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Fundrise is a platform for real estate crowdfunding. It actually allows ordinary investors a chance to access returns that they couldn’t get through a traditional Real Estate Investment Trusts or when they can’t get some on their own. The platform's focus are those real estate deals that are normally out of reach by most individuals and overlooked by institutional investors.
But how is this investment platform different from other channels? That’s what you’re going to learn in this post.
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Non-Accredited Investors Can Join
Fundrise, unlike most other investment channels, is no longer reserved for individuals with high net worth. It makes investing available for anyone. According to this Fundrise review, the platform has made private real estate investment trusts accessible for the average and even non-accredited investors.
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Focuses Entirely On Senior Positions For Debt And Ownership
Fundrise entirely focuses on senior debt and ownership positions and it dramatically reduces the risk of the investments. It becomes possible due to Fundrise actually crowdfunds capital before acquiring a property, it allows them to transact quickly. Since they can provide a large number of funds, they can invest even in a short time.
Fundrise gets paid in advance than other owners/lenders when an investment or a project fails due to focusing on a senior position. It’s one of the positive things that investors can enjoy with crowdfunding. It’s so powerful that you actually become the bank.
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Lowest Fees
Investors need to be aware of two specific fees when investing with Fundrise. The platform prides itself on having one of the lowest fees you’ll find in the world of investment management.
The first fee is the one for Annual Management. There are two components under the Annual Management fee, and all investor accounts get charged for this each year. One component is the asset management which is levied at 0.85% of your investment. It covers the actual real estate’s management. Next, you have portfolio management, which is also an annual cost of 0.15%. Every year, these components cost 1% of the investment.
Second, is the Origination Fee. It accounts for the work that Fundrise puts in the origination, researching, as well as acquiring real estate assets. Depending on your investment, the Origination Fee can cost between 0% and 2%.
With Fundrise, you get real estate experts managing your investments for a very low fee. As you can see, the platform’s fees actually are significantly lower when compared to what you might pay if you opt to hire an investment advisor.
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Lowest Minimum Investment
When investing with Fundrise, a starter portfolio is what you’ll almost always start with, but you can still opt to set a different type of investment portfolio based on your needs.
The good thing about investing in this platform is that you can start even with as little investment as $500 and you’ll receive a confirmation for the fund transfer after you’ve made the deposit. The basic option which is the starter portfolio already comprises five to ten real estate projects.
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Allows Investors To Focus On Financial Goals
Another thing that sets Fundrise apart from other investment channels is that this new platform allows investors to focus not on the type of return they want but instead their financial goals. They’re categorized as long-term growth, balanced investing, and supplemented income.
Asset appreciation is where you make the majority of the money when you choose long-term growth as your financial goal. This is obviously a growth-oriented approach. Your investment goes to undervalued real estate assets, then Fundrise will improve and sell it. The real estate’s cash flow or dividend payments also give investors a tiny bit of income. Since you can expect appreciation not only in the value of the real estate asset itself but also in rents because of the ongoing housing shortage, you can expect to reap more rewards later on. Long-term real estate investments also help in hedging inflation and bring tax benefits.
What happens with balanced investing is that Fundrise purchases properties, fixes them up, makes repairs, and then sells them down the line. Balanced investing is more like a blend of growth and income, as well as a cash flow generating property.
Fundrise is looking at emerging areas where it could buy an undervalued property and look to earn cash from asset appreciation. The yield that investors can benefit from is the gap between how much Fundrise purchased the property for, the costs of renovation, and what they’re selling that specific real estate for later.
You’re investing in cash flow with a supplemental income goal or plan. It’s an income-oriented strategy. Investments under this plan make returns primarily through dividends instead of the underlying asset’s appreciation. It’s like investing in stocks that don't have plenty of underlying asset growth but pay a consistent and high dividend.
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Easy Investment Management Via Mobile Devices
Another unique thing about Fundrise is that it targets the younger generation by allowing access to its platform via mobile devices. Their app brings almost all of the key features that were previously only available to desktop users to the fingertips of those who tend to use mobile devices more.
It’s definitely something that the younger generation would love since they’ve been used to doing almost everything online using their smartphones. Fundrise has an app that makes it easier for younger investors to actually invest within minutes.
The Bottom Line
It’s easy to keep track of investments made via Fundrise because you can quickly access it using your mobile devices. It is also easy to sign up, it’s low risk, has lower fees and lower investment minimums when compared to other investment channels and the fact that Fundrise allows you to completely focus on your financial goals. All of these advantages makes this platform a unique way to diversify your portfolio.
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