Is Fundrise a Good Investment Option in 2020?

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Fundrise makes property investing accessible to small and mid-range investors. In a ground-breaking move, Fundrise uses a pool of investor money to purchase properties below market value. Where lucrative, they upgrade the property and, eventually, flip it. 

Investors receive Fundrise returns from rentals received and capital growth. Is the company as special as it seems? In this Fundrise review, we’ll find out.

fundrise review company logo

Editorial Rating

Pros

  • Low-cost, high quality investing
  • Low minimum investment
  • May choose passive asset allocation or active asset allocation
  • Decisions made by a financial advisor team, not a robo-advisory service
  • Invest just $1,000 to manage your portfolio
  • Property is a tested way for wealth generation
  • Easy access to eReit investments
  • Takes the hassle out of property investment

Cons

  • Illiquid
  • No guarantees
  • Capital at risk

Preliminary info required

Experience as an investor

Where you go for investment advice

Why you want to invest with the company

How long you plan to keep your investment with the company

How much you hope to invest annually

Age

What Is Fundrise Best For?

Fundrise is an investment opportunity for those with a long-term outlook. Your portfolio with the company is illiquid, so you must be prepared to leave the money there for a minimum of five to 10 years. 

Investors who’d like to diversify outside of their bond, exchange-traded funds, and equity portfolio will appreciate this investment. 

Those who invest $1,000 have some selection of the portfolio where their money goes. This choice at such a low entry-level makes Fundrise unique. 

If the idea of house flipping or being a landlord appeals to you, but doing the work doesn’t, Fundrise’s professional investment management is a viable alternative.  You’ll receive similar benefits, with little of the effort.

Fundrise Service Overview

The company makes it simple enough to get started. 

Account Minimum

The account minimum for the Starter account is just $500. At this level, you have no say in how your money is invested. If you’d like to choose a specific portfolio, you’ll have to deposit at least $1,000. Investors with $100,000 or more have access to the full range of investment options. 

Setup & Ease of Use

You must be: 

  • A US Citizen or permanent resident
  • Residing in America
  • Older than 18

Getting Started Is Simple

Hit the “Get Started “ button at the top right-hand corner of the screen and then submit your email address. You’ll go through to a questionnaire. You’ll tell them your: 

  • Age
  • Experience as an investor
  • Where you go for investment advice
  • Why you want to invest with the company
  • How long you plan to keep your investment with the company
  • How much you hope to invest annually

The system then suggests a plan based on your responses. You’ll get a basic idea of the return you might make. You may then accept the proposal or change it, and continue to create an account. 

You’ll complete all the details and link your bank account, and you’re done.  

Portfolio Management

The company selects its strategies with an eye on the long term. They’re not interested in short-term gains. Portfolio management options are, therefore, reasonably limited. You buy a share in the eFund or eReit. 

These aren’t shares in the usual sense of the word. If you wish to redeem your capital, you sell your shares back to the company. If you do so within the first five years, you’ll pay the penalty. The company reserves the right to suspend redemptions during tough economic times. 

You may add to your portfolio, but switching funds from one collection to another requires company approval. 

Features

Fundrise provides four portfolio levels. 

Starter

With a minimum investment of $500, this is the most affordable Fundrise investing option. Your choices are limited here. You have no say in which Fundrise opportunity fund your money goes into. 

For someone itching to invest in real estate, it’s a perfect way to test the waters. 

It’s also ideal for those who don’t know much about REITs and don’t want to pay for a traditional financial planner. Dividends are automatically reinvested, and there are no fees waived for referring friends. 

Core

The Core Portfolio has a minimum investment of $1,000. It encourages investors to take a more active role in their investment. Investors may select from a range of different eREITs and change their investment according to their goals. 

With a Core plan, you have: 

  • Auto-invest
  • Dividend reinvestment
  • IRA account support
  • A referral program

 Advanced

With these accounts, investors must invest at least $10,000. You needn’t be an accredited investor, but you should know how to do your due diligence. There is a wide range of eReits to choose from. At this level, you’ve got access to the Plus Plan as well. 

