Fundrise Review 2024: Real estate crowdfunding for as little as $10
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4.5
4.5
Commissions and fees 4.3
Customer Service4.5
Ease of use4.8
Diversification4
Amount of deals4
Due diligence4.5
Real estate crowdfunding with Fundrise
Fundrise is one of the easiest ways to start investing in real estate, even for non-accredited investors. However, based on the last few years, annualized returns are unimpressive.
Visit FundriseFundrise pros and cons
Pros
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Diversified real estate access: Through a REIT, investors can buy into a diverse portfolio of residential and commercial real estate projects
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Not just for accredited investors: Fundrise is open to any investor in the United States, regardless of income or net worth
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Low minimum: The minimum investment to start with Fundrise is $10
Cons
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Investment liquidity: Fundrise eREITs are not publicly traded. Investments are typically long-term and added fees apply for sales in less than five years
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Tax consequences: Distributions are taxed as ordinary income, as opposed to the 15% tax rate on qualified dividends
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Management fee: Fundrise charges a 0.85% asset management fee per year
What is Fundrise?
Fundrise is a pioneer of online real estate crowdfunding. Founded in 2010 and launching its first investment offering in 2012, the platform allows you to invest in real estate starting with as little as $10, and you don’t have to be an accredited investor to participate. If Fundrise funds perform well, you can earn passive income from real estate without the risks and time commitment of buying properties on your own.
Fundrise isn't the only real estate crowdfunding option on the market, so it's critical to understand its fee structure and redemptions. It’s also good to look at past performance and how real estate may fit into your portfolio when deciding if it’s right for your investment goals.
A focus on crowdfunding real estate
Fundrise's primary focus is real estate investing. The company offers diverse real estate funds called eREITs, a type of real estate investment trust where investors pool their assets in a fund managed by Fundrise real estate professionals. Fundrise manages more than $1 billion in investor funds.
Funds include the Flagship Real Estate Fund, regionally focused funds and funds focused on growth or passive income. When you invest in a fund, you can view a list of the fund’s holdings and each property’s details. Holdings include single-family rental properties, multifamily real estate and industrial buildings nationwide.
Investing in private credit funds
Fundrise private credit funds make loans to other businesses to maximize your income from the recently increased interest rates. Fundrise has invested in more than $500 million in debt projects.
Unlike real estate, private credit investments can grow through appreciation and cash flow. Fundrise lists an average interest rate of 10.8% for private credit investments.
Fundrise features
Fundrise has grown a lot over the years. These days, investors have far more control over the types of investing accounts they use and their overall portfolio strategy.
Some of Fundrise's main features include:
- eREITs: A non-traded REIT that invests in diverse real estate projects. The Fundrise eREITs invest with various strategies and include residential and commercial projects.
- IRA: Fundrise offers traditional IRA and Roth IRAs. A Fundrise IRA works much like an IRA from a traditional brokerage, but with access to Fundrise real estate funds.
- Investment plans: When setting up an account, you can allocate funds across different investment plans, including supplemental income, long-term growth, balanced investing and venture capital.
- Standard and Pro plans: Most investors start with a standard Fundrise account. For $10 per month, you can upgrade to Fundrise Pro for priority access to new investments, direct investments and custom plans.
- Fundrise "iPO": Fundrise is a private company, but investors can buy Fundrise shares periodically to capture pre-IPO value. When the company goes public in the future, iPO investors may see significant profits if the company is successful. To join in, you need an advanced plan and at least $1,000 in your Fundrise account. iPO investments open periodically and limits apply.
Fundrise account features
Fundrise fees and pricing
Fundrise charges an annual investment advisory fee and investment fund management fees. Fees are above what you’ll pay for a low-fee index fund, but are reasonable when compared to others in the industry.
The advisory fee is charged on all balances, while the fund management fees are charged for holding specific investments. If you only invest in real estate funds, for example, your total fee would be 1% per year.
The company may charge other miscellaneous fees like development or liquidation fees that can add up to 2%. But for many long-term investors, Fundrise only charges 1% annually.
Minimum requirements to invest in Fundrise
All you need is just $10. This amount gets you Fundrise's Starter Portfolio, a diversified mix of eREITS and eFunds with underlying crowdfunding real estate investments from around the U.S. You receive returns via quarterly dividends, as well as appreciation in the value of your shares.
With an investment of $1,000, you upgrade to the Basic Portfolio, which opens up Fundrise retirement accounts, investment goal planning, and access to Fundrise iPO.
And if you invest $5,000, you upgrade to the Core Portfolio, which lets you choose different investing plans to match your goals:
- Supplemental income: A steady income stream with a focus on dividends.
- Balanced investing: A diversified portfolio made for greater wealth-building.
- Long-term growth: Designed for potentially superior returns over the long term.
If you are unsure which one is right for you, Fundrise offers a three-step questionnaire that can help determine how you should invest.
But the fact that it only takes $10 to begin investing in income-generating real estate is one of Fundrise's main strengths. And after investing $5,000, you have more control over the types of investing plans you use.
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How has Fundrise performed?
Fundrise publishes historical performance reports every year as well as quarterly reports. Fundrise performed poorly in 2022 and 2023 as interest rates increased, leading to sub-par investment returns compared to the S&P 500.
The three-year annualized return is just 2.7%.
Fundrise vs Public REITs vs. the S&P 500
| Year | Fundrise | Public U.S. REITs | S&P 500 |
|---|---|---|---|
| 2023 | - | - | - |
| 2022 | 3.49% | -5.27% | -4.60% |
| 2021 | 22.99% | 39.88% | 28.71% |
| 2020 | 7.31% | -5.86% | 18.40% |
| 2019 | 9.16% | 28.07% | 31.49% |
| 2018 | 8.81% | -4.10% | -4.38% |
| 2017 | 10.63% | 9.27% | 21.83% |
As you can see, both public US REITs and the S&P 500 have had quarters with higher returns. But they've also had worse quarters than Fundrise.
