Radical FIRE is a non-client promoter of Fundrise.
Real estate investments can sometimes be complicated and take up much of your time. Are you looking for a platform to help you with your investments? Check out our Fundrise review for the best online platform for your investing needs.
Before diving deep into Fundrise, let’s first understand crowdfunding platforms. Crowdfunding is the process of raising funds from a large number of people to fund a project, a company, or a cause.
It means you can only invest a small amount of money into real estate instead of having to buy an entire condo yourself. Getting interested?
Learn more about Fundrise and how it can help you with your investments. Know your way in the real estate market using Fundrise and check out the different ways to diversify your investment portfolio.
What Is Fundrise?
Fundrise is one of the leading and most reliable real estate crowdfunding platforms currently on the market. They’re the biggest platform, established in 2010. Fundrise is the first company to successfully bring crowdfunding investments into the real estate market.
The most recent figures indicated that in 2019 alone, Fundrise made over $1.1 billion worth of equity and debt investments. Now that’s big.
Fundrise was developed to create a simple, affordable way for anyone who wants to access real estate’s historically consistent returns and invest in them.
Fundrise is open to non-accredited investors, making it possible for nearly anyone who wants to invest in private real estate. In contrast, other US crowdfunding platforms may require you to be an accredited investor, meaning you must meet a certain minimum income or wealth.
Fundrise also offers the lowest minimum and has a plan that starts with $10 to invest. In addition, Fundrise has an account structure where you don’t have to pick individual deals to invest in or a particular real estate investment trust (REIT). Instead, Fundrise extends your money to different diversified REITs.
They are called eREITs and eFunds based on their account level and investment objectives. Fundrise’s offer will outshine other real estate crowdfunding sites if you bring them all together.
How does Fundrise work?
When you invest with Fundrise, your funds are distributed across various associations of Fundrise’s contributions, such as eREITs and eFunds. They are both managed portfolios of private real estate assets placed all over the United States.
Fundrise has several account levels you can choose from depending on the different investment minimums you are looking for. Here are the different accounts and their offers:
- Starter Account: The minimum amount required is $10 for this plan. The starter plan is the simplest out of all the accounts offered, and it allows investors to test the products Fundrise offers.
- Basic Account: With a minimum investment of $1,000, you can start with the basic plan of Fundrise. This plan includes essential choices like IRA investing, investor goals, dividend reinvestment, and auto-invest.
- Core Account: $5,000 minimum investment. This core plan provides personalized access to “core plans,” which are automated investment strategies to reach your financial goals. It gives the investors options to focus on producing consistent cash flow, a balanced approach or maximizing long-term growth.
- Advanced Account: With a minimum investment of $10,000, you now have an option to access the “plus plans,” which is an additional add-on option to each core plan. This plan allocates a piece of your capital to more advanced real estate strategies that progress depending on the new opportunities in the market.
- Premium Account: $100,000 minimum requirement. This account level offers accredited investors access to the private funds as they become available. These are dedicated to illiquid private funds with a long-term time outlook that provides a possibility of earning outsized returns.
Every time an investor adds capital, it unlocks new investment options for them to choose from, and the more you invest, the greater chances you get to have a large return.
Minimum Requirement To Start Investment in Fundrise
Now you know how Fundrise works, it’s time to go into the minimum requirement to start investing in Fundrise. Fundrise allows almost anyone to invest, as long as you are a US resident aged 18 years or older. The initial investment is just $10.
This part is what makes the Fundrise platform enticing to aspiring investors. Before, real estate investing was only for accredited investors. With Fundrise, it’s available for anyone who wants to start their real estate investment journey.
To become accredited investors, individuals or businesses must meet one of the two requirements:
- Income: Your annual income must exceed $200,000 within the last two years or $300,000 jointly with your spouse. Furthermore, you are expected to earn the same income or more in the current year.
- Net worth: Your net worth must be over $1,000,000, individually or jointly with your spouse.
Why do they demand high minimums? The Securities and Exchange Commission (SEC) states and believes that investors with ample assets or income can understand the risks of unregulated investments. Meaning it is a method to protect people from investing in properties with the risk of losing their money.
However, that got changed when the Jumpstart Our Business Startups (JOBs) Act of 2012 modified the federal regulations to open up many new options for non-accredited investors.
