Is Fundrise Legit? A Comprehensive Fundrise Review
Money Main St is reader-supported. When you buy through links on the site, we may earn an affiliate commission. Learn More
Investing in real estate can be a lucrative way to grow your wealth, but it can also be a daunting and expensive task.
This is where Fundrise comes in, an online real estate investment platform that allows everyday investors to invest in private real estate deals for as little as $10.
But the question on many people’s minds is whether Fundrise is legit.
Is fundrise legit: The good news is that Fundrise is a legitimate business that has been operating since 2010. Fundrise Advisors, LLC, the manager of the platform, is registered with the US Securities and Exchange Commission (SEC). Additionally, Fundrise has received positive reviews from reputable sources such as Forbes and Business Insider.
However, as with any investment, it’s important to do your due diligence and understand the risks involved.
In this article, we’ll take a closer look at Fundrise, its pros and cons, and whether it’s a good fit for your investment portfolio.
FYI: A great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio with ONLY 10$!
What is Fundrise?
Fundrise is an online real estate investment platform that allows the everyday investor to access private real estate deals. It was founded in 2012 and is based in Washington, DC.
The company uses crowdfunding to raise funds for its real estate investment properties, making it easier for smaller investors to get involved in real estate investing.
History of Fundrise
Fundrise was founded by brothers Ben and Dan Miller, who come from a real estate background.
They saw an opportunity to democratize real estate investing by creating a platform that would allow anyone to invest in private real estate deals.
Since its launch in 2012, Fundrise has raised over $1 billion in capital and has over 150,000 active investors.
How Fundrise Works
When you invest with Fundrise, your money is pooled with other investors’ money to purchase real estate assets.
Fundrise then manages the properties and distributes any profits to investors. The platform offers a variety of investment options, including eREITs (electronic real estate investment trusts) and eFunds (electronic real estate funds).
One of the unique features of Fundrise is that it allows investors to choose between different investment plans based on their investment goals and risk tolerance.
The plans range from a conservative income-focused plan to a growth-oriented plan that focuses on capital appreciation.
Types of Investments on Fundrise
Fundrise offers a range of investment options, including:
- eREITs: These are electronic real estate investment trusts that invest in a diversified portfolio of commercial real estate properties. They offer regular dividends to investors.
- eFunds: These are electronic real estate funds that invest in specific real estate projects, such as apartment buildings or office complexes. They offer the potential for higher returns but also carry more risk.
- Private REITs: These are private real estate investment trusts that invest in commercial real estate properties. They require a higher minimum investment than eREITs and are only available to accredited investors.
Fundrise offers a unique opportunity for investors to access private real estate deals and diversify their investment portfolios.
It’s important to carefully consider the risks and fees associated with real estate investing before making any investment decisions.
Is Fundrise Legit?
When considering investing with Fundrise, one of the most important questions to ask is whether the platform is legitimate. Here are some factors to consider:
Regulatory Compliance
Fundrise is regulated by the Securities and Exchange Commission (SEC) and is compliant with all applicable securities laws. The platform is also registered with the Financial Industry Regulatory Authority (FINRA).
Track Record of Performance
According to the National Council of Real Estate Investment Fiduciaries (NCREIF), the average annualized returns of private commercial real estate properties, such as office buildings, was 10.3%.
Fundrise has consistently outperformed this benchmark, with an average annualized return of 11.44% since its inception in 2012.
Investor Protection
Fundrise takes investor protection seriously and has implemented several measures to safeguard investor funds. The platform uses bank-level security to protect against fraud and cyber attacks, and all investments are held in a separate legal entity to protect against bankruptcy.
Additionally, Fundrise has a buyback program in place to protect investors in the event that a property fails to meet its projected returns.
Third-Party Reviews
Fundrise has received positive reviews from several reputable sources, including Forbes, NerdWallet, and The Millennial Money Woman. While there have been some negative reviews and complaints, these are relatively rare and do not appear to be indicative of any widespread issues with the platform.
