Fundrise: Real Estate Investing for the Masses

This is a fascinating data table. It is yearly % total returns of the SnP 500 stock index versus Fundrise, the crowdfunded private equity real estate fund. You see that Fundrise produces higher return, but also it has lower volatility. If you think of the track of real estate since the bust in 2009, its been on a steady run. I have read that the number of first time home buyers who cannot afford a house has increased from 35% to 50%, and you are certainly seeing home price inflation in many areas across the US. It appears we have entered a new world of real estate, where the value is now exceeds the majorities ability to own. Lots of people still want to own property, but the definition of that property is going to evolve to fill affordable niches, like condos and townhomes, while others are going to need apartment rentals.

Year	Fundrise	SnP 500
2014	12.3%	11.4%
2015	12.4%	-0.7%
2016	8.8%	9.5%
2017	11.4%	19.4%
2018	9.1%	-6.2%
Average	10.8%	6.7%

Fundrise is a low cost of entry, $500 min, way for you to get into the private real estate market which has historically provided returns much higher than stocks and bonds. The theory on classical investing is evolving, and I personally buy into it. Rather than 100 minus your age for a stock bond mix, I believe it wise for you to seek investments not traditionally available through your financial advisor. I have documented my personal findings on Lending Club, a low entry peer to peer investment option, and Fundrise is another option for you to broaden your investments. I also have an income producing commercial rental building, so my total portfolio is probably broader that most.

This fund is a source of cash for real estate companies who are focused on returns. You get both debt and equity in the portfolios. As I look through my portfolio it is mainly in multi unit housing developments, with a few commercial real estate projects and a few single family homes. I like it because its hands on, has a low entry point, and I can see where every penny is invested. You can call up a single project, look at a picture, a map, the amount, who owns debt vs equity, review the market analysis, projected return and associated risk range, etc. You get more than 5 levels of Why for everything in your portfolio. Also, it auto invests across their portfolio projects, which I can control. In addition, and once again I kick the dead mule here, probably my favorite thing is that it cycles differently than the stock market.

Your should always consider the risk and downsides of each investment. Like every good business deal, its the ending and the rough times you have to prepare for. Real estate can be very regional, subject to natural disasters, and can experience its own slowdowns. When you transfer money to Fundrise, they make you state that this investment is less than 10% of your portfolio, which is wise. In addition, this is an illiquid investment, so you have to be aware of how much of your money you can actually get to in case of need. What you get is a historically high return investment that will not cycle with pig belly futures, or quarterly steel manufacturing volumes. My own personal experience confirms this, that commercial real estate brokers are focused on cap rate, and if you are not talking 8% or greater, they have little interest. With all its upsides and downsides, Fundrise is worth considering as part of your overall investment strategy.