Updated February 7, 2024

Fundrise Review: Is It Legit?

Read more about Fundrise
Ad Disclosure: This article contains references to products from our partners. We may receive compensation if you apply or shop through links in our content. You help support CreditDonkey by using our links. (read more)

Fundrise lets you invest in real estate with just $10. But is it any good? Find out if it's legit and make an informed decision before you sign up.

5-point scale (the higher, the better)

Pros and Cons

  • Just $10 to start
  • Strong past performance
  • Passive investing
  • Illiquid investment
  • Unknown future returns

Bottom Line

Good way to invest in real estate with low fees and no income requirements

Fundrise is one of the earliest real estate investing platforms. It offers a great way for the "average" person (aka: non-accredited investors) to get started with $10.

Aside from physical real estate properties, Fundrise now even offers investments in private tech companies before they IPO.

Is it the right choice for you?

Learn more in our detailed Fundrise review.

Note: This is a testimonial in partnership with Fundrise. We earn a commission from partner links on CreditDonkey.

Fundrise vs Competitors

Bottom line: Fundrise is a great option for non-accredited investors to get into real estate investing and earn passive income. It's only $10 to start and the platform does all the analysis, procurement, and management, so it's completely hands-off.

Just be aware returns can be volatile based on the market.

Here's a quick look at how Fundrise stacks up against other popular real estate platforms.

Fundrise has the lowest minimum investment, and it offers a variety of projects (including even private tech companies). The 1% management fee is on par with most real estate investing platforms.

What is Fundrise?

Fundrise is a real estate investment platform. It's an easy way to invest in a diversified portfolio of alternative assets, like private market real estate and now even private tech companies.

Ben Miller, the co-founder and CEO of the company, started Fundrise in 2012 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.

Here are some Fundrise stats-to-date:[1][2]

Active investors385,000+
Active real estate projects290
Completed real estate projects150+
Real estate portfolio value$7+ billion
Dividends paid to investors$361+ million
Venture capital portfolio21+ assets, $110+ million raised

Fundrise Pros & Cons

Pros:

  • Don't need to be an accredited investor
  • Just $10 to start
  • Diverse real estate properties across the U.S.
  • Quarterly dividend distributions
  • Completely passive investing
  • Several investment options (including an optional Fundrise Pro membership for investors who want more control)
  • Available as IRA
  • See Fundrise Deal >>

Cons:

  • Long term investment (typically five years or more)
  • Potential liquidation fees
  • Could have volatile performance; Unknown future returns
  • Lack of fees transparency

Read on to learn more.

How does Fundrise Work?

Fundrise offers two ways to invest, depending on how hands-off you want to be:

1. Fundrise-directed plans
This is for passive investors who want to sit back and let Fundrise do all the work. Your money will be automatically invested in a diverse mix of real estate properties.

You can choose your investment portfolio based on your goals. Fundrise offers 3 different plans for: passive income generation, long term growth, or a balance of the two.

2. Custom investment plan
Or there's a Fundrise Pro membership for active investors who want more control over their strategy. This lets you customize your portfolio to better fit your goals. You can pick your specific funds and the exact allocation you want.

You get priority access to investment options, including strategy-specific funds. You also get expert-level data to help you make smarter choices.

This membership is optional and costs $10/mo or $99/year.[3]

Is commercial real estate a good investment?
Commercial real estate has the potential to generate steady passive income and grow in value. However, it can also be risky based on market conditions, supply and demand, and industry trends. Overall, the average return has outperformed the stock market over the last 30 years.

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.

How much do you want to invest in real estate?

What Fundrise Invests In

Fundrise offers different real estate funds. These are diversified portfolios of real estate properties that Fundrise acquires and manages.

Their current real estate portfolio consists of over 290 active projects across the country. It's a mix of:

  • Multi-family apartments
  • Single-family homes
  • Industrial properties
  • Commercial properties

So how is Fundrise different from traditional REITs?

With Fundrise, you can only invest directly through Fundrise's website. This means the investment is not as liquid. For traditional publicly traded REITs, you can trade shares any time the stock market is open with most brokerages.

However, beginners may find Fundrise simpler. All you have to do is sign up and pick a plan, and Fundrise automatically invests for you.

