Let’s face it – with the staggering annual gains in real estate value, a lot of young people FOMO seriously own real estate (for fear of losing).
There are plenty of tools for investing in real estate projects through platforms like M1 Finance and SoFi Invest, but many of them don’t sleep well knowing how far real estate moves out of reach every day.
If you want exposure to real estate but can’t make a large down payment, you may have considered investing with Fundrise.
There is good news – you can be sure that it is not a scam or a fraudulent scheme. The bigger question is whether their service suits your individual needs.
Keep reading to find out the answer to the question, “Is Fundrise a project?” Determine if this is the best option available for your money in real estate.
What is Fundrise?
If you haven’t yet read our full Fundrise review, here’s a brief breakdown of what you need to know about the platform.
Fundrise has been in operation since 2012 and has handled more than $5 billion in real estate transactions. This is the oldest and largest real estate crowdfunding platform available right now.
Create an account with Fundrise and you can invest in eREITs for as little as $500 minimum investment, with only 1% annual asset management fee. Although Fundrise is not a traditional REIT investment, it has created eREITs and eFunds, which are various REITs combined into one fund.
What’s more, you don’t need to be Certified Investor To start, as in other real estate investment platforms.
What is a Real Estate Investment Trust (REIT)?
The Real Estate Investment Trust (REIT) is a public company that invests in income-producing real estate projects. REITs offer exposure to both the residential and commercial real estate market while offering many of the same benefits as equity such as quarterly dividends and share repurchases.
Investing in a REIT provides tax benefits through dividend payments and capital gains dividends. Dividends are taxed at lower rates than ordinary income, and capital gains are taxed at a maximum rate of 15% instead of the higher rates applied to ordinary income.
REITs are required to distribute 90% of their taxable income each year, so they usually pay out more than 80% of profits annually. This means that REITs tend to outperform most other types of mutual funds.
Why are we sure it’s legitimate
Asking if an unfamiliar platform is legitimate before lowering the $500 minimum investment is just common sense. Fortunately, when it comes to Fundrise, the answer is clear.
The company was founded by two former Morgan Stanley mortgage bankers who saw a gap in the market for real estate investors looking to get through without having to make a large deposit up front.
They also wanted to provide these same real estate investors with transparency about the process and to make sure all investments are vetted by third party professionals.
In addition to being regulated by the Securities and Exchange Commission, Fundrise operates under the Investment Corporation Act of 1940.
How does Fundrise work?
Fundrise operates similarly to Kickstarter. You create a project page where you pitch your idea and seek funding from others.
You will then get paid based on the amount of support you receive. If you fail to achieve your goal, you will not receive any money.
Once you have raised enough capital, you will use the money to purchase real estate. These will be managed by Fundrise and sold at a profit once their value increases.
Fundrise uses its own software to track and manage all real estate projects throughout the entire process.
Learn more about Fundrise
Is Fundrise Safe?
yes! Fundrise is fully compliant with Securities and Exchange Commission(d) and Section 506(c) exemptions.
This means that Fundrise does not require registration with the Securities and Exchange Commission and is not subject to the same restrictions as mutual funds.
Additionally, Fundrise is registered with FINRA and is a member of the Financial Industry Regulatory Authority (FINRA), the American Stock Exchange, and the National Association of Real Estate Investment Trusts (NAREIT).
The internet is full of positive reviews that show good results and most importantly a real service behind Fundrise. Lots of individual investors have shared their success stories, and it has an excellent rating of 4.8 out of 5 on the App Store with over 15,000 reviews.
very credible The Better Business Bureau (BBB) gives a strong rating. If you read the comments and reviews, even negative reviews and reviews do not claim fraud / illegality, but rather provide opinions on the essence of how the program works.
Can you make legitimate returns with Fundrise?
Fundrise is a legit platform where you can earn money. according to National Council of Real Estate Investment Trustees (NCREIF), average annual returns for private commercial properties, such as office buildings, were 10.3%.
On the other hand, as of the end of 2020, Fundrise has reported an average annual return of 10.11% since 2014. The difference is with Fundrise, you don’t need to spend your time managing your real estate deals. With eREIT, the platform handles everything for you.
How powerful is investing in Fundrise?
There is little doubt about the authenticity of this crowdfunding real estate platform. Fundrise has a proven track record when it comes to long-term growth. It regularly reports to the Securities and Exchange Commission (SEC) for all of its REITs.
The most recent figures released in June 2019 indicate that it has generated $816 million in debt and equity investments in real estate deals since its inception.
Why is this important?
Other similar platforms tend to be private companies with little or no preservation requirements. Fundrise’s transparency is what gives it a credibility unmatched by its competitors.
It is important that you fully understand what you are signing up for to ensure that it is the right place to invest your money. Cash or the most common problem identified is liquidity. We know for sure that your money isn’t going anywhere, and we know there’s a good chance it will appreciate, but you need to very carefully read the fine print about when and how you can withdraw cash from your Fundrise investment. Make sure you’re investing money that you won’t need in cash tomorrow – and preferably not for several years.
Is your money safe with Fundrise?
The Rise Companies is the organization responsible for managing Fundrise investments. There are some risks associated with the business model because the biggest revenue stream is not asset management but developer financing creation.
One day, the real estate market will experience a downturn, and this may pose some risks to emerging companies, including:
- Low access to investor capital
- Less demand for capital from developers
- Redemption requests increased
Is this a problem for individual investors?
Unlikely because this is a short-term issue and will not affect REITs that are held by investors. Additionally, as we can see from balance sheets and the inherent management experience of bull companies, they have all the tools needed to navigate a market downturn.
Plus, in the worst-case scenario, your REITs are separate from the rest of the upside. Even if creditors go after the start-ups, they won’t be able to touch investors’ holdings, such as real estate assets, except for a Fundrise IPO.
In other words, your money is very safe when you decide to invest in Fundrise REIT.
Why should I consider using Fundrise?
There are many reasons why you should consider using Fundrise instead of buying individual properties.
First, you can learn about multiple types of real estate projects. This means that you can benefit from both commercial and residential real estate.
Second, you don’t need to deal with tenants or manage repairs yourself. The Fundrise team takes care of everything for you.
Third, you can have a diversified portfolio without having to spend a lot of time researching individual properties.
Finally, you can use Fundrise to invest as little as $500. This makes it possible for anyone to start earning passive income.
Conclusion: Is the money legitimate?
In our Fundrise review, we praised it for removing the high barriers to traditional real estate investing. Almost anyone can open an account and invest with Fundrise.
The platform’s safety and security are guaranteed, and its long track record of success shows that it is an investment option that can make you money. Its management team has also demonstrated a smart approach to property management, which should give investors peace of mind.
Like anything at Modest Money, we preach diversification. If you want to invest in real estate with Fundrise REITs, be sure to keep a diversified portfolio to help you negotiate challenging market cycles.
To start investing in real estate with Fundrise, follow this unique Modest Money link and invest now.