Fundrise vs individual property

[Jim Truman]

Greetings,

I am exploring the possibility of getting started in real estate investing. My wife and I really don't have an interest in real estate but looking at the numbers, it seems like something we should pursue. 

During my research I've come across companies such as Fundrise. I'm wondering if this is a good way to receive some of the benefits of real estate investing, without the hassle of owning an actual property? I researched a bit on the forums but I'm not finding a really great comparison. What are the downsides of investing in real estate through a company like fundrise vs buying my own SFH?

From what I can tell so far, some possibilities are below, but I might not be correct....

-I don't get the tax advantages of owning a property.

-I don't have the advantage of leverage. 

Other than these what am I missing? It seems like I get shared ownership in a diverse portfolio of multiple properties. The rent/cash flow is returned to us as dividends. When the property is sold, any profits are returned to us as increased share values.

For someone who doesn't really want to deal with the full scope of owning properties, but sees real estate as a good investment, is something like fundrise somewhat comparable to actually owning property?

Thanks.

[John Bradley]

I think we can view the fundamental difference between a fund/trust and an investment in terms of risk/return and time. Fundrise is an eREIT with 8-12% return. It's primary differentiating characteristic is its low minimum, and slick online presence. REITs are a segment of commercial real estate investments which are the 2nd highest dividend-yielding asset class after small cap growth stocks. A REIT/eREIT/fund is a passive investment, requiring minimal time investment. The choice between investing in individual real estate purchases versus funds/REITs is fundamentally the decision between active and passive investment. The key questions are: How much money do you want to put into real estate investments? How much time? What're your financial goals? If you have time and resources, you certainly have other options than an eREIT. I'll give two real world examples to show what's out there: 1) I'm friends with the founder of the Palo Alto Real Estate Investor Group which has yielded 86% return on investments over the past several years (and which is not currently taking investors). I know two real estate developers with returns several times what most people consider exceptional, both with Stanford computer science backgrounds. We can call these exclusive passive investing - Generally high buy-in, long holding periods, high returns. 2) I recently had some friends who did a flip - They bought at 1.2M, 80K of construction, sold at 1.7M, ROI of 20.8%. This is a standard example of active investing. Many of the smartest people I know are very into 'mobile home syndication.' The bottom line is there's a whole world out there.