Nearly 18-months have gone since my initial investment with Fundrise. It also feels like we just posted our 6-month and 12-month updates on the Fundrise passive income experience last week. It’s crazy how quickly life is moving.
In this post, we’ll cover my current progress with Fundrise. I also provide some updated observations and thoughts on the investment experience.
For those of you who haven’t read the prior reviews, I’ll include a quick recap of some key elements of the Fundrise platform and service offering. Additionally, some ongoing intuitive changes and enhancements have been made to the platform. We’ll cover some of those, too.
Fundrise Overview
Fundrise is an online real estate crowd-funding service, which offers both accredited and non-accredited investors the opportunity to invest in various real estate assets. Investors access properties via the Fundrise platform.
Investments are offered via two primary products:
(1) eREITs – composed of online Real Estate Investment Trusts (REITs) investments
(2) eFunds – composed of for-sale single family homes as investment properties
Overall, the mix of eREITs and eFunds offered tries to provide growth and/or income, as well as risk diversification, by offering properties or related assets across locations and different investment types.
Both debt and equity investments are utilized.
Related: 5 Ways to Balance Account Types To Balance Life’s (Un)known Milestones
The Fundrise platform also aims to offer investors the opportunity to benefit from market inefficiencies. In particular, the platform enables “direct private market investing”, as Fundrise describes its key offering.
By offering traditionally inaccessible market opportunities to individual investors, users benefit from a combination of Fundrise’s technology, real estate expertise, and related investment knowledge.
Visit the Fundrise website for further details.
Balanced Dividends Investment Experience
Here is a summary of my experience in the primary areas of the investment components.
Capital & Dividends
I initiated my position in Fundrise via their Starter Portfolio for only $500. In the nearly 18 months since, I’ve added nearly $15,000 of new capital to the Balanced Dividends Fundrise holdings.
Similar to the 6-month update, I actually have an in-flight investment at the time of this snapshot. It is possible to have investments in-flight which may reflect differently within the principal invested and the estimated value columns.
Here is a current reflection of the Balanced Dividends holdings recently:
Overall, after six quarters, I’ve received six dividend payments – $599.87 in total. All proceeds are currently reinvested automatically back into the Fundrise portfolio.
Details of the latest distribution are below:
It’s key to remember that new capital contributed to the displayed returns. As of the 6-month update, I had invested approximately $5,000. Many positions or allocations are still not operating fully.
Most importantly:
you need to comprehend that Fundrise is a long-term investment. With any investment, there is also risk of losing your entire investment.
Portfolio & Diversification
One interesting thing to note is the updated positions screen within the Portfolio section of Fundrise. Investors can now see a clearer view of their allocations.
The map of the US showing the number of projects by location is very helpful. In our 12-month update, I’d suggested to Fundrise to somehow incorporate an allocation weighting in terms of capital by region.
Unless I missed something (which is quite possible), I previously didn’t see a geographic representation of capital allocation AND returns – only the number of projects.
Now we do! At least in table format. Did Fundrise listen or read the review!? No, it’s likely they already had this in the works (or, as mentioned, I completely missed yet).
Regardless, you’re still able to view your capital allocations across the different eFunds and eREITs. And it’s fairly straight forward to determine your capital in the Los Angeles and Washington D.C. eFunds.
But now investors can also know what percentage of their capital within the Income eREIT is allocated toward a particular city or region. Good stuff!
A Reminder of Key Fundrise Changes Since the Last Review
I’ve been exploring some of the interface (UI) updates that have been made to the platform before and since the last review. We’ll also highlight a few other items related to our use of Fundrise. Some of these might not be a new offering, but we recently learned of them and/or utilized a particular feature.
Create Your Investment Goal
Great for initial investors or those starting on the Fundrise platform, I liked the savings target or goal feature. Users can select a time horizon of 5, 10, 15, or 20 years.
The tool then asks users to select their target account value. Still a bit too enthusiastic (from my perspective), the pre-set drop-down menu has amounts ranging from $175,000 to $325,000.
Users can also enter their own amount, which must be at least $50,000 but not greater than $1,300,000. I’ll try to start with the $50,000 and go from there.
Ability to Switch Fundrise Investment Plans
To be clear, the savings target feature is different from the Fundrise portfolio strategy choices. The latter still exist:
- (1) Supplemental Income
- (2) Balanced Investing
- (3) Long-Term Growth
We originally started with the Long-Term Growth strategy but switched to the Balanced Investing strategy (how did we not start there in the first place with a name like Balanced Dividends?). It’s easy to switch. I don’t know though if there is a restriction on when or how often you can switch strategies.