How To Make Money With Fundrise?
With Fundrise, investors don’t invest in individual real estate projects. Instead, you may invest in one of the company’s eREITs or eFunds. eFunds are equities, while eREITs have both debt (loans made to a property developer) and equity.
Fundrise has two ways to make money with your investments: dividends and appreciation.
Dividends
Dividends consist of rental incomes produced on properties and interest earned from mortgages. These dividends are computed based on the total rental and interest income received by Fundrise.
Fundrise pays out dividends quarterly, which is a great source of passive income. You can choose to have Fundrise move your earnings to your bank account or reinvest them into your portfolio using their auto Invest dividend reinvestment plan (DRIP).
Appreciation
What can you earn on properties aside from the rental income? The appreciation in value. Individual properties within an eFund or eREIT increase in value, increasing the net asset value per share of the eFund or eREIT.
For instance, you invested $1,000 into an eREIT at the start of the year. If your holdings were $1,100 at the end of the year, your account would grow 10% due to the appreciation of properties.
It does not require you to sell your shares to realize gains. However, if Fundrise sells a property that is part of your fund, they will pay you a certain amount of the proceeds based on your fund shares.
Although, the fundamental method to profit from appreciation is to sell your shares once their Net Asset Value (NAV) has expanded.
Fundrise Features
Other than the different plans Fundrise offers, you also get to enjoy these amazing features that will help you with your investments. Here are the features you should know about before investing with Fundrise:
- Available to non-accredited investors: This is the best thing about Fundrise. It is not limited only to accredited investors but to also non-accredited ones. Fundrise products are available to all investors.
- Low-cost investment minimums: If you are into private real estate deals but can’t put up with the high minimum requirement, Fundrise is right for you.
- Easy-to-use platform: Fundrise is simple, and it takes only 10 minutes to create an account.
- Redemptions: Fundrise has a redemption that lets its investors sell shares back to Fundrise for a fee. That fee can be paid into the eREIT or eFund. The fee can be computed as a reduction to the share price value: 0% in the first 90 days, a 3% deduction if the shares are held at least 90 days but less than 3 years, 2% fee if the shares are held at least 3 years but less than 4 years, and 1% fee if the shares held at least 4 years but less than 5 years.
- Fundrise may suspend or delay redemptions during periods of extreme economic uncertainty: As the economy had a fallout in March 2020, companies have similar practices with Fundrise with the temporary suspension or delay of redemptions which prevents companies from bankruptcy.
- Interval fund: More and more liquid options are available than eREITs and eFunds. Investors can now participate in Fundrise’s interval fund. This feature improved access to your invested money in the form of quarterly repurchase offers. Unlike REITs and funds, there is no penalty for liquidating Interval Fund shares quarterly.
- Non-traded REITs: Fundrise’s REITs do not trade on the public exchange. They are highly illiquid. That’s because there’s no guarantee that there will be buyers for investors who like to sell shares. You can view this from the Financial Industry Regulatory Authority or FINRA.
Maximizing Your Earnings With Fundrise
Maximizing your earnings with Fundrise will depend on your portfolio and investments within it. However, there are things you can do to maximize earnings.
Consider Their Options
Fundrise has various portfolio offers, and there are quite a few that will fit your specific investment style. Understanding each plan offered by Fundrise will make sure you know which one is the best option for your circumstances.
Reinvest Your Dividends
As tempting as it can be to take out your earnings, it is still better to reinvest your dividends. That money will be placed straight back into the open offerings with Fundrise, and reinvesting your dividends does not require a fee.
Over time, the money you reinvested will grow due to compound returns. That means that your returns start to earn more money, creating a snowball effect. The longer you continue to reinvest dividends, your account will grow quicker.
Pros And Cons Of Fundrise
Like other investments, there are pros and cons corresponding to investing in Fundrise.
Here are the top pros and cons you should be aware of:
Pros: Fundrise
- Easy-To-Navigate: Fundrise is developed to provide an easy-to-use investment platform.
- Accessibility: Fundrise is not limited to accredited investors but also open to non-accredited investors. This gives them the ability to invest in private real estate deals without purchasing the rental property by themselves.
- Return Potential: Fundrise yielded some impressive returns and provides an opportunity for those who continue in the future to be promising.
