FUNDRISE REVIEW 2023 – Passive Real Estate Investing

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This is the digital nomad quest podcast with Sharon Tseung. teaching people how to build passive income, become financially free and design their best lives.

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Hey, guys, it’s Sharon Tseung. And today we’re gonna do a fundraiser view. So guys, I am pretty excited to do this Fundrise review, I’ve received a lot of questions about my thoughts on Fundrise. And if I currently invest in it, so that’s why I wanted to make this episode now a few months ago, we decided to open a portfolio where we currently have $1,550 in it. And we’ve been putting in $250 per month, and we may increase our contributions in the future. Now in this episode, I’m gonna go over what Fundrise is how it all works, the pros and cons, the different plans and what my current portfolio looks like. If you guys don’t know already, I’ve been investing in real estate and stocks for a decade now. And in terms of real estate, I have 34 units with my husband across the nation around California, Florida, Georgia, and Texas. And that’s why Fundrise is particularly interesting to me. So let’s get right into it. So what is Fundrise Fundrise is an online real estate platform that lets people invest in commercial and residential properties through crowdfunding. So instead of coming up with the full purchase price for property on their own, people can pull their money together and invest in properties as a group Fundrise lets you own property in a low cost way. So as a real estate investor, you normally need a decent amount of capital like multiple five figures for a downpayment. And if you wanted to be a limited partner in a large real estate syndication deal, you usually need to be an accredited investor, as well as invest a large amount of capital but for real estate investing with Fundrise, you don’t need to be an accredited investor. And what I mean by an accredited investor is you either have a gross income of over $200,000 a year, or you’re someone who has a 1 million plus in net worth not including your primary residence. Now with Fundrise, you don’t need any of that. And on this platform, you have hundreds of 1000s of investors on deals with you, and you only need $10 or minimum investment. So that’s pretty crazy. Now how does Fundrise work? Well, the platform creates e REITs, which are electronic Real Estate Investment Trusts by pulling together investor capital and using it to purchase real estate assets. They’re structured privately and aren’t publicly traded like traditional REITs. So they’re sold directly to investors through fundraises online platform, they’re focused on a diversified portfolio of real estate assets and generate returns mostly through rental income and appreciation of property values. They also can sell properties to realize gains and generate cash for investors. Fundrise uses the funds raised from investors to purchase diversified portfolios of real estate assets like apartments, office buildings or retail spaces. These properties are then managed and operated by Fundrise. And the income generated from the properties is distributed to investors. So Fundrise really changes the game and makes it a lot more accessible. According to their site. They mentioned since launching our first offering in 2012, we’ve invested in more than $4 billion worth of real estate across the country. Today we manage more than $1 billion dollars of equity on behalf of more than 387,000 Plus individual investors. Now when you’re investing in it, you should know that they invest your money in the form of debt investments and equity real estate investments. So what does that mean debt investments mean your money is going to be in the form of loans to the property owner, they’re lower risk, but they have a lower return potential usually, and they get their return from interest payments. And this is outlined in the deal before the investment is committed. Now equity investments mean ownership of the property they get returned to the regular income from rental payments if the property is occupied and appreciation through profit or if the property is sold for more than they bought it. Something you should also take note of is that your minimum Fundrise time investment should be at least five years the flagship Fund, which is the one I currently have money invested in and the income fund don’t have penalties if you sell before any e ri or E fund you withdraw from in under five years, you do have to pay those fees. That’s why investing here is low liquidity, meaning it’s not as easy to get your money out as compared to stocks and then they do have ongoing fees that add up to 1% annually, which is on the low side for this type of investment. So let’s go over the pros of Fundrise. So first pro is diversification. Fundrise does allow you to invest in a diversified portfolio of private real estate assets. And that way you can spread out your risk and reduce the impact of any one investments performance on your overall returns. But because fund rises, ie REITs aren’t publicly traded, they’re also not going to fluctuate the same way as a market and can provide a level of stability for investors. So if you’re invested in stocks, it could be good to diversify through this platform. Another thing is it’s low cost to start. So you only need $10 to start investing on Fundrise. And when I used to look at it, it actually used to be $500. But they’re really trying to make it more and more accessible for people to get into real estate this way. Number three is low fees for this asset class. So as mentioned, their ongoing fees add up to about 1% annually charges an annual point eight 5% flat management fee and then another 15% in annual advisory fees but since you’re diversifying into