But why would you? We did it because of our consideration for our investment horizon time frame. Then again, we only changed it once, and we don’t plan to do so again.
Refreshed ‘Recent Update’ Look
I’ve really enjoyed this aspect of the platform in the last 6 months. Users can continue to access high-quality videos, images, and background information on the various projects.
The “quick view” also provides key highlights of a specific project. Full market analysis and project descriptions are also made available.
I found the “capital stack” table to also be very informative. Users can see the actual amount and percentage of Fundrise’s respective investment (equity or debt), along with those of other lenders and/or project participants, for a specific project.
A timeline or history of the project is also available to review prior updates. Overall, a number of useful data sets are available in a clear, concise manner.
Other Considerations
Here are some other random things I’ve noticed or continue to realize with Fundrise so far.
Desktop / Online Only
There still isn’t an app. Not a must-have, but a nice-to-have.
Cumulative Earnings
As mentioned, each time you log in, you see your cumulative earnings and what you’ve earned since last logging in. It’s addicting (don’t log in too frequently). Also, remember: It’s your cumulative earnings.
Despite reminding myself of this since highlighting it previously, I still need to refrain from checking this too often.
Timing of Investments
Withdrawals from your bank account still take longer than I’d expect, but not too long.
I think the withdrawals might happen a bit sooner than I recall, but the time to allocate your capital to the underlying investments still takes a few business days.
Automatic Allocations
Based on the amount invested each time, the platform will automatically allocate across your various holdings.
Note: You’ll also see a separate debit in your bank account per allocation (e.g., if you invest $1,000 and gets allocated five ways, you’ll see five different withdrawals in your bank account).
More recently, I’ve realized I like this approach. It’s easier to account for where things are going. Additionally, it helps round-up additional savings transfers via another savings tool we utilize.
Fees / Expenses
Still a bit higher than what I’m used to from investing in index funds and other publicly traded securities, but Fundrise still seems like a great deal based on what you get as an investor. Visit the Fundrise site for further details.
However, I have referred another investor I know who signed up; we both received 90 days without the advisory fee. Good stuff.
Tax Implications
Most investors will receive 1099-DIV forms if invested in the eREITS. I’ve never dealt with the 1065 K-1 forms related to the eFunds. But guess what?
With 2018 taxes approaching in the new year, I will be dealing with this after waiting until 2018 to invest in the eFunds for this reason.
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Lack of Individual Project or Property Selection
As far as I can tell via my profile view and log-in experience, users do NOT have the ability to select individual properties or projects to invest in.
Users select their respective portfolio strategy as outlined above (or select eREITs or eFunds in some instances), but a specific project cannot be selected.
But this isn’t necessarily a bad thing. It enables users to benefit from diversification and prevent a user from potentially allocating 100% of her or his respective capital into a single property or project.
For the undisciplined, like me, it enforces discipline.
Looking Back and — More Importantly — Ahead
I’ve enjoyed utilizing Fundrise even more over the last 18 months. The user interface remains terrific and the overall investment opportunities continue to meet our personal needs and investment objectives so far.
I’m continuing to evaluate the next steps and monitor our exposure to real estate. Fundrise has given diversification away from the traditional, publicly-traded REITs that form the bulk of my real estate exposure. The opportunity for potential long-term passive income and capital appreciation is very appealing.
As soon as some new capital becomes available, I’m planning to add fresh funds to the Balanced Dividends Fundrise portfolio. The balanced approach of Fundrise fits nicely as part of my overall portfolio and long-term investment strategy.
Readers, have you tried Fundrise or a related platform yet? What role does real estate play in your investment portfolio? How do you balance the need or desire for income vs. capital appreciation over the long-term?
Related:
Tax Reform & Your PFUI: Applying the 10 Heuristics
How We Got To Averaging +$1,000 a Month In Passive Income
Land(less) Landlording: How and Why We Use REITs
Our favorite free financial tool is Personal Capital. We use it to track our net worth, manage our spending & savings, and to monitor our investments. It’s simple and free to use.
I tried to change plans after reading this article. It an only be done by adding new funds. The original investment stays in the plan it started in. This was explained in an email from fundrise after I’d changed my preferences in my account. Rather disappointed, as they do say you can change plans later after signing up. Still I’m enjoying this form of investment and love the app.