Real estate investments can be profitable if done right. From flipping houses to simply renting them out, there are several ways to make a killing in this industry.
However, the process from conception to implementation can be tedious. With so many factors, such as time, resources, and skills required, most might be wary of this investment path.
This is where Fundrise comes in. Fundrise offers clients a way to earn without doing all the dirty work that comes with property ownership.
What is Fundrise?
Fundrise is a crowdfunding platform that takes away the stress of dealing with all aspects of owning a property.
For example, flipping a house involves spending a lot of money purchasing the property and hiring contractions and other workers. Furthermore, you would have to supervise the project, such as revamping the living room from start to finish.
Being a landlord also has drawbacks, such as finding tenants, handling repairs, and others.
Fundrise allows you to invest using just your money. The platform handles everything else, from groundwork to asset management. This works because you are not actually buying the property itself but notes categorizing the property as an investment.
With Fundrise, you do not need to purchase the property directly. Instead, you invest in Fundrise, and the platform invests in various real estate projects. It is a smart move to make when you want to use your money for something other than investing in Airbnb or other residential investments.
How Fundrise Works
Fundrise allows you to see a return on your investment through its assets. The company makes use of its vast experience and network to attain the best assets possible.
The idea behind Fundrise’s strategy is to invest in assets sold for less than their actual price and replacement cost. By doing so, the Fundrise team, along with local operators, can work on the asset to increase its value gradually.
The mechanism behind locating these assets is a well-thought-out procedure in which Fundrise finds real estate investments that fall between institutional and individual investments.
Heavy investments have a lot of competition and end up running down profits as time goes on. On the other hand, smaller investments require a lot of money to operate, and the odds of something going wrong are high.
This is why Fundrise focuses on mid-size assets with lesser competition and a higher potential for substantial returns.
When it comes to investments, there are no certainties. So, when there is severe economic distress, chances are you are bound to lose. However, Fundrise takes great measures to prevent this by only investing in conservative endeavors that can withstand long periods of economic problems.
One of Fundrise’s selling points is its low-fee structure. Regarding real estate investments, you have to pay high fees for consultations, hidden management, and others. However, this is not an issue with Fundrise.
You do not need to pay transaction and performance fees or sale commissions. This is because Fundrise takes out the need for a middleman.
Another reason the fees are so lowered is that the investment company created software that makes several expensive processes more affordable.
Additionally, everything needed for investments is done within the company, reducing expenses for all processes. That said, there are still some fees to consider.
As an investor, you have to pay an annual advisory fee of 0.15%. This means that you will have to pay a fee of $0.15 for every $100 you invest per year. In addition, you will also have to pay an 0.85% annual fee for asset management, meaning you’ll pay $0.85 for every $100 yearly.
So, in total, you will have to pay 1% in fees. Luckily, you do not need to worry about paying the fee by yourself because the money is automatically removed from your account.
The first thing you need to do is create an account, and you can do it in a few minutes. The only requirement for investing is to be a U.S. citizen or a permanent resident currently living in the U.S. and over 18 years old.
After creating the account, you select a portfolio strategy, and Fundrise will diversify your capital into various funds based on the strategy you opt for.
After your first investment, Fundrise takes over and keeps adding assets to your portfolio without making any additional investments. Ultimately, this process helps to strengthen your portfolio as time goes on.
When you finish the initial investment process, you can monitor your assets via the newsfeed on the Fundrise app.
While there, you can view regular updates on your assets, such as the progress of new construction, occupancy reports, and notifications of project completion.
With Fundrise, you never have to be in the dark because the company ensures to make your investing experience as transparent as possible.
Investing in Property with Fundrise
Fundrise has various accounts plan that accommodates all kinds of investors. Using as little as $10, you can invest with Fundrise. There are other higher-priced plans (with eREIT™ products) that have varying minimum investments. Here are the plans and their minimum investment:
- Starter – $10
- Basic – $1,000
- Core – $5,000
- Advanced – $10,000
- Premium – $100,000
Fundrise has some trademarked terms that help to make investing a unique experience. Here are those terms and how they work.
eREIT™ products are similar to Real Estate Investment Trusts(REITs). REITs have been around for about 50 years. These trusts own actual property and using a broker, you can buy and sell shares.
Fundrise’s electronic Real Estate Investment Trust (eREIT™) products do not need a broker, and this is because the shares aren’t traded on a public exchange. Instead, you purchase shares via Fundrise using your account.
eREIT™ products are great because they are not affected by the market’s volatility. Nevertheless, it is important to note that you might find it hard to sell your share because they are not traded publicly.
eFund™ is a diverse fund that contains various residential projects, including condos, single-family homes, etc. Fundrise made these funds as partnerships (as opposed to corporations), thereby eliminating double taxation. Investors can only purchase eFund™ using Fundrise. Also, note that eFund™ products are not traded publicly.
This type of investment is great for people who want to try out real estate without fully investing.
Fundrise Investment Strategies
Fundrise provides investors with three investment strategies to help them achieve their goals. The names of these plans are self-explanatory, and you can find a questionnaire on the platform to help you make a decision. Regardless, here are the Fundrise investment strategies and how they are.
Supplemental Income Strategy
The Supplemental Income strategy offers you the most income stream using your investments.
Balanced Investing Strategy
The Balanced Investing Strategy is for investors who want to make money in the long term. This method reduces immediate income and focuses on long-term growth.
Long-term Growth Strategy
Long-term Growth Strategy focuses on high-risk projects that offer lower immediate income. But, on the other hand, this approach allows you to grow your investments in the long term better.
Why You Should Invest with Fundrise
There are numerous property investment platforms online, but here are some reasons why you should invest with Fundrise:
Fundrise relieves you of the stress required for traditional real estate investments. You can use Fundrise to invest at home, and once you choose an investment, the platform will take care of the rest.
As mentioned earlier, Fundrise offers some of the lowest fees. It offers a 1% yearly fee which is better than other methods that would cost you about 5-6% yearly.
Flexible Maturity Dates
Fundrise offers maturity dates that you can rollover. Granted, not all investment options offer this feature, but some options allow you to take out some or all your investment after a few years.
This feature does not make your investment liquid, but you get to access your funds after a while, unlike other investment platforms.
Multiple Investment Options
Using Fundrise, you can search and select offers that suit your criteria and allow you to make the most profit. In addition, Fundrise gives you a choice to control your investments.
Opening a Fundrise account is completely free; you can also search for investments free of charge. This way, you can create your account and see how it works before you actually invest any money.
Fundrise makes real estate investment a breeze. Using this platform, you do not have to worry about all the hard work of owning a property. All you need to do is create an account, invest, and let Fundrise do the rest. The best part is that you can start investing for as long as $10.