Overall:
Platform Provided Due Diligence:
Platform Fees:
Quality of Deals:
Website - Fundrise
Fees - .3% annual management fee
Phone - (202) 584-0550
SEC REG - USES 506(c) and 506(b)
Fundrise is a crowdfunding platform for investing in real estate with a unique focus on involving local investors with opportunities close to home. Benjamin and David Miller founded the company in August of 2012 to give everyone the opportunity to invest in real estate. This amazing platform is now raising in hours what once took months and best of all—these are local investors.
By investing in the Project Payment Dependent Notes, issued by the Rise Companies Corp., the parent of Fundrise LLC, both accredited and in some cases, non-accredited investors can take part in return of the real estate market. Every investment opportunity is vetted and comes with a complete projection of returns and a distribution schedule specific to that project.
Fundrise also allows investors to gather together into investor networks that can follow and work with specific real estate companies. By allowing investors to pool their resources and fund opportunities with a stable of entrepreneurs they trust, Fundrise makes it easier and more efficient for great investors and great companies to connect in mutually beneficial ways.
Fundrise raised over $31 million dollars in its first round of funding, with this infusion; Fundrise is broadening far beyond its roots in Washington and is now beginning to offer opportunities for crowdfunded investments nationally. Fundrise charges different fees for each Project Payment Dependent Note, though they range typically from 0-3%. Fundrise utilizes 506b, which does allow a limited number of non-accredited and self-certified investors to fund projects.
Let’s get into the nitty-gritty of what our Fundrise review reveals about this real estate crowdfunding investment endeavor. Here’s a quick list of the most important aspects of how Fundrise works. Think of it as the first step in your own due diligence!
Available to Non Accredited Investors:
A number of online platforms that offer investment in real estate projects are only available to what the Security and Exchange Commission calls accredited investors. These accredited investors need to have more than $1 million in net worth, excluding the value of their primary home. Alternatively, they need to be taking home a minimum of $200,000 a year individually or $300,00 if married. This means that many real estate investments are out of the running for anyone who isn’t so well-heeled, but Fundrise is different - a number of its real estate investing opportunities are open to those who aren’t accredited investors.
Low Minimum Investment:
In addition to how welcoming Fundrise is to investors who don’t literally have millions in the bank, the platform also offers low minimum investment thresholds on its real estate deals. While due diligence will require you to examine the exact investment minimum for the investments you’re interested in, overall a low minimum investment makes it easy for an investor to invest in a real estate investment trust with the Fundrise platform, creating more democratized investments and resulting in more easily accessible for an investor from every walk of life, not just the accredited investor with a fat wallet.
Ease of use:
Investing with Fundrise is simple and straightforward. Signup takes around 10 minutes, though you should always spend some time going through the investor disclosures first. It’s part of your due diligence after all. Fundrise asks for your typical details: address, phone number, and your SSN; you then have the option of linking your bank account to the system for ACH transfers or if you want to rely on wire transfers for cash transactions.
Redemptions:
Fundrise is a real estate investment platform that provides fee-based share selling. Investors can return their shares to the platform minus a fee, with the fee then going into either the eFund or eREIT. Fees are calculated against the price of the share. Within the first 90 days, there’s a 0% fee; from then until 3 years is 3%, 3 to 4 years is 2%, and 4 to 5 years is 1%. Share redemption past five years holds no fee associated with it, with the obvious conclusion that the platform encourages you to hold on to shares of your real estate assets as long as possible before redeeming them. An additional note if you choose to invest in Fundrise: like other platforms, it has the right to delay or suspend redemptions during periods of economic turmoil, such as it did during the early days of the coronavirus outbreak in March of 2020. Fundrise returned to its regular operations just a few months later in July.
Non-traded REITs:
Fundrise does not trade its electronic real estate investment trusts on public exchanges. eREITs are highly illiquid, and there’s no way to guarantee that investors who want to sell shares will be able to find buyers for these shares (part of why Fundrise provides a redemption program). This is one of the biggest risks when it comes to a non-traded REIT, but the rewards are commensurate as well - Fundrise says that its returns from 2014 through 2019 have been between 8.76% and 12.42%. If the idea of a non-traded REIT scares you, you can invest in a publicly traded one instead, which is traded in more traditional methods like you would find on a stock exchange.
