Fundrise Review 2022: Invest In Real Estate With Just $10

June 26, 2022
Fundrise

Quick Summary:

Fundrise is a real estate investment platform that allows accredited and non-accredited investors to gain exposure to commercial real estate starting at just $10.

PROS

  • $10 Minimum Investment
  • Strong Track Record
  • Customized portfolio recommendation
  • $25-50 referral bonus

CONS

  • Limited liquidity

This post contains affiliate links which we will receive a commission at no cost to you.

At A Glance:

Minimum Investment$10
Current Promotions$25 – $50 worth of shares per referral
Returns11.58% net of all fees across all clients
21 consecutive quarters of positive returns
Fees1%/yr of AUM
Early RedemptionYes
IRA InvestingYes, for basic portfolio and up
Dividend ReinvestingYes
Auto InvestingYes
Types of InvestorsAccredited and Non-Accredited

Who Should Use Fundrise?

Fundrise is best for…

  • Investing with a small amount of money ($10)
  • Diversification outside traditional stock market investing
  • Individuals who can do their own due diligence.

About Fundrise

Established in 2010, Fundrise is the oldest real estate crowdfunding platform. Fundrise provides people with an alternative option to investing in real estate without the stress and costs of traditional real estate investing.

More than 300,000 people use Fundrise today and have invested over $7billion in properties throughout the U.S. Fundrise has had 21 consecutive quarters of returns, averaging 22.99% in 2021.

Fundrise is based in Washington, DC, and was founded by Ben Miller, who has over 20 years of experience in the real estate industry.

How does Fundrise work?

When you invest with Fundrise, you are investing in either Fundrise eREITs or eFunds.

The eREITs and eFunds are comprised of a basket of non-traded real estate properties, from multi-family apartments to industrial complexes.

The investments aim to seek a combination of dividends and capital appreciation, depending on the strategy.

In general, real estate investing has a long-term investment horizon.

However, Fundrise recently launched its Income Real Estate fund, which offers a current dividend of 6.5% and quarterly liquidity options with no fees. Other investment options do offer liquidity options if you need to exit your investment early.

Fundrise is available to non-accredited and accredited investors alike with a minimum investment of just $10.

And once you open an account, you can view and manage your investments from one easy-to-use dashboard:

Fundrise Investor Dashboard
Fundrise Investor Dashboard

Fundrise Account Level and Minimum Investments

The Fundrise platform consists of five types of accounts with various minimum balance requirements. Depending on the type of account, you will have access to different investment options.

Fundrise’s most affordable option is its ‘Starter’ portfolio. This low-cost package starts at $10. The portfolio includes access to Fundrise’s registered products and dividend reinvestment, and auto investing.

If you open a ‘Starter’ portfolio, you can invest in the Income Fund, which focuses of cashflow generation, or the Flagship Fund, which focuses on income and capital appreciation.

However, the Starter portfolio does not have IRA access or other advanced functionality.

For $1,000, you can upgrade your account to the Basic Plan. With the Basic Plan, you can define your investment goals, open a taxable IRA, and invest in the Fundrise iPO.

Neither the Starter or Basic plans grant access to Fundrise’s non-registered investment programs.

After that, there are 3 higher level plans which include: Core, Advanced, and Premium. These plans have a higher minimum balance, but also come with more advanced features including additional investment options such as an Opportunity Zone Fund.

Fundrise Investment portfolios

Why Invest In Private Real Estate?

Private real estate investing has shown year over to year to provide Income, Stability, and Risk-adjusted returns. Taking all three factors into consideration, real estate provides a tremendous opportunity to diversify your investment portfolio.

Income

Over the past 20 years, NPI (the index that tracks private real estate performance), has averaged a higher rate than the yields of other major asset classes such as publicly-traded REITs, Bonds, and Stocks.

Private Real Estate Returns
Yields of Private Real Estate compared to publicly traded securities.

Stability During Economic Crisis

Private real estate has historically demonstrated a low correlation with both publicly traded stocks and REITs. When public sectors of the market have exhibited greater degrees of volatility and vulnerability to investor sentiment, real estate has been steady in comparison — especially during the past three major economic crises.

Fundrise stability

Risk-Adjusted Return

Of the four major asset types readily available to investors, private real estate generally mitigates risk while still prioritizing attractive returns, as shown below.

Fundrise risk-adjusted returns

Investment Options Explained:

The Starter and Basic level accounts allow individuals to invest only in Fundrise’s registered products. At the Core level and beyond, investors have access to non-registered products as well.

Let’s take a look at all the investment options in detail…

Income Real Estate Fund [Recommended]

The Income Real Estate Fund is an innovative new real estate fund intended to generate a low-volatility income stream of cash distributions with a current 6.5% distribution rate. This fund was launched in April 2022 and will offer quarterly liquidity (in the form of quarterly repurchase offers) with zero penalties or costs associated with liquidating Fund Shares.

Best For: Income generation and if you do not want to lock your money up for a long period of time.

Open to: All portfolio levels

Current Distribution Rate: 6.5%

Objective: Income

Current NAV: $10 per share

Flagship Real Estate Fund

The Flagship Real Estate Fund has an investment objective to generate income, while also seeking long-term capital appreciation with low to moderate volatility and low correlation to the broader markets.

Open to: All portfolio levels

Current Distribution Rate: 0.75%

Objective: Balanced

Current NAV: $13.44

Flagship Real Estate Fund holdings

eREITs

eREITs are a diverse family of funds, each of which pursues a focused real estate investment strategy. Fundrise typically allocates their clients’ portfolios to a combination of eREITs, calibrating each client to specified objectives and risk tolerance.

