- So in this video today,
we're going to be doing a review of the crowdfunded
real estate investing platform known as Fundrise. Now I have personally
been investing in Fundrise since June of 2018 and I have about $25,000
invested in this platform. And so at the end of this
video, we're actually going to do to a live video inside
the Fundrise platform, where I'll show you
guys what it looks like, what my money is invested
in and what my returns have been this far. But I just wanted to make
sure you guys are aware of the fact that I
actually use this platform and actively invest a
sizable amount of money in this investment. Now, before I get into the video, I just wanna mention two things. Number one, if you wanna
support me for putting this video together, I do have
an affiliate link down below and if you use that, I
will earn a commission in the process. And then number two, I also
have a completely free guide on investing in crowdfunded
real estate for beginners, that talks about the
difference between debt and equity investments, how to get started and a lot of the ins and outs. So if you wanna check those
out at the end of the video, guys, those are linked up,
down in the description below. Okay, so first of all, let's talk about what exactly is Fundrise. Well, Fundrise is a crowdfunded
real estate investing platform which essentially
makes the way that people invest in real estate way different than it was in the past. So back in the day, if
you were looking to get in on a private real state investment, you had to be in the know and you had to have a lot of money. So let's say for example,
you have a 100 unit apartment building that is being offered for sale. Well, back then before
crowdfunding, before you could raise money from all kinds of different people, you would have to have
a small group of people getting involved in the deal. So in the past, if you
were investing in a large real estate deal, you
typically had to have hundreds of thousands, if not millions of dollars, oftentimes you had to be
an accredited investor. And it was a very small
number of people getting involved in that deal. So for those who are accredited
investors with millions of dollars, that's not really a problem, but if you're like most people and you don't have those
things available to you, this is where Fundrise and
other crowdfunded real estate sites come in. Because rather than
having just four investors on a given property, you potentially have thousands of investors. You don't have to be an
accredited investor with Fundrise. And the minimum rather than
being hundreds of thousands of dollars is just $500. Because rather than then raising
money from just a handful of people, they're able to raise money from thousands of people
through the internet. Now that being said, guys,
before we go any further, there's a few things that you
need to know about Fundrise that I'm going to right now. First of all Fundrise invest
your money in debt investments and equity real estate investments and these are longterm investments. It's not as easy to sell
a piece of real estate as it is to sell a stock. So that being said, your
minimum time horizon with a Fundrise investment
should be five years. And we're gonna talk about
the fees in a little bit here, but understand that if you
invest your money in Fundrise and pull it out before
that five year window, you will end up paying fees on that. So if you're looking for a
short term place to invest your money, this is not
the investment for you. Another thing you have to understand here is that this is called a
low liquidity investment. And what I mean by that
is it's not as easy to get your money out of it, as
it is less stock market or something else like that. Fundrise does offer quarterly redemption. However, they reserve the
right to suspend redemptions at any point in time as they see fit. So for example, earlier
this year, when that global pandemic hit, Fundrise
suspended redemptions, because they didn't want
a flood of people trying to cash out, which would
force them to sell real estate in non-optimal conditions
which would hurt the returns for other investors. So you should understand that
the liquidity here is low. It's a five plus year investment and if you don't like that
aspect of low liquidity where you may not be able
to get your money out exactly when you want to,
then again this is probably not going to be the investment for you. But that being said,
these also carry benefits and because they're kind
of protecting you from you, it's a much less volatile investment and because they're able
to remain fully invested and not have as much cash
set aside for redemptions returns overall are
often better than you see with a publicly traded REIT. And the other thing is
by suspending redemptions as they see fit and only
offering quarterly redemptions, it takes your emotions
out of this investment. So you're not gonna have a panic and try to cash out because of the market. You know, it kind of protects you from you because you can't just
pull your money out. And the reason is because
your money is collectively with everyone else's being
put into real estate, which is a low liquidity investment. So you can't just throw your money in and take it back out. If you do, you are going
to pay redemption fees. So understand that Fundrise
is a five year plus low liquidity investment. All right, so moving on now
let's talk about the different Fundrise plans that they offer and the corresponding minimums. Well, they did change this recently. We have new plans over
here called advanced and premium, but the same plans over here are still the same. So first of all, we have
the starter portfolio, which has a minimum
investment of just $500, which is essentially for those
who want to give it a shot, try out Fundrise without
committing tons of money. Then they have the advanced
