What is Fundrise?

Jeremy BiberdorfBy: Jeremy Biberdorf

April 26, 2023April 26, 2023

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

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Fundrise is a real estate investment platform that provides everyday investors with access to professionally managed, diversified portfolios of real estate assets. This platform allows non-accredited investors to invest in real estate projects, real estate investment trusts (REITs), and other real estate deals, providing passive income and the potential for long-term growth.

With a low minimum investment, Fundrise caters to a wide range of investment goals and strategies, making it an attractive alternative to traditional stock market investing.
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Company Background: Revolutionizing Real Estate Investing

Fundrise was founded in 2012 by brothers Ben and Dan Miller with the mission to revolutionize the real estate investing landscape. Headquartered in Washington, D.C., the company aimed to make real estate investments more accessible and cost-effective for everyday investors, breaking down barriers that had previously limited participation to accredited investors and institutional entities.

In its early days, Fundrise focused on crowdfunding individual real estate projects, allowing investors to contribute small amounts of capital towards the development of specific properties. As the platform evolved, it introduced eREITs and the Interval Fund, broadening its investment offerings and further diversifying the investment opportunities available to its users.

Throughout its growth, Fundrise has remained dedicated to its core principle of providing access to high-quality, professionally managed real estate investments for a wide range of investors. The company’s innovative approach has attracted attention from both the real estate and fintech industries and has helped democratize real estate investing for thousands of individuals across the United States.

Fundrise Client Performance Overview

Over the past six years, Fundrise clients have experienced remarkable performance across various investment categories, particularly when compared to traditional benchmarks like the S&P 500 and public REITs. This outstanding track record demonstrates the benefits of investing with Fundrise and its innovative approach to real estate investment.

In 2021, Fundrise clients enjoyed a remarkable return of 22.99%, significantly outperforming both public REITs at 1.50% and the S&P 500 at -25.10%. This substantial return highlights the potential for investors to achieve substantial gains with Fundrise’s investment strategies.

In the years prior, Fundrise’s performance has consistently outperformed public REITs. In 2020, clients experienced a return of 7.31%, which was markedly higher than the -5.86% posted by public REITs. In 2019, returns reached 9.16%, surpassing public REITs’ 28.07% return. Moreover, in 2018 and 2017, Fundrise clients enjoyed returns of 8.81% and 10.63% respectively, outpacing public REITs in both instances.

While the S&P 500 has experienced volatility in recent years, Fundrise’s clients have been able to achieve more stable and reliable returns. For instance, in 2020, when the S&P 500 posted a negative return of -18.11%, Fundrise clients still managed to generate positive returns.

Minimum Investment: Making Real Estate Investing Accessible

One of the most notable features of Fundrise is its low minimum investment requirement. For as little as $10, individuals can become real estate investors and begin building a diversified portfolio of real estate assets. This accessibility makes it easier for everyday investors to enter the world of real estate investing, previously reserved for wealthier, accredited individuals or institutional investors.

Real Estate Investment Trusts (REITs): Diversification Through Professionally Managed Funds

Fundrise’s primary offering is its eREITs, which are real estate investment trusts that pool investors’ money to purchase and manage a diversified portfolio of real estate properties. These eREITs provide exposure to various real estate markets and property types, including commercial properties, office buildings, and housing markets. Fundrise eREITs differ from public REITs in that they are not traded on the stock market, resulting in lower fees and potentially more stable returns.

Interval Fund: A Real Estate Fund with Mutual Fund Features

In addition to eREITs, Fundrise offers an Interval Fund that combines the features of a real estate fund and a mutual fund. This hybrid investment vehicle provides even more diversification and flexibility, allowing investors to participate in both public and private real estate markets. The Interval Fund also offers quarterly liquidity, enabling investors to access their funds at regular intervals, albeit with potential liquidation fees.

Investment Strategy: Active Management for Long-term Growth

Fundrise’s investment team actively manages its real estate investments, seeking to generate long-term growth and attractive returns for its investors. Through careful property selection and ongoing asset management, the team aims to create a diversified portfolio that can weather market fluctuations and deliver consistent, long-term returns.

Growth eREIT: Targeting High-growth Real Estate Markets

One of Fundrise’s flagship funds, the Growth eREIT, focuses on high-growth real estate markets, aiming to deliver long-term capital appreciation. The Growth eREIT invests in commercial properties and office buildings in rapidly expanding urban areas, targeting markets with strong fundamentals and promising prospects for future growth.

Passive Income: Quarterly Dividends and Long-term Investment Strategy

Investors in Fundrise can enjoy the benefits of passive income through quarterly dividends, which are generated from rental income and interest payments on real estate investments. By reinvesting these dividends or using them as a source of income, investors can take advantage of the long-term investment strategy that real estate assets offer.

Fees: Annual Asset Management and Investment Advisory Fees

Fundrise charges an annual asset management fee and an annual investment advisory fee, which cover the costs of managing the platform’s real estate investments and providing investment advice to investors. These fees are typically lower than those charged by traditional REITs or actively managed mutual funds, making Fundrise a cost-effective alternative for real estate investing.

Non-accredited Investors: Expanding Access to Real Estate Investments

Fundrise is unique in its ability to cater to non-accredited investors, who make up the majority of everyday investors. By offering real estate investment opportunities to this previously underserved market segment, Fundrise is democratizing the world of real estate investing and providing a valuable alternative

Final Thoughts – What is Fundrise?

Fundrise is a real estate investment platform that provides everyday investors with access to professionally managed, diversified portfolios of real estate assets. Its low minimum investment requirement and innovative investment offerings, including eREITs and the Interval Fund, make real estate investing more accessible and cost-effective for non-accredited investors.

With a track record of impressive returns and a focus on long-term growth, Fundrise offers an attractive alternative to traditional stock market investing. If you’re interested in real estate investing and want to learn more about how Fundrise can help you achieve your investment goals, click here to 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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