Updated February 9, 2021

Fundrise Review: Is It Legit?

Pros and Cons

Just $10 to start
Quarterly dividends
Passive investing

Illiquid investment
Unknown future returns

Bottom Line

Passive real estate investing with no income requirement

Investing in commercial real estate can be a lucrative way to expand your portfolio and grow your money. Over the last 30 years, real estate has performed better on average than stocks.

Many people think they don't have the money necessary for investing in real estate. But investing with Fundrise offers a great way for the "average" person (aka "non-accredited investors") to get started with $10. Is it the right choice for you?

Learn more in our detailed Fundrise review.

What is Fundrise?

Fundrise is a real estate investment platform. It's a new way to invest by using crowdfunding to pool funds with other investors in order to purchase properties.

The company founder, Ben Miller, started Fundrise with the idea to make real estate investing accessible to everyone.

The investment platform is open to anyone who is a U.S. resident 18 years or older. The minimum investment is only $10 for the Starter Portfolio.

Since its founding in 2012, Fundrise has invested more than $4 billion in real estate projects in the country. The company is valued at $800 million. It currently has more than 150,000 active investors and over $500 million in assets under management.

Best Place for Beginners to Invest in Real EstateSelect your state to become a real estate investor

How does Fundrise Work?

The money you invest gives Fundrise the capital necessary to acquire, build, and manage properties. These include things like apartment complexes, single-family homes, office buildings, industrial properties, hotels, and shopping centers.

Fundrise earns returns in a variety of ways:

Buying undervalued real estate, and then renovating the property to raise the rents or property value
Collecting rental income on stabilized properties
Holding mortgages and collecting interest
Acquiring properties that have potential to appreciate in value

The profits are then distributed to the shareholders.

If you're looking for a short-term investment, this isn't the app for you. Fundrise is best for long-term investors who want a simple way to get into real estate. Check out their website to start investing with just $10.

Invest in Real Estate with $10+

Click Here to Start Investing

Become real estate investor with as little as $10

Here is an in-depth overview of Fundrise's investment strategy over the next year in light of the current crisis.

Fundrise e-REIT Explained

Fundrise's main investment offering is their eREIT (electronic Real Estate Investment Trust). You may have heard of traditional REITs, but Fundrise's eREIT works a little differently.

A REIT is a company that owns and operates real estate assets. With a traditional REIT, you can invest in the company like a stock (such as the Vanguard REIT). You can buy and sell shares anytime on the open stock market using a brokerage.

But Fundrise's eREIT is what's known as a public non-listed REIT. This means it's regulated by the SEC, but not listed on the open stock market. You can only buy directly through the company (in this case, Fundrise's website).

The downside of not being able to trade openly is that you can't sell your investment whenever you want. But the upside is that eREITs could have better return potential because they don't need to maintain liquidity.

Here's a chart of some key differences between Fundrise's eREIT and traditional REIT.

eREIT	Traditional REIT
Not publicly traded	Publicly traded on the stock exchange
No secondary market	Listed on secondary market
Not as liquid; Can only sell during certain times	Can buy and sell anytime
Sold directly by Fundrise	Sold on the open market
Low management fee	Higher upfront fees
Regulated by SEC	Regulated by SEC

Debt vs Equity Real Estate Investing
Real estate crowdfunding platforms offer two kinds of opportunities:

Debt investing means the investor becomes one of the lenders for a property owner. As the owner pays back the mortgage on that property, your investment is paid off with interest.
Equity investing means you own a piece—or stake—of the real estate property itself. You can earn a return on your investments through income (like rental fees) or through the property as it appreciates in value.

Making Money with Fundrise

Investors are paid in 2 ways:

1. Quarterly dividends
This is rent income generated from the rental properties. You'll typically receive dividend distributions a few weeks after the end of each quarter. You can choose to have them directly deposited into your bank account or automatically reinvested back into Fundrise.

2. Appreciation in share value
You'll receive proceeds when a property is sold. Appreciation is only paid at the end of the investment - this can take a few years. While a few years might sound like a long time, in reality, real estate has shown to be an overall good investment.

Is commercial real estate a good investment?
While commercial real estate investments comes with risks, the average return has outperformed the stock market over the last 30 years. Historically, this type of investing has been limited to people who have enough capital to buy and manage properties. But crowdfunding through platforms like Fundrise has opened up commercial real estate to the everyday investor.

