With as little as $10 anyone can invest in real estate with Fundrise. Fundrise pays out dividends and offers passive investing with no income requirements. But how does it stack up against its competitors?
In this Review
- What is Fundrise?
- How does Fundrise Work?
- Fundrise vs Competitors
- Diversyfund
- REIT
- Crowdstreet
- Roofstock
- RealtyMogul
- Number One Takeaway
What is Fundrise?
Fundrise is a company that runs a crowdfunding platform that allows anyone to invest in real estate. Fundrise buys properties and invests in REITs with funds invested by individuals.
The properties range from single-family houses to apartments, and commercial real estate. Fundrise manages the properties and pays quarterly dividends to investors. These dividends are not guaranteed but are dependent on rental income, expenses, and other factors. Investors also earn equity when the property appreciates.
Fundrise offers various account types from:
- Personal taxable account
- Joint account
- Certain entity accounts (Trusts, LLC, Limited Partnerships, C or S Corporations)
- Traditional or Roth IRA
Fundrise was founded in 2012 and its headquarters are in Washington, DC. You can pick from five different account levels from Starter to Premium. The minimum investment levels vary from $10, $1,000, $5,000, $10,000, and $100,000
How Does Fundrise Work?
With traditional real estate investing an individual would need to buy a property on their own or with the help of a bank loan. The property owner would need to manage or outsource the maintenance and landlord functions of the property.
Crowdfunding is different. When you invest in real estate via crowdfunding you send your investment dollars to a central company that is raising funds from many investors to then invest in real estate.
Investing in Real Estate with Crowdfunding
The passage of the 2012 Jobs Act opened the door for companies to raise capital via online funding portals and crowdfunding. Title III of the JOBS Act became known as the “CROWDFUND Act” because it empowered companies to raise capital using alternative methods.
Crowdfunding is a great way for new investors to enter the realm of owning rental properties.
Some platforms offer investments that require you to be an “accredited investor.” You must meet at least one of the following criteria to be considered accredited.
- Over $200,000 average annual earnings over the past 2 years ($300,000 for joint)
- Over $1 million in net worth excluding your primary home
- Some businesses or institutions can invest as accredited under certain guidelines.
- As of August 26, 2020, the SEC has opened up the accredited status to some financial professionals with defined experience and certifications.
Fundrise Fees
Fundrise charges investors annual fees based on how much they invest. This is known as AUM – or assets under management. They currently charge 1% per year. They break down the fees into 0.15% advisory + 0.85% managing.
Fundrise Funds
When you invest with Fundrise you are investing in eREITS and actual real estate properties. An eREIT is a form of a Real Estate Investment Trust. The eREITs from Fundrise can only be bought from Fundrise. Other REITs are available to the public via the stock market.
Follow this link to try Fundrise today.
Fundrise vs Competitors
Now we are going to look at how Fundrise compares to several of its competitors.
Accredited Investor Required?
| Accredited Required | Yes or No |
| Fundrise | No |
| Diversyfund | No |
| REIT | No |
| Crowdstreet | Yes |
| Roofstock | No |
| RealtyMogul | Yes |
Crowdfunding Platform?
| Crowdfunding | Yes or No |
| Fundrise | Yes |
| Diversyfund | Yes |
| REIT | No |
| Crowdstreet | Yes |
| Roofstock | No |
| RealtyMogul | Yes |
Minimum Investment?
| Minimum Investment | Amount |
| Fundrise | $10, $500 |
| Diversyfund | $500 |
| REIT | $1 |
| Crowdstreet | $25,000 |
| Roofstock | Sales Price |
| RealtyMogul | $5,000 |
DiversyFund
First, let’s look at DiversyFund. DiversyFund was founded in 2016. It is based in San Diego and they focus on large multi-unit apartments and complexes.
The minimum investment is $500 and you do not have to be an accredited investor. DiversityFunds main fund is a non-traded REIT that owns all of the properties that they manage.
The biggest difference between DiversyFund and Fundrise is that DiversyFund does not charge management fees on assets under management. However, since DiversyFund controls every step of the process and they do take profits up to 8%.
REIT
A REIT stands for Real Estate Investment Trust. A REIT can be held privately or traded publicly. REITs can have different themes like commercial properties, industrial or residential.
Some popular REITs include:
- VNQ – Vanguard’s Real Estate ETF – holds $40 billion in assets
- PLD – Prologis, Inc – focused on Warehousing
- O – Realty Income Corp – Commercial Properties
- IRM – Iron Mountain – Data and record storage
Publicly traded REITs are traded on the stock market. Private REITs must be purchased directly and follow different rules. Most private REITs are less liquid than public ones.
CrowdStreet
CrowdStreet was founded in 2014 with headquarters in Austin, TX and Portland, OR and many remote workers. CrowdStreet is a “marketplace” for commercial real estate investors and sponsors. CrowdStreet appears to be a very professional looking company. New investors will have to look elsewhere unless they are considered accredited.
Roofstock
Roofstock is a platform built for buying and selling rental real estate. Buyers can purchase a single house or multiple houses from one seller. Many of the properties already have renters and property management companies in place.
Roofstock allows an investor to purchase a group of rental properties online. It’s kind of like Amazon for rental properties.
RealtyMogul
RealtyMogul is based in Los Angeles, CA. Investors can invest in their non-traded REITs with a $5,000 minimum. Most of their other investments require investors to be accredited. Many of their properties require a $25,000-$50,000 minimum investment and a long-term holding period of 4-6 years.
Number One Takeaway
When it comes to real estate investing investors have more options now than ever before. The internet has brought together crowdfunding and marketplaces that we didn’t have just 10 years ago.
Fundrise is the most popular real estate investing app currently available for beginners. Fundrise does offer a diverse selection of properties and a mixture of real estate equities as well.
Check out Fundrise today or click here for more reviews and comparison.
