Purchasing a rental property and investing in a crowdfunding platform like Fundrise both have their own unique set of benefits and drawbacks. In this blog post, we will compare the two options head-to-head to help you determine which is right for you. It’s also important to note that Fundrise is not the only solution that has been developed for the hands-off real estate investor. So be sure to check out our review of the competition. (First National Realty Partners, EquityMultiple, Realtymogul, and others)
Benefits of Purchasing a Rental Property
One of the biggest advantages of purchasing a rental property is that it allows you to have direct control over your investment. As the owner of a rental property, you have the ability to make decisions about the type of property you buy, the location, the rent you charge, and any renovations or improvements you make. This can be a great way to build equity and potentially earn a significant return on your investment.
Drawbacks of Purchasing a Rental Property
However, there are also some significant drawbacks to owning a rental property. For one, it requires a significant upfront investment of both time and money. You will need to research the market, find a suitable property, and make a down payment in order to purchase it. You will also need to budget for ongoing expenses such as property taxes, insurance, and maintenance costs. Additionally, being a landlord can be time-consuming and require you to deal with tenant issues, such as late rent payments or property damage. This is why many investors interested in real estate have started looking for other liable options. Meet Fundrise.
What is Fundrise?
Fundrise is a real estate crowdfunding platform that allows individuals to invest in commercial and residential real estate projects. It allows people to invest in real estate without the need for large amounts of capital or extensive experience in the industry. The platform provides access to a variety of real estate investment opportunities, including debt and equity offerings, and allows investors to invest as little as $10 in a project. And with over $4 Billion in real estate assets across the country and over 371,000 individual investors, it’s safe to say Fundrise is legit, and here to stay.
Benefits of Investing in Fundrise
Investing in a crowdfunding platform like Fundrise offers a more passive investment option. With Fundrise, you can invest in real estate projects without having to deal with the day-to-day management and maintenance of a rental property. Fundrise also offers a diverse portfolio of properties, so you can spread your risk across a variety of assets.
Fundrise offers several different investment portfolios, including:
- The Income eREIT Portfolio focuses on generating stable and consistent income through investments in a diversified portfolio of income-generating real estate assets.
- The Growth eREIT Portfolio focuses on capital appreciation through investments in a diversified portfolio of real estate assets with the potential for higher returns.
- The Balanced eREIT Portfolio, aims to provide a balance of income and growth by investing in a diversified portfolio of real estate assets.
- The Supplemental Income Portfolio focuses on generating additional income through investments in high-yield, short-term real estate debt.
- The Core Income Portfolio focuses on generating stable income through investments in a diversified portfolio of core real estate assets.
- The Core Plus Income Portfolio aims to provide stable income and potential for capital appreciation through investments in a diversified portfolio of core and value-add real estate assets.
In addition to these pre-built portfolios, Fundrise also offers a custom portfolio option for investors who want to build their own portfolios with a more personalized investment strategy.
Another advantage of investing in Fundrise is that it allows you to start investing with a smaller amount of money. With Fundrise, you can invest as little as $10, whereas purchasing a rental property often requires a much larger upfront investment. This makes Fundrise a more accessible option for investors with limited capital.
Drawbacks of Investing in Fundrise
On the other hand, investing in a crowdfunding platform like Fundrise also has its drawbacks. For one, you will not have the same level of control over your investment as you would with a rental property. Fundrise makes the decisions about which properties to invest in and how to manage them, so you are essentially entrusting your investment to the platform (which is actually a benefit for many investors).
Cost is another potential drawback, Fundrise charges an annual asset management fee of 0.85% on the total value of your investment and a 0.15% investment advisory fee. This fee is automatically deducted from your account and is used to cover the cost of managing and maintaining your investment portfolio. In addition to the advisory and management fee, Fundrise may also charge certain transaction fees for certain actions, such as withdrawing funds from your account or transferring your account to another person. These fees are typically disclosed in the investment offering materials and will vary depending on the specific investment.
In conclusion, both purchasing a rental property and investing in a crowdfunding platform like Fundrise have their own unique advantages and drawbacks. If you are looking for direct control over your investment and are willing to put in the time and effort to manage a rental property, purchasing a rental property may be the right choice for you. On the other hand, if you are looking for a more passive investment option with the potential for higher returns and lower upfront costs, stop delaying and Sign up for Fundrise today!