Written By
Kat TretinaFundrise is an online platform that makes private real estate investments accessible to everyday people. With a Fundrise account, you can add commercial and residential real estate holdings to your portfolio, and with a low minimum investment.
The platform aims to offer property investments once reserved for institutional investors to the rest of us, and with competitively priced annual advisory and management fees. Fundrise may suit individuals who are interested in real estate investing and are comfortable exchanging a longer holding period for potentially higher returns.
| Minimum deposit | $500 for a Starter portfolio $1,000 for a Basic portfolio $5,000 for a Core portfolio $10,000 for an Advanced portfolio $100,000 for a Premium portfolio |
| Account types |
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| Tradable securities | Fundrise offers commercial and residential real estate investments located throughout the U.S. through proprietary eREITs and eFunds, including:
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| Fees |
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| Sign-up bonus | None currently available, though investors can earn ongoing referral bonuses |
- What Fundrise offers and who it’s for
- Fundrise fees and costs
- Fundrise investing tools and research
- Fundrise user experience
- Fundrise investor education
- Fundrise security
- Alternatives to Fundrise to consider
What Fundrise offers and who it’s for
Fundrise is not a traditional brokerage account. Instead, Fundrise serves both accredited and nonaccredited investors who are interested in adding private real estate investments to their portfolios. An accredited investor is someone who meets net worth and/or income standards established by the Securities and Exchange Commission (SEC) or has certain professional credentials or certifications. For example, if you have a net worth over $1 million you may qualify for accredited investor status.
There are five account types to choose from, depending on how much money you have to invest. It’s possible to open a Starter portfolio and begin investing in real estate with as little as $500.
Similar to buying shares of stock, Fundrise allows you to buy shares of property, specifically residential and commercial real estate. You can earn returns through dividends and asset appreciation. Fundrise investments have a minimum holding period of five years, making them more illiquid than stocks, mutual funds or other types of securities.
Pros
- Low minimum investment: Fundrise requires just $500 to create a Starter portfolio. By comparison, some online real estate investment platforms require $1,000 or even $10,000 to get started.
- No accreditation requirement: Fundrise is open to both accredited and nonaccredited investors. That means you don’t have to worry about meeting income or net worth requirements to open an account.
- 90-day introductory period: Fundrise offers a 90-day window in which you can avoid redemption penalties or advisory fees if you choose to withdraw your investment. This allows you time to decide if the platform is right for you.
- Diversification: Real estate has low correlation to stocks and can act as a hedge against inflation. By investing with Fundrise, you can add real estate to your portfolio without having to carry the burdens of owning property directly.
Cons
- Liquidity: Real estate investments are by nature less liquid than other investments. When you invest with Fundrise, you should expect a minimum holding period of at least five years.
- Fees: While Fundrise charges no commission or transaction fees, it’s not fee-free. You’ll still pay a 0.15% advisory fee and a 0.85% management fee to maintain your account.
- Account tiers: Fundrise makes it easy to start investing in real estate with as little as $500. But if you want to unlock additional features and benefits, such as dividend reinvestment, exposure to private eREIT funds or priority access to the Fundrise investments team, you’ll need to upgrade your account to a higher tier by investing more money.
- The “new” factor: Founded in 2012, Fundrise is still a relatively new company so it doesn’t have a lengthy track record yet. And the real estate crowdfunding space in general is still in its infancy.
Fundrise fees and costs
| Annual advisory fee | 0.15% |
| Annual account management fee | 0.85% |
| Commission/transaction fee | None |
Fundrise uses a simplified fee structure, charging investors an annual advisory fee and an annual account management fee. The 0.15% advisory fee covers things like ongoing reporting, automated distributions, rebalancing and composite tax management. The 0.85% account management fee covers the ongoing operation and managing of the real estate properties included in your portfolio.
Fundrise doesn’t charge commission or transaction fees for its accounts. According to the platform’s fee analysis, Fundrise saves its investors 0.37% to 5.45% on advisory and management fees annually, compared with traditional investments from full-service brokers. The platform estimates that it also saves investors 23% to 40% in upfront costs associated with asset acquisition. This refers to the costs involved in selecting and vetting real estate investments, which can be much higher with a traditional real estate investment trust (REIT).
Fundrise investing tools and research
Fundrise doesn’t offer the traditional investment analysis and research tools that you might expect with an online brokerage. For example, there are no tickers or stock screeners, since the platform doesn’t offer publicly traded investments.
Instead, Fundrise does the research for you. The platform evaluates and vets each property that’s presented for investment. This is done using proprietary technology to identify investment opportunities that may provide the greatest return to investors while minimizing fees.
