Real estate is increasingly becoming 1) viable and 2) accessible to consumers every day. Real estate investment trusts are as easily traded as stocks, national mortgage companies allow for more accessible real estate financing, and new crowdfunding services are emerging daily or starting access to private equity real estate markets. Fundrise is one of the oldest companies providing real estate investment services, and it is also one of the most reputable.
But there is a new competition every day.
Today we’ll look at some of Fundrise’s competitors and how they stack up.
Fundrise: Overview
First, let’s take a refresher course on what Fundrise has to offer – especially if you’re not familiar with its long track record of excellence and service.
Fundrise is one of the most accessible services available to the everyday investor without a lot of capital looking to get into the real estate game.
Fundrise emphasizes investing in “real estate investment trusts,” or REITS, and offers four levels of a membership plan based on investment goals: entry-level, supplemental income, balanced investing, and long-term growth. The titles speak for themselves and describe the focus on the REIT you will invest in.
Accessibility
Fundrise is a great service that offers new real estate investment opportunities to the everyday investor. You don’t need hundreds of thousands of dollars to invest in real estate, and you don’t need to take out a loan with a high interest rate (like a mortgage in today’s Fed rate-increasing environment).
Alternatively, you can start with an account balance as low as $10 for the start option. Additionally, the fee is set at 1% per annum (0.85% management plus 0.15% advisory). This is very low for a private equity fee structure, although there is a small additional fee if you withdraw funds before the agreed exit windows.
In addition to the base cost of capital, Fundrise’s platform and tier/strategy structure are intuitive and easy to navigate, especially when you learn how the real estate industry works.
yields
Not only has the overall real estate market gone up significantly over recent years, but Fundrise has achieved an average long-term return (among all levels) in the 11% range. This return is impressive and is especially important to offset upcoming losses in the stock market with more tangible shares and less sensitivity to equity problems.
Negatives
What are some of the negatives?
- market risk. This doesn’t just apply to Fundrise – as we saw in 2008, the real estate market is impenetrable, and crashes can still happen. Fortunately, post-crisis legislation and regulation helped mitigate the potential for future problems as we saw in 2008.
- This is an advantage we mentioned, but while the basic fees are small, there can be complex fee and penalty structures if you choose to withdraw funds before the expiration window that you agree to when investing. It’s always important to read any agreement you sign when investing in a new service, but Fundrise’s complex contingency fee structure increases the importance.
Get started with Fundrise
diversification
Diversity offers only two REITs rather than the tiered structure offered by Fundrise, and both focus on multi-family projects of over 100 units. Since this
Projects in various stages of development, you can expect more than 5 years before you see significant returns, and these returns are usually around 10%.
Diversification, like Fundrise, is available to both accredited and unaccredited investors – but, unlike Fundrise, it requires a minimum investment of $500.
Get started with DiversyFund
real estate investment funds
Real estate investment trusts, or REITs, are broad, publicly available stocks that represent a company’s stake in income-producing real estate. Think apartments and shopping centers,
Resorts, whatever – many REIT options available.
Since REITs are traded like stocks, they have many of the same advantages and downsides. For example, when looking for an initial investment, you will be required to invest a minimum price of one share – which can range from $100 to $1,000+, compared to Fundrise’s minimum investment requirement ($10).
You will also have to do your due diligence when choosing the REITs in which to invest. You will need to define and manage your risk profile, risk-adjusted returns, management fees and costs – the list is endless. Compare this to Fundrise’s fully managed, diversified, risk-adjusted offerings with transparent base fees.
Get started with REIT
Crowd Street
CrowdStreet is an excellent, exclusive, and less accessible option for Fundrise. Available only to accredited investors (SEC rating is based on net
value, income or other factors), CrowdStreet also requires a minimum investment of $25,000 compared to Fundrise.
Exclusivity is a win – if you meet the conditions of Accredited Investor Status. But many don’t, especially newcomers to real estate, so a significant barrier to entry is also the main drawback of CrowdStreet for the typical investor. The high account minimums, and extended project horizon, also mean that a significant portion of your capital can be tied up with CrowdStreet for a long time.
Get started with Crowdstreet
RealtyMogul
RealtyMogul, like Crowdstreet, is a crowdfunding platform. Unlike Crowdstreet, it is more accessible but requires a minimum investment of $5000 compared to it
Fundrise $10. Like Diversify, it offers two REITs, MogulREIT I investing in commercial real estate and MogulREIT II investing in multi-family apartments and similar projects. Unfortunately, its high investment costs and relative lack of track record make it less attractive to a newer real estate investor than Fundrise.
Get started with Realtymogul
bottom line
Fundrise is the real estate mile winner. With access to anyone, even non-accredited investors, low account minimums, and a proven track record of success, Fundrise should be the first choice for new and experienced investors alike.
Regardless of macroeconomic conditions, people need places to live, work and shop — Fundrise has it covered and can provide uncorrelated market returns to offset any stock market losses as volatility increases.
Ready to get started? Click here to explore all the exciting opportunities to invest in Fundrise.
