Fundrise Review 2022

Invest in Commercial Real Estate With Just $10

Advertising Disclosure This article/post contains references to products or services from one or more of our advertisers or partners. We may receive compensation when you click on links to those products or services
Fundrise

Fundrise is one of the pioneers of online real estate crowdfunding. Founded in 2010, the platform has had some of the earliest successes in this space, allowing everyday investors the opportunity to profit from real estate offerings starting with just $10.

But Fundrise isn't the only real estate crowdfunding option on the market. And it's critical to understand how its fee structure works and what the process is like to redeem shares.

Our Fundrise review is covering all the pros and cons, features, account types, and liquidity concerns for this platform so you can decide if it's right for you.

Commissions & Fees - 8.5
Customer Service - 9
Ease of Use - 9.5
Diversification - 8
Amount of Deals - 8
Due Diligence - 9

9

Invest online in commercial real estate via eREITs and eFunds. Gain access to real estate deals starting with just $10 and without being an accredited investor or paying expensive fees.

INVEST IN REAL ESTATE WITH FUNDRISE

pros

  • Low Minimum – The minimum investment to start with Fundrise is $10.
  • Low Fees – Fundrise charges only a 0.85% asset management fee per year.
  • No Accreditation – Unlike competing firms, Fundrise is open to any investor in the United States, regardless of income or net worth.
  • Diversification – Unlike other private REITs, Fundrise eREITs have a pool of many properties that could smooth out returns.
  • Commercial Real Estate Access – Commercial real estate is typically a high-dollar investment, whereas Fundrise allows you to invest with little money.
  • Passive Investment – Unlike owning your own commercial real estate outright, Fundrise investments are truly passive.
  • Quarterly Redemptions and Distributions – The Fundrise eREIT has adopted a quarterly redemption plan to provide periodic liquidity; however, distributions are not guaranteed.
  • Variety Of Investing Goals – Fundrise lets you choose different portfolio goals like supplemental income, balanced investing, and long-term growth.

cons

  • Investment Liquidity – Fundrise eREITs are not publicly traded. Once you make an investment, you are pretty much committed to the investment for the term. You can sell shares before a five-year holding period, but you pay a 1% fee in many cases.
  • Tax Consequences – Distributions are taxed as ordinary income, as opposed to the 15% tax rate on qualified dividends.

Fundrise and Commercial Real Estate Investing

Commercial real estate investing can be an excellent way to grow your nest egg, although it's not without risks.

The big risk? Commercial real estate requires large amounts of upfront capital to purchase a property. To properly diversify your portfolio, you should own multiple properties, various types of features (e.g., apartment complexes, strip malls, office space, etc.) and properties in various locations.

However, one avenue for the small investor who wishes to invest in commercial real estate is through a REIT (real estate investment trust). Luckily for investors, there's an online platform that can simplify investing in REITs.

It's called Fundrise, and we think it's one of the best real estate investment services in the market today. Let's take a closer look to find out how it works, how you can utilize it, and if it's for you.

How Does Fundrise Work?

When you sign up for Fundrise, you can invest in its Starter Portfolio with just $10. Alternatively, Fundrise offers four different portfolio plans that have varying minimum investing minimums and grant you more control over the types of funds you invest in.

Whichever one you pick, Fundrise invests your money in an assortment of eREITs, and eFunds consisting of private real estate assets located across the U.S. Fundrise will tailor your specific allocation based on your personal investment needs.

Although your results will vary according to your plan, Fundrise pays investors in two ways:

  1. Quarterly dividend distributions
  2. Appreciation in asset value at the end of that asset's investment term. Keep in mind, though, that Fundrise's portfolios are meant to be long-term in nature so that it won't happen overnight! (Also, these returns can't be guaranteed.)

Fundrise Features

Fundrise has changed significantly as a platform since its inception. These days, investors have far more control over the types of investing accounts they use and their overall portfolio strategy.

