Disclosure: We earn a commission for this endorsement of Fundrise.

Wondering how to make money with real estate investing? Our Fundrise review explores the advantages (and risks) of one of the most popular real estate investment platforms in the market. 

Before the introduction of Fundrise and similar real estate investment platforms, commercial real estate investing was reserved for investors with deep pockets. Investing in commercial real estate back then required a large amount of upfront capital, especially when your goal was to diversify your portfolio.

An investor who wanted to make it big needed to own multiple properties in various locations with multiple features (e.g., strip malls, apartment complexes, condos, and office spaces). With money being a big barrier to entry, only the big guns played the real estate investing game. 

Thankfully, platforms like Fundrise level the playing field for us. Fundrise has real estate investment at its core, and with a minimum investment of $10, many people can easily buy residential or private commercial property.

Our Fundrise review explores how Fundrise works, its pros and cons, tips, and what to watch out for. This will help ensure that you make an informed decision about where to invest your hard-earned cash. 

Ready to try out real estate investing? Read our Fundrise review and how it works below!

About Fundrise

Founded in 2010, Fundrise is one of the oldest real estate investment platforms. Fundrise offers people another option to invest in real estate without the stress and cost of traditional real estate investment.

Accredited and non-accredited investors can invest in real estate through Fundrise’s wide variety of eREITs and eFunds with a minimum investment of $10.

The company boasts a wide variety of investment options and strategies, goal planning features, and a user-friendly investment dashboard.

More than 300,000 people use Fundrise today and have invested over $7 billion in properties throughout the United States. Since 2017, Fundrise has returned 21 consecutive positive quarters of returns.

Fundrise is based in Washington, DC, and was founded by Ben Miller, who has over 20 years of experience in the real estate industry.

What is Real Estate Crowdfunding?

To better understand our Fundrise review, readers need to understand the basics of real estate crowdfunding. 

To start with, real estate crowdsourcing works by pooling investment capital from various investors and buying a real estate asset using those funds. Investors then receive a portion of the earnings throughout the holding period of their investment. This portion also includes any appreciation that occurred upon sale. 

Before the invention of real estate crowdfunding, this process of pooling together investment funds was generally called “syndication.” Through syndication, money was collected privately and without open advertising.

Today, however, with the introduction of the Jobs Act and new crowdfunding rules, money for capital may now be solicited openly and online. 

Fundrise Products

The main products of Fundrise are REITs or real estate investment trusts. REITs generally invest in income-producing properties through buying and managing buildings or by holding a mortgage. Fundrise refers to its products as “eREITs”.

The company also offers “eFunds”. These allow investors’ pooled money to be used to buy land and develop housing before it can be sold to home buyers.

As an investor, you’ll purchase shares of eREITs or eFunds. This is through a limited liability company conducting the deals or by buying a Fundrise portfolio. Fundrise offers several portfolios depending on your investment strategy, including:

• Starter ($10 minimum)
• Basic ($1,000 minimum)
• Balanced Investing ($5,000 minimum)
• Supplemental Income ($5,000 minimum)
• Long-Term Growth ($5,000 minimum)

In each plan, Fundrise determines the mix of eFunds and eREITs and its underlying properties. It’s a totally hands-free investment, much different than owning and managing rental property.

There are also Advanced ($10,000 minimum) and Premium ($100,000 minimum) accounts. These provide investors access to more real estate projects with additional benefits and features. However, we won’t be focusing this review on the Advanced or Premium accounts because that’s not where most investors will startt.

Fundrise has also recently added some new products to its lineup. The platform now offers a Self Directed IRA, so you can invest with pre-tax dollars for your retirement planning, potentially reducing your taxable income. There is also Goal-Based Investing, so you can invest based on your specific financial goals rather than locations or types of investment. Finally, there is the Fundrise iPO, where you can buy shares in the company via an Internet Public Offering. You need to have an advanced plan and a minimum of $1,000 in your Fundrise account to be eligible for the iPO.