The Plus Plan unlocks more investments and allows you to narrow in on niches. 

With an Advanced Plan, you have: 

  • Everything you get in the Core plan
  • An additional three months of fees waived for the referral program
  • Access to most funds and the ability to direct your investment

Premium

Investors with $100,000 may opt for the Premium Portfolio. Premium members get access to specialized offerings not offered to the rest of the investors. They receive offers that have longer timelines and low liquidity, with outstanding performance. 

With a Premium Plan, you have:  

  • Everything you get in the Advanced Plan
  • An additional six months of fees waived for referring investors
  • Priority access to the company’s team of investors

Fundrise Cons 

There’s unquestionably the potential for good returns. Before you sign on the dotted line, let’s look at the downsides. 

Illiquid

The company is transparent. They’ll only consider withdrawals once a quarter. The investment team may opt to decline a withdrawal if the market conditions aren’t favorable. 

Before investing, ask yourself if you might need the money in five to 10 years. If the answer is yes, consider alternatives. 

No Guarantees

The company’s past performance has been good. Last year they returned an average of 8.1% after costs were taken into account. It’s essential to note that there are no guarantees of performance. If the property market plummets, or we go into recession, your returns could nosedive. 

Capital at Risk

You’re investing in shares, rather than a tangible asset. If the Fundrise goes under, you’ll have to place your claim against the estate just as other creditors do. With the underlying emphasis being investing in tangible assets, there should always be some return.

It just depends on how speculative the asset managers are. A highly risky property investment might not work out as planned. 

Customer Service

Fundrise reviews agree that there should be more ways to contact the company. You may either reach out via the form on the website or email support@Fundrise.com. It takes at least a day or two for an employee to answer you. 

When you do get through, the employees are helpful and willing to offer necessary advice. Premium members have better access and more specific information. 

Knowledge Base

Fundrise provides all users access to the knowledge base on their website. There’s an extensive amount of information there, but it centers on real estate investing. It doesn’t cover many elements of modern portfolio theory

Commissions & Fees

Investors typically pay an annual advisory fee of 0.15%. That works out to $1.50 per $1,000 for a full year. This is reasonable, but not all there is to it. 

There’s an extra annual asset management fee of 0.85% per year with each fund. You’ll pay $8.50 per $1,000 investment in any of the funds. That’s over and above the $1.50 per $1,000 for your overall investment. 

The effect is that you’re paying 1% of your overall investment amount. 

Mobile Apps

You’ll find the Fundrise app on both IoS and Android. Is it one of the best apps to make money? Probably not – the app offers nothing that the website doesn’t. It works, but many users find that the features it’s sold on don’t add value. 

We didn’t see any significant advantage in having an app for this type of investment anyway. 

Fundrise User Reviews

Fundrise has a B+ rating on the BBB and is accredited. Fundrise reviews on the BBB are what you’d expect – a mixture of one-star and five-star reviews. A Fundrise review on Reddit and the Fundrise Google reviews we found paint a similarly mixed picture.

Why the disconnect? 

As one Fundrise review from 2020 succinctly stated, “people are being ignorant and not reading the disclosures”.

The Positives

Most consumers praise the company’s decision to halt redemptions during times of economic hardship. By doing so, they say, the company shows that it has the investor’s best interests at heart. Most investors agree that the company couldn’t be more explicit about the conditions of investing. 

The Negatives

The most common point of complaint is that you don’t have access to the money when you need it. In fairness, the company makes this clear from the start. You’re even asked during the pre-screening if you can leave the money in for the long-term. 

Is Fundrise the Best for You?

If you’re a patient investor and only need access to your capital in the long-term, Fundrise offers good returns. It’s similar to owning a rental property without the trouble of managing it. You shouldn’t consider your Fundrise investment as your emergency fund. 

Getting money out of the fun early is tricky. You’ll have to apply, and the trustees review withdrawal applications quarterly. 