plans where there are three different ones and those have a minimum investment of $1,000. Now the good news is at
any time you can upgrade from the starter portfolio
to the Advanced plan. So you don't have to dive in
with a large amount of money. You can dip your toes
in, see if you like it, and then move towards one
of the advanced plans. Now, as far as those advanced plans go, they offer three different ones. They have a growth oriented portfolio, they have a blended portfolio and they have an income
oriented portfolio. So depending on where you're
at in your life financially, you may have more of a priority on growth or as an appreciation versus income through dividends or distributions, or you might be smacked out in the middle, which is what I decided because
I use the blended approach or the blended plan. Now, like I said, there are two new plans that have been added to Fundrise recently. The advanced plan has a $10,000 minimum and the advanced account
level offers the choice to opt into a plus plan and
unlock a greater variety of investments, including
more sophisticated and niche specific strategies. So pretty much with the advanced plans, you're picking one of
them three portfolios, but once you have over $10,000
invested, you can choose a more specific strategy
and kind of be more zeroed in with your investments. Even though I have over 10,000, I still just have my money
in the balanced portfolio. That's what works well for me. And lastly, if you have a
hundred thousand dollars or more, you're going to
have premium account access. And as far as the benefits
of that, this is going to give you a priority, customer service and the option to schedule a
call with a Fundrise expert to basically talk about your investments and the platform overall. So for most people, they're
gonna fall in into the $500 plan for the starter or one
of the advanced plans, because at the end of the
day, Fundrise is meant to be a platform for
many smaller investors to get in on private real estate deals. But that being said, if
you wanna do a more sizable investment, you can get
into the advanced plan and pick a more specific strategy. All right so now what I
wanna do is I wanna cover the historical returns of Fundrise. And this is net of, or after fees. We're gonna talk about
the fees here in a minute, but understand that these
returns are what people sow after paying fees to Fundrise. In 2014, that was a return of 12.25%. 2015 was 12.42%, 2016 8.76%, 2017 11.44%, 2018 9.11% and 2019 9.47. So we don't have a heck
of a lot of data to go off of here, but it's really been solid so far as far as those returns go. And the idea with investing in real estate is to be investing in an
asset that is less correlated with the overall stock market. And I will say this a lot of
people looking for real estate exposure, we'll go out
there and they'll purchase a publicly traded REIT,
which is essentially a way to buy real estate
as if it was a stock. Essentially these
companies own large amounts of real estate, and then
they share the income in the form of dividends. But the problem with
a publicly traded REIT is that it's susceptible to panic selling because of the high liquidity. And it's also almost directly correlated with the stock market. You want your assets
doing different things at different times. And if your real estate
investment takes a dip at the same time as your
stock market investment, that essentially defeats the
purpose of diversification. And again, not to mention,
as we spoke to earlier, those publicly traded
REITs are often lower in returns than private
real state investments. And there is a lot less transparency because you really have
no idea what exactly it is that you are investing in. In a little bit here we're
gonna open up my Fundrise account and you're gonna
be amazed at the level of transparency Fundrise offers showing you exactly what your
money is invested in. Now, lastly, before we get
into that live demo here, I want to cover the Fundrise fees so you are familiar with them. First of all, they have an advisory fee and an asset management fee and combined that is 1% per year that's going to be automatically
deducted from your account. So you don't have to
like write them a check or have that deducted
from your bank account. They're gonna pull that out
of your Fundrise account. Second of all, there are
loan origination fees with new projects. However, oftentimes these
are paid by the borrower and not by you. But these fees are anywhere from 0% to 2%. And then lastly, there
are early redemption fees. I'll put the chart up on the
screen so you guys can see it. And this is why you need to
commit to the five year term if you are in fact, going
to invest with Fundrise, because you don't wanna be
paying those early redemption fees and this early
redemption fee discourages people from investing if they don't have a
longterm time horizon, which overall is in the best
interest of all Fundrise investors, because you
don't want people doing massive swaths of
redemptions that could cause Fundrise to have to sell a
property at an undesirable price, and that's gonna hurt
returns across the board. So that being said, guys,
let's jump into the live demo now and take a look
at my Fundrise portfolio. So here we are inside of my
Fundrise investment portfolio. And as you can see, the
current value of my portfolio is just over $25,000. So I definitely have a
sizable amount of money invested with Fundrise. So, you know, I've
definitely have put my money where my mouth is here
and I'm just reviewing a random platform that I don't use myself. So that being said, I wanna cover a couple of quick things here before we
move on to what else you have within the Fundrise dashboard. So, first of all, you can
see I've been investing in Fundrise since June of 2018 so a little bit over two years. I am in the Advanced plan and I'm doing the balanced investing, which is a blend of
