Fundrise is my favorite private real estate investing platform. The company began in 2012 and has grown to manage over $7 billion in assets. It specializes in Sunbelt single-family and multi-family real estate. This article will take a deep-dive look at Fundrise’s historical performance and Fundrise returns overall.
What’s great about Fundrise is that it is a vertically integrated real estate investing platform. This means that it sources its deals, manages its properties, and raises its own funds. As a result, there is more operational efficiency investing in Fundrise versus other platforms, which act as middlemen.
For background, I have personally invested $810,000 in private real estate funds and individual deals since 2016. I’ve shared my key takeaways after investing in private real estate for over five years. And my Fundrise returns and private real estate returns overall have been very positive.
I started Financial Samurai in 2009. This site is now one of the largest independently owned personal finance sites with about one million organic pageviews a month. I spent 13 years working in investment banking. And real estate accounts for about half of my current $350,000 annual earnings in passive investment income.
Fundrise Returns Compared To Stocks And Public REITs
One of the main reasons why I invest in Fundrise and other private real estate investments is due to lower volatility, potential outperformance, diversification, and 100% passive income and distributions.
Public REITs can be highly volatile and actually declined more than the S&P 500 during the March 2020 stock market meltdown. In the 2022 bear market, public REITs have also been underperforming the S&P 500. As a result, investing in public REITs is not a good way to minimize portfolio volatility.
Fundrise is preferable and their performance proves it. Here are the latest Fundrise returns. Year-to-date Q3 2022, Fundrise has returned 5.4% to all clients versus -28.34% for Public REITs and -23.87% for Public Stocks. Again, notice how Public REITs have declined more than the S&P 500.
In 2021, Fundrise returns were 22.99% versus 39.88 for Public REITs and 28.71% for the S&P 500.
In 2020, Fundrise returns were 7.31% versus negative 5.86% for Public REITs and 18.4% for the S&P 500.
Before the pandemic in 2019, Fundrise returns were 9.16% versus 28.07% for Public REITs and 31.49 for the S&P 500.
Fundrise Returns During Bear Markets
If you notice from the Fundrise returns chart, Fundrise tends to significantly outperform during bear markets. A return of 5.4% through Q3 2022 versus a negative 23.87% return in stocks is an astounding 29.27% outperformance.
In 2018, Fundrise returns were a strong 8.81% versus negative 4.10 for Public REITs and -4.38% for the S&P 500. Therefore, investing in Fundrise has proven to be a good way to diversify your portfolio during downturns.
The main reasons why Fundrise outperforms during bear markets are as follows:
- Invest in undervalued properties in the Sunbelt
- Buy and hold properties for rental income, which is much stickier
- Buy and rehabilitate properties to boost property values and rents
- Experienced management team that is able to identify strong buying opportunities
- Fundrise is easily able to raise funds to purchase properties with cash
As a early retiree who is focused on generating 100% passive income so I can raise my children and do what I want, Fundrise helps fill my investing needs. I’m not looking for aggressive returns. Instead, I’m looking for stable returns no matter the economic environment.
Further, I’m a strong believer in investing in the heartland of America. Work from home is here to stay post pandemic. Further, technology and the internet is only getting better and more efficient. As a result, more people will logically relocate away from high-cost areas of the country to low-cost areas of the country.
Investing in heartland / sunbelt real estate is a long-term, multi-decade trend I want to be a part of. Other savvy investors also believe in this trend, which is why a tremendous amount of capital has gone inland.
Fundrise Historical Performance
You can also check out Fundrise’s historical performance directly on their site. Given Fundrise has many diversified funds, each client’s returns will be different. However, overall, you can see Fundrise returns in aggregate.
Below is a chart that shows the real-time returns of Fundrise client accounts. It is updated daily and displays over 435,000 accounts. As an investor, you want to invest for as long as possible to let compounding work in your favor.
Fundrise offers a few different plans or portfolios based on your goals. You can invest for income, growth, or a combination of both. Additionally, each investor’s portfolio will differ because of the timing of when they started investing.
As you look at the historical Fundrise returns, please remember that your returns will vary. During a bull market, growth funds will tend to outperform income funds. During a bear market, balanced and income funds will tend to outperform growth funds.
My Fundrise Returns After 5+ Years
After publishing my piece on investing in long-term trends in the heartland, I decided to invest in the Fundrise Heartland eREIT fund at the end of 2016. The Heartland eREIT focuses on a balanced approach of acquiring both debt and equity investments in commercial real estate assets located primarily in the Midwest region.