Possible additional fees:
In many ways, Fundrise saves investors money by cutting some typical costs out of the equation. Without having to rely on a broker-dealer to act as a middleman, Fundrise doesn’t have to spend money on creating links between real estate and investors. That being said, there are plenty of pitfalls that, as an investor, you’ll have to look out for when it comes to your money. Fundrise clearly states what its advisory and annual asset management fee schedules are (as it should), but upon a closer reading, your due diligence will see that it also reserves the right to charge additional fees on specific assets, such as liquidation or development fees. It proves rather difficult to find these fees stated anywhere online, though they may be better publicized on the offering circulars associated with each property offering.
Fundrise focuses its online real estate investing on individuals that might not have the most robust income or net worth. This is accomplished by allowing Fundrise account holders pool their resources in order to buy into real estate investments and real estate assets that they wouldn't be able to invest in by themselves. This crowdfunding makes real estate investing much more accessible to the average person. It also makes investment in real estate much more simple for those who don’t have access or desire to take out self-directed IRAs, for example.
Due diligence reveals that the main products that Fundrise offers are real estate investment trusts. These REITs are investments in commercial and private real estate as a way to produce income. This income is produced either through holding mortgages or managing a building and then providing returns to the investor. Fundrise calls such an investment opportunity an “electronic REIT” or eREIT offering for short. Fundrise also offers eFunds, a way to allow investors to pool their money with the intention of purchasing land, develop it for residential use, and then market it to home buyers before reaping the returns.
Investing in eREITs and eFunds is done through purchasing shares. These eREITs and eFunds are limited liability companies that then purchase one of the portfolios that Fundrise maintains. These include the Starter Portfolio, the Supplemental Income Portfolio, and both the Balanced Investing Portfolio for income-balanced investing or Long-Term Growth Portfolio for those wanting to take the long view. The company chooses which plan contains which eREIT or eFund, and it also decides which properties are for investing in each plan as well. You can also get a Fundrise account at either an Advanced or Premium level, which offers investors additional features, benefits, and access to a wider array of real estate projects, from office buildings, commercial properties, and more to invest in, to maximize the returns on your investments.
Real estate has always been an excellent income builder, and an investor looking to diversify their holdings and build their money through returns on property ownership is usually in for a low-risk return on their investment and a surefire way to increase cash flow over time. As a real estate market investment platform, Fundrise certainly takes the difficulty out of the entire process, making it easy for just about anyone to invest in property and experience financial growth thanks to its crowdfunding approach and due to the fact that you need not be an accredited investor in order to participate. With a low minimum investment threshold and opportunities for a non-accredited investor in addition to that minimum investment, we can proudly say that our Fundrise review indicates that, by and large, that Fundrise is a solid investment opportunity for any investor looking to make returns on real estate investments.
At the same time, Fundrise is not a perfect platform. Such a thing would be an impossibility, after all! In the spirit of due diligence, it’s our responsibility to point out where the investment platform may have some drawbacks. First and foremost, it’s important to note that the crowdfunding real estate market hasn’t undergone any truly catastrophic real estate market activity that could disrupt investments in a meaningful way. Since Fundrise reviews economic conditions and reserves the right to pause redemption during times of economic turmoil (such as it did in May of 2020), a Fundrise real estate investment trust might be able to be redeemed in the face of an even bigger real estate downturn such as a housing crash. Real estate crowdfunding is therefore susceptible to letting down an investor in this way. Thankfully, real estate crowdfunding isn’t the only way to make supplemental income off investment activity but is instead just simply one way you should be diversifying your investment money for income growth.
Additionally, Fundrise investments, by necessity, are more long-term than not. This means that as an investor you will be tying up your money for some time before you can begin seeing returns on your investment. There’s nothing wrong with a long-term investment, and the ability to redeem your investments early, albeit with an associated fee, seeks to address any investor who feels the need to regain access to their money if necessary. Any investor that still finds this real estate crowdfunding arrangement as still insufficient for their needs because of its reliance on long term growth can always seek real estate deals through a standard brokerage account instead. You won’t have access to the exact investment opportunities that Fundrise offers you, of course, but you will be able to pick and choose the real estate projects you want to invest in with some more freedom. Sometimes, as an investor, freedom to access your investments when necessary is more important than any possible ROI.