Once Fundrise chooses which offerings to make available to investors, you can then review them on the platform and choose the best fit for your portfolio. It’s worth noting that on average, Fundrise accepts less than 1% of the investment deals presented to it each year.
Fundrise user experience
Fundrise offers access to investment accounts online and through a mobile app. The Fundrise app is available in the Google Play store and the Apple store.
The mobile app is designed to provide the same functionality and account access that investors enjoy when they log in on desktop. That includes being able to:
- Monitor your portfolio’s performance
- Check your transaction history
- Review your portfolio’s composition
- Get the latest real estate investment news
- Compare investment options
- Manage your account settings
Fundrise customer support can be reached by sending a secure message online. You can also reach out to the platform via its social media accounts on Twitter, Facebook, Instagram and LinkedIn. Live chat and phone support are not mentioned on the website.
Fundrise investor education
Fundrise offers two resources for investors. The first is a Help and FAQs page. This page includes answers to a variety of questions about investing with Fundrise related to account minimums, fees and investment offerings.
The Education page is a library of articles that covers investing in real estate in general and investing with Fundrise specifically. At this time, the platform doesn’t offer additional educational resources, such as webinars, virtual workshops or video training.
Fundrise security
- Bank-level security: Fundrise utilizes bank-level security measures to protect customer information. That includes encryption with an AES bit symmetric key, which is the same level of security used by large commercial banks.
- Data encryption: Fundrise also uses encryption to ensure the safe transmission of account data. Connections to the platform are encrypted over HTTPS with Transport Layer Security (TLS). Fundrise also uses Amazon Web Services as its host for added security and stores applications and data in multiple secure data centers.
- Two-factor authentication: Fundrise users have the option to enable two-factor authentication to secure their account login information. This feature can be enabled in the settings section of your account when you login on desktop or through the mobile app.
While Fundrise is registered with the Securities and Exchange Commission, it is not registered with the SIPC or the FDIC. The SIPC insures eligible investor deposits while the FDIC offers protections to banking customers. The platform includes a disclaimer on its website, which specifically states that “All securities involve risk and may result in partial or total loss.”
Alternatives to Fundrise to consider
Investing with Fundrise could be an attractive option if you’re a nonaccredited investor or you’d like to own real estate without making a large upfront investment. The platform offers a wide selection of property investments to choose from, with compact and transparent pricing.
On the other hand, you may consider a different platform for real estate investing if you’re looking for a more established company or you want to diversify beyond just property investments. For instance, you may want to compare online stock brokers if you’re also interested in adding stocks, mutual funds, ETFs or other securities to your portfolio.
To better understand how Fundrise measures up, we’ve selected Vanguard and Yieldstreet for comparison. Vanguard is one of the best-known brokerages around, and Yieldstreet is one of the largest real estate investment platforms, with $1.3 billion invested to date.
| Average Cost | Minimum Deposit | Best for... | |
|---|---|---|---|
| Fundrise | 1% (0.15% advisory fee + 0.85% management fee) | $500 for a Starter portfolio | Investors who want to own real estate with a low minimum investment and low fees |
| Vanguard | Pay $0 commissions to trade stocks, Vanguard mutual funds and ETFs online; $20 annual account service fee | Open an account with as little as $1,000 , though you may need to meet a higher minimum to invest in certain Vanguard real estate funds | Investors who want to build a well-rounded portfolio that includes Vanguard real estate funds as well as other securities |
| Yieldstreet | Management fee ranging between 1% and 4% annually | Investment minimums typically begin at $10,000, though the Yieldstreet Prism Fund starts at $5,000 | Accredited investors who can afford to make a larger minimum investment |
Fundrise vs. Vanguard
Vanguard offers online brokerage services to those interested in low-cost investing. You can open an individual or joint brokerage account and Vanguard also offers Individual Retirement Accounts as well.
This platform is not exclusively real estate focused, though you can invest in Vanguard‘s selection of real estate mutual funds and ETFs. Stocks, ETFs and Vanguard funds trade commission-free. You may choose this platform over Fundrise if you’re looking for a more complete approach to diversification.
Fundrise vs. Yieldstreet
Yieldstreet is another online real estate investment platform, but it differs from Fundrise in several key ways. First, Yieldstreet is primarily designed for accredited investors. While nonaccredited investors can also open an account here, they’re limited to just one investment option: the Yieldstreet Prism Fund.
Second, Yieldstreet investments require a much higher minimum, typically around $10,000 or more. That could put it out of reach for someone who’s just beginning to dip their toes in real estate investing. In terms of fees, Yieldstreet‘s annual management fee is also significantly higher than what you’ll pay with Fundrise.
All rates and fees mentioned in this article are accurate as of the date of publishing.
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