Fundrise Stock Investing Explained

Fundrise is a real estate investment platform that allows you to invest in a diversified portfolio of properties with as little as $500.

Fundrise offers a range of eREITs and eFunds that allow you to invest in a variety of property types, including apartments, office buildings, and retail spaces.

You can start investing with Fundrise by creating an account and setting a budget, which can be as low as $500.

Fundrise's platform is designed to be user-friendly, with a dashboard that allows you to track your investments and receive regular updates on the performance of your portfolio.

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Fundrise is a real estate investment platform that allows individuals to invest in a diversified portfolio of properties with as little as $1,000.

It was founded in 2012 by a team of experienced real estate investors and developers, including Benjamin Miller, Dan Miller, and William MacDonald.

Fundrise offers a range of investment options, including eREITs and eFunds, which allow investors to buy into a diversified portfolio of properties with a single investment.

These investment options are designed to provide a steady stream of income and the potential for long-term capital appreciation.

Fundrise has a minimum investment requirement of $1,000, making it more accessible to individual investors than traditional real estate investment options.

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Investing in Fundrise requires careful consideration of your financial goals and risk tolerance. Fundrise's eREITs are illiquid, meaning you can't quickly sell or trade them for cash without a loss in value.

You should only invest in Fundrise's eREITs if you're looking for a long-term position, as there's a waiting period for redemption and an early-withdrawal penalty. This can be a problem if you need immediate access to cash for an emergency.

The good news is that Fundrise limits how much you can invest in its IPO based on your total cost basis or a maximum of $1,000 at the time of investment. This aligns your investment with your risk tolerance and capital.

Investing in Fundrise can be a bit complex, but I'll break it down for you. Accredited investors can buy pre-IPO stock in Fundrise through EquityZen funds.

Existing Fundrise shareholders, often early employees, sell their shares on EquityZen's platform to fund life events like a house or education. These shares are then made available to accredited investors through a fund.

Investing in private companies like Fundrise can help you diversify your portfolio, access potential growth, and earn high returns. But keep in mind, it's not without risk.

Accredited investors can invest in Fundrise stock through a fund, similar to how hedge funds serve large investors.

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Investing in Fundrise requires careful consideration of several key factors.

The first essential question to answer is whether Fundrise eREITs align with your investment goals. You should also think about whether their investment strategy and risk level match your expectations.

Fundrise eREITs have a minimum investment requirement of $1,000. This can be a barrier for some investors, but it's also a way to ensure that only serious investors put their money into the platform.

Before investing, it's crucial to understand the fees associated with Fundrise eREITs. These fees can eat into your returns, so it's essential to factor them into your investment decision.

Fundrise eREITs offer a diversified portfolio of properties, which can help spread risk and increase potential returns. However, this also means that you'll have limited control over the specific properties in your portfolio.

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The sweet spot for real estate investing is a topic I'm passionate about, and I'm excited to share my insights with you. Historically, investors who allocate around 20% of their portfolio to real estate have outperformed those who only own stocks and bonds.

The 20% real estate model has been made famous by the Yale Endowment, which has outperformed traditional allocations 22.6% annually for decades by investing at least 20% of its portfolio in real estate.

I've personally experienced the benefits of investing in real estate, and I've seen how it can provide a more stable source of income. Fixer-uppers can be a great option, but they can also be risky and stressful if you don't know what you're doing.

The midsize market is often considered the sweet spot for investing, as it offers less competition and potentially higher risk-adjusted returns. Fundrise operates in this market, providing a more efficient way to invest in real estate.

Here's a rough breakdown of the different sized real estate markets:

In my opinion, investing in the heartland of America is a great way to diversify your portfolio and potentially earn higher returns.

Fundrise has pioneered a new way to raise capital with its internet public offering (iPO). This allows existing customers to purchase a share of the Fundrise company itself.

The iPO was created to democratize investing and benefit customers from the profits of the firm. Customers with $500 or more already invested in Fundrise's projects are eligible to participate in their first year.

The minimum initial investment required is $500, and the maximum investment is capped at the amount already invested in Fundrise's projects. For example, if a customer has invested $5,000, their maximum iPO investment is also $5,000.

