If you’re researching real estate investment platforms, you may be overwhelmed by the options available. In addition to a variety of platforms, various types of investment vehicles provide access to the real estate market.
Fundrise is a popular real estate investing platform that connects investors with a variety of real estate eFunds and eREITs. But is Fundrise a good investment? Learn more about the platform here to determine whether Fundrise can help you achieve your financial goals.
What is Fundrise?
Fundrise is a platform designed to help investors grow their wealth through access to the real estate market. It can be great for a variety of investors, especially those who don’t want to actively manage their accounts. Upon opening their account, investors will answer a variety of questions about their financial situation and investment goals. These questions help Fundrise determine your real estate project investment strategy.
Once the account is open, investors just need to fund their account and Fundrise’s professionals will invest the money in eFunds and eREITs that suit their investment strategy. And you can get started with only $10.
Fundrise’s professionals use the money in your account to craft a diversified portfolio that provides exposure to the real estate market. All you need to do is add the funds. However, it’s important to note that Fundrise has a tier system, and investors need to be in certain tiers to access certain products and features. The tiers are:
- Starter: $10 minimum
- Basic: $1,000 minimum
- Core: $5,000 minimum
- Advanced: $10,000 minimum
- Premium: $100,000 minimum
So while you can start your portfolio with only $10, you’ll need to reach the Core tier to access their eREITs. Starter and Basic tiers only have access to eFunds.
Pros of Investing in Fundrise
The Fundrise platform offers many benefits, which is why it is so popular among investors. It’s easy to use and makes real estate investing accessible to any investor. It doesn’t require active management, so investors can fund their accounts and be confident the Fundrise team is selecting investments that will help them achieve their goals. Fundrise makes it easy to diversify your portfolio with alternative investment, which will mitigate risk. The professionals at Fundrise will use your funds to invest in a variety of eFunds and eREITs, depending on your tier.
Portfolios with Fundrise also have higher than average annual returns, so investors may be able to achieve greater profit than investing in other public real estate investment trusts (REITs) or traditional markets. Fundrise only charges a 1% fee annually.
Cons of Investing in Fundrise
There’s no risk without reward, and investors should be aware of a few negatives before opening an account with Fundrise. Investors need to understand they won’t have access to Fundrise’s full scope of products unless they reach the Core tier. If investors are primarily interested in REITs, they’ll need to have at least $5,000 in their investment account to access them.
Fundrise has a track record of producing higher-than-average expected return for its customers, but the real estate market is still risky. Property prices can rise and fall quickly, and trends can change at any time. Diversified holdings in real estate do not necessarily make a diversified portfolio. It’s still recommended to have investments in other markets and sectors to mitigate risk.
Understanding Fundrise Real Estate Investing Platform
Before starting with any investing platform, you’ll want to have a clear understanding of the products, services and opportunities it can offer you. If you’re wondering if Fundrise is a good investment, you’ll want to see how it ranks in these categories.
Historical Performance
From 2017 to 2022, Fundrise produced positive returns on average for its clients. It outperformed public REITs in four out of those six years. It outperformed the S&P 500 in two of those years. As of October 2023, Fundrise’s returns are in the negative, at -3.21%, compared to public REITs' -5.17% returns and the S&P 500s' 13.07% returns.
It’s important to note that Fundrise typically outperforms public REITs. And on years the S&P 500 performs poorly, Fundrise performs well. While it may not be a smart idea to solely invest in Fundrise, it can be a good addition to an overarching portfolio.
Transparency and Accessibility
Fundrise is accessible to all investors who are U.S. citizens and are over the age of 18. The company is transparent with the fees it charges. There is not a lot of information about its investment process, but it aims to tailor your portfolio to your needs. You can see your holdings at any time. Fundrise publishes regular updates and news regarding your assets, such as construction updates, market data and occupancy reports so that you get a holistic picture of your investments.
Diversification and Risk Management
The level of risk in your portfolio will be determined by your investment strategy. Upon creating your account, Fundrise will ask questions regarding your goals and investment preferences. Plus, Fundrise claims to ensure your funds are diversified into a series of investments that are tailored to your investment strategy. As your account grows, it will continue to identify investments to add to your portfolio to ensure further diversification.
Customer Support and Satisfaction
The resource page on the Fundrise website holds articles on everything from how to navigate your account to tax information. However, its only channel for direct customer support is through its email and contact form. It claims to respond to customers within 1 to 2 business days. It doesn’t list a customer service phone number. The website does have an AI-powered chatbot that can respond to general questions and help users navigate the website.
On Google Reviews, Fundrise scored 4.3 stars. It has an A+ rating from the Better Business Bureau and 3.88 stars from customer reviews.
Create a Diversified Real Estate Portfolio
Fundrise may not be suitable for every investor, but it may be a great addition to the portfolio of passive investors who prefers real estate investing. Fundrise’s team does the heavy lifting in regard to crafting your portfolio; all you need to do is provide the funds. And while its $10 minimum investment makes the platform accessible, you’ll need at least $5,000 to access eREITs.
And while Fundrise has provided positive annual returns, returns are not guaranteed and it should not be the only platform used. Investors may see the greatest success by diversifying their entire investing portfolio across several markets, such as real estate and the stock market. If you have questions about diversification or how Fundrise fits into your investing strategy, contact your financial planner or adviser.
For more on Fundrise check out Benzinga's Fundrise Review or Fundrise vs. Reits.
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Frequently Asked Questions
Is Fundrise worth it?
Fundrise may be a good investment for passive investors looking to diversify into real estate. Investors should consider their goals and risk tolerance before investing in Fundrise.
Is Fundrise better than stocks?
Fundrise is a good real estate investing platform, but investing in the stock market and real estate is likely to provide the best diversification.
Is it better to invest in REITs or Fundrise?
From 2017 to 2022, Fundrise outperformed public REITS for four years. REITS outperformed Fundrise twice.
***This is a testimonial in partnership with Fundrise. We earn a commission from partner links on Benzinga.com. All opinions are our own.
About Savannah Munholland
Savannah Munholland is an investment writer passionate about helping people learn more about accessible alternative investments. She has more than three years of writing experience, focusing on alternative and traditional investing, technology, and education. Her expertise in writing about art and wine investments is grounded in an MFA with knowledge of and immersion in a wide range of art-related topics. She uses her skills in creative writing to bring an appealing level of interest to her journalistic work, shifting even the most basic financial and investment topics from humdrum to compelling. Her work has been published on Benzinga, FreightWaves, and Study.com.
