Fundrise Review: Is It Worth It?

Fundrise is one of the original pioneers of online, crowdfunded real estate investing. The company – which was founded in 2010 – provides access to a host of opportunities for prospective investors, including eFunds and Fundrise’s own eREITs.

But like all investments, Fundrise comes with risks, especially as a company specializing in highly illiquid real estate assets.

Plus, Fundrise comes with a slew of hidden and underlying fees that crop up at inopportune times.

And although they put your money to work in a variety of company-selected funds, it’s up to you to do your due diligence on what lies behind the curtain.

Keep reading to find out why Fundrise is one of the best platforms for consumers to invest in real estate.

Fundrise Review: At a Glance

• Account Minimum: $10
• Fees: 1%; other fees may apply
• Current Promotions: 3 to 12-month advisory fee waiver for each friend you invite

Fundrise Pros and Cons

Pros:

• Low investment minimums
• Low standard fees
• Open to all investors, including nonaccredited investors
• Quarterly redemption plans and dividend payouts
• Automatic recurring investments available

Cons:

• Highly illiquid investments
• Lots of research required for full due diligence
• REITs are not publicly traded
• Can’t invest in individual funds or property deals
• Hidden and underlying fees in some circumstances

What is Fundrise?

Fundrise is an online-only real estate company that allows non-wealthy and wealthy investors alike put their money to work in private residential and commercial properties.

To do so, Fundrise crowdfunds to build an asset pool, then puts it to work in various real estate products to generate dividend and capital gain income.

eREITs

Fundrise’s main product is its eREIT, invented and introduced in 2015 as a first-of-a-kind REIT.

These e-real estate investment trusts invest primarily in income-generating real estate products such as mortgages or commercial properties.

From the investor’s side, eREITs work similarly to ETFs or mutual funds to make commercial real estate investments more readily accessible to the masses.

But unlike traditional REITs, Fundrise’s real estate investment trusts are not traded on public or secondary markets, leading to higher illiquidity. Though they are SEC-regulated.

eFunds

Fundrise also offers eFunds, or pooled assets used to buy land, develop housing, and sell the new units to buyers.

Unlike eREITs, eFunds focus on long-term growth rather than income generation.

Interval Funds

Fundrise investors can also put their money to work in the Interval Fund. This fund offers higher liquidity and diversification than Fundrise’s other funds for investors who don’t want to tie their money up for the standard five-year investment period.

How Does Fundrise Work?

Fundrise provides investor access to real estate and property deals without having to shell out tens to hundreds of thousands of dollars.

Moreover, there’s no accredited investor requirements (except for premium investors) or high front-end load fees.

Fundrise’s comparatively low fees are possible due to their crowdfunding operation, as well as the various ways they earn money, such as:

• Buying, renovating, and capitalizing on undervalued real estate by raising rents or selling assets
• Collecting rent on stabilized properties
• Buying or holding mortgages and collecting interest payments
• Investing in properties with appreciation potential

Then, Fundrise distributes any resulting profits to shareholders via quarterly dividend distributions or appreciation value at the end of the investment term.

Keep in mind that, like any investment, returns are not guaranteed.

How to Open a Fundrise Account

To get started, you select an account plan from one of Fundrise’s five options.

The three most expensive plans let you choose whether you want to opt for Supplement Income, Long-Term Growth, or Balanced Investing, while the two cheapest plans simply get you invested right away.

Regardless of your plan, you typically don’t have the option to pick and choose specific investments.

Instead, Fundrise allocates your money into a predefined – but well-diversified – basket of eREITs and eFunds determined by your account plan and goals.

At the time of writing, each fund holds private properties based in the United States.

Fundrise also offers several types of accounts in which you can hold your assets. Two of their most common include personal taxable and joint accounts.

You can also put your money to work in Self-Directed IRA (individual retirement account) stuffed with eREITs.

Or you can establish an entity account, such as a trust, LLC, or Limited Partnership.

Fundrise Features and Benefits

As one of the original crowdfunded real estate investment companies, Fundrise comes with a handful of unique benefits. (Plus a few standard – but essential – features.)

Entirely Online

From the investor’s viewpoint, Fundrise operates entirely online. The platform is simple to use, with easy navigation and a clean, modern design. Signing up only takes minutes (after you read the investor disclosures).