The results will vary depending on your chosen plan, but you can expect to receive payouts as quarterly dividends and appreciation in the asset value at the end of the investment term. You can choose to have the dividends automatically reinvested or deposited into your bank account as cash. You can change this setting at any time, so it’s really easy to turn your investment into an income-producing asset if you want to start receiving dividends as cash.

Fundrise Review 2023

The Fundrise mission is far reaching but helps explain what they’re all about.We’re reinventing the way people invest their money… Fundrise was born from the belief that everyone deserves a simpler, smarter, more reliable way to invest their money. Using technology, we are rebuilding the entire investment system from the ground up so individuals can efficiently access the best investments.

Innovation is at the core of Fundrise. Since it’s first funded property, it has grown significantly in users and products, many of which were the first of its kind.

From filing the original patent for real estate crowdfunding to using Regulation A to fund itself (in the Fundrise “iPO – internet Public Offering”), Fundrise continues to push limits of what is possible.

The minimum investment for Fundrise is $10, making it possible for anyone to invest in high-quality real estate. 

Fundrise 2.0

Fundrise started by crowdfunding individual properties, much like many other platforms still do. Then in 2015, they created the first eREIT, a regulated security that made it easy for ordinary investors to begin investing.

The company recently reinvented its platform again by introducing Fundrise 2.0. Instead of investing in individual eREITs, new investors can now invest based on investment objectives.

Investors who opened accounts prior to Fundrise 2.0 have the option to upgrade. 

The difference between Fundrise 1.0 and 2.0 is that Fundrise 2.0 chooses your eFunds and eREITs for you. You get instant diversification across all seven funds (as of August 2017). Allocations to those seven funds vary based on which objective you choose.

Going forward, Fundrise chooses the best funds for my investment goal (Balanced). The other upside is I can now reinvest my dividends back into new funds again. 

This upgrade to Fundrise 2.0 further simplifies the platform and builds broad diversification into the core of Fundrise.

How Does Investing With Fundrise Work?

With Fundrise, you are investing in either Fundrise eREITs or eFunds. eREITs and eFunds are comprised of a basket of non-traded real estate properties, from multifamily apartments to industrial complexes. The eREITs and eFunds aim to seek a combination of dividend distribution and capital appreciation, depending on the strategy.

When you open an account with Fundrise, they offer a wide range of account levels; Basic accounts require a minimum investment of $10, and its Advanced Portfolio requires a minimum investment of $10,000. The premium level is reserved for accredited investors only with a minimum investment of $100,000.

However, Fundrise’s most popular account is its Core Portfolio which has all the options and benefits most investors need. A Core account requires a minimum investment of $5,000.

You can create a customized investment strategy at the Core account level and above. Investors can customize their portfolio by diversifying across a wider variety of funds with specific objectives, such as income, growth, and balanced.

What are Fundrise Investment Options? 

Our Fundrise review will walk you through all the investment options possible within Fundrise. 

The Starter Portfolio

The Starter Portfolio allows anyone to invest in eREITs for just $10. eREITs give you access to over 20 various properties across major cities in the United States.

Our review of the Fundrise Starter Portfolio discovered that the investment option comes with a .85% annual management fee and a .15% annual investment fee that is waived under specific circumstances. 

Investors who choose to invest in the Starter Portfolio will hold a portfolio that consists of 50% income eREIT and 50% growth eREIT. Investors should expect to manage both of these investments for around five or more years, with the chance to liquidate once every quarter. 

Core Account

Investors who invest up to $1,000 will be upgraded to this portfolio. The portfolio includes around 7 eREITs and dozens of different properties.

Here, the type of eREITs you invest in depends on your goals. But you’ll also have to select between a passive income portfolio, a balanced portfolio, or a long-term growth portfolio.

The Fundrise website gives you information about each of your eREITs, including the properties you own and details about future growth and income. 

