Fundrise Growth eREIT

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Contributor, Benzinga
August 16, 2022

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The only thing better than consistent returns on an investment is consistent double-digit returns. The Fundrise Growth eREIT has earned double-digit returns every year for investors since 2017. The Growth eREIT focuses on acquiring undervalued commercial real estate with long-term appreciation and upside. The upside comes from the real estate investment trust’s (REIT’s) strategy of buying small-to-medium-sized institutional quality assets that aren’t large enough to attract attention from institutional funds. 

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While many REITs look for luxury housing because of the high rents, the Growth eREIT’s primary focus is on acquiring workforce housing. This REIT specifically looks for assets where there is a growing workforce and a resulting high demand for quality affordable housing. The Growth eREIT also specifically hunts out undervalued assets that can be acquired for below the current market value of building them from the ground up.

Once the assets are acquired, unit upgrades and improved management combine to make them attractive to new renters in the area. The low purchase price of the assets means they are price-competitive in their respective markets even after the rent increases. Another key element of the Growth eREIT strategy is securing fixed-rate, long-term financing for all the assets. This method helps keep returns consistent in spite of the Federal Reserve’s recent rate hikes. 

Growth eREIT Portfolio

The Growth eREIT’s current portfolio consists of 11 multifamily properties. Almost all the assets are in the value-add or core-plus strategy category. The asset mix is roughly 55/40 between value add and core-plus and one fixed income asset. The assets are primarily concentrated in the American sunbelt or other cities where workers are moving to escape high living costs. Examples of the Growth eREIT portfolio’s assets include

  • Stabilized apartments: Jacksonville, Florida
  • Stabilized apartments: Las Vegas, Nevada
  • Stabilized apartments: Hollywood, Florida
  • Apartment renovation: Tampa, Florida
  • Stabilized apartments: Charlotte, North Carolina

Fundrise Growth eREIT Stats

The Growth eREIT was established in 2016. Many of the assets in the fund have become stabilized and are delivering solid revenue, which has resulted in strong appreciation across the fund. Fundrise investors must have core-account-level status, which means the minimum investment in the Growth eREIT is $5,000. Although the geographic focus for the REIT is national, most of the assets are concentrated in the sunbelt. 

Other relevant stats include:

  • Current NAV/share: $20.75
  • Current dividend: 2.17%
  • Tax reporting: 1099-DIV
Image source: Fundrise website

Final Thoughts

If you had invested $10,000 in the Fundrise Growth eREIT at its inception in 2016, it would be worth $20,750 today. Since 2017, the REIT has delivered a double-digit return every year. The current returns through July 2022 are 9.2%. Overall, the Growth eREIT has done an admirable job of accomplishing its investment goals. However, REIT investments carry risk, and returns are not guaranteed. 

The stabilized assets are performing well, and it is expected, although not known for sure, that the assets under renovation will also generate an impressive combination of cash flow and appreciation. Overall, the Growth eREIT has done a laudable job of delivering on its stated investment goals. If you’ve been looking for a REIT to invest in for wealth building and passive income, the Fundrise Growth eREIT should be near the top of your list.

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