FUNDRISE REVIEW 🏢 Is This Real Estate Investment Legit? #Best Education Page #Online Earning

- How's it going today guys?

I hope you're having a fantastic day.

So in this video here

we're going to be talking about Fundrise

which is a platform for investing in commercial real estate.

I've been getting a lot of people

asking questions about this and I wanted to go ahead

and do a very, very in-depth review of this platform.

So I'm gonna be covering

a lot of different stuff in this review here.

And if you're only looking for maybe one certain aspect

in the description below I'm going to outline this

into the 10 different sections

and include timestamps as well.

So if you want to skip ahead to a different section,

feel free to do that down in the description below.

But if you are interested

in learning more about this platform

I would recommend watching this entire video

just so you have a good idea of what it is

you would be investing in using Fundrise.

Now I do have a link to Fundrise

down in the description below as well.

That is an affiliate link, you do not have to use it

but understand that if you do use it

it help support me and my channel

and helps me make more videos like this.

And then the only other thing I wanted to mention

before I get into this video is that

Graham Stephan is another youtuber out there,

he is a real estate investor.

He did a great video, about a 20-minute video as well

talking about Fundrise.

And I know this is gonna be a long video as well

but if you are looking to do more research on this platform

above and beyond this vi
deo or get a second opinion,

I would highly recommend watching that video

and I'm going to include that

in the description down below as well.

But let's go ahead and get into the first part of this

and talk about what Fundrise is.

So Fundrise is essentially a 100% passive way

to be investing in commercial real estate.

And the way you are able to do this

is by pooling money with other people.

So commercial real estate,

for example malls or medical offices

or large apartment buildings

usually that's reserved for very rich investors

who have millions of dollars to invest.

But then at that point in time

if you're only invested

in one piece of commercial real estate

you're not well diversified.

So what they've been able to do here

and this isn't anything new,

we're talking about a REIT here,

a real estate investment trust.

Fundrise is offering something called an eREIT

which we're going to explain later on.

So they're essentially offering a REIT

or real estate investment trust

that is when people pool their money together

and invest in a diversified collection

of real estate properties.

Primarily its commercial real estate

and then those properties are managed by that REIT.

The expenses are paid

and then the rental income

or the income generated from those properties

is paid out in quarterly dividend payments

that is the basics of a REIT.

And Fundrise is offering what is called an eREIT

to which we're going to explain in a little bit here.

So essentially what Fundrise has done here

is giving you access

to the private commercial real estate market

as a small-time investor.

And what is the main perk here

is the fact that you can get started with as little as $500.

So most commercial real estate projects and investments

you have to have a lot of money to get involved with

except for a REIT.

A REIT, you can buy a REIT for as little as one share,

there's a very popular Vanguard REIT reach out there

and you can buy one share of that and be invested

in a diversified pool of real estate.

But that's kind of what we're gonna be talking about as well

is the difference between

these traditional REITs that were used to

and this new eREIT that Fundrise is offering.

But that's the background on what Fundrise is.

It's a platform that allows you to invest

in commercial real estate

by pooling your money with other people.

But the main difference between this and a traditional REIT

is that this REIT does not trade on a major exchange.

So you can't go on your stock broker app

and buy shares of the Fundrise funds or REITs,

you have to buy them through Fundrise.

And so that right there is a pro for some

and a con for others.

I know a lot of people are probably interested

in exploring Fundrise

because the returns in the stock market have not been

what they were in 2017 so far in 2018.

So a lot of people are looking to diversify asset classes,

invest in different areas of the economy.

And so some people are saying,

"You know, I want to own some real estate

"as well as owning stocks.

And so I understand your idea behind that,

it's a good idea to be diversified across your assets.

I personally am invested in Fundrise

and I'm also looking to be invested

in some physical real estate by the end of this year.

So I understand that idea

of exploring different asset classes.