Advanced Account

The advanced account offers more complex strategies with a chance for higher returns. With a $10,000 minimum investment, the advanced account offers all of the core features plus the capacity to invest directly to most of Fundrise’s funds.

Premium Account

Investors who have invested $100,000 or more will be upgraded to the Premium Account. This plan gives them access to private funds that become available periodically.

While the investments offered here are more long-term, they offer the highest returns. Premium account members also have priority access to Fundrise’s investments team.

Making Direct Investments

Fundrise allows you to make direct investments by investing in an eFund rather than an eREIT. Investors who invest in an eFund are investing in a real estate project. This means that they cannot expect liquidity until their project is completed.

To make direct investments, you’ll have to pay a 0.85% annual fee and a 0.15% portfolio management fee (waived in certain circumstances).

Becoming an eFund investor grants you access to the ‘first look’ program, which allows you to purchase a home before it makes its way to the market. Investors are allowed to use their eFund investment as part of their downpayment. 

IRA Investments

Fundrise also allows you to invest your IRA funds in several diversified real estate investments. IRA accounts allow you to save money for retirement (without taxes).

Investors may be able to reduce contributions on their tax return, or their earnings may even grow tax-deferred depending on the type of their IRA account (Simple, Traditional, SEP, or ROTH). See Related: Important Pros and Cons of Real Estate Investing

Fundrise Features

The main advantage of Fundrise is that there are no investor requirements. It is open to non-accredited investors, making it highly accessible. This makes Fundrise stand apart from many other online real estate platforms that are only available to accredited investors. To qualify as an accredited investor you need a net worth of $1 million or more (excluding your primary residence) or an annual income of $200,000 or more.

The minimum investments for Fundrise are also very reasonable, making it an ideal platform for anyone who wants to get started with real estate investing.

Signing Up

Fundrise has an easy-to-use platform, and the signup process takes just 10 minutes. Of course, you should read the investor disclosures before you start the signup process.

You’ll need to provide your contact details including your address and phone number. Fundrise also requires your Social Security number.

You will then need to choose whether you want to fund your account by linking to your bank account via an ACH transfer, manually entering your bank details, or via wire transfer.

Fundrise Past Performance:

Fundrise offers several different investments and portfolios, so your results will vary depending on your specific investment. However, since 2014, the returns produced by Fundrise investments have averaged between 8% – 12% per year. An annual return in the upper single digits is a reasonable target. Read our article on Fundrise returns to see more specifics.

Of course, past performance does not indicate future results, but it does provide some reassurance that the company has the potential for a decent yield on your investment. However, one caveat is if you want to cash out your gains. The money you invest will be used to purchase particular properties. So, you cannot receive money from a specific deal until that property is sold. As such, Fundrise is not a 100% liquid investment.

Fundrise has recognized this complication, so has added the possibility to cash out of a deal during a specified quarterly period. So, you can exit a trade during four windows throughout the year without needing to wait for the property to be sold. Still, this is ideally a long-term investment with a timeline of at least five years.

Fundrise Safety

There are very few investments considered “safe” or that provide a guaranteed return.  The Fundrise eREITs and eFunds are about as safe as anything you can find within the real estate investment sphere. The eREITs are registered investments and must meet the same SEC requirements of exchange-traded traditional REITs. They are not directly correlated with stock market volatility.

The potential downsides are that you will not enjoy the same liquidity since they are not traded on the market, and your front-end fees will be higher.

Like any other investment, you should do your own due diligence before investing and don’t invest money that you can’t afford to lose.

Fundrise Pros and Cons

As with any investment platform or company, there are pros and cons.