In the end, our Fundrise review reveals that the platform is a solid one if you’re willing to invest funds under certain conditions. If you’re already got a widely diverse personal finance portfolio and you have no worries about cash flow issues, then becoming an investor in a Fundrise property offering or two has the potential to provide you some growth. This is especially true if, as an investor, you have no qualms about leaving your money fallow for up to five years or more in order to facilitate that growth. Such an offering provides solid opportunities for any investor looking to add to the possibility that you’ll earn some real money from real estate. However, as always, be aware of the risks associated with these types of investments and conduct more due diligence on your own before investing any money.
Jun 25, 2019
My ratings are based on the fact that this platform is meant to provide RE institutional investment quality to non-accredited investors at low investment minimums. I applaud them for doing this. They switch to the eREIT format to my dissappointment but it makes more sense in order to mass market the product. They also offer funds and a QOF. The online platorm is easy to use and provides detailed portfolio performance tracking. They have great due diligence reports on the projects but you have to request it directly since they don't publish it on the site.
I never invested in a competing platform so I can't make any specifc comparison. Fundrise did have better deals and returns than Realty Mogul when I reviewed it 3 years ago. Nonetheless, Realty Mogul seem to have pivoted their offerings and is similar to Fundrise. The only comparison I would have, based on non-accredited investments and my personal experience, is to compare the performance to directly purchasing rental real estate. My IRR has been 9% to 11% in this rental arena which is in line with returns from Fundrise products. While direct RE investments has the benefit of depreciations write-offs, it is a lot more work to manage and exit an investment.
Overall, I am happy with their service and product and have been recommending them to my non-accredited friends or the ones seeking low investment minimum.
-Chris
Nov 01, 2017
Easy, beginner friendly REIT for non-accredited investors, but agree with other comments that accredited investors can find better deals elsewhere.
Friends who used to use the platform mentioned good double-digit returns, but those days are probably over with the REIT model.
Aug 24, 2017
I agree with the comments below. Too bad they switched to their eREIT model and abandoned their earlier business.
May 02, 2017
I still think Fundrise has the best website for RE Crowdfunding compared to its peers. However, the transition to the REIT format has me looking elsewhere for opportunities.
I had 10 notes on their site with 8 completely closed with an annualized return in the upper teens.Very happy with the individual opportunities but not interested in the eREIT.
Feb 19, 2017
I made two preferred equity deals in 2015 with Fundrise that are both working well. Unfortunately they don't do those anymore and have switched to a REIT model. My limited investigation of that convinced my I could probably do better elsewhere.
Jan 30, 2017
Fundrise use to be one of my favorite real estate crowdfunding platforms. When they started they were focused on matching sponsors and investors. They recently changed their model tot he eReit for all investors. While their eReit is a welcomed opportunity for the non accredited investor, accredited investors have better low fee options than the ereit. I have not seen a new investment opportunity for the accredited investor in over 6 months. SInce they no longer serve the accredited market, it looks like I have made my last investment at Fundrise.
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Website - Fundrise
Fees - .3% annual management fee
Phone - (202) 584-0550
SEC REG - USES 506(c) and 506(b)
Fundrise is a crowdfunding platform for investing in real estate with a unique focus on involving local investors with opportunities close to home. Benjamin and David Miller founded the company in August of 2012 to give everyone the opportunity to invest in real estate. This amazing platform is now raising in hours what once took months and best of all—these are local investors.
By investing in the Project Payment Dependent Notes, issued by the Rise Companies Corp., the parent of Fundrise LLC, both accredited and in some cases, non-accredited investors can take part in return of the real estate market. Every investment opportunity is vetted and comes with a complete projection of returns and a distribution schedule specific to that project.
