Fundrise is an online crowd funding platform that allows investors to invest into real estate. The platform provides another avenue for passive income that can be helpful on the journey to financial freedom! That is the exact reason we have been investing with Fundrise.
My wife and I have now been investing with Fundrise for approximately 2.5 years. We cannot wait to share with you the performance and the additional income that the investment can provide!
Fundrise: brief background
Fundrise has been around since 2012, investing over $5.1 billion of real estate holdings and transactions. They are a premier, real estate crowdfunding investment platform.
Fundrise has 4 (they brought in “Basic” to replace the Starter plan!) different categories or what they call, “Plans”, of Investors for you to choose from:
- Basic Plan: Start with $1,000 and gain immediate exposure to real estate investments, with the ability to earn and reinvest dividends! However, plans get much more expansive, once you reach the next tier, as you’ll see below for Fundrise.
- Core Plan: Level up at a $5,000 initial Investment. Choose between a Supplemental Income, Balanced Investing and a Long-Term Growth plan. You can see the breakdown of each below, as I talk about how we selected the Supplemental Income plan.
- Advanced Plan: Available to investors with $10,000+ invested. This plan has a more variety, as well as sophisticated and specific investment strategies.
- Premium: Available to those investors with $100,000+ invested. Even longer-holding periods, with greater potential for returns. For some reason, I just can’t find the $100,000 underneath that couch cushion I thought I had… Details on the Premium investment class is below.
Their fees are approximately 1.00% but can be waived through generation of referrals. My fees YTD for 2021 are at 0.94%, therefore – lower than anticipated.
You can review Fundrise service and approach to investing here.
The three plans within the Core Investment Category are listed below and you know we chose the Supplemental Income plan! We are at the Core Plan Tier, almost to the Advanced!
For further details on my investment and background, see – Fundrise Review – A New Investment, Pros & Cons
For 2020 Update – Fundrise: Real Estate Investment Lanny’s 2020 Year-End Review
Our Current investment
Core Plan: Supplemental Income
As stated above, we invested into the Core Plan –> Supplemental Income type. I have taken a screen directly from the Fundrise platform, to show you what my real estate investment looks like. My attempt is to make this as transparent as possible. We initially started with a $1,000 investment back in February/March of 2019 and we have invested $100 monthly through February 2021. If you re-call, we made the move to $200 per month in March of 2021! Therefore, you can see those results under “Real Estate” in the screen shot below and the total is $7,914.76 as of 7/9/21.
My wife and I will look at our networth and portfolio at the end of the year to decide if we want to increase our contribution to $250 per month for 2022. Since we have enjoyed Fundrise, we would like to increase our investment. The investment in Fundrise performed well during the pandemic – returning 7.4% in 2020. Fundrise significantly outperformed the REIT index – which was a NEGATIVE 5.86% for 2020. That is EXACTLY why I love Fundrise – as it doesn’t track the equity REIT market!
Active Projects within Core Plan
What’s great is that the investments are spread throughout the country. In addition, the Fundrise investments are on different timelines from an investment standpoint. Timelines such as – new investments, stabilized positions and fully operating real estate properties.
Example of a few stabilized apartments in Florida and North Carolina:
The transparency to each investment is fully appreciated and pleasant to see. Talk about helping you sleep at night!
Here is a re-cap that I was able to take to summarize the positions as of July 9, 2021:
What you’ll also notice is the $1,883.93 from the Fundrise Investment Internet Public Offering (iPO). As an investor on the platform, you receive an opportunity to own shares in Fundrise, the company. I took the opportunity and based on my holdings, was able to invest $1,883.93. The valuation is currently at $2,365.30. Extremely curious as to what may occur at the end with the iPO!
Related: Fundrise iPO, Say What?!
Related: Fundrise: Internet Public Offering (iPO) Round 2 – Adding $900 to My Fundrise Investment
Fundrise: Year-to-Date Performance
My friends, including Bert, and I have a very good joke. We send a message out about how our Fundrise investments are doing and each response always follows the lines of, “Steady Eddy”. This has been the case, even during the global pandemic of COVID-19 (especially during 2020, as noted above). In fact, the weathered the pandemic very well. I wonder how much this had to do with the CARES, forbearances and the forgiveness on rent.
As you can see in the first image, there has not been a single dip in performance. Performance continues to be steady with each additional investment. My selection of Supplemental Income did estimate my return wouldn’t be the overall best, but that usually means the investment does not fall as hard. Therefore, the downside risk to my investment was lower than the other investment options on the platform.
