Real estate investments can be some of the most lucrative investments people ever make. Many people would love to flip houses or rent condos to the upper class, but unfortunately, this seems like a dream to most. In an economy where many people (especially Millennials) struggle to afford their own house, how can buying more real estate be feasible?
Technology is once again here to help, through the crowdfunding company Fundrise. With starting investments as low as $500, almost anyone can get started with investing. You’ll choose the portfolio you want to invest in, with each portfolio having a specific goal in mind. By investing small percentages of your money into different properties (from hotels to condos to apartment buildings), your investments work similarly to a mutual fund. The biggest difference is you aren’t playing the always risky stock market, but rather, the more predictable real estate market.
Fundrise boasts two things: high returns and low fees. 2017’s Q2 performance was 10.88%, up from Q1’s 10.59%. This is a substantial number. On their site, they have a graph that shows current annualized dividend yields as more than 4% higher than public real estate, and more than 5.5% higher than public bonds. Their fees stack up in their favor as well. Fundrise charges fees of 1% annually, compared to 1.37-6.45% for traditional investments. This is huge, as the fees from traditional investments can easily deplete most or all of your earnings.
While the returns and fees sound good, I also appreciate the transparency behind the company. Reviews are listed on the site and include both good and bad (although the good vastly outnumber the bad). If you’re interested in finding out what your investments are going toward, it’s easy to find out. You can click on a property and all of the information is there. Right below the picture, there are key points about the deal, such as loan type, other companies involved in the deal, and more. Below the key points is a detailed summary of the investment, including what your money is going toward, how any other companies involved, and what the outcome should look like, if everything goes according to plan. Finally, below the summary is a map with the location of the project.
After reading all this information, how do you know if using Fundrise is the best option for you? I can’t make that decision for you, but I can provide some thought points for you to decide on your own. First, consider how much money you have to invest. Fundrise portfolios start at $500, so if you have less than that available, it might not be right for you. Likewise, if you have enough to own properties, you might want to consider buying outright, because the investment will be solely in your hands. Also, if you are a fan of buying individual stocks and are not interested in mutual funds, you may not like this method, as it is most similar to mutual funds. However, if you have the money, you like the numbers, and you want an investment that requires little attention, I would suggest looking into Fundrise to see if it is the right option for you.