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Is Fundrise a Good Investment?

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Fundrise investor since 2020 and sharing my experience with it over the last few years and if I would recommend it for you.

fundrise-review

What is Fundrise?

I stumbled across Fundrise while watching the Minority Mindset YouTube channel in mid-2020 and it sounded like a great investment for me to have at the time. Up to that point, I was looking to start diversifying more assets and knew I wanted to dive into real estate next. The problem I had, I did not know where to start and what the easiest way for a beginner was to start investing. When I heard about Fundrise, I knew instantly this might be a great potential place to start. What Fundrise does is they are an online crowdfunding real estate platform to allow anyone to tap into real estate assets that otherwise most people would have a hard having access to. Crowdfunding real estate investing is gathering a large pool of money from various investors and using it to develop a project, and if completed successfully, you will receive a portion of a return on your investment, depending how much you contributed. Your income is made through what is called a REIT, or a Real Estate Investment Trust. This is essentially a company in the real estate business that you invest your money into in exchange for a return on your investment.

Front Page of Your Portfolio

Front Page of Your Portfolio

Overview

The overview page is your front page when you log in, and gives a quick snapshot of everything involving your portfolio. As you can see towards the right, you can set your own personal goal for your portfolio and Fundrise will indicate to you if you are on track to meet that goal and what you would need to contribute monthly to achieve that goal. You can change or edit your goal at any time.

On the left, you can see dividends, appreciation, and the advisory fees.

Since I have been invested in Fundrise, I have earned a dividend everyday over the last two years. This income is mostly generated through apartment complexes your money is invested in, as you are paid a portion of the rent paid by the tenants. If you have a supplemental or balanced investment plan, this would most likely where most of your returns are made. Having a long-term plan, most of your returns would be made through appreciation.

Appreciation is an increase in value of a project you are invested in. If for example, you bought a house for $100,000 and over a three year period, your house appreciates to a value of $125,000, your profit would be $25,000 from the increase in value if you decided to sell it.

The advisory fees are very low from my experience. Unlike a lot of managed portfolios that have high fees, this one has been one of the lowest I have seen.

fundrise-review
fundrise-review

Portfolio

The portfolio tab is a more detailed page about the various projects your money is currently invested in throughout the United States. You can allow Fundrise to select your projects for you, which I have had nothing negative to say about up to this point, or you can manually select which REIT you want your money invested in. Generally, each REIT is divided up by regions in the United States. An East Coast REIT and a West Coast REIT for example. Other REIT's are divided by an income REIT, or a growth REIT for example, depending upon your investment plan. Most of the projects I have been assigned are multifamily homes generally located in states like Texas, Georgia, Florida, Arizona, and North Carolina. You could also be assigned apartment complexes, commercial projects, resorts, or single family homes.

Transactions

The transactions tab simply shows you how much you have contributed since you initially opened your portfolio. You are not required to have a minimum monthly contribution, so you can make a one time initial investment and see what happens over time. However, your portfolio can grow exponentially in the long run by even contributing as little as $10 a month. Eating out one less night a month can make a huge impact. Check out the two charts below to see how much you can earn over a lifetime depending on how much you contribute.

$1,000 a month could put you in a top wealth bracket.

$1,000 a month could put you in a top wealth bracket.

More

The More tab is essentially your settings and personal information page, but a great feature under this tab is the calculator that you can estimate what your earnings will be in the long-term based upon how much you contribute monthly. As you can see from the estimate above, starting off young and contributing over a 50 year period for example can have a great return with $1,000 a month. Now I know what you are thinking, where am I going to find $1,000 a month? Or I can't afford that. Or that is not worth it because there is no guarantee I will live to be retirement age. Well, to answer the last question, is mostly depends on what is important to you or what you value in life. Would you rather take a gamble living to 75 knowing you could have an 8 digit net worth, or live today, maybe enjoy life, but at the same time maybe have little to no money to enjoy retirement. It all depends what is important to you.

To answer where you can find an extra $1,000 a month, it is not quite as hard as you might imagine. With the age of the internet, there are infinite possibilities to make extra money, and no other time in human history has humanity had so many resources to make extra money. The example I will use for this is Uber. Depending where you live, you could make $1,000 extra a month by just driving through Uber for 4-5 days a month. For just working a few extra days a month, you could see a huge impact in your net worth.

Even at $10 a month, the chart below shows what your return could potentially be with making an initial $5,000 investment, and adding $10 a month over the course of a lifetime. $10 a month is not money most people are going to miss, and I think most people would be happy seeing that type of return with money that is not going to break the bank.

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Now, I know some reading this are thinking "well, I'm 35 or 40 years old, or even 50 years old, I do not have that kind of time to build this type of investment portfolio for the long-term." What I can say to this is it is never too late to start investing. Granted, your goals and priorities with this might need to pivot more compared to someone that is 20 years old for example, but even in your 30s, 40s, and even 50s, you can still have many investing years ahead of you to see a great return. The biggest disservice to yourself would be taking no action at all if this is something you want to do. It does not specifically have to be through Fundrise, it can be through any investment you are most comfortable with and know best, but this is just one opportunity out of many.


Even at $10 a month, over a lifetime you could have a great return.

Even at $10 a month, over a lifetime you could have a great return.

Investment Plans

Supplemental Income

This plan is perfect if you are mostly looking for passive income. By opting into this plan, most of your portfolio will be invested in properties that give you a portion of the income it generates. Generally, low risk is involved and has a lower rate of return compared to the other plans, but again, it is ideal if you are looking for more passive income.

Balanced Investing

This investment is great if you want a little bit of supplemental income with some long-term growth factored in. Overall this plan is great if you want a more stable return on your investment and want less risk involved. You have less potential for a return, but at the same time less volatility.

Long-Term Growth

Long-term growth is exactly what it sounds like. Your portfolio will be geared more towards long-term investment properties with the intent of having the maximum amount of returns. This is the plan I personally have and would recommend if you are younger and intend to have this over the course of your life. The average rate of return for my portfolio with this plan is 9.1%, ranging from 7% to 12% depending on the year.

The Returns

At the time of publishing this article, I have had a long-term plan for nearly two years now and have had better returns than I expected, roughly 12.6% to be exact. This is during a time when the real estate market is at a high point though. Of course, the market fluctuates year after year and some years are going to be significantly higher than others, but according to Fundrise, you should expect an average yearly return of roughly 9%. In the long-term, this is a great annual return, in competition with the S&P 500.

fundrise-review
fundrise-review

My Thoughts

Personally, I feel after two years of investing into Fundrise, it can be a great investment to have on the side, especially if you are either new to investing or are looking for something you do not have to actively manage or pay close attention to for the long-term. The returns have been great so far, but that also is during a time when the housing market is booming. I would not recommend to most people to go all in on one investment, so if you are looking to diversify your investments, this can be a great one to have. If you are a brand new investor and looking for a great place to get started, I think this could be a great first start.

If you are interested in Fundrise, you can get started with the link below.


This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2022 Jason

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