You can also access Fundrise via the app, which is just as simple to use and includes all the same information and access as the web browser.

The major downside is that it’s almost too easy to skip the hefty due diligence required of property investing.

Low Investment Minimums

Fundrise is unique among many of its competitors for its (comparatively) low investment minimums.

With a Starter account, you can put as little as $500 to work right away.

Interval Funds

Unlike many property investments, Fundrise offers a way to cycle out of your investments quickly: Interval Funds.

These are more liquid than either eREITs or eFunds, though they come with many of the same benefits – plus:

• Quarterly repurchase offers
• No penalties for early redemptions
• Higher diversification than other funds

Investor Redemption Program

For those who want to exit their positions but don’t want to opt for the Interval Fund, Fundrise offers an investor redemption program.

This allows you to sell your shares back to Fundrise directly early – for a fee. The final cost is calculated as reduction in your share price value depending on how long you’ve held your position:

• 0% within the first 90 days and after five years
• 3% between 90 days and 3 years
• 2% between 3-4 years
• 1% between 4-5 years

That said, neither the Starter nor Basic accounts charge redemption fees. And due to its short-term cycle, there’s no redemption penalty for Interval Funds, period.

However, Fundrise does retain the right to delay or suspend all redemptions in some situations, as it did between March and July 2020.

Wide Selection of Real Estate Deals

While you typically can’t select your specific investments, Fundrise invests in a large number of properties to keep you diversified.

At the time of writing, Fundrise is (or was) involved in in 238 active projects and 97 completed projects, including:

• Single-family rentals
• Home construction
• Stabilized apartments and commercial properties
• New apartment and commercial developments
• Commercial, home, and apartment renovations

Fundrise Accounts

Fundrise offers five account plans with varying investment minimums and perks.

Most Fundrise products are open to nonaccredited investors, and the Starter and Basic plans incur no redemption penalties.

Note that all accounts come with an advisory fee of 0.15%, as well as a 0.85% asset management fee.

Fundrise may also charge other fees depending on underlying asset movements.

Additionally, all accounts come with phone and email customer support 9am-5pm EST Monday-Friday. (Premium members have additional service options.)

#1. Starter Plan (Best for New Investors) 

• $10 Investment Minimum

The Starter plan is the cheapest and best plan for new investors. Your money will be invested entirely in the Flagship Fund, which already touts $250 million dollars worth of real estate holdings. It comes with a diversified mix of eFunds and REITs comprised of U.S.-based real estate projects. 

From red-hot single family rentals to last mile e-commerce logistic centers, the Flagship Fund is a great way for investors to diversify their money across various real estate assets that are cash flow positive and appreciating. 

#2. Basic Plan

• $1,000 Investment Minimum

Upgrading to Basic opens options like IRA investing, adding investor goals, and reinvesting your dividends.

You can also set up auto-investing with a minimum $100 monthly investment.

#3. Core Plan

• $5,000 Investment Minimum

Opting for a Core account opens up possibilities of investing in private eREIT funds and customized investment strategies.

Moreover, Core lets you choose from one of three goal-based plans:

• Supplemental Income:
  • Weighted toward fixed-income and Core Plus investments
  • Designed for investors seeking the biggest dividends
  • Typical asset allocation: 20-30% growth; 70-80% income
• Long-term Growth:
  • Weighted toward long-term returns by investing in assets with high appreciation potential, including opportunistic and value-added properties
  • Designed for investors seeking to grow in value
  • Typical asset allocation: 20-30% income; 70-80% growth
• Balanced Investing:
  • Weighted toward balanced returns between dividend payments and capital appreciation
  • Designed for investors who want both short-term payouts and long-term growth
  • Typical asset allocation: 40-60% income; 40-60% growth

#4. Advanced Plan

• $10,000 Investment Minimum

A Fundrise Advanced plan includes more sophisticated offerings, such as Core Plus add-ons.

You can also allocate a portion of your capital to strategies with more room to evolve as new opportunities crop up.

#5. Premium Plan

• $100,000 Investment Minimum

The Premium plan is only available to accredited investors. It provides access to specialized, highly illiquid private funds with the potential for outsized returns on longer time horizons.

Fundrise Property Types: What Real Estate Can You Invest in?

