Fundrise was founded in 2012 and is one of the largest and best private real estate investment platform today. I've been working with Fundrise for years and Financial Samurai is a six-figure investor in Fundrise. I've also met with and spoken to the CEO, Ben Miller, at length multiple times before. Let me share my detailed Fundrise review so you can decide whether to invest with the platform or not.
As of 2024, Fundrise has $3.3+ billion in assets under management, $7+ billion in total asset transactional value, and over 500,000 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, or private real estate funds. They offer investors an easy way to gain exposure to residential and industrial real estate in the Sunbelt region where valuations tend to be lower and yields tend to be higher.
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. Real estate is a more stable asset that that provides shelter as well.
However, many people don't have the 20%-30% downpayment necessary to get started in rental property investing. Some people also have a difficult time coming up with a 10% down payment for a primary residence. 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 private real estate easier than ever. With just $10, you can get started investing in Fundrise. Let's explore what it's like to invest in real estate crowdsourcing with Fundrise, one of the leaders in the space.
My Real Estate Investing Background
For background, I've been a big fan of real estate since graduating college in 1999. Starting in 2003, I've built a ~$15 million physical 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.
However, after having my first child, I decided to slow down my physical rental property accumulation because I wanted to spend more time being a father. Managing rental properties takes work and patience. This is where when I started looking at passive real estate alternatives in 2016.
I also believed that investing in real estate in the heartland was a good idea due to a demographic shift towards lower-cost areas of the country thanks to technology. With so much concentration of expensive real estate in San Francisco and Honolulu, I needed to diversify.
It's 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 private real estate funds 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. As you become more familiar with the platform and more sophisticated, you can invest more and customize your investments with its new Fundrise Pro feature.
Since selling my main SF rental house in 2017, I reinvested $954,000 of the proceeds in private real estate funds to earn income passively. This has been a life-saver given my responsibilities as a father.
Now that I have two children to raise, I appreciate the stability and the 100% passiveness of earning income through real estate crowdfunding. Investing in private real estate funds has simplified my life, reduced stress, and earned me more passive income. It's been great to invest in real estate outside of expensive San Francisco.
Fundrise Company Overview 2024 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
Contact: contact@fundrise.com
Employees: 200+
Number of investors: 500,000+
Assets Under Management: $3.3+ billion
Total Asset Transaction Value: $7.7+ billion
Sign up link: Fundrise
Fundrise Background
Fundrise's platform allows individuals to invest as little as $10 in real estate development projects. As a result, it's much easier for everyday investors to dollar cost average into real estate and venture capital.
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 million 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 uses an innovative and smart way to raise capital, which is through its Fundrise Internet Public Offering. Fundrise enables existing investors to invest in Fundrise, the company, based on how much they've invested in the funds. It's a smart way to get the users of Fundrise to also invest in the company.
Fundrise Management Team
Below is the current Fundrise management team for 2024. I actually spoke to Ben Miller multiple times regarding their good performance and latest real estate outlook. Ben turned out to be spot on regarding higher-than-expected mortgage rates and interest rates.
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.
Profiles Of C-Level Executives
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.
CFO: Alison Staloch has been the Chief Financial Officer of Fundrise since 2021. Previously, she worked at the U.S. Securities & Exchange Commission for six years as a Chief Accountant. Prior to that, she was a KPMG for 10 years.
CMO: Jon Carden is the Chief Marketing Officer of Fundrise and has been with the firm since October 2017. Previously, Jon was at Uber for two years as Head of Digital, Southeast.
Fundrise Review: Overview Of The Best Real Estate Platform
PROS
- 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 residential and industrial real estate deals previously unobtainable by common retail investors.
- More customization for real estate enthusiasts through its Fundrise Pro offering
CONS
- Somewhat of a new space with a 12-year track record versus multi-decade track record for stocks.
- 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.
Deep-Dive Interviews With Ben Miller On Real Estate
Here's my latest interview with Ben Miller, CEO of Fundrise about his views on real estate and artificial intelligence. Ben Miller believes we are past the bottom of the real estate market with brighter days ahead. In addition, Ben is bullish on how artificial intelligence companies will change the world.