Some of Fundrise's main features include:

  • Self-Directed IRA (New) – Now, you can invest in Fundrise with pre-tax dollars and use for retirement planning. (Note that, currently, self-directed IRAs can be used only for eREIT offerings.)
  • Goal-Based Investing (New) – Via the Fundrise 2.0 platform, invest in real estate based upon your goals rather than types of investment or location. Goals include supplemental income, balanced investing, and long-term growth.
  • eREIT – A non-traded REIT that invests in multiple commercial real estates. Compared to traditional REITs, cuts out the middleman saving you on commissions.
  • eFund – A private fund that invests in multiple commercial real estate properties that, unlike Fundrise's eREITs, focuses on growth rather than income.
  • Standard & Plus Plans (New) – Once you invest $10,000 or more, you can choose between Standard or Plus plans. Both plans let you choose different investing goals. Standard plans mostly invest in eREITS and commercial real estate funds. In contrast, Plus plans can invest in more specialized real estate strategies that Fundrise's team identifies in the market.
  • Direct Investments – By investing in Fundrise eFunds, you get to actually invest in specific real estate projects. For example, the Fundrise eFund targets debt and equity investments in homes and condos in the Los Angeles area.
  • Fundrise iPO (New) – Fundrise is getting ready to sell shares in the company itself via an “internet Public Offering” (IPO). To be eligible for this investment, you must have at least $1,000 in your Fundrise account and have selected one of the advanced plans. You can invest up to 25% of your total account balance in this offering

What Are the Minimum Requirements to Invest in Fundrise?

Fundrise requires a minimum starting investment of just $10. This amount gets you the service's Starter Portfolio, a diversified mix of eREITS and eFunds with underlying real estate projects located throughout the U.S. You receive returns via quarterly dividends, as well as appreciation in the value of your shares.

With an investment of $1,000, you upgrade to the Basic Portfolio which opens up Fundrise retirement accounts, investment goal planning, and access to Fundrise iPO. And if you invest $5,000, you upgrade to the Core Portfolio which lets you choose different investing plans to match your goals.

Different investing plans Fundrise offers include:

  1. Supplemental Income: A steady income stream with a focus on dividends.
  2. Balanced Investing: A diversified portfolio made for greater wealth-building.
  3. Long-Term Growth: Designed for potentially superior returns over the long term.
Fundrise Investing Goals
Image courtesy of Fundrise.

If you are unsure which one is right for you, Fundrise offers a three-step questionnaire that can help determine how you should invest.

You can also compare all of Fundrise's different account levels and perks to decide which plan is right for you:

 StarterBasicCoreAdvancedPremium
Minimum Investment$10$1,000$5,000$10,000$100,000
Standard PlansNoNoYesYesYes
Plus PlansNoNoYesYesYes
Potential iPO AccessNoYesYesYesYes
Auto-Invest OptionYesYesYesYesYes
Investor GoalsLimitedYesYesYesYes
Direct Investment Into Open FundsNoNoYesYesYes

But the fact that it only takes $10 to begin investing in income-generating real estate is one of Fundrise's main strengths. And after investing $5,000, you have more control over the types of investing plans you use.

How Has Fundrise Performed?

Fundrise publishes historical performance reports every year as well as quarterly reports. To date, it's had 21 positive quarters and zero negative quarters, with the worst quarter returning 1.15% and the best quarter returning 9.40% for investors.

Here's how Fundrise's performance compares versus public REITs and the S&P 500:

 FundrisePublic U.S. REITsS&P 500
2022 Q13.49%-5.27%-4.60%
202122.99%39.88%28.71%
20207.31%-5.86%18.40%
20199.16%28.07%31.49%
20188.81%-4.10%-4.38%
201710.63%9.27%21.83%

As you can see, both public U.S. REITs and the S&P 500 have had quarters with higher returns. But they've also had worse quarters than Fundrise as well, so there's more volatility.

That said, always remember that past performance doesn't guarantee future performance.

Fundrise Fees & Pricing

Fundrise charges an annual asset management fee of 0.85%, in addition to a 0.15% advisory fee. These add up to 1.0% annually. You don't pay transaction fees or sales commissions either.

However, the company can charge other miscellaneous fees like development or liquidation fees that that can add up to 2%. But for many long-term investors, Fundrise only charges 1% annually in fees.

How to Redeem Your Fundrise Shares

When it comes to investing in real estate, liquidation is one crucial factor to consider. After all, real estate properties are less liquid than investing in stocks, ETFs, or even cryptocurrency in most cases.

