Fundrise Review: Pros, Cons, My Experience, and More

Investing in real estate can be an extremely lucrative venture. However, in some cases, certain real estate investments are limited to accredited investors who typically need to have an income greater than $200,000 per year (or $300,000 per household) or a household net worth greater than $1 million. 

Sure, anybody can finance or buy a property, such as a house or condo, as long as they can afford it. But traditionally, only a select group of people can directly invest in a real estate fund, which is much different from being a property owner.

However, over the past few years, a wealth of new opportunities has emerged for so-called non-accredited investors. One of the most popular new platforms for real estate investing is Fundrise, which describes itself as “America’s largest direct-to-consumer private markets manager.”

As is the case with all investment opportunities, it is important to consider both the pros and the cons of utilizing Fundrise before making a final decision. In this comprehensive overview, we take a close look at what makes Fundrise unique, how it works, and answer some of the most common questions about this particular fund.

By taking the time to learn more about Fundrise, you can decide if becoming an investor is compatible with your current financial goals.

What is Fundrise?

Fundrise is a real estate investment platform (application) that caters to non-accredited investors with a long-term investment horizon. The platform allows users to select individual real estate investment funds and build diversified real estate investment portfolios.

The platform features several different types of investment opportunities, including commercial projects, IPOs, venture funds, and many others. The app is frequently compared to other real estate investment platforms, such as CrowdStreet and Yieldstreet.

These funds have become increasingly popular since 2012, when the passage of the JOBS Act unleashed new types of investment opportunities for non-accredited investors, such as Crowdfunding.

The platform positions itself as a tech-driven member of the “alternative asset” market, which generally just means assets other than bonds, stocks, and other equities. Fundrise differs from real estate investment trusts (REITs), which can be easily traded on the open market. While Fundrise investors can get started with as little as $10, they will usually need to plan on holding their positions for at least five years.

How Does Fundrise Work?

Generally speaking, the Fundrise platform is easy to use and has a very intuitive user interface. Most new users can sign up in a matter of minutes, which involves submitting personal information, such as bank account information (to transfer funds) and your social security number.

Once an account has been created, Fundrise users will be able to choose the amount of money they would like to transfer—currently, the minimum amount of investment required to open an account is $10.

Once an account has been established, Fundrise users will be able to choose from one of three distinct portfolio options (each of which is both managed and directed by Fundrise itself). These include the supplemental income portfolio (which focuses mostly on revenue-generating properties), the highly-diversified balanced investing portfolio, and the long-term growth portfolio (which focuses mostly on equity growth).

The portfolio that makes the most sense for you will depend on your investment horizon, risk tolerance, and general financial goals. In general, the growth-seeking funds will have higher potential returns (and higher volatility), while the income-generating funds will be much more stable.

In addition to choosing from the three portfolios mentioned above—each of which also has corresponding individual retirement accounts (IRAs)—users will also have the option to directly select different investment opportunities.

By using the “Fundrise Pro” feature, investors can hand-pick their own investments while also gaining access to extensive industry research. The cost of using Fundrise Pro is $10 per month or $99 per year. New users are also eligible for a 30-day free trial.

Visit Fundrise.com to learn more.

Fundrise Real Estate Assets

As of July 2023, Fundrise has approximately $7 billion in real estate assets, which is distributed across 293 different properties.

Each of these properties is classified as either a fixed-income property or a value add property, typically ranging in value from a few million dollars to tens of millions of dollars.

The broader portfolio contains a mix of property types, including undeveloped land, multi-unit residential properties, mixed-use properties, single-family communities, and more. In general, these properties tend to be located in the Southern United States, though the platform features opportunities all across the country.

Fundrise Fee Structure

One of Fundrise’s biggest points of pride is that—due to its drive to be a tech-driven platform—the fees it charges are relatively limited. The total fee is 1%, which consists of a 0.85% fee for the asset management fee and 0.15% for the advisory fee. This figure is well below the industry average; however, some users have complained that there are other fees that may apply, such as liquidation fees.

The Fundrise platform features something called a “redemption program,” which essentially allows its users to sell their open positions (or “shares”) directly back to the company. If the user’s position is less than five years old, they will need to pay an additional 1% when utilizing the redemption program (naturally, this affects a position’s true return).

It’s also important to note that Fundrise reserves the right to temporarily suspend the redemption program during times of extreme uncertainty, such as the very beginning of the COVID-19 pandemic.

Related: 9 Best Stock Investment Newsletters (Ranked and Rated)

Who is Allowed to Become a Fundrise Investor?

As suggested, one of the primary appeals of Fundrise is—contrary to many real estate investment platforms—it is open to anyone. In order to become a Fundrise user, all you will need to do is have an active bank account, social security, and at least $10 to cover the investment minimum for the “Starter Portfolio.” Additionally, since this is an investment, rather than a loan, your credit score will not be considered when opening an account.

Beyond the starter portfolio, there are several other “plans” that investors will have the option to choose from. Each of these plans has a notably higher minimum investment; for example, the basic plan has a $1,000 minimum, the core plan has a $5,000 minimum, the advanced plan has a $10,000 minimum, and the premium plan (the highest tier) has a $100,000 minimum. Many users start small and upgrade to larger plans (which have more features and benefits) over time.

