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FundRise.com Review


FundRise.com review: borrower, lender, investor returns, IRA account fees, competitors, rates, real-estate risks, pros and cons.



FundRise.com Overview


Fundrise was founded in June 2012 as a vehicle for “crowdsourced real-estate funding”. Since then, it has developed into a full-fledged online investment service that promises “Low-fee, direct access to private market commercial real estate investments.”

It does this by selling shares in its various eREITs -- Electronic Real Estate Investment Trusts. A REIT is an investment vehicle similar in principle to a mutual fund. But instead of owning many different shares of stocks, a REIT owns many different real estate investments. Historically they have offered high dividend yields and certain tax advantages, and so they have been popular with retirees and those seeking a more stable investment as compared to the stock market.

However, most REITs are not available to the general public. They are only sold to institutional investors — big companies, nonprofits, pension funds, and the like. But Fundrise aimed to change that, and make REITs available to retail investors.


Fundrise Investment Options


Currently, Fundrise offers several SEC-qualified eREITs. Each one focuses on a particular investment goal: supplemental income, balanced investing, or long-term growth, depending on your time horizon and risk tolerance. Each one of these has a $1,000 minimum investment.

Additionally, Fundrise offers a “starter portfolio”, which is a blend of several eREIT offerings. This option has a lower minimum investment of just $500, making it attractive to those who would like to get a feel for the service without making too large of a commitment.

The specific eREITs that are offered at any one time can change as new real estate assets are acquired and shares are sold. An overview of the holdings are available for each eREIT.


FundRise.com Review


Fundrise Sign-Up Process


Opening an account with Fundrise is very straightforward, and should be familiar to anyone who has opened a brokerage account online.

You begin by selecting the investment goal that you are interested in (or the Starter Portfolio), and your initial investment amount. Fundrise shows a slick graph of the growth of your investment, but do keep in mind the timeframe that is shown; $6,000 on a $1,000 investment looks good on the graph, but it is over a 30 year span, assuming the dividend yield of 9% is maintained.

Next, you are asked to enter your name, email address, and a password. Then you must confirm your citizenship and residency, as Fundrise currently only accepts investors from the United States.

Then you enter your address, phone number, and social security number, as this form acts as your W9 form for tax purposes. Then, you have the opportunity to link a bank account, either automatically by entering your sign-in credentials for your bank, or by manually entering your routing number and account number.

Finally, you are presented with the electronic versions of the various account disclosure forms and eREIT offering forms. If everything looks good, then your account is created and you are on your way to investing.


Post-Signup


After you complete the sign-up process, your account must still be “approved”. This usually takes one business day. After that, the ACH transfer from your bank account is initiated, which takes an additional 2-5 business days, depending on your bank. Throughout the process, Fundrise keeps you informed via email.

Additionally, Fundrise sends a series of welcome emails meant to introduce you to their method of investing. However the material does not appear to be any different than what is available on their site, and anyone who has done their due diligence before investing should be familiar with it.


FundRise Review


Fundrise Account Management


After logging into your account, you are presented with your “earnings to date”, which includes dividends that will be paid out at the next distribution, and dividends that have already been paid or reinvested. The 30-year time horizon graph is also visible.

Below that, there is a list of the properties that your eREITs are currently invested in, along with a “risk factor” for each one. A timeline on the right shows any updates that are relevant to you as an investor, including new investments that have been made, and upcoming dividend distributions.

You also have the option to add funds, which are automatically distributed among available eREIT offerings at the time of the deposit. Recurring automatic investments are now available and can be enabled from the main page. Automatic dividend reinvestment can also be switched on or off from there.

Other than those functions, there is not much else to “do” in the client portal area. As Fundrise is designed mainly for passive, medium-to-long term investing, of course this is not a bad thing. The important features are easily accessible, and the data about your investment is displayed attractively in a way that is easy to understand. Those who are used to having more fine-tuned control over their investments, however, may be disappointed.


Fundrise Returns


Fundrise historically has seen annualized returns in the range of 9-11%. Depending on which eREIT you invest in, this could take the form of asset appreciation or dividend distributions.


Fundrise Fees


Fundrise charges a 0.15% “Investment Advisor” fee, plus a 0.85% “Asset Management” fee, for a total annual fee of 1.0%. This is somewhat higher than the 0.15-0.2% management fees that many of us are used to on security-backed ETFs, but is on the order of what one would pay in management overhead for a no-load mutual fund. There are no other account maintenance fees outside of the eREIT management fees.


Fundrise Risks


The eREITs are not liquid investments, meaning it is not possible to sell your shares on the open market. However, Fundrise does offer a 60-day money-back guarantee, as well as the opportunity for quarterly buy-back, should the need arise. However Fundrise is upfront with this stipulation, and does remind you that these investments are meant for a multi-year time horizon at a minimum.

And of course, there is the risk that the real estate market crashes again. But, Fundrise focuses on commercial real estate investments, and does so in diverse geographical locations that mitigate the risk of a local real estate crash.


Fundrise Competitor


The major and highesr rated competitor to Fundrise is Realty Shares - read Review of Realty Shares »


Awards





Fundrise Review Summary


If you are looking for a way to diversify your long-term investments away from securities, Fundrise provides a dead-simple platform for getting into the commercial real estate investing world.
FundRise reviewed by Brokerage-Review.com. Rating: 4