Fundrise Review 2022: 40% Return After 3 Years

Fundrise Review

Fundrise is an online real estate company that lets you invest in private commercial and residential real estate deals with as little as $10. My Fundrise review will discuss my personal experience with Fundrise after depositing $1,000 3 years ago in 2019.

Fundrise: My Favorite Real Estate Crowdfunding Platform

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Enter Fundrise. Fundrise allows non-accredited investors to buy private owned real estate with just $10.

The company was founded in 2012 with headquarters in Washington, DC and currently has over 370,000 active investors on its platform. Fundrise has a total asset transaction value of over $7 billion and has paid $226 million in net dividends to its users (minus management fees).

Who Owns Fundrise?

Fundrise was co-founded in 2012 by two half-brothers, Ben and Daniel Miller.

I personally know the CEO of Fundrise, Ben Miller, because I attended high school with his younger brother, Daniel Miller.

Ben Miller

He is a talented, driven individual who created a fantastic solution to the lack of real estate investment opportunities for the average joe. He attended the Wharton school of business at University of Pennsylvania and co-founded the company alongside his brother, Dan.

Daniel Miller left Fundrise in 2015 to start his own farmland REIT, Gosteward. Ben Miller is a regular guest on CNBC and has spent over a decade helping retail investors gain access to the massive private equity real estate industry.

He is following in the footsteps of his father, Herbert Miller, who led a multi-billion dollar company called the Mills Corporation back in the late 90’s. Herbert Miller ended up selling Mills Corporation to Simon Property Group.

If you’re familiar with the Washington, DC area then you probably heard of Potomac Mills. That’s one of Herbert Miller’s former properties and it makes sense that his eldest son, Ben, would adopt the same real estate pedigree and use real estate crowdfunding to build the family’s legacy.

Being able to invest in private equity real estate is extremely empowering and financially intelligent strategy.

Since launching in 2012, Fundrise has returned over $228 million dollars to its investors. Notice the exponential growth of the graph below as more people sign up:

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If you’re an income investor, Fundrise is a smart alternative to owning publicly traded real estate ETFs due to the higher yield and lower cost.

How Does Fundrise Work?

First, you create a Fundrise account then choose between 5 different account levels:

  • Starter: $10 minimum investment
  • Basic: $1,000 minimum investment
  • Core: $5,000 minimum investment
  • Advanced Plan: $10,000 minimum investment
  • Premium: $100,000 minimum investment

Fundrise Account Levels Compared

Here is a comparison chart that shows the differences between each account level.

I got started with the Basic plan for a total initial investment was $1,000. If you don’t have $1,000 to invest then get started on the Starter plan for at least $10.

The Starter Plan invests automatically in the Flagship Real Estate fund because you cannot choose an investment plan on the Starter plan.

Choose an Investment Plan

If you invest at least $5,000 then you can choose from 3 investment strategies:

  • Supplemental income: Focuses more on dividends and less on capital gains
  • Balanced: a balanced mix of dividends and capital gains
  • Aggressive Growth: Focuses more on capital gains and less on dividends.

If you plan to invest in Fundrise over the long run then choose the Long Term Growth plan to maximize your overall returns.

I choose the Balanced plan when I got started because I wanted a mix of capital appreciation and dividend income. Now, I realize that I’d probably have more money if I just choose Long term growth.

Once you get older, you can switch to supplemental income if you need passive income to fund your lifestyle.

How Do Fundrise Dividends Work?

Fundrise pays dividends on a quarterly basis just like many publicly traded companies do. Dividends are distributed directly to your Fundrise account on the month after the quarter end (April, July, October, January).

Fundrise Portfolio Performance after 3 years

As of Q3 2022, my Fundrise portfolio has returned $409. I’m up 40% since I joined in 2019.

Fundrise Portfolio Performance
My Fundrise Portfolio Performance

One of the nice things about Fundrise is the slow, steady approach to investing. I don’t have to constantly check my portfolio or worry about fluctuating stock tickers.

