Fundrise is one of the leading real estate crowdfunding today. They were founded in 2012 after the JOBS Act was passed and have grown into one of the largest and trusted platforms. This post will highlight Fundrise performance growth figures.
Fundrise is an online real estate company that enables non-accredited investors buy into private commercial and residential properties across the country by pooling their assets through an investment platform.
The company’s main products are eREITs, an asset class in which they pioneered. Their eREITs are specialized funds they invest in various types of real estate investments for different purposes e.g. growth, income, western part of the U.S., etc.
As a real estate investor, you ideally want to earn profits in as hassle-free a manner as possible. Passive income is one of the reasons why real estate crowdfunding has grown so fast since 2012.
If you don’t have to deal with tenants and maintenance issues, and can earn a higher rate of return around the country, then why not? I sold my SF rental property in 2017 because it was a pain to manage and it only had a 2.5% cap rate. I then reinvested $550,000 of the proceeds into real estate crowdfunding with a 10%+ cap rate.
Let’s take a look at Fundrise’s latest performance and growth figures.
Fundrise Performance And Growth Figures
According to the latest public offering documents by Fundrise for its Internet Public Offering in 2021, the firm manages roughly $1 billion in assets under management, has 150,000 active investors, and 100 employees. Their AUM grow and investor signups have been very promising.
Fundrise’s five-year average platform portfolio has also done quite well, yielding a 10.79% return versus 7.92% for the Vanguard Total Stock Market ETF and 7.4% for the Vanguard Real Estate ETF.
Their massive 14%+ outperformance in 2018 versus the Vanguard Total Stock Market ETF is particularly impressive. 2019 was a year of underperformance, but steady growth because the S&P 500 performed so well.
By generating a strong 6-year return, Fundrise has taken a huge step forward in proving out what they have believed for so long: that a model of individuals diversifying into real estate through a direct, low-cost technology platform is a superior investment alternative to owning only publicly traded stocks and bonds.
More Fundrise Performance Figures
After a tumultuous 2020 in the stock market, Fundrise performance held steady. During the worst of the downturn in March 2020, Fundrise was actually slightly up. Below you can see how Fundrise closed up 7.42%. Fundrise underperform the S&P 500, but significantly outperformed VNQ, the Vanguard Real Estate ETF.
I’ve written an entire post about how real estate gets impacted by a decline in stocks. Fundrise holds steady when stocks decline. However, real estate ETFs and public REITs tend to be more volatile and decline more.
Fundrise Is Good For
- Investors with a long-term outlook. These investments are not traded on a public exchange — that means they’re illiquid. If you can hold for 1-3 years, your duration matches Fundrise’s most common duration.
- Investors looking for diversification. You may already own expensive coastal city real estate and don’t want any more exposure. Instead, you want to invest in the heartland of America where demographics are rapidly shifting towards lower cost areas of the country thanks to technology.
- Investors looking for completely passive income. As you get older and busier with life, you may no longer want to manage tenants and call the plumber. Fundrise does all the heavy lifting so you don’t have to. I rank real estate crowdfunding as a top three passive income investment.
By investing in a diversified eREIT, Fundrise provides investors exposure without as much risk as investing in an individual commercial real estate investment.
Fundrise is mainly know for its eREITS, a product which it pioneered. They currently have seven main eREITs to choose from. Some are not always available due to excess demand. Each eREIT can only have up to $50 million in assets due to regulations.
- Income eREITs I and II: Focus on debt investments in commercial properties
- Growth eREITs I and II: Focus on commercial properties, particularly multifamily buildings, that will appreciate over time
- East Coast eREIT: Focuses on debt and equity investments on the East Coast
- Heartland eREIT: Focuses on debt and equity investments in the Midwest
- West Coast eREIT: Focuses on debt and equity investments on the West Coast
Fundrise also has eFunds, which are a little more adventurous. eFunds invest in the development and sale of residential real estate in major U.S. cities, like Los Angeles and Washington D.C, where housing supply is in a shortage.
With each of the eFunds and eREITs, you are investing in a limited liability corporation that conducts the deals. Therefore, in the unlikely circumstance that Fundrise goes under, there is still an LLC there to manage your investments. In other words, your investment on the Fundrise platform is not co-mingled with an investments in Fundrise, the company.
Fundrise currently offers four investment portfolios, each of which invests in a diverse mix of the company’s eREITs and eFunds: the Starter Portfolio, Supplemental Income plan, Balanced Investing plan and Long-term Growth plan, each of which has the following terms:
- Minimum investment: $1,000 ($500 for the Starter Portfolio)
- Advisory fee: 0.15%
- Management fee: 0.85%
There’s also a retirement account option. With a minimum investment of $1,000, investors can open an IRA via the Fundrise platform (the custodian is Millennium Trust Company, an outside company that maintains self-directed IRAs for people seeking to invest in alternative assets) and can invest in any of the eREITs or one of the investment plans, for a $75 annual fee per eREIT (fee capped at $125 annually).
Fundrise Is One Of The Best
I’ve been working with Fundrise since 2016, and I believe they are the most innovative and best-run real estate crowdfunding platform online today. Fundrise performance and growth figures have been solid. And with inflation picking up, I believe the returns will continue to be solid.
Real estate is one of the best ways to build wealth over time. With a company like Fundrise, investors can now invest in real estate projects that were once only available to ultra high net worth individuals or institutional investors.
There are of course no guarantees when it comes to investing. It’s always important to due your research before investing in anything. Start small and work your way up. Thankfully, Fundrise allows investors to invest as little as $500 to get started.
About the Author: Sam worked in investing banking for 13 years at GS and CS. He received his undergraduate degree in Economics from The College of William & Mary and got his MBA from UC Berkeley. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $250,000 a year in passive income, most recently helped by real estate crowdfunding. He spends most of his time playing tennis and taking care of his family. Financial Samurai was started in 2009 and is one of the most trusted personal finance sites on the web with over 1.5 million pageviews a month.