Fundrise is an online real estate investing platform with two clear aims: to simplify and democratize real estate investing. While there is no shortage of real estate investing platforms, Fundrise is one of the few that is open to non-accredited investors. Traditional real estate investing, and by extension most real estate crowdfunding platforms, require investors to pledge large amounts of capital. As opposed to the $25,000 to $50,000 investment minimums on many competing platforms, Fundrise distinguishes itself from the crowd by accepting investor contributions as low as $10.
The platform also has some of the highest quality real estate deals available. With a massive portfolio of institutional-quality properties, Fundrise investors can generate cash flow and long-term growth through a diverse portfolio of commercial real estate, multifamily properties, single-family rentals and ground-up developments.
- New real estate investors looking to get their feet wet
- Non-accredited investors
- Real estate investors who want a “set-it and forget it”-oriented option
- Investors looking for low-to-moderate cost buy-ins
- Multiple offerings available to non-accredited investors
- Simple menu of investment options
- Can use for IRA contributions
- Incredibly affordable buy-ins
- Low, easy-to-understand investor fee schedule
- Extended hold periods
- Limited secondary market
Fundrise Ratings at a Glance
Fundrise Quick Summary
|Available Asset Classes||Non-traded eREITs, real estate funds and single-asset offerings|
|Minimum Investment||$10 for the Starter Portfolio.|
$1,000 for the Basic account.
$5,000 for the Core account.
$10,000 for the Advanced account.
$100,000 for the Premium account.
|Investor Requirements||Available to all U.S. investors|
|Historical Returns||13.5% average annual return across all account levels|
Almost every investor is aware of the tremendous potential real estate investments provide for building wealth and generating passive income. Unfortunately for most people, accessing real estate investment opportunities beyond single-family homes poses several significant logistical and economic hurdles that are difficult to navigate.
Decades ago, the federal government helped millions of Americans to reap the benefits of real estate ownership by insuring private home loans. Once the government began insuring loans, banks began offering borrower-friendly terms. Today, home ownership remains the most common type of real estate investment.
But the other side of real estate investing, where investors build wealth through passive income, has largely been walled off from most people because of its high cost. Fundrise's real estate platform aims to shift that paradigm by offering investors the chance to make real estate equity investments for as low as $10. That’s a marked departure from traditional real estate investment offerings, which typically require investor accreditation and six-figure buy-ins.
How Does Fundrise Work?
Fundrise’s founders are established real estate investment professionals and fund managers who generated millions of dollars for their clients. They realized that most of their clients were already rich, so they started Fundrise to make real estate investing work for non-accredited investors, many of whom were limited to growing wealth through traditional investing, such as stock or bond purchases.
For Fundrise’s founders, the bitter irony of retail investors being limited to stock purchases was that their own personal experience had taught them that most of the highest-performing funds they represented had large real estate holdings, not stocks.
So, the company took on the mission of creating a way for non-accredited investors to buy into the same commercial and institutional investments that heavy hitters like mutual funds and real estate investment trusts use to generate passive income. Fundrise accomplishes this mission by creating a fixed menu of real estate investment options that cater to accredited and non-accredited investors. All Fundrise’s offerings fall into one of the following categories:
- Fixed Income: conservative, fixed returns derived from mortgage interest
- Core Plus: long-term investments in multi-family real estate for passive income
- Value Add: long-term investments in under-performing assets with capital improvements to increase rents and property value
- Opportunistic: long-term investments focused on acquiring and rehabilitating underused properties in hot markets and increasing value
Its offerings' minimum investment and risk profile increase as you go up this scale. The potential profit payout also rises in much the same way. The higher-risk investments have higher buy-ins but also higher potential payouts, which allow you to build wealth quicker.
As an investor, you are free to concentrate on one or two types of investments or mix them into your own custom portfolio. Bear in mind, however, that some of the opportunistic and value-add investments may require accreditation.
Another important consideration for investors is that while Fundrise does have many offerings with affordable investment minimums, they almost all have long hold periods. This means you must be able to withstand not having access to your investment capital for an extended period. The secondary market for liquidating your investment will be limited or may not exist at all.
When you go to a fancy restaurant downtown with valet parking, you know you’re going to pay a fee for the service. Real estate investing works in much the same way. Every investment requires the sponsor or owner to incur costs related to managing the investment, adhering to regulatory requirements and keeping investors informed. These fees have become a necessary evil, much like the valet parking at the fancy restaurant.
With that said, a lower fee is always preferable to a higher one. Fundrise is meant to cater to the regular investor. To that end, the platform does an admirable job of maintaining a simple, straightforward fee structure. You pay an annual fee of 0.15% of your initial investment capital for any offering you participate in.