Key differences between Fundrise funds and traditional REITs:

Fundrise FundsTraditional REIT
Not publicly tradedPublicly traded on the stock exchange
No secondary marketListed on secondary market
Not as liquid; Can only sell during certain timesCan buy and sell anytime
Sold directly by FundriseSold on the open market
Low management feeCould have higher management fees
Regulated by SECRegulated by SEC

Making Money with Fundrise

Investors are paid in 2 ways:[4]

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 asset value
You'll receive proceeds when a property is sold and if it goes up in value. Appreciation is only paid at the end of the asset's investment term - this can take a few years.

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

If you can hold your investment for at least 5 years, Fundrise is a great way to make passive income. Click here to see their current promotions.

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 12 to 18 months.

Best Alternatives to Fundrise



Returns and Performance

Fundrise annual returns were between -7.45% to 22.99% from 2017 to 2023, with an average income return of 4.81%.

Out of these 7 years, 24 quarters had positive returns, while 4 quarters experienced a negative return. In comparison, stocks and public REITs had 7 quarters of negative returns during the same period.

Here's a breakdown of the average annualized returns (after the fees are subtracted) per year:[5]

201412.25%
201512.42%
20168.81%
201710.63%
20188.81%
20199.16%
20207.31%
202122.99%
20221.50%
2023-7.45%

Fundrise vs. Traditional REITs:
Here's how Fundrise performed compared to publicly traded REITs and the Vanguard Real Estate ETF:

FundrisePublic REITsVanguard Real Estate ETF[6]
201710.63%9.27%4.90%
20188.81%-4.10%-5.97%
20199.16%28.07%28.89%
20207.31%-5.86%-4.64%
202122.99%39.88%40.33%
20221.50%-25.10%-26.21%
2023-7.45%11.48%11.79%

Can you make money with Fundrise?

Yes, Fundrise can be a profitable long term investment. After 5 years, Fundrise averages 49.3% cumulative net return for investors. If you hold onto your investment for longer, it increases to 75.7% average returns after 7 years.

As always, past results don't guarantee future success. And 2021 was definitely an outlier so don't expect every year to be like this. As you can see, it's possible to have a negative year too.

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.

Is Fundrise High Risk?

Fundrise is not risk-free. Its performance can be affected by real estate market volatility and changes in interest rates. Plus, Fundrise has somewhat limited liquidity, so you can't just sell whenever you want.

Real estate funds can experience high returns (like Fundrise in 2021). But it can also have negative returns in bad real estate markets (like in 2023).

It is still unclear how Fundrise (and similar real estate investments) would perform in a financial crisis like the 2008 market crash.

My Experience with Fundrise

Here, I'll share my personal Fundrise experience and returns. I started investing with Fundrise in February 2019. Since then, I've invested $12,943 total by making steady auto deposits each month.

As of end of December 2023, my account value is $13,442.77. This is $499.35 in total returns with an average annual return of 1.5%. The total advisory fees is $46.

Here's how it breaks down by year. I've also included how much were from dividends and appreciation.

YearAnnual ReturnDividends AppreciationTotal returns (net of fees)
2019 (from Feb)6.1%$49.77$53.24$103.01
20207.6%$67.28$196.30$263.53
202127.1%$142.22$1,365.50$1,506.72
20221.0%$429.55-$317.95$111.60
2023-8.4%$157.06-$1,642.73-$1,485.67

I chose the Long-Term Growth portfolio. This means the investments focus more on long-term appreciation than on dividends. Your returns will differ according to which portfolio you choose.

In the 5 years, Fundrise has been volatile with highs and lows. 2021 was an outstanding year, but like mentioned earlier, don't expect every year to perform like that.

Since I am in the Long-Term Growth plan, it's still unclear how much appreciation I'd see in a few years when more projects mature. I plan to keep my investments for the long haul to ride out the downs.

So yes, you could make more with other investments, but remember that all investments carry some risk. It depends on your risk appetite and your time horizon.

Fundrise 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)

For Fundrise Pro, the membership fee is $10/month or $99/year (30-day free trial).[7]

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 real estate funds directly through the platform. That means you save on broker commissions.

