Birds eye photography of high rise buildings

My Review of Fundrise and Why You Should Consider It for Real Estate Investing

Real estate investments are not just for the rich and powerful.

Have you ever considered owning a piece of an office building, apartment complex, or retail space? Yes, I know. It’s well beyond the scope of most of our budgets. … Or, is it?

You don’t have to be a millionaire to enjoy the benefits of real estate investing.

You don’t have to own property directly in order to enjoy the benefits of real estate investing.

Best of all, investing in real estate does not have to be complicated.

It sounds like cheap marketing, doesn’t it? But if you have a little time to spare, hang with me through this long post to understand why this could be a viable investment option for you at a starting investment of only $10.

Before you can appreciate what Fundrise is, we need to understand three things.

What is Crowdfunding?

You may have heard of GoFundMe from individuals and organizations seeking to raise money. LendingClub works well for people who need help paying off debt. Patreon is recommended for people who want to build memberships, but crowdfunding is also viable for people looking to invest in a business.

In times past, if an entrepreneur wanted to raise money for their idea, they would have to prepare a business plan, market research, and prototypes. They would pitch these to a close collection of banks, venture capital firms, or angel investors. This approach is still practiced. Note the wild success of Shark Tank, but these days budding entrepreneurs can take their pitch to a wider funding pool and skip the traditional establishment.

Crowdfunding platforms like Kickstarter, Indiegogo, and Fundable let you leverage social media to attract capital from a broader audience. You put your best foot forward, and if people think your plan looks promising, they can take it upon themselves to promote your idea to their circles. People then have the option to make contributions according to their comfort level.

Is crowdfunding successful? The Pebble watch raised more than $10 million. The Oculus virtual-reality headset and the Canary Smart Home Security system raised more then $2 million and $1 million respectively. Crowdfunding is an evolving way to raise money, and depending on your proposal, it could be a more favorable way of raising money without the traditional barriers of a financial institution.

Entrepreneurs aren’t the only ones benefiting from this new style of capital. Investors can get in on the ground floor of some of these projects. Sure, not all of them will go on to be successful, but there’s never going to be a consistent formula to spot winners in the early stages. Fundrise was thought to be a crazy concept when it launched its first fund in 2012.

“Over the course of 10 years, the reaction changed from people saying that’s crazy, to that’s novel, to that’s obvious,” CEO Ben Miller said about the company’s focus on individual investors. The company just closed a $300 million agreement with Goldman. So much for crazy. You can read how the company went mainstream here.

What is a Non-Accredited Investor

The second thing you should learn is the difference in investor types.

The Securities and Exchange Commission (SEC) was established, in part, after the financial crisis of 1929 to protect Americans from making substantial investments they could not afford or invest in areas they did not understand.

According to the SEC, a non-accredited investor, or retail investor, is someone who does not meet the net worth or income requirements to take advantage of certain investment opportunities such as hedge funds, private equities, and venture capitals.

You are a non-accredited investor if:

  • You earn less than $200,000 a year, $300,000 if married; or
  • Have a net worth of less than $1 million, excluding the value of your primary home.

By this standard, most of us are non-accredited investors. And before you rail against the privileges of the wealthy, understand that as a non-accredited investor, our investments receive greater protection through the SEC. For starters, the investments we’re able to make are required to be a lot more transparent than some of those hedge funds out there.

Fortunately, as of May 2015, the SEC has loosened some of the restrictions previously imposed on non-accredited investors.

Understanding Real Estate Investments

The third thing you should learn is real estate investing. We won’t do a deep dive, but it’s important enough to understand the core basics.

I’m going to divide this into two sub categories, traditional real estate and REITs.

Traditional Real Estate

When you think of investing in real estate, you likely think of buying a house or condo or some other flavor of property that will serve as your primary home. You work hard to save up for a down payment, take out a mortgage, and later, if you decide to upgrade, you know you have the option of turning the first property into a rental. Rinse and repeat, and before long you’ve acquired a collection of properties that make up a nice little empire. This model is best manifested in the lessons we previously discussed about playing Monopoly.

The problem with this traditional approach is that you need to save up a sizable down payment to reach 20% of the cost of a home. You typically want to come in with 20% to avoid private mortgage insurance. Where I live, it’s not unusual to need to save $100,000 to be adequately competitive, but even if you live in an area with a lower cost of living, saving even $25,000 is not something most families can achieve in a short length of time. People save up anyway, because they want to call a piece of property their own, but if you want to generate profit without direct ownership, crowdfunding is worth exploring.

The advantages of generating income from traditional real estate are numerous. You rely on tenants to pay down your mortgage. With the exception of maintenance costs, it’s a nice way to create passive income, and it’s one way to protect against the swings of the stock market, to name just a few key benefits.

Of course, there are also disadvantages. Maintenance costs eat into your equity. You never really know what kind of tenants you’ll attract and what kind of damage they could inflict on your property, and even if we’re just talking about your primary residence, there’s no guarantee the property will appreciate in value. To be fair, that is the sort of chance you take with any investment.