Thankfully, Fundrise has made some positive changes to make its shares more liquid. For eREITS and the Fundrise eFund, you can request partial or full redemption of shares without paying penalties if you've held shares for 5 years or more. For shares under 5 years, you pay a 1% penalty.

As for Fundrise's Real Estate Fund and Income Real Estate Fund, there's a quarterly liquidation window in the form of quarterly repurchase-offers that carry zero penalties.

Note: In extremely volatile market conditions and tough times, Fundrise reserves the right to suspend its redemption program so investors can't sell shares.

Overall, Fundrise is a long-term investment play because of the 5 year requirement for avoiding penalties. And just note that shares aren't as liquid as other assets like stocks and ETFs.

Is Fundrise Safe?

Very few investments can be considered truly “safe” — that is, with a guaranteed return. However, less-liquid real estate investments tend to give better protection from downturns in the broader market than securities such as stocks and mutual funds.

And Fundrise's portfolios of eREITs and eFunds are about as safe as you can find in the real estate space.

Non-traded REITs and eREITs are registered investments, and while they're subject to the same SEC requirements that an exchange-traded REIT must meet, they're not directly correlated with stock market fluctuations. Two downsides: There isn't the same liquidity since they're not traded on the markets, and front-end fees are higher than exchange-traded REITs.

eREIT vs. Non-Traded REIT vs. Publicly Traded REIT

Type eREITs Non-Traded REITs Exchange-Traded REITs
Publicly Traded No No Yes
Secondary Market No Typically No Yes
Front-End Fees None 0-15% 0-7% + broker commission

The minimum investment is just $10 for Fundrise eREITs, and you don't have to be an accredited investor to participate. Shares of the eREITs are purchased exclusively online, and Fundrise members receive notifications when new assets are added to the eREITs.

Is Fundrise Legit?

Fundrise is a legitimate real estate investment platform and is registered with the Securities and Exchange Commission as an investment adviser under the Investment Advisers Act of 1940.

It also has a low investing requirement and strong track record. However, Fundrise correctly discloses that past performance isn't a guarantee of future results or expected returns.

Fundrise Alternatives

Fundrise is one of the best real estate investing platforms because of its $10 investing minimum. Few platforms offer such a beginner-friendly way to invest in real estate. And with its positive track record and variety of investing plans and funds, Fundrise has a lot going for it.

That said, some Fundrise alternatives like RealtyMogul and Streitwise may be superior to Fundrise depending on your investing goals and starting investment amount.

HighlightsFundriseRealtyMogulStreitwise
Rating9/109/107/10
Minimum Investment$10$5,000$5,000
Account Fees1%/year1-1.25%/year asset management fee2% annual management fee
Private REIT
RealtyMogul has similar fees to Fundrise. But one main difference is that many equity investments have target holding periods of three to five years, which is shorter than Fundrise. The $5,000 investment minimum is much higher, but RealtyMogul focuses on investing in real estate that's generating cash flow and offers REITs and a 1031 exchange.

As for Streitwise, you pay 2% annually, which is higher than Fundrise. But Streitwise focuses on providing steady dividend income. According to its website, Streitwise has returned 8% or higher in annualized returns since 2017.

Overall, Fundrise is a well-rounded and beginner-friendly option for real estate investing. And the fact you can choose investing goals with its Basic Plan is a plus. But don't be afraid to look at some alternatives if you want more investment selection or dividend income.

Bottom Line

Real estate as an asset class is a long-term investment. This includes REITs, whether they're publicly traded, non-traded or eREITs. The opportunities for capital appreciation, portfolio diversification, and regular distributions are alluring; however, distributions are never guaranteed.

While not the same as investing in real estate directly, REITs are much more passive and allow you to invest in properties outside your geographic location. Fundrise can be a way to diversify into real estate without the massive amounts of capital or management headaches involved when doing it yourself.

While I am a real estate investor, REITs have never appealed to me for several reasons — primarily because of the front-end load and ongoing fees. Fundrise takes the sting out of those investing fees with its 0.85% asset management fee.

And the fact that Fundrise only takes $10 to get started makes it an excellent way for investors to dip their toes into real estate investing.

Fundrise FAQ

What's the big advantage of REITs?