Hidden Fees

  • 0-2% acquisition fee when Fundrise buys a new asset
  • 1% penalty when you redeem shares within five years of investing (No fee in the first 90 days)[8]
  • An annual fee of $125 to Millennium Trust Company if you're investing as an IRA[9]

Specific funds 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 Groundfloor. The company offers short-term real estate loan projects and has no monthly management fees.

How to Withdraw Money

To withdraw funds from Fundrise, you must submit a liquidation request, which are reviewed on a quarterly basis. Unlike publicly traded REITs, you can't sell and withdraw anytime you want.

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

There may also be penalties if you're redeeming shares held for less than 5 years. The penalties are:[10]

  • 0% penalty for Fundrise Flagship Fund, Income Fund, and Innovation Fund
  • 1% penalty for Fundrise eREIT and eFund shares held for less than 5 years

This redemption program gives investors some flexibility if you want to withdraw money (with some limitations). When you redeem, the shares you've had for the longest will be liquidated first.

How is Fundrise taxed?
Dividends are generally taxed as ordinary income. Non-dividend distributions are taxed as capital gains when you redeem your investment. Fundrise will send an annual tax form for your investments.

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 an account for only $10.

How to Get Started

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

1. Visit website
View special offers and enter your email address.

2. Pick a plan
Pick an investment plan based on your goals (earning passive income or long term growth). Read more about the choices below.

Or you can sign up for a Fundrise Pro membership (optional). This is for active investors who want to customize their portfolio.

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.

Portfolio Options

Fundrise offers 4 investment plans. Each investment portfolio diversifies your funds differently, based on your goals. Pick the one best for your needs.

  1. Supplemental Income: This focuses on properties that generate cash flow (collecting rent or interest). You will earn more dividends. It's best if your goal is generating passive income.

  2. Balanced Investing: This approach creates a more balanced mix of income and growth properties. You earn money through both dividends and appreciation.

  3. 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.

  4. Venture Capital: This portfolio invests in high-growth private tech companies (some examples include Uber, Unity, and Canva). Returns are expected to be in the form of long-term appreciation.

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.

Fundrise Pro members can customize their plans if they want more or less of certain types of properties.

Types of Accounts

Fundrise supports the following accounts:

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

You should know: Typically, private 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, which can provide a tax advantage.

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. Fundrise also has an A+ rating with the Better Business Bureau (BBB). [11]

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.

Fundrise reduces risk through extensive due diligence, conservative approach, and thorough underwriting, positioning their portfolio to sustain severe economic downturns.[12]

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 >>

How Fundrise Compares

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

Fundrise vs Groundfloor
Groundfloor is a good option if you're looking for short-term real estate investments. The projects last only 12 to 18 months.

Groundfloor works a little differently. Instead of investing in equity, you are lending money to borrowers for quick fix-and-flip housing projects. When the house is renovated and then sold, you'll get your investment back (along with interest).

So far, the average returns to date is 10%.[13] Each loan has a fixed interest rate and projected term, so you know beforehand what to expect.

You can pick your own loans, or you can even set up automated investing and Groundfloor will invest for you based on the portfolio profile you create.

Fundrise vs Crowdstreet
Crowdstreet is one of the largest commercial real estate marketplaces. This platform is only open to accredited investors (unlike Fundrise, which is open to everyone).

They focus on high quality commercial real estate deals. You can either choose your own deals, or invest in a fund that includes multiple projects. Most of the deals require a $25,000 minimum investment.

Crowdstreet is popular because of its impressive returns. Since 2014, it has averaged a very strong annualized IRR of 17.9%.[14]

Fundrise vs Yieldstreet
Yieldstreet is a platform for alternative investments. Instead of only real estate, you can also invest in other alternative assets like art, luxury vehicle leasing, and litigation financing.

Non-accredited investors can invest in Yieldstreet's Prism Fund. This is a collection of a lot of different alternative assets. It's an easy way to get a little of everything with only one investment.

If you are accredited, you can pick your own individual offerings. They usually start at $10,000 minimum. Yieldstreet's investments have an average IRR of 9.6%. [15]

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 could be a good way to make passive income from real estate.