- Low Investment Minimum: Unlike other platforms, you can start investing as low as $10 with the Fundrise starter plan.
- Diversification: Investing in real estate can be a good diversification tool to build beyond a portfolio of stocks and bonds.
- Passive Income: Investing in Fundrise can be passive income where minimum work is required. Similar to other investments with Fundrise as your source, you can have potential passive income.
Cons: Fundrise
- Fees: Fundrise fees can be confusing. The standard 1% in advisory and management fees is higher than the average annual fee on the index funds and exchange-traded funds (ETFs). Although it might be higher, you can expect high returns to offset them. In addition to that, Fundrise charges an Origination fee (up to 2%) on a new project and an early exit fee (up to 3%).
- Liquidity: When investing in the private real estate market, the investments are somewhat illiquid. With Fundrise, you can have an early exit, which will cost you up to 3% in fees.
- Risk: With Fundrise’s high returns, you should expect risks. There is a risk that returns are lower, and there is a possibility that you could lose your investment altogether. That’s why you should only invest money you can afford to lose.
- Taxes: Dividends are non-qualified and taxed as regular income rather than at the 15% rate.
How To Stay Safe Investing With Fundrise?
Due to the nature of the investments, Fundrise eREITs and eFunds have the lowest connection to the market and might offer significant protection from market movements.
Fundrise does not carelessly invest in any real estate, and it has a real estate team that focuses solely on high-quality investments that have the possibility to earn income.
Fundrise uses bank-level security to ensure that your information is safe while you use the platform. If you are having second thoughts about whether to use the Fundrise or not, you can start by trying out the 90-day trial period where you can invest but avoid fees and penalties.
If you request a redemption within the 90-day, you will receive your initial investment minus any distributions taken, and the amount will not be subject to any charges.
Is Fundrise Legit?
Fundrise is a legitimate real estate investment business. As one of the most leading and popular crowdfunding real estate platforms in the industry, it has solidified its record for serving and helping people with their investment for years.
They also regularly file reports with the Securities and Exchange Commission (SEC) for all their REITs and for Rising Companies, the parent company.
Alternatives To Fundrise
Most people would think of Fundrise when you mention real estate crowdfunding platforms, and that’s because they were one of the first companies that brought real estate investment to the people.
And yet, many legitimate alternatives have been launched to help people who are willing to invest in real estate. If you are looking for other platforms that offer more or are similar to Fundrise, then here are the top sites like Fundrise.
GroundFloor
Typically, most investment companies in real estate have a minimum amount required to start. Like Fundrise, GroundFloor has a minimum amount of $10 to start and a free account.
GroundFloor is one of the best investment platforms for investors who are looking to make high returns on short-term real estate investments. With a starting investment of $10, you get to diversify and learn about investing in real estate.
This platform is currently the only investment platform that provides high-yield short-term real estate investments to the masses.
If you were to compare GroundFloor to Fundrise, GroundFloor is not solely focused on a huge commercial real estate property.
Instead, when you open an account, you will get a long list of potential investments to choose from, with returns from 6-14% and a different grade for each investment.
Mostly the current real estate investments consist of single-family homes, duplexes, and some are apartments or condos. You can check our full review about GroundFloor and how it can help you with your investments.
EstateGuru
EstateGuru is a platform based in Estonia, Europe, and it primarily offers to invest in real estate development loans. The returns they offer are usually around 10-12%.
One of the things people like about EstateGuru is that it provides monthly repayments on the loans they offer, meaning you will get passive income coming each month when you invest in those development loans.
EstateGuru’s minimum investment is €50 per project, which is lower than the other similar platforms. That means it is easier to diversify your investments on the platform.
EstateGuru’s network is easy-to-use and straightforward, with each project written in a detailed and documented manner. They also provide an auto-invest function which is nice if you want to automate your investments.
Here is our full EstateGuru review and sign-up now to get 0.5% cashback on any investments you make within the first 3 months if you sign up using our link.
💸 Sign Up With EstateGuru Here
Reinvest24
Reinvest24 is a real estate crowdfunding platform that is based in Estonia, just like EstateGuru, with over €12 million worth of projects. This platform provides real estate equity projects to become a partial owner of the project.