Overall, while no investment is completely risk-free, Fundrise appears to be a legitimate and well-regulated platform with a strong track record of performance and a commitment to investor protection.
Pros and Cons of Investing in Fundrise
Pros
Investing in Fundrise can be an attractive option for those who want to diversify their portfolio and invest in real estate without buying physical property. Here are some of the benefits of investing in Fundrise:
- Low minimum investment: With Fundrise, you can start investing in real estate with as little as $10.
- Diversification: Fundrise allows you to invest in a wide range of real estate properties, including commercial and residential properties across the US.
- Professional management: Fundrise has a team of experienced real estate professionals who manage the properties and investments on your behalf.
- Passive income: Fundrise offers the potential for passive income through dividends and appreciation of your investment.
Cons
While investing in Fundrise has its benefits, there are also some drawbacks to consider:
- Highly illiquid investment: Real estate investments are generally less liquid than stocks or bonds, and Fundrise is no exception. It can be difficult to sell your investment if you need to cash out quickly.
- Fees can be difficult to understand: Fundrise charges fees for managing your investment, but the fees can be complex and difficult to understand. Be sure to read the fine print before investing.
- Complex investments that require investor due diligence: Investing in real estate can be complex, and it’s important to do your due diligence before investing in Fundrise. You should understand the risks and potential returns of the investment before making a decision.
FAQs: Is Fundrise Legit?
Is Fundrise A Ponzi Scheme?
No, Fundrise is not a Ponzi scheme. A Ponzi scheme is a fraudulent investment scheme where returns are paid to earlier investors using the capital of newer investors. Fundrise is a legitimate real estate investment platform that allows investors to invest in private real estate deals. The company is regulated by the SEC and has been in operation since 2012.
Is Fundrise A Scam?
No, Fundrise is not a scam. Fundrise is a legitimate real estate investment platform that allows investors to invest in private real estate deals. The company is regulated by the SEC and has been in operation since 2012. However, it is important to note that investing in real estate, like any investment, carries risks. It is important to do your own research and understand the risks before investing.
Is Fundrise Safe?
Fundrise is generally considered safe. The company is regulated by the SEC and has been in operation since 2012. However, investing in real estate carries risks, and it is important to do your own research and understand the risks before investing. Fundrise also charges fees, which can impact your returns. It is important to understand and consider all fees before investing.
It is also important to note that Fundrise investments are illiquid, meaning that they cannot be sold easily. It is important to have a long-term investment horizon and be prepared to hold your investment for several years.
What Is A Pyramid Scheme?
First of all, let’s consider what a Pyramid Scheme actually is. A Pyramid Scheme presupposes that there is a certain number of people that come in each round to increase the capital supply of the scheme. This way the people that get in first reap the rewards of the people that come in later with the first person to start the scheme at the top gaining the most.
With this definition of a Pyramid Scheme let’s see if Fundrise actually holds up to this definition.
Why Do People Think Fundrise Is A Pyramid Scheme?
People have alleged that Fundrise is a Pyramid Scheme mostly because they are not able to withdraw their money anytime they like. However, such a lock-up period is common for liquid investments such as real estate.
Especially on Reddit, there has been some debate about the legitimacy of Fundrise:
Does Fundrise actually hold the real estate it claims to hold?
Does Fundrise use too much leverage to buy over-leveraged assets?
What would happen to Fundrise if all investors decided to pull out at once and create a bank run?
The overwhelming majority of Reddit users agree that such claims simply cannot be verified about Fundrise.
Another reason why some users have wielded accusations against Fundrise for being a scam is that they have suffered losses for withdrawing their funds early. However also the fact that a penalty will be imposed on the early withdrawal of funds – i.e. less than one year – is clearly stated in the terms and conditions.
- Is Vanguard FDIC Insured? Everything You Need to Know - September 2, 2023
- How to Invest in Wagyu Cattle: A Comprehensive Guide - August 30, 2023
- Vanguard Drip: What It Is and How to Do It - August 30, 2023