However, be aware that the real estate market can be volatile too, so it's best if you can invest for the long term. Also remember that accessing your funds will be more limited, and there could even be a penalty in the first 5 years.

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.

References

  1. ^ Fundrise. About Us, Retrieved 12/23/2023
  2. ^ Fundrise. Real Estate Strategies, Retrieved 12/23/2023
  3. ^ Fundrise. How much does Fundrise Pro cost?, Retrieved 01/18/24
  4. ^ Fundrise. How can I earn returns on my investment?, Retrieved 2/8/2024
  5. ^ Fundrise. Explore client performance over time, Retrieved 2/2/23
  6. ^ Vanguard. VNQ Vanguard Real Estate ETF, Retrieved 1/3/2024
  7. ^ Fundrise. Discover these features and more, with Fundrise Pro, Retrieved 2/8/2024
  8. ^ Fundrise. Are there any costs associated with liquidating shares?, Retrieved 2/8/2024
  9. ^ Fundrise. What are the fees associated with investing through my IRA?, Retrieved 2/8/2024
  10. ^ Fundrise. How do I withdraw funds (request a liquidation)?, Retrieved 2/8/2024
  11. ^ Better Business Bureau. Fundrise BBB Rating & Accreditation, Retrieved 4/3/2022
  12. ^ Fundrise. How It Works, Retrieved 10/28/2023
  13. ^ Groundfloor. Groundfloor for investors, Retrieved 1/3/2024
  14. ^ Crowdstreet, Marketplace Performance, Retrieved 1/3/2024
  15. ^ Yieldstreet. Historical Performance, Retrieved 1/3/2024
Fundrise

Invest in Real Estate with $10+

  • Only $10 minimum investment
  • Get a diversified portfolio of real estate projects across the US
  • Open to all investors
Arrived Homes

Invest in Rental Homes with $100+

Browse rental home investments for free. No bank account required

CrowdStreet

Invest in Private Equity Real Estate

  • Access to institutional grade commercial real estate deals
  • Choose your own projects or invest in a fund
  • $25,000 minimum investment
Yieldstreet

Online Alternative Investments

  • Exclusive access to private market investments
  • Wide range of alternative investments like art, real estate, legal financing, and more
  • Goal-based investing for growth or income
  • Minimums starting from $10,000
GROUNDFLOOR

Invest in Real Estate with $10

The minimum investment amount is only $10. (Though most transfer $100 for better diversification; subsequent transfers can be for any amount)

  • Short-term real estate investments lasting just 12-18 months
  • Open to non-accredited investors
  • No investor fees

Write to Anna G at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

Fundrise, LLC ("Fundrise") compensates CreditDonkey Inc for new leads. CreditDonkey Inc is not an investment client of Fundrise.

Expert InsightsA visitor from Michigan read Best Ways to Invest $10000
TrendingA visitor from California read Arrived Homes Review
TrendingA visitor from Utah read Groundfloor Review
TrendingA visitor from Florida read CrowdStreet Review
TrendingA visitor from Michigan read YieldStreet Review

Compare:

How much do you want to invest in real estate?
29% Less than $500
21% $500 - $1,000
19% $1,000 - $5,000
13% $5,000 - $10,000
19% More than $10,000
Source: CreditDonkey poll of 2,348 respondents. Totals may not add to 100% due to rounding.
Invest money and build wealth. Sign up to get our free email newsletter.
FOREX.com Review

FOREX.com Review

FOREX.com is one of the leading forex brokers in the US. But is it the right broker for you? Read on to find out.

About CreditDonkey
CreditDonkey is a personal finance comparison website. We publish data-driven analysis to help you save money & make savvy decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

†Advertiser Disclosure: Many of the offers that appear on this site are from companies from which CreditDonkey receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). CreditDonkey does not include all companies or all offers that may be available in the marketplace.

*See the card issuer's online application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However, all information is presented without warranty. When you click on the "Apply Now" button you can review the terms and conditions on the card issuer's website.

CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice.

About Us | Reviews | Deals | Tips | Privacy | Do Not Sell My Info | Terms | Contact Us
(888) 483-4925 | 680 East Colorado Blvd, 2nd Floor | Pasadena, CA 91101
© 2024 CreditDonkey Inc. All Rights Reserved.