How to redeem Fundrise shares
When it comes to investing in real estate, liquidation is one crucial factor to consider. After all, real estate properties are less liquid than investing in stocks, ETFs, or even cryptocurrency in most cases.
Thankfully, Fundrise has made some positive changes to make its shares more liquid. For eREITs and the Fundrise eFund, you can request partial or full redemption of shares without paying penalties if you've held shares for five years or more. For shares under five years, you pay a 1% penalty. Redemptions are offered quarterly.
As for Fundrise's Real Estate Fund and Income Real Estate Fund, there's a quarterly liquidation window in the form of quarterly repurchase offers that carry zero penalties.
Overall, Fundrise is a long-term investment play because of the five-year requirement for avoiding penalties. And just note that shares aren't as liquid as other assets like stocks and ETFs.
Is Fundrise safe?
Very few investments can be considered truly “risk-free” — that is, with a guaranteed return. However, less liquid real estate investments sometimes offer better protection from downturns in the broader market than securities such as stocks, ETFs and mutual funds.
Fundrise's portfolios of eREITs and eFunds are about as safe as you can find in the real estate space. Non-traded REITs and eREITs are registered investments, and while they're subject to the same SEC requirements that an exchange-traded REIT must meet, they're not directly correlated with stock market fluctuations.
Two downsides to note include lower liquidity, as they're not traded on the public investment markets, and front-end fees higher than typical exchange-traded REITs.
eREIT vs. non-traded REIT vs. publicly traded REIT
| Type | EREITs | Non-Traded REITs | Exchange-Traded REITs |
|---|---|---|---|
| Publicly traded | No | No | Yes |
| Secondary market | No | Typically No | Yes |
| Front-end fees | None | 0-15% | 0-7% + broker commission |
The minimum investment is just $10 for Fundrise eREITs, and you don't have to be an accredited investor to participate. Shares of the eREITs are purchased exclusively online, and Fundrise members receive notifications when new assets are added to the eREITs.
Is Fundrise legit?
Fundrise is a legitimate real estate investment platform and is registered with the Securities and Exchange Commission as an investment adviser under the Investment Advisers Act of 1940.
It also has a low investing requirement and strong track record. However, Fundrise correctly discloses that past performance isn't a guarantee of future results or expected returns.
Fundrise vs. RealtyMogul, Fundrise vs. Arrived
Fundrise is one of the best real estate investing platforms because of its $10 minimum investment. Few platforms offer such a beginner-friendly way to invest in real estate. With its positive track record and variety of investing plans and funds, Fundrise has a lot going for it.
That said, some Fundrise alternatives like RealtyMogul and Arrived may be superior to Fundrise depending on your investing goals and starting investment amount.
| Highlights | Fundrise | RealtyMogul | Arrived |
|---|---|---|---|
| Rating | 4.5/5 | 4.5/5 | 4.3/5 |
| Minimum investment | $10 | $5,000 | $100 |
| Account fees | 1% annual fee per year | 1-1.25%/year asset management fee | 1% annual management fee |
| Accredited investors only | đť’™ | đť’™ | đť’™ |
| Private REIT | âś“ | âś“ | âś“ |
| Sign up | Sign up | Sign up | Sign up |
| Moneywise reviews | Fundrise review | RealtyMogul review | Arrived review |
RealtyMogul has similar fees to Fundrise. But one main difference is that many equity investments have target holding periods of three to five years, which is shorter than Fundrise. The $5,000 investment minimum is much higher, but RealtyMogul focuses on investing in real estate that's generating cash flow and offers REITs and a 1031 exchange.
Overall, Fundrise is a well-rounded and beginner-friendly option for real estate investing. And the fact you can choose investing goals with its Basic Plan is a plus. But don't be afraid to look at some alternatives if you want more investment selection or dividend income.
Is Fundrise worth it?
Real estate as an asset class is a long-term investment. This includes REITs, whether they're publicly traded, non-traded or eREITs. The opportunities for capital appreciation, portfolio diversification, and regular distributions are alluring; however, distributions are never guaranteed.
While not the same as investing in real estate directly, REITs are much more passive and allow you to invest in properties outside your geographic location. Fundrise can be a way to diversify into real estate without the massive amounts of capital or management headaches involved when doing it yourself.
While I am a real estate investor, REITs have never appealed to me for several reasons — primarily because of the front-end load and ongoing fees. Fundrise takes the sting out of those investing fees with its 0.85% asset management fee.
And the fact that Fundrise only takes $10 to get started makes it an excellent way for investors to dip their toes into real estate investing.
Fundrise FAQs
Disclaimer: The information contained herein neither constitutes an offer for nor a solicitation of interest in any securities offering; however, if an indication of interest is provided, it may be withdrawn or revoked, without obligation or commitment of any kind prior to being accepted following the qualification or effectiveness of the applicable offering document, and any offer, solicitation or sale of any securities will be made only by means of an offering circular, private placement memorandum, or prospectus. No money or other consideration is hereby being solicited and will not be accepted without such potential investor having been provided the applicable offering document. Joining the Fundrise Platform neither constitutes an indication of interest in any offering nor involves any obligation or commitment of any kind.
Ruth Lyon is a freelance contributor for Moneywise.
Eric Rosenberg is a finance, travel and technology writer in Ventura, California. He is a former bank manager and corporate finance and accounting professional who left his day job in 2016 to take his online side hustle full time.
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