Fundrise: Exploring Alternative Investment Opportunities And Strategies

Fundrise is an online real estate company that allows investors to access private real estate deals. It is a crowdfunded alternative investment platform for small investors, giving them access to alternative investments in real estate. Fundrise's main products are real estate investment trusts (REITs), which invest in income-producing real estate. The company calls its products eREITs. It also offers eFunds, where investors' pooled money is used to buy land, develop housing, and then sell it. Fundrise's Flagship Fund offers higher liquidity and diversification than its other funds, while its Income Real Estate Fund seeks to provide regular cash distributions based on commercial and residential investments. The company also has an Innovation Fund, which focuses on shares of privately held tech companies.

Fundrise's fees and account minimums

Fundrise's fees and minimum investment amounts depend on the type of account and investment plan you choose.

Fees

Fundrise charges an annual advisory fee of 0.15% for all Fundrise assets, which is similar to the wrap fee charged by a financial advisor for managing your assets. On top of this, there is a real estate fund fee of 0.85% for all Fundrise assets. This means that for every $100 you invest, you will be charged $0.15 for the advisory fee and $0.85 for the real estate fund fee, totalling $1 for asset management and advisory fees.

The Innovation Fund, which focuses on venture capital investing, has a higher fee of 1.85%. There is also an optional service called Fundrise Pro, which gives investors more control over their portfolios, for $99 per year or $10 per month.

It is important to note that additional fees may apply, such as development or liquidation fees for specific assets. These fees are not easily accessible on the main Fundrise website but can be found in the offering circulars.

Account Minimums

The minimum investment amount for a standard Fundrise investment account is $10. However, for an IRA (Individual Retirement Account), the minimum investment amount is $1,000.

Fundrise offers four investment plans: Supplemental Income, Balanced Investing, Long-Term Growth, and Venture Capital. Each plan has a different mix of eREITs, eFunds, and other funds selected by Fundrise, with the Venture Capital plan offering access to private technology companies.

The Flagship and Income Funds do not impose early redemption penalties, but most other funds do. There is also a redemption program that allows investors to sell shares back to Fundrise, but they may have to pay a 1% fee if they have not held their shares for at least five years.

Fundrise's low investment minimums and transparent fee structure make it a popular choice for investors seeking to diversify their portfolios into real estate and alternative investments.

The types of investment plans offered by Fundrise

Fundrise is an online real estate company that offers investors access to private real estate deals and other alternative investments. The platform provides several investment plans, each with its own unique characteristics and objectives. Here is an overview of the types of investment plans offered by Fundrise:

• Supplemental Income Plan: This plan focuses on providing cash flow to investors through private credit loans. It is designed for those seeking regular income from their investments. The minimum investment requirement for this plan is $10 for taxable investment accounts and $1,000 for IRAs.
• Balanced Investing Plan: The balanced investing plan offers a mix of real estate and private credit securities. It aims to provide a balance between income and growth, making it suitable for investors seeking diversification. Like the Supplemental Income Plan, it also has a $10 minimum investment for taxable accounts and $1,000 for IRAs.
• Long-Term Growth Plan: As the name suggests, this plan is designed for investors with a long-term horizon. It focuses solely on real estate assets, aiming to provide capital appreciation over time. The minimum investment requirements are the same as the previous plans.
• Venture Capital Plan: This plan offers access to startup and technology companies, providing very long-term growth potential. It is suitable for investors comfortable with higher risk and longer investment horizons. The minimum investment for this plan is also $10 for taxable accounts and $1,000 for IRAs.
• Custom Plan (Fundrise Pro): Fundrise Pro is a service that allows investors to create their own custom investment plans. It provides more hands-on investors with the ability to select their own investments and set automatic contributions. Fundrise Pro costs $99 per year or $10 per month and is suitable for self-directed, advanced investors.

Each investment plan offered by Fundrise has different underlying assets and strategies. Investors can choose the plan that aligns with their financial goals, risk tolerance, and investment preferences. It is important to note that all investments come with risks, and Fundrise is no exception. While it provides access to alternative investments, investors should carefully consider their options and conduct their own due diligence before committing their capital.