But there is a big difference here with Fundrise

versus traditional REITs and that is the fact that

you cannot openly trade shares of this fund

and so there is not high liquidity

with Fundrise eREITs and the eFunds.

And there are certain redemption periods

where you can get your money out

but it is not guaranteed

and that is because real estate traditionally

is not a highly liquid investment.

And so if you're looking to have that high liquidity,

the ability to trade in and out of that REIT

you're gonna want to stick to a publicly traded REIT

like the Vanguard REIT for example.

But if you're looking to have those benefits

that come with that private real estate investment

and you're looking for an asset

that is less heavily correlated with the stock market

then Fundrise might be an interesting option for you.

That is one of the problems with investing in a REIT

is that because it's traded on a public stock exchange,

it's going to behave very similarly to a stock

and it's going to pretty much correlate pretty close

to the overall stock market.

So when stocks are going up, REITs are going up.

When stocks are going down, REITs are going down.

And the idea behind diversifying across different assets

is for each of these assets to move in different ways

at different times.

And so that right there is a pro for some

and a con for others.

If you're looking to have

less correlation to the stock market

then Fundrise would be a plus.

But if you're looking to have

high liquidity with your investments,

Fundrise is not for you,

you're gonna want to stick to a traditional

publicly traded REIT.

Okay, so we've covered what Fundrise is,

we've covered what a REIT is

and now we're going to move on and talk about

what is an eREIT and what is an eFund,

those are the two products that Fundrise

is offering on their platform.

So first of all, an eREIT is an electronic REIT,

this is a product invented by Fundrise.

Now the main difference here

is that you are buying this directly from Fundrise

and essentially you are cutting out

the broker or the middleman

and that is going to be reducing the fees.

A lot of the times with these REITs

you're going to pay a front load of sometimes 7% to 15%

just to be investing your money into that REIT.

And so you would be 7% in the hole on that investment

just getting started.

So instead of charging these front-load fees

like many REITs do traditionally,

Fundrise instead charges just a 1% asset management fee

on an annual basis.

Now second of all the eFund is the electronic Fund,

also invented by Fundrise.

And this is a professionally

managed portfolio of real estate similar to a mutual fund

and the funds are structured as partnerships

not corporations,

resulting in tax savings passed along to investors.

So there is a tax advantage involved with these a eFunds

and the way they are structured.

And then again like the eREITs,

the eFunds are sold directly from Fundrise

cutting out the middleman or the broker

and again this reduces the fees involved

with this investment.

Okay number four, the fourth thing I want to cover here.

Is it safe to be investing in Fundrise?

A lot of people are weary of investing in things

outside of the stock market.

They're worried about whether or not it is a scam

and so that's what I want to cover at this point in time.

First of all, Fundrise files with the SEC,

the Securities and Exchange Commission

and it is audited annually.

And those financial statement audits are disclosed

on the Form 1-K which you could look at right now

just by searching for it.

And they also have a 90-day satisfaction guarantee

with Fundrise.

So if you invest your money

and within 90 days you decide,

you know what, I don't want to be invested in this anymore,

they will give you your money back.

Now there are some limitations involved with this

so you're going to want to look into that

guarantee yourself.

But the main thing I want to stress here

so far with Fundrise is that

this is a long term investment.

This is not like a stock investment

where some people are gonna buy it

and sell it in three months.

Or they're going to invest in a stock, change their mind,

sell it and try to buy something else.

You're not going to have that liquidity with Fundrise

because of the fact

that it's not traded on a major exchange.

So it is good that they include that 90 day guarantee,

so if somebody makes an impulse decision

they invest their money and then they realize,

you know what, I don't want to be invested in this anymore,

you can back out and they will buy back your investment

at the original price that you had paid.

But again look into those limitations on that

just to make sure you are clear on what the guarantee is

and the limitations that apply.

Number five.

What are the requirements to invest in Fundrise?