both growth investments, as well as income investments. And the idea behind that
is you get a good blend of both income from your
investments through interest and rental payments, as
well as asset appreciation through essentially purchasing
properties, remodeling them or repositioning
them and selling them for a greater price down the road. So that being said here,
guys, as you can tell, I actually ramped up my
investment in Fundrise quite a bit in the recent months. For the first year or so I had just about a
thousand dollars invested, but you can see it did
grow steadily over time. Then I bumped it up to a $5,000 investment for about another year. And then at the beginning of
2020, I had $5,000 invested and I started doing $2,000
per month for a period of time following that dollar
cost averaging type strategy. And then as you can see here
in May, I had some extra money and I put 10 grand into Fundrise. Now that I have $25,000
invested, I'm actually not gonna put any more money in probably for the rest of this year,
just because I need to build up my emergency fund and
direct some money elsewhere. But so far I've been very
satisfied with Fundrise, as well as the returns. And I can basically plan
on keeping this money in here and adding more down the road. So on the left here, we can
see that from dividends, I've earned a basically
just under $500 all time, about 236 from 2020. And you can see what I've earned
from appreciation as well. And they're very transparent too, about what you're paying in advisory fees. Now, if you're wondering
why these overall returns seem kind of low, well that's
because I just recently ramped up my contributions here. So because I added so
much money over the last couple of months, I
haven't had that much time where that money's actually been invested, earning dividends and
potentially earning appreciation. Now here's one of the big
differences between investing in Fundrise and investing in a REIT. And that is the level of
transparency available to you. Because right here, I can
see exactly what my portfolio is invested in and it's
across 187 different projects. Now of those projects,
we can see 67% are equity and 33% are debt. And you can also see the rating
of each of these properties telling you what are the
more conservative investments and what are the riskier ones. So for example, let's just
click on a random one here. Maybe this one right here,
stabilized apartments in Washington, DC, you
will literally can click on that and it shows you exactly
what you're investing in. And if you want more
details, you just click View More Details, and it's
gonna give you basically a full overview of why they are invested in this particular property. If you try to find this
level of transparency with a REIT, it is just
not going to happen. You're gonna be digging
through complicated financial documents and
good luck trying to figure out what your money is even invested in. But with Fundrise it is
so easy to go through here and navigate and see
exactly what your money is invested in as far as properties go. They also tell you when
things are paid back, they have progress reports
depending on how actively involved you wanna be. Like for example, this project
was completed successfully. So if you wanna be in here,
you know, on a monthly basis, checking out properties,
you're more than welcome to, or you can just set it and forget it and trust that the experts have
your best interest in mind. If we click on dividends,
we can see that my dividends activity has been reinvested. And again, these dividends
are smaller because it's not based on that
large $10,000 investment that I just put into this portfolio, but my next dividend should
be substantially larger. And of course I am using
that automated reinvestment. That way that money
goes back into Fundrise, I'm able to earn more
dividends from my dividends, essentially earning that compound interest and maximizing my returns. So now let's take a look
at the performance here of my portfolio. And I like the fact that
Fundrise is extremely transparent about returns, and they're not trying to hide it. They're not trying to hide their fees. They're very forthcoming about everything. Now, 2020 has been kind
of a crazy year for real estate with this global pandemic. So I would actually say, I
expect returns to be quite a bit lower in 2020, than
they have been prior, but we already covered
what those Fundrise returns have been historically. And over the long run, they
have been relatively solid. But if you wanna get an
idea of how you're assets are performing, everything is
available to you right here. And if you want a more
specific view, you can click on the dropdown and see
based on these different E-reads and E-funds how each specific
investment is performing. And then if you click
on the portfolio tab, you can see exactly how much
of your money is invested in each specific investment
and how that all pans out. So I wanna be as hands off as possible guys, you can say, add it and forget it. Or if you wanna be actively involved, you can literally look into
each investment and track this and see exactly what they
are doing with your money. Again, this is not something
you're going to experience if you simply buy into a REIT because you will not have that
same level of transparency. So anyways guys, there you have it. I hope you enjoyed this video. Like I said, if you wanna
support this channel for putting this video
together, I do have an affiliate link for Fundrise down below. And I also have that completely
free guide on crowdfunded real estate investing for beginners. Check it out if you're
looking to learn more about this investment in general, it is a tremendously valuable resource. But thanks so much for watching guys. I hope you enjoyed this video and I will see you in the next one.