Fundrise uses pools of crowdfunded capital to invest in hundreds of real estate deals, such as debt and equity stakes, as well as property renovations, developments, and sales.

Each deal is vetted and decided upon by Fundrise’s management team.

Overall, this strategy reduces the risk of loss, increases diversification, and lets you breathe easy as you don’t have to select your individual investments.

That said, it does leave you with hours of due diligence to understand the risks of lack of liquidity in your invested capital.

Fundrise Fees Explained

Fundrise’s 0.15% advisory fee and 0.85% asset management fee add up to a neat 1% annually.

However, their platform comes with some hidden fees, such as:

• Up to 2% in acquisition (“origination”) fees when they buy a new asset
• Up to 3% for early redemptions
• $125 annually for Self-Directed IRAs

Fundrise also notes it reserves the right to charge action-specific fees, such as liquidation or development fees.

You can find these listed in offering circulars – though not always in plain sight.

Who is Fundrise Best for?

Fundrise isn’t for everyone – profitable real estate investments tend to tie up your funds for longer periods of time than stocks and even some bonds.

As such, you may be suited for Fundrise if you:

• Have a long-term outlook and five years to divert your funds
• Are seeking diversification outside stocks and bonds
• Have the time and resources to do due diligence on your underlying investments

How Does Fundrise Compare to Other Real Estate Investing Platforms?

#1. DiversyFund vs. Fundrise

DiversyFund requires no income or accreditation limits, has a low $500 investment minimum, and charges no management fees as it owns all its projects.

But it comes with some limits – chiefly, it only invests in a handful of properties at once. Plus, it does not pay dividends, and it can take up to 5 years to see returns.

That said, it is the best platform for new investors and those looking for a low-fee real estate investing experience.

>> Learn More:DiversyFund Review

#2. Fundrise vs. RealtyMogul

RealtyMogulis another crowdfunding platform for accredited and nonaccredited investors, though it has a higher minimum of $5,000.

Accredited investors also have increased investment options, such as in LLC shares and real estate debts. RealtyMogul charges up to 1.25% in assets under management.

>> Learn More: RealtyMogul Review

#3. Fundrise vs. Roofstock

Roofstock is an online marketplace to buy and sell single-family home titles. With Roofstock, you can take on management and repairs yourself, or hand off responsibility to a property management service for a fee.

That said, you must have the funds or financing to buy a house upfront to start investing.

#4. EquityMultiple vs. Fundrise

EquityMultiple is a crowdfunded real estate investment platform for accredited investors.

The minimum to get started is $5,000, and the platform keeps 10% of your total profits. However, you have more opportunities to select your investments.

Fundrise Review: FAQs

What are the Minimum Requirements to Invest in Fundrise?

All you need to get started with Fundrise is $500 and time to research the underlying investments.

Is Fundrise a Good Investment?

Fundrise generated average time-weighted, weighted-average annualized returns of 10.11% between 2014 and 2020.

While some years have underperformed the stock market, Fundrise investments have outperformed many other real estate investments thanks to its focus on fixed-income and preferred equity investments.

That said, this reduced risk comes at the cost of capping upside potential.

Is Fundrise Safe?

No investment is “safe” – in other words, there are no sure things in investment.

However, illiquid investments historically have provided better protection during periods of economic downturn. (Discounting 2008, that is.)

Moreover, Fundrise’s parent company, Rise Companies, regularly files reports with the SEC.

And, as all investments are stored in bankruptcy-remote entities, creditors would be unable to go after REIT assets in the event of bankruptcy.

Does Fundrise Pay Monthly?

No; Fundrise offers quarterly distributions on some investments.

Can You Really Make Money with Fundrise?

It’s definitely possible! Fundrise pays out quarterly dividends, as well as value appreciation on sold properties.

Bottom Line: Fundrise Review

Fundriseis new type of investment as a crowdfunded real estate platform, which means that its profit-generation model has yet to be tested during a real-estate driven downturn.

That said, the company charges relatively low fees, automatically diversifies your portfolio regardless of your account plan, and hasn’t experienced a bad year yet.

However, any returns you see come at the risk of tying up your capital for up to five years (if you want to avoid fees, that is).

Fundrise might be for you if you’re seeking portfolio diversification outside traditional stocks and bonds, but don’t want to go all-in on traditional real estate investments.