If you want to get into real estate without tying up your money for years at a time, check out Groundfloor. They offer short-term, high-yield investments for just 6 to 12 months.

Returns and Performance

Here's a look at how Fundrise has performed for the past 6 years:

The average annualized returns (after the fees are subtracted) are calculated below:

2014	12.25%
2015	12.42%
2016	8.76%
2017	11.44%
2018	9.11%
2019	9.47%

Invest in Real Estate with $10+

Click Here to Start Investing

Become real estate investor with as little as $10

Can you make money with Fundrise?

You can make money with Fundrise through rental income, which you'll get in quarterly dividends. The other way to earn returns is when the properties appreciate over time and then are sold. Fundrise does charge a 1% management fee. The minimum investment is $10.

The average return for Fundrise investments in 2019 was 9.47%. This assumes you reinvest dividends back into Fundrise. As always, past results don't guarantee future success. It's important never to invest what you can't afford to lose.

We do like that they've been consistent and in place for a number of years now. However, it's unclear how this kind of investment would perform in a financial crisis like the 2008 market crash.

How is Fundrise taxed?
Your earnings with Fundrise are taxed as ordinary income. Dividends and distributions are reported on a IRS 1099-DIV tax form each year.

Fees

Fundrise charges an all-in 1% management fee as follows:

0.85% annual asset management fee (that goes towards operating costs of the projects)
0.15% annual advisory fee (can be waived in certain circumstances)

This pricing is pretty competitive. However, some of Fundrise's potential costs are not as transparent. Read on to learn more.

With Fundrise, there is no middleman. You invest in eREITs and eFunds directly through the platform. That means you save on broker commissions.

Hidden Fees

Origination fee: A 0-2% acquisition fee when Fundrise buys a new asset.
Early redemption (or "exit") fee: 1-3% loss for redeeming shares within five years of investing. (No fee in the first 90 days.)
Self-directed IRA fees: An annual asset fee of $125 to Millennium Trust Company

Specific eREITs may have additional fees, including asset management, acquisition, servicing and others. For a full picture of these charges, you would need to review the few hundred-page circular that comes with each investment.

If you're looking for a no-fee alternative, check out DiversyFund. The company owns all its real estate projects, so they don't charge management fees.

How to Withdraw Money

Fundrise investments are meant to be long term - typically five years or more. Its eREITs are not publicly traded (unlike traditional REITs) so you can't sell your shares and withdraw the funds anytime you want.

If you plan to invest in Fundrise, this is something to keep in mind.

But it does have a redemption plan to sell your shares four times a year (at the end of every quarter). Based on how long you've held your fund, this may cost you up to a 3% penalty. But this redemption program gives investors some flexibility if you want to withdraw money (with some limitations).

How do I get money out of Fundrise? To redeem your shares, you must submit a redemption request through the website. Go to Settings then Account Settings. You can find the Redemption Request Form at the bottom of the page.

Shortcut: With Fundrise, after five years you can redeem your shares without paying any fees. If you don't mind tying your money up for a while, open a starter portfolio for only $10.

The penalty for redeeming shares under this program is as follows:

None for the first 90 days
3% if shares are owned for less than 3 year
2% if shares are owned 3 - 4 years
1% if shares are owned 4 -5 years
None for shares held for at least 5 years

Fundrise Pros & Cons

PROS:

No income or accreditation requirements
Just $10 to start
90-day money-back promise
Portfolio of properties across the U.S.
Quarterly dividend distributions
Completely passive investing
Available as IRA
See Fundrise Deal >>

CONS:

Illiquid investments (typically five years or more)
Unknown future performance and returns
Tax liability—regular income tax on earnings
Lack of fees transparency

Read on to learn more.

How much do you want to invest in real estate?

How to Get Started

Interested? Ready to get started? Follow these simple steps to begin investing in real estate through Fundrise.

1. Visit website

2. Pick a plan
First, you'll choose which account level you want (Starter, Core, or Advanced). Read more about these three choices below.

Which plan should you get? Depends on how much you have to invest. Here are our tops picks for your minimum balance.

How much do I have to invest?	Fundrise Plan
$10 - $1000	Starter
$1,000 - $5,000	Basic
$5,000 - $10,000	Core
$10,000+	Advanced
$100,000+	Premium

3. Sign up
The process takes 10 minutes and requires some personal information like your name, address, phone number and Social Security number.

