We all want to get the highest possible returns on our investments. But, this isn’t ever guaranteed and there are a lot of barriers to investing in big-ticket assets like real estate. If you’ve always wanted to invest in residential and/or commercial properties but the thought of having to save up thousands of dollars for a down payment has been holding you back, then you can’t afford to overlook the latest tech-driven investment platform, Fundrise.
As one of the few companies offering high-quality real estate investments to everyday investors, Fundrise is truly a unique platform with impressive figures to its name. Fundrise has 80,000 individual investors, $3 billion worth of real estate in its portfolio, and 4.98/5.00 star review average with the Better Business Bureau.
To determine whether investing in homes, office buildings, and other investment properties is a good option for your own portfolio, here are some things to consider about the company and our Fundrise Review.
How is Fundrise Unique?
Instead of saving tens of thousands of dollars to invest in your own property, Fundrise lets starter investors begin with just $500, or $1,000 for an “advanced portfolio”. Fundrise supports many different investment accounts, including personal, joint, and some entity accounts. You can even invest money using funds from your IRA account!
But what makes Fundrise truly unique is that they were the first company to offer low-fee, diversified real estate investments for the average person. Whereas individuals were previously limited to stocks, bonds, and mutual funds, Fundrise makes it simple for individuals to access private market real estate, which has historically performed better compared to public investment options.
Investing in Real Estate
According to Forbes, public stocks typically underperform private investments. This is due to the fact that public stocks come with an auction liquidity premium, which means you’re paying approximately 20-30% more for an asset simply because you purchase it through a public market rather than a private market.
With Fundrise, an asset class that was once limited to the richest investors is now readily available to everyday investors. The company has essentially cut out the middleman and offers high-quality real estate opportunities. You can invest in some of the many properties Fundrise manages without the exorbitant expense that comes with traditional investment management.
Elysium – a $6.475 million investment
Washington, D.C.’s vibrant 14th street corridor is one of the most exciting neighborhoods in the nation’s capital. In 2016, Fundrise invested in the construction of 56 new apartments in a key stretch of the area, ultimately generating a realized return of 11.4%.
Elysium is in a high-foot-traffic area, with a Lululemon and Jeni’s Ice Creams on its ground floor. The metro and grocery stores are minutes away.
Fundrise’s preferred equity behaved like debt. The project’s sponsor had to pay Fundrise a fixed rate of return, providing them with a cushion against losses.
247 luxury apartments near Dallas
Fundrise has invested approximately $4.3 million in the acquisition of The Watson Apartments, a new 247-unit apartment community in Grand Prairie, TX, between Dallas and Fort Worth. The units offer open floor plans, luxury finishes, and amenities including a pool and outdoor entertainment space.
Fundrise evaluated this as a strong asset thanks to its promising location, its 95% occupancy and income generation, and its sponsor’s deep experience.
This is their eighth investment in the Dallas-Fort Worth area, which is one of the fastest-growing job markets in the nation.
As a debt investment, this asset is projected to earn a fixed rate of return of 9.5% annually over the investment’s duration, with a strong margin of safety.
$4.8 million invested in apartments in Macon, GA
Fundrise has invested in the Riverstone Apartments, a 220-unit apartment community in Macon, Georgia. This project is part of an 11-asset portfolio located in Georgia, which includes six other projects they acquired earlier this summer.
The asset’s sponsor has planned value-add renovations for all units, which Fundrise expects to strengthen rental income and overall property value.
Paid first upon exit: their equity stake is structured so that they’re entitled to a return of 10.6% annually upon the asset’s sale or refinancing.
$7M invested in San Antonio
In December 2016, Fundrise invested roughly $7 million in the construction of Estraya Westover Hills, a 278-unit apartment community. After completing construction in late 2018, the project’s sponsor, Waypoint Residential, began to lease the units, achieving 92% occupancy in just over six months.
Now that the property is stabilized, Waypoint Residential has paid back Fundrise’s investment. During the investment term, the property drove an annualized return of ~10%, matching their initial projection, and the income it generated supported dividend payments to Fundrise investors.
What is eDirect Investing?