By pooling the funds of many individual investors, the REIT can purchase a diversified mix of commercial properties — such as office buildings, shopping centers, hotels, and apartments — that the typical investor might not otherwise be able to purchase individually. One type of REIT, an exchange-traded REIT, is available through any broker; as the name implies, its shares trade on the securities markets. Exchange-traded REITs have a few downsides, however. For one thing, their performance is heavily correlated with the broader stock market.

How are eREITs different from other REITs?

Fundrise’s eREITs are most similar to non-traded REITs. The primary difference is in the fees. When you invest in an eREIT, you don’t go through a broker -- you buy directly from Fundrise. That allows Fundrise to reduce the fees dramatically. There’s no middleman, so there are no upfront fees or commissions. And rather than paying a front-end load of 7%–15%, Fundrise charges just a 1.0% annual asset management fee.

What are eFunds?

An eFund (short for Electronic Fund) invests in commercial real estate and is exclusive to Fundrise. It's similar in design to a professionally managed mutual fund, but like the eREITs not publicly traded. eFunds are set up as partnerships and not corporations, so they are taxed differently — saving on double taxation, also, like eREITs Fundrise offers these eFunds to investors without any brokers or commissions. Unlike an eREIT which is typically used for income, Fundrise's eFunds are set up for growth.

Fundrise Features

Minimum Investment$10
Account Fees1%/year
Time Commitment0 Months
Accreditation Required
Private REIT
Offering TypesDebt, Equity, Preferred Equity, Direct Ownership
Property TypesCommerical, Residential, Single Family, Foreign Investors
Regions Served50 States
Secondary Market
Self-Directed IRA
1031 Exchange
Pre-vetted
Pre-funded

Disclaimer: The information contained herein neither constitutes an offer for nor a solicitation of interest in any securities offering; however, if an indication of interest is provided, it may be withdrawn or revoked, without obligation or commitment of any kind prior to being accepted following the qualification or effectiveness of the applicable offering document, and any offer, solicitation or sale of any securities will be made only by means of an offering circular, private placement memorandum, or prospectus. No money or other consideration is hereby being solicited and will not be accepted without such potential investor having been provided the applicable offering document. Joining the Fundrise Platform neither constitutes an indication of interest in any offering nor involves any obligation or commitment of any kind.

Ruth Lyons

Trading three decades of financial publishing experience in the corporate world for a life of personal and financial freedom as a freelancer in 2012, Ruth is passionate about helping others take control of their personal finances and to become aware and educated on their options as self-reliant individuals. Disenfranchised with the high cost and lackluster performance of her IRA, college savings and other retirement accounts handled by a full-service broker, Ruth moved her retirement money to a self-directed IRA in 2015. Ruth holds an MS in Finance from Johns Hopkins Carey School of Business (1991) and a Business Management degree from University of Maryland (1984). You can follow Ruth on: Twitter

Related Articles

53 Comments

  1. I use FundRise as my “Gap Fund” in the hope that I will have a few years prior to 59.5 years old that I can retire if I choose. With the main source of retirement funds coming from my 401k that I can access without penalty beginning at 59.5. I like the transparency, IPO offerings, and ease of use in both the mobile and desktop versions of FundRise. It’s really cool to see the growth YOY within FundRise and hear from the CEO on a regular basis. Returns are good too! Part of me thinks that one day, the IPO will go public and I will be very glad I invested!

  2. STAY AWAY! I invested in one of their first properties back in 2012. They projected a 6-year investment life before the property would be recapitalized or sold (and my investment would therefore be cashed out). Ten years in, and I’m stuck with the pittance of an investment, which wouldn’t be a big deal, except that it requires a K1 tax form, which they NEVER issue within the IRS-required time period. Here it is, 3 days before the tax-filing deadline, and I STILL do not have a K1, and the best they can say is, “we expect to issue K1s by Jan 31.”

    Furthermore, the distributions on this investment (in one of the hottest DC neighborhoods, BTW), have been few and far between. And when I read the fine print, I see that they BORROW money to fund distributions. So I am now paying interest on money that they borrow to (maybe or maybe not) pay me a (tiny) distribution.