So, if you put up a $1,000 investment, you would have an annual fee of $1.50. In the case of Fundrise’s real estate investment trust (REIT) offering, there is an additional annual fee of 0.85%, which would bring your total annual fee up to 1% or $10.00 annually per $1,000 invested.
Some offerings have a small development fee, but there are no additional surcharges, transaction fees or commissions. In the case that your offering has a secondary market, there may also be a liquidation fee for cashing out early. The platform does a good job of advising you of any fees above and beyond the 0.15% in the individual investment prospectuses.
Investors will be happy to know that not only is Fundrise easy to use, but it’s also intuitive and helps guide you to the right lane for your investment profile. After a quick sign-up process, the platform asks you several questions about your investment goals, overall knowledge of investing and what kind of portfolio you would like to establish.
Based on your responses, the platform will create a unique investor profile for you and then assign you one of its five different user levels. These levels are as follows:
- Starter: $10
- Basic: $1,000
- Core: $5,000
- Advanced: $50,000
- Premium: $100,000
After you’ve been assigned a profile, you are guided to an easy-to-understand investor dashboard. This dashboard will have a pie graph that illustrates the balance of your investments, where your money is invested and how well your investments are performing. Your account level designation, which is based on your answers to the survey questions, will appear at the top of your home page.
As your investor profile rises, so too does the level of offerings you are eligible to participate in. There are also some additional investment perks for “Advanced” or “Premium” account holders. Regardless of your account level, browsing investments and loading funds into your Fundrise account is an easy process. Fundrise is easy to use, even for someone who is brand new to online investment platforms.
User-friendliness and affordable buy-ins are certainly important, but an investment platform can only be as good as its offerings. This is another area where the Fundrise business model shines. Regardless of what investor category you fit into, the platform has an incredibly diverse range of investment offerings. View Fundrise offerings.
All of Fundrise’s offerings have been vetted for quality and viability by the platform’s brain trust. While that’s no guarantee of profits, it’s certainly reassuring to know that trained professionals have reviewed your chosen offering and that it’s passed their initial test.
Fundrise has multiple real estate funds, many of which are classified as REITs for tax purposes. Investors can allocate their capital to the various funds depending on their investment goals and their account level. Those with a Starter Portfolio have access to the main Flagship Real Estate Fund. Once your account balance exceeds $1,000, you can begin accessing additional offerings such as the eREITs, Income Fund, Opportunity Zone Fund and Housing eFund.
Current Fundrise offerings include:
- Flagship Real Estate Fund
- Growth eREIT
- East Coast eREIT
- Heartland eREIT
- West Coast eREIT
- Growth eREIT II
- Growth eREIT III
- Development eREIT
- Growth eREIT VI
- Growth eREIT VII
- Balanced eREIT II
- Income Real Estate Fund
- Opportunity Zone Fund
- Housing eFund
As noted above, one of the best aspects of Fundrise is that it has a number of offerings that are eligible for IRA contributions. This feature dovetails well with the platform’s offerings, most of which have long hold periods. While you can choose to invest in Fundrise through an existing self-directed IRA, the company has created a simpler option by offering its own IRA accounts.
Why Invest in Real Estate With an IRA?
Real estate can be an excellent addition to a retirement portfolio. Especially for those that are still several years away from retirement. Real estate can provide stability and insulation from market volatility and generate cash flow returns through all market cycles.
An IRA may allow you to defer taxes or let your retirement funds grow tax-free. This can significantly boost your after-tax profits. This benefit is especially helpful with assets like real estate that provide cash dividends. Instead of being taxed on cash distributions each year, the full amount can be reinvested without adding to your taxable income that year. This can accelerate the compound growth of your retirement account.
IRA Account Types
Fundrise offers both Traditional and Roth IRAs. Be aware of the key differences between these two types of retirement accounts.
Fundrise IRAs have a $125 annual fee in addition to the standard fee structure. However, you have two ways for the annual fee to be waived.
- Earn a one-year fee waiver by investing $3,000 or more.
- Receive an automatically recurring fee waiver by maintaining an account value of over $25,000.
Annual contribution limits for individual retirement accounts are set by the IRS. For 2022, the total contribution to all your IRAs can’t exceed $6,000 ($7,000 if you’re age 50+) or your taxable compensation for the year, whichever is less.
Funds invested into an IRA are meant to be held long term and saved for retirement. In addition to platform-based fees, early withdrawals or liquidation of your IRA contributions can have serious tax implications.
A well-stocked investor education section is a must-have for any investment platform that caters to non-accredited investors. Most of Fundrise’s competitors have set the bar high in this department, and Fundrise 100% meets the current industry standard.
