Intro: Real Estate Crowdfunding with Fundrise
With the rise of the Internet, raising funds for creative projects is becoming easier than ever. Crowdfunding platforms allow easy access for investors and creators to connect
There are crowdfunding sites for artistic projects, films, innovative products, startups, and even charitable endeavors.
As the accessibility and popularity of crowdfunding increases, it was only a matter of time before real estate crowdfunding sites emerged for private commercial real estate investing.
As the first private market real estate investing platform, Fundrise has risen to become one of the most popular real estate crowdfunding sites.
Maybe you’ve never heard of real estate crowdfunding sites before, and need more information about how crowdfunding real estate works.
To that end, many consumers are asking, “What is Fundrise, and how does it work?” How can you tell if Fundrise is the best real estate crowdfunding platform for you?
In our Fundrise review, we’ll look at the basics of how commercial real estate investing works, addressing the following consumer questions:
- What is a real estate investment trust?
- What is Fundrise? How does Fundrise work?
- What type of Fundrise returns & fees can investors expect?
- Is Fundrise a legit site for real estate crowdfunding?
If you’re interested in commercial real estate investing, but aren’t sure where to start, read on. Our Fundrise review may reveal that this is the best real estate crowdfunding platform for you.
Fundrise Review | Why Choose Commercial Real Estate Investing?
Private and commercial real estate investing has always been around. Having these investments in your portfolio is one of the best ways to ensure that your portfolio is geared for long-term growth.
Compared to stocks and bonds, real estate investments yield as much as 10 percent higher in dividends, making Fundrise returns on investments incredibly attractive.
In fact, with historically high returns and consistent growth, virtually every successful institutional investor maintains an average of 25 percent of their portfolio in private real estate investments.
This is because private commercial real estate investing has two key advantages. First, it provides consistent cash flow from renters. Second, it holds intrinsic value—the demand for real estate grows along with the population, but will always be limited by geography.
While there’s no doubt that commercial real estate investing is a lucrative market to get into, it hasn’t always been accessible.
Before real estate crowdfunding, it took a significant amount of capital to invest in real estate, meaning that many smaller, individual investors were left out. Fundrise believes that everyone should have a shot at commercial real estate investing.
To break down the exclusivity of private and commercial real estate investing, Fundrise combines new technology and an updated take on portfolio theory (Modern Portfolio Theory 2.0) to level the playing field and help investors access other options.
Fundrise Review | What is a Real Estate Investment Trust?
A real estate investment trust (REIT) is a great way to own real estate without the hassle of purchasing it directly.
Commercial real estate investing through REITs provides similar benefits to investing in an ETF. It’s a group of real estate investments that can provide high dividends when the market is successful.
With the combined funds of multiple individual investors, a real estate investment trust can combine a range of diversified commercial real estate investing securities, including:
- Retail—Shopping malls, freestanding shopping centers
- Residential—Apartment buildings
- Health—Small medical centers, hospitals, retirement homes
- Office—Rented office buildings
On their own, individual investors would have a difficult time raising the funds—and spending the time—needed for these types of commercial real estate investing.
Ultimately, the convenience, affordability, and diversification of a real estate investment trust makes commercial real estate investing much more accessible for individual investors.
Fundrise Review | What is Fundrise?
Fundrise is a platform that allows investors to access private commercial real estate to create a diversified and efficient portfolio.
Founded by Ben Miller, Kenny Shin, Brandon Jenkins, and Daniel Miller (no longer with the company), crowdfunding real estate has sparked a timeline of revolutionary accomplishments, including:
- 2011—Fundrise becomes the very first real estate crowdfunding platform
- 2012—First-ever real estate crowdfunding deal
- 2015—Creation of the first eREIT
- 2015—Fundrise investors participated in funding the iconic, $2 billion creation of the 3 World Trade skyscraper
- Named on the Forbes Fintech 50 for 2015-2016
- 2017—First-ever Tech iPO
Our Fundrise review found that this best real estate crowdfunding platform is backed by a wide range of industry leaders, raising over $55 million in personal funds from investors.
Fundrise Review | How Does Fundrise Work?
So—what is the process of crowdfunding real estate like? How does Fundrise work?
Fundrise is consistently looking for private commercial real estate investing opportunities, like investing in high-quality, income-producing commercial assets or acquisition loans.
Becoming an investor is a way to participate, fund, and personally benefit from the process. Investors receive monetary benefits from interest payments, rental income, and any additional profits from selling an asset.
To further answer the question, “How does Fundrise work?,” our Fundrise review will examine three primary features of this top real estate crowdfunding site: eREITs, eFunds, and Investing Goals.
Fundrise uses their own version of real estate investment trusts for commercial real estate property, called eREITs.
Because investors purchase directly from Fundrise, there are no brokers or selling commissions, making eREITs much more affordable for individual investors.