    Their whole gimmick is ‘real estate investing for the little guys,’ when in reality, IMHO, all I see is an easy way for them to raise equity from a bunch of suckers (my self included), pay themselves layers upon layers of fees (again, read the fine print), and there is not one thing us little guys can do about it.

    Enter at your own risk (obviously)…

  3. I just wanted to view some of their open investments. They had me create an account and wanted to see my bank information before showing me anything. Sounds like the cart before the horse. I’m not buying.

  4. FRAUD!!!! fundrise will not release my funds from my account that I closed in December in 2019. They issued a letter in April 2020 stating they will not release disbursements for the integrity of the fund because of COVID -19 and uncertain market. Well in May and June the market has been doing well, Especially in June, its been doing really well. You would think they would release funds for a closed account. I need the money to pay bills now, I closed my account in DECEMBER! BEFORE COVID-19 and its now June. But.. also in April of 2020 they bought a 15Million dollar stake in a project in DC. So….. they cant pay investers their money of a closed account to maintain integrity of a portfolio during COVID even if the account was closed before COVID? But, will spend 15 million dollars (to maintain integrity apparently)doesnt make sense to me. My account has been closed for 7 months now and I still have not received my money and I dont think I will

  5. Fundrise is one of my favorite investments I have. I put some money in as a trail run a few years ago. Had about 7 pros, 7 cons. Fast forward to today. They fixed all cons except 1. That being liquidity, which they are very upfront about. If you want passive commercial real estate investment exposure. This is it. My plan is buy and hold for 20 years, switch from reinvest dividends to cash. If that’s not your plan too. Put your money elsewhere

    1. What were the pros and cons in your list? What’s the average annual rate of return for your investment so far?

  6. STAY AWAY FROM FUNDRISE! After three years of investing with Fundrise, my returns have lagged other real estate investment options that are easier to access and manage. On Jan 13, 2020 I officially requested to liquidate my funds from my Fundrise account so I can put it towards better investments. Almost 3 months later now (Apr 2, 2020) they have sent me a message saying that they aren’t allowing any liquidations until further notice. So basically they’re holding my money against my wishes, and have provided no direction to me at all as to when I can be “allowed” to get my money out. When I do eventually get my money out (if I ever do) I will definitely never invest here again. There are far better investment options available that don’t steal your money and lock it away from you indefinitely.

  7. I had a horrible experience with them. The returns are not amazing. They reinvest into funds that don’t start giving a return for a long time. Liquidity is non existent. I just pulled out the last $2000 I had there, they have been in for a while with no return whatsoever, and cost me 3 percent to withdraw. I will also have to wait until the end of the quarter in order to get my disbursement. I’m writing here because I relied on this post before I invested. This post minimized the downside of this investment.

  8. My husband invested some money in this company. However, he passed away 2 months ago and I am the sole trustee of his assets. He gave this investment to his kids. I sent them the copy of the living trust almost 2 months ago Certified Mail; I received the return receipt. I waited to hear from them. A month passed and nothing. I sent them an email and the Associate said he will get back to me once the document is mailed to Computerhare; that was Dec 14. I sent another email and no answer. The agent’s name is Thomas Eden.
    I couldn’t find telephone number where I can actually talk to a live person. Very bad customer service! Bad enough to lose my husband and now his money is being kept hostage!

  9. This is an update to my 2 previous posts. 6 months have passed since my last post. Not too much has changed except that I receive notifications about properties in one of of my EREITS quite often. That is a positive. What is not is they do not tell you which EREIT. Since I have 2, I have no idea. I have taken to ignoring most of the updates. Overall, they are becoming more conservative with 3 times as many debt deals as equity. I view that as a positive as well.

    My previous concerns remain. The original investors in the EREIT products have been disenfranchised by Fundrise. Our yields dropped so they could purchase more properties. They purchased more properties because the regs changed allowing them to have a higher level of assets in EREITS. The original investors have not earned anywhere near the promised returns. I honestly believe they are in violation of certain disclosure regs now especially on the expense ratio. The proper thing to do would have been to keep the old EREITS closed and open new ones. However, the old EREITs seem to be the only ones to garner real interest.

    So, end of that rant. I have noticed that the various services are now trading properties at times. Not directly but I have seen properties that were on fundrise wind up on Realty Shares and other services. That is not a healthy sign .