However, that sort of dialogue only focuses on one way to invest in real estate. If you’ve ever been interested in real estate but did not want to deal with the headaches of property management, there are other options available to you.

Real Estate Investment Trusts

Real estate investment trusts, or REITs, are companies that own or finance income-producing properties across multiple sectors. Think office buildings, apartment communities, strip malls, new housing developments, etc. These companies have to meet a number of requirements to achieve REIT status, and most of them trade on major stock exchanges, making it possible for everyday Americans to benefit from valuable real estate through dividend income and total returns. Approximately 145 million Americans contribute to REITS through a 401(K), IRA, pension plan, or other investment fund.

A REIT will let us get in on the action through the purchase of individual stock, a mutual fund, or an exchange traded fund (ETF). We can earn a share of the income without having to go out and buy, manage, or finance the property ourselves, and since the REIT has to meet a number of qualifiers before operating, we can feel reasonably sure our investments will be held by legitimate entities.

If this is starting to sound similar to the crowdfunding model we touched on a moment ago, it’s because the concepts are similar. There was a time when the average investor would not have been able to get in on the ground floor of a smart watch or pair of virtual reality glasses. Now we can back up a campaign early on and reap the benefits. The same holds true for commercial and residential real estate investments.

So why wouldn’t you just stick to the publically traded REITs? You could, and as someone with part of his retirement invested in Vanguard’s REIT, I can tell you this is perfectly acceptable, but having gone in on Fundrise, I can tell you the most distinguishing factor between the two companies is information. Vanguard does not publish anything beyond the obligatory shareholder reports. Continue reading to see an example of the sort of updates you’re likely to expect from Fundrise.

And here at last we get to the main point of the article.

Introducing Fundrise

Fundrise capitalized on the crowdfunding concept. After the SEC updated its rules in 2015, the platform opened the way for the general public to enjoy commercial and residential real estate opportunities previously only available to accredited investors.

I’ve been hearing about Fundrise for a few years now. The first time I read about the platform, I dismissed it as a fleeting trend, something that would either be too risky for my blood or an opportunity that would have likely met its peak by the time I bought into it. I didn’t put it into the same speculative category as cryptocurrency, but it was pretty dang close.

Except, Fundrise kept cropping up on the pages of financial sources I had grown to respect. I had to get past my skepticism that financial bloggers, despite solid reputations, were just trying to earn credit through their referrals. Mind you, I’m using my own referral code to earn us both a little extra credit at no additional expense to you, but during my evaluation stage, I wanted to find my own reasons for wanting to jump on the bandwagon.

Remember, you should never make an investment if you cannot clearly articulate why you did so, which is why I dedicated so much text to the introduction before getting to the meat of this post.

Let me walk you through the list of considerations I worked through before deciding Fundrise was worth my hard-earned money and why it might be worth yours.


If you want to sell shares of a stock, or sell off the stock altogether, you notify your investment firm, and a few days later, the money is deposited into your bank.

Fundrise will not allow for the same flexibility. In fact, there are only four periods during the year when withdrawal requests are processed.

If that squeezes your stomach a little, you should also know Fundrise can temporarily suspend the funds to stop withdrawals during economic crises such as the start of the pandemic in March 2020. This is a notice the company sent to investors a month after the suspension to give you an understanding of why they did what they did.

The rationale is simple. When the market goes south, people have a kneejerk reaction to sell off their investments. That is not the sort of habit you want to get into as an investor, because regardless of whether you invest in Fundrise or something else, a longer period is always going to be better. You have to reverse your psychology to buy when prices are low so that when prices climb up again, you will have benefited from the dip in the market. In other words, buy low, sell high.

Okay, but why can’t Fundrise give me my money when I want it?

Because it’s real estate. You can’t just sell off real estate and cash a check overnight. If you decided to sell your house tomorrow, you wouldn’t be able to close right away either. With Fundrise, your money is spread across multiple properties.


Fundrise hopes you will keep your money invested for at least five years. Up until recently, the earlier you withdrew your money, the more you would pay in fees, up to 3%.

I got stuck on this point for a while, because with Vanguard’s REIT, for example, I pay less than 1% in maintenance fees. Why would I want to give up 3% to Fundrise?

The point is now moot. I received an email which outlined their new fee structure for their eREIT and eFund redemption policy that goes into effect October 1 of this year.

The highlights are:

  • Shares held less than 5 years will be subject to a flat 1% penalty
  • “First in, first out,” meaning the shares you’ve held the most amount of time will be redeemed first.

You can learn more here.


Speculative investments are those types of investments you know carry a substantial risk of losing a lot of money, but you buy into them because you expect them to yield a significant return. Cryptocurrency could be considered a form of speculative investment at this stage. Dropping money at a casino, on the other hand, is not speculative. It’s just silly unless you’re going in with a set amount of money you’re fully prepared to lose. Have fun with it, if that is your prerogative, but don’t confuse it with investing.