The Pros:

• Low Minimum Investment: You can start a Fundrise investment with just $10. This makes the platform far more accessible than other real estate investment companies.
• Low Fees: Fundrise also has a low fee structure. You can expect to pay just 1% in fees, which is pretty good compared to other alternative investments.
• Open to Non-Accredited Investors: Unlike many real investment firms, Fundrise is open to any investor in the US regardless of their net worth or income.
• Diversity: Unlike many private REITs, the Fundrise eREITs have a pool of numerous properties to even out returns.
• 90-Day Guarantee: If at any time in your first 90 days, you’re not satisfied with Fundrise, the company will buy back your investment at the original price. While this is subject to some limitations, it’s practically unheard of within the investment industry.
• Access to Commercial Real Estate: Fundrise provides access to commercial property. This is typically a high-dollar investment area, but Fundrise provides investment access with a very low minimum amount. This creates a passive investment in a potentially lucrative area.
• Quarterly Redemptions: Unlike many real estate investment platforms that lock you in until the specific property is sold, Fundrise offers an out. The eREIT program has a quarterly redemption plan, so you can cash out in four windows throughout the year if necessary.
• Take Dividends as Cash or Reinvest: You can use Fundrise as a source of passive income by taking the quarterly dividends as cash, or you can reinvest to grow wealth faster. All you need to do is change one setting to take a different approach.
• Transparency and Communication: Fundrise does an excellent job communicating with investors regarding new properties that are added to the portfolio and status updates each project progresses or completes.
• Multiple Options: With the three core portfolios, you can choose whether you want to invest for long-term growth, supplemental income, or take a balanced approach.

The Cons:

• Liquidity: Since Fundrise eREITs are not publicly traded, there are some liquidity issues. While there is a quarterly redemption program to redeem shares, there are no guarantees that they’ll be able to honor redemption requests. Additionally, there’s no secondary market where you can sell a Fundrise investment to others.
• Tax Consequences: The distributions are taxed as ordinary income. This makes there potentially higher tax consequences than if they were classified as a qualified dividend with a 15% tax rate.
• Relatively Short Track Record: Real estate crowdfunding is still new. Fundrise has a longer track record than most other platforms, but it’s still relatively short.

Investment Options

The Starter and Basic level accounts allow individuals to invest only in Fundrise’s registered products. At the Core level and beyond, investors have access to non-registered products as well.

Let’s take a look at all the investment options in detail…

Income Real Estate Fund [Recommended]

The Income Real Estate Fund is an innovative new real estate fund intended to generate a low-volatility income stream of cash distributions with a current 6.5% distribution rate. This fund was launched in April 2022 and will offer quarterly liquidity (in the form of quarterly repurchase offers) with zero penalties or costs associated with liquidating Fund Shares.

Best For: Income generation and if you do not want to lock your money up for a long period of time.

Open to: All portfolio levels

Current Distribution Rate: 6.5%

Objective: Income

Current NAV: $10 per share

Flagship Real Estate Fund

The Flagship Real Estate Fund has an investment objective to generate income, while also seeking long-term capital appreciation with low to moderate volatility and low correlation to the broader markets.

Open to: All portfolio levels

Current Distribution Rate: 0.75%

Objective: Balanced

Current NAV: $13.44

Summary

As we have mentioned above, real estate is a long-term investment asset class. This includes publicly traded and non-traded REITs and eREITs. There are opportunities for portfolio diversification, capital appreciation, and regular distributions, but these are never guaranteed.

REITs provide a more passive way of investing in real estate assets. You can pool your funds with many other individual investors and take part in direct access to a mix of commercial and residential properties. These projects such as apartments, office buildings, hotels, and even shopping centers are not the type that a typical real estate investor would be able to purchase individually. You can also invest in properties that are outside your geographic location with ease.

So, in short, Fundrise can be a good way to diversify into the real estate market without a massive amount of capital or the management headaches that would normally accompany this type of investment if you did it solo.

Of course, you need to consider that REITs do have ongoing fees and a front-end load. But, Fundrise does offer fairly low fees of just 1%. The company also has a unique accountability guarantee, so you won’t get stuck paying hefty fees regardless of your investment performance.

TRY NOW FOR FREE