    If I were to contemplate making an investment today, I would not invest in any of these platforms. As it stands I was an early investor under a better model for my situation and have done fairly well. I still have have around $175K in the various platforms. I have a little ways to go before I can get out of the EREITS without taking a huge haircut. When that times comes, I will consider it. The rest is private investments where I will just wait.

  10. Fundrise needs to make some changes to it’s method of disclosure regarding not only fees, but also with regard to investment types, for example, exactly where and how the invested money will be used. This information needs to be easy to find in a user-friendly format that is not vague about it, but that instead provides specific information about the properties and projects being funded with our investment funds.

    Fundrise also should provide its account-holders with the ability to direct exactly where they want their money to be invested. For example, I find smoking to be one of the most ridiculous and deleterious plagues upon our society . Therefore, if I knew that the money I invested was to be used say, for example, to fund the construction of an office building which would be used by Big Tobacco for any reason, I would absolutely refuse such an investment because I do not believe in contributing to such a demeaning product that inflicts untold yet preventable sicknesses upon our society. In that regard, Fundrise should absolutely be providing such information to it’s account-holders so that they can determine for themselves whether to invest in such properties or not.

    The whole “East-Coast, West Coast” fund type descriptors thing, is just far too vague and uninformative for me as a scrupulous investor whom cares about the environment.

    This aspect of Fundrise’s data structure and investment disclosure needs to be more transparent. As a matter of good ethical practice, Fundrise needs to adopt as Standard Operating Procedure, this type of full disclosure to its account-holders so that we are properly informed of the real estate projects and/or properties to which our funds will be invested. Anything less than that could very easily constitute a deceptive marketing practice which should not be ignored the Financial Industry’s Regulatory Authorities.

    As investors we deserve substantive transparency and control over our investments. To with-hold this information from us, only makes institutions like this one, just another corporate thug exercising it’s tyranny over the common people.

  11. The site needs to provide updated information on the FS returns. It has fallen. Also, I question how they come up with a NAV on their own company. Raising the NAV after diluting the equity seems odd to me.

  12. I’m really new to this and has a dumb question. So I invested in Fundrise $3K and If I want to cash out one day. How could I do it? or When I can?

    1. Patricia – if you invest in an EREIT and want to cash out, then you would be subject to a redemption fee of up to 3% if you held for the short term. I would suggest VNQ if liquidity is an issue.

  13. So I understand the eREITs are the main focus here but curious on how the eFUNDs differ exactly? From what I can tell the eFUND should be called eBOND maybe? With the eFUND having more of a long-term maturity date of some kind and eREIT being more focused on the compounding dividend yields? And the Goal Orientation feature determining your exposure to one or the other? Is this kind of how it works? Or not really….

  14. I cannot understand why a small investor would choose this illiquid investment over purchasing shares of a traditional REIT like CLNS or ACRE or CIO. Not only is there greater liquidity, but these REITS have to follow SEC requirements regarding reporting and transparency. Fundrise just does not smell right to me.

  15. I don’t mind the fact that it’s illiquid. But I don’t like the fact that it’s perpetual and simply keeps adding properties as they drop out. I’d rather have a defined exit point whether that’s 3 months or 3 years.

      1. Hi Larry,

        Do you invest in this space? Fundrise? What are your thoughts about 2018 and the potential for Private REITs?

        Most appreciative!

  16. If you want a secondary market, stick with REIT mutual funds. You will get more diversification and lower fees and a daily market to sell plus the opportunity to buy foreign real estate. Due diligence on eREIT is more difficult than on REIT funds or stocks.

    Some of these products are Partnerships that give K-1 and you can report a loss due depreciation although you have positive cash flow.

    1. It doesn’t even have to be “REIT mutual funds”; you can just buy individual REITs, most of which are diversified by region. Things like 0 for retail, APLE for hotels, APTS for rental housing, EPR for entertainment, STAG for industrial, FPI for farmland (heck, even GEO for prisons, though that one’s not for me), etc., etc., etc.

  17. I have used Fundrise for 30 months now. Before that, I did due diligence for 18 months since I had never invested in real estate that way before. I had invested in Lending Club but don’t consider the two to be similar.