It is open to U.S. investors

and international investors may be able to invest

through US-based entities.

And I included a link where you can read more about that.

It's a Q&A page,

you're going to click on international investors

and then Fundrise is going to give you an email

where you can contact them and inquire about

investing in Fundrise as an international investor.

There are two different portfolios out there or plans,

the $500 minimum is going to put you

in the starter portfolio

which we're going to talk about in a little bit.

And the $1,000 minimum is going to give you the ability

to have an advanced plan.

And with that there are three different

goal based investing portfolios that you can be a part of.

Number six, let's go ahead and talk about

the actual Fundrise investments

and what you would be getting a part of

by being a Fundrise investor.

First of all, if you invest at $500 minimum

they're going to put you in the starter portfolio

which is very simply a 50% income

and 50% growth oriented approach

to this commercial real estate investing.

If you do invest a $1,000 or more,

you have the ability to invest in three goal based plans.

One is called supplemental income

which is an income oriented approach.

You're investing in cash flow producing real estate

and returns are produced primarily through dividends

and not the appreciation of the underlying asset.

So that would be a strictly income approach,

very similar to investing in dividend stocks

that don't have a lot of growth of the underlying asset

but they are paying a consistent dividend

and a high dividend yield.

Second of all, you have the balanced investing plan

that is a blend of both income and growth

cashflow producing real estate

and they also are purchasing undervalued real estate

in emerging areas

and looking to make money from the asset appreciation.

They're buying properties, fixing them up, making repairs

and then selling them down the road

and that is how they are recognizing that return

is that difference between what they bought it for,

their renovation costs

and then what they're selling

that piece of real estate for down the road.

And then third and finally,

the long term growth plan

that is a growth oriented approach

investing in undervalued real estate,

improving it, selling it.

And asset appreciation

is where you're making the majority of the money

with a little bit of income from dividend payments

or the cash flow from the real estate.

So now we're gonna go ahead and take a look at

the projected annual return plus historical performance.

And do keep in mind that Fundrise

only has a four year track record here.

They only have been started since 2014,

so this is not a company with a massive track record.

So we know like we said

the stock market historically pays about

an 8% to 10% return per year

but that is over more than 100 years of data

and we do not have that much data here with Fundrise.

So while these numbers are exciting,

while they are very high,

one of the main things I want to stress here

is that this is not a long amount of time

and this has been only in a bull market

that we have seen this.

And so once we see the economy begin to turn around

that will be the real test

or the true test here with Fundrise

and what these returns will be.

But the projected annual return

for the supplemental income plan

is about 6.6% to 7.3% from dividends,

that's the highest dividend yielding plan.

And 1.8 to 3% from asset appreciation,

resulting in 8.05 to 10.3% return expected per year.

Moving on balanced investing is 3.7 to 4.1% from dividends,

4.2 to 7.6% from the asset appreciation

resulting in an eight to 11.7% projected annual return.

And then finally the long-term growth

that is the smallest amount from dividends

2.3 to 2.5% from dividends.

5.4 to 10% from asset appreciation

resulting in a 7.7 to 12.5% projected annual return.

Now how has Fundrise performed over the last four years?

Well the average annualized return

after the 1% paid in fees for 2014 was 12.25%.

For 2015, it was 12.42%.

For 2016, 8.76%.

And for 2017, 11.44%.

So based in the last four years

you're looking at about

an eight to 11% return from Fundrise

after your expenses are paid that 1% fee.

But again keep in mind this is four years of data,

this is a very small amount of data

that we are looking at here.

And as I'm sure you know past results

do not guarantee a similar outcome.

So there's no guarantee

they will have these returns going forward

but that is what they are expecting as returns

from these funds.

Moving on now, let's go ahead

and talk about the pros of investing in Fundrise.

First of all, the fact that is

is a $500 minimum to get started,

that is a very low barrier to entry

to be investing in commercial real estate.