There are currently 11 active eREITs. Strategies span from income generation to Midwest Region strategies. eREITS are only available at the ‘Core’ level plan and above.

Open to: ‘Core’ level and above

Current Distribution Rate: Varies

Objective: Varies

Current NAV: Varies

eREITObjectiveCurrent DividendInception
Growth eREITAppreciation2.46%Feb 2016
East Coast eREITBalanced0.70%Oct 2016
Heartland eREITBalanced2.67%Oct 2016
West Coast eREITBalanced2.43%Oct 2016
Development eREITAppreciation0.93%Oct 2019
Balanced eREITBalanced6.72%Dec 2019
Balanced eREIT IIBalanced0.81%Jan 2021
Growth eREIT IIAppreciation3.53%Sep 2018
Growth eREIT IIIAppreciation3.00%Feb 2019
Growth eREIT VIAppreciation0.83%Dec 2019
Growth eREIT VIIAppreciation0.85%Jan 2021

Returns

From 2017 – 2021, Fundrise returned an average annualized return of 11.58%, net of fees across all clients. Compared to all public REITs, which returned 13.4% and 19.21% for the S&P 500.

It’s important to note that your total returns could vary depending on your chosen plan and investment objective.

Fundrise has had 21 consecutive quarters of positive returns, with their best quarter returning 9.40% and their worst quarter being 1.15%.

Both the S&P500 and all public REITs had only 17 consecutive positive returns, with their best quarters returning 20.54%/16.70% and worst quarters returning -19.60%/-25.42%, respectively.

YearFundrise Returns
2022 Q13.49%
202122.99%
20207.31%
20199.16%
20188.81%
201710.63%

Investment Strategies Explained

Fundrise has 4 real estate investment strategies: Fixed Income, Core Plus, Value Add, and Opportunistic. Fixed Income portfolios focus on income generation while opportunistic strategies focus on total return.

If you invest in an eREIT or eFund, the portfolio may consist of some, all, or a combination of the investment strategies listed below.

Fundrise Investment Strategy

Fixed Income

Typical Return Profile

Cash flowing at acquisition
Income: 6-8%

Fundrise’s Fixed Income strategy seeks to generate above-market yields by providing creative and comprehensive financing solutions underpinned by high-quality real estate.

This strategy seeks to lend with a margin of safety to product types with high durability of demand (e.g., housing) and real constraints on new supply, thereby supporting property values.

Core Plus

Typical Return Profile

  • Total Return: 8 – 10%
  • 6 – 12 months to first cash flow
  • Income: 4-6%

Their Core Plus strategy features stabilized real estate with a long investment horizon and moderate leverage, seeking to unlock additional value through focused asset management. This strategy seeks to buy quality assets at an attractive basis in growing markets across residential and industrial asset classes.

Value Add

Typical Return Profile

  • Total Return: 10 -12%
  • 12-18 months to first cashflow
  • Income: 2 – 4%

The Value-Add strategy focuses primarily on acquiring existing properties below replacement cost and investing capital to increase their competitiveness. They focus primarily on acquiring reasonably-priced residential communities in growing markets where affordable rental housing is scarce.

Opportunistic

Typical Return Profile

  • Total Return: 12 -15%
  • 2-3 years to first cash flow
  • Income: 0-2%

The opportunistic strategy seeks to acquire underutilized, well-located properties in the most dynamic markets. These business plans are the most complex and longest-dated that Fundrise has, but also carry the potential for the greatest reward.

Fundrise Fees & Pricing

Fundrise charges a yearly asset management fee of 0.85% plus a 0.15% advisory fee, so 1%/yr. All dividends are net of fees. So for every $1,000 invested, you will pay $10 in fees.

Fundrise does not charge any transaction fees, sales commissions, or additional fees for enabling features on your accounts, such as dividend reinvestment or auto-invest. 

Note: There may be costs associated with redeeming depending on when the request is made. 

Fees Compared:

FeesFundrise Real Estate Investment TrustBlackstone Real Estate Income TrustStarwood Real Estate Income Trust
Sales CommissionNone3.5%3.5%
Annual Servicing Fee0.15%0.85%0.85%
Annual Management Fee0.85%1.25%1.25%
Carried Interest (Profits above 5% return hurdleNone12.5%12.5%

Liquidity Features Explained

If investors want to redeem their shares for the eREITs or eFund, they can place a redemption request at any time.

After a request is submitted, they typically process those requests quarterly for the eREITs, and monthly for the eFunds after a minimum 60-day waiting period.

Any eREIT or eFund redemptions processed before an investment is five years old will be subject to a flat 1% penalty. After five years, investors can request to redeem their shares at any time for their full value, with no penalty applied

It’s important to note that while under normal market conditions Fundrise seeks to provide investors with liquidity through the redemption plan, during a financial crisis, investors should expect us to pause the redemption plan long enough to allow enough time for whatever events may unfold.

Note: Investors in the Fundrise Income Real Estate Fund can redeem their shares quarterly with no penalty or cost.

Alternatives To Fundrise

FeaturesFundriseGroundfloorDiversyFund
Overall Rating
Minimum Investment$10$10$500
Fees1%None2%
Property TypesVariesResidentialMulti-family
Open To All Investors?
Retirement Account Investing?
Current Promotions$25 in shares for every referralNoneNone
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Is Fundrise Worth It?

Real estate in the asset classes is an investment with a long-term investment horizon. The potential for capital appreciation, portfolio diversification, and regularly distributed assets is alluring.

REITs can help investors to invest directly in properties without a huge amount of money required and managerial headaches of direct ownership. Furthermore, you can invest in assets outside of your region.

Yes, Fundrise is worth investing in if you want to diversify your portfolio outside of traditional stocks and bonds.

Frequently Asked Questions

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