Get to know more about the beauty of hassle-free real estate investing through this Fundrise review.
Most of us have known Fundrise to be a platform that gives an opportunity to investors as well as real estate experts to invest together, thus eliminating the need for them to search individually for deals on their own. In this Fundrise review, I will orient you how Fundrise can fund high-potential projects, while ordinary investors are also given an excellent way of investing into commercial and other real estate properties without having to go through any red tape or wait around for years until your project comes off first.
What is Fundrise?
Fundrise is an innovative platform that provides solutions for investing in real estate without having to go through any red tape or wait around for years until your project comes off first. You can get involved with a number of deals, and by getting access to direct deals you can also increase your returns on investment easily.
There are two ways in which you can invest: Buying shares and lending money. The former allows you earn passive income while the latter gives you higher interest rate but involves more work on your part as well as lower returns on investment.
However, whatever path you choose, Fundrise will help make it easy and profitable for you to invest into commercial real estate. While this company was created with the help of developers as well as investors in mind, it is open to everyone who wants to create wealth through a combination of passive income and direct investments.
Fundrise Review: How Does It Work?
There are two kinds of deals on the platform: Direct Deals and Marketplace Deals. In this Fundrise review, I will focus on the latter. The most significant difference between them is that with Direct Deals, you invest in completed real estate projects, while with Marketplace Deals you get access to developments before they have been built or renovated.
This means that you will be required both to lend money for their construction, and also pay for your share later on. It seems that getting involved in such an investment requires users to do work first they can earn returns later.
However, this is not necessarily the case. Since you will earn money through interest payments, there may be a delay before your investment pays off. In the end, it's all up to you how much effort and time you want to put into your investments, since Fundrise gives two options with different kinds of return on investment.
It starts with an evaluation of possible projects by experienced development specialists. Next comes project selection when developers present their ideas and investors are given an opportunity to choose which ones they like most as well as pledge money for them.
When it comes to Marketplace Deals, pre-registration takes place when user deposits are collected from select buyers interested in specific projects. These are refunded when a project is fully funded, and credited to the account when it enters construction, thus allowing you own shares.
If your investment happens to be a Direct Deal, once the developer has completed the building or renovation, he will inform you about your return on investment.
Once your money is in an equity real estate portfolio managed by Fundrise , you can get access to detailed information about how much money you have made or lost over time as well as request withdrawal at any point in time.
Fundrise Review: Who Can Use Fundrise?
This platform was created for people like you who are interested in investing into commercial property without having to go through any red tape or wait around for years until their projects arrive first.
The reason why this company was founded is to provide one solution for investors and developers alike. While you are invited to join the platform, there are a few restrictions that you need to be aware of in order not to get banned or lose your accounts.
How Much is the Limit on Transactions?
Your transactions must never exceed $2 million within any period of 12 months. Transactions within the amount of $100,000 through a single account should take place once within every 90 days. If you choose to invest more than $ 5,000 at once or come close to this limit with multiple investments, this will look suspicious from the company's point of view and they have a right to freeze or terminate your account without prior notification. In other words, you should not try to use Fundrise to launder money or get away with any illegal activity.
Furthermore, if you are a resident of China and want to invest into US properties through Fundrise platform this will be denied for you as well.
Simple Signup Process of Fundrise
If you pass all criteria mentioned in the previous paragraph, there is nothing that can stop you from signing up. The process is pretty straightforward: Just enter your name, email address and password, then click on the register button.
After registration you will need to fill out a short form about your investment goals as well as risk tolerance before finally getting one-time access code sent to your email address which will help verify account ownership.
What Are PFM and Tax Benefits?
PFM stands for personal financial management tool that allows you to get access to all your financial data in one place. This feature is designed with the purpose to help users make better decisions about their investments based on detailed information about current balances, property performance and available cash flows.
Moreover, this platform has a partnership with Kabbage which allows investors to receive instant funding opportunities so they can invest into Fundrise projects without any delay due to lack of liquidity or experience with real estate.
The last but not least benefit of Fundrise investment platform is federal tax exemption if it's an equity share that doesn't exceed $10 million. It means that even if you have failed to recapture your initial investment plus 7%, you may be able to claim tax benefits as a non-corporate business owner.
Pros and Cons of Investing in Fundrise Platform
There are a number of advantages to working with this company which we will discuss in the points below:
- You don't have to be a super-rich person and invest hundreds of thousands or even millions to start your investment journey
- You can make money on capital appreciation, dividends, fees as well as tax benefits because there is no maximum income requirement that you need to exceed before getting access to the platform
- The platform offers free tools that allow you to get easy access to all available data and market information that will help you make better decisions about your investments although it is worth mentioning issues with incorrect property data at some point
- In case if developers were not able to repay their debt after the project was completed successfully, Fundrise will cover the costs but still be entitled to recover principal and interest from developers
- You can get access to information about your investment such as expected returns or any changes in properties' value (which may occur depending on market conditions) through PFM tool
Cons of Using This Platform:
With all those advantages I've mentioned so far in this Fundrise review, it's quite hard to find a number of complaints towards this platform provided you are now oriented with how its system works which may not be that easy for beginners. That's why I am here to help you make up your mind before signing up with one of their competitors. Here are some of the cons:
- The most important caveat would be lack of transparency regarding fees so investors don't really know how much they have to pay for advisory service and how much of their investment will be invested into the selected property that they've chosen
- Although investor fees are affordable and not as high as in other platforms it can still be a burden for those who lack experience in real estate investments. Also, there is an opportunity to get a higher return on investment if you invest more money through any Fundrise affiliated broker. However, you should consider this option with care because it's better to diversify your portfolio first before investing more since some traders don't offer transparency when collecting transaction fees which can make things even worse for investors
If you already know everything about Fundrise platform and just made up your mind to invest in it, then you should be able to invest your money easily. All you need is a US social security number, a bank account or an existing brokerage investment account with at least $500 deposited in it and you are good to go.
Fundrise may seem like the best way to diversify your investment portfolio with easy-to-use tools as well as affordable fees but there will always be someone who offers a better alternative so we should be careful.
As investors, we should always consider a number of options that are out there on the market before making any decision because we don't want to regret later on not getting what we wanted. I'm hoping that through this Fundrise review, you are now able to decide whether this platform is worth giving a try or not. Good luck!
Read the Entire Real Estate Investing Series
- How to Start Investing in 2021
- How to Find Commercial Real Estate Investors?
- Where to Invest to Get the Best Returns with Less Risk
- How to Get Rich in a Year: 7 Things Worth Investing Your Time
- Renting vs Buying a Home [Reasons I Made a Financially-Dumb Decision]
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.