Investing in real estate can be rewarding, but picking the right investment is challenging. When it comes to real estate investment trusts (REITs), choosing between the higher potential returns and appreciation upside offered by equity REITs and the steady, but comparatively smaller, returns offered by debt REITs has always been a difficult choice for investors. But investors who insist on the best of both worlds can go with the Balanced eREIT II from Fundrise.
This hybrid REIT combines a mix of real estate assets (most of which are in the core-plus sector) chosen to deliver strong returns with a solid set of real estate securities backed by commercial properties. The end result is a REIT that gives investors an ideal combination of passive income and potential for asset appreciation. The Balanced eREIT II has a $5,000 minimum and is open to investors in Fundrise’s core category.
The Balanced eREIT II has already delivered impressive investor returns, which is impressive considering it’s a little more than a year old. The eREIT II’s was created in January 2021, when it opened with a net asset value (NAV) of $10. It closed the year at $12 per share — a 20% gain.
So far in 2022, the eREIT has continued performing solidly, and the current NAV is $12.46. Overall, that means the Balanced eREIT II’s NAV is up 25% in less than two years. It’s hard to argue with that kind of performance.
The quality of the assets in a REIT is always of prime importance, as is the degree to which the assets are diversified from a geographical and sector perspective. Any REIT that concentrates its assets in a limited set of markets exposes investors to an elevated risk of market fluctuations and downside. The Balanced eREIT II’s real estate assets consist of multifamily properties in growing markets all over the country.
The overwhelming majority of the 12 assets in the Balanced eREIT II are considered core plus, but there are also a few assets in the fixed-income and opportunistic categories. Fundrise is betting that by spreading the assets across some of the most dynamic and fast-growing real estate markets in the country, it will be able to give investors the upside they want along with the passive income they need.
A brief look at the Balanced eREIT II’s assets include:
- New apartment development in Vero Beach, Florida: fixed income
- Stabilized apartments in North Las Vegas, Nevada: core plus
- Single-family rental development in Locust Grove, Georgia: opportunistic
- Stabilized apartments in Georgetown, Texas: core plus
- Stabilized apartments in The Woodlands, Texas: core plus
Below are current stats for the Balanced eREIT II:
- Inception: January 2021
- Phase: Ramping up
- Objective: Balanced
- Geographic focus: National
- Current NAV per share: $12.46
- Current dividend yield: 1.20%
- Tax reporting: 1099-Div
The Fundrise Balanced eREIT II’s early returns are impressive. This hybrid REIT’s balanced approach and mix of assets have so far delivered investors exactly what they were looking for when they signed up. Considering the fact that many of the REIT’s assets are already stabilized and strategically located in markets experiencing strong growth, there is no reason to believe it won’t continue to deliver solid investor returns.
If you were looking for a REIT that took a balanced approach to investing, this one is worth strong consideration. Of course, you must always remember that past performance is no guarantee of future results, and the risk of loss always exists with any investment. However, the fundamentals of the Balanced eREIT II seem solid. Considering that it’s still just ramping up, now might be the time to get on board.
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