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A real asset class you wouldn’t normally have access to. The fees are pretty low for this type number four is its passive. So traditional real estate investing usually does require management. For me personally, we hire property managers to make our lives much easier with our 34 unit portfolio. But if you’re looking for something super hands off, you don’t want to own real estate at all, this might make sense for you, because you just need to invest money on the platform, and you don’t really have to do anything else. You don’t have to deal with pipes, bursting tenants leaving roof repairs or anything like that. Number five is transparency. So they give regular updates on your performance. And they provide you access to detailed information about the properties you’re investing in which I’ll show you guys in a bit. And then lastly, it is intended to withstand downturns. So in this quote from Fundrise, they mentioned nothing can be guaranteed. But because of our conservative approach and extensive underwriting processes, we believe the Fundrise portfolio is from a risk adjusted return standpoint well positioned to be able to sustain a severe economic downturn. Now, as you can see from this chart, even during the downturns of 2022, Fundrise still was able to provide a return, whereas public stocks had a negative 18 point 11%. They’re quite transparent with their annual returns as compared to other types here. So let’s go over the cons. I don’t have that many cons. So the first one is lack of liquidity, you are tying your money to this for five years and longer, you’ll incur a fee if you do sell unless you have your investment in the flagship fund or the Income Fund. But generally real estate does take time to appreciate as well as sell. So that’s why there are generally penalties to trying to withdraw. And it takes longer to liquidate. So that means it’s not good for people who want to sell fast like how easy it is with stocks, it’s better for long term investors. I would say though, that the benefit there is that there are less fluctuations, it’s less volatile, because people aren’t just selling off right away. So it’s almost like they’re protecting you from you. Another thing is the dividends are not taxed like qualified dividends are. So instead, they’re going to be taxed as ordinary income as their non qualified dividends, which as of 2023, Max is at 37%. So in my opinion, there are a lot of amazing pros. And that’s what made me start my portfolio right now, like I mentioned at $1,550 in the platform, and I’m putting into under $50 per month, which I may increase in the future. Depending on how my journey goes. I’m not investing a ton of money in it yet. But I do have that regular investment. And we’ll just keep tracking the progress. If you guys are interested, you can try it out through my link below. And with the link, both of us would get $50 of free shares, which is pretty cool. Now let’s go over some of the Fundrise plans, they’ve made updates to these plans. So these are updated as of the publication of this video. And another thing to know is you can upgrade plans as you deposit more money. So you don’t have to worry if you choose one plan and you want to change it later. So if you look at this chart here, there’s the starter portfolio with a minimum investment of $10, which is honestly crazy, it’s recommended for those who just want to try Fundrise. And you can again upgrade to a higher plan anytime. And then there’s the basic plan which has a $1,000 minimum and gives you the benefits of the starter account level as well as benefits of retirement accounts potential Fundrise IPO access and investment goal planning. Then there’s the core plan, which includes the benefits of the basic plan, but you got to do a $5,000 minimum investment. And it also includes the ability to choose an investment plan that best matches your unique investment objective and the ability to directly invest in any e REIT that’s accepting investments. And there’s the advanced plan, which is a minimum of $10,000. And it gives you access to everything in the core plan plus exclusive access to invest in the Fundrise e fund which has certain tax advantages. Now the last one is the premium plan, which is $100,000 minimum. And it provides investors with access to priority support for the team the ability to schedule a call with one of their team members and the ability to earn $100 In bonus shares when people join through your link. So I’m going to also show you guys the investment plans under the core plans and above. So basically, you can only do this if you have a $5,000 minimum investment but basically this tailors to what you’re more interested in. So if you want a consistent income stream, you might be more into the supplemental income where the percentage is going to be more in dividends. Then there’s the balanced investing, which I think a lot of people do, which is kind of a balance between dividends and appreciation. And then the last one is a long term growth one which is more focused on appreciation. As you can see, with the timing of returns, it’s very different here. The allocation of assets in the Supplemental Income Plan is more focused on income focused assets, whereas with long term growth, it’s more around growth focused assets. So overall, I think Fundrise is a great platform. It’s great for people who want that diversification and low volatility and for people who are okay with long term investments who aren’t trying to liquidate quickly for me, I did want to diversify a bit and I also wanted to show you guys my journey. So I’ll keep you guys updated with videos on the progress of this portfolio. Another side note we also started a dividend portfolio so I’m going to update you guys on that as well. Now if you

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guys are interested in Fundrise. For a limited time, you guys can get $50 in free shares through my link. If you want to start your portfolio, I’ll link it down below. Now when you click the link, you’ll add in your email and password. And the setup is pretty simple. They’ll ask you what kind of account you want to open. And if you want to just start off with $10 you do the general investing account and then they’ll ask you some thoughts on your goals, how much you plan on investing and for how long and what your experience level is. And then you can either keep exploring or you can start investing by depositing into your account. So the process is pretty simple to start. Again, none of this is financial advice, but I am trying it out and I’ll keep you guys posted on the progress. So I hope you guys enjoyed this episode. Please make sure to rate review and subscribe. It really helps our podcast grow. And thanks again. I’ll see you guys in the next one.

Transcribed by https://otter.ai