Fundrise was founded in 2012 and is the largest and best private real estate investment platform today. I’ve been working with Fundrise for close to a decade and have spoken to the CEO, Ben Miller, at length. Let me share my detailed Fundrise review so you can decide whether to invest with the platform or not.
As of 2023, Fundrise has $3.2+ billion in assets under management, $7+ billion in total asset transactional value, and over 387,000 accredited and non-accredited active investors. They’ve also helped investors earn over $226 million in net dividends so far and counting.
Fundrise is also the pioneer in eREITs and is my favorite real estate crowdfunding platform today. They offers investors an easy way to gain exposure to commercial office space and multi-family condominium complexes across the country.
You can also take a comprehensive look at Fundrise’s returns here. They’ve built a solid track record.
Why Invest With Fundrise?
More investors are looking for ways to diversify their investment portfolios and reduce volatility. In my mind, buying real estate is the best way to diversify and profit from inflation. Inflation helps boost rental income and real estate values.
However, many people don’t have the 20%-30% downpayment necessary to get started in rental property investing. In addition, many people don’t know how to get started due to a lack of experience and knowledge.
What’s great about Fundrise is they’ve made diversifying your investments into real estate easier than ever. Therefore, let’s explore what it’s like to invest in real estate crowdsourcing with Fundrise, one of the leaders in the space.
I’ve been a big fan of real estate since college. Since 2003, I’ve built a $10 million real estate portfolio in San Francisco and Honolulu. I’ve always just bought a place to live in for several years and then rented it out.
It’s So Easy To Start Investing With Fundrise
But with Fundrise, you don’t need to part with your life savings to get real estate exposure. You can open an account and start investing with as little as $10! They offer various types of diversified eREITs with no hassle. In the past, these deals would have required hundreds of thousands of dollars or even millions to access. No more!
The average investment on the Fundrise platform is about $5,000 with annual returns of between 9% – 10% according to management.
Since selling my main SF rental house in 2017, I reinvested $550,000 of the proceeds in real estate crowdfunding to earn income passively. This has been a life-saver given I also became a new father in 2017.
Now that I have two children to raise in the new decade, I appreciate the stability and the 100% passiveness of earning income through real estate crowdfunding.
Fundrise Company Overview 2023 And Beyond
Fundrise is one of the leading real estate crowdsourcing platforms that has raised over $355 million to date. They are based in the Dupont Circle area of Washington, DC. Here is a Fundrise review profile of key company stats.
Total Funding: $355.5 million in 8 rounds including two equity crowdfunding rounds from Fundrise members through their “Internet Public Offerings.”
Headquarters: Washington DC.
Description: Fundrise is the leading online real estate investment crowdfunding platform. Starting in 2012, Fundrise was the first company to take commercial real estate public online and offer true equity ownership in local properties.
Founders: Brandon Jenkins, Benjamin Miller, Kenny Shin
Categories: Real Estate Investment, Crowdfunding, Financial Services
Founded: January, 2011, Seed funding in 2011
Number of investors: 387,000+
Assets Under Management: $3.2+ billion
Total Asset Transaction Value: $7+ billion
Sign up link: Fundrise
Fundrise’s platform allows individuals to invest as little as $10 in real estate development projects.
The inspiration for founders (and brothers) Ben and Dan Miller was to open up real estate investing to ordinary people and to give them a chance to own a piece of property in their communities. Their father was a major real estate investor. Thus, the Miller co-founders have grown up with real estate in their blood.
Fundrise Funding History Details
Fundrise has raised over $355 in 8 rounds. The company had a $2 million seed round in 2011 followed by a $38 million Series A in 2014.
In early 2017, 2018, and 2019, Fundrise also raised over $14 million in funding from existing Fundrise investors through an “Internet Public Offering,” bringing total funds raised to over $60 million.
Then in 2021, Fundrise received $300 million in debt financing from Goldman Sachs. Fundrise is well capitalized to continue growing in 2023 and beyond.
Fundrise Management Team
Below is the current Fundrise management team for 2023. I actually spoke to Ben Miller at the beginning of 2022 regarding their excellent 2021 performance and 2022 real estate outlook.