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Sometimes, owning stocks can be stressful when prices are falling quickly. The 2022 stock market crash shows why investors should diversify their portfolio in different asset classes to reduce risk and protect your capital.

Fundrise removes a lot of worry and anxiety from my life. It’s a simpler, more passive way to invest in real estate.

My Fundrise Average Annual Returns After 3 Years

I started investing in Fundrise starting on August 16th, 2019. My all-time annual returns are 12.1% per year.

Fundrise Average Annual Returns

Fundrise Returns Vs REITs Vs S&P 500

You maybe wondering if Fundrise outperformed the S&P 500 over the last few years. Here’s a comparison chart showing the returns for Fundrise versus two major benchmarks: the Public REIT sector and the S&P 500.

Fundrise returns Vs REITs Vs S&P 500

Can You Make Good Money with Fundrise?

Absolutely. My personal 40% total return using the Fundrise balanced plan over the last 3 years would have grown much larger if I invested more money.

I turned $1,000 into $1,400 but imagine if I invested more money upfront. Here is an example of some potential gains I missed out on.

Initial InvestmentTotal Account Value After 3 Years
$5,000$7,000
$10,000$14,000
$20,000$24,000
$50,000$70,000
$100,000$140,000
$500,000$700,000

Fundrise is a good way to make money investing in real estate but you won’t get rich quickly unless you invest a massive amount of money.

I’m excited to see how my returns will be throughout this decade once the compound effect starts kicking in.

Fundrise Withdrawals: Can You Get Your Money Out?

I’ve never withdrew funds from Fundrise because I want my account to grow passively as I ride out stock market & crypto volatility.

However, Fundrise does allow you to get your money out of the platform by submitting a liquidation request.

Fundrise will review your request at the end of each quarter after a 60-day waiting period. There may be a penalty fee depending on which REIT you want to liquidate.

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The Flagship Fund and Income Fund will offer quarterly liquidity (in the form of quarterly repurchase offers) and there is zero penalty or cost associated with liquidating these shares. 

Any other REIT will incur a 1% penalty fee if you sell before a 5 year holding period.

Why Invest in Real Estate?

Investing in private equity real estate is a great way to diversify your portfolio and add a solid long term asset to your portfolio allocation. Most investors choose REITs as a simple way to earn passive income from residential and commercial properties.

In fact, REITs have outperformed every single asset class over the long term due to the fact that there is a fixed amount of land on earth and real estate becomes more valuable over time.

Here’s a chart from 1996 to 2005 showing how REITs led all other asset classes including stocks, bonds & gold:

Real estate has several advantages over stocks in the long term:

  • Lower volatility due to less liquidity
  • Land is finite while stocks can become diluted due to poor management or too many shares outstanding
  • People always need a place to work and live so demand remains strong no matter what’s going on in the economy
  • Real Estate favors a long term outlook that normally outperforms short term behavior

I own a few REIT stocks like Realty Income (NYSE: O) and Washington Prime Group (NYSE: WPG) but I wanted to gain exposure to the private real estate sector through the power of crowdfunding.

In the past, only accredited and high net worth investors gained access to profitable real estate deals. You needed lots of capital & financing to take advantage of real estate selling at a discount.

That’s until real estate crowdfunding changed the game forever. Instead of personally raising millions of dollars to purchase an apartment complex, I can pool my resources with thousands of other investors and own a small slice of the property. Now, anybody with a couple hundred dollars can build a private equity real estate portfolio over time.

Is Fundrise a Good Investment for Passive Income?

I earned a 40% ROI over a 3 year holding period using the balanced plan and I’m extremely happy with my results.

If you want to generate passive income then Fundrise is a nice alternative to the stock market. In 2022, most publicly traded REITs crashed in price and you lost a lot of money if you held through the bear market.

However, my Fundrise account gained in value during the stock market crash plus my dividends continued to pile up in my account.

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Conclusion

I’m happy to be up 40% and plan to add more money to my portfolio heading into 2023. After 3 years using the platform, I can safely recommend them as a good real estate crowdfunding platform.

Sign up for Fundrise Now (aff link)

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