Here are my Fundrise returns as of 4Q 2022:
- 2017: 8.1%
- 2018: 5.7%
- 2019: 7.3%
- 2020: 8.1%
- 2021: 41.7%
- 2022: 10.2%
- All time – 12.6% (annually)
2021 was clearly a banner year with a 41.7% increase because so many people relocated to the heartland. Once the pandemic began, droves of people relocated away from expensive coastal cities to the midwest region.
Such robust returns will unlikely happen again. But this massive return shows how patiently investing and waiting can pay off big. It often takes time for investors to recognize a trend. To make outsized returns, you’ve got to take an earlier leap of faith.
I’m also pleased my Fundrise portfolio is up 10.2% through the first three quarters of 2022 while the S&P 500 is down about 25%. This is exactly the type of outperformance I was hoping for when I first invested. I want investments that zig when my stocks zag. The current dividend is about 2%.
Fundrise Plans and Portfolios
Fundrise has changed the way they offer their portfolios. In the past, you could invest in funds that invested by region. But as Fundrise has grown, they decided to offer funds based on investment objectives. Below are the five fund offerings. You can click the image to learn more.
- Starter – For those just starting off, the Starter portfolio is the most straightforward portfolio. You can invest with as little as $10.
- Basic – For those who want to invest with $1,000 or more, go with the Basic. You can invest using an IRA and more.
- Core Strategy – If you want to invest at least $5,000, this offers increased customization. It’s the most popular of the five account types.
- Advanced – If you have at least $10,000 to invest and are looking for income and higher returns, this portfolio is most suitable.
- Premium – If you are an accredited investor with at least $100,000 to invest, this portfolio offers both growth and income. It has the most account features and offerings.
You can learn more about these strategies at Fundrise’s website.
Common Questions Asked About Fundrise
What is the management fee?
The annual advisory fee is 0.15% and annual asset management fee is up to 0.85%. These fees are at least 50% lower than traditional private real estate investment funds.
How long should I invest in a Fundrise fund?
The recommended investment time frame is five years or longer. Long-term investor enables investors to earn compound returns. Therefore, please invest only with money you don’t need for five years.
Does Fundrise pay a dividend?
Yes, Fundrise investors receive dividends quarterly, assuming the portfolio produces the cash to support dividends. Balanced and Income portfolios pay dividends. Investors can obtain the dividends as cash or have them automatically reinvested. In general, I recommend reinvesting dividends.
How is Fundrise taxed?
Dividends earned from Fundrise investments are taxed as ordinary income, which is true for all REITs.
What is the minimum investment amount?
$10. Fundrise used to have a minimum investment amount of $1,000, then $500, and now only $10. The reason Fundrise can offer institutional quality access for such a low minimum is due to its technology and scale.
How are dividends and returns taxed?
You will receive a 1099-DIV tax form. The income and returns are taxed as ordinary income.
How risky is Fundrise?
Based on my experience, Fundrise is less risky than stocks and public REITs. You can see the performance numbers for yourself above. Fundrise is much less volatile than stocks and public REITs as well.
Investing With Fundrise For The Long Term
My experience investing with Fundrise has been great so far. I have followed them since 2015 and have watched them innovate and grow.
With over $7 billion in assets under management, Fundrise has grown into one of the largest private real estate investing platforms. As a result, they can use their brand and capital to potentially purchase more deals at favorable prices.
With over a 10-year track record of operation, Fundrise is here to stay for the long term. I’ve spoken to Ben Miller, the CEO and co-founder of Fundrise multiple times. I am impressed with his ability to invest prudently in various economic environments.
In fact, Ben has always been more cautious and measured than most CEOs, which is exactly what I want. There are plenty of CEOs and investors who are cheerleaders and permabulls, which can be dangerous.
When I spoke to Ben in early 2022, he warned me of 8%+ inflation rates and a rapid rise in mortgage rates as a result. This type of foresight is excellent as it made him not chase hot deals in 2021 and early 2022. A disciplined and measured approach to investing is what Fundrise follows.
If you’re looking to earn less volatile returns passively, I recommend taking a look at all that Fundrise has to offer. Please make sure you do your own due diligence before making any investments.
Financial Samurai is one of the largest independently-owned personal finance sites in the world. It was started in 2009 to help readers slice through money’s mysteries. Sam is a 26-year financial veteran who writes from firsthand experience. He has invested $810,000 in private real estate since 2016.