Ben is a relatively conservative CEO who is always on the lookout for what could go wrong. This is the type of leader you want, compared to a leader who is always bullish. A cautious leader tries to anticipate problems, so that when they do arise, they can be more easily handled.
Fundrise’s leadership team gets high marks from industry insiders. The founding brothers, Benjamin and Daniel Miller, are sons of noted Washington D.C. real estate developer Herb Miller.
CEO: Ben Miller, who acts as CEO, has 15 years of experience in real estate and finance. He worked on $500 million of property as a managing partner of WestMill Capital Partners.
COO: Brandon Jenkins is Chief Operating Officer at Fundrise. Brandon helps to run the design and tech teams to ensure the Fundrise software platform is running smoothly. He was previously an investment advisor and broker for Marcus & Millichap, the largest real estate investment brokerage firm in the U.S.
CTO: Kenny Shin is Fundrise’s Chief Technical Officer. He has been the CTO since January 2011 and has previously consulted for Fortune 500 companies in the finance and technology space, including Fannie Mae, Oracle, Department of Defense and NATO.
CPO: Luke Roth joined Fundrise in 2014 as a Front-End Developer at the DC headquarters. He was promoted to VP of Product in 2018, Senior VP of Product in 2020, and to CPO in January 2022.
As Fundrise builds out its Innovation Fund to invest in technology, I can see the same cautiousness of Ben and his team’s buildout. This is the type of leadership and firm you want to invest with.
Fundrise Review: Overview Of The Best Real Estate Platform
- Prefunds all deals with their own capital, showing commitment and confidence in their deals.
- Very low minimum investment (only $10), compared to $10,000 for other platforms.
- One of the longest track record in the industry.
- Well capitalized with over $355 million in funding raised so far in 8 rounds.
- High quality deal flow (they only approve about 2% of deals).
- Allows non-accredited investors to diversify into commercial real estate deals previously unobtainable by common retail investors.
- Somewhat of a new space with a 10 year track record versus multi decade.
- A rising interest rate environment may put a damper on property prices in the short run, but should raise yields in the long run as rising interest rates is a long-term sign for strong demand.
- You’ll be taxed on your distributions as regular income versus the 15% on qualified dividends.
Latest Fundrise Company Performance
Fundrise has over 387,000 active investors and manages over $3.2 billion in assets as of 2023. In fact, Fundrise has risen to become a leading institutional real estate investor competing against heavyweights like BlackRock and more.
Fundrise’s returns are steady, with very little volatility. During times of stock market volatility, Fundrise has outperformed. Here is more detail on the latest Fundrise performance as well as historical returns.
If you want to invest in a more defensive asset class, investing in a Fundrise fund looks like a promising choice. The Vanguard real estate ETF moves up and down as much as the stock market. Below is another way to compare the stock market and Fundrise returns.
Fundrise Returns 2022: During A Bear Market
In 2022, Fundrise returned 1.5% overall compared to -25.10% for Public REITs, -18.11% for Public Stocks net of dividends, and -11.99% for Bonds net of coupon payments.
2022 was clearly a difficult year for risk assets overall. However, Fundrise overall significantly outperformed due to:
- Lower leverage (40% LTV vs. 70%+ other funds)
- A concentration of single-family and multi-family property, which outperformed other commercial real estate
- A concentration of properties in the Sunbelt / Heartland, which saw strong rent growth
Fundrise Returns 2021 During A Bull Market
2021 was a very strong year for Fundrise. It was a bull market across stocks, Public REITs, and many risk asset classes. Therefore, Fundrise can perform well in a bull market and in a bear market.
Take a look at the various return figures below.
The combination of high inflation, low interest rates, strong demographic trends, and greater interest in real estate helped boost performance.
Fundrise’s flagship Interval Fund saw a 28% return in 2021 as well.
Fundrise Historical Returns
Below is a look at the Fundrise historical returns. Notice how Fundrise outperforms extensively during bear markets. Therefore, if you want to diversify your portfolio, lower volatility, and outperform, Fundrise may be a good solution for you.
When you look at Fundrise’s AUM and active investor base history, it’s clear they have had significant growth.
Prior to Fundrise’s 2019, they were managing roughly $488 million in assets under management, had 63,271 active investors, and 76 employees. Their AUM growth and investor signups have continually been very promising.