Real estate falls into a blurry middle ground. If you buy a group of properties with the intent to rent them, it would be considered an investment. Buying the same group of properties at a low price with the intent to make a quick profit is speculative.

I have a moderate aggressive tolerance level. I’m open to trying new things but only make calculated moves after studying the pros and cons. For a while I wasn’t sure if I could trust Fundrise to be a steady investment. What if Fundrise turned out to be another fleeting trend?

Worse, what if the train had already left the station? If the chatter surrounding Fundrise was noticeably increasing, was I already too late?

You might remember GameStop. That little episode had a good run, but it was a speculative investment because most people knew the good times would not last. As of this writing, the stock price has not exactly crashed, but the volatility is stomach-churning.

Speaking of performance, how has Fundrise done? In fiscal 2014, 2015, 2016 and 2017, they returned 12.25%, 12.42%, 8.76% and 11.44%, respectively, on an average annualized basis. For the 2020 performance, check out this year-end letter to investors. Bear in mind past performance is not indicative of future results.

How to Get Started?

You can sign up using my referral link. The process will take you about ten minutes to complete, shorter if you have your banking information readily available. Don’t worry, it won’t be anything more complex than your routing and account numbers.

The enrollment form is brief, not complicated, and accessible with screen reader technology for blind users. As part of the enrollment process you will tell them what your financial goals are for the money you’re investing.

Fundrise features several plans, or portfolios. The portfolio you get enrolled in depends on the initial amount you invest:

  • $10, Starter;
  • $1,000, Basic;
  • $5,000, Core;
  • $10,000, Advanced; and
  • $100,000, Premium.

To clarify, these are just base levels. If you have $500 you can invest, by all means get in on that Starter portfolio!

The more you invest, the greater access and flexibility you enjoy. That does not mean the Starter portfolio is inferior in the slightest. If you move from Starter to Basic, for example, you gain auto-investment and dividend reinvesting, investment goals, IRA investing, and Fundrise IPO investing. These additional perks are nice but not at all necessary to start growing your money. By all means, do your due diligence, but don’t waste more than a year educating yourself, because that’s a year your money could have been multiplying.

After you enroll, it’ll take about a week for your bank to be verified and your dashboard to reflect your first investment.

I reached out to customer service with questions about the different portfolios. I received the first response within twenty-four hours and a follow-up response only a couple hours after that. This may sound long, but since this type of investment is set it and forget it, the prompt customer service was not a huge concern for me. Also, at the time of this writing, the company appeared to be going through a hiring blitz.

Periodically I get emails from Fundrise alerting me to new property purchased under my portfolio. I get information on the geography, the property class and the rationale for why the purchase was made.

Here’s a brief excerpt from a recent update:

We’ve invested roughly $2.1 million to acquire eight brand new single-family homes within the Liberty Grove community of Locust Grove, Georgia, about 50 minutes south of downtown Atlanta, with plans to acquire a total of 60 rental homes in the community over the next year.

At a strategic level, this investment fits within our affordably-priced Sunbelt apartment / rental housing thesis. From millennials to retirees, a broad group of Americans has been taking part in a migration from northern to southern states over the past decade, driving continued demand for well-priced, well-located real estate, and supporting steady returns for disciplined investors.

If you’re blind or visually impaired, you will be glad to note the platform is fully accessible, both the website and the iOS app. I have not yet tested its Android counterpart. Whether this was intentional or accidental, I couldn’t say, but it’s always nice to see a mainstream business incorporate accessibility into their operations. Blind people are investors too and should be entitled to the same equal access. Note the website is usable without the accessibility overlay.

So, have I teased your interest? Ready to get started? Let’s do this!

Final Thoughts

I had two reasons for opening a Fundrise account: to expand beyond traditional stocks and to set aside money for a future child.

529 plans are a good option for future college expenses, but considering the educational restrictions, and considering my first daughter opted not to go to college, I would rather invest in an account I can later withdraw for any reason. Even though my primary investments will remain in stock, I will spend the better part of the next two decades investing a little at a time and allow compound interest to work its magic. Five years short of my target deadline I could theoretically stop contributing to avoid the 1% withdrawal fee.

In my opinion, the only real drawback to Fundrise is the liquidity. Because I am committed to this serving as a long-term investment, I’ve decided the benefits of greater gains outweigh the cost of having the money locked up. Besides, less liquid real estate investments like Fundrise tend to provide better protection against downturns in the broader market.

I’m not a financial advisor. The amount of time I spent putting together this article was for educational purposes. I’ll update this article as time goes by with information on my returns to give you a real world perspective on one example of an initial investment.

If you have any questions at all, please use the comments to pose them. I believe this is a great way to diversify your investments, or if you’re new to investments, this is a solid way to get started!

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My blog is a collection of advice I wish someone had shared with me when I was young and targets subjects like personal finance, careers, and relationships. It publishes Mondays with the occasional bonus article. Sign up to have fresh content delivered straight to your inbox, no SPAM!


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