4. Fund your account
You can link a checking account to your Fundrise account or set up a wire transfer. It may take several days for your account to fund so you can start investing.

5. Earn money
Investors are paid dividends on a quarterly basis and at the end of investments when the properties get sold. (More on that below.)

Is Fundrise Safe?

Fundrise uses bank-level security to keep your personal information safe. This includes 2-factor authentication, AES bit symmetric key encryption, and Transport Layer Security (TLS).

Fundrise portfolios are made up of qualified offerings regulated by the Securities and Exchange Commission (SEC). They must follow strict reporting requirements. So you get the same sense of transparency as required for public companies.

Being registered with the SEC also allows Fundrise to open investments to everyone, not just accredited investors. Since it's regulated by the SEC, the investment is less risky.

But all investing come with some risk. Fundrise has done well since its establishment, but there is no guarantee it'll continue to do so.

See Current Offer >>

Types of Accounts

Fundrise supports the following accounts:

Personal taxable account
Joint account
Certain entity accounts (Trusts, Limited Liability Companies, Limited Partnerships, C Corporations, and S Corporations)
Traditional or Roth IRA (through Millennium Trust Company)

You Should Know
Typically, real estate investments are made through taxable accounts, which require you to pay income tax on what you earn. You do have the option to invest in Fundrise through a self-directed IRA. This can provide a tax advantage when investing in private real estate.

There is an additional $125 annual fee when you invest with Millennium - Fundrise's self-directed IRA partner.

Portfolio Options

Investors have five account levels. Each investment portfolio diversifies your funds differently, based on your goals. Pick the one best for your needs.

Starter Portfolio ($10 minimum)
You will be invested in Fundrise's Flagship Fund. This fund owns over $250 million worth of real estate assets around the US.

90-day money-back guarantee
If you decide you aren't comfortable with your Starter portfolio, you can request your money back within the first 90 days. Fundrise will buy the investment from you for the amount you paid.

Basic Portfolio ($1,000 minimum)
This option also lets you invest in an IRA. You also get access to the Fundrise iPO.

Core Plans ($5,000 minimum)
This lets you customize your portfolio to better suit your goals. Pick the one that best fits your financial goals.

Supplemental Income: This focuses on properties that generate cash flow (collecting rent or interest). You will earn more dividends.
Balanced Investing: This approach creates a more balanced mix of income and growth properties. You earn money through both dividends and appreciation.
Long-Term Growth: This focuses on properties that are expected to appreciate in value. You'll earn less dividends now, but the potential returns could be the highest in the long term.

You're able to change your investment plan at any time, so you're not stuck with your initial choice. For example, if you started with Supplemental Income, you can change it to Balanced Investing. Changing will only affect future investments and will not rebalance your current positions.

Advanced Portfolio ($10,000 minimum)
This tier portfolio offers access to Plus Plans. This is an optional add-on that allocates a portion of your portfolio to more sophisticated strategies for potentially higher returns.

Premium Portfolio ($100,000 minimum)
This option is offered for accredited investors. You get access to private equity funds. These specialized offerings periodically become available. You also get priority access to the investment team.

How Does Fundrise Selects Projects?

Fundrise reviews thousands of real estate investment deals and selects only the top 2% of projects. Here's the process:

Real estate companies submit projects to Fundrise.
Fundrise conducts a basic screening to ensure it's up to company standards.
Projects go through an intense underwriting process, which includes (but not limited to):
- Credit and background check
- Experience and track record check
- On-site visit by member of Fundrise team
- In-depth schedule and budget analysis
- Market analysis (supply and demand, demographics, etc.)
- Sale/refinance stress tests
If the project passes, Fundrise approves the deal and acquires it.

Fundrise rates each of its projects with a value ranging from A1 to E3. This estimates the risk of a project, with E3 being the riskiest. For example, a project rated D will carry more risk than something rated B, but also have the potential for greater returns.

Invest in Real Estate with $10+

Click Here to Start Investing

Become real estate investor with as little as $10

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The Fundrise Platform and Features

Here's a more detailed look at how the Fundrise platform works and some of its features.

When you log into your Fundrise account, you'll see your dashboard with your:

Summary of returns: Shows how much you've earned in dividends and appreciation, and how much was taken out in advisory fees.
Growth graph.
News feed announcing recently acquired or completed projects.