An eREIT also comes with the following benefits:
- Aims for consistent quarterly income
- Potential for additional returns when the investment ends
- Maximizes diversification by including multiple states across the country
With no selling commissions and a goal to provide consistent returns, an eREIT offers one of the best real estate crowdfunding strategies for new and seasoned investors.
Income can be earned through interest payments, property income, and appreciation in value over time.
For additional information about how eREITs compare to a traditional REIT, click here for a comparison article by Fundrise.
Their eFunds lets investors access a professionally managed portfolio of housing for sale in cities across the US.
These real estate crowdfunding investments focus on single-family homes, and come with the following benefits:
- Highly diversified to invest in multiple assets
- Long-term growth through appreciation
- Investors save up to 40 percent by investing directly with Fundrise
According to Fundrise, eFunds offer some of the best real estate crowdfunding opportunities by capitalizing on Millennial trends. Home ownership is important to Millennials, but they prefer to live in the city, creating high demand for affordable for-sale properties.
As a result, eFunds look to buy, develop, and sell to capitalize on the Millennial shift from renting to homebuying, “aiming to meet demand for attached homes and condos in high-growth neighborhoods in these core metro areas.”
Primary Investing Goals
Our Fundrise review found that this best real estate crowdfunding platform employs a goal-based investment approach to real estate crowdfunding.
Users of this best real estate crowdfunding site choose from three different investment goals:
- Supplemental Income—Ideal for those nearing retirement or for investors that simply want additional cash flow
- Balanced Investing—Focuses on wealth diversification, and features high stability with moderate growth potential
- Long-Term Growth—Provides highest overall returns on investments
Fundrise Review | Fundrise Fees & Minimum Investment Requirements
Just as with any investment, crowdfunding real estate is not without cost. Fundrise fees depend largely upon the type of investment product that you are investing in.
The benefit of choosing Fundrise is that, no matter what real estate crowdfunding product you choose, there are no commissions or broker fees, making this one of the best real estate crowdfunding sites for individual investors.
See below for a detailed review of Fundrise fees and minimum requirements.
Fundrise Fees for eRITs, eFunds, & Starter Portfolio
Fundrise fees for eRITs and eFunds are 0.85 percent annually for account management, with both real estate crowdfunding products requiring a minimum investment of $1,000.
For newer investors, however, our Fundrise review found that the Starter Portfolio is particularly beneficial. Fundrise returns for this portfolio are significantly higher, as they average as much as 7 percent more than public bonds or public real estate.
- Minimum investment of $500
- Fundrise fees waived through December 31, 2017
- Discounted Fundrise fees of 0.15 percent afterwards
- Diversification across over 20 real estate assets
Uniquely, the Starter Portfolio also comes with a 90-day satisfaction period. During the first 90 days, if an investor is not satisfied with real estate crowdfunding, Fundrise will buy back their original investment amount.
Fundrise Review | Is Fundrise Legit?
With the rise of crowdfunding platforms, some investors may be wondering if real estate crowdfunding is a legitimate way to diversify their portfolio.
Is Fundrise legit? Can you trust that commercial real estate investing with Fundrise will keep your money and your personal information safe?
As previously mentioned, Fundrise has earned over $55 million in backing from investors, which certainly speaks to its legitimacy. Crowdfunding real estate is something high-net-worth investors believe in and trust, paving the way for new investors to safely join Fundrise.
What about safety and security? Is Fundrise a legitimate, safe site for you to enter your personal information?
Our Fundrise review found that investor information is protected with bank-level security, which includes:
- Encryption with an AES bit symmetric key
- Connection encrypted over HTTPS with Transport Layer Security (TLS)
Additionally, the real estate crowdfunding model offered by Fundrise has received wide acclaim, with positive Fundrise reviews appearing in financial publications such as:
- Fast Company
- Yahoo! Finance
- The Wall Street Journal
Our Fundrise review also found that the company has a rigorous, institutional underwriting process that uses predictive analysis and proprietary due diligence technology to evaluate investments.
The team at Fundrise has 75 years of collective experience from nearly 20 national investment companies, which certainly speaks to the legitimacy of this best real estate crowdfunding platform.
Conclusion: Is Fundrise the Best Real Estate Crowdfunding Platform for You?
There’s no doubt that Fundrise has a bright future. With a keen eye for real estate trends and a strong investment presence, real estate crowdfunding is likely here to stay.
With a growing number of positive Fundrise reviews, innovative investment products, and a focus on making private commercial real estate funding accessible to all investors, it’s hard to imagine that the success of Fundrise will slow down anytime soon.
Should you sign up with Fundrise for private, commercial real estate investing? As with any investment, choosing to participate in real estate crowdfunding will depend solely upon your unique financial goals.
If you’re looking to diversify your portfolio with affordable, accessible, and innovative commercial real estate investing, our Fundrise review considers this best real estate crowdfunding platform as an excellent place to start.
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