Fundrise’s Customer Education section is broken down into several distinct sections, including the following:
- Investing 101: A running blog that offers investors notes on private investment
- Point of View: Market trends discovered by Fundrise analysts and common-sense advice on money management
- Advanced Investing: In-depth analysis on the present and predicted future state of the real estate market and real estate investing
The Help Center walks investors through the nuts and bolts of how Fundrise works. This series of informative blogs includes the following sections:
- About Fundrise
- Getting Started
- Account Management
- Our Investments
Last but certainly not least, Fundrise offers a podcast called Onward. It gives investors invaluable information about the real estate market's current conditions and helpful tips on how to maximize the platform’s capabilities. Fundrise deserves strong plaudits for giving investors an auditory method to learn about real estate and the platform.
Fundrise features a functional app that works well for both iPhone and Google Android aficionados. Both apps provide users with a simple mobile dashboard where they can browse new offerings, review the status of their current investments and add account funds from their preferred mobile device or tablet.
Seeing as how most people are increasingly going away from traditional computers, the quality of an investing platform’s mobile app is becoming more important. Fundrise clearly sees this trend and deserves kudos for creating a top-notch mobile app. No matter which of the two mobile operating systems you prefer, Fundrise’s app will serve you well and accurately mimics the desktop experience.
Every Fundrise offering has its own individual level of risk and target for annual returns. Almost all the offerings have long hold periods during which the offering should generate passive investor income, assuming the offering hits its pro forma target. Every investment carries a risk of loss, even real estate. Fundrise offerings have paid an aggregated $209,744,506.23 cumulative net distributions earned by clients since the platform launched in 2014, but past performance is no guarantee of future success. (Data as of October 2022.)
Fundrise has had 23 consecutive positive quarters across all of its funds, with annual returns ranging from 7.31% to 22.99% since 2017.
Despite those solid numbers, investors must keep in mind that the aggregated payout doesn’t mean every offering has been or will be profitable. But those strong return numbers speak to the overall quality of Fundrise’s offerings. Review offerings carefully before pledging and be sure you won’t have a problem committing the required capital for the entirety of the hold period.
Despite real estate prices falling in recent months, Fundrise has still managed to produce positive returns in Q3 2022. It's investment team has also remained active with acquisitions, which will likely mean that investors will realize significant upside over the next few years. Check out recent news about Fundrise.
It’s important to take online customer service ratings for any platform with a grain of salt. Although Trust Pilot has Fundrise rated at 3.0, it would seem that many of the more negative reviews are older, so many of the issues those clients mentioned may have been addressed. The BBB customer reviews have Fundrise rated at 3.77 with an A+ accreditation from the BBB itself.
It’s also possible that some less-favorable reviews have come from investors who experienced a loss or didn’t make the gains they expected. Still, the overwhelming majority of the reviews are positive, which means you can reasonably expect a positive experience as a Fundrise investor.
Fundrise’s founders set out to claim a unique space in the online real estate investment platform market. By catering to non-accredited investors and setting up a simple-to-use platform, it has absolutely owned the space it wants to operate in. If you never invested in real estate before, you could do it with Fundrise any amount of money as you feel comfortable investing.
Fundrise offers something for everyone. Whether you are a real estate investing pro looking to make a six-figure investment or a novice who just wants to get their feet wet. Add that to its solid mobile app performance and excellent customer education section, and you end up with a solid real estate investment platform. Anyone thinking about getting into online real estate investments would be well served to give Fundrise a long look.
Fundrise vs. Competitors
As a platform, Fundrise stands up well against its competition. First, the availability of offerings to non-accredited investors puts it in a category that other popular platforms like Crowdstreet, RealtyMogul and Yieldstreet can’t enter. Secondly, the fact that it’s user-friendly and helps out investors by creating a profile — which you can change as your needs or available investment capital changes — will give inexperienced investors a feeling of comfort that they’re not in over their heads.
As far as functionality of the platform itself, although Fundrise caters to the regular investor, it still provides a first-class investing experience on par with that of its rivals. The current response time to inquiries and Fundrises’s customer education sections are both stand-out highlights. Overall, this platform offers an investor experience that most people will enjoy.
Is Fundrise legit?
Fundrise is one of the most well-known and trusted real estate investment platforms available. The platform’s offerings are qualified by the SEC and follow strict reporting and disclosure requirements.
The platform is also used by more than 300,000 active investors.
Is Fundrise a good investment?
Whether or not Fundrise is a good investment depends completely on each individual’s investment goals. However, when comparing Fundrise’s past performance to that of the S&P 500, it’s easy to make the argument that Fundrise is a good investment. The platform has produced positive returns for the past 21 consecutive months, compared to 17 positive quarters for the S&P 500.
Is Fundrise a REIT?
Fundrise itself is not a REIT. It is a real estate investment platform that has multiple investment offerings, many of which are REITs.