    There are many positives. The customer service is outstanding. You send an email and get one in return. The philosophy of democratizing real estate has been disruptive. I have investment in many deals with FR and they have delivered on their promise.

    I am somewhat dismayed that they have given up on the private investing model. I don’t dislike the EREITS but I am forced to give up certain aspects of diversfiication (staggered maturity dates, etc..). There is one issue they need to be aware of. Their founder has stated that he FR to be known as the Vanguard of real estate. He needs to understand what that really means. Recently one of my private investments, paying 12%, was returned 8 years early. That’s OK. However, what wasn’t was who bought it back. FR bought it back for their own EREIT. Vanguard does not favor one class of investors over another except for small breaks in expense ratio. FR needs to understand that.

    However, I would still give them very high marks and really do hope they can be a true disrupter. Full disclosure – I invested in the firm’s online IPO. No idea if I will ever make a cent on it. Just thought that was relevant.

    1. Time to add to my review. I am now seeing the downside of the EREIT model. I had noticed in early January that my daily accrual of dividends (this was a feature FR touted – we could watch it grow), was cut in half. I questioned this and was told that this was needed because FR was acquiring more properties. The reason for that is due to some of regs changing allowing an EREIT to have more in assets. Obviously, this affects the returns for current investors. We are subsidizing new investors. FR quotes an expense ratio of 0.85% but this is inaccurate. It is, at least for the time being, much higher given the dramatic decrease in the yield offered. The rep was very polite about my concerns and said she would pass it on to Mr. Miller. I never heard anything from him.

      Also, this company needs to be more careful about it’s marketing, especially on social media. It is clear to me that they do not understand that they are now a financial services firm, not just a real estate firm. Especially given that they no longer limit themselves to accredited investors. A whole new set of risks apply that are in addition to the usual risks of real estate investing. I see apples to oranges comparisons being made continually and, honestly, just some incorrect information. If the NASD was paying attention, they would have a field day with this. I suggested that they have a client counsel, perhaps with people like me who have experience in the financial services industry. They never responded to that suggestion.

      At this point, I am going to lower my grade to a C, which would be maybe a 5.5 out of 10 on your scale. I just see too many obvious issues. I am an investor in the firm as well. My suspicion is that fin tech, at least for real estate has reached it’s peak. I still have a considerable investment with FR and Realty Shares so I obviously with for decent performance to continue.

  18. Why does no one ever review Groundfloor? I am tired of these reviews of “accredited investor” sites. Heck why would anyone with that kind of money invest with the internet? I am an investor with Groundfloor and I am waiting to see how my investments do though I don’t see any real problems yet. Groundfloor offers the ability to put in any amount of money. $10 if you want.. substantially reducing risk. They will also give you a bonus if you do have 50K lying around and want to invest with them. They also just launched IRAs from your investments with them. Finally, I find the website easy to use. The only drawback is that it isn’t open to all states but if your state allows it… it is a great site. I only wish more would be started up this way. Roofstock seems to be a site for the flat up insane. Buy real estate without ever seeing it? Insane! I have to assume that the backers of Roofstock are powerful otherwise it would b laughed out of the room. I would like to find a real estate crowdfunding site that allows me to invest in rental property but not own it. Similar to the flipper model of Patch of Land / Groundfloor. I give you money to get an investment property and you pay me back a certain amount per month on the loan.

      1. Ok thanks. I would be interested in knowing about non accredited investor sites. I would also be interested in knowing if there is any movement to change in the SEC rules.

  19. I’m not sure that the SEC has oversight over Fundrise. While there has been legislation that permits crowd-funding endeavors, I don’t know if Fundrise is required to submit other quarterly or annual documentation.

    1. The SEC only regulates IPOs or companies on the stock market like Lending Club but not Fundrise based from what I understand from my research.

  20. I fail to understand this review. It seems that the author had two cons against it with one being liquidity and then mentions that quarterly redemptions are possible, so I’d take that to be neither a pro or con. I could understand this being a newer investment platform that hasn’t been time tested more than a liquidity argument like the one above.

    1. Hi Tex, You are limited to withdrawing your money at 4 specified periods. So you are able to sell but you aren’t very liquid.