If you don't have $500 you could open up a brokerage account

and invest in a publicly traded REIT

for the cost of one share.

So it's not the cheapest way to get involved in real estate

but it is a good way to be getting involved

in some private commercial real estate.

And again not being correlated

with the stock market so heavily

as you would be with a publicly traded REIT.

Second of all, Fundrise has transparency

when it comes to their fees.

They charge a 1% fee beyond that

there aren't any hidden fees like you would hear about

with mutual funds or other funds out there.

Third of all, there's no minimum income or net worth

to be involved in this.

A lot of times with these funds

they're reserved for the very high end investors,

the very rich investors.

And traditionally to be investing in commercial real estate

you need millions of dollars

and you need to have a massive net worth.

With this the only limitation is you need to have $500

to get started with Fundrise.

So there aren't those income limitations

that are traditionally involved

with investing in commercial real estate

and private real estate investments.

The other pro is that it is well diversified here,

you're investing in a pool of different real estate.

And so it's not like going out there and buying

one apartment building or one shopping mall

where you're not well diversified.

You're investing in a pool of real estate

that is producing cash or it is growing in value.

And if there is some real estate

that's not performing as well

the other pieces of real estate that are

producing positive cash flow and the asset is appreciating,

that's going to offset the losses

from the other pieces of real estate

that are not performing as well.

But again you're gonna find that diversification

with pretty much any REIT

that you are investing in out there.

Another pro is that Fundrise has a built in drip,

a dividend or distribution reinvestment plan

that's going to allow you to take your dividends

that you are receiving or your distributions,

reinvest it back into the fund

and that's going to allow you to earn compound interest.

Very similar to investing in a dividend stock

and reinvesting those quarterly dividends.

Some brokerage accounts out there

charge a premium for a drip.

Fundrise does not charge for that,

they have the built-in availability

or features to have a drip

when you reinvest those distributions that are paid.

Another pro for Fundrise is you can invest in them

through a self-directed IRA.

So if you are interested in investing in Fundrise

through a retirement account

and sheltering yourself from taxes

you do have the ability to do that as well.

And the other thing is the fact

that this is a 100% passive real estate investment.

You're not going to be managing this at all,

you're not going to be reallocating.

You're gonna put your money in,

you may decide to set up a drip

and then unless you're going to be adding more money to it

you're really not going to have

to think about it or worry about it

and you have that built in diversification

across different pieces of real estate.

Another pro is that they do offer

the gold based investing plans.

If you invest more than $1,000

you can pick between those three we discussed earlier.

So if you're looking for a more income

or growth oriented approach,

you can pick the plan that best suits your needs.

And then the final pro I have

is that because there is low liquidity with this investment

they are essentially protecting you from yourself.

And so if there is a downturn with the market

you're not gonna have the ability to go in there

and do panic selling.

With the stock market, if the stocks are falling

you're gonna have a lot of people running in there,

selling as fast as possible.

Taking a loss, selling down,

that's going to cause the crash

to be worse than it would be ordinarily.

And so with Fundrise

we are going to talk about the liquidity

but the fact that they have low liquidity

does protect you from yourself

and it protects you from other people getting involved

in panic selling and selling it the worst possible time.

Moving on, let's go ahead

and talk about the cons of Fundrise.

The first one, the main one is that

distributions are never guaranteed.

But that's the same thing with dividend stocks.

When you're investing in a dividend stock,

dividends are never guaranteed,

they could be cut or they could be discontinued

at any point in time.

The same thing is true with these Fundrise dividends

or distributions that are paid out.

And also liquidity is not guaranteed.

What they have said is they're going to do the best they can

and they have set up quarterly redemption programs

where every quarter you do have the opportunity

to sell your shares and free up your cash.

But they cannot guarantee liquidity

on this type of investment

because it's not traded on a major exchange

and they can't guarantee that's going to be a buyer

on the other end when you are looking to sell.