Fast forward to 2023, and they have over $3.2 billion in assets under management, over 387,000 active investors, and roughly 200-300 employees. That’s significant growth in the last several years.
Real Estate Crowdsource Investing
One of the most efficient ways to invest in real estate around the country is through real estate crowdsourcing. Instead of flying around the country to kick some sheetrock, one can simply invest as little as $10 in various pre-vetted deals on Fundrise’s platform.
It wasn’t always the case that you could start with $10 on Fundrise’s platform. The minimum used to be $1,000, which was already an industry low. But starting in August 2021, Fundrise introduced its Starter Portfolio for beginning investors to get their feet wet.
Fundrise only chooses the best operators based on their careful vetting process. From there, the individual can analyze each potential deal to fit what suits them best.
Fundrise Investment Offerings Going Forward
In 2023 and beyond, Fundrise is focused on a concierge investment strategy approach based on the amount you want to invest. Below are Fundrise’s five investment account level offerings. Core is the most popular.
Sign up with Fundrise here today to get started. It’s free to explore and learn more.
Fundrise Review: Fees
Fundrise has a 0.15% annual advisory fee for managing investor’s accounts. In other words, every 12 months, you would pay a $1.50 advisory fee for every $1,000 you invested. That’s very low and even beats Vanguard’s 0.2% advisor fee.
In addition, there are no transaction fees, no sales commissions, no dividend reinvestment fees, and no auto-invest fees on Fundrise.
Each deal’s annual returns are quoted gross, not net, of annual servicing fees. The platform has historically not taken a spread between income from the asset and payments. Fundrise also charges real estate companies a one-time 1% to 2% origination fee and a $5,000 closing cost.
Currently, Fundrise charges a 0.85% flat management fee for the Flagship Fund, the Income Real Estate Fund, and its eREITs and eFund. That equates to $8.50 in management fees for every $1,000 invested. Due to their use of technology and lack of intermediaries, they’re able to offer competitive, low fees.
Note, there could be costs with redeeming depending on when the request is made. But that’s industry standard. And they also notate that there is the possibility for “other fees, such as development or liquidation fees” for work on a specific project.
Also to note, the newly launched Fundrise Innovation Fund differs from the real estate products and has a 1.85% flat management fee.
Fundrise, like other platform counterparts, touts the cost-saving advantages of crowdfunding over traditional investing models. Fundrise wants users to know that their advantages can boost returns on a theoretical project with a 14% gross annual return on a $100,000 investment.
On Fundrise, the investor would get a net return of 13.7% or $68,500 versus a 7.7% net return, or $38,500 on a non-traded REIT
Real Estate Crowdfunding Benefits
One of the most efficient ways to invest in real estate around the country is through real estate crowdsourcing. Instead of flying around the country to kick some sheetrock, simply invest as little as $10 and get exposure to various pre-vetted deals on Fundrise’s platform. Fundrise only chooses the best operators to provide high quality, resilient assets.
What’s awesome about Fundrise is that it has easy eREITs to invest in. Investors can can simply ride the geographic/strategic decisions the eREIT manager chooses to make a potentially healthy 8% – 16% return based on historical performance. Fundrise aims to acquire high-quality assets that range from debt to equity, commercial to residential, and more.
Each eREIT is also low-cost and tax efficient. Some of their real estate investment offerings include the Development eREIT, Fundrise eFund, Growth eREIT, East Coast eREIT, Heartland eREIT, Growth eREIT II, West Coast eREIT, Growth eREIT VII, Growth eREIT III, and the Balanced eREIT II.
Investors with the Core account level ($5,000+ initial investment) and above can invest directly in the majority of the funds that are presently accepting additional investments.
Here are three examples of Fundrise’s eREITs. I’m partial to the Heartland eREIT due to the new administration that’s focused on bringing jobs back to middle America.
Further Reading: Are Fundrise eREITs A Good Investment?
Real Estate Versus Equities Performance
The following chart compares the performance between real estate and the S&P 500. I’m surprised to see such massive outperformance by the FTSE NAREIT ALL REITs asset class.
But it makes sense because after the NASDAQ bubble burst in March 2000, real estate started taking off partly. Investors shifted capital to real assets. Further, the Fed aggressively lowered interest rates.