Fundrise has used its iPO to raise money without hiring investment industry professionals or going through the traditional listing process. The value of the shares will only be unlocked when the firm decides to go for a traditional IPO.

As of now, Fundrise is not heading for a traditional IPO anytime soon, but it has launched an iPO on its website in January 2023, offering 1,298,000 shares of Class B common stock to investors.

The price of the Fundrise IPO appears to be reasonable, with a price range of $30 to $50, based on the company's competitors and REITs trading on the stock market.

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Fundrise has been around since 2012 and launched the first eREIT a few years later. Fundrise's portfolio delivered an average annual return of approximately 1.50% in 2022.

The company has over 400,000 active investors and manages over $3.3 billion in assets under management as of 2023. Fundrise outperformed the stock market and public real estate market during the 2022 bear market and 2018 downturn.

In five years, one investor saw a total return of 59%, with an annualized return of 10.8% IRR. This IRR would double your money in 6 to 7 years using the rule of 72.

The investor's 10.8% IRR is similar to the long-term returns of the stock market when averaged over many decades. However, past results don't necessarily predict future returns.

Fundrise's fees, including a 0.15% annual advisory fee and 0.85% management fee, are 1% per year in total. The investor's lifetime average return of 10.8% is after accounting for these fees.

The Fundrise portfolio has yielded a 10.79% return over five years, outperforming the Vanguard Total Stock Market ETF and the Vanguard Real Estate ETF.

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Fundrise is a real estate investment trust (REIT) that offers a unique way to invest in properties without directly managing them. Fundrise has a minimum investment requirement of $1,000.

The fees associated with Fundrise can be a bit steep, with a management fee of 0.15% to 0.85% per year, and a servicing fee of 0.25% to 0.50% per year. However, these fees are offset by the potential for higher returns on investment.

Fundrise also offers a tax-advantaged option, allowing investors to defer taxes on capital gains through a 1031 exchange, which can be a big plus for investors looking to minimize their tax liability.

Fundrise charges investors a high asset management fee of 0.85% and an advisory fee of 0.15% for every $1,000 invested, adding up to $10 in fees each year.

The total fee is made up of $8.50 in asset management fees and $1.50 for advisory fees.

This is a significant difference from the expense ratio of the Schwab's REIT ETF, which is a mere 0.07%.

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Fundrise's operating revenues for the year ending December 21 were $36 million, a significant increase from the previous year's reported figures of $15 million.

This 130% increase is a notable achievement, especially considering the company's early success in raising $14.6 million from customers in February 2017 with tremendous oversubscription.

Taxes can be a complex and overwhelming aspect of investing, but Fundrise makes it relatively straightforward.

You'll receive a 1099-DIV each year, which reports the distributions you've received from your Core account as a mix of Box 3 (Nondividend distributions) and Box 5 (Section 199A dividends).

Return of capital (Box 3) distributions are not taxed, but they can decrease your cost basis, resulting in long-term capital gains when selling the asset.

Section 199A dividends qualify for a 20% QBI deduction, but you'll need to qualify as a taxpayer to take advantage of this.

Investors in the Fundrise eFund will receive a K-1, which is a different type of tax form that reports pass-through income.

Fundrise is a real estate investment platform that offers access to investments for both U.S. accredited and non-accredited investors. It's a great option for those looking to diversify their portfolios.

Investments on Fundrise are allocated across a diversified mix of offerings: eREITS and eFunds. These portfolios are made up of private real estate assets located across the United States.

Fundrise offers eREITs, which are managed, diversified portfolios of commercial real estate assets. This can be a good option for those looking to invest in commercial properties without directly managing them.

eFunds, on the other hand, are managed, diverse portfolios of residential real estate assets. This can be a good option for those looking to invest in residential properties without directly managing them.

Fundrise is owned by Rise Companies Corp., which also includes customers who invested through the initial public offering (iPO) route.

The parent company has acquired $355.5 million in nine funding rounds, with the latest one coming in 2021.