Fundrise’s eDirect technology combines secure, cloud-based software with investment and programming professionals to create an autonomous investment platform. Referred to as “full stack financial integration,” this Fundrise technology is incredibly advantageous for investors. It offers greater affordability and efficiency in comparison to traditional advisors and fund managers.
Fundrise also abides by SEC regulations, offering utmost transparency for its investors through annual audits and consistent financial reports made public. The company estimates its eDirect investment technology produces an average of 4.1% greater returns on investments in comparison to other forms of technology-driven capital formation. This suggests that Fundrise is an excellent alternative investment to protect your portfolio from market swings.
Investment Plan Options
Fundrise offers three primary investment plans, supplemental income, balance investing, and long-term growth. Each plan comes with its own unique advantages, such as the supplemental income plan’s dividends-driven, private equity strategy, or the growth-oriented strategy that prioritizes equity real estate assets that appreciate in value over time.
Fundrise is completely transparent about its investment options and includes vital information to help you decide which plan is right for your investment needs. They include the average age of investors with that particular plan, its popularity among Fundrise users, and the average dollar amount individuals have invested in those plans.
Once you decide on a plan, you’ll get access to a full range of data, charts, graphs, and other informative resources to help you track your portfolio’s performance and reallocate funds, as needed.
Investments designed for consistency
Last year, Fundrise investments capped off a five year period during which the Fundrise platform portfolio averaged 10.79%. Over the same time frame, Vanguard’s Total Stock Market ETF and Real Estate ETF produced average returns of 7.92% and 7.40%, respectively.1
One of the reasons why Fundrise was able to achieve such a strong five-year average is their overall consistency. During that period, Fundrise’s annual platform returns fluctuated by only 3.66 percentage points. Vanguard’s ETFs? Their annual performances varied as widely as 36.24 percentage points. 2
How do Fundrise investments achieve consistency?
- Diversification across multiple dimensions
Fundrise portfolios are diversified across many different deal sizes, property types, risk levels, and over 60 cities in 22 states. That deep diversity helps make their portfolios resilient.
- High margins of safety
Many of their investments are structured as preferred equity or debt. These types of deals often include high margins of safety, by design.
- Low correlation with the public market
Private real estate has a lower correlation to stocks and bonds than many public market investments. This helps them stay steady, even if the public market gets volatile.
- Portfolios constructed by experienced real estate professionals
Fundrise’s in-house team of real estate professionals are experienced in recognizing and acquiring deals with solid fundamentals, to help their investors build weather-proof portfolios.
Award Winning Real Estate Investing Platform
The annual FinTech Breakthrough Awards are an open-nomination program designed to recognize businesses that bring revolutionary ideas to financial technology and services, judged by an independent panel of experts. In 2019, Fundrise was named this year’s Best Real Estate Investment Platform.
Fundrise continues to show the industry the possibilities that arise when real estate and tech intersect. They were recognized alongside companies like Kabbage, Paypal, Acorns, Betterment, and Klarna as one of the businesses forging new paths in 2019’s financial world.
Fundrise included on list of fastest growing companies
The Deloitte Technology Fast 500 awards recognize organizations in North America that have achieved outstanding growth over multiple years. We’re excited to share that Fundrise has been included on the 2019 list.
As Deloitte describes it, “the Technology Fast 500 has been one of the most objective rankings for technology, media, telecommunications, life sciences, and energy tech companies for 25 years.” Other companies on this year’s list include ZipRecruiter, Kabbage, Zendesk, and BiggerPockets.
It’s an honor to be recognized by Deloitte, and we’re proud to celebrate our ongoing growth as we continue giving investors of every type the opportunity to improve their investment portfolios and financial futures, thanks to the power of private market real estate.
Should You Invest with Fundrise?
Fundrise presents an incredible opportunity for investors who want to jump into the real estate market without having tens or hundreds of thousands of dollars to invest upfront. The tech-driven platform is also ideal because you don’t have to put much effort into managing your investments. Plus, you can save money with the low-fee structure compared to traditional investment advisors.
Ultimately, if you want higher returns on your investments, highly efficient portfolio management, and access to quality, diversified investment options in the private real estate market, then Fundrise is your best bet.
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