For instance, if you are an investor, you get to have a monthly share of the rental income relative to the amount you invested in a project. Moreover, you can also get capital gains when a project is sold. The sale date of the project is specified in their platform.
Investing with Reinvest24 is like an “offline” real estate investment because you get a monthly rental income and capital gains when selling. This platform in Europe is one of the best ways to further diversify your peer-to-peer lending portfolio.
Check our full Reinvest24 review and learn more on how to invest in the platform.
DiversyFund
DiversyFund is a real estate crowdfunding platform that offers investors a non-traded real estate investment trust (REIT). Their Growth REIT is open to non-accredited investors with a low minimum amount. The fund focuses on investing in value-add multifamily opportunities across the United States, similar to Fundrise.
They target those that can produce IRRs (Internal Rate of Returns) of 10%-20% over a 5-year investment cycle. In addition, the REIT has a low direct investor fee with no management or broker fees.
Diversyfund pays no dividends at all but with returns slated for appreciation. This platform reinvests all profits back into buying more properties in an effort to build a large diversified portfolio.
One of the benefits you get to enjoy with DiversyFund is that among the crowdfunding platforms, it has the lowest minimum investment, and you can start with as little as $500, 1/10 of the minimum for competitors such as Streitwise or ReatlyMogul.
Fundrise Review – Frequently Asked Questions
Now that we know all about Fundrise, here are some of the frequently asked questions for you to have a clearer understanding of the platform.
Who Can Invest In Fundrise?
People who can invest in Fundrise are US citizens aged 18 or older. For most of the Fundrise investment, such as the starter plan, it does not require you to have a certain level of wealth or income. You can start investing from $10.
Are There Fees For Using Fundrise?
When you use Fundrise, there are no transaction fees or commissions. However, there is a 1% charge for managing your account. This fee comes from their advisory fee (0.15%) and their asset management fee (0.85%).
Fundrise charges a 0.15% advisory for managing your investment portfolio and at the same time giving you the Fundrise eDirect investment platform. That is lower than other services, which tend to charge between 0.25% and 1.45% annually.
Plus, Fundrise charges a 0.85% annual asset management fee. Even so, Fundrise does not impose commissions or transaction fees, nor does it impose you for features such as the DRIP plan.
These are the other fees you need to be aware of when using Fundrise:
- IRA (Individual Retirement Account) fee: The Millennium Trust Company fee is $125 yearly for IRA (Individual Retirement Account) management.
- Acquisition fee: This fee lets Fundrise obtain a new real estate property for its eREITs and eFunds. Fundrise charges a 0-2% fee on the purchase price for the new investments so that they can pay back the sponsor.
- Development and liquidation fees: Fundrise has the right to charge development and liquidation fees, but it doesn’t often happen. Fundrise does charge these fees to cover the costs of managing for-sale housing development.
Does Fundrise Have An App?
Yes, Fundrise has an app. It is one of the few real estate crowdfunding platforms with an app. It is completely mobile-friendly and provides its users with a wealth of information.
Most importantly, Fundrise provides the investors the same level of access and management they’d find in a website.
Conclusion – Fundrise Review
When investing in real estate, people think you need a huge amount of money. But with the help of a real estate crowdfunding platform like Fundrise, you now have the opportunity to make your debut in the world of real estate.
With their low minimum investments offered and managed risk, it has become easier to invest. While Fundrise also provides a long-term investment, you can also bind your money for the next 5 years.
If you are willing to invest your money and start small, then expanding into real estate using the Fundrise might be a better idea and worth the investment. This may be the x-factor you need to reach your financial independence and freedom.
Start investing with Fundrise now!
Founder of Spark Nomad, Radical FIRE, Journalist
Expertise: Personal finance and travel content
Education: Bachelor of Economics at Radboud University, Master in Finance at Radboud University, Minor in Economics at Chapman University.
Over 200 articles, essays, and short stories published across the web.
Experience: Marjolein Dilven is a journalist and founder of Radical FIRE, a personal finance platform, and Spark Nomad, a travel platform. Marjolein has a finance and economics background with a master’s in Finance. She has quit her job to travel the world, documenting her travels on Spark Nomad to help people plan their travels. Marjolein Dilven has written for publications like MSN, Associated Press, CNBC, Town News syndicate, and more.