But again this is because real estate is inherently

not a highly liquid investment.

And so they're not going to be able to maintain

that high level of liquidity

holding on to a massive amount of cash,

they're going to be investing in real estate projects

that are going to be low in liquidity.

They're not going to be able

to sell these things left and right

to offer people liquidity.

And so that's something you should know going in

before making any kind of real estate investment

is that the liquidity is not there.

If you're looking for a highly liquid real estate investment

you're gonna want to stick to a publicly traded REIT.

Another con is that the distributions paid by Fundrise

are going to be taxed as ordinary income

not as qualified dividends.

If you are familiar with that

there are certain criteria

where your dividends are taxed at a lower tax rate.

But that is not going to be the case with these dividends

or distributions paid by Fundrise

so you don't have that tax advantage

as you do with some income investments out there.

So you do want to consider the tax implications

of those quarterly distributions.

And then forth and finally the other con

that I have for Fundrise

is that there's a four year operating history here.

They've been around since 2014,

there's not a ton of data to go off of,

they haven't been through a poor economic time.

We've only seen their performance in a great economy here.

So that is the final con I have,

we don't have a ton of data

or history to go off up here with this company.

Finally, the last thing I want to cover here

is what type of investors should be investing in Fundrise?

It's going to be somebody who is a passive investor.

You're not interested in being active,

you're not interested in actively picking investments

or picking stocks.

You want to put your money to work

and you want to forget about it entirely.

You want to automate your drip,

reinvest your distributions

and maybe add contributions a couple times a year

and not think about this investment until tax time

when you're reporting your income.

It's for people who want to be investing

for five plus years.

If you're looking to put your money in Fundrise

and get it out in two months or three months,

do not invest in Fundrise.

Even if you're looking to get your money out

in a year or two, I would not invest in Fundrise.

Real estate is a long-term investment.

If you're investing in a house or a piece of real estate

or a multi-family property,

you're not gonna buy it now

and then try to sell it in six months or even two years,

you're gonna sell it many years down the road

and those same rules apply here with investing in Fundrise.

Fundrise is a good investment for new real estate investors

that want low risk exposure to this area.

It's not like going out there and buying a rental property

where you're gonna be actively managing it.

Now by doing that that is higher risk,

higher return exposure.

But by investing in Fundrise you're getting that low risk,

lower return exposure to real estate.

And it's also for people

who want to diversify their asset classes.

Maybe you are 100% invested in stocks

and you want to maybe invest some money in real estate,

you don't want to be actively managing real estate yourself

so you're looking at possibly a REIT

or possibly investing in Fundrise.

And Fundrise is also for people

who are looking to be less correlated to the overall market.

Because this is a private investment

that is not publicly traded on a major exchange,

it's going to be less correlated to the overall market.

And because of the fact that they prevent panic selling

by not having that liquidity available to you,

that is another advantage as well.

But for some they may say that's a con,

it all depends on your investing style

and how long you're looking to have your money invested for.

So Fundrise is 100% not for active investors,

it's 100% not for short-term investors.

So if you're looking to be active with your investments,

pick your own investments.

If you're looking to buy this and sell it in three months,

stay away from Fundrise maybe look at a REIT.

But these are not short-term investments,

these are a long term investments.

But anyways guys, that's gonna wrap up this video.

I hope you enjoyed it.

Like I said, I do have a link for Fundrise down below.

It's an affiliate link, you do not have to use it,

but it does help me out

and help me to continue to make videos like this.

And I do recommend doing some more research.

I've included that video that Graham Stephan did.

Check that one out as well

just to check out some information from

at least two different sources here on this platform.

Always listen to different opinions,

always look at the pros and the cons

when considering any investment option.

But thank you guys so much for watching

and I will see you in the next video.

If you are interested in learning more about

investing in the stock market,

I've created a free course just for you.

The link is in the description below.

Here are a few other videos you might enjoy as well.

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