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Fundrise is an online, crowd funding real estate investment 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 almost 4 years. Fundrise provides us a nice diversification tool, to invest outside of the stock market, have an option for real estate investment and create passive income.
Fundrise: brief background
Fundrise has been around since 2012, investing over $7 billion of real estate holdings and transactions with over 330,000 investors. They are a premier, real estate crowdfunding investment platform.
Fundrise has 5 different categories or what they call, “Plans”, of Investors for you to choose from:
- Starter Plan: Start with ONLY $10 and you become a Real Estate investor! The limitations to this plan would be the inability to invest in an IRA with $10 nor the ability to join in on their iPO or internet public offering.
- 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. I started with the Basic plan in early 2019 and have since moved up!
- 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. My wife & I have invested over $10,000 into real estate with Fundrise and we now are Advanced plan members! Onward to the next class, which is…
- 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%, 0.85% for asset management and 0.15% for for advisory. My fees YTD for 2022 are at 0.15-0.25%, therefore – lower than anticipated.
You can review Fundrise service and approach to investing here.
We currently are in the Advanced Plan, specifically the supplemental income branch. That allows us to reduce our risk, be at the highest for income, but may not produce the greatest net overall return. However, that’s what we are looking for in regards to passive income. Lower risk with a higher cash flow.
Our Current real estate investment
Advance Plan: Supplemental Income
Our current ~$16,000 investment with Fundrise has been performing extremely steady, as reported in my Q3-2022 update.
Evidence of the consistency this year is below, with my year-to-date return screen shot.
I am as passive of an investor as there is and my recurring investment into fundrise, has consistently grown, day by day. Here is the fun chart:
My current investments are spread in 235 projects all over the country. In addition, 48% of those investments are strictly in fixed income producing properties, with the remaining 52% spread amongst other opportunities, such as Core, Value and Opportunistic.
That’s a brief background on what my investment is composed of and how the investment has performed. Why am I increasing my Fundrise contribution each month?
Reasons Why I’m Increasing My Monthly investment
Passive Income
It’s no question that one of the main reasons why we invest every month is to produce passive income. Investing with Fundrise provides an instant cash flow opportunity, one that accumulates dividends each quarter and then you can either elect to receive or reinvest the dividends.
Being a real estate investor, whether crowdfunding or physical real estate, that’s why you invest – for the cash flow or passive income the property can provide.
The yield that is being generated is higher than my overall dividend stock portfolio AND the value of real estate tends to not sh*t the bed during turbulent time periods. The geographies that the new investments are in – such as Texas, Tennessee, Florida, Georgia – are all newly popular areas where the younger generation want to live. Cities such as Houston, Charlotte, L.A., etc.
Therefore, I am increasing my monthly investment in Fundrise due to the passive income it provides.
Consistency is key
Fundrise, without a question, has been the most consistent and reliable investment I’ve owned for 4 years. I am talking there has not been a blip on the radar investment.
How could my real estate investment be less volatile than owning a Top 5 Foundation Stock or buying Vanguard’s High dividend Yield ETF (VYM)? Well, it has, and it more than likely has to do with the surge real estate was on for many years post the financial crisis. Therefore, while we are in the midst of a stock market crash, Fundrise continues to perform, gain market value and grow the passive income stream.
Each day, my investment grows, primarily due to the accumulated dividend over the month. Then, at every month or quarter end, the change in market value on the investment (such as appreciate or depreciation) occurs. The dividends definitely take out some of the volatility there.
Therefore, I’m increasing my investment in Fundrise because of the consistency in the dividend income stream and growing portfolio value over time.
Investment diversification
It’s no question, take a look at my Dividend Stock Portfolio, I am heavy into dividend stocks. The overall networth is heavily tied into the equity market or the stock market.
When we could be on the verge of a stock market crash, having investments and assets outside of that room, helps pad the volatility.
Increasing my monthly investment with Fundrise will further reduce my overall exposure to the equity market possibly and increase my diversification. The weight of this investment in our overall pie is very low, at < 5%. Therefore, we’d like it higher/be closer to 5%.
In addition, it’s so easy to sign up for Fundrise, to create that diversified passive income stream. It’s nice if a lever isn’t firing on all cylinders that other investments, such as Fundrise, can be there to keep things afloat.
Fundrise conclusion and a request for feedback!
Therefore, my wife and I are increasing our monthly investment by 25%, technically. We are going from $200 per month invested into Fundrise to $250 per month.
This increase alone will add another $600 to the Fundrise investment annually. It’s been a few years since we increased our recurring investment and based on the turbulence in 2022, why not diversify now.
We also committed another one-time $500 to Fundrise in Mid-October.
For 2023, a goal/strategy we have been debating in our household is getting our Fundrise Investment to $25,000. We are far from the top of the hill, but with enough consistency, we’ll get there. There mare be a few more one-time contributions to occur, but it’s all for creating more passive income.
What do you think? Are you adding to your crowdfunding real estate investments at all? Have you ever considered investing into Fundrise or a similar platform?
Do you find other assets that will perform well now and over the next decade?
-Lanny
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