As stated earlier, we add $200 per month, hence the slow/small step-ups each month in the first image. We also did a “one-time” $2,500 additional contribution in early June, as we are striving for the Advance Plan! The best part of the performance is that it’s primarily driven from Dividends. We have earned over $370+ in dividends (see left side of image) since inception. What happens with the dividends earned?
The dividends are reinvested, of course! Fundrise gives you the option to either receive dividends as cash or reinvest back into the real estate investment. You better believe, sticking to my dividend investing roots, I am reinvesting dividends earned.
Related: The Power of Dividend Reinvesting
Each quarter end – dividends are reinvested in that subsequent month. The reinvestment occurs automatically, which is very nice. This takes part of the emotion out of investing, as well. Below you can see that this typically occurs between the first two weeks after the quarter ends.
The question you may have is – what is your actual return %? What have we returned since owning this investment? Well – the screen shot below does a fairly decent job at depicting that, again – straight from the Fundrise dashboard.
The investments, on a weighted average basis, have returned 9.7% since investing with Fundrise. Obviously this lags the S&P 500 by a great deal, as the market has returned over 16% YTD in 2020 and Fundrise only did 7.4%. To note, the returns below primarily are from the income being generated.
My goal wasn’t to beat any index or market, but to differentiate my investment portfolio. To have a differentiator that also produces a steady stream of income. I would say, Fundrise has fit the bill perfectly, thus far.
Fundrise: Investment Update Year-End 2020 Conclusion
Fundrise, overall, has been a sound and steady investment. The investment definitely hasn’t tracked the S&P 500, which was the goal and provides a steady stream of income. As we’re on the journey to financial freedom, this adds more to the passive income stream that we have built. The $200 month has worked perfectly, as well as the one-time $2,500 additional contribution we made. Do we go up to $250 per month soon?
Given I chose the “lower” risk amongst the Core investment class, my decline in return hasn’t been significant. Given I am on track to return over 10% on 2021, primarily through dividends and slight appreciation, I will take it.
We are going to continue to invest $200 per month to end 2021 with Fundrise. If Fundrise finishes off on the right foot, i.e. over 10% for 2021 (they are projected to perform 13.4%, based on the 6.7% YTD above), we will consider $250 per month to start 2022.
In summary, our investment in Fundrise has provided a very transparent, consistent income stream that has differentiated our portfolio. The platform is tremendously easy to use and understand. The time input after the initial investment is minimum. I tend to read new investments that are added and update performance on my spreadsheet. Here is an example of an investment update:
We plan to continue to invest in Fundrise as an alternative to our investment portfolio. Fundrise has provided us an exposure to actual real estate and to do this in a low-cost/low-barrier to entry, as well as a less-time consuming aspect to real estate. Again, we plan to continue our $200 per month investments and will re-visit at the end of the year to increase the investment per month or not. We love the portfolio income / cash flow stream that Fundrise provides, no doubt!
Is there something more you’d like to see during my next update? Something you are not sure of that I can go into detail on? Please let me know, as I’d love to help out as much as possible. Thank you again for reading, good luck and happy investing!
-Lanny
Thanks for the Fundrise recap, I’ve been researching it and haven’t pulled the trigger just yet.
Can you elaborate a bit on how the investment is treated as far as taxes are concerned? Are the dividends qualified or non-qualified? If you sell out, as long as you’ve held for more than a year, I would assume your proceeds would be taxed at LT rates?
JB –
Yes – I would assume that as well. Honestly, non-qualified, similar to a REIT if that helps – ordinary tax rate.
Any other questions? Let me know!!
-Lanny
I was just looking into this platform as an alternative investment vehicle, thanks for the review and thoughts
Chris –
Nice! What do you think? Need any other information? Let me know – I am fairly transparent and full disclosure!
-Lanny
Hi Lanny,
Thanks for the offer, right now I am trying to save to make the initial investment. Deciding if I want to get started with the $500 and add to it when I can. Or start with $1,000 and add to that when I can.
Sincerely,
Chris
Chris –
Always a good process. I know I had two co-workers just start, as well. One did one and one did the other. One did the $500 and is going to add when they can in lumps. The other did $1,000 and is doing $100/month to start.
-Lanny
Interesting. Most transparent review I’ve read on this.
Somewhat related question, what are your thoughts on paying off your home mortgage early? I know you’re a dividend investor, but I’d be very interested to see what you (and Bert) have to say about home ownership and how eliminating a monthly mortgage can turbo charge the amount of available income for investing.