Fundrise Alternatives

Are there Fundrise alternatives on the market? If you compare apples for apples, not really. The company is unique in that its focus is solely on real estate investing. If its business model is unappealing, here are some others that might suit you better. 

 Fundrise vs Betterment

Betterment is another of the apps to make money. The company doesn’t require a minimum balance, but it’s automated investment management service fees are high. The upside is that you gain exposure to a wide range of financial instruments like an online investment advisor and portfolio recommendation

Fundrise vs Ally Invest

Ally Invest provides a similar service to Betterment with cheaper options. There’s also no minimum investment here unless you want to use the low-cost robo-advising. To use the service, you must invest at least $100. 

Ally Invest provides stocks, bonds, ETFs, and various other options at low costs. Most of these options are liquid. None offer much protection against the movements of the stock markets.

Fundrise vs Worthy Bonds

Starting with a minimum investment of $10, Worthy Bonds might be the new investor’s place to start. The returns are just 5%, but it’s a good investment option given that the cost is zero. Worthy Bonds is liquid and an excellent place to save money for any goal.   

Are bonds a good investment? 

They’re good as part of an overall strategy when your risk tolerance is low. We recommend diversifying to get the most out of your money. Equity typically performs better, but bond investing is more secure.

Is Fundrise Any Good?

Fundrise provides a simple and affordable way for small to medium investors to engage in property investing. The company has demonstrated a conservative approach to investment, leading to reasonable, reliable returns. 

The illiquidity of the investment makes it unsuitable for investors needing fast access to their money. We’ll end off this Fundrise review by saying that you must understand the terms before you invest. 

Pros

  1. Fundrise reviews are primarily positive
  2. Low-cost, high quality investing
  3. Low minimum investment
  4. May choose passive asset allocation or active asset allocation
  5. Decisions made by a financial advisor team, not a robo-advisory service
  6. Invest just $1,000 to manage your portfolio
  7. Property is a tested way for wealth generation
  8. Easy access to eReit investments
  9. Good option if you have low-risk preferences
  10. With property assets under management, there’s less risk of losing all value 

Cons

  1. Illiquid
  2. No guarantees and capital at risk
  3. Limited choices on the lowest packages
  4. No face to face financial advice

Best For

Investors with money that they can set aside for five to 10 years and forget. The company does allow you to draw an income, and every Fundrise review we’ve read says they’re good about that. However, your capital is locked in for the duration unless the firm permits you to withdraw it. 

fundrise review company logo

Editorial Rating

FAQ

What is Fundrise?

1. Fundrise is a property investment firm with a difference. It pools investor’s funds to purchase, maintain, and improve its property portfolio, while investors buy a share in a portfolio, rather than a property.

Is Fundrise legit?

1. Don’t be put off by a bad Fundrise review – most are from those who misunderstood the investment. The company started out in 2010, has been BBB-accredited since 2016, and currently has a BBB rating o.f B+.

Is Fundrise a good investment?

1. Yes, but only for patient investors. If you want easy access to your capital, this isn’t one of the best investments

Can you make money with Fundrise?

1. Yes, depending on the skill of the investment management team and the property market. You, however, could also lose your money if the property market goes down or something goes wrong with the property.

Does Fundrise really work?

1. Yes, if you know what you’re doing. Keep in mind though that property investments are a long-term game — if you bought an investment property, you’d typically wait around 10 years to offset the transfer costs and see a decent profit. Fundrise reviews properties on the market to find undervalued options with potential.

Is Fundrise a pyramid scheme?

1. No, it’s a pool of investors that buy property. With a pyramid scheme, you have to get investors to join under you to receive your money back. With Fundrise, this is unnecessary. As long as there’s enough money in the pool, the company may make new investments. Another difference is the liquidity of your investment. With pyramid schemes, you get a cut when someone joins. Check any Fundrise review, and you’ll see that the company doesn’t work that way. Some have referred to Fundrise as a scam because the company offers incentives if you bring two new members. These incentives are, however, a reduction in fees, not a cash incentive.