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Fundrise

Fundrise - Private Real Estate Investing

Fundrise is a decade old company focused on opening the commercial real estate market to everyday investors. Real Estate Investment Trusts are not a new concept. They’re one of the oldest investment vehicles out there. Fundrise has opened private REITs to the general public by lowering investment limits and offering a wide variety of investment options to meet investor’s needs.  

In this post, I cover the website, features for investors, Investing process, my experience so far, and provide links to get started selling shares or investing through Fundrise. 

Fundrise Home

Getting Started with Fundrise

First, real estate investing should be seen as a long-term investment. This means that you should be prepared to hold your position for years, if not decades. If that matches your investment time horizon and your looking for simplified real estate investing, then Fundrise might be a good option for you. 

Opening and funding an account with Fundrise is pretty straight forward. Simply create your account, select your investment level and transfer funds via Plaid. Unlike many of the platforms I cover, you are not required to be an accredited investor to invest through Fundrise, which allows more investors to take advantage of their offerings. 

They were offering a starter level at $500, but it appears they have removed that option. Now, the lowest investment level available is $1,000 – the Core Level. This is the level I am currently invested in. I’m in the long-term growth plan, but they also offer income generating and a balance between growth and income. Your selection depends on your overall goals – growth or income. 

For those making larger investments, Fundrise offers more benefits. The 2nd level, is the Advanced investment plan. Like the Core plan, this plan offers 3 options between growth, income, or a balance between the two. The main benefit is the ability to select from a larger variety of funds. While the core funds focus on multi-family and industrial properties, Advanced investors have access to single-family homes and more.

Finally, for those looking to invest $100,000 or more, there is the Premium plan. Fundrise doesn’t offer a lot of details, but it appears to be private funds focused on large investment opportunities. Investors have to inquire about this level and talk to their sales team to determine if it a right fit or not. I don’t think I’ll be at this level any time soon. 

What am I buying and how has it performed?

Like a lot of alternative investment vehicles, you are not investing in the underlying asset. You are, in fact, investing in a fund – typically an LLC – that acts as the purchaser and manager of the assets. For real estate, this is the common Real Estate Investment Trust (REIT). With Fundrise, your investment is spread across multiple REITs, focused on growth and income, depending on the plan you select. So based on your goals, you will be invested across numerous REITs to provide the best chance of achieving your desired results. 

Lets look at some of the performance info.

Fundrise Performance

The graph above shows the total returns from Fundrise investment funds. At first glance, this chart looks like the funds are providing exponential returns. In actuality, as the investment pool has increased, you would expect the total returns to increase. The important part is the Average Annualized Returns. As expected, their returns range between 9% and 12.5% over the past 6 years. 

My account

So, how has my portfolio performed? My initial investment came in June of 2019 in the amount of $500. Then, that was the minimum investment for the Starter plan. After a year, my investment had grown to $546.02 or 9.2%. In June of 2020, I invested an additional $475 to switch to the Core Plan. To date, my $975 total investment has returned $61.48.

Investor Account

Investing in real estate is complicated. Investing across numerous REITs is even more complicated. The investor account section provides an overview of your account and breaks down the returns into somewhat simpler and easier to understand sections. 

Returns are arguably the most important aspect of your investment. I have goals, and I am interested in how my investment is performing with respect to my goals. The account section allow me to dive into performance per year and understand where my returns are coming from – dividends or appreciation. 

Fundrise Dividends

Dividends are representative of cashflow from properties. This can be income generated from rents or from selling properties. Fundrise calculates dividends on a quarterly basis and distributes them the month following the quarter’s close – January, April, July, and October. 

REITs

The most difficult aspect of investing through Fundrise is understanding the tax implications. I have invested the minimum amount, $1000, and my investments are spread across 12 different REITs. Therefore, I will receive 12 different K-1s from Fundrise at the end of the year. That means including the information for all 12 K-1s in my 2020 income tax filing – a little extra paperwork. 

Fundrise Financials

As with any investment, it is important to understand the underlying financial situation of the company you are investing with or through. Luckily, companies as mature as Fundrise are easy to find and research. 

The screenshot here is the semi-annual report filed with the SEC by Fundrise’s parent company – Rise Companies Corp. It provides an overview of the companies revenue, expenses and net income for period ending June 30, 2020. The entire filing is available on the sec.gov website. 

Overall, Fundrise is performing like many early stage startup companies. They brought in over $6.2M in operating revenue and spent over $15.3M on maintaining their website, sale & marketing, conducting business, facilities and so on. It’s not unusual for startups to burn through cash like this. Since 2017, Rise Companies Corp has conducted 10 capital raises totaling just under $60M – they’re doing fine. 

Fundrise financials

If you read through their semi-annual report, you’ll find a dizzying array of LLCs, funds, REITs, general partnerships and so on. This creates a high level of legal complexity that carries some risk. Ideally, this structure provides insulation from risk and limits potential legal problems to one entity. It’s not important to understand the inner workings of the company. But, you should be aware that the company runs a complex business model, which adds some risk. 

Do Your Homework

My blog is a great place to start, but I encourage you to conduct thorough due diligence prior to investing through Fundrise. Research REITs, real estate and Fundrise itself. To help you get started, I provided the links below to connect you to the Delaware Division of Corporations website, the SEC and CFPB. Make sure you search by Rise Companies Corp – that’s the parent for Fundrise. 

Filing Info

Delaware Filing Info

SEC Info

SEC.gov

Complaints

BBB.org

Join me on Fundrise

Interested in joining me on Fundrise? That’s great! The link here will get you started.

Real Estate can be an engaging and lucrative investment option. As discussed above, Fundrise is a unique platform providing easy access to this industry and helping you navigate the complexities. I’m looking forward to investing along side you.

Invest

No account fees for you and me! If you use the link above to create your account, we both get a few months of investing without having to pay advisory fees. Not a bad deal!

Disclosure Statement

The statements in this post are my opinion and reflect my personal experience investing thru Fundrise. I cannot, and do not, guarantee that your results will be similar. Please, invest carefully and understand that your investment may lose value. 

I do not receive compensation from Fundrise for writing or maintaining this post. However, they do waive my advisory fees if you use the link above to create an account. 

Question? Contact Me

The post Fundrise appeared first on What to Invest in Today.



This post first appeared on What To Invest In Today, please read the originial post: here

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