      1. Hi Larry,

        I’m off topic! Sorry! 🙂 What are your recommendations for building passive income for 2018?

        I currenting have both L-Club & Prosper, ROI Finding (real estate) and just bought an investment property. I’m about 8 years from retirement.

        After reading The 4 Quadrandants to Cash Flow (should be required reading for all investors) I have ventured away from the corp Fortune 500 environment to a business owner to Q4.

        What are your recommendations?

        Thought that this topic may be enlightning for your audience.

        Thank you. 🙂

          1. Interested in possibly investing and was going through the comments and reviews but don’t understand your last comment.

  21. I have 3000 dollars in 1 fund
    And 2000 dollars in another
    Since this is the first full year I been in it
    Last quarter I made about 120 dollars
    For that quarter
    So I will write on this website about the next quarter but it seems like its on track and this is after the rate hikes
    So far so good

  22. So what are the real fees associated with Fundrise? It says 1% asset management fee per year but on the website it says:

    What are the costs and fees associated with investing?
    Assuming a fully subscribed offering, each eREIT™ anticipates having a reimbursement of organizational expenses of approximately 2%, marketing and distribution expenses of each offering up to 1%, and annual ongoing asset management fees and operational expenses of approximately 1-1.5%.

    Sounds like its more than 1%

  23. This is a REIT, with lower upfront fees. All REITs are crowd investing, that is how they are funded- by a group of investors. REITs were created specifically for this purpose. This is the same thing as all the other REITs out there, minus a broker soliciting it. Same Illiquidity, same risks. Most REITs have a low entry purchase amount, usually about $1,500-2,500. This is a Regulation A offering- read up on that (different reporting standards). From the offering documents… “Investing in our common shares is speculative and involves substantial risks. You should purchase these securities only if you can afford a complete loss of your investment”. This is a “blind pool” offering because we have not identified any investments to acquire with the net proceeds of this offering. You will not be able to evaluate our investments prior to purchasing shares.” NAV is updated quarterly. Please, please, please read the offering documents very carefully. This is a long term investment, so spend some time reading it because you will be locked up for a while. It will be worth the time spent. Especially read up on your ability to liquidate shares and the amounts these funds can liquidate. These are serious investments, which are complex and speculative.

  24. I invested $1000 in June 2016, just to see how it goes, and I got my first quarterly dividend in October….of $15.56

    1. That is 1.556% per quarter. Which translate to about 6% per year.
      Considering the risk and non liquidity it is not much. I would rather play poker with $1000.

    2. If my math is correct $15.56 quarterly dividend equates to apx 6.2% total return. Have you received any other dividends?

  25. REITs that trade on an exchange do not have a sales load or up front fee. They are also liquid unlike eREITs. Further “the market” determines their value. Who values the share price of the eREIT? Is it the eREIT themselves? Or is it an independent nationally know auditor?

    1. You’re eliding two different things. “The market” determines the daily share price of a public REIT, and it also determines the current value of the (mostly illiquid) properties that are actually held by that public REIT. But the latter is mostly theoretical until the REIT actually tries to unload the property, and if it got into a jam and had to unload a lot of them all at once, it might have sell them at a deep discount.

      For the private REIT, the value of the (mostly illiquid) properties held by that REIT are *also* set by the market.

      Of course, for the public REIT, many if not most of the shares you buy are being bought from other private individuals who happen to be trying to sell that day, not from the company itself.

      Many public REITs have dropped by 15% to 20% in share price just over the past few months. It is seriously doubtful that the current market value of the properties they own has dropped by that much– and maybe hasn’t dropped at all. By the same token, a few years ago the share price of many REITs went up a good 30% or more within a year, with no corresponding increase in the value of the properties they own. The share price market is very different from the value of the properties. And at the same time, many of them have collected fairly stable (perhaps gently rising) rental income and paid out fairly stable (perhaps gently rising) dividends. The daily share price has had no close relationship to either the value of the properties, or the value of the rents/ dividends. In other words, the share price of public REITs behave very much like any other stock: irrationally in the short term.

    1. i joined i like it because all you needmis 1000 to invest not 5000 like most websites
      now lets see how long it takes to get my money back
      that is the question

Back to top button