Fundrise also allows investors to gather together into investor networks that can follow and work with specific real estate companies. By allowing investors to pool their resources and fund opportunities with a stable of entrepreneurs they trust, Fundrise makes it easier and more efficient for great investors and great companies to connect in mutually beneficial ways.
Fundrise raised over $31 million dollars in its first round of funding, with this infusion; Fundrise is broadening far beyond its roots in Washington and is now beginning to offer opportunities for crowdfunded investments nationally. Fundrise charges different fees for each Project Payment Dependent Note, though they range typically from 0-3%. Fundrise utilizes 506b, which does allow a limited number of non-accredited and self-certified investors to fund projects.
Let’s get into the nitty-gritty of what our Fundrise review reveals about this real estate crowdfunding investment endeavor. Here’s a quick list of the most important aspects of how Fundrise works. Think of it as the first step in your own due diligence!
Available to Non Accredited Investors:
A number of online platforms that offer investment in real estate projects are only available to what the Security and Exchange Commission calls accredited investors. These accredited investors need to have more than $1 million in net worth, excluding the value of their primary home. Alternatively, they need to be taking home a minimum of $200,000 a year individually or $300,00 if married. This means that many real estate investments are out of the running for anyone who isn’t so well-heeled, but Fundrise is different - a number of its real estate investing opportunities are open to those who aren’t accredited investors.
Low Minimum Investment:
In addition to how welcoming Fundrise is to investors who don’t literally have millions in the bank, the platform also offers low minimum investment thresholds on its real estate deals. While due diligence will require you to examine the exact investment minimum for the investments you’re interested in, overall a low minimum investment makes it easy for an investor to invest in a real estate investment trust with the Fundrise platform, creating more democratized investments and resulting in more easily accessible for an investor from every walk of life, not just the accredited investor with a fat wallet.
Ease of use:
Investing with Fundrise is simple and straightforward. Signup takes around 10 minutes, though you should always spend some time going through the investor disclosures first. It’s part of your due diligence after all. Fundrise asks for your typical details: address, phone number, and your SSN; you then have the option of linking your bank account to the system for ACH transfers or if you want to rely on wire transfers for cash transactions.
Redemptions:
Fundrise is a real estate investment platform that provides fee-based share selling. Investors can return their shares to the platform minus a fee, with the fee then going into either the eFund or eREIT. Fees are calculated against the price of the share. Within the first 90 days, there’s a 0% fee; from then until 3 years is 3%, 3 to 4 years is 2%, and 4 to 5 years is 1%. Share redemption past five years holds no fee associated with it, with the obvious conclusion that the platform encourages you to hold on to shares of your real estate assets as long as possible before redeeming them. An additional note if you choose to invest in Fundrise: like other platforms, it has the right to delay or suspend redemptions during periods of economic turmoil, such as it did during the early days of the coronavirus outbreak in March of 2020. Fundrise returned to its regular operations just a few months later in July.
Non-traded REITs:
Fundrise does not trade its electronic real estate investment trusts on public exchanges. eREITs are highly illiquid, and there’s no way to guarantee that investors who want to sell shares will be able to find buyers for these shares (part of why Fundrise provides a redemption program). This is one of the biggest risks when it comes to a non-traded REIT, but the rewards are commensurate as well - Fundrise says that its returns from 2014 through 2019 have been between 8.76% and 12.42%. If the idea of a non-traded REIT scares you, you can invest in a publicly traded one instead, which is traded in more traditional methods like you would find on a stock exchange.
Possible additional fees:
In many ways, Fundrise saves investors money by cutting some typical costs out of the equation. Without having to rely on a broker-dealer to act as a middleman, Fundrise doesn’t have to spend money on creating links between real estate and investors. That being said, there are plenty of pitfalls that, as an investor, you’ll have to look out for when it comes to your money. Fundrise clearly states what its advisory and annual asset management fee schedules are (as it should), but upon a closer reading, your due diligence will see that it also reserves the right to charge additional fees on specific assets, such as liquidation or development fees. It proves rather difficult to find these fees stated anywhere online, though they may be better publicized on the offering circulars associated with each property offering.
