Author Topic: thoughts on fundrise  (Read 5334 times)

Stache In Training

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thoughts on fundrise
« on: January 06, 2016, 11:30:54 PM »
Hello,
I am curious if anyone had thoughts or experience with the new company Fundrise.com?  I think I'll probably stick with my vanguard reit index, but the fact that this is crowdfunding commercial real estate, intrigued me a bit.  Especially when they aren't having any management fees for the next 2 years unless it beats 15%.  Still seems like the fees (upfront etc) might be higher than Vanguard, even though they are claiming to be much lower than the industry average.

Just curious if there were thoughts.  Too good to be true? Doomed to fail?  Something worth throwing some "fun money" at?

Thanks!

zz_marcello

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Re: thoughts on fundrise
« Reply #1 on: January 07, 2016, 07:12:13 AM »
Hello,
I am curious if anyone had thoughts or experience with the new company Fundrise.com?  I think I'll probably stick with my vanguard reit index, but the fact that this is crowdfunding commercial real estate, intrigued me a bit.  Especially when they aren't having any management fees for the next 2 years unless it beats 15%.  Still seems like the fees (upfront etc) might be higher than Vanguard, even though they are claiming to be much lower than the industry average.

Just curious if there were thoughts.  Too good to be true? Doomed to fail?  Something worth throwing some "fun money" at?

Thanks!

Hi,

I'm an accredited investor with Fundrise and invested in their specific projects.
Up to now they never had a default and things look good.
These projects are different then exchange traded REITS because you don't get distributed rental income but you lend money so property objects can be established/optimized/upgraded... Its currently mostly preferred equity, which means you come behind senior debt but before normal equity in terms of risk.
What I like specifically about the business model is that they put their money in the same projects than you, so there is a high chance those projects are really well chosen (Different to Lending Club, where you have to take care by yourself and scan with own parameters)


As part of a broadly diversified portfolio I'm allocating 5-8% of my net worth with them and an additional 5-10% with Lending Club (with some tested/optimized lending parameters).

Have a nice day!
« Last Edit: January 07, 2016, 08:18:04 AM by zz_marcello »

Mr. FI

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Re: thoughts on fundrise
« Reply #2 on: January 07, 2016, 09:29:14 AM »
After a lot of research, reading the offering, reading forums, etc. I decided to take the plunge. I think it's a pretty intriguing offer to get into real estate while not being tied to the stock markets.
Highly risky but could be a good way to diversify. I only put down $1500 and it's a very small part of my portfolio.

Also, approach it as a longer-term investment. You can redeem shares quarterly, but I wouldn't recommend this if you can't be in it at least 3 years

GGNoob

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Re: thoughts on fundrise
« Reply #3 on: January 07, 2016, 10:48:28 AM »
I put $2,000 into the eREIT they are offering. It's all I had available when the offering was open and it closes very quickly each time. I'm hoping to increase this investment quite a bit over time and would like to be at least $10,000 in the next 6 months.

My wife is a part owner of her hair salon after purchasing 10% of the salon and gets semi-annual profit checks. I'd like to treat this as a very similar investment and look at it for the income it provides and not that value of the investment.

I also allocate about 15% of my stocks to Vanguard's REIT Index.

HeadedWest2029

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Re: thoughts on fundrise
« Reply #4 on: January 07, 2016, 11:39:23 AM »
I'm kinda intrigued by this.  The annual returns (net) look decent based on prior investments, but not 15% as far as I can tell.  More inline with 8-10% which you might expect from a REIT fund.  Curious, what do others who use Fundrise view as advantageous over the Vanguard REIT, which has similar returns but with less concentrated risk and a low barrier to getting started?

Mr. FI

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Re: thoughts on fundrise
« Reply #5 on: January 07, 2016, 11:52:14 AM »
I'm kinda intrigued by this.  The annual returns (net) look decent based on prior investments, but not 15% as far as I can tell.  More inline with 8-10% which you might expect from a REIT fund.  Curious, what do others who use Fundrise view as advantageous over the Vanguard REIT, which has similar returns but with less concentrated risk and a low barrier to getting started?

The Vanguard REIT is publicly traded and seems to follow the S&P for the most part. I wanted something that has less of a correlation/volatility. Plus the minimum for Vanguard's is $3000. I wasn't sure if I wanted to pony up that much to begin with. Like I stated, Fundrise is definitely riskier, but I think they could outperform Vanguard's, which is showing a return of 10.76% as of November 2015.