Its initial investors included Guggenheim Partners, James Ratner from Forest City Enterprises, and Justin Elghanayan from Rockrose Development Corporation.

The company even has the backing of Goldman Sachs, as reported by the Wall Street Journal.

Rise Companies has also acquired nearly $170 million through its Regulation A+ offerings, with each share priced at $15.15.

Fundrise's management team is led by a group of experienced professionals who have a deep understanding of the real estate industry.

Fundrise was founded in 2012, marking a significant milestone in the history of commercial real estate investment.

The company's innovative approach to online real estate investment crowdfunding has been a game-changer for many investors.

Fundrise was the first company to take commercial real estate public online, offering true equity ownership in local properties.

Fundrise's value is a bit tricky to pin down due to its unconventional funding routes. As of 2020, the company is worth $800 million, according to a Forbes report.

This valuation is a significant milestone for the firm, but it's also worth noting that the price would be difficult to determine if the company were to go for a traditional listing.

Fundrise is owned by Rise Companies Corp., a parent company with diverse ownership.

The ownership includes customers who have invested through the company's IPO route, venture capitalists, and the founders and management team.

Rise Companies Corp. has acquired $355.5 million in nine funding rounds, with the latest one taking place in 2021.

Some of Fundrise's initial investors were Guggenheim Partners, James Ratner from Forest City Enterprises, and Justin Elghanayan from Rockrose Development Corporation.

Fundrise also has the backing of Goldman Sachs, according to a report from the Wall Street Journal.

In its various IPOs, Rise Companies Corp. has raised nearly $170 million through Regulation A+ offerings.

Fundrise has some notable competitors in the real estate investment space. The Invesco Active Fund comprises more than 80 companies involved in construction, leasing, financing, and sales of real estate assets in the US.

One of the most notable competitors is the Vanguard Real Estate ETF (VNQ), which has an asset under management of $39 billion, dwarfing Fundrise's $3 billion. It's based on the MSCI US IMI Real Estate 25/50 Index and has a very low tracking error.

The Invesco Active Fund has a higher expense ratio of 0.35%, compared to VNQ's 0.12%. However, its top 10 holdings account for only 35% of the fund's value, making it slightly better diversified.

The Invesco Active Fund is actively managed, which means it has more control over its investments. This is in contrast to VNQ, which is passively managed and highly diversified. Its holdings include several popular REITs.

Fundrise offers a unique approach to investing in real estate, allowing you to buy and sell shares in their eREITs.

You can buy Fundrise shares with a minimum investment of $500, making it more accessible to a wider range of investors.

Fundrise eREITs are traded on the secondary market, where you can buy and sell shares just like stocks on a traditional stock exchange.

The prices of Fundrise shares can fluctuate based on market demand and investor sentiment.

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You can buy Fundrise stock, but not in the traditional way. Traders can't purchase Fundrise stock directly.

Fundrise chose not to go the traditional route and hire investment banks for an IPO. Instead, it opted for an "internet public offering" (iPO).

You can purchase Fundrise stock through this iPO, even if you're not an accredited investor.

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You can sell your Fundrise stock through EquityZen's private company marketplace, which has a network of over 350K accredited investors interested in buying private company stock.

EquityZen's platform guides you through a straightforward process for selling your stock.

To get started, simply head to EquityZen's website and learn more about their Shareholder process.

If you're looking for a steady income stream, Fundrise's eREITs might be a good option. They're required to distribute at least 90% of their annual income to unit holders, which means you can expect high-yield cash distributions every quarter.

However, it's worth noting that REIT distributions are taxed like regular income, making them a tax-inefficient investment. This is because corporate dividends are taxed at a lower rate, but REIT distributions are not.

Fundrise's eREITs aim to make high-yield cash distributions at the end of every quarter, which can be a great way to create an additional revenue stream. But it's essential to consider your specific tax situation and whether this type of investment is right for you.

Here are some key facts to keep in mind:

Ultimately, whether you need steady income will depend on your individual financial goals and situation. It's crucial to weigh the pros and cons of investing in Fundrise's eREITs and consider whether this type of investment aligns with your needs.