Moreover, the investor needs to diversify across office spaces, event spaces, strip malls, apartment complexes, etc. (which is prohibitively expensive). To invest in commercial deals, small investors can buy private REITs (real estate investment trusts). A REIT pools funds from lots of individual investors and buys and manages income-producing real estate assets. The downside to private REITs, however, is they require a broker to gain access and often charge management fees between 7% and 15%.
Fundrise, a technology company, has solved this issue. Fundrise created the eREIT (electronic Real Estate Investment Trust) which is similar to an ETF or mutual fund, except the investments are in commercial real estate.
The funds are pooled together just as in a REIT and are used to invest in commercial real estate projects across multiple sectors and geographic locations. Instead of buying through a broker, the Fundrise platform allows the investor to buy directly from Fundrise. As a result, overall costs are much lower and Fundrise charges only 0.85% in annual management fees. A minimum of $500 is required to start investing on the platform.
For a deeper analysis and more information, read Investor Junkie's review of Fundrise.
Get 3 Months Free with Fundrise
Investor Junkie readers are invited to sign up to Fundrise and receive three months free; paying ZERO advisory fees. This is through Fundrise's refer-a-friend program
Unlike some of the other real estate service, Fundrise does not require you to be accredited. The promotion applies to both eREITs and eFunds. To take advantage of this offer, click on the link below and get started earning returns on commercial real estate deals today!
Note: This promotion is currently unavailable.