EDITED to reflect correct return %
« Last Edit: January 07, 2016, 12:10:54 PM by Mr. FI »

HeadedWest2029

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Re: thoughts on fundrise
« Reply #6 on: January 07, 2016, 11:55:23 AM »
Looking at the eREIT, which seems to be somewhat diversified.  So basically you're banking on the expertise of the management team to select projects more profitable than average, but isn't this similar to choosing an actively managed mutual fund in the stock world?  According to Vanguard, their REIT has an average annual return of 10.76% unless I'm reading this wrong https://personal.vanguard.com/us/funds/snapshot?FundId=0123&FundIntExt=INT
« Last Edit: January 07, 2016, 11:58:36 AM by FourPercenter »

Mr. FI

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Re: thoughts on fundrise
« Reply #7 on: January 07, 2016, 12:13:32 PM »
their REIT has an average annual return of 10.76% unless I'm reading this wrong https://personal.vanguard.com/us/funds/snapshot?FundId=0123&FundIntExt=INT

You are correct. This is what I get for trying to write on this forum using my phone. 10.76%. My main point still stands, I am okay with the higher risk for less volatility with a trial sum of money.

zz_marcello

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Re: thoughts on fundrise
« Reply #8 on: January 07, 2016, 02:21:16 PM »
... According to Vanguard, their REIT has an average annual return of 10.76% unless I'm reading this wrong https://personal.vanguard.com/us/funds/snapshot?FundId=0123&FundIntExt=INT
This average return was possible by a good part through rising valuations of REITs due to falling treasury yields.
If the yield curve stabilizes of turns (which it has to do at one point, because we are close to 0 ) than yearly yields will be more in line with dividend payments+inflation. (which are currently ~4% for the Vanguard REIT + 2%? Inflation).

JZinCO

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Re: thoughts on fundrise
« Reply #9 on: January 07, 2016, 11:28:35 PM »
Looking at the eREIT, which seems to be somewhat diversified.
Isn't the eReit diversified into just three commercial projects?

I'm really intrigued by Fundrise. Yesterday was just their second offering for the eREIT, correct? What's the return like so far? What are the fees? There's a buy in fee and then an ongoing expense fee that is 0% until 15% return is achieved or until Dec 2017 whichever comes first, correct? And then 1%?  And then there is a redemption fee of 3% after holding for at least 3 years.

Curious, what do others who use Fundrise view as advantageous over the Vanguard REIT, which has similar returns but with less concentrated risk and a low barrier to getting started?

Fundrise states "Generally speaking non-traded REITs have less liquidity than those that are publicly traded." fwiw..

As for myself, I think I would like to see actual results (not the results on their home page of their past ventures) before I take the plunge...

Vagabond76

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Re: thoughts on fundrise
« Reply #10 on: January 08, 2016, 05:15:14 AM »
Why no comparison to Realty Income (O)? It has a 40 year history, 20 as a public company; high yield; small but steadily rising distribution even during the tech bubble and financial crisis; and a diversified commercial real estate portfolio.

Stache In Training

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Re: thoughts on fundrise
« Reply #11 on: January 09, 2016, 09:10:26 PM »
I'm really intrigued by Fundrise. Yesterday was just their second offering for the eREIT, correct? What's the return like so far? What are the fees? There's a buy in fee and then an ongoing expense fee that is 0% until 15% return is achieved or until Dec 2017 whichever comes first, correct? And then 1%?  And then there is a redemption fee of 3% after holding for at least 3 years.

This is what I couldn't find: What the fees were after 15% or Dec 2017?  So a 1% ongoing expense fee.  Add-in the 3% redemption, and whatever the buy-in fee is, and basically it seems like it would have to hugely outperform a Vanguard REIT to break even.  Or am I missing something that would make it worthwhile for the extra fees?

GGNoob

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Re: thoughts on fundrise
« Reply #12 on: January 12, 2016, 08:51:25 AM »
Why no comparison to Realty Income (O)? It has a 40 year history, 20 as a public company; high yield; small but steadily rising distribution even during the tech bubble and financial crisis; and a diversified commercial real estate portfolio.

Thanks for pointing this out. I'd heard of it before, but never really looked into it. Looked into it a lot for the past few days and decided to start putting some money into O as well as I increase my real estate exposure.

AZDude

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Re: thoughts on fundrise
« Reply #13 on: January 25, 2017, 07:34:29 PM »
O is fine if you want a monthly dividend. However, SNH - Senior Housing Property Trust has higher returns, but dividends are dispersed quarterly. I own some of both. SNH has been steadily outperforming O.

Just something to think on. Realty Income is steady and reliable, but you can find better returns if you look around(including on MMM, which is where I first heard of SNH).

jeromedawg

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Re: thoughts on fundrise
« Reply #14 on: February 07, 2017, 10:35:36 AM »
Just checking in here... anyone else invested in Fundrise? Seems they have 5 funds now that you can invest a min $1000 into each: Income+Growth West Coast, Income+Growth East Coast, Income+Growth Heartland, Growth National, Income National.

Seems like it could be prudent doing some of each if you're willing to lay out $5000... thoughts?

EDIT: looks like Growth National and Income National are "sold out" - how does that work? So the max min investment to invest in the Income+Growth 'regional' eREITS is $3k.