I’m in the camp that interest rates will stay lower for longer. As a result, I continue to see real estate as an attractive long-term asset class. The Fed and the government will continue to be supportive. Mortgage rates will continue to stay low. And more people are spending more time at home.
Real estate also tends to significantly outperform stocks during times of volatility. With stocks at all-time highs, we could easily see another 10% – 20% correction.
In 2023, I expect Fundrise to have continued steady performance as investors shy away from stocks and shift further into real estate.
I am continuously impressed with Fundrise’s forward-thinking ways. My only wish is that they open up a satellite office in San Francisco so we can go get a beer and brainstorm about the future of real estate even further.
Real Estate Investing Sweet Spot
Historically, there’s data that shows investors with roughly 20% allocated to real estate have outperformed those who only own stocks and bonds.
The 20% real estate model was made famous by the ~$25B Yale Endowment. It has outperformed traditional allocations 22.6% annually for decades by investing at least 20% of its portfolio in real estate.
However, in the past, the best private real estate opportunities require minimums of $100,000 or more, making them inaccessible unless you’re very wealthy. The only other option is to go through middlemen who charge high fees, thereby negatively impacting returns.
This is where Fundrise and their technology comes. You can invest on their platform with as little as $10 with a Starter account. They’ve also made it easy to unlock exclusive features as your investment grows.
Below is a chart highlighting the different sized real estate markets. You and I can’t buy trophy properties like the Empire State Building. These properties are just too large and expensive.
You and I can buy fixer uppers to make some sweat equity. I did so in 2014 by buying a panoramic ocean view property in Golden Gate Heights, San Francisco.
But fixers can be risky and stressful if you don’t know what you’re doing. So it seems like the Midsize market is the sweet spot for investing. There is less competition and a more inefficient market to exploit.
This is where the real estate crowdsourcing industry currently operates.
An Easier Life With Real Estate
The biggest benefit of not owning physical rental property is never having to deal with people. For the most part, tenants are fine to deal with if you’ve vetted them properly. But sometimes, no matter how nice they can be on paper and in the interview, conflicts may arise.
If I can invest in real estate and make a 7%-8% return a year, I’ll double my investment after 6-7 years. As an early retiree, I like low volatility and steady returns.
The main “drawback” to investing in eREIT is liquidity. Expect to invest in an eREIT or in a specific commercial real estate investment over a 3-5 year period before getting all your capital back.
Therefore, invest your capital accordingly. As an investor for over 25 years, “patient capital” is key to growing your wealth. You want to invest in trends and invest for the long term to enable compounding to take effect.
Fundrise Review Conclusion: Diversify Your Investments
Everybody should seek to own their primary residence to get neutral inflation. After that, consider investing in stocks, bonds, and real estate crowdsourcing investments through a company like Fundrise.
Fundrise has opened up new opportunities for everyday investors to gain access to properties they otherwise would not have access to in the past.
I’ve personally invested $810,000 in real estate crowdfunding to diversify and earn income 100% passively. I plan to continue diversifying my real estate holdings across the country. The spreading out of America is real post pandemic. It should continue to be a decade-long trend.
If you want to grow your wealth, it’s best to invest in income producing assets. Not only will they provide a higher income stream, they’ll also attract more demand. As a result, the principal value of your income investment may go up.
Fundrise performs extensive due diligence and pre-funds all its investments from its own balance sheet before offering them to investors. The company wants to align its interests with all of its investors.
The following diagram shows the approval process for a project at Fundrise.
As a real estate crowdfunding investor, proper due diligence is vital. Always take your time to research any fund or individual opportunities before investing.
Finally, Fundrise introduced the first low-cost private market investment portfolio. When you invest with Fundrise, your money is automatically diversified across their proprietary eREITs and eFunds. These investment products specifically designed to be low-cost and tax efficient.
For those who want to diversify their investments, own an underlying hard asset, not have to deal with maintenance and tenants, and take advantage of lower valuations and higher rental yields across the country, take a look at Fundrise.
I hope you enjoyed my comprehensive Fundrise review. To get started, simply click the button below.
About the Author: In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $310,000 a year in passive income. He spends time playing tennis, taking care of family, and writing online. Sam is one of the pioneers of the modern-day FIRE movement.
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