Fundrise focuses its online real estate investing on individuals that might not have the most robust income or net worth. This is accomplished by allowing Fundrise account holders pool their resources in order to buy into real estate investments and real estate assets that they wouldn't be able to invest in by themselves. This crowdfunding makes real estate investing much more accessible to the average person. It also makes investment in real estate much more simple for those who don’t have access or desire to take out self-directed IRAs, for example.
Due diligence reveals that the main products that Fundrise offers are real estate investment trusts. These REITs are investments in commercial and private real estate as a way to produce income. This income is produced either through holding mortgages or managing a building and then providing returns to the investor. Fundrise calls such an investment opportunity an “electronic REIT” or eREIT offering for short. Fundrise also offers eFunds, a way to allow investors to pool their money with the intention of purchasing land, develop it for residential use, and then market it to home buyers before reaping the returns.
Investing in eREITs and eFunds is done through purchasing shares. These eREITs and eFunds are limited liability companies that then purchase one of the portfolios that Fundrise maintains. These include the Starter Portfolio, the Supplemental Income Portfolio, and both the Balanced Investing Portfolio for income-balanced investing or Long-Term Growth Portfolio for those wanting to take the long view. The company chooses which plan contains which eREIT or eFund, and it also decides which properties are for investing in each plan as well. You can also get a Fundrise account at either an Advanced or Premium level, which offers investors additional features, benefits, and access to a wider array of real estate projects, from office buildings, commercial properties, and more to invest in, to maximize the returns on your investments.
Real estate has always been an excellent income builder, and an investor looking to diversify their holdings and build their money through returns on property ownership is usually in for a low-risk return on their investment and a surefire way to increase cash flow over time. As a real estate market investment platform, Fundrise certainly takes the difficulty out of the entire process, making it easy for just about anyone to invest in property and experience financial growth thanks to its crowdfunding approach and due to the fact that you need not be an accredited investor in order to participate. With a low minimum investment threshold and opportunities for a non-accredited investor in addition to that minimum investment, we can proudly say that our Fundrise review indicates that, by and large, that Fundrise is a solid investment opportunity for any investor looking to make returns on real estate investments.
At the same time, Fundrise is not a perfect platform. Such a thing would be an impossibility, after all! In the spirit of due diligence, it’s our responsibility to point out where the investment platform may have some drawbacks. First and foremost, it’s important to note that the crowdfunding real estate market hasn’t undergone any truly catastrophic real estate market activity that could disrupt investments in a meaningful way. Since Fundrise reviews economic conditions and reserves the right to pause redemption during times of economic turmoil (such as it did in May of 2020), a Fundrise real estate investment trust might be able to be redeemed in the face of an even bigger real estate downturn such as a housing crash. Real estate crowdfunding is therefore susceptible to letting down an investor in this way. Thankfully, real estate crowdfunding isn’t the only way to make supplemental income off investment activity but is instead just simply one way you should be diversifying your investment money for income growth.
Additionally, Fundrise investments, by necessity, are more long-term than not. This means that as an investor you will be tying up your money for some time before you can begin seeing returns on your investment. There’s nothing wrong with a long-term investment, and the ability to redeem your investments early, albeit with an associated fee, seeks to address any investor who feels the need to regain access to their money if necessary. Any investor that still finds this real estate crowdfunding arrangement as still insufficient for their needs because of its reliance on long term growth can always seek real estate deals through a standard brokerage account instead. You won’t have access to the exact investment opportunities that Fundrise offers you, of course, but you will be able to pick and choose the real estate projects you want to invest in with some more freedom. Sometimes, as an investor, freedom to access your investments when necessary is more important than any possible ROI.
In the end, our Fundrise review reveals that the platform is a solid one if you’re willing to invest funds under certain conditions. If you’re already got a widely diverse personal finance portfolio and you have no worries about cash flow issues, then becoming an investor in a Fundrise property offering or two has the potential to provide you some growth. This is especially true if, as an investor, you have no qualms about leaving your money fallow for up to five years or more in order to facilitate that growth. Such an offering provides solid opportunities for any investor looking to add to the possibility that you’ll earn some real money from real estate. However, as always, be aware of the risks associated with these types of investments and conduct more due diligence on your own before investing any money.
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