Fundrise Review 2022:
Fundrise is an online real estate company that gives investors access to private real estate deals, but be wary of underlying costs.
The bottom line:
Fundrise makes it easy to become a real estate investor, but be prepared to do your own due diligence to make sure you understand each investment’s risks and underlying costs.
Pros & Cons
Low minimum investment.
Open to all investors.
IRA accounts available.
Highly illiquid investment.
Fees can be difficult to understand.
- Complex investments that require investor due diligence.
Fundrise is an online real estate company that lets average — read: not wealthy — investors buy into private commercial and residential properties by pooling their assets through an investment platform.
Fundrise’s main products are real estate investment trusts, or REITs, which generally invest in income-producing real estate, either through buying and managing buildings or by holding mortgages. The company calls its products “eREITs.” Fundrise also offers eFunds, in which investors’ pooled money is used to buy land, develop housing and then sell it. Fundrise also offers what it calls an Interval Fund, which offers higher liquidity and diversification than its other funds.
Investors purchase shares of the Interval Fund, eREIT or eFund by buying one of Fundrise’s portfolios: Starter, Supplemental Income, Balanced Investing or Long-term Growth. Fundrise determines the mix of eREITs and eFunds in each plan, as well as the underlying properties. Fundrise also offers Advanced and Premium account levels, in which investors may get access to a greater number of real-estate projects, plus other features and benefits.
Fundrise is best for
Investors with a long-term outlook.
Those seeking diversification outside of stocks and bonds.
- Investors willing to do their own due diligence.
Is Fundrise right for you?
There’s a lot to like about real estate as a way to diversify your portfolio, and the Fundrise platform is easy to navigate.
But it’s also true that crowdfunded real estate platforms such as Fundrise have yet to be tested during a real-estate driven downturn. For example, in the event of a housing crash, Fundrise could be forced to postpone redemptions for some investors. (There are unknowns here, so if you’re risk-averse, know that there’s more than one way to invest in real estate — we outline five methods here.) We should also note that while the Interval Fund has no penalties for early redemption, 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 gives you access to a wide range of investments.