Related: Investing in Private or Public REITs - What's the Difference?

Who Should Consider Investing in Fundrise?

In general, Fundrise is ideal for individuals who want to become real estate investors without the expense, volatility, and delays that tend to come with alternative options. It is a platform that caters to individuals who are fairly comfortable using technology and also don’t have a strong need to have their investments managed by one specific person.

The low minimum investment for the starter portfolio ($10) makes the platform especially appealing to people who are not qualified investors or are simply trying to learn more about real estate investing. However, that doesn’t mean that Fundrise is used exclusively by new investors—there are plenty of qualified investors who utilize the platform, as well.

My Experience with Fundrise

I decided to try Fundrise and take advantage of the $25 voucher for opening a new account. Why not?  I created account and invested $100 of my own money for now just to test the waters.

With the $25 voucher, my account is currently up 25%... 🙂

In the few weeks since starting on Fundrise, I can see both the mobile app and website are easy to use. I can track the performance of my investments and if I choose to, it's very easy to automate my investing.

You can easily enter the amount of money you want to invest, and sit it up as as a weekly, biweekly, or monthly investment. I like the idea of automating my monthly  investing, and already do this with stocks and with my daughter's 529 plan. 

I may automate $50-$100 monthly with Fundrise. The account is very new, but I plan to come back in a year and update this review with more data as I add more to the account and see how these funds perform.

Visit Fundrise.com with this link and claim your $25 voucher. 

Fundrise Historic Returns

When compared to publicly traded real estate investment trusts (REITs), Fundrise has consistently been less volatile. As a result, Fundrise tends to yield smaller gains and smaller losses. For example, in 2022, Fundrise yielded a return of 1.50%, while publicly-traded REITs experienced a steep 25.10% loss. However, in 2021, public REITs outperformed Fundrise by nearly 17% (22.99% for Fundrise and 39.88% for REITs).

Benefits of Using Fundrise

One of the first things you will notice about Fundrise is that it is easy to use and has a well-designed user interface. Creating an account only takes a few minutes, meaning that you can begin comparing different opportunities and begin making investments almost right away.

When combined with the low minimum investment, the $25 voucher and relatively reasonable fee structure, the initial risk that comes with using Fundrise is relatively limited. Additionally, while you will need to do your own research before making any investments, the platform has a reputation for being remarkably transparent.

The investment strategies, asset selection process, and other essential details are all clearly outlined directly on the platform. Users who are selecting assets individually will be able to see the total value of the asset, where it is located, whether it is a value add property or income-generating property, and more. This makes it easy for aspiring investors to find opportunities that match their personal investment profile.

In general, the Fundrise investment funds have had less volatility than comparable REITs and are usually less volatile than the stock market (as measured by the S&P 500), as well. As a result, aspiring investors can quickly diversify their holdings without assuming excessive amounts of risk.

These are just a few of the reasons Fundrise has become one of the most popular options for aspiring real estate investors. Of course, before deciding that this is the way to go, it is also important to consider the potential drawbacks.

Click here to visit Fundrise.com and get started today.

Fundrise Review: Drawbacks of Using Fundrise

The most frequently cited drawback of using Fundrise is that the platform itself is not very liquid. It is important to remember that, while similar to REITs in some ways, this platform is not a publicly traded REIT, meaning that if you need to convert your investment back into cash you will not be able to just sell it on the open market.

Users can usually exit their positions early but if they have held onto the position for less than five years, they will need to pay a 1% fee. At first, that might not seem like that much but if the position is, say, $50,000, then that means the fee will be around $500.

Furthermore, if there is sudden financial turmoil, Fundrise can temporarily suspend your ability to cash out your funds. This has only happened once before—during the very beginning of the pandemic—but it is certainly worth keeping in mind.

Another common criticism is that while the platform itself is very transparent, some users feel that knowing the exact terms and conditions being applied to them is not always very clear.

Signing up for a Fundrise account only takes a few minutes, making it tempting to simply hit “Agree” at the bottom of the Terms and Conditions page without ever taking the time to read it. 

This is especially likely to happen because the platform consistently markets itself to new investors (often discussing the “$10 minimum investment") who assume that the T&C page they are signing is a boilerplate formality.

Some new users further complain that their investments did worse than they originally had hoped, though this is not so much a problem with the platform itself as it is an active component of speculative investing.

The customer support provided by Fundrise is generally limited, with some services only being available to users between 9 AM and 5 PM (EST), Monday through Friday. This limited amount of support can be stressful in certain situations, such as when users are having difficulties accessing their accounts or need to make a transfer.

Fundrise Review: Is Fundrise Right for Me?

There are plenty of attractive features of the real estate market, such as its many opportunities to accumulate equity and generate a reliable stream of income. Overall, Fundrise is one of the easiest ways to diversify into real estate investing, especially due to its low minimum investment, limited fees, and intuitive user interface. 

However, investors should be mindful of what’s at stake when making a long-term investment—failing to read the fine print can indeed be consequential. But with a little bit of research and attention to the platform’s finer details, Fundris can indeed be a very useful platform.