Fundrise and REITs appear to be comparable investments. Even though they are similar in many ways, each is different enough to stand out in the real estate investment field. Both, for instance, engage in real estate projects or assets and are centered around real estate investment trusts (REITs).

Their methods of investing, the types of investments they make, and their accessibility to the general public, however, differ significantly from one another.

Most references to “REITs” in this article will be publicly-traded REITs. A publicly listed REIT is accessible to the general public and trades on well-known stock markets.

Here is a table of comparisons between the two investment platforms. 

Criteria  Fundrise  Reit
Investment type 
  • Publicly non-traded REITs (eREITs)
  • Public traded REITs 
Fees
  • 1% annual charge and 1% redemption fee within the first five years
  • Expense ratios, which typically range from 0.6% to 1% plus
Liquidity 
  • Option to redeem every quarter (not guaranteed)
  • High
Accredited investor requirement 
  • No 
  • No
Available for retirement accounts 
  • Self-Directed IRAs (SDIRAs)
  • Standard IRA, 401(k), 403(b), and 457 options 
Minimum investment 
  • $10
  • The cost of a share in a REIT
Average annual returns 
  • 7.31 to 22.99% net of fee 
  • 11.51%

Fundrise Vs. Reit Summary

For many individuals, investing in REITs can be profitable, particularly publicly traded ones. These investments not only consistently outperform the market but also offer a better return yield than the S&P 500. However, the eREITs provided through Fundrise are not publicly traded investments. This implies that they might not offer the same returns or advantages as publicly-traded REITs bought through a brokerage account.

Fundrise is a better option for those new to real estate investment because it relies on the industry knowledge and experience of its managers. Remember that any funds you invest with Fundrise may not be available for several years until the fund distributes it, liquidates a property in its portfolio, or approves your withdrawal.

Fundrise often offers a variety of investing opportunities. As a result, they might provide stronger market downturn protection than some specialized REITs or one-off real estate deals.

Fundrise Overview

Fundrise is a legit online company where investors can buy shares of real estate assets. Investors can diversify their portfolios by adding low-cost real estate investments without the trouble of purchasing, refurbishing, or managing those properties.

Users can begin investing in a diverse pool of real estate holdings using the Fundrise platform for as low as $10 using the Fundrise Starter account. Fundrise has four additional account levels based on your goals and the amount of money you want to invest.

Features

  • Self-directed IRA
  • Goal-based investing
  • Direct investments
  • eREIT and eFund

Pros

  • Regular quarterly dividends
  • Benefit from company expertise
  • Completely passive income
  • Dividends can be reinvested

Cons

  • Penalises early withdrawals
  • Bad for short-term investment 
  • May get many tax documents every year 
  • Expenses are 1% annually 

Get Started With Fundrise 

Reit Overview

The term REIT stands for ‘real estate investment trust’. A real estate investment trust (REIT) is a firm that owns and runs income-producing assets on behalf of real estate investors. These real estate assets generate revenue that is disbursed as dividends to investors.

There are different kinds of REITs available. A new investor may find it challenging to choose where to start due to the many options. It would be best if you had a long-term (like investing with Fundrise) perspective while investing due to the risks involved, but you can rest assured that most publicly-traded REITs and real estate mutual funds can be sold at any time.

Features

  • In addition to providing tax benefits to investors, REITs make it possible to participate liquidly in the normally illiquid real estate market. 
  • The ability to own a portion of non-residential properties like hotels, shopping centers, and industrial buildings is another feature of REITs.
  • REITs don’t have a set minimum investment requirement, and their value doesn’t always rise and fall with the general market.
  • Regardless of how well the shares perform, they pay yields in the form of dividends.
  • Similar to stocks, REITs can be priced based on fundamental metrics. However, various figures frequently play a significant role in REIT valuation.

Pros

  • No corporate taxes
  • It offers multiple choices for users 
  • Have high yield dividends
  • You can begin with just a share
  • You can create liquidity (buy and sell) at any time 
  • Offers portfolio diversification 

Cons

  • It has higher taxes on dividends
  • Analysis paralysis can impact the start of your investment
  • You need more time and effort to choose the right investment 
  • Interest rate sensitivity impacts your investments

Fundrise Vs. Reit Conclusion

Standard REITs can be traded publicly, privately, or non-publicly. Since Fundrise REITs are private, they might be less liquid but may also be easier for some investors to understand and only demand a $10 initial investment. Investors can select the pre-built portfolio that best suits their needs. The yearly platform charge for Fundrise is 1%, greater than the typical public REIT fee. Although the Fundrise investment concept is quite straightforward, depending on your selected portfolio, return yields may be lower than those of public REITs. 

Jeremy Biberdorf

Jeremy Biberdorf is a long time internet marketing professional turned full-time online entrepreneur and blogger. Check out his site modestmoney.com for investing advice and reviews of the best investing platforms such as M1 Finance and SoFi.

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