, industrial properties, and commercial properties. You’re also relying on Fundrise to source and manage deals on your behalf.
Fundrise is also best for long-term investments. While you can withdraw your money anytime, Fundrise makes money by lending to developers over months or years. If you think you need quick access to your cash, Fundrise probably isn’t the right choice.
Overall, Fundrise offers an innovative way for new investors to gain exposure to real estate. Their low-cost, low-hassle approach can be an easy entry point into the market. However, for experienced investors or those with shorter time horizons, more traditional real estate investments may be a better fit. Click here to check out Fundrise today. Don’t forget to look out for promo codes to save on sign-up fees.
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