2022 Fundraising Review – Forbes Advisor
Fundrise operates an online platform for real estate investing. They combine money from many small investors to build private real estate portfolios (REITs).
When you open a Fundrise account, the platform asks you to choose a real estate investment strategy from several options that meet different preferences for risk, income and long-term growth:
- Fixed income. Generate modest income with less risk by making home loans.
- Core More. Get higher income and some growth by investing in real estate.
- Added value. Aim for better returns by investing in properties that need renovations.
- Opportunistic. Invest in high-risk, high-reward potential projects, such as building a new development.
Fundrise will manage your funds and continue to add properties that meet your investment objective.
The Fundrise platform offers five account levels with different investment options and minimum investment requirements:
- Hall. Access to the company’s flagship fund only, a minimum initial investment of $10
- Basic. Choose investment goals and open an Individual Retirement Account (IRA), minimum initial investment of $1,000
- Heart. Build a custom portfolio with a minimum initial investment of $5,000
- Advanced. Access all fund options with a minimum initial investment of $10,000
- Prime. For qualified investors, the minimum initial investment is $100,000
With the Starter tier, you can only invest in Fundrise’s main flagship fund and you cannot open an investment retirement account (IRA). All other accounts offer IRAs and start with Core. You can choose between several funds and customize your investment strategy, such as choosing real estate funds specifically to generate income.
The key thing potential Fundrise users should understand is that all accounts allow you to invest in the company’s REIT investment funds, although your fund menu will vary depending on your account level.
Fundrise manages all private REITs available on the platform. They are not publicly traded like REITs like those available for purchase through an online brokerage account, tradable on the open market whenever you want to buy or sell shares.
Instead, you must buy and redeem your shares with Fundrise.
You can request a redemption at any time, but the company must approve the redemption. The company warns that in the event of a downturn in the real estate market, it could restrict withdrawals.
If you choose to invest with Fundrise, it is important to understand that this type of private REIT is considerably less liquid – and potentially riskier for this reason – than publicly traded REITs.
There is only one buyer for your investment: Fundrise. If the company encounters difficulties or decides to limit redemptions, you have no choice but to leave your money on the platform.
Top-tier accounts also allow you to invest in non-registered funds. These offer a greater variety of investments and can offer even higher returns, but perhaps even less liquid than private REITs. Fundrise calls these unregistered funds e-REITs, which charge an early redemption penalty.