The example shown below is a Core long-term growth portfolio.

You can click into your "Portfolio" tab to see your investments in detail. This graph allows you to see your spread of projects at a glance. You can see where they lay on Fundrise's risk scale, as well as percentage of debt and equity projects.

You can also see the complete list of your projects. In this portfolio, there are 80 active projects. You can click into each one to see more details such as the projected annual return, total size, location, timeline updates, and market analysis.

This portfolio has a mix of apartment buildings and commercial real estate. The investments consist of new construction, renovations, and stabilized apartments.

You'll also get a full breakdown of your portfolio by each eREIT and their values.

In your "Performance" tab, you can see your personal returns information.

Fundrise App

Fundrise recently released a mobile app for iPhone. The app for Android is currently in the works.

screenshot from a CreditDonkey author's account

The app is a great companion to the desktop site. You can:

Touch ID log-in (with PIN backup)
Sign up for Fundrise
View your portfolio dashboard
Add funds
See transaction history
View your active projects
See breakdown of each eREIT's performance
Get project updates and photos

How It Compares

See how Fundrise stacks up against the competition, including other real estate crowdfunding platforms.

Fundrise vs Traditional REIT (such as Vanguard REIT)
There's one major difference between Fundrise's eREIT and a standard REIT—liquidity.

A traditional REIT (Real Estate Investment Trust) is traded on the public market, which means investors can sell any time the stock market is open.

Fundrise's eREIT is not publicly traded (you can only buy on the Fundrise platform) and thus requires a long-term investment.

Fundrise vs RealtyMogul
RealtyMogul is a crowdfunding platform with opportunities for both accredited and average investors. If you're non-accredited, you can invest in their REITs with a minimum of $5,000.

For the accredited investors, you can invest in Realty Mogul LLC shares, or real estate loans or debt.

	Fundrise	RealtyMogul


	SPECIAL OFFER Invest in Real Estate with $10+ - Learn More	SPECIAL OFFER Access Private Market Offerings - Learn More
	Benefits and Features
Annual Fee	1% management fee	1% - 1.5%
Minimum Deposit	$10	$5,000
Dividends	Choose quarterly payouts or auto reinvest	Monthly or quarterly payouts or auto reinvest
Investment Types	Commercial, single family, industrial	Commercial, multifamily, office, industrial
Wealth Requirements	None	Non-accredited investors are eligible to invest in the REIT offerings; Accredited investors have access to private placements

	Invest in Real Estate with $10+ Earn Passive Income with Real Estate Starter Plan	Access Private Market Offerings Invest in Real Estate Investment Trusts (REITs) Earn Potential Cash Distributions
	Terms Apply. Offering Circulars

Fundrise vs. DiversyFund
DiversyFund also requires just $500 to start and has no income or accreditation requirements.

DiversyFund focuses on purchasing multi-unit properties (like apartment complexes) in high-growth areas and generating rental income. It directly owns all its projects. This allows them to charge no management fees.

However, despite the name, DiversyFund only has 3 projects so far. It doesn't have the nationwide diversity that Fundrise has. Another downside is that there is no dividend payouts. So it's a long term investment of at least 5 years before you get any returns.

	Fundrise	DiversyFund


	SPECIAL OFFER Invest in Real Estate with $10+ - Learn More	SPECIAL OFFER Earn Passive Income with Real Estate - Learn More
	Benefits and Features
Annual Fee	1% management fee	$0. No management fees and no commissions
Minimum Deposit	$10	$500
Phone Support	No	Yes, normal business hours
Live Chat Support	No	Yes
Email Support	Yes	Yes
Dividends	Choose quarterly payouts or auto reinvest	Automatically reinvested
Investment Types	Commercial, single family, industrial	Apartment buildings and condos
Wealth Requirements	None	None

	Invest in Real Estate with $10+ Earn Passive Income with Real Estate Starter Plan	Earn Passive Income with Real Estate Become Part-Owner in Apartment Complexes Growth REIT
	Terms Apply. Offering Circulars

Fundrise vs. Roofstock
Roofstock works completely differently. Roofstock is not a crowdfunding platform. Instead, it's an online marketplace to buy and sell single-family homes.

You can buy a house already with tenants and immediately start earning rental income. You hold the direct title to the property. You're responsible for managing it and making repairs. Roofstock does offer property management services so you can be hands-off.