I highly encourage you to listen to episode before investing. This way, you can gain comfort and better understanding about khow Fundrise works, its investment process, and its goals.
Conversation with Ben Miller about real estate as it relates to Fundrise's real estate product.
Conversation with Ben Miller about the future of artificial intelligence as it relates to Fundrise's venture product.
Latest Fundrise Company Performance
Fundrise has over 500,000 active investors and manages over $3.3 billion in assets as of mid-2024. 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 the Fundrise real estate product 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: Outperformed 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
Historically, Fundrise has outperformed during stock market corrections and bear markets. Although, historical performance does not guarantee future performance.
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 Historical Returns
Below is a look at the Fundrise historical returns. Notice how Fundrise outperforms extensively during down markets (2018/2022). Therefore, if you want to diversify your portfolio, lower volatility, and outperform, Fundrise may be a good solution for you.
Fundrise Growth In Assets Under Management And Investors
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 2024, and they have over $3.3 billion in assets under management, over 500,000 active investors, and roughly 335 employees. That's significant growth in the last several years.
In 2023, Fundrise had a difficult time due to 11 Fed rate hikes since 2022. Given real estate performance tends to lag, you saw an underperformance of Fundrise returns compared to the S&P 500 in 2023. However, now that inflation has peaked and mortgage rates are coming down, Fundrise has begun to perform again.
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.
New Fundrise Offerings For 2024 And Beyond
In 2024 and beyond, Fundrise launched some new initiatives:
Fundrise Pro: A subscription service for investors who want more customization
Venture product: Enables investors to take advantage of private growth company opportunities post the 2022 bear market. The product invests in artificial intelligence, property tech, financial tech, SAAS, and more.
Opportunistic credit product: A way for investors to take advantage of higher interest rates through developer loans and refinances for high-quality projects that need a bridge due to the dramatic increase in rates since 2022
In addition to these products, Fundrise offers a variety of other products to choose from.
Fundrise Review: Fees
Currently, Fundrise charges a 0.85% flat management fee for their main real estate products. 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.
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.
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.
In addition, there are no transaction fees, no sales commissions, no dividend reinvestment fees, and no auto-invest fees on Fundrise.
The venture product has a 1.85% fee, but 0% carry fee. Traditional venture capital funds have a 2% – 3% management fee and 20% – 35% carry fees.
Different Funds Different 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.
The Fundrise venture product differs from the real estate products and has a 1.85% flat management fee. This is much lower the traditional venture capital funds that charge 2% – 3% of assets under management AND 20% – 35% of profits (carry). The venture product charges no (carry) and has a $10 investment minimum.
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 across the country is through real estate crowdsourcing. Instead of flying around the country to inspect properties, you can invest as little as $10 and gain exposure to various pre-vetted deals on Fundrise’s real estate platform.
Fundrise has a team of portfolio managers who carefully vet every potential investment opportunity. Only a small minority of reviewed investments make it through Fundrise's rigorous selection process. Once an investment is made, Fundrise works to optimize each one for higher returns.
As a busy individual, you don't have time to hunt for deals and monitor each investment. You'd rather pay a small fee and have a team of professionals manage your real estate portfolio for you.
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 2024+, 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 ~$40 billion 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 Private 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 private real estate is liquidity. Expect to invest in an eREIT or in a specific 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: A Great Way To Diversify
Everybody should seek to own their primary residence to get neutral inflation. After that, consider investing in stocks, bonds, and private real estate 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. Real estate is my favorite asset class to build wealth because it provides utility, generates income, can be improved upon, rides the inflation wave, is tangible and less volatile.
I've personally invested $954,000 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.
When you invest with Fundrise, your money is automatically diversified across a variety of assets. 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.
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.
FinancialSamurai.com was started in 2009. It is now one of the most trusted personal finance sites today with over 1.5 million pageviews a month. Financial Samurai has been featured in top publications such as the LA Times and The Chicago Tribune. This Fundrise Review is a FS original publication.
Fundrise is a sponsor of Financial Samurai and Financial Samurai is an investor in Fundrise.
