Real estate investing is competitive, especially if you are trading in the public market. Many individual investors search for real estate projects after real estate projects in an attempt to create diversified portfolios. Even institutional investors have to deal with this hassle, but what if there was an easier way? As it turns out, there is!
Any investor worth the money knows that building diversified portfolios is the only way to protect against an economic downturn. This makes it one of the most important financial goals in addition to securing attractive annual returns.
Unfortunately, many traditional real estate investment platforms are not open to the public. Either they only accept accredited investors or require a higher minimum investment than the average person can afford.
Fortunately, Fundrise has none of these issues. It’s open to non-accredited investors, requires minimal initial investments, and even offers some alternative investment opportunities (as covered in this comprehensive review). Fundrise allows anyone to start investing and reach their financial goals. How do they do it? Let’s take a look and find out!
What are Fundrise investment strategies?
There is more than one way to invest in this platform. Each Fundrise Strategy is a different portfolio, each offering unique investment opportunities and assets (such as office buildings or single-family homes). These diversified portfolios are actually REITs, though Fundrise refers to them as “eREITs.”
Fundrise investment strategies have historically enjoyed a positive return. While the exact returns will vary depending on the investment portfolio, you can rest assured that any of them will help you reach your financial goals.
The company as a whole has enjoyed an average return of 5.42% over the past twenty-three quarters. During that entire time, Fundrise has never had a single negative quarter! Compare that to the stock market, which averaged a 2.17% return with six negative quarters.
It is consistent portfolio performance such as Fundrise that makes real estate investing – and specifically private market investments – attractive to new investors. It’s hard to say exactly what makes this company such a success (although we doubt it is because they hand-select every real estate project!). Regardless, the numbers speak for themselves.
Before you can start enjoying the diversified portfolios and long-term returns from your selected Fundrise strategy, you’ll need to choose an investment class. Like many other real estate companies, the minimum investment required varies from category to category (plan to plan).
Fortunately, Fundrise has investment products available to almost any real estate investor. You’ll want to compare the requirements and features of each option before settling on a category. Below is a brief overview of the benefits of each category.
- clerk – $10 minimum investment, limited options, auto-invest included
- Basic* – $10,000 minimum investment, investor goals, IRA options, and access to a Fundrise IPO
- Essence* – $5,000 minimum investment, and access to unregistered products
- advanced* – $10,000 minimum investment, and access to specialized funds
- Premium* – $100,000 minimum investment and investment options approved
Includes access to all of the above features *
Choosing a Fundrise strategy
With a category selected, it’s time to look at Fundrise’s various investment strategies. Each of these diverse portfolios offers different potential for annual returns and long-term growth. However, you will want to consider the risks before investing in a real estate project.
Fundrise investment strategies with the highest growth potential also have the highest risks. If all goes well, you will earn more from these investments. However, they are also more likely to fail, underperform, or even cost you capital!
On the other hand, strategies with lower growth potential involve less risk. They tend to focus on earning consistent—not huge—returns from the real estate market. Although the gains may be minimal, these strategies are the least likely to lose your money.
One last thing to consider: liquidation fees! Because Fundrise is a private company, the process for getting your investment back is a little different. Liquidation fees vary depending on your specific investment. Make sure to consider them when choosing a Fundrise strategy.
This strategy provides little returns but will still outperform the general stock market over time. The most modest of all diversified portfolios, Fixed Income relies on the provision of loans and other types of structured financing in these real estate investments.
Each real estate project generates interest, which is the primary source of income for this strategy. Investors can expect to start seeing returns right away. The Fixed Income is ideal for the real estate investor looking for a low risk, fixed income investment and is expected to offer a total return of 4-8%.
This Fundrise strategy offers a positive return using a combination of rental income and growth. Unlike other diversified portfolios, Core Plus is primarily focused on buying and operating real estate. There are many different assets under management in this real estate development, including single-family homes and residential communities.
Investors should expect to wait between 6 to 12 months before they start seeing a return on their investment. Income ranges from 4 to 6%, with a total return of 8% to 10%.
This investment portfolio – as the name suggests – focuses on acquiring and adding value to new real estate. It offers greater potential returns for retail investors, but it can take a bit of time. Fundrise estimates that it will take between 12-18 months before you start seeing a positive return from this real estate project.
Value Added generates income primarily from growth, although investors will also benefit from rental income. It is considered a “high risk” investment.
The riskiest of all diversified portfolios, “opportunistic” focuses on real estate acquisition and development/re-development. Total returns are expected to range between 12% to 15%. However, investors should be willing to wait (up to 3 years) before seeing any cash flow from this real estate portfolio.
Fundrise investment strategies: a summary
For non-accredited investors and accredited investors alike, Fundrise offers profitable private market investments to help reach your financial goals with long-term returns. Unlike the public market (and most other real estate companies), the platform is highly accessible thanks to minimal investments.
You can invest with confidence, knowing that each real estate project has been comprehensively vetted by a legitimate company to ensure long-term growth potential.
Each investment portfolio offers instant diversification with a single investment. This provides protection from any financial crisis that may occur in the future. You will need to make many different individual investments if you want the same stock market protection!
If you’re interested in real estate investments, Fundrise is the place to start. With diversified portfolios, low fees, low minimum investments, and a history of success, there has never been an easier way to achieve your investment goals. Click here to start investing today!
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