Roofstock does not have accreditation or income requirements. However, you'll need enough money to either purchase the house outright or finance it. In this sense, Fundrise is better for small investors without a lot of capital.

	Fundrise	Roofstock


	SPECIAL OFFER Invest in Real Estate with $10+ - Learn More	SPECIAL OFFER Build Wealth Through Real Estate - Learn More
	Benefits and Features
Annual Fee	1% management fee	No platform fee. Buyers pay 0.5% transaction fee for each purchase or $500 (whichever is greater)
Minimum Deposit	$10	House down payment usually requires at least 20% of purchase price
Dividends	Choose quarterly payouts or auto reinvest	Rental income from your properties
Investment Types	Commercial, single family, industrial	Single family homes
Wealth Requirements	None	None

	Invest in Real Estate with $10+ Earn Passive Income with Real Estate Starter Plan	Build Wealth Through Real Estate
	Terms Apply. Offering Circulars

Fundrise vs. Rich Uncles
Rich Uncles focuses more on collecting rent and paying monthly dividends. Fundrise also has growth properties for more long-term growth.

Rich Uncles requires a minimum investment amount of $500 for its National REIT. You'll also need an income of $70,000 AND a net worth of $70,000, so that may not be accessible to many investors.

However, the platform also offers a Student Housing REIT with no income or net worth requirements. You can start investing with just $5. While this offering may appeal to beginning investors without a lot of capital, the investments are more limited.

	Fundrise	Rich Uncles


	SPECIAL OFFER Invest in Real Estate with $10+ - Learn More
	Benefits and Features
Annual Fee	1% management fee	3%
Minimum Deposit	$10	$5 for Student Housing REIT $500 for National REIT
Dividends	Choose quarterly payouts or auto reinvest	Monthly dividends or auto reinvest
Investment Types	Commercial, single family, industrial	Commercial properties with long-term recognizable tenants, student housing
Wealth Requirements	None	None to invest in Student Housing REIT $70,000 annual income and $70,000 in net worth to invest in National REIT

	Invest in Real Estate with $10+ Earn Passive Income with Real Estate Starter Plan
	Terms Apply. Offering Circulars

You Should Know
Rich Uncles only chooses commercial projects with 50% equity and recognizable big-name tenants. Fundrise offers more developing projects.

What the Experts Say

Beginners can start investing in real estate with just a little bit of money. Find out if that's a good idea.

As part of our series on real estate investing and passive income, CreditDonkey asked a panel of industry experts to answer some of our readers' most pressing questions:

Is real estate crowdfunding a safe or risky investment?
What is the best way for beginners to invest in real estate?

Here's what they had to say:

Bottom Line

Typically, investing in real estate requires large amounts of money. Fundrise gives anyone the opportunity to enter the world of real estate investing at low cost and without taking a large risk. It's also an easy way to invest as its completely passive.

Because it's a long-term investment, though, you should give this investment careful thought. Can you tie up your money for the next five years? Remember the fact that you may not be able to access it any time before that.

If you're willing to tie up your money up and start small, diversifying into real estate through Fundrise might be worth the investment.

Next steps: View portfolio plans, terms and details

Disclaimer: The information contained herein neither constitutes an offer for nor a solicitation of interest in any securities offering; however, if an indication of interest is provided, it may be withdrawn or revoked, without obligation or commitment of any kind prior to being accepted following the qualification or effectiveness of the applicable offering document, and any offer, solicitation or sale of any securities will be made only by means of an offering circular, private placement memorandum, or prospectus. No money or other consideration is hereby being solicited, and will not be accepted without such potential investor having been provided the applicable offering document. Joining the Fundrise Platform neither constitutes an indication of interest in any offering nor involves any obligation or commitment of any kind.

The publicly filed offering circulars of the issuers sponsored by Rise Companies Corp., not all of which may be currently qualified by the Securities and Exchange Commission, may be found at www.fundrise.com/oc.

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The minimum qualifying deposit to receive a cash bonus is $10,000. Accounts will be reviewed 60 days after account opening to determine the total qualifying deposit. Corresponding cash bonus will be credited to the account within 10 business days. Once the bonus is credited to the account, the bonus and qualifying deposit (minus any trading losses) is not available for withdrawal for 300 days. If the qualifying deposit is withdrawn, the bonus may be revoked.

Deposit or Transfer	Cash Bonus
$10,000 - $24,999	$100
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