The benefits of a Fundrise Pro membership

Fundrise Pro is an additional service offered by Fundrise that gives more hands-on investors the ability to customize their portfolio. Here are some benefits of a Fundrise Pro membership:

• Customization: Fundrise Pro allows investors to make direct investments in specific funds and build custom allocations based on their financial goals and risk tolerance. You can choose from a wide range of real estate equity and debt investments, as well as venture capital opportunities.
• Control: With Fundrise Pro, you have greater control over your investments. You can select your own investments and receive ongoing income and capital appreciation potential. This level of control is ideal for self-directed, advanced investors who want more say in their investment choices.
• Automatic contributions: Fundrise Pro enables you to set automatic future contributions based on your custom allocations. This feature helps you stay on track with your investment goals without having to manually contribute each time.
• Trial period: Fundrise Pro offers a 30-day free trial period, so you can test out the service before committing to the additional cost. This trial period lets you explore the customization options and see if they align with your investment strategy.
• Low cost: For $10 per month or $99 per year, Fundrise Pro provides you with the tools to take a more active role in managing your investments. Compared to other investment platforms, this is a relatively low cost for the level of customization and control you gain.

How Fundrise compares to other real estate investing platforms

Fundrise is an online real estate company that allows investors to access private real estate deals. It is a crowdfunding platform that offers both large and small investors access to investment opportunities in real estate and other alternative investments.

Fundrise vs. CrowdStreet

Fundrise is ideal for investing in cost-effective real estate, private credit, and venture capital funds. It is perfect for non-accredited investors as most of its investment options are available to all investors regardless of accreditation status. On the other hand, CrowdStreet only accepts accredited investors and has much higher minimum requirements. CrowdStreet is better suited for those interested in automated, tailored portfolios of commercial real estate investments.

Fundrise vs. Yieldstreet

Yieldstreet is another popular real-estate investing platform for accredited and non-accredited investors. However, in addition to real estate, Yieldstreet also offers fine art, short-term notes, and multi-asset class funds. Its minimum investment is significantly higher than Fundrise's, making Fundrise the more affordable option for non-accredited investors.

Fundrise vs. RealtyMogul and DiversyFund

Fundrise is also similar to RealtyMogul and DiversyFund in that it is open to non-accredited investors.

Fundrise vs. Standard Brokerage Account

Fundrise's Interval Fund has no penalties for early redemption. However, the eREITs and eFunds in the Core, Advanced, and Premium service levels may still impose an early redemption fee of 1%. Investors concerned about this might prefer investing through a standard brokerage account, which provides access to a wider range of investments.

The trustworthiness of Fundrise

Regulation and Transparency

Fundrise is regulated by the Securities and Exchange Commission (SEC) in the United States. Three of its funds are registered with the SEC, while 10 are exempt from registration. The company has been responsive to regulatory actions in the past, such as in 2023 when the SEC filed charges for violating the cash solicitation rule. Fundrise agreed to a settlement, demonstrating a willingness to cooperate with regulatory authorities.

Fundrise's platform is generally considered transparent. Users can access information about fees, liquidity, and reporting. However, some specific project details and legal documents can be challenging to find.

Performance and Returns

Fundrise's performance has been mixed, with average annual returns between -7.45% and 22.99% from 2017 to 2023. The company claims an average annual income return of 4.81% for long-term investors. However, it's important to note that past performance does not guarantee future results.

Fees and Costs

Fundrise has a competitive fee structure, with a 1% management fee comprising an annual asset management fee of 0.85% and an annual advisory fee of 0.15%. The advisory fee is comparable to what a financial advisor might charge to manage your assets. However, there are additional costs that may not be immediately apparent, such as acquisition fees, liquidation fees, and an annual fee for IRA accounts. These fees are outlined in the offering circulars but are not easily accessible on the main website.

Customer Service and Support

Fundrise's customer service has received mixed reviews. The company offers email support and a help centre, but there is no direct phone support. Responses to queries can take time, and some users have reported delays in hearing back from the support team.

Safety and Security

Fundrise employs bank-level security measures to protect users' personal information, including two-factor authentication, AES bit symmetric key encryption, and Transport Layer Security (TLS). The platform has an A+ rating from the Better Business Bureau (BBB), indicating reliability and trustworthiness in handling customer data.

In summary, Fundrise operates in a regulated environment and has taken steps to ensure the security of its users' information. The platform provides transparency around fees and performance, although there are some challenges in finding specific project details. Customer service could be improved to provide more timely responses. As with any investment, there are risks involved, and individuals should carefully consider their investment goals and risk tolerance before committing their money.

Frequently asked questions